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Acquisitions | 9 Months Ended
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Mar. 31, 2025
Acquisitions [Abstract] |
Acquisitions | 2. Acquisitions The Company did not make any acquisition during the nine months ended March 31, 2024. The cash paid, net of cash received related to the Company’s acquisitions during the nine months ended March 31, 2025, is summarized in the table below: Total Total cash paid $ 24,161 Less: cash acquired 11,207 Total cash paid, net of cash received $ 12,954 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, and at acquisition, it served approximately 23,000 active merchants 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; ● The Adumo ISV business, known as GAAP, has operations in South Africa, Botswana and Kenya, and clients in a further 21 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; 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. The acquisition continues the Company’s consolidation in the Southern African fintech sector. At acquisition, the Company’s ecosystem served approximately 1.7 million active consumers, 120,200 merchants, and processes over ZAR 270 billion in throughput (cash, card and VAS) per year. The acquisition of Adumo enhances the Company’s strength in both the consumer and merchant markets in which it operates. The total purchase consideration was ZAR 1.67 billion ($ 96.2 million) and comprised the issuance of 17,279,803 shares of the Company’s common stock (“Consideration Shares”) with a value of $ 82.8 million ( 17,279,803 multiplied by $ 4.79 per share) and cash of $ 13.4 million. The purchase consideration was settled through the combination of the Consideration Shares and a ZAR 232.2 million ($ 13.4 million, translated at the prevailing rate of $1: ZAR 17.3354 as of October 1, 2024) payment in cash. The Company’s closing price on the Johannesburg Stock Exchange on October 1, 2024, was ZAR 83.05 ($ 4.79 using the October 1, 2024, $1: ZAR exchange rate). 2. Acquisitions (continued) 2025 Acquisitions (continued) October 2024 acquisition of Adumo (continued) The closing of the transaction was subject to customary closing conditions, including (i) approval from the competition authorities of South Africa and Namibia; (ii) exchange control approval from the financial surveillance department of the South African Reserve Bank; (iii) approval from all necessary regulatory bodies and from shareholders to issue the Consideration Shares to the Sellers; (iv) obtaining certain third-party consents; (v) the Company obtained confirmation from RMB that it has sufficient funds to settle the cash portion of the purchase consideration; (vi) approval of Adumo shareholders (including preference shareholders) with respect to entering into and implementation of the Purchase Agreement, and all other agreements and transactions contemplated in the Purchase Agreement; (vii) obtained the consent of Adumo’s lender regarding Adumo entering into and implementing the Purchase Agreement, and all other agreements and transactions contemplated in the Purchase Agreement; (viii) the release of certain Seller’s shares held as security by such bank; (ix) consent of the lender of one of Adumo’s shareholders regarding Adumo entering into the transaction; (x) the Company signing a written addendum to the Policy Agreement with International Finance Corporation that provides for the inclusion of the Consideration Shares attributable to certain Seller shareholders in the definition of “Put Shares” under the Policy Agreement, and related change; and (xi) a Seller (or their nominee), which ultimately was Crossfin, concluding share purchase agreements to dispose of an amount of Consideration Shares (which ultimately was determined as 3,587,332 Consideration Shares). 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 $ 1.7 million during the nine months ended March 31, 2025, related to the acquisition of Adumo. The Company’s accruals presented in Note 10 of as March 31, 2025, includes an accrual of transaction related expenditures of $ 0.4 million and the Company does not expect to incur any further significant transaction costs over the remainder of the 2025 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 12 months and requires him, among other things, to support operational activities of the Recharger business, in 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 will be reported as part of the Company’s Enterprise Division and demonstrates positive advancement of the Company’s strategy in its Enterprise Division. The Company expects the acquisition to act as an entry point for it into the South African private utilities space while augmenting the