UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
☒
ACT OF 1934
For the fiscal year ended
OR
☐
EXCHANGE ACT OF 1934
For the transition period from
To
Commission file number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction
(IRS Employer
of incorporation or organization)
Identification No.)
,
,
,
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code:
-
-
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange
on which registered
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
☐
☒
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
☐
☒
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
days.
☒
☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required
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).
☒
☐
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
☐
☒
The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of
December 31, 2024 (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 $
. This calculation does not reflect a determination that persons are affiliates for any other
purposes.
As of September 29, 2025,
of treasury shares, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the definitive Proxy Statement for our 2025 Annual Meeting of Shareholders are
incorporated by reference into Part III of this Form 10-K.
1
LESAKA TECHNOLOGIES, INC
INDEX TO ANNUAL REPORT ON FORM 10-K
Year Ended June 30, 2025
Page
PART I
PART II
[
PART III
PART IV
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 2026 fiscal year, which runs from July 1, 2025 to June 30, 2026.
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 enables underserviced consumers and businesses in the southern cone of Africa to manage their daily financial activities
in a better way, improving people's lives and increasing financial inclusion in the markets in which we operate. We have developed a
unique ecosystem of communities that provides: (1) over 2 million consumers with specialized banking, credit, insurance and payout
solutions to help them manage their evolving financial needs; (2) over 125,000 merchants of all sizes with payment acceptance
solutions to facilitate their daily commercial activities more efficiently and effectively; and (3) over 750 enterprises with proprietary
network capabilities to facilitate payments between consumers and businesses in a fast and secure manner.
We bring these communities together within the Lesaka ecosystem by enabling them to engage and transact with each other in a
better, more convenient and safe manner. For example, we offer bill payment solutions to consumers, merchants and enterprises by:
(1) connecting over 620 enterprise service providers to our proprietary biller network so that they can offer their customers a convenient
channel to pay their respective bills; (2) enabling over 95,000 merchants to offer our Alternative Digital Products (“ADP”) at their
locations and then digitizing any cash payments they receive through one of our cloud-connected cash vaults or recycling the cash via
an ATM that we may place in their store to drive foot-traffic; and (3) offering consumers the convenience of paying their bills at a
nearby merchant where they may already shop frequently, using cash withdrawn from one of our ATMs or paying with a debit card
linked to a digital-bank account that we provided to them to deposit and manage the funds from their employer payrolls or welfare
grants from the South African government.
To build and maintain our valuable and growing ecosystem, we have over 3,500 employees operating on the ground in five
countries, including South Africa (our primary market), Namibia, Botswana, Zambia, and Kenya, and we have the ability to reach
deeper and more broadly into adjacent markets through a variety of strategic partnerships. This enables us to target and serve a market
with approximately 250 million people and an estimated serviceable addressable market of approximately $12 billion in net revenue
by 2030 according to reports by Global Data Analytics, McKinsey & Company, BDO, Genesis Analytics, the International Monetary
Fund, the Population Reference Bureau and internal management estimates. According to a report by Boston Consulting Group,
favorable secular tailwinds, have helped position Africa as the fastest growing fintech market globally, that projects growth in the total
African fintech revenue pool to grow by 13 times between 2021 and 2030, as illustrated below.
3
Our Strategy
To build our unique ecosystem and capture this large and attractive market opportunity, we developed a 5-phase strategy to win
and serve customers across a diversified range of channels and markets. These phases include:
1.
Address
customer segment. Today, we have three core platforms allocated to each of our reported business segments (or
divisions), Consumer, Merchant and Enterprise;
2.
Position
- Second, we position ourselves in the market to gain access to data that gives us valuable insights into our
customer base. We develop solutions that enable us to learn from the flow of funds and financial behaviours in our
customers daily lives to better understand their needs. For example, our banking solutions enable us to see the sources
and frequency of consumer income deposits as well as their spending behaviours, while our merchant solutions enable
us to see a merchant’s cash flows and selected spending such as inventory purchases and supplier payments;
3.
technologies to create integrated, end-to-end fintech solutions that have superior functionality and convenience relative
to available alternatives. Competitor offerings are typically provided by (i) legacy banks with poor track records of
customer service for the underserviced, (ii) government entities, such as the post office, with limited capabilities and
R&D budgets to invest in solutions, or (iii) a fragmented universe of single-solution vendors who provide more narrow
services, forcing a customer to spend more and manage multiple relationships to meet their end-to-end needs;
4.
Combine
customers in an advantaged way. We use the advantages embedded in our strategy to (i) drive client acquisition and
retention with targeted offers that may best meet their needs, (ii) bundle or cross-sell new solutions that may be suitable
for their evolving financial journeys, (iii) underwrite and manage risk effectively; and
5.
Consolidate
to grow our customer base, extend our capabilities and expand our ecosystem into new areas, and potential cost synergies
to scale our ecosystem and improve our operating efficiencies. For example, in fiscal 2025 we closed and are integrating
two acquisitions which expanded our customer base, broadened our suite of solutions, and provided additional cross-
selling opportunities, including:
a.
Adumo
software solutions to approximately 29,000 active merchants (as of June 30, 2025) in a variety of business
verticals across South Africa, Namibia, Botswana and Kenya. This acquisition has enabled us to extend our
reach into larger merchants with more sophisticated point-of-sale (“POS”) software needs. Adumo was
integrated into our Merchant Segment and has contributed to our fiscal 2025 financial results since October 1,
2024.
b.
Recharger
solutions to an installed base of over 500,000 registered prepaid electricity meters across South Africa. This
acquisition has enabled us to enter the private utilities market and extend our payment solutions into a large,
new customer base. Recharger was integrated into our Enterprise Segment and has contributed to our fiscal
2025 financial results since March 3, 2025.
Our Go-
To
-Market Model
To go-to-market, we created a proprietary business model to reach, engage and serve our Merchant, Consumer and Enterprise
Segments’ customers over time. The five elements of our go-to-market model include:
1.
Wide-Breadth of Solutions
stages of their financial journeys using a
Land and Expand
needed to win a customer relationship at a relatively stable customer acquisition cost (“CAC”). These include our
government grant and bill payment solutions for consumers, and our card acquiring and cash management solutions for
merchants. Then we offer a growing range of complementary services to expand our share of wallet, bundling or cross-
selling complementary or adjacent services as a customer’s needs grow. We believe this increases the lifetime value
(“LTV”) of our customer base with very little incremental CAC, increasing our LTV/CAC ratio and compounding value
over time. We organize our solutions across our customers’ financial lifecycles including: (1)
Receive Money
,
Manage
Money
,
Borrow Money
, and
Protect Assets
Accept Payments
,
Manage Money
,
Grow Revenue,
and
Access Capital
4
2.
Differentiated Reach in the Market
customers close to where they live or close to government offices that disburse grant payments by deploying on-the
ground sales teams and low-cost retail offices, or hubs. Our salespeople are trained to engage in-person and educate
customers on the value and advantages of our solutions in a friendly and respectful manner.
3.
A Digital Engagement Approach
effectively with our customers, so we train and steer them to use our digital apps to manage and grow their financial
services over time. We have developed a variety of digital apps for our customers to use when engaging with our different
solutions including a digital banking app for our consumers and a payments management account app for our merchants.
4.
Proprietary Access to Data
into our customers, which we use to serve them more effectively. For example, we can often see the timing, amount
and frequency of a consumer’s income deposits and how they spend their money and pay their bills. We believe this is
rare in Africa, particularly among the underserviced, and provides a competitive advantage in the market.
5.
Leading Brand Value
strong brands and brand equity in the market across our three business segments and different product lines. We believe
these brands are valuable touch points, with which to evolve a unified leading brand, that helps us attract new customers,
build trust, and facilitate the roll-out and adoption of new solutions over time.
Our Business Segments
We go-to- market and operate through three business segments including our Merchant Segment (“Merchant”), our Consumer
Segment (“Consumer”) and our Enterprise Segment (“Enterprise”).
1.
Our Merchant Segment
Our Merchant Market
We serve merchants of all sizes, ranging from micro -merchants to small-to-medium merchants. Currently, we serve over
125,000 merchants across Southern Africa, of which more than 100,000 merchants are in South Africa. Approximately 95,000 of
the merchants are micro merchants who range from local kiosks and spaza shops (corner stores) to sole proprietors, including
taverns, marketplaces and the businesses and suppliers that serve them. These merchants typically have lower payment volume,
and a lower proportion of merchants accepting digital payments given a larger dominance of cash in rural areas. However, as the
secular shift from cash to digital payments continues to progress, we believe these merchants will increase adopt new digital
payment solutions and complementary services. Approximately 30,000 of the merchants are small-to-medium merchants, who
are larger and more formal businesses. They can range from small local retailers to merchants with multi-lane stores, franchises
and online storefronts. These merchants are more professional businesses with sophisticated business needs with a greater need
for more advanced business solutions that can help them run and grow their businesses more efficiently.
Our Merchant Solutions
Our merchant solutions serve merchants of all sizes offering a wide breadth of capabilities across their financial lifecycles to
help them
Accept Payments
,
Manage Money
,
Grow Revenue,
Access Capital
, as illustrated below.
5
Our Merchant solutions and products comprise:
●
Merchant acquiring:
●
Software:
●
Cash:
bank” in micro-merchants’ and small-to-medium sized businesses’ stores. We provide them with digital accounts so
merchants can track their deposits and supplier payment services to order and pay for more inventory.
●
Lending:
our proprietary visibility into their business activity.
●
ADP
: This solution comprises 4 categories including prepaid solutions (airtime, data, electricity and gaming), bill
payments, International Money Transfers (“IMT”) and supplier enabled payments. Our supplier enabled payments
product suite has specifically been developed for the micro-merchants.
Merchant Competitive Landscape and Market Share
We estimate an addressable revenue pool of approximately of $2.8 billion of which we believe we have approximately 7.0%
market share of the revenue in the market
(according to Global Data Analytics 2024, Genesis Analytics 2024, South African
Reserve Bank Interchange Rate 2021, IFC MSME Opportunity in South Africa 2019, Electrum Value Added Services in South
Africa 2020, peer company public quarterly results from 2024 and management’s best estimates).
A key component of our strategy is to differentiate ourselves by being a customer-led provider rather than a product-led
company by evolving our product offerings to meet the various needs of our customers, being merchants. While the rest of the
industry is highly fragmented with companies providing 1-2 products on their platforms, we have positioned ourselves to provide
an integrated suite of solutions for merchants. No single competitor offers the range of solutions we provide in the market. In this
respect we face a different competitive environment dependent on the specific product. For example, while traditional South
African banks may dominate the core merchant acquiring market, they do not offer software or alternative digital products for
which we face a different universe of competitors.
2.
Our Consumer Segment
Our Consumer Market
Through our Consumer Division 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). LSM is a research tool used in South Africa to segment the population based on living standards rather than income
alone. It considers factors like access to services and durable goods (for example electricity, running water, appliances) to classify
consumers into different groups, typically from LSM 1 (lowest) to LSM 10 (highest).
6
There are approximately 12.1 million permanent grant beneficiaries in South Africa, in addition approximately 9.0 million people
receive a Social Relief of Distress (“SRD”) grant each month (according to the South African Social Security Agency (“SASSA”) as
of June 30, 2025). As of the date of this Annual Report, we have approximately 2.1 million active consumer customers comprising
1.9 million grant beneficiaries (approximately 90% permanent grant beneficiaries and the balance SRD grant beneficiaries) and 0.2
million EasyPay Payouts cardholders. We believe that for those consumers receiving welfare grants from the South African
government, there are no other providers able to provide a transactional account, lending and insurance product under one ecosystem.
Our proposition has a unique ‘last mile’ service and distribution model whereby we go to the rural and peri urban geographies across
the country to bring our services to the customer. Through digitally enabled onboarding, we can open accounts and issue a physical
card at the point of application.
Our Consumer Solutions
Our consumer solutions serve to provide a wide breadth of banking, credit and insurance capabilities across their financial
lifecycles to help them
Receive Money
,
Manage Money
,
Borrow Money
, and
Protect Assets
, as illustrated below.
Our Consumer product offering is targeted at underserviced South African consumers, and includes:
●
Transactional accounts:
card, mobile application, web integration and unstructured supplementary service data (“USSD”). To contextualize the
value of USSD for our consumers - consumers often have no data nor access to WiFi, so USSD is a very effective channel
for them. USSD is a communication protocol used by mobile phones to interact with a mobile network operator’s system,
including real-time interaction (no need for internet) and works on any mobile phone, including basic feature phones.
Consumers can manage and use the funds they receive with a complementary debit card and a mobile app, through which
they can withdraw cash at ATMs, make purchases at points of sale, and pay bills. This helps us build a relationship with
our consumers and cross-sell additional financial services over time.
7
●
Lending:
access to short-term, unsecured personal loans to qualifying EPE consumers. For many of our consumers, we provide
their first-time access to regulated credit.
●
Insurance:
relationship with our consumers, and access to data.
●
Payouts:
their employers (South African businesses) through us.
Consumer Competitive Landscape and Market Share
The consumer market we address today is focused on South African grant beneficiaries and other payout cardholders. We
estimate an addressable revenue pool of approximately $1.4 billion of which we believe we have approximately 6.5% market
share of the revenue in the market
(according to SASSA grant data and management’s best estimates in 2024).
subset of competitors depending on the product offering. While banks are the principal competitors for transactional accounts, the
lending market is dominated by micro-finance companies and the insurance market by insurance companies.
3.
Enterprise Segment
Our Enterprise Market
Our Enterprise Division serves more than 750 Enterprise clients with large ecosystems of billpayers, tenants, employees or
constituents. The Enterprise Division is focused on providing strategic and targeted solutions that facilitate payments between
consumers and businesses. Our target market primarily focuses on our network of more than 620 billers across South Africa and
over 100 corporate clients. We have deep integrations across municipal councils, utility providers, banks and mobile operators
who leverage our technology to create readily scalable solutions.
8
Our Enterprise Solutions
Instead of a financial lifecycle, our enterprise solutions organized by platforms which provide hardware, software and services
to different constituents, as illustrated below.
Our Enterprise product offering is focused across three core verticals and includes:
●
ADP:
(e.g. airtime, electricity or gaming) and/or pay a bill through channels such as retailer distribution networks and online
banking apps.
●
Utilities:
landlords to manage the electricity usage of each of their tenants without the postpaid risk. This was incorporated
following our acquisition of Recharger in March 2025 and is a low churn annuity-based revenue model.
●
Payments:
insource components of the payments value chain to create greater efficiencies and reduce third party dependencies.
Ancillary security and tokenization services are also offered to enterprise clients. This solution remains a modest
contributor to the Enterprise Division’s revenue.
Enterprise Competitive Landscape and Market Share
We estimate an addressable revenue pool of approximately of $200 million of which we believe we have approximately
10.0% market share of the revenue in the market
(according to South African Local Government Association 2024, Statista 2024,
South African Treasury 2024, Grand View Research 2024 and management’s best estimates. Bill payments is a representation of
the non-bank bill collection market in South Africa).
Like our Merchant Division and Consumer Division, we have competitors within each of our core products, however no
specific competitor participating across the integrated suite of products, offered in our Enterprise Division.
9
Human Capital Resources
Over the last few 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 for our Consumer customers,
which comprise mainly 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 investment in
employee development contributes to high performance and high employee engagement as well as a strong pipeline of talent for key
and critical roles This increases loyalty, which will in turn contribute to employee retention. We offer the following development
programs to enhance employee performance and skills:
•
training programs;
•
leadership development programs;
•
unemployed and employed learnerships;
•
internships;
•
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 capital team in
partnership with our leaders drive 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.
10
As of June 30, 2025, the composition of our workforce was:
•
53% female and 47% male;
•
42% between 18 and 34 years old, 53% between 35 and 54 years old, and 5% over 55 years old; and
•
66% Black, 9% two or more races, 10% Indian and 15% 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 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, 2025, 2024 and 2023, is
presented in the table below:
Number of employees
2025
2024
2023
Consumer
(1)
1,542
1,333
1,306
Merchant
(1)
1,957
1,059
872
Enterprise
(1)
213
130
118
Total segments
3,712
2,522
2,296
Group
(1)
16
9
7
Total
3,728
2,531
2,303
(1) Consumer includes one executive officer for each of fiscal 2024 and 2023. Merchant includes one executive officer for each
of fiscal 2024 and 2023. Group includes five executive officers for fiscal 2025, and two executive officers for each of fiscal 2024 and
2023.
On a functional basis, as of June 30, 2025, five of our employees were our named executive officers, 1,567 were employed in
sales and marketing, 703 were employed in finance and administration, 432 were employed in information technology and 1,021 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.
11
Our Executive Officers
The table below presents our executive officers, their ages and their titles:
Name
Age
Title
Ali Mazanderani
43
Executive Chairman and Director
Dan L. Smith
53
Group Chief Financial Officer and Director
Naeem E. Kola
52
Group Chief Operating Officer and Director
Lincoln C. Mali
57
Chief Executive Officer: Southern Africa and Director
Steven J. Heilbron
60
Head of Corporate Development and Director
Ali Mazanderani
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.
Dan L. Smith
services sectors in South Africa and the United Kingdom. Mr. Smith is a director of ADvTECH Limited (JSE: ADH). He founded
DLS Advisors in 2020 and was its CEO until joining VCP in 2021, where he was employed until September 2024. Prior to that, he
was employed by Standard Bank South Africa for a number of years where he accumulated vast corporate finance experience,
including heading the Mergers & Acquisitions investment banking team. He holds a Bachelor of Commerce, a Bachelor of Accounting
and a Higher Diploma in Taxation Law from the University of Witwatersrand and is a Chartered Accountant (SA). He is a Graduate
of the Oxford Fintech Programme from the Saïd Business School, University of Oxford. He also has an Advanced Valuation
Techniques certificat ion from the Gordon Institute of Business Science and a Diploma in Strategic Client Management from the UCT
Graduate School of Business.
Naeem E. Kol
a has been our Group Chief Operating Officer since October 1, 2024, and was previously our Group Chief Financial
Officer from March 1, 2022 until September 30, 2024. 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 Network International.
Since the acquisition of EMP by Network International in 2017, Mr. Kola had been an Operations Director and Strategic Advisor to
the emerging market private equity firm Actis, where he again focused on fintech businesses. He is a qualified Chartered Accountant
(SA) and a member of the South African Institute of Chartered Accountants.
Lincoln C. Mali
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
joined us following the acquisition of Connect in 2022. 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 .
12
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 2025, 2024 and 2023. 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
2025
2024
2023
2025
2024
2023
$'000
$'000
$'000
$'000
$'000
$'000
South Africa
624,846
537,594
505,558
392,098
286,700
300,104
India (MobiKwik)
-
-
-
-
76,297
76,297
Rest of the world
34,855
26,628
22,413
3,055
2,548
2,197
Total
659,701
564,222
527,971
395,153
365,545
378,598
(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 2025, 2024 and 2023.
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.
13
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 STOC K
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, including the acquisitions of
Adumo and Recharger, and the proposed acquisition of Bank Zero (which remains subject to the fulfilment or waiver of various
conditions precedent), 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.
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, 2025, we had aggregate borrowings outstanding of ZAR 3.6 billion ($200.8 million translated at exchange rates
as of June 30, 2025). We partially funded certain of our recent acquisitions through South African bank borrowings. We, together with
Lesaka SA and the majority of Lesaka SA’s directly and indirectly wholly-owned subsidiaries, have agreed to guarantee the obligations
of Lesaka SA and of the other borrowers under the certain of the borrowings to the lenders. Certain of these borrowings contain
customary covenants which include a requirement for Lesaka SA to maintain specified Net Debt to EBITDA and Interest Cover Ratios
(as defined in the lending agreements) and restricts the ability of 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 borrowings through our merchant lending operations, through Cash Connect Capital (Pty) Ltd (“CCC”) and K2020 Connect
(Pty) Ltd (“K2020”), include a ZAR 400 million revolving credit facility agreement. 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.
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.
Failure to complete, or delays in completing, the Bank Zero acquisition, could materially and adversely
affect our results of operations and stock price.
The completion of the Bank Zero 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.
14
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 Bank Zero’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 Bank Zero acquisition or we may fail
to realize some or all of the expected benefits of certain recently integrated acquisitions, including Adumo
and Recharger
Even if we complete the Bank Zero 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 Bank Zero’s business does not perform as expected. Our expectations regarding Bank Zero’s business and
prospects may not be realized, including as a result of changes in the financial condition of the markets that Bank Zero serves. In
addition, there are risks associated with Bank Zero’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.
Further, there are numerous challenges, risks and costs involved with integrating the operations of Bank Zero with ours. For
example, integrating Bank Zero 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 Bank Zero’s key employees.
During fiscal 2025 we closed the acquisitions of Adumo and Recharger and have integrated their businesses into our ours. As
these businesses have only been recently integrated in our business there is a risk that we may fail to realize some or all of the expected
benefits from these acquisitions.
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, 2025, excludes the operations of Adumo and Recharger as these transactions
were only closed during fiscal 2025. The requirement to evaluate and report on our internal controls also applies to companies that we
acquire, including Bank Zero. As a group of South African private companies prior to acquisition, Adumo, and more recently
Recharger, were not required to comply with Sarbanes prior to the time we acquired them. The integration of Adumo, Recharger and
Bank Zero 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, Recharger and Bank Zero into our internal control over financial reporting, our internal control over financial reporting
may not be effective.
As such, if some or all of the aforementioned risks materialize, our ability to successfully integrate Bank Zero’s operations into
our business and realize the associated benefits of that acquisition could be adversely impacted. This could lead to the recording of
material impairments, 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.
15
Geopolitical conflicts, including the conflict between Russia and Ukraine and in the Middle East, may
adversely affect our business and results of operations.
The current conflicts between Russia and Ukraine, and in the Middle East are creating substantial uncertainty about the future of
the global economy. Countries across the globe have instituted 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 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, the Middle East and globally and assessing the potential impact on our business.
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 electricity disruptions, 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.
Any economic slowdown may be further exacerbated by the recently imposed trade tariffs on South Africa by the U.S. While the
South African government intends to negotiate the reduction of the 30% tariff hike, it is uncertain as to whether the planned attempt
to negotiate will result in the desired outcome. It is therefore necessary to consider the macroeconomic effect of the tariff hike in the
context of the South African economy which may ultimately have a ripple effect on our operations as our client consists of, but are
not limited to, merchants, retailers, mobile phone operators and account holders. We are unable to quantify the impact of the tariff
hike on our business and results of operations.
Our ability to fund our ATM network requires that we continue to have access to an agreement with
African Bank to provide liquidity to operate our ATM network.
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. In September 2024, we entered into an
arrangement with African Bank Limited (“African Bank”) and certain cash-in-transit service providers to fund our ATMs. Under this
arrangement, African Bank will use its cash resources to fund our ATMs and it is specifically recorded that the cash in our ATMs are
African Bank’s property. Therefore, as we have not utilized a facility to obtain the cash, and do not own or control the cash for an
extended period of time, we do not record cash or cash equivalents and borrowings in our consolidated statement of financial position.
Cash withdrawn from our ATMs by our EPE customers and other consumers are settled through the interbank settlement system from
the ATM users bank account to African Bank’s bank accounts. We pay African Bank a monthly fee for the service provided which is
calculated based on the cumulative daily outstanding balance of cash utilized multiplied by the South African prime interest rate less
1%. We are exposed to the risk of cash lost while it is in our ATMs (i.e. from theft) and are required to repay African Bank for any
shortages.
We may not be able to extend the terms of the arrangement with African Bank and certain cash-in-transit service providers to
fund our ATMs 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 these arrangements, any adverse change to the terms of these arrangements, or a
significant reduction in the amounts provided under these arrangements. We may also suffer reputational damage if our service levels
are negatively impacted due to the unavailability of cash.
16
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 nine months or less and all of our merchant lending 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.
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.
Cybersecurity breaches and other system disruptions pose a significant threat to business operations.
As a fintech organization reliant on digital infrastructure, we are highly susceptible to cybersecurity incidents involving sensitive
data such as personally identifiable information (“PII”), payment card information (“PCI”), and proprietary business records. Our
exposure includes the risk of data breaches, ransomware, denial-of-service attacks, and unauthorised system access. Although we
follow the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework in our security controls, evolving cyber
threats mean no system is invulnerable. A successful cybersecurity breach could result in financial losses, regulatory penalties,
reputational damage, operational interruptions, and legal consequences. Prolonged or frequent breaches or system disruptions may
diminish customer trust, potentially leading customers to consider our systems unreliable, which could impact adoption and harm
brand reputation. Addressing breaches or system disruptions can significantly strain staff resources and delay new service launches.
Furthermore, if customers rely on our products for critical transactions, a breach could disrupt their businesses and lead to claims for
compensation. 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 and systems 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 suppliers, 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 damages claims. We have not yet experienced any significant security breaches affecting our business.
17
Despite robust measures, unforeseen cyber incidents or natural disasters could trigger lengthy service interruptions. Existing
business interruption insurance may not adequately compensate for losses stemming from cybersecurity failures.
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 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 protection. Our means of protecting
our intellectual property rights in countries where we currently have 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 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, electronic payment and POS devices, components for our vaults, components to repair the
ISV (independent software vendor) division’s POS hardware, 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 previous 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 Limited (“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.
18
Risks Relating to Operating in South Africa and Other Foreign Markets
Operating in Southern and East Africa, both emerging markets, 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. Under our consolidated scorecard, which includes
all South African businesses, we currently hold a BEE Status Level 2.
Two of our South African businesses, being EasyPay Financial Services (Pty) Ltd (“EP FS”) and EasyPay Insurance Limited,
are subject to the Amended Financial Sector Code, or the FS Sector Code, and all other businesses are consolidated under the
Department of Trade and Industry (DTI) Generic Codes. The FS Sector Code have been amended and aligned with the new BEE
Codes and were promulgated in December 2017. Licensing and/or regulatory authorities overseeing these South African businesses
may set minimum adherence requirements to BEE standards as a condition for an operating license to trade. The minimum requirement
under the Financial Sector Code is Level 8. We currently have a BEE Status Level 5 for EP FS and BEE Status Level 4 for EasyPay
Insurance.
The BEE scorecard includes a component relating to management control, which serves to determine the participation of Black
people in 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.
19
During fiscal 2025, we made cash contributions to 36 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 were also
involved in disaster relief efforts for 275 families who were affected by disasters such as floods, cyclones and fires. We also advanced
digital transformation in over 80 high schools by donating over 3,800 mobile devices. On November 14, 2024, our shareholders voted
on and approved the funding and issuance of 2,490,000 shares of our common stock to the Lesaka ESOP Trust. The Lesaka Employee
Share Ownership Plan (“ESOP”) is designed to create alignment with our long-term growth objectives. The Lesaka ESOP Trust is
also expected to advance our transformation initiatives and plays an important role in improving our BEE Status Level.
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 in the South African marketplace, 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, and/or changing
to suppliers that have higher BEE Status Levels. 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.
We continually seek ways to improve our BEE Status Level, especially the ownership (so-called “equity”) and procurement elements
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, in recent years, Eskom has been unable to consistently 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, 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.
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, the impact of which may be exacerbated in the short-term by the discontinuation of the U.S.
government’s funding of certain HIV/AIDS research and outreach programs.
20
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.
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.
21
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. We are also required to comply with the requirements
of payment schemes, including VISA and Mastercard. Furthermore, we provide certain of our services under
partnerships with South African banks. We will be unable to provide our payments and card-acquiring
businesses if we fail to comply with payment scheme rules, and/or fail to maintain certain regulatory licenses
and registrations, and/ or if we were unable to continue to partner with South African banks to provide our
payments and card acquiring services.
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 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 African Bank and ourselves.
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 (“FSP”) license on June 9, 2015, and EP FS 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 (“COFI”) Bill will overhaul the current regulatory and legislative
framework by replacing the rules-based approach with an outcomes-driven and principles-based model, and the adoption of an activity-
based licensing regime. It will establish a uniform legislative framework to regulate the conduct of all financial institutions across the
financial services sector. While the framework will make significant changes, including the conversion of existing licences through
transitional arrangements and new activities requiring licensing, it is likely to increase operational costs to meet regulatory
expectations. The final draft of the COFI Bill is expected to be tabled before Parliament late 2025 or early 2026 for approval. However,
contingencies are in place to ensure smooth transition should the COFI Bill face further delays which will include formal consultations
and the phased introduction of the new legislative framework.
We are required to comply with the requirements of payment schemes, including VISA and Mastercard. We have deployed a
significant number of devices, and any mandatory compliance upgrades to our deployed POS devices would require significant capital
expenditures and/or be disruptive to our customer base. Failure to comply with the payment schemes’ rules may result in significant
fines and/or a loss of license to participate in the scheme(s).
We provide card acquiring services to our customers by partnering with Nedbank Limited and ABSA Bank Limited, and payment
processing services in partnership with the largest banks in South Africa. If these agreements were to be terminated, Adumo would
not be able to operate its payment services unless it were able to obtain alternative card acquiring or payment processing agreements
with other partners or obtain a direct designation license with the schemes and regulatory bodies. In addition, if we were to lose our
Payment Association of South Africa (“PASA ”) registrations or fail to have them renewed, it would be unable to operate its payment
services.
22
Compliance with the requirements under these 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.
