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Acquisitions | 6 Months Ended
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Dec. 31, 2024
Acquisitions [Abstract] |
Acquisitions | 2. Acquisitions The Company did not make any acquisition during the six months ended December 31, 2023. The cash paid, net of cash received related to the Company’s acquisitions during the six months ended December 31, 2024, is summarized in the table below: Total Total cash paid $ 13,392 Less: cash acquired 9,435 Total cash paid, net of cash received $ 3,957 2. Acquisitions (continued) 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 also provides card issuing program management to corporate clients such as Anglo American and Coca-Cola; ● The Adumo ISV business, also 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). 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. 2. Acquisitions (continued) 2025 Acquisitions (continued) October 2024 acquisition of Adumo (continued) The Company incurred transaction-related expenditures of $ 1.7 million during the six months ended December 31, 2024, related to the acquisition of Adumo. The Company’s accruals presented in Note 10 of as December 31, 2024, includes an accrual of transaction related expenditures of $ 0.6 million and the Company does not expect to incur any further significant transaction costs over the remainder of the 2025 fiscal year. November 2024 acquisition of Innervation Value Added Services Namibia Pty Ltd (continued) 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 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 preliminary purchase price allocation of acquisitions during the six months ended December 31, 2024, translated at the foreign exchange rates applicable on the date of acquisition, in provided is the table below: Acquisitions during fiscal 2025 through December 31, 2024 Adumo IVAS Nam Total Cash and cash equivalents $ 9,219 $ 216 $ 9,435 Accounts receivable 6,800 630 7,430 Inventory 5,121 3 5,124 Property, plant and equipment 9,169 12 9,181 Operating lease right of use asset 1,024 - 1,024 Equity-accounted investment 477 - 477 Goodwill 72,299 432 72,731 Intangible assets 28,383 - 28,383 Deferred income taxes assets 1,060 55 1,115 Other long-term assets 2,809 - 2,809 Current portion of long-term borrowings (1,178) - (1,178) Accounts payable (3,266) (388) (3,654) Other payables (28,045) (226) (28,271) Operating lease liability - current (1,019) - (1,019) Income taxes payable (150) (42) (192) Deferred income taxes liabilities (6,994) - (6,994) Operating lease liability - long-term (326) - (326) Long-term borrowings (7,308) - (7,308) Other long-term liabilities (141) - (141) Settlement assets 8,610 - 8,610 Settlement liabilities (8,530) - (8,530) Fair value of assets and liabilities on acquisition $ 88,014 $ 692 $ 88,706 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 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 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 Adumo 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 six months ended December 31, 2024: Adumo – technology assets $ 13,949 3 - 7 Adumo – customer relationships 10,813 5 - 10 Adumo – brands $ 3,621 10 - 15 On acquisition, the Company recognized a deferred tax liability of approximately $ 7.7 million related to the acquisition of Adumo intangible assets during the six months ended December 31, 2024. Pro forma results related to acquisitions Pro forma results of operations have not been presented for the acquisition of IVAS Nam because the effect of the IVAS Nam acquisition is not material to the Company. Since the closing of the IVAS Nam acquisition, it has contributed revenue and net income of $ 0.9 million and $ 0.2 million, respectively, for the six months ended December 31, 2024. The results of Adumo’s operations are reflected in the Company’s financial statements from October 1, 2024. The following unaudited pro forma revenue and net income information has been prepared as if the acquisition of Adumo had occurred on July 1, 2023 using the applicable average foreign exchange rates for the periods presented: Three months ended December 31, 2023 (As restated) (A) Six months ended December 31, 2024 2023 Revenue $ 159,397 $ 335,146 $ 307,897 Net loss $ (3,040) $ (35,024) $ (15,088) (A) Revenue during the three and six months ended December 31, 2024 has been restated to correct the misstatements of $ 29.4 million and $ 37.4 million, respectively, discussed in Note 1. The unaudited pro forma financial information presented above includes the business combination accounting and other effects from the acquisition 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; and (3) an adjustment to exclude all applicable transaction-related costs recognized in the Company’s consolidated statement of operations for six months ended December 31, 2024, and include the applicable transaction -related costs for 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 acquisition, Adumo has contributed revenue of $ 17.0 million and net income attributable to the Company, including intangible assets amortization related to assets acquired, net of deferred taxes, of $ 0.45 million.

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