Enterprise division’s alternative payment offering. The transaction consideration per the Recharger Purchase Agreement was ZAR 503.4 million ($ 27.0 million) and comprised ZAR 328.4 million ($ 17.6 million) in cash and ZAR 175.0 million ($ 9.4 million) in shares of the Company’s common stock, to be 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 43.1 million ($ 2.3 million) loan to Recharger at closing which was exclusively used to repay an existing loan due by Recharger to the Seller. The first tranche, comprising ZAR 153.4 million ($ 8.2 million) in cash and 1,092,361 shares of the Company’s common stock with a value of ZAR 98.3 million ($ 5.3 million), was settled at closing. The value of the shares of common stock were calculated using the shares issued multiplied by the Company’s closing price on the Johannesburg Stock Exchange on March 3, 2025, of ZAR 90.00 , and translated to U.S. dollars at the exchange rate of $1: ZAR 18.63 . Lesaka SA delivered the 1,092,361 shares of the Company’s common stock from a pool of shares it purchased in October 2024, and the Company recognized a gain in additional paid-in-capital of $ 0.4 million related to the difference between in the value on March 3, 2025, and the price paid per share in October 2024. 2. Acquisitions (continued) 2025 Acquisitions (continued) March 2025 acquisition of Recharger (continued) The total purchase consideration was ZAR 294.8 million ($ 15.8 million) and comprised the issuance of the 1,092,361 shares of the Company’s common stock with a value of ZAR 98.3 million ($ 5.3 million), the settlement of the pre-existing relationship loan of ZAR 43.1 million ($ 2.3 million) and cash of ZAR 153.4 million ($ 8.2 ) million. The second and final tranche is due on March 3, 2026, and comprises a contractual cash payment of ZAR 175.0 million ($ 9.4 million) and the delivery of shares of Lesaka’s common stock with a contractual value of ZAR 75.0 million ($ 4.0 million). Pursuant to the Recharger Purchase Agreement, payment of the second tranche in March 2026 is contingent on Recharger’s former chief executive officer ’s ongoing service under the independent contractor agreement until March 3, 2026. If the future services are not provided, then the second tranche will not be paid, 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 is also a director of the Seller, and signed the Recharger Purchaser Agreement on behalf of himself, Recharger and the Seller. He has also signed an independent contractor agreement under which he is required to provide post-combination service to Recharger. 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 U.S. GAAP, represents compensation for post-combination services. The post-combination services for the three and nine months ended March 31, 2025, of $ 1.1 million was calculated as the sum of one twelfth of the future cash payment and one twelfth of 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 75.0 million divided by the volume-weighted average price of the Company’s common shares for the three-month period prior to March 31, 2025, divided by twelve and at the applicable exchange rate. The post-combination compensation charge is included in the caption transaction costs related to Adumo and Recharger acquisitions and certain compensation costs included on the unaudited condensed consolidated statement of operations. Refer to Note 13 for additional information. The liability for the future payments is included in the caption Other payables in the unaudited condensed consolidated balance sheet as of March 31, 2025, refer to Note 10. The Company incurred transaction-related expenditures of $ 0.3 million during the nine months ended March 31, 2025, related to the acquisition of Recharger. The Company does not expect to incur any further significant transaction costs over the remainder of the 2025 fiscal 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 50 % of the issued and outstanding shares) it did not own in Innervation Value Added Services Namibia Pty Ltd (“IVAS Nam”) for $ 0.4 million (ZAR 6.0 million, translated at November 1, 2024 exchange rates). IVAS Nam was accounted for using the equity method prior to the acquisition of a controlling interest in the company. Adumo paid ZAR 2.0 million of the purchase price prior to the acquisition of Adumo by the Company and the balance of ZAR 4.0 million will be paid in two equal tranches, one in March 2025 and the other in September 2025. The Company did not incur any significant transaction costs related to this acquisition. The Company, through Lesaka SA, acquired 100 % of Genisus Risk (Pty) Ltd for a cash consideration of ZAR 2.0 million ($ 0.1 million). The Company did not incur any significant transaction costs related to this acquisition. The Company, through its wholly owned subsidiary Cash Connect Management Solutions Proprietary Limited (“CCMS”), acquired 100 % of Master Fuel (Pty) Ltd (“Master Fuel) for a cash consideration of ZAR 2.0 million ($ 0.1 million). The Company did not incur any significant transaction costs related to this acquisition. 