Proposed regulatory changes to the national payments system are expected to have a substantial impact
on the South African payments industry. It may change the manner in which we conduct business and likely
lead to increased operating costs for our business as we work to ensure compliance with the new legislative
and regulatory framework, which may have a material adverse effect on our business.
On March 3, 2025, the South African Reserve Bank (“SARB”) published certain draft regulatory documents for commentary
that are expected to have a substantial impact on how we conduct our business namely: (i) a draft directive entitled “Directive in
respect of specific payment activities within the national payment system” (the “Directive”); (ii) a draft exemption notice entitled
“Designation by the Prudential Authority of specific activities conducted in the national payment system which shall be deemed not
to constitute ‘the business of a bank’ under paragraph (cc) in section 1(1) of the Banks Act, 1990” (the “Exemption Notice”); and
(iii) the National Payment System Bill (“NPS Bill”), which seeks to replace the existing National Payment System Act, 1998. The
proposed regulations were made available for comment, and we submitted detailed comments to our industry body, Association of
South African Payment Providers, on the proposed regulations.
The key objectives of the proposed regulations are to clarify the mandate and objectives of the SARB with respect to the national
payment system (“NPS”); and establish a robust regulatory, oversight, and supervisory framework for the NPS. The proposed
regulations also aim to promote financial inclusion, competition, the prevention of financial crime, and the fair treatment and protection
of customers, while introducing an activity-based licensing and authorization regime. In this regard, the Directive defines thirteen
“payment activities” and provides that a person, which can be a bank or a non-bank, providing a “payment activity" must obtain
authorisation from the SARB to undertake such activity. Under the Exemption Notice, certain payment activities are exempted from
the definition of ‘the business of a bank’. Prior to the Exemption Notice, these activities could only be undertaken by a bank. Pursuant
to the Exemption Notice, these activities can be undertaken by non-banks, subject to certain conditions. Certain of our businesses,
including EasyPay Everywhere, Adumo and Kazang Pay, currently undertake activities which would qualify as “payment activities”
under the Directive and the NPS Bill. Under the current regulatory framework, these activities are undertaken in partnership with a
sponsoring bank and the sponsoring bank is subject to regulation by the SARB. In other words, the business undertaking the “payment
activity” is not subject to direct regulation with respect to such payment activities.
It is uncertain if and when the proposed regulations will enter into effect and whether a non-bank such as the relevant Lesaka
subsidiary may elect whether to conduct an exempted payment activity by partnering with a bank to do so, or on its own, if it is
authorised by the SARB - i.e. whether both options will be available to a non-bank. Should our businesses be subject to direct regulation
under this new regime (i.e., if our current sponsorship model is no longer available), we expect that we will incur significant operating
costs to comply with the new requirements, and to obtain authorization with respect thereto. Furthermore, while some requirements
may already exist under other current regulatory frameworks for certain of our businesses, we will likely need to invest in additional
resources, systems and processes to satisfy the regulatory requirements contemplated in the proposed regulations, which may also lead
to increased operational costs, which may have a material adverse effect on our business.
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.
23
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 2025 fiscal year, our stock price ranged from a low
of $3.39 to a high of $5.60. 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. Certain IFC Investors were
also investors in Adumo and on October 1, 2024, we issued an aggregate of 1,989,162 additional shares of our common stock to these
IFC Investors pursuant to the Adumo transaction agreement. As of June 30, 2025, the IFC Investors held 9,356,028 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 and October 2024 transactions 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.
Approximately 31% 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 31% 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 19% and 12% of our outstanding common stock as of June 30, 2025,
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.
24
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, 2025 and that we had, as of such date, material weaknesses in our internal control over financial reporting
related to:
●
Our Consumer lending process, specifically insufficient risk assessment and monitoring activities relating to changes in
systems and processes, insufficient controls over internal information and information from service organizations, and
insufficient design and implementation of information technology general controls (“ITGCs”), controls over service
organizations and process level controls, resulting in ineffective process level controls, including a lack of validation of the
completeness and accuracy of information used within the process;
●
Our payroll process, specifically insufficient risk assessment and monitoring activities relating to changes over the transfer
of ownership to the centralized payroll processes, insufficient controls over information from service organizations, and
insufficient design and implementation of ITGCs, controls over service organizations and process level controls resulting in
ineffective process level controls including a lack of validation of the completeness and accuracy of information used within
this process;
●
Our annual goodwill impairment process, specifically related to insufficient risk assessment and ineffective design and
implementation of controls resulting in ineffective process level controls;
●
Our business combination process, specifically insufficient risk assessment and ineffective design and implementation of
controls over the purchase price allocation of the Adumo and Recharger acquisitions including insufficient controls over
information resulting in ineffective process level controls including a lack of validation of the completeness and accuracy of
information used;
●
Our revenue recognition process relating to prepaid airtime sold and processing fees relating to certain agreements,
specifically insufficient risk assessment and ineffective design and implementation of controls related to our judgement over
revenue recognized either as principal versus as agent resulting in ineffective process level controls.;
●
Our journal entry process, specifically relating to insufficient risk assessment, and ineffective design and implementation of
controls including insufficient controls over information resulting in ineffective process level controls including a lack of
validation of the completeness of the journal entry population and a lack of validation of the completeness and accuracy of
information used within the process; and
●
An insufficient number of experienced and trained resources to execute on their internal control responsibilities resulting in
ineffective design, implementation and operating effectiveness of process level controls for processes in the scope of our
internal control over financial reporting evaluation.
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.
25
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 and Recharger, 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.
The restatement of our prior quarterly financial statements may affect shareholder and investor
confidence in us or harm our reputation, and may subject us to additional risks and uncertainties, including
increased costs and the increased possibility of legal proceedings and regulatory inquiries, sanctions or
investigations.
We identified material misstatements in the original filings of our Quarterly Report on Form 10-Q for the quarters ended
September 30, 2024, December 31, 2024 and March 31, 2025 (“Original Filings”) and withdrew reliance on these Original Filings on
September 10, 2025. We filed amended quarterly reports on September 29, 2025 which include restatement(s), refer to the section
titled “Restatement” in Note 1 to the unaudited condensed consolidated financial statements in each of the amended filings on Form
10-Q/A for the quarters ended September 30, 2024, December 31, 2024 and March 31, 2025, for additional information regarding the
restatement(s). Management also identified material weaknesses in our internal control over financial reporting specific to the
evaluation of information that was known or knowable at the time of the transaction or event included in the Original Filings, refer to
Item 9A—“Controls and Procedures.”
As a result of the restatement described above, we have incurred, and may continue to incur, unanticipated costs for accounting
and legal fees in connection with, or related to, such restatement. In addition, such restatement could subject us to a number of
additional risks and uncertainties, including the increased possibility of legal proceedings and inquiries, sanctions or investigations by
the SEC or other regulatory authorities. Any of the foregoing may adversely affect our reputation, the accuracy and timing of our
financial reporting, or our business, results of operations, liquidity and financial condition, or cause shareholders, investors and
customers to lose confidence in the accuracy and completeness of our financial reports or cause the market price of our common stock
to decline.
You may experience some difficulties in effecting service of legal process, enforcing U.S and/or 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, substantially all of the company’s assets are located outside
the United States. For this reason, 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.
26
Any legal processes initiating action in the United States against Lesaka's directors, officers, and experts who are located outside
of the United States, will need to be served on them in that country, in accordance with the procedures prescribed by the relevant U.S.
court. South Africa is not a party to any treaties regarding the enforcement of foreign commercial judgments. In order to be able to
enforce a foreign judgment, it is required for the South African courts to first "recognize" the U.S. judgment – in the absence of this,
the foreign judgment has no automatic extra territorial effect. The foreign judgment constitutes a "cause of action" which
may
recognized and enforced by South African courts. In order to achieve this, legal proceedings must be commenced in the South African
courts.
South Africa is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and its
International Arbitration Act 15 of 2017 provides that foreign arbitral awards
must
However, application must still be made to the South African High Court in order for the award to be recognised and enforceable in
South Africa.
Additional, practical, considerations relating to the enforcement of foreign judgments and arbitration awards in South Africa
include the following:
●
If a foreign judgment is enforced by a South African court, the approval of the SARB (or an Authorised Dealer of SARB) is
required (i) before a defendant resident in South Africa may pay money to a non-resident plaintiff; and (ii) to settle the
judgement in a currency other than South African Rand; and
●
A plaintiff who is not resident in South Africa may be required to provide security for costs when initiating court proceedings
in South Africa (including for the enforcement of foreign judgments and awards).
27
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
systems. Our cybersecurity program is aligned with industry standards and best practices, specifically the Payment Card Industry Data
Security Standard (“PCI DSS”), the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework and more
recently the SARB Directive No. 01 of 2024, focusing on cybersecurity and cyber-resilience within the National Payment System
(“NPS”).
-party Security Risk Assessment (“SRA”) to
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 a robust 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
Chief Information Security Officer
”)
, a
qualified cybersecurity professional with over 25 years
of experience and a Master’s in Information Security from Royal Holloway, University of London
.
As of the date of this Annual Report, we do
reasonably likely to materially affect us, including our results of operations or financial condition.
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.
28
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 207 financial services branches, 14 financial service express stores, 17
satellite branches and 14 sites to support our integrated POS software and hardware to the hospitality industry operations. We also
lease additional office space in Johannesburg, Cape Town and Durban, South Africa; Gaborone, Botswana; Windhoek Namibia; and
Nairobi, Kenya. These leases expire at various dates through 2030, 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
Lesaka SA is a party to proceedings in the Constitutional Court of South Africa involving its subsidiary, Cash Paymaster Services
Proprietary Limited (“CPS”), which is currently in liquidation. The objective of these proceedings is to procure an order for CPS to
pay to SASSA the profit generated by CPS pursuant to an agreement concluded between SASSA and CPS, following the award of a
tender to CPS. This arose as a consequence of prior court proceedings which concluded that the tender should not have been awarded
to CPS (for technical reasons not related to any conduct by CPS). Lesaka SA has been included in these proceedings in order to provide
information relevant to determining the profit so made by CPS.
A hearing was held in the Constitutional Court on May 27, 2025 and we await the ruling of the Constitutional Court. While no
formal steps have been taken by CPS or any other party to these proceedings to claim that Lesaka SA should be liable to SASSA or to
CPS as a consequence of the proceedings currently before the Constitutional Court, it is difficult to anticipate what the ruling of the
Constitutional Court will be.
General
From time to time, we are involved in legal proceedings and litigation arising in the ordinary course of business. As of the date
of this Annual Report on Form 10-K, we are not a party to any litigation or legal proceeding or subject to any claim that, in the current
opinion of management, could reasonably be expected to have a material adverse effect on our financial position or results of
operations. However, due to the risks and uncertainties inherent in legal proceedings, actual results could differ from current expected
results.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
29
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 September 25, 2025, there were 6 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 September 2, 2025, our board of directors approved a share repurchase authorization to repurchase up to an aggregate of $15
million of our common stock. The authorization has no expiration date. This share purchase authorization replaces our $100 million
share repurchase authorization.
The table below presents information relating to purchases of shares of our common stock during the fourth quarter of fiscal
2025:
Period
(a)
Total number of
shares purchased
(b)
Average price
paid per share ($)
(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 2025
0
-
-
100,000,000
May 2025
(1)
230,442
4.49
-
100,000,000
June 2025
(1)
2,853
4.19
-
100,000,000
Total
233,295
-
(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 our previous $100 million share repurchase program.
30
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,
2020, 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]
31
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 an integrated and holistic multiproduct platform that provides transactional accounts, lending, insurance, merchant
acquiring, cash management, software and ADP. Targeted solutions and integrations facilitate payments between consumers and
businesses. 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 revenue through a diversified portfolio of financial, payment, software, and technology solutions, structured across
three reportable segments: Merchant, Consumer, and Enterprise.
Merchant
Revenues in Merchant are derived from a combination of transaction-based fees and an ad valorem pricing model.
●
Merchant acquiring:
We earn revenue from merchant acquiring on an ad valorem basis, based on a percentage of the total
transaction value processed through our network. We also earn revenue from transaction fees charged to merchants.
●
Software (technology products):
Revenue is generated through selling hardware (such as POS devices) and providing
licensing software and technology services to merchants.
●
Cash:
We generally earn revenue on an ad valorem basis, based on a percentage of the total cash settlements processed
through our cash vaulting network. We also earn transaction fees when customers utilize our ATM network.
●
Lending:
We generate interest revenue from qualifying merchant customers who are able to access short-term business loans.
This revenue stream includes interest charged on outstanding loan balances.
●
ADP:
We also offer merchant customers access to platforms through which we (a) generate revenue from the sale of prepaid
airtime and generate fees from distribution of ADP, including prepaid solutions (airtime, data, electricity and gaming), bill
payments, International Money Transfers (“IMT”) and supplier enabled payments. These fees are largely charged on an ad
valorem basis.
Consumer
Revenues in Consumer are generated from transactional banking fees, interest income, insurance premiums and card transaction
processing fees.
●
Transactional Fees:
services purchased. Transactional fees associated with our consumer accounts include monthly account service fees, ATM
withdrawal fees, and other fees based on usage.
●
Lending:
outstanding loan balances and monthly service fees.
●
Insurance:
Enterprise
Like Merchant, Enterprise generates revenue from a combination of transaction-based fees and an ad valorem pricing model.
●
ADP:
pricing model is on an ad valorem basis, depending on the specific digital product being sold.
●
Utilities:
Our utilities vertical generates revenue predominantly through an annuity-based model, with fees charged on an ad
valorem basis based on the total value of electricity vended through our platform. Ad-hoc hardware sales of utility meters
also an additional contribution to revenue.
●
Payments:
Our payment solutions enable payment acceptance for us and external enterprises, on which we earn a fee per
transaction processed.
32
Developments during Fiscal 2025
This item generally discusses our 2025 results compared to our 2024 results. Discussions of our 2024 results compared to our
2023 results can be found within our Annual Report on Form 10-K for the year ended June 30, 2024.
Merchant Division
Performance in Merchant has been driven by:
Merchant acquiring
Merchant acquiring includes 84,541 devices deployed under the Adumo, Card Connect and Kazang brands.
2025
2024
2023
2025 vs
2024
Number of devices in deployment
84,541
51,880
44,935
63%
Total Throughput for the year (ZAR billions)
35.5
15.6
12.0
127%
●
2025 is inclusive of approximately 29,000 devices deployed by Adumo with the Adumo transaction closing on October
1, 2024, the impact of which is not included in the prior period comparatives.
●
Throughput increased to ZAR 35.5 billion for the year, driven mainly by the inclusion of Adumo for nine months of
fiscal 2025 and 15% year-on-year growth attributable to Kazang Pay.
Software
Our software solutions are offered through GAAP.
2025
Number of GAAP sites
9,649
Approximate ARPU per site (ZAR)
(1)
3,144
ending June 30, 2025.
●
GAAP was acquired on October 1, 2024.
●
Monthly ARPU per site combines hardware on a rental basis and software subscription revenue, but excludes the
merchant acquiring revenue when our software customers utilize our merchant acquiring payment solutions.
Cash
2025
2024
2023
2025 vs
2024
Number of devices in deployment
4,572
4,448
4,393
3%
Cash settlements (throughput) for the year (ZAR billions)
114.8
112.6
110.1
2%
Our cash business continues to reflect a tale of two distinct markets:
●
Small-to-Medium merchant sector: Ongoing decline in cash usage with flat net growth in vault activity in a more mature
digital economy where cash is increasingly displaced by digital alternatives.
●
Micro-merchant market: High cash prevalence and increasing digital adoption is supporting strong growth in the numbers of
devices and cash settlements. Throughput in our vaults placed in the micro-merchant sector increased more than 90% to ZAR
13.8 billion in fiscal 2025, representing more than 10% of total vault throughput for the year compared to over 5% a year
ago. This is fast becoming a meaningful contributor to our cash offering.
33
Lending
Our lending solutions are offered to merchants through Capital Connect and Adumo Capital. Adumo Capital is a joint venture
with Retail Capital, a division of Tyme Bank, with a 50:50 profit share.
2025
2024
2023
2025 vs
2024
Total lending origination volume (ZAR millions)
(1)
917
716
769
28%
Total net loan book outstanding at period end (ZAR millions)
(1)
479
284
294
69%
(1) Amounts reflected above includes 100% of Adumo Capital’s credit disbursed and net loan book.
●
2025 is inclusive of lending origination volume (for nine months) and the net loan book under the Adumo brand, with
the Adumo transaction closing on October 1, 2024, the impact of which is not included in the prior period comparatives.
●
Capital Connect comprises more than 70% of our merchant lending activity. After a challenging two-year period shaped
by macroeconomic headwinds, Capital Connect lending origination volume rebounded during fiscal 2025. Capital
Connect disbursed ZAR 783 million in 2025, compared with ZAR 716 million last year and ZAR 769 million in 2023.
This recovery has been driven by targeted strategic interventions, including dedicated sales teams, improved proprietary
visibility into merchants’ business activity, increased emphasis on new client acquisition and renewals for repeat
borrowers.
ADP
ADP in our Merchant Division includes prepaid solutions (airtime, data, electricity and gaming), bill payments, IMT and
supplier enabled payments. IMT and bill payments are included in the supplier enabled throughput shown below, with supplier
payments representing the most significant contributor to ADP throughput in the Merchant Division.
2025
2024
2023
2025 vs
2024
Number of devices in deployment
94,345
87,562
74,955
8%
Total throughput for the year (ZAR billions)
42.5
33.0
27.6
29%
Prepaid solutions throughput for the year (ZAR billions)
19.1
18.1
14.8
6%
Supplier enabled payments throughput for the year (ZAR
billions)
23.4
14.9
12.8
57%
●
We had 94,345 devices deployed as of June 30, 2025, representing a 8% year-on-year growth. Core to our device
placement strategy is the decision to focus on quality business and optimizing our existing fleet, which is reflected in
healthy throughput growth.
●
Total throughput increased 29% to ZAR 42.5 billion year-on-year, driven by a 57% increase in supplier enabled
payments.
Unification of Merchant under Lesaka brands
Over the past three years, we have brought together Kazang and Connect and subsequently added Adumo and GAAP to our
Merchant Division. In 2025, we accelerated the integration of our micro-merchant and merchant businesses as we build an integrated,
multi-product platform serving merchants of all sizes. The unification of our Merchant Division’s operations and the realignment of
these brands under a single Lesaka identity has commenced. We expect streamlining efforts to reduce complexity, eliminate
duplication, and unify our go-to-market strategy. As a result of these actions, we have incurred reorganization costs, as well as
additional intangible asset amortization charges due to the shortening of the deemed useful lives of some of our brands.
Consumer Division
Our consumer base includes South African grant beneficiaries and other EasyPay Payouts cardholders.
●
Our grant beneficiary base includes both permanent and non-permanent grant beneficiaries. As the division has evolved,
both sub-categories of consumers are revenue generating and hence the combined consumer base metrics shown below
are most appropriate to measure the performance of the division financially and operationally. Although historically we
have shown these metrics separately, it is maintained that 90% of the active consumer base are permanent grant
beneficiaries.
●
Our definition of an active consumer is any EPE consumer that has made a voluntary transaction (debit and/or credit)
within the last 90 days. Consumers who may be charged a monthly banking fee but have not made a voluntary transaction
in the last 90 days would not be considered an active consumer.
●
The definition of an active consumer reflects the revenue generating engagement of our entire consumer base and more
accurately tracks our current and future monetization strategy for the division.
34
●
We will continue to show the EasyPay Payouts separately given this follows a different monetization model.
2025
2024
2023
2025 vs
2024
Transactional accounts (banking) - EPE
Total active EPE transactional account base at year end
(millions)
1.9
1.5
1.3
24%
Approximate Net EPE account activations for the year – active
EPE transactional account base (number '000)
348
235
143
48%
Lending - EasyPay Loans
Approximate number of loans originated during the year
(number '000)
1,299
1,061
856
22%
Gross advances in the year (ZAR millions)
2,500
1,686
1,306
48%
Loan book size, before allowances, at year end (ZAR millions)
(1)
996
548
415
82%
Insurance - EasyPay Insurance
Approximate number of insurance policies written in the year
(number '000)
210
170
125
23%
Total active insurance policies on book as of year end (number
'000)
564
439
335
28%
Gross written premium (ZAR millions)
404
294
229
38%
Average revenue per consumer per month, in the quarter,
(active customers) (ZAR)
(2)
85
76
71
11%
EasyPay Payouts
Approximate number of active cardholders (number '000)
212,724
n.a.
n.a.
nm
Approximate load value for the year (ZAR millions)
(3)
457
n.a.
n.a.
nm
(1) Gross loan book, before provisions.
(2) ARPU is calculated on a revenue per active consumer basis whereby an active consumer can be both a permanent and non-
permanent grant beneficiary with prior periods adjusted for comparison purposes. Previously ARPU represented only accounted
for permanent grant beneficiaries. ARPU is a monthly figure based on a 3-month rolling average for the quarter ended June 30,
2025.
(3) Represents the 9-month period for fiscal 2025 given Adumo integration into results from the second quarter of fiscal 2025
onwards.
●
Driving customer acquisition, supported by increased focus on customer service.
o
Net active account growth (
permanent grant beneficiaries per SASSA’s monthly Social Assistance report for June
30, 2025, on the SASSA statistical reports portal)
for the year was approximately 348,000 accounts, compared to
approximately 235,000 a year ago (fiscal 2024).
o
Our focus is on all revenue generating consumers who have initiated a transaction within the last 90-day period.
This will include both permanent and temporary grant beneficiaries. Our total active consumer base stood at
approximately 1.9 million at the end of June 2025, compared to 1.5 million a year ago.
●
Progress on cross selling.
EasyPay Loans
o
We originated approximately 1.3 million loans during the year, with our consumer loan book, before allowances
(“gross book”), increasing 82% to ZAR 996 million as of June 30, 2025, compared to ZAR 548 million as of June
30, 2024.
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 several targeted Consumer lending
campaigns and encouraging results from our digital channels.
o
The portfolio loss ratio, calculated as the loans written off over the last 12 months as a percentage of the total gross
loan book at the end of the quarter, has remained stable at approximately 6% on an annualized basis, compared to
a year ago (fourth quarter of fiscal 2024). With the roll-out of the new lending product, targeting larger loans for a
longer tenor, we expect a modest and non -material increase in the portfolio loss ratio.
35
EasyPay Insurance
o
Our insurance product sales continue to grow and is a material contributor to the improvement in our overall ARPU.
We have been able to improve customer penetration to approximately 34% of our active permanent grant account
base as of June 30, 2025, compared to 33% as of June 30, 2024. Approximately 210,000 new policies were written
in the year, increasing 23% compared to approximately 170,000 a year ago. The total number of active policies has
grown 28% to approximately 564,000 policies at year end, compared to 439,000 policies a year ago (fiscal 2024).
ARPU
o
ARPU for our active consumer base has increased to approximately ZAR 85 per month for the fourth quarter of
fiscal 2025 from approximately ZAR 76 a year ago (during the fourth quarter of fiscal 2024). ARPU reflects the
definition of an active customer and includes permanent and non-permanent grant beneficiaries.
EasyPay Payouts
o
The number of active card holders was approximately 213,000 at year end, with a load value of approximately ZAR
457 million for 9 months with the Adumo transaction closing on October 1, 2024.
Enterprise Division
ADP includes prepaid solutions and bill payments through channels such as retailer distribution networks and online banking
apps.
2025
2024
2025 vs
2024
ADP
Total Throughput for the year (ZAR billions)
40.7
38.5
6%
Utilities
Total Throughput for the year (ZAR millions)
(1)
1,329
1,051
26%
Number of Registered Meters (Thousands)
524,711
444,397
18%
(1) The Recharger transaction closed on March 3, 2025. Utility payments throughput for fiscal 2025 is a 4-month contribution
(comprising a 1-month contribution to the third quarter and a full quarter contribution to the fourth quarter). Utilities throughput
shown combines historical performance pre -acquisition.
Acquisition of Bank Zero
On June 26, 2025, we announced the acquisition of Bank Zero, subject to regulatory approval. The transaction marks another
key milestone in our journey to build a vertically integrated fintech platform. The combination of Bank Zero's digital banking
infrastructure and its operational banking license, together with our fintech and distribution platform, is intended to transform the way
Lesaka is able to conduct business in the future, offering key financial, strategic and regulatory benefits, including:
(i)
Better end-to-end servicing of Lesaka's customer base through a full suite of banking services,
(ii)
Unlocking meaningful synergies and new opportunities for the group,
(iii)
Accelerating product innovation and streamlining operations across Consumer, Merchant and Enterprise,
(iv)
Enabling a transformative shift in our financial profile, and
(v)
Empowering the combined group to deliver greater value to consumers and businesses across South Africa.
Upon completion of the proposed transaction, the selling shareholders of Bank Zero – which include Michael Jordaan (Chairman
of Bank Zero), Yatin Narsai (CEO of Bank Zero), and other key members of the Bank Zero will collectively hold an approximate 12%
stake in Lesaka. Bank Zero sellers will be subject to regulatory and contractual lockups ranging from between 18 and 36-months post-
completion, depending on the seller.
Subject to completion of the transaction, Michael Jordaan is expected to join our Board of Directors, while Yatin Narsai is
expected to continue as CEO of Bank Zero. The broader Bank Zero leadership team will remain in their current roles, ensuring
continuity and integration.
36
Balance Sheet Optimization
Debt refinance and new banking partner
At the end of February 2025, we completed the ZAR 4.5 billion refinance of our debt facilities, including Investec Bank Limited
(acting through its Investment Banking division: Corporate Solutions) (“Investec Bank”) as a new banking partner alongside our
incumbent bank, FirstRand Bank Limited (acting through its Rand Merchant Bank division) (“RMB”). The benefits of the debt
refinance include: (i) consolidating most of our legacy senior debt facilities at the center, (ii) reducing our overall weighted average
borrowing rate by approximately 1.3% per year, (iii) reshaping the repayment profile of our senior debt, and (iv) diversifying our
funding sources and increasing debt facility headroom, thereby creating flexibility and capacity for organic and inorganic growth.
Refinancing the Merchant lending facility
At the end of September 2025, we refinanced and increased our merchant lending facility to $22.5 million (ZAR 400 million) to
create capacity to fund growth of our merchant lending book. We achieved a 75 basis point reduction in the overall funding cost of
this facility.
Mobikwik
We completed the disposal of our major non -core asset, Mobikwik, for $16.4 million (ZAR 290 million) with proceeds received
at the end of June. These funds have been included in our cash balances and used to partially offset our debt, in line with our stated
intention.
Lesaka Employee Share Trust
We successfully launched Lesaka’s Employee Share Ownership Plan (“Lesaka ESOP”) in March 2025 reflecting our
commitment to our people and adherence to change of control obligations placed on us by the Competition Commission South Africa
at the time of the Connect acquisition in 2022. Our ESOP is designed to create alignment with our long-term growth objectives. The
Lesaka ESOP Trust held an effective 3% of our issued shares at the date of implementation, representing approximately ZAR 220
million at the current market price. This allocation of shares ensures that employees have a meaningful stake in our future financial
success and gives them the opportunity to share in the value created by us.
The Lesaka ESOP Trust advances our transformation initiatives and plays an important role in improving our BBBEE rating.
Our employee base is comprised of 87% designated groups for BBBEE purposes. Through the creation of a broader base of employee
ownership, we are helping to promote economic inclusion and contribute to transformation in the broader South African economy.
Association of South African Payment Providers (“ASAPP”)
ASAPP, publicly launched (www.asapp.co.za) in January 2025, is now fully established as the main representatives of non-bank
participants in the payments space. The eight original members (Altron Fintech, Hello Group Inc., iKhokha (Pty) Ltd, Lesaka
Technologies (Pty) Ltd, Network International Holdings Plc, Peach Payment Services (Pty) Ltd, Shop2Shop (Pty) Ltd, Yoco
Technologies (Pty) Ltd) have been joined by Flash Group, PayU GPO, Cross Switch Technology Ltd, and Paycorp Group. Key
workstreams include:
●
Greater inclusion of Non-Bank participation in the payment’s ecosystem including services such as settlement of funds
as part of the Bank's Act.
●
Calling to action a review of interchange pricing in South Africa, directly with the SARB.
●
Working alongside the SARB and other regulatory stakeholders on the strategic direction of the Faster Payment System,
National Treasury Financial Inclusion Forum and the Payments Industry Body Formation.
37
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 understandi ng of the
results of our operations and financial condition.
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 (June 30) or more frequently if circumstances indicating impairment have
occurred.
W
e did not perform interim impairment testing in fiscal 2025 as no triggering events were identified outside of the annual
impairment test date. 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. Changes in these judgements and estimates may impact on the outcome of the impairment test. For instance, the fair
value of the ISV reporting unit included in our acquisition of Adumo exceeded the carrying value of the reporting unit as of June 30,
2025, by only 2.4%. If we had used a weighted average cost of capital (“WACC”) rate that was 1% higher, we would have recorded
an impairment of $3.8 million, and if the WACC rate was 1% lower, the headroom would have increased from 2.4% to 12.4%.
In determining the fair value of reporting units for fiscal 2024 and 2023, 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 2025, we considered key judgements related to reporting unit revenue growth rates, the
weighted-average cost of capital applicable to peer and industry comparables of the reporting units and the forecast period to be used.
