Lesaka(US:LSAK)2021-11-08 21:11Acquisition and Investments - The company entered into an agreement to acquire a controlling stake in the Connect Group for ZAR 3,683,559,419, which includes 3,065,883 shares of common stock to be issued over three years [164]. - The company has signed non-binding term sheets for a ZAR 2.35 billion ($154.4 million) debt package to support the acquisition of the Connect Group [165]. - The company expects to incur additional expenses related to the Connect Group transaction in the second quarter of fiscal 2022 [213]. Financial Performance - Revenue for the first quarter of fiscal 2022 decreased by 2% to $34.5 million compared to $35.1 million in the same period of fiscal 2021 [191]. - Operating loss increased by 4% to $11.2 million from $10.8 million year-over-year [191]. - Net loss attributable to the company decreased by 55% to $13.0 million from $29.0 million in the prior year [191]. - Revenue in South African Rand (ZAR) decreased by 14% to ZAR 504.2 million from ZAR 589.4 million year-over-year [193]. - Operating loss margin for the first quarter of fiscal 2022 was (32.5%), compared to (30.7%) in the same quarter of fiscal 2021 [196]. - Interest income decreased by 36% to $0.4 million from $0.6 million year-over-year [191]. - Financial services segment revenue increased by 29% to $10.6 million, driven by higher account fee and lending revenues [202]. - Technology segment revenue decreased by 22% to $4.8 million due to fewer hardware sales compared to the prior period [202]. Cash Flow and Liquidity - Cash and cash equivalents as of September 30, 2021, totaled $188.5 million, with a decrease attributed to weak trading activities [214]. - Net cash used in operating activities during Q1 fiscal 2022 was $7.9 million (ZAR 116.1 million), a decrease from $29.9 million (ZAR 501.2 million) in Q1 fiscal 2021 [222]. - Cash used in investing activities for Q1 fiscal 2022 included capital expenditures of $0.7 million (ZAR 10.2 million), primarily for new express branches [225]. - Approximately $138.9 million was utilized from South African overdraft facilities to fund ATMs in Q1 fiscal 2022, compared to $69.1 million in Q1 fiscal 2021 [227]. - Restricted cash as of September 30, 2021, included approximately $51.6 million related to cash withdrawn from debt facilities to fund ATMs [219]. - Total short-term facilities available as of September 30, 2021, amounted to $92.6 million (ZAR 1,399.995 million) with $51.6 million (ZAR 779.451 million) utilized [217]. - Capital commitments outstanding as of September 30, 2021, were $1.0 million, expected to be funded through internally generated funds [229]. - Cash flows from financing activities showed a repayment of $98.9 million of overdraft facilities in Q1 fiscal 2022 [227]. - No significant tax payments were made during Q1 fiscal 2022, while foreign taxes paid amounted to $36,000 [224]. - The company has no off-balance sheet arrangements [228]. Customer Metrics - Gross customer additions for the quarter were approximately 124,000, a significant increase from 43,000 in the previous quarter, while net additions amounted to 102,000 compared to 33,000 previously [175]. Operational Insights - Transaction volumes in the ATM business were down by 12% compared to the previous quarter, largely due to social unrest, but volumes had largely recovered by September 2021 [177]. - The company believes it has sufficient cash reserves to support operations through the next twelve months, with no significant adverse effects on liquidity expected from the pandemic [171]. - The South African insurance business is experiencing higher claim levels, but the company believes it is adequately capitalized to address these claims [171]. - The average exchange rate for ZAR to USD was 14.6246 for the three months ended September 30, 2021, compared to 16.9080 for the same period in 2020 [185]. - The company aims to grow its B2B operations, with throughput growing by 4% compared to the previous quarter and transaction volumes increasing by 11% [178]. - The company continues to focus on enhancing the presence of its EPE bank account, known as 'the green card', through localized marketing efforts [173]. - The company continues to evaluate the impact of COVID-19 on its operations, with uncertainties regarding future financial position and cash flows [172]. Interest Rates - Interest rates on short-term borrowings are based on the South African prime rate, with a hypothetical 1% increase resulting in an estimated annual expected interest charge increase from $4.631 million to $5.293 million [233].