2. Acquisitions (continued) 2025 Acquisitions (continued) The preliminary purchase price allocation of acquisitions during the nine months ended March 31, 2025, translated at the foreign exchange rates applicable on the date of acquisition, in provided is the table below: Acquisitions during fiscal 2025 through March 31, 2025 Adumo Recharger Other Total Cash and cash equivalents $ 9,227 $ 1,720 $ 260 $ 11,207 Accounts receivable 6,799 17 706 7,522 Inventory 5,122 194 3 5,319 Property, plant and equipment 9,170 39 15 9,224 Operating lease right of use asset 1,025 401 - 1,426 Equity-accounted investment 477 - - 477 Goodwill 73,173 2,878 539 76,590 Intangible assets 27,187 17,179 69 44,435 Deferred income taxes assets 1,061 81 55 1,197 Other long-term assets 2,809 - - 2,809 Current portion of long-term borrowings (1,178) - - (1,178) Accounts payable (3,266) (149) (428) (3,843) Other payables (28,044) (1,439) (252) (29,735) Operating lease liability - current (1,019) (185) - (1,204) Income taxes payable (150) (4) (42) (196) Deferred income taxes liabilities (6,670) (4,638) (19) (11,327) Operating lease liability - long-term (326) (269) - (595) Long-term borrowings (7,308) - - (7,308) Other long-term liabilities (140) - - (140) Settlement assets 8,603 - - 8,603 Settlement liabilities (8,530) - - (8,530) Fair value of assets and liabilities on acquisition $ 88,022 $ 15,825 $ 906 $ 104,753 The fair value of the non-controlling interests recorded was $ 7.6 million. The fair value of the non-controlling interest 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 20 % minority discount. The allocation of the purchase price related to the various acquisitions is preliminary and not yet finalized. The preliminary allocation of the purchase price is based upon preliminary estimates which used information that was available to management at the time the unaudited condensed 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 and, for Adumo, the valuation of the non-controlling interest. 2. Acquisitions (continued) 2025 Acquisitions (continued) Intangible assets acquired No intangible assets were identified related to the acquisition of IVAS Nam. Summarized below is the fair value of the intangible assets acquired 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 nine months ended March 31, 2025: Adumo – technology assets $ 13,997 3 - 7 Adumo – customer relationships 9,567 5 - 10 Adumo – brands 3,623 10 - 15 Recharger – technology assets 1,074 4 Recharger – customer relationships 16,105 5 Genisus Risk – technology assets 68 0.1 On acquisition of these businesses, the Company recognized an aggregate deferred tax liability of approximately $ 12.0 million related to the acquisition of intangible assets during the nine months ended March 31, 2025. Transaction costs and certain compensation costs The table below presents transaction costs incurred related to the acquisition of Adumo and Recharger, as well as certain post- combination compensation costs expensed during the three and nine months ended March 31, 2025 and 2024: Three months ended March 31, Nine months ended March 31, 2025 2024 2025 2024 Adumo transaction costs $ - $ 631 $ 1,702 $ 665 Recharger transaction costs (1) 92 - 342 - Recharger post-combination services expensed 1,130 - 1,130 - Total $ 1,222 $ 631 $ 3,174 $ 665 (1) Recharger transactions costs for the six months ended March 31, 2025, of $ 0.25 million have been allocated from Selling, general and administration to Transaction costs related to Adumo and Recharger and certain compensation costs in the unaudited condensed consolidated statement operations for the nine months ended March 31, 2025. 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 $ 0.2 million and $ 0.1 million, respectively, for the nine months ended March 31, 2025. 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 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: Three months ended March 31, Nine months ended March 31, 2025 2024 2025 2024 Revenue $ 137,713 $ 153,890 $ 449,891 $ 466,873 Net loss $ (21,810) $ (3,292) $ (56,292) $ (23,846) 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 $ 32.2 million and net income attributable to the Company, including intangible assets amortization related to assets acquired, net of deferred taxes, of $ 0.68 million.

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