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. Refer to Note 10 to our audited
consolidated financial statements for a summary of the key judgements used in our impairment testing.
The results of our impairment tests during fiscal 2025 and 2023 indicated that the fair value of our reporting units exceeded their
carrying values, with the exception of the $17.0 million (related to the Cash Connect, Adumo Technologies, Adumo Payouts and
EasyPay reporting units) and $7.0 million (related to the PPT/ NUETS reporting unit), respectively, of goodwill impaired during fiscal
2025 and 2023, as discussed in Note 10 to our audited consolidated financial statements. 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.
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 completed the acquisition of Adumo and Recharger during fiscal 2025 where we identified and
recognized intangible assets. We did not identify any significant intangible assets related to the Touchsides acquisition in fiscal 2024.
We used the relief from royalty method to value identified brands identified in the Adumo acquisition, and the multi-period excess
earnings method to value identified customer relationships and the replacement cost approach to value the identified technology assets
related to Adumo and Recharger . 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, WACC rates,
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 assesses
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.
38
For instance, during early calendar 2025, our executive considered the unification of our merchant segments operations and the
realignment of our brands under the master brand “Lesaka”.
We
have identified the steps and timing to realign the affected brands
under the master brand and expect to have complete alignment by February 2027, with certain brands expected to be aligned by
December 2025. The change in brands has resulted in a change in the useful life of certain of our brand and trademark intangible assets
which has resulted in an increase in amortization expense of $2.6 million during the year ended June 30, 2025. Furthermore, we
recorded an impairment loss of $1.8 million related to Adumo Technologies intangible assets which were fully impaired during the
year ended June 30, 2025. Refer to Note 10 of our audited consolidated financial statements for additional information.
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 that are held as inventory and (b) distribute ADP, including prepaid airtime
vouchers (which we do not hold as inventory), prepaid electricity, gaming vouchers, and other services, to end consumers through our
platforms. The determination of whether we act as a principal or as an agent when providing these services using guidance contained
in
Accounting Standards Codification (“ASC”) 606 Revenue from Contracts with Customers
judgement. When we are the principal in a transaction, revenue is reported on a gross basis. When we are an agent in a transaction,
revenue is recognized based on the amount that we are contractually entitled to receive for performing the distribution service on
behalf of our customers.
Finance Loans Receivable and Allowance for Credit Losses
Merchant lending
The allowance for credit losses related to Merchant finance loans receivables is calculated by multiplying the expected write-off
rate for doubtful or legal debt with the total 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. In addition, management determines
the expected write-off rate for doubtful or legal debt based on historical recovery trends for defaulted receivables. The allowance for
credit losses related to these merchant finance loans receivables is calculated by multiplying the expected write-off rate for doubtful
or legal debt with the total actual receivables in default plus multiplying the lifetime loss rate with the month-end outstanding lending
book. The lifetime loss rate as of June 30, 2025 and June 30, 2024, was 1.14% and 1.18%, respectively. 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 95%, 4% and 1%, respectively, of the outstanding lending book as of June 30, 2025.
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 , excluding upfront initiation fees. Loans to customers have a tenor of up to nine 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. While the allowance for credit losses is primarily determined utilizing a provisioning model, there is still an
element of judgment 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, excluding upfront initiation fees. The lifetime loss rate as of each of June 30,
2024 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, 2025.
39
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 , in the
event of the borrower’s death, or if the borrower was under debt review.
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, 2025 and 2024. We utilized the latest business plan provided by Cell C management
for the period ended May 31, 2030, for the June 30, 2025, valuation and the business plan approved by Cell C management for the
period ended December 31, 2027, for the June 30, 2024, valuation, and the following key valuation inputs were used:
Weighted Average Cost of Capital:
24% as of June 30, 2025 and between 21% and 23% as of June 30, 2024
Long-term growth rate:
4.5% (4.5% as of June 30, 2024)
Marketability discount:
15% (20% as of June 30, 2024)
Minority discount:
17% (24% as of June 30, 2024)
Net adjusted external debt - June 30, 2025:
(1)
ZAR 8.3 billion ($0.5 billion), no lease liabilities included
Net adjusted external debt - June 30, 2024:
(2)
ZAR 8 billion ($0.4 billion), no lease liabilities included
(1) translated from ZAR to U.S. dollars at exchange rates applicable as of June 30, 2025.
(2) translated from ZAR to U.S. dollars at exchange rates applicable as of June 30, 2024.
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, 2025.
On September 1, 2025, Cell C’s largest shareholder, Blue Label Telecoms Limited (“BLT”), announced that BLT, The Prepaid
Company Proprietary Limited (a wholly-owned subsidiary of BLT), Cell C Limited, Comm Equipment Company Proprietary Limited
(a wholly-owned indirect subsidiary of BLT), K2021889191 (South Africa) (RF) Proprietary Limited, and K2022559963 (South
Africa) (RF) Proprietary Limited, had entered into an agreement setting out the terms of the proposed restructure of BLT and its
subsidiaries (the “Pre-Listing Restructuring”). The Pre-Listing Restructuring encompasses various transactions aimed at optimizing
Cell C’s capital structure and balance sheet in preparation for a separation and listing of the Cell C business on the JSE. The Cell C
listing remains subject to, amongst other things, market conditions, shareholder, regulatory and other relevant approvals and therefore
the exact date of listing is unknown at the date of this Annual Report on Form 10-K. The listing of Cell C’s business on the JSE may
result in a change in the methodology used to value our interest in Cell C because we may use its quoted listed price instead of the
discounted cash flow model currently used.
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, 2025
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, 2025, including the expected dates of adoption and effects on financial condition, results of operations and
cash flows.
40
Currency Exchange Rate Information
Actual exchange rates
The actual exchange rates for and at the end of the periods presented were as follows:
Table 1
June 30,
2025
2024
2023
ZAR : $ average exchange rate
18.1644
18.7070
17.7641
Highest ZAR : $ rate during period
19.6350
19.4568
19.7558
Lowest ZAR : $ rate during period
17.1144
17.6278
16.2034
Rate at end of period
17.7554
18.1808
18.8376
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, 2025, 2024 and 2023, 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,
2025
2024
2023
Income and expense items: $1 = ZAR
17.9031
18.6844
17.9400
Balance sheet items: $1 = ZAR
17.7554
18.1808
18.8376
We have translated the results of operations and operating segment information for the year ended June 30, 2025 and 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.
41
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 is our Executive Chairman and
he 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”) 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, 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. We have included an intercompany interest expense in our Consumer Segment Adjusted
EBITDA for fiscal 2025. Once-off items represent non-recurring expense items, including costs related to acquisitions and transactions
consummated or ultimately not pursued. 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. Effective from fiscal 2025, all lease charges
are allocated to our operating segments, whereas in previous filings we presented certain lease charges on a separate line outside of
our operating segments. Prior period information has been recasted to include the lease charges which were previously reported on a
separate line in our Consumer and Merchant (and now Merchant, Consumer and Enterprise) operating segments.
Group Adjusted EBITDA represents Segment Adjusted EBITDA after deducting group costs. Refer also “Results of
Operations—Use of Non-GAAP Measures” below.
In fiscal 2025 we closed the acquisitions of Adumo and Recharger and have integrated their businesses into our ours. Our fiscal
2025 financial results include Adumo from October 1, 2024 and Recharger from March 3, 2025. Refer also to Note 3 to the audited
consolidated financial statements for additional information regarding these transactions. Adumo and Recharger are not included in
our financial results for fiscal 2024 and 2023.
We analyze our business and operations in terms of three inter-related but independent operating segments: (1) Merchant (2)
Consumer and (3) Enterprise. 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 2025 Compared to Fiscal 2024
The following factors had a significant influence on our results of operations during fiscal 2025 as compared with the same period
in the prior year:
●
Revenue increased:
Our revenues increased by 16.9% in U.S. dollar and 13.5% in ZAR, primarily due to the inclusion of
Adumo and Recharger, an increase in value-added services activity in Merchant, higher Pinned Airtime sales, as well as
higher transaction, insurance and lending revenues in Consumer, which was partially offset by a lower contribution from our
legacy Enterprise businesses;
●
Operating income increase, before transaction costs:
Operating income, before transaction and related costs, increased
significantly primarily due to contribution s from Adumo from October 1, 2024 and Recharger from March 3, 2025, which
were partially offset by increased costs and an increase in amortization of acquisition-related intangible assets related to the
acquisition of Adumo and Recharger;
●
Non-cash fair value adjustment related to equity securities:
We recorded a non -cash fair value loss of $59.8 million during
fiscal 2025 related to the disposal of our investment in MobiKwik;
●
Higher net interest charge:
311.1 million) primarily due to higher overall borrowings, which was partially offset by an increase in interest received as a
result of the inclusion of Adumo; and
●
Foreign exchange movements:
period, which positively impacted our U.S. dollar reported results.
42
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,
2025
2024
$ %
$ ’000
$ ’000
change
Revenue
659,701
564,222
17%
Cost of goods sold, IT processing, servicing and support
486,546
442,673
10%
Selling, general and administration
131,512
91,969
43%
Depreciation and amortization
33,721
23,665
42%
Impairment loss
18,863
-
nm
Transaction costs related to Adumo, Recharger and Bank Zero acquisitions and
certain compensation costs
16,159
2,325
595%
Operating (loss) income
(27,100)
3,590
nm
Change in fair value of equity securities
(59,828)
-
nm
Loss on disposal of equity-accounted investment
161
-
nm
Reversal of allowance for EMI doubtful debt receivable
-
250
nm
Interest income
2,596
2,294
13%
Interest expense
21,453
18,932
13%
Loss before income tax (benefit) expense
(105,946)
(12,798)
728%
Income tax (benefit) expense
(18,198)
3,363
nm
Net loss before earnings (loss) from equity-accounted investments
(87,748)
(16,161)
443%
Earnings (Loss) from equity-accounted investments
114
(1,279)
nm
Net loss
(87,634)
(17,440)
402%
Add net loss attributable to non-controlling interest
130
-
nm
Net loss attributable to us
(87,504)
(17,440)
402%
Table 4
In South African Rand
Year ended June 30,
2025
2024
ZAR %
ZAR ’000
ZAR ’000
change
Revenue
11,980,399
10,553,233
14%
Cost of goods sold, IT processing, servicing and support
8,833,924
8,280,262
7%
Selling, general and administration
2,388,795
1,719,992
39%
Depreciation and amortization
612,298
442,570
38%
Impairment loss
334,929
-
nm
Transaction costs related to Adumo, Recharger and Bank Zero acquisitions and
certain compensation costs
291,358
43,154
575%
Operating (loss) income
(480,905)
67,255
nm
Change in fair value of equity securities
(1,089,871)
-
nm
Loss on disposal of equity-accounted investment
2,886
-
nm
Reversal of allowance for EMI doubtful debt receivable
-
4,741
nm
Interest income
47,108
42,896
10%
Interest expense
389,882
354,048
10%
Loss before income tax (benefit) expense
(1,916,436)
(239,156)
701%
Income tax (benefit) expense
(328,347)
62,616
nm
Net loss before earnings (loss) from equity-accounted investments
(1,588,089)
(301,772)
426%
Earnings (Loss) from equity-accounted investments
2,035
(24,298)
nm
Net loss
(1,586,054)
(326,070)
386%
Add net loss attributable to non-controlling interest
2,307
-
nm
Net loss attributable to us
(1,583,747)
(326,070)
386%
43
Revenue increased by $95.5 million (ZAR 1.4 billion) or 16.9% (in ZAR, 13.5%). The increase in ZAR was primarily due to,
the inclusion of Adumo, an increase in the volume of value-added services provided (Pinless Airtime and gaming), an increase in
Pinned Airtime sales, an increase in certain issuing fee base prices and transaction activity in our issuing business, and an increase in
insurance premiums collected and lending revenues following higher loan originations. Refer to discussion above at “—Recent
Developments” for a description of key trends impacting our revenue this fiscal year.
Cost of goods sold, IT processing, servicing and support increased by $43.9 million (ZAR 0.6 million ) or 9.9% (in ZAR, 6.7%),
primarily due to the inclusion of Adumo, higher commissions paid related to ADP revenue generated, and higher insurance-related
claims and third-party transaction fees, which was partially offset by the decrease in Pinned Airtime sales.
Selling, general and administration expenses increased by $39.5 million (ZAR 668.8 million), or 43.0% (in ZAR, 38.9%). The
increase was primarily due to the inclusion of Adumo; higher employee-related expenses (including annual salary increases); higher
stock-based compensation charges, consulting fees and audit fees; and the year-over-year impact of inflationary increases on certain
expenses.
Depreciation and amortization expense increased by $10.06 million (ZAR 169.7 million), or 42.5% (in ZAR, 38.4%). The
increase was due to the inclusion of acquisition-related intangible asset amortization related to intangible assets identified pursuant to
the Adumo and Recharger acquisitions and an increase in depreciation expense related to additional POS devices deployed.
During fiscal 2025, we recorded an impairment loss which includes an impairment of goodwill of $17.0 million related to the
impairment of goodwill allocated to each of Merchant, Consumer and Enterprise as well as an impairment of intangible assets of 1.8
million. Refer to Note 10 of our audited consolidated financial statements for additional information regarding these impairment losses.
Transaction costs related to Adumo, Recharger and Bank Zero acquisitions and certain compensation costs includes fees paid to
external service providers associated with legal and advisory services procured to close the Adumo transaction on October 1, 2024,
and the Recharger transaction in March 2025, as well as post-combination compensation charges recognized related to the Recharger
acquisition of $13.6 million (ZAR 245.7 million) and increased primarily due to these post-combination compensation charges. This
caption also includes transaction costs related to the proposed acquisition of Bank Zero. Refer to Note 3 to our audited consolidat ed
financial statements for additional information.
Our operating (loss) income margin in fiscal 2025 and 2024 was (4.1%) and 0.6%, respectively. We discuss the components of
operating loss margin under “—Results of operations by operating segment.”
The change in fair value of equity securities of $59.8 million during fiscal 2025 represents a non-cash fair value adjustment loss
related to MobiKwik. We did not record any changes in the fair value of equity interests in MobiKwik during the fiscal 2024, or any
fair value adjustments for Cell C during fiscal 2025 or 2024, respectively. We continue to carry our investment in Cell C at $0 (zero).
Interest on surplus cash increased to $2.6 million (ZAR 47.1 million) from $2.3 million (ZAR 42.9 million), primarily due to the
inclusion of Adumo and higher overall average cash balances on deposit during fiscal 2025 compared with 2024.
Interest expense increased to $21.5 million (ZAR 389.9 million) from $18.9 million (ZAR 354.0 million). In ZAR, the increase
was primarily as a result of higher overall borrowings during fiscal 2025 compared with the comparable period in the prior quarter,
which was partially offset by lower overall interest rates.
Fiscal 2025 income tax benefit was $18.2 million (ZAR 328.3 million) compared to an income tax expense of $3.4 million (ZAR
62.6 million) in fiscal 2024. Our effective tax rate for fiscal 2025 was impacted by deferred tax impact related to the fair value
adjustment to our equity securities, the reversal of $12.8 million related to certain valuation allowances created in prior years following
(i) an improvement in profitability of certain of our subsidiaries and (ii) a change in judgment on the need for a valuation allowance
of $11.4 million related to an entity which we believe has achieved sustainable profitability, the tax expense recorded by our profitable
South African operations, a deferred tax benefit related to acquisition-related intangible asset amortization, non-deductible expenses
(in transaction-related 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 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.
44
Results of operations by operating segment and group costs
The composition of revenue and the contributions of our business activities to Group Adjusted EBITDA are illustrated below:
Table 5
In U.S. Dollars
Year ended June 30,
2025
% of
2024
% of
%
Operating Segment
$ ’000
total
$ ’000
total
change
Consolidated revenue:
Merchant
526,598
80%
459,790
81%
15%
Consumer
96,008
15%
69,211
12%
39%
Enterprise
42,556
6%
46,897
8%
(9%)
Subtotal: Operating segments
665,162
101%
575,898
101%
15%
Eliminations
(5,461)
(1%)
(11,676)
(1%)
(53%)
Total consolidated revenue
659,701
100%
564,222
100%
17%
Group Adjusted EBITDA:
Merchant
(1)(2)
36,195
71%
29,170
79%
24%
Consumer
(1)(2)
23,949
47%
12,679
34%
89%
Enterprise
(1)(2)
1,287
3%
2,931
8%
(56%)
Group costs
(10,743)
(21%)
(7,844)
(21%)
37%
Group Adjusted EBITDA (non-GAAP)
(3)
50,688
100%
36,936
100%
37%
(1) Segment Adjusted EBITDA for fiscal 2025, includes reorganization and retrenchment costs for Merchant of $0.8 million,
Enterprise of $0.8 million, and Consumer of $0.1 million. Segment Adjusted EBITDA for fiscal 2024, includes retrenchment costs for
Merchant $0.3 million and Consumer of $0.2 million.
(2) Lease expenses which were previously presented on a separate line in fiscal 2024 are now included in Merchant, Consumer
and Enterprise Segment Adjusted EBITDA. The prior period has been re-presented to conform with current period presentation.
(3) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations—Use of Non-
GAAP Measures”.
Table 6
In South African Rand
Year ended June 30,
2025
% of
2024
% of
%
Operating Segment
ZAR ’000
total
ZAR ’000
total
change
Consolidated revenue:
Merchant
9,562,360
80%
8,599,450
81%
11%
Consumer
1,744,429
15%
1,294,632
12%
35%
Enterprise
773,057
6%
877,317
8%
(12%)
Subtotal: Operating segments
12,079,846
101%
10,771,399
101%
12%
Eliminations
(99,447)
(1%)
(218,166)
(1%)
(54%)
Total consolidated revenue
11,980,399
100%
10,553,233
100%
14%
Group Adjusted EBITDA:
Merchant
(1)(2)
657,177
71%
545,472
79%
20%
Consumer
(1)(2)
435,193
47%
237,362
34%
83%
Enterprise
(1)(2)
23,724
3%
54,924
8%
(57%)
Group costs
(193,853)
(21%)
(146,815)
(21%)
32%
Group Adjusted EBITDA (non-GAAP)
(3)
922,241
100%
690,943
100%
33%
(1) Segment Adjusted EBITDA for fiscal 2025, includes reorganization and retrenchment costs for Merchant of ZAR 15.7
million, Enterprise of ZAR 13.6 million, and Consumer of ZAR 1.5 million. Segment Adjusted EBITDA for fiscal 2024, includes
retrenchment costs for Merchant of ZAR 4.9 million and Consumer of ZAR 3.5 million.
(2) Lease expenses which were previously presented on a separate line in fiscal 2024 are now included in Merchant and Consumer
Segment Adjusted EBITDA. The prior period has been re-presented to conform with current period presentation.
(3) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations—Use of Non-
GAAP Measures”.
45
Merchant
Segment revenue primarily increased due to the inclusion of Adumo, and a higher volume of ADP provided (Pinless Airtime and
gaming) and an increase in fewer Pinned Airtime sales. In ZAR, the increase in Segment Adjusted EBITDA is primarily due to the
inclusion of Adumo, which was partially offset by higher operating expenses incurred, including employment-related expenditures, to
expand our offering, an increase in the allowance for credit losses following higher loan originations and reorganization and
retrenchment costs incurred during fiscal 2025.
Our Segment Adjusted EBITDA margin (calculated as Segment Adjusted EBITDA divided by revenue) for fiscal 2025 and 2024
was 6.9% and 6.3%, respectively.
Consumer
Segment revenue increased primarily due to higher transaction fees generated from the higher EPE account holders base, an
increase in certain issuing fee base prices and transaction activity in our issuing business, insurance premiums collected, lending
revenues following an increase in loan originations and the inclusion of Adumo. This increase in revenue has translated into improved
profitability, which was partially offset by a higher allowance for credit losses following an increase in loan originations during fiscal
2025, higher insurance-related claims, interest expense (of ZAR 61.4 million) incurred to fund our lending book, higher computer
software license costs, and the year-over-year impact of inflationary increases on certain expenses. We have included an intercompany
interest expense in our Consumer Segment Adjusted EBITDA for fiscal 2025 compared with fiscal 2024.
Our Segment Adjusted EBITDA margin for fiscal 2025 and 2024 was 24.9% and 18.3%, respectively.
Enterprise
Segment revenue decreased primarily due to fewer ad hoc hardware sales as well as lower revenue generated from the sale of
prepaid airtime vouchers, which was partially offset by the inclusion of Recharger. In ZAR, the significant decrease in Segment
Adjusted EBITDA is primarily due to the impact of few sales, which was partially offset by the inclusion of Recharger .
Our Segment Adjusted EBITDA margin for fiscal 2025 and 2024 was 3.0% and 6.2%, 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 2025 increased compared with the prior period due to higher employee costs resulting from an increase
in the number of individuals allocated to group costs and base salary adjustments, higher bonus expense, travel, audit, consulting and
legal fees.
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 6.9% in U.S. dollar and 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:
299.9 million) primarily due to higher interest rates;
●
Significant transaction costs:
and
●
Foreign exchange movements:
period, which adversely impacted our U.S. dollar reported results.
46
The following tables show the changes in the items comprising our statements of operations, both in U.S. dollars and in ZAR:
Table 7
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
91,969
95,050
(3%)
Depreciation and amortization
23,665
23,685
(0%)
Impairment loss
-
7,039
nm
Transaction costs related to Adumo and Recharger acquisitions
2,325
-
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 8
In South African Rand
(US GAAP)
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
1,719,992
1,705,196
1%
Depreciation and amortization
442,570
424,909
4%
Impairment loss
-
126,280
nm
Transaction costs related to Adumo and Recharger acquisitions
43,154
-
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.
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.
47
Selling, general and administration expenses decreased by $3.1 million (ZAR 14.8 million), or 3.2% (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 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.
48
Results of operations by operating segment and group costs
The composition of revenue and the contributions of our business activities to Group Adjusted EBITDA are illustrated below:
Table 9
In U.S. Dollars
Year ended June 30,
2024
% of
2023
% of
%
Operating Segment
$ ’000
total
$ ’000
total
change
Consolidated revenue:
Merchant
459,790
81%
416,562
79%
10%
Consumer
69,211
12%
62,801
12%
10%
Enterprise
46,897
8%
50,456
10%
(7%)
Subtotal: Operating segments
575,898
101%
529,819
101%
9%
Not allocated to operating segments
-
-
1,469
-
nm
Eliminations
(11,676)
(1%)
(3,317)
(1%)
252%
Total consolidated revenue
564,222
100%
527,971
100%
7%
Group Adjusted EBITDA:
Merchant
(1)(2)
29,170
78%
29,008
117%
1%
Consumer
(1)(2)
12,679
34%
1,675
7%
657%
Enterprise
(2)
2,931
8%
3,256
13%
(10%)
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 fiscal 2024, includes retrenchment costs for Merchant $0.3 million and Consumer of $0.2
million.
(2) Lease expenses which were previously presented on a separate line in fiscal 2024 are now included in Merchant, Consumer
and Enterprise Segment Adjusted EBITDA. The prior period has been re-presented to conform with current period presentation.
(3) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations—Use of Non-
GAAP Measures”.
Table 10
In South African Rand
Year ended June 30,
2024
% of
2023
% of
%
Operating Segment
ZAR ’000
total
ZAR ’000
total
change
Consolidated revenue:
Merchant
8,599,450
81%
7,473,122
79%
15%
Consumer
1,294,632
13%
1,126,650
12%
15%
Enterprise
877,317
8%
905,181
10%
(3%)
Subtotal: Operating segments
10,771,399
102%
9,504,953
100%
13%
Not allocated to operating segments
-
-
26,354
-
nm
Eliminations
(218,166)
(2%)
(59,507)
-
267%
Total consolidated revenue
10,553,233
100%
9,471,800
100%
11%
Group Adjusted EBITDA:
Merchant
(1)(2)
545,472
79%
520,403
117%
5%
Consumer
(1)(2)
237,362
34%
30,049
7%
690%
Enterprise
(2)
54,924
8%
58,413
13%
(6%)
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 fiscal 2024, includes retrenchment costs for Merchant of ZAR 4.9 million and Consumer of
ZAR 3.5 million.
(2) Lease expenses which were previously presented on a separate line in fiscal 2024 are now included in Merchant and Consumer
Segment Adjusted EBITDA. The prior period has been re-presented to conform with current period presentation.
(3) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations—Use of Non-
GAAP Measures”.
49
Merchant
Segment revenue increased due to the increase in prepaid airtime vouchers sold and other ADP provided, which was partially
offset by lower revenue generated from a decrease in certain ADP transaction volumes processed (such as international money
transfers). In ZAR, the increase in Segment Adjusted EBITDA is primarily due to the higher sales activity.
Our Segment Adjusted EBITDA margin in fiscal 2024 and 2023 was 6.3% and 7.0%, 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 18.3% and 2.7%, respectively.
Enterprise
Segment revenue decreased due to 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, which was partially offset by the increase in prepaid airtime vouchers sold
and other value-added services provided . In ZAR, the decrease in Segment Adjusted EBITDA is primarily due to lower hardware
sales.
Our Segment Adjusted EBITDA margin in fiscal 2024 and 2023 was 6.2% and 6.5%, 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.
50
Presentation of Merchant, Consumer and Enterprise by segment for fiscal 2025, 2024 and 2023
The tables below present Merchant, Consumer and Enterprise revenue and EBITDA for fiscal 2025, 2024 and 2023, including
lease charges, as well as the U.S. dollar/ ZAR exchange rates applicable per fiscal quarter and year:
Table 11
Fiscal 2025
In United States dollars
Quarter 1
Quarter 2
Quarter 3
Quarter 4
F2025
$ ’000
$ ’000
$ ’000
$ ’000
$ ’000
Revenue
Merchant
123,651
145,209
128,781
128,957
526,598
Consumer
21,072
22,929
24,096
27,911
96,008
Enterprise
11,883
8,933
9,444
12,296
42,556
Subtotal: Operating segments
156,606
177,071
162,321
169,164
665,162
Eliminations
(3,038)
(855)
(871)
(697)
(5,461)
Total consolidated revenue
153,568
176,216
161,450
168,467
659,701
Group Adjusted EBITDA:
Merchant
7,554
10,319
8,103
10,219
36,195
Consumer
4,396
4,342
6,333
8,878
23,949
Enterprise
362
(31)
133
823
1,287
Group costs
(2,949)
(2,820)
(1,772)
(3,202)
(10,743)
Group Adjusted EBITDA (non-GAAP)
9,363
11,810
12,797
16,718
50,688
Income and expense items: $1 = ZAR
17.72
17.85
18.40
17.87
17.90
Table 12
Fiscal 2024
In United States dollars
Quarter 1
Quarter 2
Quarter 3
Quarter 4
F2024
$ ’000
$ ’000
$ ’000
$ ’000
$ ’000
Revenue
Merchant
112,061
117,182
111,801
118,746
459,790
Consumer
15,580
16,707
17,904
19,020
69,211
Enterprise
9,467
11,921
11,322
14,187
46,897
Subtotal: Operating segments
137,108
145,810
141,027
151,953
575,898
Eliminations
(1,019)
(1,917)
(2,833)
(5,907)
(11,676)
Total consolidated revenue
136,089
143,893
138,194
146,046
564,222
Group Adjusted EBITDA:
Merchant
6,910
7,497
7,420
7,343
29,170
Consumer
2,120
2,575
3,757
4,227
12,679
Enterprise
815
891
725
500
2,931
Group costs
(1,822)
(2,011)
(2,199)
(1,812)
(7,844)
Group Adjusted EBITDA (non-GAAP)
8,023
8,952
9,703
10,258
36,936
Income and expense items: $1 = ZAR
18.71
18.71
18.88
18.47
18.68
51
Table 13
Fiscal 2023
In United States dollars
Quarter 1
Quarter 2
Quarter 3
Quarter 4
F2023
$ ’000
$ ’000
$ ’000
$ ’000
$ ’000
Revenue
Merchant
96,771
105,034
108,414
106,343
416,562
Consumer
15,004
15,434
15,876
16,487
62,801
Enterprise
14,450
16,999
10,157
8,850
50,456
Subtotal: Operating segments
126,225
137,467
134,447
131,680
529,819
Not allocated to segments
-
-
-
1,469
1,469
Eliminations
(1,439)
(1,399)
(479)
-
(3,317)
Total consolidated revenue
124,786
136,068
133,968
133,149
527,971
Group Adjusted EBITDA:
Merchant
6,406
6,693
7,645
8,264
29,008
Consumer
(1,893)
171
1,263
2,134
1,675
Enterprise
1,174
2,087
335
(340)
3,256
Group costs
(2,300)
(2,256)
(2,293)
(2,260)
(9,109)
Group Adjusted EBITDA (non-GAAP)
3,387
6,695
6,950
7,798
24,830
Income and expense items: $1 = ZAR
17.13
17.52
17.93
18.74
17.94
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, change in fair value of equity securities),
(earnings) loss from equity-accounted investments, stock-based compensation charges and once-off items. We included an
intercompany interest expense in our Consumer Segment Adjusted EBITDA for eight months to February 28, 2025. We commenced
utilizing our February 2025 lending facilities to fund a portion of our Consumer lending book from March 1, 2025. Once-off items
represents non-recurring income and expense items, including costs related to acquisitions and transactions consummated or ultimately
not pursued.
