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Income Taxes
 12 Months Ended
Jun. 30, 2025
Income Taxes [Abstract]  
Income Taxes
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)
312
(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
$
5,757
$
5,766
$
6,317
South Africa
5,582
5,634
6,317
Other
175
132
-
Deferred tax (benefit) expense
 
(23,955)
(2,712)
(7,442)
South Africa
(13,817)
(2,716)
(7,490)
United States
(10,120)
-
-
Other
(18)
4
48
Foreign tax credits generated – United States
-
309
115
Change in tax rate – South Africa
-
-
(1,299)
Income tax (benefit) expense
 
$
(18,198)
$
3,363
$
(2,309)
There were
no
 
changes to the
 
enacted income tax
 
rate in the
 
years ended June
 
30, 2025 and
 
2024 in any
 
of our major
 
jurisdictions.
The South African corporate
 
income tax rate reduced
 
from
28
% to
27
%, 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 $
1.3
 
million in the Company’s
 
income tax (benefit)
 
expense line in
 
its consolidated statements
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.
 
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
 
$
12.8
 
million
 
related
 
to
 
certain
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 $
11.4
 
million related to an entity which the
 
Company believes has
achieved sustainable
 
profitability.
 
During the
 
year the
 
Company recognized
 
a benefit
 
for operating
 
loss carryforwards
 
generated of
$
6.8
 
million where the related deferred
 
tax asset was not offset by
 
a valuation allowance. During the
 
year the Company recognized a
valuation
 
allowance
 
related
 
to an
 
operating
 
loss carryforward
 
of $
6.0
 
million
 
following a
 
determination
 
by the
 
management,
 
after
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
27.00
%
27.00
%
27.00
%
Non-deductible interest expense
(1.29)
%
(24.55)
%
-
 
-
 
Movement in valuation allowance
5.62
%
(22.15)
%
(17.66)
%
Non-deductible transaction costs
(4.19)
%
(5.91)
%
-
 
-
 
Goodwill impairment
(4.22)
%
-
 
-
 
-
 
-
 
Capital gains tax rate differential
-
 
-
 
1.62
%
(0.51)
%
Prior year adjustments
0.22
%
(1.37)
%
7.60
%
Non-deductible items
(3.23)
%
(1.11)
%
(13.28)
%
Foreign tax credits
0.03
%
0.19
%
-
Foreign tax rate differential
(2.77)
%
-
(0.02)
%
Change in tax laws – South Africa
-
-
4.03
%
Effective tax rate
17.17
%
(26.28)
%
7.16
%
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 $
3.4
 
million represents (
26.28
%) multiplied by the loss before tax (benefit) expense of $(
12,798
).
 
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.
 
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
$
29,475
$
28,786
Capital loss carryforwards
7,094
9,253
Net operating loss carryforwards
63,740
42,025
Foreign tax credit carryforwards
12,300
32,527
Provisions and accruals
6,648
3,294
Other
4,604
4,494
Total
 
deferred tax assets before valuation allowance
123,861
120,379
Valuation
 
allowances
(107,252)
(114,687)
Total
 
deferred tax assets, net of valuation allowance
16,609
5,692
Total
 
deferred tax liabilities:
Intangible assets
36,403
29,918
Equity investments
-
10,354
Other
1,573
102
Total
 
deferred tax liabilities
37,976
40,374
Reported as
Long-term deferred tax assets, net
12,554
3,446
Long-term deferred tax liabilities, net
33,921
38,128
Net deferred tax liabilities
$
21,367
$
34,682
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 $
0.0
 
million
(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 $
0.0
 
million (nil).
 
The change
 
in Equity
 
investments also
 
includes the
 
impact of
 
currency changes
 
between the
 
South
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 $
17.7
 
million and capital loss carryforwards
in the
 
United States
 
of $
15.5
 
million. Capital
 
loss carryforwards
 
in South
 
Africa do
 
not expire,
 
and capital
 
loss carryforward
 
in the
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.
 
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 $
20.2
 
million expired.
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 $
16.6
 
million (2024:
 
$
5.7
 
million), net
 
of the
 
valuation allowance.
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.
 
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 $
107.3
 
million (2024:
 
$
114.7
 
million) to
 
reduce its
 
deferred tax
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
$
109,120
$
27,782
$
8,485
$
38,381
$
32,599
$
1,873
Charged to statement of operations
5,061
-
665
3,163
-
1,233
Reversed to statement of operations
(1,865)
-
-
(1,793)
(72)
-
Foreign currency adjustment
2,371
1,004
103
1,215
-
49
Net change in the valuation allowance
5,567
1,004
768
2,585
(72)
1,282
June 30, 2024
114,687
28,786
9,253
40,966
32,527
3,155
Charged to statement of operations
6,241
-
977
4,063
-
1,201
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
22,976
-
-
20,354
-
2,622
Foreign currency adjustment
1,722
690
90
887
-
55
Net change in the valuation allowance
(7,435)
690
(2,159)
12,617
(20,227)
1,644
June 30, 2025
$
107,252
$
29,476
$
7,094
$
53,583
$
12,300
$
4,799
Net operating loss carryforwards and foreign tax credit carryforwards
South Africa
Net
 
operating
 
loss
 
carryforwards
 
generated
 
in
 
South
 
Africa
 
of
 
$
212.1
 
million
 
are
 
carried
 
forward
 
indefinitely,
 
but
 
the
 
loss
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
 
$
30.8
 
million are
 
carried forward
 
indefinitely,
 
but the
 
loss
carryforward
 
that
 
may
 
be
 
used
 
against
 
future
 
taxable
 
income
 
is
 
limited
 
to
 
80%
 
of
 
taxable
 
income
 
before
 
the
 
net
 
operating
 
loss
deduction.
Lesaka had
no
 
net unused foreign
 
tax credits
 
that are more
 
likely than
 
not to
 
be realized as
 
of June
 
30, 2025 and
 
2024, respectively.
Unrecognized tax benefits
As of June 30, 2025 and 2024, the Company had
no
 
unrecognized tax benefits. The Company files income tax returns mainly in
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.