Lesaka(US:LSAK)2024-09-11 20:11Financial Performance - Operating income improved to $3.6 million (ZAR 67.3 million) in fiscal 2024, compared to a loss of $15.3 million (ZAR 275.3 million) in fiscal 2023[50]. - Group Adjusted EBITDA reached $36.9 million (ZAR 690.9 million) in fiscal 2024, a 55% increase in ZAR from $24.8 million (ZAR 445.5 million) in fiscal 2023[50]. - Revenue increased by 11.4% in ZAR, driven by higher low-margin prepaid airtime sales and increased transaction, insurance, and lending revenues[75]. - Total consolidated revenue for fiscal 2024 was $564.2 million, an increase of 7% compared to $528.0 million in fiscal 2023[80]. - The net loss attributable to Lesaka for fiscal 2024 was $(17.4) million, an improvement from $(35.1) million in fiscal 2023[98]. Device and Transaction Growth - The number of devices deployed increased to approximately 87,500, representing a 17% year-on-year growth and a 2-year CAGR of 31%[51]. - Card acceptance throughput for the year was ZAR 15.6 billion, a 30% increase from ZAR 12.0 billion in fiscal 2023[54]. - Supplier payment throughput volumes increased by 124% in fiscal 2024, now accounting for approximately 35% of VAS throughput volumes[53]. - The cash management business saw over ZAR 113 billion deposited into vaults in fiscal 2024, highlighting the value of digitalizing cash for merchants[55]. Acquisitions and Market Expansion - The acquisition of Touchsides, completed on April 30, 2024, enhances Kazang's presence in the informal market and adds data analytics capabilities[56]. - The acquisition of Adumo is expected to enhance Lesaka's strengths in both consumer and merchant markets, with a transaction value of approximately ZAR 1.59 billion ($85.9 million)[58]. Loan and Insurance Growth - Approximately 1.06 million loans were originated during the year, a 24% increase from 850,000 in the previous year[60]. - The gross loan book size reached ZAR 548 million, reflecting a 32% increase from ZAR 415 million in 2023[60]. - The number of insurance policies written increased by 37% to 170,000, compared to 124,000 in the previous year[60]. - The funeral insurance product has shown strong growth, contributing to an increase in ARPU, with customer penetration rising to approximately 33% of the active permanent grant account base as of June 30, 2024, up from 31% a year earlier[62]. Economic and Regulatory Environment - The South African economy remains challenging, with high unemployment and interest rates, but there is anticipation of a lower interest rate environment that could benefit consumers and merchants[62]. - The company improved its B-BBEE rating from level 8 to level 5 during fiscal 2023, with a target to achieve level 4 by the end of fiscal 2024[62]. Financial Management and Risk - The company generates revenue from transaction-processing services, with significant judgment required to determine whether it acts as a principal or agent in transactions[66]. - The company has experienced a marked improvement in the economic environment, with over 100 days without loadshedding, positively impacting market confidence[62]. - The company maintains an allowance for doubtful finance loans receivable related to its Merchant services segment, reflecting ongoing risk management practices[112]. Interest and Taxation - Interest income rose by 29% to ZAR 42.9 million, indicating improved financial performance[76]. - The effective tax rate for fiscal 2024 was impacted by a tax expense of $3.4 million (ZAR 62.6 million), compared to a tax benefit of $(2.3) million (ZAR (41.4) million) in fiscal 2023[77]. - Total South African taxes paid in fiscal 2024 amounted to $6.5 million (ZAR 120.7 million), a decrease from $7.2 million (ZAR 129.9 million) in fiscal 2023[103]. Capital Expenditures and Investments - Capital expenditures for fiscal 2024 totaled $12.7 million (ZAR 236.6 million), compared to $16.2 million (ZAR 289.8 million) in fiscal 2023[106]. - The company had outstanding capital commitments of $0.3 million as of June 30, 2024, which are expected to be funded through internally-generated funds[106]. Currency and Exchange Rates - The U.S. dollar was 4.1% stronger against the ZAR during fiscal 2024, adversely impacting reported results in U.S. dollars[75]. - The U.S. dollar to ZAR exchange rate has fluctuated significantly, posing translation risk to the company's financial results[108].