52
The table below presents the reconciliation between GAAP net loss attributable to Lesaka to Group Adjusted EBITDA:
Table 14
Years ended June 30,
2025
2024
2023
$ ’000
$ ’000
$ ’000
Loss attributable to Lesaka - GAAP
(87,634)
(17,440)
(35,074)
Loss from equity accounted investments
(114)
1,279
5,117
Net loss before loss from equity-accounted investments
(87,748)
(16,161)
(29,957)
Income tax expense (benefit)
(18,198)
3,363
(2,309)
Loss before income tax expense
(105,946)
(12,798)
(32,266)
Interest expense
21,453
18,932
18,567
Interest income
(2,596)
(2,294)
(1,853)
Reversal of allowance for doubtful EMI loan receivable
-
(250)
-
Net loss on disposal of equity-accounted investment
161
-
205
Change in fair value of equity securities
59,828
-
-
Operating (loss) income
(27,100)
3,590
(15,347)
Impairment loss
18,863
-
7,039
PPA amortization (amortization of acquired intangible assets)
21,384
14,419
15,149
Depreciation
12,337
9,246
8,536
Stock-based compensation charges
9,550
7,911
7,309
Interest adjustment
(2,195)
-
-
Once-off items
(1)
17,826
1,853
1,922
Unrealized Loss FV for currency adjustments
23
(83)
222
Group Adjusted EBITDA - Non-GAAP
50,688
36,936
24,830
(1) The table below presents the components of once-off items for the periods presented:
Table 15
Years ended June 30,
2025
2024
2023
$ ’000
$ ’000
$ ’000
Transaction costs related to Adumo, Recharger and Bank Zero acquisitions and
certain compensation costs
16,159
2,325
-
Transaction costs
1,794
480
850
Indirect taxes provision
(127)
-
438
(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
Separation of employee expense
-
-
262
Total once-off items
17,826
1,853
1,922
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 2025 we incurred significant transaction costs related to the acquisition of Adumo and
Recharger over a number of quarters, and the transactions are generally non-recurring
Indirect tax provision release relates to the reversal of a non-recurring indirect tax provision created in fiscal 2023 which was
resolved in fiscal 2025 following settlement of the matter with the tax authority. (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. 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.
53
Liquidity and Capital Resources
At June 30, 2025, our unrestricted cash and cash equivalents were $76.5 million and comprised of ZAR-denominated balances
of ZAR 1.0 billion ($55.2 million), U.S. dollar-denominated balances of $3.2 million, and other currency deposits, primarily Indian
rupee (related to the sale of MobiKwik), of $18.1 million, all amounts translated at exchange rates applicable as of June 30, 2025. The
increase in our unrestricted cash balances from June 30, 2024, was primarily due to the positive contribution from all of our operating
segments, proceeds from the sale of MobiKwik, and utilizing of our borrowing facilities, which was partially offset by the utilization
of cash reserves to fund certain scheduled and other repayments of our borrowings, settle the cash portion of the purchase consideration
related to our various acquisitions, purchase ATMs and vaults and other items of capital expenditure, pay annual bonuses, pay for
expenses included in our group costs, 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. Refer to Note 12 to our consolidated financial statements
for the year ended June 30, 2025, for additional information related to our borrowings.
Our ability to make payments on our indebtedness and to fund our operations may be dependent upon the operating income and
the distribution of funds from our subsidiaries. However, as local laws and regulations and/or the terms of our indebtedness restrict
certain of our subsidiaries from paying dividends and transferring assets to us, there is no assurance that our subsidiaries will be
permitted to provide us with sufficient dividends, distributions or loans when necessary.
We will make a cash payment of ZAR 175.0 million ($9.9 million translated at exchange rates as of June 30, 2025) in March
2026 related to the cash portion of the deferred consideration due to the seller of Recharger.
Available short-term borrowings
Summarized below are our short-term facilities available and utilized as of June 30, 2025:
Table 16
RMB GBF
RMB Other
Nedbank
$ ’000
ZAR ’000
$ ’000
ZAR ’000
$ ’000
ZAR ’000
Total short-term facilities available, comprising:
Total overdraft
39,475
700,901
-
-
-
-
Indirect and derivative facilities
(1)
-
-
5,672
100,718
8,817
156,554
Total short-term facilities available
39,475
700,901
5,672
100,718
8,817
156,554
Utilized short-term facilities:
Overdraft
24,469
434,461
-
-
-
-
Indirect and derivative facilities
-
-
1,864
33,089
119
2,110
Total short-term facilities available
24,469
434,461
1,864
33,089
119
2,110
Interest rate, based on South African prime rate
10.25%
N/A
N/A
(1) Other facilities include 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.
In terms of a commitment provided to the lender under the CTA entered into on February 27, 2025, we have undertaken not to
utilize more than ZAR 5.0 million ($0.3 million) of the Nedbank Facility.
Long-term borrowings
We have aggregate long-term borrowing outstanding of ZAR 3.6 billion ($200.8 million translated at exchange rates as of June
30, 2025) as described in Note 12. These borrowings include outstanding long-term borrowings obtained by Lesaka SA of ZAR 3.1
billion, which was used to refinance our previous long-term borrowings. We have utilized all of these long-term borrowings. As of
September 29, 2025, we also have a revolving credit facility, of ZAR 400.0 million which is utilized to fund a portion of our merchant
finance loans receivable book and an asset backed facility of ZAR 227.0 million which is utilized to partially fund the acquisition of
POS devices and vaults.
54
Restricted cash
We have also entered into cession and pledge agreements with Nedbank related to our Nedbank indirect 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, 2025, includes restricted cash of $0.1 million that has been ceded and pledged.
Arrangement with African Bank to fund our ATMs
In September 2024, we entered into an arrangement with African Bank Limited (“African Bank”) and certain cash-in-transit
service providers to fund our ATMs. Under this arrangement, African Bank will use its cash resources to fund our ATMs and it is
specifically recorded that the cash in our ATMs are African Bank’s property. Therefore, as we have not utilized a facility to obtain the
cash, and do not own or control the cash for an extended period of time, we do not record cash or cash equivalents and borrow ings in
our consolidated statement of financial position. Cash withdrawn from our ATMs by our EPE customers and other consumers are
settled through the interbank settlement system from the ATM users bank account to African Bank’s bank accounts. We pay African
Bank a monthly fee for the service provided which is calculated based on the cumulative daily outstanding balance of cash utilized
multiplied by the South African prime interest rate less 1%. We are exposed to the risk of cash lost while it is in our ATMs (i.e. from
theft) and are required to repay African Bank for any shortages.
Cash flows from operating activities
Net cash used in operating activities during fiscal 2025 was $9.1 million (ZAR 163.3 million) compared to net cash provided by
operating activities of $28.8 million (ZAR 537.9 million) during fiscal 2024. Excluding the impact of income taxes, our cash used in
operating activities during fiscal 2025 includes cash utilized for the settlement of working capital movements within our Merchant and
Enterprise businesses related to quarter-end transaction processing activities and which were settled in the following week (our fourth
quarter of fiscal 2024 closed on a Sunday), and the net growth in our Consumer and Merchant finance loans receivable books, which
was partially offset by the positive contribution from our Merchant and Consumer businesses.
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
During fiscal 2025, we paid our first provisional South African tax payments of $4.2 million (ZAR 76.1 million) related to our
2025 tax year. During fiscal 2025, we also made our second provisional South African tax payments of $2.2 million (ZAR 39.3 million
related to our 2025 tax year and received tax refunds of $0.44 million (ZAR 7.2 million). We also paid taxes totaling $0.3 million in
other tax jurisdictions, primarily in the Botswana and Namibia.
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 $0.0 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.
Taxes paid during fiscal 2025, 2024 and 2023 were as follows:
Table 17
Year ended June 30,
2025
2024
2023
2025
2024
2023
$
$
$
ZAR
ZAR
ZAR
‘000
‘000
‘000
‘000
‘000
‘000
First provisional payments
4,182
2,663
2,955
76,118
49,534
50,798
Second provisional payments
2,198
2,861
4,079
39,279
52,721
76,089
Taxation paid related to prior years
225
641
15
4,081
12,187
273
Tax refund received
(438)
(38)
(210)
(7,173)
(768)
(3,756)
Total South African taxes paid
6,167
6,127
6,839
112,305
113,674
123,404
Foreign taxes paid
314
379
361
5,738
7,063
6,482
Total tax paid
6,481
6,506
7,200
118,043
120,737
129,886
55
We expect to make additional provisional income tax payments in South Africa related to our 2025 tax year in the first quarter of
fiscal 2026, 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 2025 included capital expenditures of $17.2 million (ZAR 307.9 million), primarily
due to the acquisition of vaults and POS devices. We also incurred expenditures of $3.9 million (ZAR 69.8 million), primarily related
to the capitalization of development costs, during fiscal 2025. During fiscal 2025, we paid $12.9 million related to acquisition of
certain businesses, including Adumo and Recharger. We also received $16.4 million related to the sale of our entire equity investment
in MobiKwik in June 2025.
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.
Cash flows from financing activities
During fiscal 2025, we utilized $98.6 million from our South African overdraft facilities to fund our ATMs and our cash
management business through Connect as well as to partially fund the acquisition of Recharger and for the February 2025 refinance
of certain of our facilities. We repaid $89.2 million of those facilities, including towards our refinanced facilities. We utilized $190.1
million of our borrowings to settle a portion of the Adumo purchase consideration, pay certain transaction expenses, repay Adumo’s
borrowings, repurchase shares of our common stock, fund the acquisition of certain capital expenditures, for working capital
requirements and for the February 2025 refinance of certain of our facilities. We repaid $131.2 million of long-term borrowings
towards our refinanced facilities and in accordance with our repayment schedule, paid $7.2 million to settle Adumo’s borrowings, and
settled a portion of our revolving credit facility utilized. We also paid an origination fee of $1.0 million to secure additional borrowings
as well as paid dividends to the non-controlling interest of $0.4 million.
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 $23.7 million of our long-term borrowings to fund the acquisition of certain
capital expenditures and for working capital requirements. We repaid $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 $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 $24.4 million of our long-term
borrowings to settle $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 $17.5 million of these long-term, including $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.
56
Contractual Obligations
The following table sets forth our contractual obligations as of June 30, 2025:
Table 18
Payments due by Period, as of June 30, 2025 (in $ ’000s)
Total
Less than 1
year
2-3 years
3-5 years
Thereafter
Short-term credit facilities
(A)
24,469
24,469
-
-
-
Long-term borrowings
Principal repayments
(A)(B)
200,769
11,956
31,445
157,368
-
Interest payments
(A)(B)
38,652
10,739
19,475
8,438
-
Operating lease liabilities, including imputed interest
(C)
11,660
4,852
5,460
1,348
-
Purchase obligations
2,872
2,872
-
-
-
Capital commitments
157
157
-
-
-
Deferred purchase consideration due to seller of
Recharger
(D)
9,856
9,856
-
-
-
Other long-term obligations reflected on our balance
sheet
(E)(F)
2,991
-
-
-
2,991
Total
291,426
64,901
56,380
167,154
2,991
Interest payments based on applicable interest rates as of June 30, 2025, and expected outstanding long-term borrowings over
the period. All amounts converted from ZAR to USD using the June 30, 2025, USD/ ZAR exchange rate.
3 to our audited consolidated financial statements. Translated at exchange rates applicable as of June 30, 2025.
rates applicable as of June 30, 2025.
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.
Off-Balance Sheet Arrangements
We have no off -balance sheet arrangements.
Capital Expenditures
Capital expenditures for the years ended June 30, 2025, 2024 and 2023 were as follows:
Table 19
2025
2024
2023
2025
2024
2023
$
$
$
ZAR
ZAR
ZAR
’000
’000
’000
’000
’000
’000
Merchant
18,117
11,202
12,812
324,350
209,302
229,847
Consumer
1,500
1,317
3,170
26,855
24,607
56,870
Enterprise
1,482
146
174
26,532
2,728
3,122
Total
21,099
12,665
16,156
377,737
236,637
289,839
Our capital expenditures for fiscal 2025, 2024 and 2023, 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 vaults, made by Connect which were funded through the utilization of asset-backed
borrowings. We had outstanding capital commitments as of June 30, 2025, of $0.2 million. In addition to these capital expenditures,
we expect that capital spending for fiscal 2026 will include acquisition of POS devices, vaults, computer software, computer and office
equipment, as well as for our ATM infrastructure and branch network in South Africa . Acquisition of these assets will be funded
through the use of internally-generated funds and available facilities.
57
ITEM 7A. 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, 2025 and 2024.
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 downwards in recent quarters and as
of the date of this Annual Report, are expected to decline by a further 25 basis points in the first quarter of calendar 2026 and stabilize
at that level for the remainder of that year. 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, 2025, 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, 2025. 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, 2025, are shown. The selected 1% hypothetical change does not reflect what could be considered the best-
or worst-case scenarios.
Table 20
As of June 30, 2025
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
23,987
1%
2,262
26,249
(1%)
(2,262)
21,725
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.
58
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, 2025, 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, 2025, we did not own any exchange-traded equity securities.
59
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-83 of this Annual Report.
60
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, 2025, 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 safeguards into the process 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, 2025.
As permitted by the rules of the SEC, management has excluded Adumo and Recharger from its evaluation for the year ended
June 30, 2025, the year of acquisition. As of June 30, 2025, Adumo and Recharger’s total assets represented approximately 7% of our
consolidated total assets and approximately 13% of consolidated total current assets. Their total revenues constituted approximately
8% of our consolidated revenue and their operating income constituted approximately 11% of our consolidated operating loss for the
year ended June 30, 2025.
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, 2025, we identified material weaknesses related to:
●
Our Consumer lending process, specifically insufficient risk assessment and monitoring activities relating to changes in
systems and processes, insufficient controls over internal information and information from service organizations, and
insufficient design and implementation of ITGCs, controls over service organizations and process level controls, resulting
in ineffective process level controls, including a lack of validation of the completeness and accuracy of information used
within the process;
61
●
Our payroll process, specifically insufficient risk assessment and monitoring activities relating to changes over the transfer
of ownership to the centralized payroll processes, insufficient controls over information from service organizations, and
insufficient design and implementation of ITGCs, controls over service organizations and process level controls resulting in
ineffective process level controls including a lack of validation of the completeness and accuracy of information used within
this process;
●
Our annual goodwill impairment process, specifically related to insufficient risk assessment and ineffective design and
implementation of controls resulting in ineffective process level controls;
●
Our business combination process, specifically insufficient risk assessment and ineffective design and implementation of
controls over the purchase price allocation of the Adumo and Recharger acquisitions including insufficient controls over
information resulting in ineffective process level controls including a lack of validation of the completeness and accuracy of
information used;
●
Our revenue recognition process relating to prepaid airtime sold and processing fees relating to certain agreements,
specifically insufficient risk assessment and ineffective design and implementation of controls related to our judgement over
revenue recognized either as principal versus as agent resulting in ineffective process level controls.;
●
Our journal entry process, specifically relating to insufficient risk assessment, and ineffective design and implementation of
controls including insufficient controls over information resulting in ineffective process level controls including a lack of
validation of the completeness of the journal entry population and a lack of validation of the completeness and accuracy of
information used within the process; and
●
An insufficient number of experienced and trained resources to execute on their internal control responsibilities resulting in
ineffective design, implementation and operating effectiveness of process level controls for processes in the scope of our
internal control over financial reporting evaluation.
Of the material weaknesses described above, the material weaknesses related to the revenue recognition process resulted in a
material corrected misstatement for the year ended June 30, 2025 and a restatement for each of the quarters ended September 30, 2024,
December 31, 2024 and March 31, 2025 of our revenue and cost of goods sold, IT processing, servicing and support, exclusive of
depreciation and amortization. There was no impact on the Company’s reported operating income (loss), net loss or loss per share in
any of such quarters.
Of the material weaknesses described above, the material weaknesses related to the annual goodwill impairment process resulted
in a corrected material misstatement and a corrected immaterial misstatement of goodwill and impairment loss in the Company’s
consolidated financial statements for the year ended June 30, 2025 .
Of the material weaknesses described above, the material weaknesses related to the journal entry process resulted in a corrected
immaterial misstatement to our revenue and cost of goods sold, IT processing, servicing and support, exclusive of depreciation and
amortization in the Company’s consolidated financial statements for the year ended June 30, 2025.
Of the material weaknesses described above, the material weakness related to an insufficient number of experienced and trained
resources to execute on their internal control responsibilities also resulted in a corrected material misstatement of current and long-
term borrowings in the Company’s consolidated financial statements for the year ended June 30, 2025.
All other material weaknesses did not result in any corrected material or immaterial misstatements, however a reasonable
possibility exists that material misstatements in the Company’s consolidated financial statements may 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, 2025, which appears in Part II, Item 9 of this Annual Report.
Remediation of Newly Identified Material Weaknesses
To address the material weaknesses, our management, including our Information Technology (“IT”) 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 enhancing the understanding of control owners related to the operation and importance of
internal controls over financial reporting, including the principles and requirements of each control, with a focus on the impacted
processes including controls over service organizations, ITGCs, and other process level controls; (2) mandating improved risk
assessment procedures with governance requirements upon implementing new systems within the Group together with the design,
implementation and monitoring of control activities; (3) the recruitment of additional appropriately skilled resources across the Finance
and Risk and Compliance disciplines coupled with the further upskilling and training of existing resources responsible for the
execution of key controls as well as a focus on a greater degree of automation of controls throughout the organization, (4) the
embedding of controls compliance in the key performance indicators of senior executives across the business and (5) collaborating
closely with internal and external assurance partners to ensure the robustness of our remediation plan.
62
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.
Remediation of Previously Identified Material Weaknesses
Management has, however, made progress in remediating the material weaknesses identified in the previous fiscal year related
to the failure of specific ITGCs for certain IT systems to operate effectively as well as the insufficient design and implementation of
controls and policies and procedures related to the goodwill impairment assessment. As a result, controls in the areas of user access
and program-change management for associated IT systems that support our financial reporting processes have been remediated.
Revised procedures have been implemented related to the validation of completeness and accuracy of the data used in the goodwill
impairment model together with additional procedures implemented to enhance the precision levels in evaluating certain assumptions
utilized in this model. Even though the controls for the goodwill impairment process have been strengthened, it has not yet been fully
remediated as model errors persisted.
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, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. As
stated, management has excluded Adumo and Recharger from its evaluation of the effectiveness of internal control over financial
reporting for the year ended June 30, 2025, the year of acquisition, however continues to evaluate Adumo and Recharger’s internal
control over financial reporting (refer to Item 1A—“Risk Factors—Failure to maintain effective internal control over financial
reporting in accordance with Section 404 of the Sarbanes-Oxley Act).
63
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, 2025, based on criteria established in
Internal Control – Integrated Framework (2013)
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, 2025, based on criteria established in
Internal Control – Integrated Framework (2013)
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, 2025 and 2024, the related consolidated statements of
operations, comprehensive loss or income, changes in equity, and cash flows for each of the years in the two-year period ended June
30, 2025, and the related notes (collectively, the consolidated financial statements), and our report dated September 29, 2025 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 risk assessment, sufficient experienced and trained resources, design and
implementation of control activities, information and communication, and monitoring 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 2025 consolidated financial statements, and this report does not affect our report on those consolidated
financial statements.
The Company acquired the Adumo (RF) Proprietary Limited, Recharger Proprietary Limited, Master Fuel Software and Support
Proprietary Limited and Genisus Risk Proprietary Limited (the “Acquisitions”) during 2025, and management excluded from its
assessment of the effectiveness of the Company’s internal control over financial reporting as of June 30, 2025, the Acquisitions’
internal control over financial reporting associated with total assets of $22,840 thousand and total revenues of $51,651 thousand
included in the consolidated financial statements of the Company as of and for the year ended June 30, 2025. Our audit of internal
control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of the
Acquisitions.
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.
Johannesburg, Republic of South Africa
September 29, 2025
64
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, 2025, no officers or directors, as defined in Rule
16a-1(f),
,
, or
defined in Item 408 of Regulation S-K.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS
Not applicable.
65
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 2025 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 2025
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 2025
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 2025
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 2025
annual meeting of shareholders entitled “Audit and Non-Audit Fees.”
66
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-83.
Report of the Independent Registered Public Accounting Firm –
)
Report of the Independent Registered Public Accounting Firm –
Firm ID 0
)
F-4
Consolidated statements of operations for the years ended June 30, 2025, 2024 and 2023
2. Financial Statement Schedules
Financial statement schedules have been omitted since they are either not required, not applicable, or the information is otherwise
included.
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
2.3
8-K
2.2
October 1, 2025
2.4
8-K
2.1
June 26, 2025
3.1
8-K
3.1
May 17, 2022
67
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*
10-K
10.4
September 11, 2024
10.5*
10-K
10.5
August 24, 2017
10.6*
14A
A
September 30, 2022
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
February 11, 2021
10.11*
8-K
10.2
February 11, 2021
10.12*
8-K
10.1
December 10, 2021
10.13*
8-K
10.2
December 10, 2021
10.14*
8-K
10.3
December 10, 2021
10.15*
8-K
10.4
December 10, 2021
10.16*
10-Q
10.52
May 9, 2023
10.17*
10-Q
10.53
May 9, 2023
10.18*
10-Q
10.53
May 7, 2025
10.19*
10-Q
10.54
May 7, 2025
10.20*
10-Q
10.55
May 7, 2025
10.21*
10-Q
10.56
May 7, 2025
10.22
8-K
10.32
April 12, 2016
68
10.23
10-Q
10.43
February 5, 2025
10.24
8-K
10.1
May 14, 2020
10.25
8-K
10.1
December 10, 2020
10.26
10-K
10.32
September 9, 2022
10.27
10-Q
10.58
May 10, 2022
10.28
8-K
10.3
March 22, 2023
10.29
8-K
10.40
October 1, 2024
10.30
14A
A
October 2, 2024
10.31
14A
B
October 2, 2024
10.32
10-Q
10.46
May 7, 2025
10.33
10-Q
10.47
May 7, 2025
10.34
10-Q
10.48
May 7, 2025
69
10.35
10-Q
10.49
May 7, 2025
10.36
10-Q
10.50
May 7, 2025
10.37
10-Q
10.51
May 7, 2025
10.38
10-Q
10.52
May 7, 2025
10.39
8-K
10.27
December 19, 2013
10.40
8-K
10.50
December 9, 2016
10.41
8-K
10.1
December 5, 2022
10.42
8-K
10.96
October 2, 2018
10.43
8-K
10.1
August 2, 2021
10.44
8-K
10.1
January 23, 2024
70
10.45
8-K
10.1
March 22, 2023
10.46
8-K
10.1
December 1, 2023
10.47
8-K
10.2
March 22, 2023
10.48
10-Q
10.41
November 6, 2024
10.49
8-K
10.1
October 1, 2024
10.50
8-K
10.1
December 10, 2024
14
X
19
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.
71
ITEM 16. FORM 10-K SUMMARY
None.
72
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 29, 2025
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 29, 2025
Kuben Pillay
/s/ Ali Mazanderani
Executive Chairman and Director (Principal Executive
Officer)
September 29, 2025
Ali Mazanderani
/s/ Dan L. Smith
Group Chief Financial Officer and Director (Principal
Financial and Accounting Officer)
September 29, 2025
Dan L. Smith
/s/ Antony C. Ball
Director
September 29, 2025
Antony C. Ball
/s/ Nonkululeko N. Gobodo
Director
September 29, 2025
Nonkululeko N. Gobodo
/s/ Naeem E. Kola
Director
September 29, 2025
Naeem E. Kola
/s/ Steven J. Heilbron
Director
September 29, 2025
Steven J. Heilbron
/s/ Lincoln C. Mali
Director
September 29, 2025
Lincoln C. Mali
/s/ Sharron Venessa Naidoo
Director
September 29, 2025
Sharron Venessa Naidoo
/s/ Ekta Singh-Bushell
Director
September 29, 2025
Ekta Singh-Bushell
/s/ Dean Sparrow
Director
September 29, 2025
Dean Sparrow
F-1
LESAKA TECHNOLOGIES, INC.
LIST OF CONSOLIDATED FINANCIAL STATEMENTS
Report of the Independent Registered Public Accounting Firm – Deloitte & Touche (South Africa)
F-4
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and 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, 2025 and 2024, the related consolidated statements of operations, comprehensive loss or income, changes in equity, and
cash flows for each of the years in the two-year period ended June 30, 2025, 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, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year
period ended June 30, 2025, 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, 2025, based on criteria established in
Internal Control
– Integrated Framework (2013)
dated September 29, 2025 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 Matters
The critical audit matters communicated below are matters arising from the current period audit of the
consolidated
statements that were communicated or required to be communicated to the audit committee and that: (1) relate 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 critical audit matters 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 matters below, providing separate opinions on the
critical audit matters or on the accounts or disclosures to which they relate.
Assessment of goodwill impairment test for certain reporting units
As discussed in Notes 2 and 10 to the consolidated financial statements, the Company recorded goodwill of $199,395 thousand
as of June 30, 2025. 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 certain assumptions related to the reporting units’
revenue growth rates, terminal revenue growth rates, forecast period for certain reporting units and weighted average cost of capital.
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 units’ revenue growth rates, terminal revenue growth rates, forecast period for
certain reporting units 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 revenue growth rates by comparing the revenue growth rates against historic performance, approved
budgets and challenged management on the expected future performance based on reporting unit specific factors.
•
We performed sensitivity analyses over revenue growth rates and the forecast period of certain reporting units to assess their
impact on the Company’s determination of the fair values in respect to the reporting units.
F-3
•
We involved valuation professionals with specialized skills and knowledge who assisted in:
o
independently recalculating the terminal revenue growth rates for the reporting units considering industry, product
and country specific information;
o
evaluating the weighted average cost of capital, by developing an independent estimate of weighted average cost of
capital range and comparing it to the weighted average cost of capital selected by the Company for each reporting
unit; and
o
performing a sensitivity and scenario type analysis on terminal revenue growth rates and weighted average cost of
capital to assess the impact of changes in those assumptions on the Company’s determination of fair value for each
reporting unit.
Assessment of certain intangibles assets acquired through business combinations
As discussed in Notes 2, 3 and 10 to the consolidated financial statements, the Company, through its subsidiary, Lesaka
Technologies Proprietary Limited, acquired 100% of the equity interests of Adumo (RF) Proprietary Limited (“Adumo”) on October
1, 2024 and Recharger Proprietary Limited (“Recharger”) on March 3, 2025, respectively. As a result of the transactions, the Company
recognized intangible assets, such as brands of $3,623 thousand which related to Adumo, and customer relationships of $11,185
thousand and $15,010 thousand related to Adumo and Recharger, respectively. The fair values of the brands were estimated based on
a relief from royalty approach, which included assumptions such as useful lives and the weighted average cost of capital. The fair
values of the customer relationships were estimated based on a multi-periods excess earnings method, which included certain
assumptions such as expected future revenues, useful lives, and weighted average costs of capital.
We identified the assessment of the fair value of the brands and customer relationships acquired through the Adumo and
Recharger business combinations as a critical audit matter. A high degree of auditor judgement was required to assess the expected
future revenues used to estimate the fair value of the customer relationships; and the useful lives and weighted average costs of capital
used to estimate the fair value of the brands and customer relationships. Changes in these assumptions could have a significant effect
on the fair value of the intangible assets.
The following are the primary procedures we performed to address this critical audit matter:
•
We performed sensitivity analyses over expected future revenues, useful lives and weighted average costs of capital to assess
their impact on the Company’s determination of the fair values of the respective intangible assets acquired through the
business combination.
•
We
involved valuation professionals with specialized skills and knowledge who assisted in evaluating the:
o
estimated useful lives for brands by comparing them to observable useful lives in similar transactions;
o
estimated useful lives for customer relationships by developing independent estimated useful lives and comparing
them to the useful lives selected by the Company; and
o
weighted average costs of capital used by developing an independent estimated of a weighted average cost of capital
range and comparing this range to the weighted average costs of capital selected by the Company.
/s/
KPMG Inc.
We have served as the Company’s auditor since 2024.
September 29, 2025
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 statements of operations, comprehensive (loss) income, changes in equity, and
cash flows, for the year ended June 30, 2023, and the related notes (collectively referred to as the “financial statements”). In our
opinion, the 2023 financial statements present fairly, in all material respects, the results of its operations and its cash flows for the year
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 audit. 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 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 the financial statements are free of material misstatement, whether due to error or
fraud. Our audit 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 audit 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 audit provides a reasonable basis for our opinion.
/s/ Deloitte & Touche
Deloitte & Touche
Registered Auditors
September 12, 2023 (September 29, 2025 as to Notes 10, 16 and 21)
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, 2025 and 2024
F-5
June 30,
June 30,
2025
2024
(A)
(In thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
$
Restricted cash related to ATM funding and short-term credit facilities (Note 12)
Accounts receivable, net and other receivables (Note 4)
Finance loans receivable, net (Note 4)
Inventory (Note 5)
Total current assets before settlement assets
Settlement assets
Total current assets
PROPERTY, PLANT AND EQUIPMENT, NET (Note 7)
OPERATING LEASE RIGHT-OF-USE (Note 8)
EQUITY-ACCOUNTED INVESTMENTS (Note 9)
GOODWILL (Note 10)
INTANGIBLE ASSETS, NET (Note 10)
DEFERRED TAX ASSETS, NET
OTHER LONG-TERM ASSETS, including equity securities (Note 9 and 11)
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Short-term credit facilities for ATM funding (Note 12)
Short-term credit facilities (Note 12)
Accounts payable
Other payables (Note 13)
Operating lease liability - current (Note 8)
Current portion of long-term borrowings (Note 12)
Income taxes payable
Total current liabilities before settlement obligations
Settlement obligations
Total current liabilities
DEFERRED TAX LIABILITIES, NET
OPERATING LEASE LIABILITY - LONG TERM (Note 8)
LONG-TERM BORROWINGS (Note 12)
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities (Note 11)
TOTAL LIABILITIES
REDEEMABLE COMMON STOCK (Note 14)
EQUITY
COMMON STOCK (Note 14)
Authorized:
Issued and outstanding shares, net of treasury - 2025:
; 2024:
PREFERRED STOCK
Authorized shares:
Issued and outstanding shares, net of treasury: 2025:
-
-
ADDITIONAL PAID-IN-CAPITAL
TREASURY SHARES, AT COST: 2025:
; 2024:
(298,523 )
(289,733 )
ACCUMULATED OTHER COMPREHENSIVE LOSS (Note 15)
(185,664 )
(188,355 )
RETAINED EARNINGS
TOTAL LESAKA EQUITY
NON-CONTROLLING INTEREST
TOTAL EQUITY
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY
$
$
(A) – The Company reclassified an amount of $
See accompanying notes to consolidated financial statements.
LESAKA TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
for the years ended June 30, 2025, 2024 and 2023
F-6
2025
2024
2023
(In thousands, except per share data)
REVENUE (Note 16)
$
$
$
Services rendered
Loan-based fees received
Sale of goods
EXPENSE
Cost of goods sold, IT processing, servicing and support, exclusive of depreciation and
amortization shown separately below
Selling, general and administration, exclusive of depreciation and amortization shown
separately below
(A)
Depreciation and amortization
Transaction costs related to Adumo, Recharger and Bank Zero acquisitions and certain
compensation costs (Note 3)
(A)
Impairment loss (Note 10)
OPERATING (LOSS) INCOME
(27,100 )
(15,347 )
CHANGE IN FAIR VALUE OF EQUITY SECURITIES (Note 6 and 9)
(59,828 )
LOSS ON DISPOSAL OF EQUITY-ACCOUNTED INVESTMENT (Note 9)
REVERSAL OF ALLOWANCE FOR DOUBTFUL EMI DEBT RECEIVABLE (Note 9)
INTEREST INCOME
INTEREST EXPENSE
LOSS BEFORE INCOME TAX (BENEFIT) EXPENSE
(105,946 )
(12,798 )
(32,266 )
INCOME TAX (BENEFIT) EXPENSE (Note 18)
(18,198 )
(2,309 )
LOSS BEFORE EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS
(87,748 )
(16,161 )
(29,957 )
EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS (Note 9)
(1,279 )
(5,117 )
NET LOSS FROM CONTINUING OPERATIONS
(87,634 )
(17,440 )
(35,074 )
ADD NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST
NET LOSS ATTRIBUTABLE TO LESAKA
$
(87,504 )
$
(17,440 )
$
(35,074 )
Net loss per share, in United States dollars
(Note 19):
Basic loss attributable to Lesaka shareholders
$
(1.14 )
$
(0.27 )
$
(0.56 )
Diluted loss attributable to Lesaka shareholders
$
(1.14 )
$
(0.27 )
$
(0.56 )
(A) – Recharger transactions costs for the year ended June 30, 2024, of $
to Transaction costs related to Adumo, Recharger and Bank Zero acquisitions and certain compensation costs in the consolidated statement
operations, refer to Note 3.
See accompanying notes to consolidated financial statements.
LESAKA TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS) INCOME
for the years ended June 30, 2025, 2024 and 2023
F-7
2025
2024
2023
(In thousands)
Net loss
$
(87,634 )
$
(17,440 )
$
(35,074 )
Other comprehensive income (loss), net of taxes:
Movement in foreign currency translation reserve
(31,183 )
Movement in foreign currency translation reserve related to equity-accounted
investments (Note 15)
Release of foreign currency translation reserve related to disposal of Finbond equity
securities (Note 9 and Note 15)
Release of foreign currency translation reserve related to liquidation of subsidiaries
(Note 15)
(952 )
Total other comprehensive income (loss), net of taxes
(26,886 )
Comprehensive loss
(85,126 )
(10,069 )
(61,960 )
Add comprehensive income attributable to non-
controlling interest
Comprehensive loss attributable to Lesaka
$
(84,813 )
$
(10,069 )
$
(61,960 )
See accompanying notes to consolidated financial statements
LESAKA TECHNOLOGIES, INC.
Consolidated Statement of Changes in Equity for the year ended June 30, 2023 (dollar amounts in thousands)
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, 2022
$
(24,891,292 )
$
(286,951 )
$
$
$
(168,840 )
$
$
$
$
Treasury shares repurchased
(352,994 )
(1,287 )
(352,994 )
(1,287 )
(1,287 )
Shares issued (Note 17)
Restricted stock granted
Exercise of stock options
Stock-based compensation charge (Note
17)
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)
Net loss
(35,074 )
(35,074 )
(35,074 )
Other comprehensive loss (Note 15)
(26,886 )
(26,886 )
(26,886 )
Balance – June 30, 2023
$
(25,244,286 )
$
(288,238 )
$
$
$
(195,726 )
$
$
$
$
LESAKA TECHNOLOGIES, INC.
Consolidated Statement of Changes in Equity for the year ended June 30, 2024 (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, 2023
$
(25,244,286 )
$
(288,238 )
$
$
$
(195,726 )
$
$
$
$
Treasury shares repurchased
(319,522 )
(1,495 )
(319,522 )
(1,495 )
(1,495 )
Shares issued (Note 17)
Restricted stock granted
Exercise of stock options
Stock-based compensation charge (Note
17)
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)
Balance – June 30, 2024
$
(25,563,808 )
$
(289,733 )
$
$
$
(188,355 )
$
$
$
$
LESAKA TECHNOLOGIES, INC.
Consolidated Statement of Changes in Equity for the year ended June 30, 2025 (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, 2024
$
(25,563,808 )
$
(289,733 )
$
$
$
(188,355 )
$
$
$
$
Treasury shares repurchased
(5,462,597 )
(13,660 )
(5,462,597 )
(13,660 )
(13,660 )
Shares issued (Note 14 and Note 17)
Gain recognized related to issue of
shares included in treasury shares (Note
3)
Restricted stock granted
Exercise of stock options
Stock-based compensation charge (Note
17)
Reversal of stock-based compensation
charge (Note 17)
(150,712 )
(150,712 )
(89 )
(89 )
(89 )
Stock-based compensation charge
related to equity-accounted investment
(Note 9)
Adumo non-controlling interest
acquired (Note 3)
-
Net loss
(87,504 )
(87,504 )
(130 )
(87,634 )
Dividends paid to non-controlling
interests
(432 )
(432 )
Other comprehensive income (Note 15)
(183 )
Balance – June 30, 2025
$
(29,934,044 )
$
(298,523 )
$
$
$
(185,664 )
$
$
$
$
See accompanying notes to consolidated financial statements.
LESAKA TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF CASHFLOWS
for the years ended June 30, 2025, 2024 and 2023
F-11
2025
2024
2023
(In thousands)
Cash flows from operating activities
Net loss
$
(87,634 )
$
(17,440 )
$
(35,074 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
Impairment loss (Note 10)
Movement in allowance for credit losses
Fair value adjustment related to financial liabilities
(120 )
(853 )
(20 )
Change in fair value of equity securities (Note 6 and 9)
Loss (Profit) on disposal of property, plant and equipment
(305 )
(468 )
Stock-based compensation charge (Note 17)
Loss on disposal of equity-accounted investment (Note 9)
(Earnings) Loss from equity-accounted investments (Note 9)
(114 )
Movement in allowance for doubtful loans to equity-accounted investments
(250 )
Dividends received from equity-accounted investments
Interest payable
Facility fee amortized (Note 12)
Changes in net working capital
Decrease (Increase) in accounts receivable (Note 20)
(10,873 )
(1,687 )
Increase in finance loans receivable (Note 20)
(34,614 )
(10,029 )
(12,353 )
Decrease in inventory
(Decrease) Increase in accounts payable and other payables
(13,401 )
Deferred consideration due to seller of Recharger included in accounts payable and
other payables (Note 3 and Note 13)
Increase (Decrease) in income taxes payable
(400 )
(800 )
Deferred tax expense (benefit)
(23,955 )
(2,712 )
(8,890 )
Net cash (used in) provided by operating activities
(9,122 )
Cash flows from investing activities
Capital expenditures
(17,199 )
(12,665 )
(16,156 )
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
(3,900 )
(294 )
(419 )
Proceeds from disposal of equity securities (Note 6 and 9)
Acquisitions, net of cash acquired (Note 3)
(12,946 )
(1,583 )
Proceeds from disposal of equity-accounted investment (Note 9)
Repayment of loans by equity-accounted investments
Loans to equity-accounted investment (Note 9)
(112 )
Net change in settlement assets
(7,196 )
(2,036 )
Net cash used in investing activities
(11,342 )
(16,415 )
(16,458 )
Cash flows from financing activities
Proceeds from bank overdraft (Note 12)
Repayment of bank overdraft (Note 12)
(90,309 )
(199,642 )
(547,271 )
Long-term borrowings utilized (Note 12)
Repayment of long-term borrowings (Note 12)
(149,511 )
(20,073 )
(17,512 )
Non-refundable deal origination fees/ guarantee fees (Note 12)
(970 )
(100 )
Acquisition of treasury stock
(13,660 )
(1,495 )
(1,287 )
Proceeds from exercise of stock options
Dividends paid to non-controlling interest
(432 )
Net change in settlement obligations
(4,179 )
Net cash provided by (used in) financing activities
(7,113 )
(19,121 )
Effect of exchange rate changes on cash
(10,999 )
Net increase (decrease) in cash, cash equivalents and restricted cash
(46,168 )
Cash, cash equivalents and restricted cash – beginning of period
Cash, cash equivalents and restricted cash – end of period (Note 20)
$
$
$
See accompanying notes to consolidated financial statements
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(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 offers an integrated multiproduct platform
that provides transactional accounts (banking), lending, insurance, payouts, card acquiring, cash management, software and Alternative
Digital Products (“ADP”). ADP includes the Company’s prepaid solutions and supplier enabled payments. By providing a full-service
fintech platform in its connected ecosystem, the Company facilitates the digitization of commerce in its markets and participate in the
secular shift from cash to digital.
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”).
Revision of Previously Issued Financial Statements
In April 2025, the Company identified that it had misclassified certain of its long-term borrowings. The Company’s CCC
Revolving Credit Facility was scheduled to be repaid in full on November 2024, at the date of issue of the June 30, 2024 consolidated
financial statements, but this was extended a number of times and was ultimately refinanced in September 2025 (refer to Note 12).
The Company incorrectly classified amounts due under its CCC Revolving Credit Facility as long-term borrowings instead of as
current portion of long-term borrowings in its audited balance sheet as of June 30, 2024. The table below presents the impact of the
revision of the Company’s financial statements for the year ended June 30, 2024:
Consolidated balance sheet
As of June 30, 2024
As
previously
reported
Correction
Revised
Current portion of long-term borrowings
$
$
$
Long-term borrowings
$
$
(11,841 )
$
The correction did not impact the Company’s audited consolidated statements of operations, consolidated statements of
comprehensive (loss) income, consolidated statement of changes in equity, or consolidated statements of cash flows for the year ended
June 30, 2024 and, except as noted above, the Company’s audited balance sheet as of June 30, 2024. The misclassification did not
affect compliance with any debt covenants. The Company assessed the materiality of this error and change in presentation on prior
period consolidated financial statements in accordance with SEC Staff Accounting Bulletin (“SAB”) No. 99 “Materiality” and SAB
No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial
Statements.” Based on this assessment, the Company has concluded that previously issued financial statements were not materially
misstated based upon overall considerations of both quantitative and qualitative factors.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(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. The Company has an obligation to absorb the financial losses of the Lesaka ESOP Trust
and also has the ability to control this trust and therefore it has been consolidated. This trust does not generate significant losses or
residual returns.
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
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, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-14
2. SIGNIFICANT ACCOUNTING POLICIES (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 useful lives are approximately:
Vaults
Computer equipment
Office equipment
Vehicles
Furniture and fittings
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, 2025 and 2024, 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, 2025 and 2024 and 2023
(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 based upon their estimated fair value at the date of purchase. The Company reviews the carrying value
of goodwill annually or more frequently if circumstances indicate impairment has occurred.
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 present value techniques of estimated future cash flows.
Intangible assets
Intangible assets are shown at cost less accumulated amortization. Intangible assets are amortized over the following useful lives:
Customer relationships
Software, integrated platform and unpatented technology
FTS patent
Exclusive licenses
Brands and trademarks
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, 2025 and 2024 and 2023
(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.
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,
2025 and 2024, 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 June 30, 2024, and June 30, 2025, the
carrying value of the Company’s held to maturity debt securities was $
.
Impairment of debt securities
Up until the adoption of guidance regarding
Measurement of Credit Losses on Financial Instruments on July 1, 2023,
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.
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. During the Company’s second and third quarter of fiscal 2025, the Company recorded changes in
the fair value of equity securities as a result of changes in market prices related to its investment in One MobiKwik Limited
(“MobiKwik”). During the fourth quarter of fiscal 2025, the Company disposed of its entire interest in MobiKwik and incurred a loss
on disposal. The changes in fair value and the loss on disposal are included in the caption change in fair value of equity securities
during the year ended June 30, 2025. There were
prices equity securities during the years ended June 30, 2024 and 2023, 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.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-17
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-18
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
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 provides rental and support services under a master rental agreement with customers. Control of the rental asset
is transferred through the right of use on a monthly basis as per the master rental agreement terms. Customers are required to pay the
monthly rental and support fee in advance . The performance obligation for the service component is provided over the month and
revenue is recognized at the end of the month. The Company recognizes revenue from these activities over time.
The Company, as a transaction processor and in the capacity of an agent, facilitates the delivery of ADP 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 ADP 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
also 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, 2025 and 2024 and 2023
(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, interest
and 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 initiation 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 (“SARB”).
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 access
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, 2025, 2024 and 2023, the Company incurred research and development expenditures of $
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, 2025 and 2024 and 2023
(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
% for the years ended June 30, 2025, 2024 and 2023 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
% to
%. The Company measured its South African current tax expense for the years ended June 30,
2025 and 2024 and its South African deferred tax assets and liabilities as of June 30, 2025 and 2024, using the enacted statutory tax
rate in South Africa of
%.
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. The Company does not consider future reversals of existing taxable temporary
differences associated with indefinite lived assets where the timing of the reversal cannot be predicted as a source of income to support
deferred tax assets for carryforward that do not expire.
Unrecognized tax benefits are recorded in the financial statements for positions which are not considered more likely than not,
based on the technical merits of the position, of being sustained upon 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 for services provided 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 the statement of operations.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-21
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Settlement assets and settlement obligations
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 November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance regarding
Segment Reporting (Topic
280)
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 was 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). Refer to
Note 21.
Recent accounting pronouncements not yet adopted as of June 30, 2025
In December 2023, the FASB issued guidance regarding
Income Taxes (Topic 740)
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
of this guidance on its financial statements and related disclosures.
In November 2024, the FASB issued guidance regarding
Income Statement—Reporting Comprehensive Income—Expense
Disaggregation Disclosures
(Subtopic 220-40)
business entities. The guidance does not change the expense captions an entity presents on the face of the income statement; rather, it
requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial
statements. This guidance is effective for the Company beginning July 1, 2027. Early adoption is permitted. The Company is currently
assessing the impact of this guidance on its financial statements and related disclosures.
In July 2025, the FASB issued guidance regarding
Financial Instruments-Credit Losses (Topic 326) Measurement of Credit
Losses for Accounts Receivable and Contract Assets
and an accounting policy election (for all entities, other than public business entities, that elect the practical expedient) related to the
estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted
for under
Revenue From Contracts With Customers (Topic 606).
This guidance is effective for the Company beginning July 1, 2026,
and interim reporting periods during that fiscal year. Early adoption is permitted. The Company is currently assessing the impact 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, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-22
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, 2025 and 2024, is summarized in the table below:
2025
2024
Total cash paid
$
$
Less: cash acquired
Total cash paid, net of cash received
$
$
2025 Acquisitions
October 2024 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 transaction closed on
October 1, 2024.
Adumo is an independent payments and commerce enablement platform in Southern Africa, 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 the Adumo Payouts business provides card issuing
program management to corporate clients such as Anglo American and Coca-Cola (Adumo Payments was allocated to Merchant
operating segment and Adumo Payouts was allocated to the Consumer operating segment);
●
The Adumo ISV business, known as GAAP, has operations in South Africa, Botswana and Kenya, and clients in a number of
other 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 (Adumo ISV was allocated
to Merchant operating segment); 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 Venture was allocated to the Merchant operating
segment).
The total purchase consideration was ZAR
Company’s common stock (“Consideration Shares”) with a value of $
cash of $
million ($
closing price on the Johannesburg Stock Exchange on October 1, 2024, was ZAR
exchange rate). Certain indirect shareholders of the sellers were investors in Adumo and the Company. These shareholders ultimately
received an aggregate of
common stock (refer to Note 14).
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-23
3. ACQUISITIONS (continued)
2025 Acquisitions (continued)
October 2024 acquisition of Adumo (continued)
The closing of the transaction was subject to customary closing conditions which we fulfilled prior to closing. The Company
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. The resale registration statement was declared effective by the SEC on December 6, 2024.
The Company incurred transaction-related expenditures of $
and 2024, respectively, related to the acquisition of Adumo. The Company’s accruals presented in Note 13 of as June 30, 2025,
includes an accrual of transaction related expenditures of $
transaction costs during the 2026 fiscal year.
March 2025 acquisition of Recharger
On November 19, 2024, the Company, through Lesaka SA, entered into a Sale of Shares Agreement (the “Recharger Purchase
Agreement”) with Imtiaz Dhooma (Recharger’s former chief executive officer) and Ninety Nine Proprietary Limited (“the Seller”).
Pursuant to the Recharger Purchase Agreement and subject to its terms and conditions, Lesaka, through its subsidiary, Lesaka SA,
agreed to acquire, and the Seller agreed to sell, all of the outstanding equity interests in Recharger Proprietary Limited (“Recharger”).
The transaction closed on March 3, 2025.
At the same time, Recharger also entered into independent contractor agreement with Recharger’s former chief executive officer
which has a term of
consultation with Company representatives, facilitate the handover process and assist Recharger in transitioning ownership to Lesaka
SA, avail himself for important customer and vendor meetings, attend scheduled weekly management committee meetings regarding
operational and business activities of the Recharger business, and providing support on an ad-hoc basis to Company representatives
with regard to operational matters and in facilitating the hand over, as and when reasonably required.
This acquisition has been reported as part of the Company’s Enterprise operating segment and demonstrates positive advancement
of the Company’s strategy in its Enterprise operating segment. The Company expects the acquisition to act as an entry point for it into
the South African private utilities space while augmenting Enterprise’s alternative payment offering.
The transaction consideration per the Recharger Purchase Agreement was ZAR
ZAR
settled in two tranches. The share price applied to determine the number of shares of common stock to be issued for the equity
consideration is based on the volume-weighted average price of the Company’s common shares for the three-month period prior to
the disbursal of each tranche. Lesaka SA extended a ZAR
exclusively used to repay an existing loan due by Recharger to the Seller.
The first tranche, comprising ZAR
with a value of ZAR
the shares issued multiplied by the Company’s closing price on the Johannesburg Stock Exchange on March 3, 2025, of ZAR
,
and translated to U.S. dollars at the exchange rate of $1: ZAR
. Lesaka SA delivered the
common stock from a pool of shares it purchased in October 2024, and the Company recognized a gain in additional paid-in-capital
of $
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-24
3. ACQUISITIONS (continued)
2025 Acquisitions (continued)
March 2025 acquisition of Recharger (continued)
The total purchase consideration was ZAR
the Company’s common stock with a value of ZAR
shareholder loan of ZAR
) million.
The second and final tranche is due on March 3, 2026, and comprises a contractual cash payment of ZAR
million) and the delivery of shares of Lesaka’s common stock with a contractual value of ZAR
to the Recharger Purchase Agreement, payment of the second tranche in March 2026 was contingent on Recharger’s former chief
executive officer’s ongoing service under the independent contractor agreement until June 30, 2025. The second tranche would not be
paid if he failed to provide the requisite service, except if failure to provide future services is due to expiry of the contract, mutual
agreement or death of the former chief executive officer. The former chief executive officer was also a director of the Seller, and
signed the Recharger Purchaser Agreement on behalf of himself, Recharger and the Seller. He also signed an independent contractor
agreement under which he is required to provide post-combination service to Recharger until March 2026 (but the vesting of the shares
is only for services to June 30, 2025). The Company has determined that as the payment of the second tranche is contingent on these
post-combination services, the value of the second tranche is not treated as purchase consideration and rather, under GAAP, represents
compensation for post-combination services. In late May 2025, an addendum was signed to reduce the post-combination period from
twelve months to four months (i.e. from March 2025 to June 2025).
The post-combination services for the year ended June 30, 2025, of $
payment and the value of future shares to be provided. The value of the future shares to be provided was calculated using the contractual
value of ZAR
prior to June 30, 2025, and at the applicable exchange rate. The post-combination compensation charge is included in the caption
transaction costs related to Adumo, Recharger and Bank Zero acquisitions and certain compensation costs included on the consolidated
statement of operations.
The Company records stock-based compensation charges that are cash-settled awards in other payables. The liability for the
future payments is included in the caption Other payables in the consolidated balance sheet as of June 30, 2025, refer to Note 13. There
is no unrecognized compensation costs related to the post-combination compensation charge as of June 30, 2025.
The Company incurred transaction-related expenditures of $
acquisition of Recharger. The Company’s accruals presented in Note 13 of as June 30, 2025, includes an accrual of transaction related
expenditures of $
year.
Other acquisitions
Effective November 1, 2024, the Company, through its wholly owned subsidiary Adumo Technologies Proprietary Limited
(“Adumo AT”), acquired the remaining shares (representing
% of the issued and outstanding shares) it did not own in Innervation
Value Added Services Namibia Pty Ltd (“IVAS Nam”) for $
rates). IVAS Nam was accounted for using the equity method prior to the acquisition of a controlling interest in the company. Adumo
paid ZAR
will be paid in
transaction costs related to this acquisition.
The Company, through Lesaka SA, acquired
% of Genisus Risk Proprietary Limited (“Genisus Risk”) for a cash
consideration of ZAR
The Company, through its wholly owned subsidiary Cash Connect Management Solutions Proprietary Limited (“CCMS”),
acquired
% of Master Fuel Proprietary Limited (“Master Fuel) for a cash consideration of ZAR
Company did not incur any significant transaction costs related to this acquisition.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-25
3. ACQUISITIONS (continued)
2026 Proposed acquisitions of Bank Zero
On June 26, 2025, Lesaka SA entered into a Transaction Implementation Agreement (the “Transaction Implementation
Agreement”) with Zero Research Proprietary Limited (“Zero Research”), Bank Zero Mutual Bank (“Bank Zero”), and other parties
identified in Annexure A to the Transaction Implementation Agreement (being all of the shareholders of Bank Zero save for Zero
Research and Naught Holdings Ltd, the “Bank Zero Sellers”), the parties listed in Annexure B to the Transaction Implementation
Agreement (being all of the shareholders of Zero Research save for Naught Holdings Ltd, the “Zero Research Sellers”) and Naught
Holdings Ltd. All amounts below translated at the closing rate of $1: ZAR
The purchase consideration payable by Lesaka SA in exchange for the relevant shares in Bank Zero and the subscription
consideration payable by Lesaka SA in exchange the subscription shares will be settled through a combination of delivery of Lesaka
shares of common stock and up to ZAR
received by it to settle the repurchase consideration due to the Zero Research Sellers. Following implementation of each of these steps,
and subject to the below adjustment, the Bank Zero Sellers, Zero Research Sellers and Naught Holdings Ltd will own approximately
% of Lesaka's fully diluted shares at the time of completion of the proposed transaction. The Transaction Implementation Agreement
allows a mechanism (in certain circumstances) pursuant to which the Bank Zero Sellers and the Zero Research Sellers may acquire
fewer shares in Lesaka and a larger cash consideration.
The Transaction Implementation Agreement includes customary interim period undertakings which required each of Zero
Research and Bank Zero, among other things (i) to conduct their business in the ordinary course during the period between the
execution of the Transaction Implementation Agreement and the closing of the transaction contemplated thereby, and (ii) not to engage
in certain kinds of transactions during such period. The Transaction Implementation Agreement is subject to the fulfilment of certain
conditions precedent. The Transaction Implementation Agreement will lapse if all of the conditions precedent are not met or not
waived by August 6, 2026 (or such later date as may be agreed).
Bank Zero and Lesaka SA have agreed to implement a long-term incentive arrangement following implementation of the
transaction, under which an agreed portion of a number of shares of Lesaka's shares of common stock calculated will be granted by (i)
dividing ZAR
“Retention LTIP Shares”) and (ii) dividing ZAR
The Retention LTIP Shares will be subject to time and certain performance-based vesting conditions. The terms of the long-term
incentive plan are required to be considered, and if necessary approved, by Lesaka's remuneration committee.
The Company incurred transaction-related expenditures of $
proposed acquisition of Bank Zero. The Company’s accruals presented in Note 13 of as June 30, 2025, includes an accrual of
transaction related expenditures of $
2026 fiscal year.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-26
3. ACQUISITIONS (continued)
2025 Acquisitions (continued)
The purchase price allocation for all acquisitions have been finalized as of June 30, 2025, except for Recharger. The purchase
price allocation of acquisitions during the year ended June 30, 2025, translated at the foreign exchange rates applicable on the date of
acquisition, is provided in the table below:
Acquisitions during fiscal 2025
Adumo
Recharger
Other
Total
Final
Preliminary
Final
Cash and cash equivalents
$
$
$
$
Accounts receivable
Inventory
Property, plant and equipment
Operating lease right of use asset
Equity-accounted investment
Goodwill
Intangible assets
Deferred income taxes assets
Other long-term assets
Current portion of long-term borrowings
(1,178 )
(1,178 )
Accounts payable
(3,266 )
(149 )
(440 )
(3,855 )
Other payables
(28,116 )
(1,439 )
(252 )
(29,807 )
Operating lease liability - current
(948 )
(185 )
(1,133 )
Income taxes payable
(150 )
(4 )
(42 )
(196 )
Deferred income taxes liabilities
(7,107 )
(4,366 )
(19 )
(11,492 )
Operating lease liability - long-term
(326 )
(269 )
(595 )
Long-term borrowings
(7,308 )
(7,308 )
Other long-term liabilities
(140 )
(140 )
Settlement assets
Settlement liabilities
(8,530 )
(8,530 )
Fair value of assets and liabilities on acquisition
$
$
$
$
The fair value of the non-controlling interests recorded was $
determined as the non-controlling interests respective portion of the equity value of the entity acquired by the Company, and which
was adjusted for a
% minority discount.
The preliminary allocation of the Recharger purchase price is based upon preliminary estimates which used information that was
available to management at the time the consolidated financial statements were prepared and these estimates and assumptions are
subject to change within the measurement period, up to one year from the acquisition date. Accordingly, the allocation may change.
We continue to refine certain inputs to the calculation of acquired intangible assets.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-27
3. ACQUISITIONS (continued)
2025 Acquisitions (continued)
Transaction costs and certain compensation costs
The Company did
t incur any transaction costs related to the Adumo, Recharger and the Bank Zero acquisitions during the
year ended June 30, 2023, and did
t incur any transaction costs related to the Bank Zero acquisitions during the year ended June 30,
2024. The table below presents transaction costs incurred related to the acquisition of Adumo and Recharger, and the proposed
acquisition of Bank Zero, as well as certain post-combination compensation costs expensed during the years ended June 30, 2025 and
2024:
Year ended June 30,
2025
2024
Adumo transaction costs
$
$
Recharger transaction costs
(1)
Recharger post-combination services expensed
Bank Zero transaction costs
Total
$
$
(1) Recharger transactions costs for the year ended June 30, 2024, of $
administration to Transaction costs related to Adumo and Recharger and certain compensation costs in the consolidated statement
operations for the year ended June 30, 2024.
Pro forma results related to acquisitions
Pro forma results of operations have not been presented for the acquisition of IVAS Nam, Genisus Risk and Master Fuel because
the effect of these acquisitions, individually and in aggregate, are not material to the Company. Since the closing of these acquisitions,
they have contributed revenue and net income of $
The results of the Adumo and Recharger’s operations are reflected in the Company’s financial statements from October 1, 2024,
and March 3, 2025, respectively. The following unaudited pro forma consolidated revenue and net income information has been
prepared as if the acquisitions of Adumo and Recharger had occurred on July 1, 2023, using the applicable average foreign exchange
rates for the periods presented:
Year ended June 30,
2025
2024
Revenue
$
$
Net loss
$
(68,367 )
$
(37,324 )
The unaudited pro forma financial information presented above includes the business combination accounting and other effects
from the acquisitions including (1) amortization expense related to acquired intangibles and the related deferred tax; (2) the loss of
interest income, net of taxation, as a result of funding a portion of the purchase price in cash; (3) an adjustment to exclude all applicable
transaction-related costs recognized in the Company’s consolidated statement of operations for three and nine months ended March
31, 2025, and include the applicable transaction-related costs for the year ended June 30, 2024; an adjustment to exclude the post-
combination compensation expenses related to the Recharger acquisition recognized in the Company’s consolidated statement of
operations for three and nine months ended March 31, 2025, and include the expense during the year ended June 30, 2024. The
unaudited pro forma net income presented above does not include any cost savings or other synergies that may result from the
acquisition.
The unaudited pro forma information as presented above is for information purposes only and is not indicative of the results of
operations that would have been achieved if the acquisition had occurred on these dates.
Since the closing of the acquisitions, Adumo and Recharger have contributed aggregate revenue of $
attributable to the Company, including intangible assets amortization related to assets acquired, net of deferred taxes and the post-
combination compensation charge, of $
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-28
3. ACQUISITIONS (continued)
2024 Acquisitions
April 2024 acquisition of Touchsides
In April 2024 the Company closed the acquisition of Touchsides Proprietary Limited (“Touchsides”). 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
Cash and cash equivalents
$
Accounts receivable
Property, plant and equipment
Operating lease right of use asset
Intangible assets
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
$
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 $
acquisition. Since the closing of the Touchsides acquisition, it contributed revenue and net loss of $
respectively, for the year ended June 30, 2024.
2023 Acquisitions
None.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-29
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, 2025, and June 30, 2024, are presented in the
table below:
June 30,
June 30,
2025
2024
Accounts receivable, trade, net
$
$
Accounts receivable, trade, gross
Allowance for credit losses, end of period
Beginning of period
Reversed to statement of operations
(521 )
(511 )
Charged to statement of operations
Write-offs
(847 )
(67 )
Foreign currency adjustment
Current portion of amount outstanding related to sale of interest in Carbon, net of
allowance: 2025: $
, 2024: $
Current portion of total held to maturity investments
Investment in
% of Cedar Cellular Investment 1 (RF) (Pty) Ltd
%
notes
Other receivables
Total accounts receivable, net
$
$
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 $
the sale of the loan, with a face value of $
doubtful loans receivable of $
million related to the sale of the equity -accounted investment in October 2023, and has reversed the allowance for doubtful loans
receivable of $
related to the sale of the $
Investment in
% of Cedar Cellular Investment 1 (RF) (Pty) Ltd
% 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, 2025 and 2024,
respectively was $
and 2023, 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, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-30
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
($
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
%) 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, 2025:
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 ($
Finance loans receivable, net
The Company’s finance loans receivable, net, as of June 30, 2025, and June 30, 2024, is presented in the table below:
June 30,
June 30,
2025
2024
Microlending finance loans receivable, net
$
$
Microlending finance loans receivable, gross
Allowance for credit losses - finance loans receivable, end of period
Beginning of period
Reversed to statement of operations
(161 )
(210 )
Charged to statement of operations
Write-offs
(2,499 )
(1,795 )
Foreign currency adjustment
Merchant finance loans receivable, net
Merchant finance loans receivable, gross
Allowance for credit losses - finance loans receivable, end of period
Beginning of period
Reversed to statement of operations
(22 )
(359 )
Charged to statement of operations
Write-offs
(3,709 )
(1,672 )
Foreign currency adjustment
Total finance loans receivable, net
$
$
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-31
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 $
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
, with the majority of loans
originated having a tenor of
. 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
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 June 30, 2025 and 2024, was
%. The performing component (that is, outstanding loan payments not in arrears)
of the book exceeds more than
% of outstanding lending book as of June 30, 2025.
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
, with the majority of
loans originated having a tenor of approximately
. 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 commenced lending to merchant customers approximately four years ago 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 June 30, 2025 and 2024, was
approximately
% and
%, respectively. 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
%,
% and
%, respectively, of the
outstanding lending book as of June 30, 2025.
5. INVENTORY
The Company’s inventory comprised the following categories as of June 30, 2025, and 2024.
June 30,
June 30,
2025
2024
Raw materials
$
$
Work in progress
Finished goods
$
$
Finished goods as of June 30, 2024, includes $
goods subject to sale restrictions. The Company sold all of this inventory during the first two months of the year ended June 30, 2025.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-32
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 downwards in recent
quarters and as of the date of this Annual Report, are expected to decline by a further 25 basis points in the first quarter of calendar
2026 and stabilize at that level for the remainder of that year. Therefore, ignoring the impact of changes to the margin on its borrowings
(refer to Note 12) and value of borrowings outstanding, the Company expects its cost of borrowing to decline moderately in the
foreseeable future, however, the Company would expect a higher cost of borrowing if interest rates were to increase in the future. 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 certain 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, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-33
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, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-34
6. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
Financial instruments (continued)
Asset measured at fair value using significant observable inputs – investment in MobiKwik
The Company’s disposed of its entire holding, comprising
listed on the National Stock Exchange of India (“NSE”) on December 18, 2024. Up until its listing MobiKwik did not have a readily
determinable fair value and the Company elected to measure its 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 a similar investment of the same
issuer (“cost plus or minus changes in observable prices equity securities”). From the date of MobiKwik’s listing, the Company used
MobiKwik’s closing price reported on the NSE on the last trading day related to last day of each of the Company’s external reporting
periods through March 31, 2025 to determine the fair value of the equity securities owned by the Company. Refer to Note 9 for
additional information.
Asset measured at fair value using significant unobservable inputs – investment in Cell C
The Company’s Level 3 asset represents an investment of
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, 2025 and June 30, 2024, respectively, and valued Cell C at $
June 30, 2025, and June 30, 2024, 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
marketability discount of
% (2024:
%) and a minority discount of
% (2024:
%). The Company utilized the latest business
plan provided by Cell C management for the period ended May 31, 2030, for the June 30, 2025, valuation and the business plan
approved by Cell C management for the period ended December 31, 2027, for the June 30, 2024, valuation. 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, 2025 and 2024:
Weighted Average Cost of Capital ("WACC"):
% as of June 30, 2025 and between
% and
% as of June 30, 2024
Long-term growth rate:
% (
% as of June 30, 2024)
Marketability discount:
% (
% as of June 30, 2024)
Minority discount:
% (
% as of June 30, 2024)
Net adjusted external debt - June 30, 2025:
(1)
ZAR
Net adjusted external debt - June 30, 2024:
(2)
ZAR
(1) translated from ZAR to U.S. dollars at exchange rates applicable as of June 30, 2025.
(2) translated from ZAR to U.S. dollars at exchange rates applicable as of June 30, 2024.
The fair value of Cell C as of June 30, 2025, 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 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
% decrease and
%
increase in the WACC rate and the EBITDA margins used in the Cell C valuation on June 30, 2025, all amounts translated at exchange
rates applicable as of June 30, 2025:
Sensitivity for fair value of Cell C investment
1.0% increase
1.0% decrease
WACC rate
$
(669 )
$
EBITDA margin
$
$
(1,444 )
The aggregate fair value of Cell C’s shares as of June 30, 2025, represented
% of the Company’s total assets, including these
shares. The Company expects that there will be short-term equity price volatility with respect to these shares given that Cell C remains
in a turnaround process
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-35
6. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
Financial instruments (continued)
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, Level 2 or Level 3 of the fair value
hierarchy.
The Company had
The following table presents the Company’s assets measured at fair value on a recurring basis as of June 30, 2025, 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)
Fixed maturity investments
(included in cash and cash
equivalents)
Total assets at fair value
$
$
$
$
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 and cash equivalents
(included in other long-term
assets)
Fixed maturity investments
(included in cash and cash
equivalents)
Total assets at fair value
$
$
$
$
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-36
6. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
Financial instruments (continued)
There have been
There was
3, during the years ended June 30, 2025 and 2024. 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, 2025:
Carrying value
Assets
Balance as of June 30, 2024
$
Foreign currency adjustment
(1)
Balance as of June 30, 2025
$
(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, 2024:
Carrying value
Assets
Balance as at 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.
Trade, finance loans and other receivables
Trade, finance loans and other receivables originated by the Company are stated at cost less allowance for credit losses. 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
basis.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-37
7. PROPERTY, PLANT AND EQUIPMENT, net
Summarized below is the cost, accumulated depreciation and carrying amount of property, plant and equipment as of June 30,
2025 and 2024:
June 30,
June 30,
2025
2024
Cost
Vaults
$
$
Computer equipment
Furniture and office equipment
Motor vehicles
Plant and machinery
Accumulated depreciation:
Vaults
Computer equipment
Furniture and office equipment
Motor vehicles
Plant and machinery
Carrying amount:
Vaults
Computer equipment
Furniture and office equipment
Motor vehicles
Plant and machinery
$
$
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
. The Company also operates parts of its financial services business from
locations which it leases for a period of less than
.
The Company’s operating lease expense during the years ended June 30, 2025, 2024 and 2023, was $
and $
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,
2025, 2024 and 2023, was $
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-38
8. LEASES (continued)
The following table presents supplemental balance sheet disclosure related to our right-of-use assets and our operating leases
liabilities as of June 30, 2025 and 2024:
June 30,
June 30,
2025
2024
Right-of-use assets obtained in exchange for lease obligations
Weighted average remaining lease term (years)
Weighted average discount rate
%
%
Maturities of operating lease liabilities
2026
$
2027
2028
2029
2030
Thereafter
Total undiscounted operating lease liabilities
Less imputed interest
Total operating lease liabilities, included in
Operating lease liability - current
Operating lease liability - long-term
$
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, 2025 and 2024, was as follows:
June 30,
June 30,
2025
2024
Sandulela Technology Proprietary Limited ("Sandulela")
%
%
SmartSwitch Namibia (Pty) Ltd (“SmartSwitch Namibia”)
%
%
Finbond
In December 2023, the Company sold its entire remaining equity interest in Finbond which comprised of
and which represented approximately
% 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 its previous South African facilities described
in Note 12.
Sale of Finbond shares during the years ended June 30, 2024 and 2023
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
ZAR
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
borrowing facilities, refer to Note 12.
The Company sold
million in the caption loss on equity-accounted investment in the Company’s consolidated statement of operations for the years ended
June 30, 2023.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-39
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 and 2023 (continued)
The following table presents the calculation of the loss on disposal of Finbond shares during the years ended June 30, 2024 and
2023:
Year ended June 30,
2024
2023
Loss on disposal of Finbond shares:
Consideration received in cash
$
$
Less: carrying value of Finbond shares sold
(2,112 )
(363 )
Less: release of foreign currency translation reserve from accumulated other comprehensive
loss
(1,543 )
(252 )
Add: release of stock-based compensation charge related to equity-accounted investment
Loss on sale of Finbond shares
$
$
(341 )
Finbond impairments recorded during the year ended June 30, 2024
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 $
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
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 $
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
% of its issued and
outstanding shares between them. The Company calculated a fair value per share for Finbond by applying a liquidity discount of
%
to the September 30, 2022, Finbond closing price of ZAR
. The Company increased the liquidity discount from
% (used in the
previous impairment assessment) to
% (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 entered into a binding term sheet to sell its entire interest, or
%, in Carbon for $
and a loan due from Carbon, with a face value of $
value of $
was expected to be paid as follows: (i) $
remaining amount, of $
Company has allocated the $
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, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-40
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 $
carrying value as of June 30, 2022, and created an allowance for doubtful loans receivable related to the $
from Etobicoke. The Company did not incur any significant transaction costs. The Company has included the gain of $
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
2023
Gain on disposal of Carbon shares:
Consideration received in cash in September 2022
$
Less: carrying value of Carbon
Gain on disposal of Carbon shares:
(1)
$
(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.
VantagePay Limited
The Company provided VantagePay with a working capital facility of $
losses related to loans receivable of $
30, 2021. This amount was still outstanding as of June 30, 2025.
Summarized below is the movement in equity-accounted investments during the years ended June 30, 2025 and 2024, 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, 2023
$
$
$
Stock-based compensation
Comprehensive loss:
(956 )
(790 )
Other comprehensive income
Equity accounted (loss) earnings
(1,445 )
(1,279 )
Share of net (loss) income
(278 )
(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 )
Balance as of June 30, 2024
Comprehensive income:
Equity accounted earnings
Share of net income
Dividends received
(96 )
(96 )
Sale of shares in equity-accounted investment
(507 )
(507 )
Equity-accounted investment acquired in business combination (Note 3)
Foreign currency adjustment
(2)
Balance as of June 30, 2025
$
$
$
(1) Includes Sandulela and SmartSwitch Namibia;
(2) The foreign currency adjustment represents the effects of the fluctuations of the ZAR 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, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-41
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, 2025, and June 30, 2024:
June 30,
June 30,
2025
2024
Total equity investments
$
$
Investment in MobiKwik (June 30, 2024:
%)
(1)
Investment in
% of Cell C (June 30, 2024:
%) at fair value (Note 6)
Investment in
% of CPS (June 30, 2024:
%) at fair value
(1)(2)
Policy holder assets under investment contracts (Note 11)
Reinsurance assets under insurance contracts (Note 11)
Other long-term assets
Total other long-term assets
$
$
(1) The Company determined that MobiKwik (up until December 2024) 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. The Company disposed of its entire
investment in MobiKwik in late June 2025.
(2) On October 16, 2020, the High Court of South Africa, Gauteng Division, Pretoria ordered that Cash Paymaster Services (Pty)
Ltd (“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 $
-month period. The Company made an initial $
and a further $
Company paid $
MobiKwik, which as of June 30, 2024, represented approximately
% of MobiKwik’s issued share capital.
Refer to Note 6 for additional information regarding the determination of the fair value of Company’s investment in MobiKwik
as of June 30, 2025. The Company disposed of its entire equity interest in MobiKwik for $
2025, and recorded a loss of $
investment by $
million upon disposal in the fourth quarter of fiscal 2025. The loss is included in the caption “Change in fair value of equity securities”
in the consolidated statement of operations for the year ended June 30, 2025.
The Company did not identify any observable transactions during the years ended June 30, 2024 and 2023, respectively, and
therefore there was no change in the fair value of MobiKwik during these years. 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 $
million as of June 30, 2024.
Cell C
On August 2, 2017, the Company, through its subsidiary, Net1SA, purchased
aggregate purchase price of ZAR
cash and a borrowing facility. Net1 SA has pledged, among other things, its entire equity interest in Cell C as security for the previous
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
% to
% 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, 2025 and 2024, respectively, the Company
owned
% of CPS’ issued share capital.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-42
9. EQUITY-ACCOUNTED INVESTMENTS AND OTHER LONG-TERM ASSETS (continued)
Other long-term assets (continued)
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, 2025:
Cost basis
Unrealized
holding gains
Unrealized
holding losses
Carrying
value
Equity securities:
Investment in CPS
$
$
$
$
Held to maturity:
Investment in Cedar Cellular notes
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
$
$
$
$
Investment in CPS
Held to maturity:
Investment in Cedar Cellular notes
Total
$
$
$
$
10. GOODWILL AND INTANGIBLE ASSETS, net
Goodwill
Summarized below is the movement in the carrying value of goodwill for the years ended June 30, 2025, 2024 and 2023:
Gross value
Accumulated
impairment
Carrying value
Balance as of July 1, 2022
$
$
(12,819 )
$
Impairment loss
(7,039 )
(7,039 )
Foreign currency adjustment
(1)
(22,857 )
(21,875 )
Balance as of June 30, 2023
(18,876 )
Foreign currency adjustment
(1)
(472 )
Balance as of June 30, 2024
(19,348 )
Impairment loss
(17,041 )
(17,041 )
Acquisitions (Note 3)
(2)
-
Foreign currency adjustment
(1)
(325 )
Balance as of June 30, 2025
$
$
(36,714 )
$
(1) – The foreign currency adjustment represents the effects of the fluctuations between the South African Rand against the U.S.
dollar on the carrying value.
(2) – Represents goodwill arising from the acquisition of Adumo, Recharger, IVAS Namibia and Master Fuel and translated at
the foreign exchange rates applicable on the date the transactions became effective. This goodwill has been allocated to the Merchant
(a portion Adumo, IVAS Namibia and Master Fuel), Consumer (a portion of Adumo) and Enterprise (Recharger) reportable operating
segments.
Goodwill associated with the acquisitions represents the excess of cost over the fair value of net assets acquired. Goodwill arising
from these acquisitions is not deductible for tax purposes. See Note 3 for the allocation of the purchase price to the fair value of
acquired net assets.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-43
10. GOODWILL AND INTANGIBLE ASSETS, net (continued)
Goodwill (continued)
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.
The Company did not perform a qualitative assessment during the years ended June 30, 2025, 2024 or 2023, respectively. Except as
discussed below, no goodwill has been impaired during the years ended June 30, 2025, 2024 and 2023, respectively.
In order to determine the amount of the goodwill impairments, the estimated fair value of our reporting units’ business assets and
liabilities were compared to the carrying value of their assets and liabilities. The Company used a discounted cash flow model in order
to determine the fair value of the businesses (this is a Level-3 fair value measurement). Based on this analysis, the Company determined
that the carrying value of the reporting units’ business assets and liabilities exceeded their fair value at the reporting date.
In determining the fair value of the reporting units, the Company considered key judgements related to the reporting units’
revenue growth rates, weighted-average cost of capital (“WACC”) applicable to peer and industry comparables of the reporting units,
and the forecast periods used. The Company may record an impairment loss in future if actual growth rates are lower than those
included in the Company’s discounted cash flow model. Furthermore, use of a higher weighted-average cost of capital may also result
in an impairment loss in the future.
Year ended June 30, 2025 goodwill impairment loss
The Company recognized an impairment loss of $
allocated to its Connect Cash and Adumo Technologies reporting units within its Merchant segment, its Adumo Payouts reporting unit
within Consumer segment and its EasyPay reporting unit within its Enterprise segment. The impairments are included within the
caption impairment loss in the consolidated statement of operations for the year ended June 30, 2025.
At June 30, 2024, the fair value of the Connect Cash reporting unit exceeded its carrying value by
%.The impairment loss in
the Connect Cash reporting unit resulted from a reassessment of the business’ growth prospects in the context of its strategic market
positioning, optimized capital expenditures and increase WACC over prior years.
The impairment loss in the Adumo Technologies reporting unit resulted from a reassessment of the business’ growth prospects,
a strategic decision to exit low return and sub-optimal merchants’ contracts.
The impairment loss in the Adumo Payouts reporting unit resulted from a reassessment of the business’ growth prospects of the
reporting unit with lower revenue and therefore lower free cash flow generation expected compared to when performing the purchase
price allocation.
Easypay was acquired in fiscal 2006. At June 30, 2024, the fair value of the EasyPay reporting unit exceeded is carrying value
by
%. The impairment loss in the EasyPay reporting unit during the year ended June 30, 2025, resulted from a reassessment of the
business’ growth and the expected impact on its future cash flows as a result the cash outflows expected from initiatives to modernize
its existing technology platform to retain and expand its product offering and customer base.
The fair value of the ISV and Humble reporting unit s (both allocated to Merchant) included in the Company’s acquisition of
Adumo did not substantially exceed the carrying value of their respective reporting unit. The fair value of the ISV reporting unit
exceeded the carrying value by
% and Humble exceeded the carrying value by
%. As of June 30, 2025, carrying value of goodwill
allocated to ISV and Humble was $
carrying value of the reporting unit by at least
%.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-44
10. GOODWILL AND INTANGIBLE ASSETS, net (continued)
Goodwill (continued)
Impairment loss (continued)
Year ended June 30, 2025 goodwill impairment loss (continued)
The table below presents the impairment per reporting unit for the year ended June 30, 2025 and the revenue growth rates, WACC
and forecast period for reporting units used in the discounted cash flow models for the June 30, 2025 and June 30, 2024, and for entities
acquiring during the current fiscal year, the information used in the purchase price allocation:
Segments and reporting units
with impairments
Impairment
Remaining
goodwill
Range of
revenue
growth rates
(%)
Terminal
revenue
growth rates
(%)
WACC (%)
Forecast
period
(years)
Merchant
$
$
Connect Cash
Used at June 30, 2025
Used at June 30, 2024
Adumo Technologies
Used at June 30, 2025
(
) -
(10.0 )
Used at acquisition
N/A
Consumer
Adumo Payouts
Used at June 30, 2025
Used at acquisition
N/A
Enterprise
EasyPay
Used at June 30, 2025
Used at June 30, 2024
(
) -
Total
$
$
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 Adumo and Recharger 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 customers of an acquired business or realize cost efficiencies or synergies or other benefits that it
anticipated when selecting its acquisition candidates. These factors may also lead to impairments in future periods.
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 Enterprise 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 (this is a Level-3 fair value measurement). 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.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-45
10. GOODWILL AND INTANGIBLE ASSETS, net (continued)
Goodwill (continued)
Impairment loss (continued)
Year ended June 30, 2023 goodwill impairment loss (continued)
Goodwill has been allocated to the Company’s reportable segments as follows:
Merchant
Consumer
Enterprise
Carrying value
Balance as of July 1, 2022
$
$
$
$
Impairment loss
(7,039 )
(7,039 )
Foreign currency adjustment
(1)
(18,523 )
(3,352 )
(21,875 )
Balance as of June 30, 2023
Foreign currency adjustment
(1)
Balance as of June 30, 2024
Impairment loss
(9,268 )
(2,197 )
(5,576 )
(17,041 )
Acquisitions (Note 3)
Foreign currency adjustment
(1)
(199 )
Balance as of June 30, 2025
$
$
$
$
(1) – The foreign currency adjustment represents the effects of the fluctuations between the South African Rand, against the U.S.
dollar on the carrying value.
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, 2025:
Adumo – technology assets
$
Adumo – customer relationships
Adumo – brands
Recharger – technology assets
Recharger – customer relationships
Genisus Risk – technology assets
$
On acquisition of these businesses, the Company recognized an aggregate deferred tax liability of approximately $
related to the acquisition of intangible assets during the year ended June 30, 2025.
Change in useful lives for certain brand and trademark intangible assets
During early calendar 2025, the Company’s executive considered the unification of the Company’s merchant segments operations
and the realignment of the Company’s brands under the master brand “Lesaka”. The Company’s Board of Directors approved the
realignment of certain of the Company’s brands to the master brand in May 2025. The Company has identified the steps and timing to
realign the affected brands under the master brand and expects to have complete alignment by February 2027, with certain brands
expected to be aligned by December 2025. The change in brands has resulted in a change in the useful lives of certain of the Company’s
brand and trademark intangible assets which has resulted in an increase in amortization expense of $
June 30, 2025. The change in the useful lives resulted in a $
for the year ended June 30, 2025, and did not have a significant impact on loss per share. The change did not impact prior periods.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-46
10. GOODWILL AND INTANGIBLE ASSETS, net (continued)
Intangible assets (continued)
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.
years ended June 30, 2025, 2024 and 2023, respectively, except for intangible assets of $
which were fully impaired during the year ended June 30, 2025. The impairment was identified during the Company’s annual goodwill
impairment testing. The method for determining fair value is discussed above under Goodwill—Impairment loss. The impairment loss
related to the impairment of the intangible assets is included in the caption Impairment loss in the consolidated statements of operations.
Summarized below is the carrying value and accumulated amortization of the intangible assets as of June 30, 2025, and June 30,
2024:
As of June 30, 2025
As of June 30, 2024
Gross
carrying
value
Accumulated
amortization
and
impairment
Net
carrying
value
Gross
carrying
value
Accumulated
amortization
Net
carrying
value
Finite-lived intangible assets:
Software, integrated
platform and unpatented
technology
(1)
$
$
(41,925 )
$
$
$
(25,763 )
$
Customer relationships
(1)
(18,568 )
(14,030 )
FTS patent
(2,158 )
(2,107 )
Brands and trademarks
(1)
(8,993 )
(4,300 )
Total finite-lived
intangible assets
$
$
(71,644 )
$
$
$
(46,200 )
$
(1) June 30, 2025 balances include the intangible assets acquired as part of the Adumo acquisition in October 2024, and the
Recharger and Genisus Risk acquisitions in March 2025.
Aggregate amortization expense on the finite-lived intangible assets for the years ended June 30, 2025, 2024 and 2023, was
approximately $
Future estimated annual amortization expense for the next five fiscal years and thereafter, using the exchange rates that prevailed
on June 30, 2025, 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 2026
$
Fiscal 2027
Fiscal 2028
Fiscal 2029
Fiscal 2030
Thereafter
Total future estimated annual amortization expense
$
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-47
11. 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, 2025 and 2024:
Reinsurance
Assets
(1)
Insurance
contracts
(2)
Balance as of July 1, 2023
$
$
(1,600 )
Increase in policy holder benefits under insurance contracts
(7,610 )
Claims and policyholders’ benefits under insurance contracts
(464 )
Foreign currency adjustment
(3)
(74 )
Balance as of June 30, 2024
(2,241 )
Increase in policy holder benefits under insurance contracts
(10,127 )
Claims and policyholders’ benefits under insurance contracts
(131 )
Foreign currency adjustment
(3)
(57 )
Balance as of June 30, 2025
$
$
(2,644 )
(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, 2025 and 2024:
Assets
(1)
Investment
contracts
(2)
Balance as of July 1, 2023
$
$
(241 )
Increase in policy holder benefits under investment contracts
(4 )
Claims and decrease in policyholders’ benefits under investment contracts
(44 )
Foreign currency adjustment
(3)
(1 )
(15 )
Balance as of June 30, 2024
(216 )
Increase in policy holder benefits under investment contracts
(5 )
Claims and decrease in policyholders’ benefits under investment contracts
(101 )
Foreign currency adjustment
(3)
(5 )
Balance as of June 30, 2025
$
$
(125 )
(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, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-48
12. BORROWINGS
Reference rate reform
After the transition away from certain interbank offered rates in foreign jurisdictions (“IBOR reform”), the reforms to South
Africa’s reference interest rate are now accelerating rapidly. The Johannesburg Interbank Average Rate (“JIBAR”) will be replaced
by the new South African Overnight Index Average (“ZARONIA”). Certain of the Company’s borrowings reference JIBAR as a base
interest rate. ZARONIA reflects the interest rate at which rand-denominated overnight wholesale funds are obtained by commercial
banks. There is uncertainty surrounding the timing and manner in which the transition would occur and how this would affect our
borrowings. The Company is in regular contact with its lenders and will update existing borrowing agreements to the new base rate
when ZARONIA is adopted by the financial industry and lenders as the new reference rate.
South Africa
The amounts below have been translated at exchange rates applicable as of the dates specified. The JIBAR, an average of 3-
month negotiable certificates of deposit (“NCD”) rates, on June 30, 2025, was
%. The prime rate, the benchmark rate at which
private sector banks lend to the public in South Africa, on June 30, 2025, was
%, and reduced to
% on July 31, 2025,
following a
% reduction in the South African repo rate, the rate at which the SARB lends money to commercial banks.
Facilities obtained in February 2025
Lesaka SA has obtained four loan facilities from FirstRand Bank Limited (acting through its Rand Merchant Bank division)
(“RMB”), FirstRand Bank Limited (acting through its WesBank division) (“WesBank”), FirstRand Bank Limited being a South
African corporate and investment bank, Investec Bank Limited (acting through its Investment Banking division: Corporate Solutions)
(“Investec” and together with RMB and WesBank, the “Lenders”). These comprise a term loan of up to ZAR
million) (“Facility A”), an amortizing loan of ZAR
up to ZAR
million) (the “GBF”, and collectively with Facility A, Facility B and Senior RCF, the “Facilities”), which are described in more detail
below.
The Company, Lesaka SA and the majority of Lesaka SA’s directly and indirectly wholly-owned subsidiaries have agreed to
guarantee the obligations of Lesaka SA and of the other borrowers under the Facilities to the Lenders.
The Common Terms Agreement (“CTA ”) governing the above contains customary covenants which include a requirement for
Lesaka SA to maintain specified Net Debt to EBITDA and Interest Cover Ratios (as defined in the CTA) and restricts the ability of
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 investments above specified levels, engage in certain business combinations and
engage in other corporate activities. The CTA provides that if any subsidiary of the Company receives proceeds from the disposal of
shares in/claims against, or assets of MobiKwik, it would offer to prepay the certain specified loans/facilities and loan outstandings to
the Lenders (as contemplated in the CTA).
Lesaka SA paid non-refundable debt structuring fees of ZAR
Long-term borrowings – Facility A and Facility B Agreements
Lesaka SA may borrow up to an aggregate amount of ZAR
of Lesaka SA and Cash Connect Management Solutions Proprietary Limited’s (“CCMS”) with RMB, funding transaction costs and
for general corporate purposes. Lesaka SA utilized Facility A in full on February 28, 2025, to settle a portion of its existing facilities
with RMB and to settle all of CCMS’ existing facilities with RMB, as well as to pay certain transaction costs.
Lesaka SA may borrow up to an aggregate of ZAR
including its general banking facilities, with RMB, and for general corporate purposes. Lesaka SA utilized Facility B in full on
February 28, 2025, to repay a portion of its existing facilities as well as to settle a portion of its existing general banking facility.
Facility A is required to be repaid in full on February 28, 2029. Facility A is subject to customary mandatory prepayment terms.
Lesaka SA is permitted to make voluntary prepayments of Facility A, and is permitted to subsequently utilize any voluntary
prepayments made under Facility A under the RCF Agreement. Amounts utilized under the RCF Agreement are required to be repaid
in full on February 28, 2029.
Facility B is required to be repaid in
28, 2026; (ii) ZAR
(iv) R
is permitted to make voluntary prepayments of Facility B, however it is unable to subsequently utilize any amounts prepaid.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-49
12. BORROWINGS (continued)
South Africa (continued)
Facilities obtained in February 2025 (continued)
Long-term borrowings – Facility A and Facility B Agreements (continued)
Interest on Facility A and Facility B as well as any interest related to utilization under the RCF Agreement is payable quarterly
in arrears at end of March, June, September and December, with the first interest payment made on June 30, 2025.
Short-term facility - General Banking Facility
Lesaka SA and certain of its subsidiaries may borrow up to an aggregate of ZAR
(“GBF”) from RMB for general corporate expenditure (including capital expenditure) and working capital purposes of the Lesaka SA
and certain of its subsidiaries. Lesaka SA utilized a portion of the GBF to refinance its existing general banking facility. As of June
30, 2025, the Company had utilized ZAR
The GBF was available for utilization from February 28, 2025, and is subject to annual review by RMB.
Interest on the GBF is payable monthly and is based on the South African prime rate in effect from time to time less
%.
The GBF Agreement also provides Lesaka SA and certain of its subsidiaries with other facilities in an aggregate of ZAR
million ($
credit card and settlement facilities. As of June 30, 2025, the aggregate amount of the Company’s short-term South African other
credit facility with RMB was ZAR
($
Note 22).
Wesbank Facilities
The Company, through certain of its South African subsidiaries, has an asset-backed facility of ZAR
of which ZAR
Refinanced CCC Loan Document, comprising long-term borrowings
On November 29, 2022, the Company, through its indirect South African subsidiary Cash Connect Capital (Pty) Ltd (“CCC”),
entered into a Revolving Credit Facility Agreement (the “Refinanced 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
Refinanced CCC Loan Document was scheduled to be repaid in full on November 2024, but this has been extended to September 30,
2025.
On September 5, 2025, the Company, through its indirect South African subsidiaries CCC and K2020 Connect (Pty) Ltd, entered
into a new Revolving Credit Facility Agreement (“CCC Loan Document”) which replaced the Refinanced CCC Loan Document and
increased the amount available from ZAR
30, 2025). The refinancing closed on September 8, 2025. The utilized portion of the Refinanced CCC Loan Document has been
presented in long-term borrowings in the consolidated balance sheet as of June 30, 2025, because the Company has demonstrated that
it has the intent and ability to consummate the refinancing prior to the issuance of these consolidated financial statements. The terms
of the CCC Loan Document are readily determinable, the agreement does not expire in the next 12 months and there is no violation of
any provision to the CCC Loan Document.
Both the Refinanced CCC Loan Document and the CCC Loan Document contain 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 and K2020 collectively may borrow up to an aggregate of ZAR
sole purposes of funding CCC’s and K2020’s lending business, settling up to ZAR
CCC’s direct parent, and paying structuring and execution fee and legal costs.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-50
12. BORROWINGS (continued)
South Africa (continued)
Refinanced CCC Loan Document, comprising long-term borrowings (continued)
Pursuant to the Refinanced CCC Loan Document, CCC was permitted to borrow up to an aggregate of ZAR
the sole purposes of funding CCC’s lending business, providing a limited recourse loan to K2020, settling up to ZAR
related to an intercompany loan to CCC’s direct parent, and paying the structuring and execution fee and legal costs.
Interest on the Refinanced CCC Loan Document was, and under the CCC Loan Document is, payable on the last business day of
each calendar month.
The Company paid a non-refundable structuring and execution fee of ZAR
taxation, to RMB on closing in November 2022. The Company paid a non-refundable structuring and execution fee of ZAR
excluding value added taxation, to the RMB on closing of the CCC Loan Document in September 2025.
Certain merchant finance loans receivable have been pledged as security for the revolving credit facility obtained from RMB.
Nedbank facility, comprising short-term facilities
As of June 30, 2025 and June 30, 2024, the Company had utilized ZAR
million), respectively, of its indirect and derivative facilities of ZAR
bank to issue guarantees, letters of credit and forward exchange contracts (refer to Note 22).
In terms of a commitment provided to the lender under the CTA entered into on February 27, 2025, the Company has undertaken
not to utilize more than ZAR
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.
RMB Bridge Facilities, comprising a short-term facility obtained in September 2024 and amended in December 2024 (all
repaid)
On September 30, 2024, Lesaka SA entered into a Facility Letter (the “F2024 Facility Letter”) with RMB to provided Lesaka
SA a ZAR
of ZAR
Holdings”) ZAR
14); (iii) pay an amount of ZAR
the transaction described in Note 3, and (iv) pay an origination fee of ZAR
with ZAR
On December 10, 2024, Lesaka SA and RMB entered into a First Addendum to the Facility Letter (the “F2024 Addendum
Letter”). The F2024 Addendum Letter provided Lesaka SA with an additional ZAR
GBF Facility”) which could be used for general corporate purposes. The Bridge Facility and 2024 GBF Facility were repaid in full on
February 28, 2025, utilizing funding obtained under the CTA and the agreements were cancelled.
Interest on the Bridge Facility and the 2024 GBF Facility was calculated at the prime rate plus
%. The Bridge Facility and
the 2024 GBF Facility were unsecured and were repaid in full on February 28, 2025, the maturity date, pursuant to the refinancing
process.
Cancelled RMB Facilities, as amended, comprising a short-term facility (Facility E) and long-term borrowings (all repaid)
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. Facilities E, G and H have been repaid and cancelled
in February 2025 and there is
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-51
12. BORROWINGS (continued)
South Africa (continued)
Cancelled RMB Facilities, as amended, comprising a short-term facility (Facility E) and long-term borrowings (all repaid)
(continued)
Short-term facility - Facility E
The available amount under Facility E was ZAR
2024). The Company cancelled its Facility E facility agreement in November 2024. The overdraft facility could only be used to fund
ATMs and therefore the overdraft utilized and converted to cash to fund the Company’s ATMs was considered restricted cash.
Interest on the overdraft facility was 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 was required to be repaid in full within one
month of utilization and at least
% of the amount utilized was to be repaid within
. The overdraft facility was 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 had against Grindrod Bank Limited. As at June 30, 2024, the Company had
utilized approximately ZAR
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
included, among other agreements, an Amended and Restated Common Terms Agreement (“Expired 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 was entitled to borrow up to an
aggregate of approximately ZAR
of up to ZAR
ZAR
On February 28, 2025, the Company used its new borrowings to settle Facility G and Facility H in full, including accumulated
interest of ZAR
($
million) (of which ZAR
February 28, 2025, utilizing funding obtained under the Expired CTA and the Facility G and Facility H agreements were cancelled.
Amounts translated at rates prevailing on the repayment date. The interest rate on these facilities was JIBAR plus a margin of
%.
Lesaka SA paid a quarterly commitment fee computed at a rate of
% of the Applicable Margin (as defined in the Expired CTA)
on the amount of the revolving credit facility outstanding and such commitment fee was capitalized, subject to the cap discussed above.
The Company used cash proceeds of ZAR
during the year ended June 30, 2024, to repay capitalized interest under Facility G and Facility H.
Cancelled Connect Facilities, comprising long-term borrowings and a short-term facility (all repaid)
On March 22, 2023, the Company, through CCMS, entered into a First Amendment and Restatement Agreement, which included,
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
to ZAR
with the first scheduled repayment commencing from March 31, 2026. These facilities were repaid in full on February 28, 2025,
utilizing funding obtained under the CTA and the agreements cancelled. Prior to settlement and cancellation, the Connect Facilities
included (i) an overdraft facility (general banking facility) of ZAR
million ($
rates prevailing on the repayment date.
On October 29, 2024, the Company, through CCMS, entered into an addendum to a facility letter with RMB, to obtain a ZAR
of prepaid airtime vouchers. This temporary increase was repayable in equal daily instalments which commenced at the end of October
2024 with the final repayment made on February 15, 2025.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-52
12. BORROWINGS (continued)
South Africa (continued)
Cancelled Connect Facilities, comprising long-term borrowings and a short-term facility (all repaid) (continued)
In February 2023, the Company, through CCMS, obtained a ZAR
period of
equal monthly instalments of ZAR
obtained a ZAR
of prepaid airtime vouchers. This temporary increase was repaid in full in June 2023. Interest at the South Africa prime rate less
%
was payable on a monthly basis on both of these temporary facilities.
Interest on CCMS Facility A and CCMS Facility B was payable quarterly in arrears based on JIBAR in effect from time to time
plus a margin.
RMB facility, comprising indirect facilities
The Company had a short-term South African indirect credit facility with RMB under its cancelled lending facilities of ZAR
2024, the Company had utilized ZAR
credit and forward exchange contracts (refer to Note 22).
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-53
12. BORROWINGS (continued)
Movement in short-term credit facilities
Summarized below are the Company’s short-term facilities as of June 30, 2025, and the movement in the Company’s short-term
facilities from as of June 30, 2024 to as of June 30, 2025:
RMB
RMB
Nedbank
RMB
RMB
RMB
GBF
Other
Facilities
Connect
Bridge
Facility E
Total
Short-term facilities available as of
June 30, 2025
$
$
$
$
$
$
$
Overdraft
Indirect and derivative facilities
Movement in utilized overdraft
facilities:
Balance as of June 30, 2023
Utilized
Repaid
(2 )
(199,640 )
(199,642 )
Foreign currency adjustment
(1)
Balance as of June 30, 2024
Restricted as to use for ATM
funding only
No restrictions as to use
Utilized
Repaid
(4,311 )
(14,627 )
(39,205 )
(31,028 )
(89,171 )
Foreign currency
adjustment
(1)
(379 )
(1,945 )
(1,064 )
Balance as of June 30, 2025
No restrictions as to use
Interest rate as of June 30, 2025
(%)
(2)
Interest rate as of June 30, 2024
(%)
(3)
Movement in utilized indirect and
derivative facilities:
Balance as of June 30, 2023
Foreign currency adjustment
(1)
Balance as of June 30, 2024
Foreign currency adjustment
(1)
Balance as of June 30, 2025
$
$
$
$
$
$
$
(1) Represents the effects of the fluctuations between the ZAR and the U.S. dollar.
(2) RMB GBF interest is set at prime less
%.
(3) Facility E interest set at prime and the Connect facility at prime less
%.
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, 2025 and 2024, was $
respectively.
The Company cancelled Adumo’s overdraft arrangements on October 1, 2024, and settled Adumo’s outstanding overdraft
balance of ZAR
included on the Company’s consolidated statements of cash flows for the year ended June 30, 2025.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-54
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, 2024, to as of June 30, 2025:
Facilities
Lesaka A
Lesaka B
Asset
backed
CCC
(6)
Lesaka
G & H
Connect
A&B
Total
Opening balance as of June 30,
2023
$
$
$
$
$
$
$
Facilities utilized
Facilities repaid
(4,205 )
(3,353 )
(12,515 )
(20,073 )
Non-refundable fees paid
Non-refundable fees amortized
Capitalized interest
Capitalized interest repaid
(6,109 )
(6,109 )
Foreign currency adjustment
(1)
Included in current
Included in long-term
Opening balance as of June
30, 2024
Facilities utilized
Facilities repaid
(4,513 )
(554 )
(60,245 )
(65,910 )
(131,222 )
Non-refundable fees paid
Non-refundable fees
amortized
Capitalized interest
Capitalized interest repaid
(11,077 )
(11,077 )
Foreign currency
adjustment
(1)
(1,000 )
(937 )
Closing balance as of
June 30, 2025
Included in current
Included in long-term
Unamortized fees
(1,038 )
(1,038 )
Due within 2 years
Due within 3 years
Due within 4 years
Due within 5 years
$
$
$
$
$
$
$
Interest rates as of June 30, 2025
(%):
Base rate (%)
Margin (%)
Footnote number
(2)
(3)
(4)
(5)
Interest rates as of June 30, 2024
(%):
Base rate (%)
Margin (%)
Footnote number
(4)
(5)
(7)(8)(9)
(10)
(1) Represents the effects of the fluctuations between the ZAR and the U.S. dollar.
(2) Interest on Facility A and Facility B is based on the JIBAR in effect from time to time plus an initial margin of
% per
annum until June 30, 2025. From July 1, 2025, the margin on Facility A will be determined with reference to the Net Debt to EBITDA
Ratio, and the margin will be either (i)
%, if the Net Debt to EBITDA Ratio is greater than or equal to 2.5 times; or (ii)
%, if
the Net Debt to EBITDA Ratio is less than 2.5 times.
(3) Interest on Facility B is calculated based on JIBAR from time to time plus an initial margin of
% per annum until June
30, 2025. From July 1, 2025, the margin on Facility B will be determined with reference to the Net Debt to EBITDA Ratio, and the
margin will be either (i)
%, if the Net Debt to EBITDA Ratio is greater than or equal to 2.5 times; or (ii)
%, if the Net Debt to
EBITDA Ratio is less than 2.5 times.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-55
12. BORROWINGS (continued)
Movement in long-term borrowings (continued)
(4) Interest is charged at prime plus
% per annum on the utilized balance.
(5) Interest is charged at prime plus
% per annum on the utilized balance.
(6) Amounts presented as of June 30, 2024, have been revised, refer to Note 1 for additional information. The amount as of June
30, 2024, was incorrectly classified as long-term borrowings, instead of as current portion of long-term borrowings.
(7) 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)
% per annum until January 13, 2023; and then (ii) from January 14, 2023, (x)
% per annum if the
Facility G balance outstanding is less than or equal to ZAR
% per annum if the Facility G balance is between
ZAR
% per annum if the Facility G balance is greater than ZAR
interest rate shall increase by a further
% per annum in the event of default (as defined in the Loan Documents).
(8) 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
% per annum which increases by a further
% per annum in the event of default (as defined in the Loan Documents).
(9) 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)
% for as long as the aggregate balance under the Facilities is greater than
ZAR
% if the aggregate balance under the Facilities is equal to or less than ZAR
ZAR
% if the aggregate balance under the Facilities is less than ZAR
interest is calculated as described above.
(10) Interest on Facility A and Facility B is calculated based on JIBAR plus a margin, of
%, in effect from time to time.
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, 2025, 2024 and 2023, was $
and $
2024 and 2023, was $
facility relates to borrowings utilized to fund a portion of the Company’s merchant finance loans receivable and interest expense of
$
consolidated statement of operations for the years ended June 30, 2025, 2024 and 2023, respectively.
The Company cancelled Adumo’s long-term borrowings arrangements on October 1, 2024, and settled Adumo’s outstanding
balances of ZAR
borrowings included on the Company’s consolidated statements of cash flows for the year ended June 30, 2025.
13. OTHER PAYABLES
Summarized below is the breakdown of other payables as of June 30, 2025 and 2024:
June 30,
June 30,
2025
2024
Vendor wallet balances
$
$
Clearing accounts
Accruals
Provisions
Payroll-related payables
Value -added tax payable
Deferred consideration due to seller of Recharger (Note 3)
Other
$
$
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.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-56
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
common stock. These shares of common stock were issued in
of the April 14, 2022 closing. The Company legally issued
first tranche, to the Connect sellers in each of April 2025, 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, 2025, 2024 and 2023,
respectively because the
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,
2025, 2024 and 2023:
2025
2024
2023
Number of shares, net of treasury:
Statement of changes in equity – common stock
Less: Non-vested equity shares that have not vested as of end of year (Note 17)
Number of shares, net of treasury excluding non-vested equity shares that have
not vested
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
the Company’s common stock, par value $
approximately $
put option discussed below.
On May 19, 2020, the Africa Capitalization Fund, Ltd sold its entire holding of
stock and therefore the additional contractual rights, including the put option rights related to these
Company reclassified $
during the year ended June 30, 2020.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-57
14. COMMON STOCK (continued)
Redeemable common stock issued pursuant to transaction with the IFC Investors (continued)
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
Company’s common stock and therefore the additional contractual rights, including the put option rights related to these
shares, expired. The Company reclassified $
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.
Certain IFC Investors were investors in Adumo and the Company issued an aggregate of
common stock at a price of $
IFC Investors amended and restated the Policy Agreement (“Amended and Restated Policy Agreement”) to include these additional
shares issued to the IFC Investors to also be covered by the put right included in the Amended and Restated Policy Agreement. The
Company also accounted for these
Board Rights
For so long as the IFC Investors in aggregate beneficially own shares representing at least
% 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
% 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.
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
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
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
% 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.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-58
14. COMMON STOCK (continued)
Common stock repurchases
October 2024 repurchase of common stock and issue of shares in Recharger transaction
On October 1, 2024, the Company, through Lesaka SA, and Crossfin Holdings entered into a share purchase agreement under
which Lesaka SA purchased
was settled in early October 2024, and the shares of the Company’s common stock repurchased have been included in the Company’s
treasury shares included in its consolidated statement of changes in equity for the year ended June 30, 2025, respectively. The
repurchase was made outside of the Company’s $
The Company, through Lesaka SA, issued
the terms of Recharger Purchase Agreement described in Note 2. The Company recognized a gain of $
which is included in the caption additional paid-in-capital in the consolidated statement of changes in equity for the year ended June
30, 2025.
Executed under share repurchase authorizations
On February 2, 2025, the Company’s Board of Directors approved a share repurchase authorization to repurchase up to an
aggregate of $
$
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
t repurchase any of its shares during the years ended June 30, 2025, 2024, and 2023,
respectively, under the $
,
stock from its employees during the years ended June 30, 2025, 2024, and 2023, respectively, refer to Note 17 for additional
information regarding these repurchases.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-59
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, 2025, 2024 and 2023:
Accumulated
foreign
currency
translation
reserve
Total
Balance as of July 1, 2022
$
(168,840 )
$
(168,840 )
Release of foreign currency translation reserve: disposal of Finbond equity securities
(Note 9)
Movement in foreign currency translation reserve related to equity-accounted
investment
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)
Release of foreign currency translation reserve: liquidation of subsidiaries
(952 )
(952 )
Movement in foreign currency translation reserve related to equity-accounted
investment
Movement in foreign currency translation reserve
Balance as of June 30, 2024
(188,355 )
(188,355 )
Release of foreign currency translation reserve: liquidation of subsidiaries
Movement in foreign currency translation reserve related to equity-accounted
investment
Movement in foreign currency translation reserve
Balance as of June 30, 2025
$
(185,664 )
$
(185,664 )
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, 2025, the Company reclassified a loss of $
loss (accumulated foreign currency translation reserve) to net loss related to the liquidation of subsidiaries. During the year ended June
30, 2024, the Company reclassified $
reserve) to net loss related to the disposal of shares in Finbond (refer to Note 9). The Company also reclassified a gain of $
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 $
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 ADP (including value-added services such as prepaid airtime, prepaid electricity and bill payment);
software solutions, transaction processing services; financial inclusion products and services, and secure payment technology. The
Company operates as 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, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-60
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, 2025:
Merchant
Consumer
Enterprise
Total
Processing fees
$
$
$
$
South Africa
Rest of world
Technology products
South Africa
Rest of world
Prepaid airtime sold
South Africa
Rest of world
Lending revenue
Interest from customers
Insurance revenue
Account holder fees
Other
South Africa
Rest of world
Total revenue, derived from the following geographic
locations
South Africa
Rest of world
$
$
$
$
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
Enterprise
Total
Processing fees
$
$
$
$
South Africa
Rest of world
Technology products
South Africa
Rest of world
Prepaid airtime sold
South Africa
Rest of world
Lending revenue
Interest from customers
Insurance revenue
Account holder fees
Other
South Africa
Rest of world
Total revenue, derived from the following geographic
locations
South Africa
Rest of world
$
$
$
$
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-61
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, 2023:
Merchant
Consumer
Enterprise
Unallocated
Total
Processing fees
$
$
$
$
$
South Africa
Rest of world
Technology products
South Africa
Rest of world
Prepaid airtime sold
South Africa
Rest of world
Lending revenue
Interest from customers
Insurance revenue
Account holder fees
Other
South Africa
Rest of world
Total revenue, derived from the
following geographic locations
South Africa
Rest of world
$
$
$
$
$
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
. 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 2022 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 progra m.
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 2022 Plan.
The total number of shares of common stock issuable under the 2022 Plan is
. 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
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 2022 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 2022 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, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-62
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
of grant. The options generally become exercisable in accordance with a vesting schedule ratably over a period of
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 calculated based on the Company’s
,
-
day volatility (as applicable). The estimated expected life of the option was determined based on the historical behavior of employees
who were granted options with similar terms.
presents the range of assumptions used to value options granted during the years ended June 30, 2025 and 2024:
2025
2024
Expected volatility
%
%
Expected dividends
%
%
Expected life (in years)
Risk-free rate
%
%
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
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 non-forfeitable 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, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-63
17. STOCK-BASED COMPENSATION (continued)
Amended and Restated Stock Incentive Plan (continued)
Restricted Stock (continued)
Market Conditions - Restricted Stock Granted in November 2024
In November 2024, the Company awarded
executive officers and 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
% appreciation in the Company’s stock price off a base
price of $
employed by the Company on a full-time basis through to September 30, 2027. 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, 2024, was $
.
The appreciation levels (times and price) and annual target percentages to earn the awards as of each period ended are as follows:
●
Prior to the first anniversary of the grant date:
%;
●
Fiscal 2026, the Company’s 30-day volume weighted-average stock price (“VWAP”) before September 30, 2025 is
approximately
:
%;
●
Fiscal 2027, the Company’s VWAP before September 30, 2026 is
:
%;
●
Fiscal 2028, the Company’s VWAP before September 30, 2027 is
) than $
:
%.
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
% for the closing price (of $
), 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.
Restricted Stock Units
The Remuneration Committee may approve the grant of other stock-based awards. In April 2022, the Company granted
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 $
conversion of restricted stock units to shares cannot exceed
% under the terms of the award and therefore no more than
,
,
amount possible, and were converted to shares of common stock. Employees elected for
,
withheld from
,
satisfy the withholding tax liability on the vesting of these and other shares. The
,
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.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(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
Options
The following table summarizes stock option activity for the years ended June 30, 2025, 2024 and 2023:
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, 2022
Exercised
(158,659 )
-
-
Forfeited
(94,292 )
-
Outstanding - June 30, 2023
Granted – June 2024
Granted – June 2024
Granted – June 2024
Granted – June 2024
Granted – June 2024
Exercised
(54,287 )
-
-
Forfeited
(200,739 )
-
Outstanding - June 30, 2024
Granted – December 2024
Granted – December 2024
Granted – January 2025
Granted – January 2025
Granted – January 2025
Exercised
(38,011 )
-
-
Forfeited
(13,333 )
-
Outstanding - June 30, 2025
These options have an exercise price range of $
.
The Company awarded
respectively.
The Company awarded
.
These stock options will vest on December 31, 2026, and vesting is subject to the executive officers continued employment with the
Company through to the vesting date. The
The
Executive Chairman, and
to shareholder approval which was obtained on June 3, 2024. The
of the grant date, and were subject to Mr. Mazandarani’s continued services as Executive Chair through the vesting date. The
options were scheduled to vest immediately if Mr. Mazanderani’s employment was terminated by the Company without cause on or
before the first anniversary of the grant date. In March 2025, the Company’s Remuneration Committee amended the exercise terms of
the
exercisable from March 2025, however, any stock options exercised may only be sold during a period commencing from January 31,
2028 to January 31, 2029. The
to this date. The
2029.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(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)
Options (continued)
During the years ended June 30, 2025, 2024 and 2023, an additional
earlier),
delivered
million. These
deliver
shares have also been included in the Company’s treasury stock. During the years ended June 30, 2025, 2024 and 2023, the Company
received approximately $
,
respectively.
During the years ended June 30, 2025, 2024 and 2023, employees forfeited
,
, and
respectively. The stock options forfeited had strike prices ranging from $
.
The following table presents stock options vested and expected to vest as of June 30, 2025:
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, 2025
These options have an exercise price range of $
, and include the
The following table presents stock options that are exercisable as of June 30, 2025:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($’000)
Exercisable - June 30, 2025
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-66
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, 2024 and 2023:
Number of shares of
restricted stock
Weighted average grant
date fair value
($’000)
Non-vested – June 30, 2022
Total granted
Granted – July 2022
Granted – August 2022
Granted - November 2022
Granted - December 2022
Granted - January 2023
Granted - June 2023
Granted - December 2022 - performance awards
Total vested
(742,464 )
Vested – July 2022
(78,801 )
Vested – November 2022
(59,833 )
Vested – December 2022
(7,060 )
Vested – February 2023
(19,179 )
Vested – March 2023
(69,286 )
Vested – April 2023
(418,502 )
Vested – May 2023
(61,861 )
Vested – June 2023
(27,942 )
Granted - December 2022
Vested - December 2022
(300,000
Total forfeitures
(114,365 )
Forfeitures - employee terminations
(34,365 )
Forfeitures – February 2020 award with market conditions
(80,000 )
Non-vested – June 30, 2023
Total granted
Granted – October 2023
Granted – October 2023, with performance conditions
Granted – October 2023
Granted – January 2024
Granted – February 2024
Granted - June 2024
Total vested
(1,232,251 )
Vested – July 2023
(78,800 )
Vested – November 2023
(109,833 )
Vested – December 2023
(67,073 )
Vested – February 2024
(14,811 )
Vested – March 2024
(69,286 )
Vested – April 2024
(394,932 )
Vested – May 2024
(88,617 )
Vested – June 2024
(350,247 )
Vested – June 2024, with performance conditions
(58,652 )
Total forfeitures
(299,463 )
Forfeitures - employee terminations
(82,077 )
Forfeitures – May and July 2021 awards with market condition
(217,386 )
Non-vested – June 30, 2024
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-67
17. STOCK-BASED COMPENSATION (continued)
Stock option and restricted stock activity (continued)
Restricted stock (continued)
The following table summarizes restricted stock activity for the year ended June 30, 2025:
Number of shares of
restricted stock
Weighted average grant
date fair value
($’000)
Non-vested – June 30, 2024
Total granted
Granted – August 2024
Granted – October 2024
Granted – November 2024, with performance conditions
Granted – January 2025
Granted - April 2025
Total vested
(1,197,944 )
Vested – July 2024
(78,801 )
Vested – November 2024, with performance conditions
(213,687 )
Vested – November 2024
(103,638 )
Vested – December 2024
(77,306 )
Vested – February 2025
(13,922 )
Vested – March 2025
(69,287 )
Vested – April 2025
(385,787 )
Vested – June 2024
(255,516 )
Total forfeitures
(150,712 )
Forfeitures - employee terminations
(121,591 )
Forfeitures – December 2021 awards with market condition
(29,121
Non-vested – June 30, 2025
Awards granted
In August 2024, October 2024, January 2025 and April 2025, respectively, the Company granted
,
,
continued employment with the Company through the applicable vesting dates. In November 2024, the Company awarded
shares of restricted stock to executive officers and employees which contained time and performance-based (market conditions related
to share price performance) vesting conditions.
In October 2023, the Company awarded
October 2023, the Company awarded
based (market conditions related to share price performance) vesting conditions. The Company also awarded
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
,
and
In July 2022, December 2022, January 2023 and June 2023, the Company awarded
,
,
of restricted stock, respectively, to employees and an executive officer which have time-based vesting conditions. In December 2022,
the Company awarded
conditions related to share price performance) vesting conditions. The Company also agreed to match, on a
-for-one basis, (1) an
employee’s purchase of up to $
2022, the Company granted
shares of the Company’s common stock, and in November 2022, the Company granted
employee. These shares of restricted stock contain time-based vesting conditions. The Company awarded
executive officer on December 31, 2022, which vested on the date of the award.
The Company has agreed to grant an advisor
Company and the advisor have agreed that the Company will issue the shares to the advisor, in arrears, on a quarterly basis. During
the year ended June 30, 2025, the Company recorded a stock-based compensation charge of $
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-68
17. STOCK-BASED COMPENSATION (continued)
Stock option and restricted stock activity (continued)
Restricted stock (continued)
Awards granted (continued)
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 was scheduled to 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
receive additional shares if the contract is terminated early due to the occurrence of the agreed events. The
month was calculated using an agreed monthly fee of $
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 the year ended June 30, 2023, the Company recorded a stock-based compensation charge of $
included the issuance of
Awards vested
During the years ended June 30, 2025, 2024 and 2023, respectively,
,
with time-based and performance-based vesting conditions vested. The June 30, 2025, shares include
granted to Mr. Meyer, our former Group CEO, which vested in July 2024, and
conditions (share price targets) which vested in November 2024, following the achievement of the agreed performance condition. The
June 30, 2024, shares of stock vesting includes
2021 to 2024 financial services plan. The fair value of restricted stock which vested during the years ended June 30, 2025, 2024 and
2023, was $
In November 2024,
to satisfy the withholding tax liability on the vesting of these shares. In addition, in November and December 2024 and February,
April, May and June 2025, an aggregate of
shares to be withheld to satisfy the withholding tax liability on the vesting of these shares.
In May 2024,
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
to be withheld to satisfy the withholding tax liability on the vesting of these shares.
In July 2022,
satisfy the withholding tax liability on the vesting of these shares. In May 2023,
vested and he elected for
in November and December 2022 and February, April, May and June 2023, an aggregate of
to employees vested and they elected for
shares.
These
),
) and
) shares have
been included in our treasury shares for the year ended June 30, 2025, 2024 and 2023, respectively.
Awards forfeited
During the year ended June 30, 2025,
(related to share price performance) were not achieved. During the year ended June 30, 2025, employees forfeited
restricted stock following their termination of employment with the Company.
During the year ended June 30, 2024,
executive officers) as the market condition (related to share price performance) were not achieved. During the year ended June 30,
2024, employees forfeited
During the year ended June 30, 2023,
condition (related to net asset value targets) was not achieved. During the year ended June 30, 2023, employees forfeited
of restricted stock following their termination of employment with the Company.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-69
17. STOCK-BASED COMPENSATION (continued)
Lesaka ESOP Trust
On November 14, 2024, the Company announced that its shareholders voted on and approved the funding and issuance of shares
to the Lesaka ESOP Trust at its annual general meeting. The Lesaka Employee Share Ownership Plan (“ESOP”) is designed to create
alignment with the Company's long-term growth objectives. The Lesaka ESOP Trust is also expected to advance the Company’s
transformation initiatives and plays an important role in improving the company’s Broad-Based Black Economic Empowerment
(“BBBEE”) rating. As of November 2024, when shareholders approved the plan, the Company’s employee base was comprised of
approximately
% designated groups for BBBEE purposes. Through the creation of a broader base of employee ownership, the
Company is helping to promote economic inclusion and contribute to transformation in the broader South African economy. The
Lesaka ESOP Trust is structured as an evergreen trust, ensuring the permanence of the plan and allowing for the inclusion of future
employees as the Company continues to grow.
The Lesaka ESOP Trust was required to have an effective holding of
% of the Company’s issued shares at the date of
implementation, and in February 2025, the Company issued
subscription price payable by the Lesaka ESOP Trust for the shares was vendor funded by the Company through a notional vendor
funding (“NVF”) structure whereby the Company provided a notional loan to the Lesaka ESOP Trust representing the fair value of
the shares, facilitating the acquisition by the Lesaka ESOP Trust of the shares without requiring any upfront payment by the Lesaka
ESOP Trust except for the payment of a nominal value of $
as a traditional loan structure from the Company to the Lesaka ESOP Trust to enable the Lesaka ESOP Trust to subscribe for shares
in the Company, but without any actual flow of funds from the Company to the Trust.
A notional amount on the date of issue was ascribed to each share that the Lesaka ESOP Trust subscribed for, which is equal to
the fair market value of one of the Company shares of common stock (which is the amount the Lesaka ESOP Trust would have paid
for one of the Company’s shares in an ordinary course cash transaction with the Company) less a
% discount. The principal amount
on the NVF loan will accrue interest at a fixed rate of
% per annum. The NVF will have a
five-year
not recognized in the Company’s financial statements because it represents a formula to calculate the number of the Company’s shares
of common stock to be returned by the Lesaka ESOP Trust to the Company after
.
On or about the 5
th
repurchase a portion of the shares held by the Lesaka ESOP Trust at the nominal aggregate amount to settle the total NVF loan
outstanding. The number of shares to be repurchased will be determined by using a formula set out in the transaction documents that
considers the total NVF loan outstanding on the Maturity Date and the market value of one of the Company’s shares held by the Lesaka
ESOP Trust. The purchase consideration that would have been payable for the shares the Company will repurchase (which is the fair
market value the Company would have paid for the shares in an ordinary course cash transaction with the Lesaka ESOP Trust on the
Maturity Date) will be set off against the total NVF loan outstanding. After settlement of the NVF loan,
% of the remaining shares
held by the Lesaka ESOP Trust, if any, will be distributed to eligible employees.
The Lesaka ESOP Trust will hold shares of the Company’s common stock. The Lesaka ESOP Trust will therefore be entitled to
receive its proportionate share of any dividends and other distributions declared by the Company to its shareholders and vote its shares
held on matters requiring shareholder approval.
The Lesaka ESOP Trust is administered by the board of trustees made up of
and the participants in the ESOP. The Company’s Board has the right to nominate
of the trustees,
of trustees may not be members of the Company’s Board or an officer as contemplated in Rule 16a-(f) of the Securities and Exchange
Act of 1934. The nominees of the participants need to meet an election criteria to be eligible for nomination which requires participant
nominees to have been employed by the Group for a continuous and uninterrupted period of at least
. The trustees have the
discretion to determine how the Lesaka ESOP Trust should vote shares of the Company common stock held on matters requiring the
Company’s shareholders approval. The decisions by the trustees are decided by a majority vote.
The Company is responsible for all reasonable operating expenses incurred by the Lesaka ESOP Trust until such time as the
Lesaka ESOP Trust has sufficient cash resources of its own to settle its operating expenses. The Company controls the Lesaka
ESOP
Trust because the Lesaka ESOP Trust is considered to be a variable interest entity (“VIE”) in which the Company has a controlling
financial interest. Accordingly, the Lesaka ESOP Trust is consolidated by the Company. As the Lesaka ESOP Trust is consolidated
by the Company, the
shares at the nominal amount of $
the Lesaka ESOP Trust will be recognized within equity with no profit or loss being recognized in the statement of operations on such
acquisition or disposal.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-70
17. STOCK-BASED COMPENSATION (continued)
Lesaka ESOP Trust (continued)
Qualifying employees were allocated A and B units. An A unit represents an option for the employees to acquire shares of the
Company’s common stock in future. The A unit represents an equity-settled share-based payment, requiring the recognition of a stock-
based compensation charge over a
Scholes valuation model. A B unit represent s an employees’ entitlement to cash payments based on dividends paid by the Company
to the Lesaka ESOP Trust, and consequently distributions that the Lesaka ESOP Trust makes to qualifying employees who are
beneficiaries of the Lesaka ESOP Trust. These payments represent an employee benefit, requiring that the Company to recognize an
expense to the value of the payment made when each payment is made.
Initial qualifying employees are required to have a minimum of
’s service with the Company, with criteria being
determined on December 31, 2024. Initial qualifying employees received invitation and allocation notices on or around April 1, 2025.
As employees complete
’ service to any subsidiary of the Company they will become eligible for consideration as a
beneficiary of the Lesaka ESOP Trust. Qualifying employees include employees of recent acquisitions, including Adumo.
On April 1, 2025, the Lesaka ESOP Trust awarded
closing price on the Nasdaq on April 1, 2025 was $
closing price less a
% discount) and is expected to grow by
% per annum through to April 1, 2030. The Company estimated a
forfeiture rate of
% per annum. The fair value of each A unit is estimated on the date of grant using Black-Scholes model that uses
the assumptions noted in the table below. The estimated expected volatility is generally calculated based on the Company’s
1,251
-day
volatility. The estimated expected life of the option was determined as the period from grant date through to the vesting date in
February 2030. The table below presents the range of assumptions used to value options granted during the years ended June 30, 2025:
2025
Expected volatility
%
Expected dividends
%
Expected life (in years)
Risk-free rate
%
Stock-based compensation charge and unrecognized compensation cost
The Company has recorded a net stock compensation charge of $
June 30, 2025, 2024 and 2023, respectively, which comprised:
Total charge
Allocated to IT
processing,
servicing and
support
Allocated to
selling, general
and
administration
Year ended June 30, 2025
Stock-based compensation charge
$
$
$
Stock-based compensation charge related to ESOP
Reversal of stock compensation charge related to stock
options and restricted stock forfeited
(89 )
(89 )
Total - year ended June 30, 2025
$
$
$
Year ended June 30, 2024
Stock-based compensation charge
$
$
$
Reversal of stock compensation charge related to stock
options and restricted stock forfeited
(134 )
(134 )
Total - year ended June 30, 2024
$
$
$
Year ended June 30, 2023
Stock-based compensation charge
$
$
$
Reversal of stock compensation charge related to stock
options and restricted stock forfeited
(364 )
(364 )
Total - year ended June 30, 2023
$
$
$
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-71
17. STOCK-BASED COMPENSATION (continued)
Stock-based compensation charge and unrecognized compensation cost (continued)
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, 2025, the total unrecognized compensation cost related to stock options was approximately $
the Company expects to recognize over approximately
. As of June 30, 2025, the total unrecognized compensation cost
related to restricted stock awards was approximately $
.
Income tax consequences
During the years ended June 30, 2025, 2024 and 2023, the Company recorded a deferred tax benefit of $
and $
these periods the Company recorded a valuation allowance related to the full deferred tax benefit recognized 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 the date of exercise by the option recipient and the
exercise price from income subject to taxation in the United States.
18. INCOME TAXES
Income tax expense
The table below presents the components of (loss) income before income tax (benefit) expense for the years ended June 30, 2025,
2024 and 2023:
2025
2024
2023
South Africa
$
(34,317 )
$
(4,405 )
$
(21,308 )
United States
(12,322 )
(8,705 )
(10,755 )
Other
(1)
(59,307 )
(203 )
Loss before income tax (benefit) expense
$
(105,946 )
$
(12,798 )
$
(32,266 )
(1) Amount for the year ended June 30, 2025, includes the impact of the change in fair value of equity securities discussed in
Note 6 related to MobiKwik.
Presented below is income tax expense (benefit) by location of the taxing jurisdiction for the years ended June 30, 2025, 2024
and 2023:
2025
2024
2023
Current tax expense
$
$
$
South Africa
Other
Deferred tax (benefit) expense
(23,955 )
(2,712 )
(7,442 )
South Africa
(13,817 )
(2,716 )
(7,490 )
United States
(10,120 )
Other
(18 )
Foreign tax credits generated – United States
Change in tax rate – South Africa
(1,299 )
Income tax (benefit) expense
$
(18,198 )
$
$
(2,309 )
There were
The South African corporate income tax rate reduced from
% to
%, 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 $
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.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-72
18. INCOME TAX (continued)
Income tax expense (continued)
The Company’s current tax expense for the year ended June 30, 2025, was higher than the previous year due to the higher taxable
income generated by the Company’s subsidiaries during the year ended June 30, 2025, primarily due to the acquisition of Adumo and
Recharger, and improved profitability generated from the Consumer operating segment, compared with the year ended June 30, 2024.
The Company’s deferred tax (benefit) expense for the year ended June 30, 2025, was higher compared with the previous year
due to reversal of the deferred tax liability (a benefit) related to the change in the carrying amount of our entire investment in
MobiKwik, the inclusion of the deferred tax benefit recorded during the year ended June 30, 2025, related to the amortization of
intangible assets recognized due to the acquisition of Adumo and Recharger and the reversal of $
valuation allowances created in prior years following (i) an improvement in profitability of certain of the Company’s subsidiaries and
(ii) a change in judgment on the need for a valuation allowance of $
achieved sustainable profitability. During the year the Company recognized a benefit for operating loss carryforwards generated of
$
valuation allowance related to an operating loss carryforward of $
considering both positive and negative evidence, that the operating loss carryforward would not be realized.
The Company’s deferred tax (benefit) expense 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.
During the years ended June 30, 2025, 2024 and 2023, 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. Net operating losses and
associated valuation allowance created during the year ended June 30, 2025, were lower then in previous periods due to the
improvement in operating performance by the Company’s subsidiaries.
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, 2025, 2024 and 2023, is as follows:
2025
2024
2023
Income taxes at South African income tax rates
%
%
%
Non-deductible interest expense
(1.29 )
%
(24.55 )
%
Movement in valuation allowance
%
(22.15 )
%
(17.66 )
%
Non-deductible transaction costs
(4.19 )
%
(5.91 )
%
Goodwill impairment
(4.22 )
%
Capital gains tax rate differential
%
(0.51 )
%
Prior year adjustments
%
(1.37 )
%
%
Non-deductible items
(3.23 )
%
(1.11 )
%
(13.28 )
%
Foreign tax credits
%
%
Foreign tax rate differential
(2.77 )
%
(0.02 )
%
Change in tax laws – South Africa
%
Effective tax rate
%
(26.28 )
%
%
Percentages included in the 2024 column 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. For instance, for the year ended June 30, 2024, income tax
expense of $
%) multiplied by the loss before tax (benefit) expense of $(
).
Movement in the valuation allowance for the year ended June 30, 2025, includes the impact of the reversal of the allowances
created in previous periods related to certain net operating loss carryforwards which the Company believes are no longer required
following improved and sustained profitability generated by certain of the Company’s subsidiaries. Non-deductible items for the year
ended June 30, 2025, includes transactions costs and interest expense incurred which the Company cannot deduct for income tax
purposes.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-73
18. INCOME TAX (continued)
Income tax expense (continued)
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.
Deferred tax assets and liabilities
Deferred taxes reflect the temporary differences between the financial statement carrying amount and tax bases of assets and
liabilities and carryforwards measured using enacted tax rates in effect for the year in which the items 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,
2025
2024
Total deferred tax assets
Equity investments
$
$
Capital loss carryforwards
Net operating loss carryforwards
Foreign tax credit carryforwards
Provisions and accruals
Other
Total deferred tax assets before valuation allowance
Valuation allowances
(107,252 )
(114,687 )
Total deferred tax assets, net of valuation allowance
Total deferred tax liabilities:
Intangible assets
Equity investments
Other
Total deferred tax liabilities
Reported as
Long-term deferred tax assets, net
Long-term deferred tax liabilities, net
Net deferred tax liabilities
$
$
Decrease in total net deferred tax liabilities
Equity investments, an asset
Equity investments as of June 30, 2025 and 2024, 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 $
(nil), and the difference between the amount paid for CPS in 2004 and the its financial statement carrying amount as of the respective
year end, of $
African Rand against the United States dollar.
Capital loss carryforwards
Capital loss carryforwards as of June 30, 2025 and 2024, comprises the temporary differences arising from the disposal of
Finbond which resulted in the generation of capital loss carryforwards in South Africa of $
in the United States of $
United States expired after five years, between 2026 and 2030. The change in Capital loss carryforwards 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, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-74
18. INCOME TAX (continued)
Deferred tax assets and liabilities (continued)
Decrease in total net deferred tax liabilities (continued)
Foreign tax credit carryforwards
Foreign tax credit carryforwards as of June 30, 2025 and 2024, comprises foreign tax credits generated from distributions from
Lesaka’s subsidiaries. The tax credits as of June 30, 2025, expire in June 2026. During the year ended June 30, 2025, foreign tax
credits of $
Net operating loss carryforwards
Net operating loss carryforwards have increased primarily due to pre-existing net operating loss carryforwards recognized by
certain subsidiaries as of the acquisition date of these subsidiaries, as well as 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 utilized during the year following improved profitability generated by certain of the
Company’s subsidiaries.
Intangibles assets
Intangible assets include intangible assets recognized related to the acquisition of Adumo and Recharger during the year
ended June 30, 2025 (refer to Note 3), and Connect during the year ended June 30, 2022 and have increased compared to June 30,
2024, due to the acquisition of Adumo and Recharger, which was partially offset by the amortization of the intangible assets.
Equity investments
Equity investment includes our investment in MobiKwik (refer to Note 9) as of June 30, 2024. The Company disposed of its
entire investment in MobiKwik during the year ended June 30, 2025, and have released the deferred tax liability previously recognized.
Decrease in valuation allowance
At June 30, 2025, the Company had deferred tax assets of $
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 near term if estimates of taxable income are revised.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-75
18. INCOME TAX (continued)
Deferred tax assets and liabilities (continued)
Decrease in valuation allowance (continued)
At June 30, 2025, the Company had a valuation allowance of $
assets to the estimated realizable value. The movement in the valuation allowance for the years ended June 30, 2025, 2024 and 2023,
is presented below:
Total
Equity
investments
Capital loss
carry-
forwards
Net
operating
loss carry-
forwards
Foreign tax
credit
carry-
forwards
Other
July 1, 2023
$
$
$
$
$
$
Charged to statement of operations
Reversed to statement of operations
(1,865 )
(1,793 )
(72 )
Foreign currency adjustment
Net change in the valuation allowance
(72 )
June 30, 2024
Charged to statement of operations
Reversed to statement of operations
(12,846 )
(10,685 )
(2,161 )
Utilized
(25,528 )
(3,226 )
(2,002 )
(20,227 )
(73 )
Acquired in business combinations
Foreign currency adjustment
Net change in the valuation allowance
(7,435 )
(2,159 )
(20,227 )
June 30, 2025
$
$
$
$
$
$
Net operating loss carryforwards and foreign tax credit carryforwards
South Africa
Net operating loss carryforwards generated in South Africa of $
carryforward that may be used against future taxable income is limited to 80% of taxable income before the net operating loss
deduction.
United States
Net operating loss carryforwards generated in the United States of $
carryforward that may be used against future taxable income is limited to 80% of taxable income before the net operating loss
deduction.
Lesaka had
Unrecognized tax benefits
As of June 30, 2025 and 2024, the Company had
South Africa, Botswana, Namibia and in the U.S. federal jurisdiction. As of June 30, 2025, 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.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-76
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
adjustments to the carrying value of the redeemable common stock during the years ended June 30, 2025, 2024 and 2023. 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, 2025, 2024 and 2023,
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
,
the calculation of diluted loss per share during the years ended June 30, 2025, 2024 and 2023, respectively, because the effect would
be antidilutive.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-77
19. (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, 2025, 2024 and 2023:
2025
2024
2023
(in thousands except percent and per share data)
Numerator:
Net loss attributable to Lesaka
$
(87,504 )
$
(17,440 )
$
(35,074 )
Undistributed loss
(87,504 )
(17,440 )
(35,074 )
Percent allocated to common shareholders
(Calculation 1)
Numerator for loss per share: basic and diluted
$
(84,557 )
$
(16,651 )
$
(33,407 )
Denominator
Denominator for basic loss per share:
weighted-average common shares outstanding
Effect of dilutive securities:
Denominator for diluted loss per share: adjusted weighted average
common shares outstanding and assumed conversion
Loss per share:
Basic
$
(1.14 )
$
(0.27 )
$
(0.56 )
Diluted
$
(1.14 )
$
(0.27 )
$
(0.56 )
(Calculation 1)
Basic weighted-average common shares outstanding (A)
Basic weighted-average common shares outstanding and unvested
restricted shares expected to vest (B)
Percent allocated to common shareholders
Options to purchase
,
$
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, 2025.
20. SUPPLEMENTAL CASH FLOW INFORMATION
The following table presents supplemental cash flow disclosures for the years ended June 30, 2025, 2024 and 2023:
2025
2024
2023
Cash received from interest
$
$
$
Cash paid for interest
$
$
$
Cash paid for income taxes, net of refunds received
$
$
$
As discussed in Note 17, during the year ended June 30, 2023, an employee exercised stock options through the delivery of
shares of the Company’s common stock at the closing price on March 7, 2023 of $
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, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-78
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 one of the Company’s debt facilities to fund ATMs. This facility was cancelled in November
2024. The Company was only permitted to use this cash to fund ATMs and this cash was considered restricted as to use and therefore
was 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, 2025, 2024 and 2023:
2025
2024
2023
Cash and cash equivalents
$
$
$
Restricted cash
Cash, cash equivalents and restricted cash
$
$
$
Leases
The following table presents supplemental cash flow disclosure related to leases for the years ended June 30, 2025, 2024 and
2023:
2025
2024
2023
Cash paid related to lease liabilities
Operating cash flows from operating leases
$
$
$
Right-of-use assets obtained in exchange for lease obligations
Operating leases
$
$
$
21. OPERATING SEGMENTS
Operating segments
The Company discloses segment information as reflected in the management information systems reports that its chief operating
decision maker (“CODM”) 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.
Change to internal reporting structure and recast of previously reported information
The Company currently has
Company’s Executive Chairman. During the second quarter of fiscal 2025, he changed the Company’s operating and internal reporting
structures to present a new segment, Enterprise, separately. The CODM has decided to analyze the Company’s operating performance
primarily based on these three operational lines, namely,
have higher revenues and have access to multiple service providers. Informal sector merchants, which are often sole proprietors and
usually have lower revenues compared with formal section merchants, operate in rural areas or in informal urban areas and do not
always have access to a full-suite of traditional banking products;
(ii) Consumer, which primarily focuses on individuals who have historically been excluded from traditional financial services
and to whom we offer transactional accounts (banking), insurance, lending (short-term loans), payments solutions (digital wallet) and
various value-added services; and
(iii) Enterprise, which comprises large-scale corporate and government organizations, including but not limited to banks, mobile
network operators (“MNOs”) and municipalities, and, through Recharger, landlords utilizing Recharger’s prepaid electricity metering
solution.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-79
21. OPERATING SEGMENTS (continued)
Reallocation of certain activities among operating segments in Q2 2025
The change in our operating segments during the second quarter of fiscal 2025 included the separation of Enterprise out of
Merchant. The Company has also allocated the majority of Adumo’s operations to Merchant, with a smaller part of its operations
focusing on the provision of physical and digital prepaid and secure payout solutions for South African businesses with large individual
end-users being allocated to Consumer. Previously reported information has been recast.
The Merchant segment includes revenue generated from the sale of ADP (select prepaid solutions, supplier-enabled payments,
international money transfer and other) and card-acquiring services to informal sector merchants. It also 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 (including card acquiring and the provision of a payment gateway services) for its customers, and rental and license fees
from the provision of point of sales (“POS”) hardware and software to the hospitality industry. The Company also provides cash
management and payment services to merchant customers through a digital vault which is located at the customer’s premises and
through which the Company is able to provide the services which generate processing fee revenue. From July 1, 2023, the segment
includes fees earned from transactions performed by customers utilizing its ATM infrastructure.
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 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, and interest revenue from the second quarter of fiscal
2025. The Company writes life insurance contracts, primarily funeral-benefit policies, and policy holders pay the Company a monthly
insurance premium. The Company also earns fees from the provision of physical and digital prepaid and secure payout solutions for
South African businesses.
The Enterprise segment provides its business and government-related customers with transaction processing services that involve
the collection, transmittal and retrieval of transaction data. Through Recharger, Enterprise offers landlords access to Recharger’s
prepaid electricity metering solution through which Enterprise earns commission revenue from prepaid electricity voucher sales to
tenants recharging prepaid meters. 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 Company evaluates segment performance based on segment earnings before interest, tax, depreciation and amortization
(“EBITDA”), adjusted for items mentioned in the sentences below (“Segment Adjusted EBITDA”), the Company’s reportable
segments’ measure of profit or loss.
The Company obtained a general lending facility in February 2025, which has been partially used to fund a portion of its
Consumer lending during the four months ended June 30, 2025, and interest related to these borrowings have been allocated to
Consumer. The Company also included an intercompany interest expense in its Consumer Segment Adjusted EBITDA for the eight
months ended February 28, 2025.
The Company does not allocate once-off items, stock-based compensation charges, 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, certain interest expense, income tax expense or 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) gain for currency adjustments represents foreign currency mark-to-market adjustments on certain
intercompany accounts. Interest adjustment represents the intercompany interest expense included in the Consumer Segment Adjusted
EBITDA. The Stock-based compensation adjustments reflect stock-based compensation expense and are 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.
Effective from fiscal 2025, all lease charges are allocated to the Company’s operating segments, whereas in fiscal 2024 the
Company presented certain lease charges on a separate line outside of its operating segments. Prior period information has been re-
presented to include the lease charges which were previously reported on a separate line in the Company’s Consumer and Merchant
(now Merchant, Enterprise and Consumer) operating segments.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-80
21. OPERATING SEGMENTS (continued)
Reallocation of certain activities among operating segments in Q2 2025 (continued)
Our CODM does not review the components of segment selling, general and administration expenses and is presented with
reports which include revenue, net revenue (a non-GAAP measure) and segment adjusted EBITDA.
The table below presents the reconciliation of revenue from external customers to the reportable segment’s revenue, significant
expenditures, the Company’s reportable segment’s measure of profit or loss, and certain other segment information for the years ended
June 30, 2025, 2024 and 2023, respectively, is as follows:
Year ended June 30, 2025
Merchant
Consumer
Enterprise
Unallocated
Total
Revenue from external customers
$
$
$
$
$
Intersegment revenues
Segment revenue
Less segment-related expenses:
Cost of goods sold, IT processing, servicing and
support
Selling, general and administration
(1)(2)
Segment adjusted EBITDA
$
$
$
$
$
Merchant
Consumer
Enterprise
Group costs
Total
Depreciation and amortization
$
$
$
$
$
Expenditures for long-lived assets
$
$
$
$
$
Year ended June 30, 2024
Merchant
Consumer
Enterprise
Unallocated
Total
Revenue from external customers
$
$
$
$
$
Intersegment revenues
Segment revenue
Less segment-related expenses:
Cost of goods sold, IT processing, servicing and
support
Selling, general and administration
(1)(3)
Segment adjusted EBITDA
$
$
$
$
$
Merchant
Consumer
Enterprise
Group costs
Total
Depreciation and amortization
$
$
$
$
$
Expenditures for long-lived assets
$
$
$
$
$
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-81
21. OPERATING SEGMENTS (continued)
The table below presents the reconciliation of revenue from external customers to the reportable segment’s revenue, significant
expenditures, the Company’s reportable segment’s measure of profit or loss, and certain other segment information for the year ended
June 30, 2023, is as follows:
Year ended June 30, 2023
Merchant
Consumer
Enterprise
Unallocated
Total
Revenue from external customers
$
$
$
$
$
527,971
Intersegment revenues
Revenue not allocated to segment
(1,469 )
(1,469 )
Segment revenue
Less segment-related expenses:
Cost of goods sold, IT processing, servicing and
support
Selling, general and administration
(1)
Segment adjusted EBITDA
$
$
$
$
$
Merchant
Consumer
Enterprise
Group costs
Total
Depreciation and amortization
$
$
$
$
$
Expenditures for long-lived assets
$
$
$
$
$
(1) Selling, general and administration includes human capital-related expenses (including base salary and bonus), IT-related
expenses (including software licenses, hardware maintenance, hosting, and communication expenses), professional fees (including
audit, legal, consulting and other fees), lease and utilities expenses, the allowance for credit losses and other operating and support
expenses.
(2) Segment Adjusted EBITDA for the year ended June 30, 2025, includes retrenchment and reorganization costs for Merchant
of $
and
(3) Segment Adjusted EBITDA for the year ended June 30, 2024, includes retrenchment costs for Merchant of $
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-82
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, 2025,
2024 and 2023, respectively, is as follows:
2025
2024
2023
Reportable segments measure of profit or loss
$
$
$
Operating loss: Group costs
(10,743 )
(7,844 )
(9,109 )
Once-off costs
(17,826 )
(1,853 )
(1,922 )
Interest adjustment
Unrealized (Loss) Gain for currency adjustments
(23 )
(222 )
Stock-based compensation charge adjustments
(9,550 )
(7,911 )
(7,309 )
Depreciation and amortization
(33,721 )
(23,665 )
(23,685 )
Loss on disposal of equity-accounted investment (Note 9)
(161 )
(205 )
Impairment loss
(18,863 )
(7,039 )
Reversal of allowance for doubtful EMI debt receivable (Note 9)
Change in fair value of equity securities (Note 3)
(59,828 )
Interest income
Interest expense
(21,453 )
(18,932 )
(18,567 )
Loss before income taxes
$
(105,946 )
$
(12,798 )
$
(32,266 )
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, 2025, 2024 and 2023, are presented in the table below:
Long-lived assets
2025
2024
2023
South Africa
$
$
$
India - Investment in MobiKwik (Note 9)
Rest of world
Total
$
$
$
22. COMMITMENTS AND CONTINGENCIES
Capital commitments
As of June 30, 2025 and 2024, the Company had outstanding capital commitments of approximately $
million, respectively.
Purchase obligations
As of June 30, 2025 and 2024, the Company had purchase obligations totaling $
purchase obligations as of June 30, 2025, 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
applicable as of June 30, 2025) thereby utilizing part of the Company’s short-term facilities. The Company pays commission of
between
% per annum to
% per annum of the face value of these guarantees and does not recover any of the commission
from third parties.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2025 and 2024 and 2023
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-83
22. COMMITMENTS AND CONTINGENCIES (continued)
RMB has issued guarantees to these third parties amounting to ZAR
applicable as of June 30, 2025) 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, 2025.
The maximum potential amount that the Company could pay under these guarantees is ZAR
exchange rates applicable as of June 30, 2025). 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
applicable as of June 30, 2025). 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.
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 undertook to procure that one or more funds
under its management (the “Purchasing Funds”) would subscribe for, and Lesaka would have the obligation to issue and sell to the
Purchasing Funds, ZAR
(ii) Lesaka SA failed 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 remained below the
U.S. dollar equivalent of ZAR
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
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
% 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 provided
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 failed to do so and did not remedy such failure within two business days of notice of such failure.
These agreements were all cancelled following the conclusion of the CTA in February 2025 (refer to Note 12).
*****************************