Fintech Security

LESAKA TECHNOLOGIES INC Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)

The following discussion and analysis should be read in conjunction with Item
8-“Financial Statements and Supplementary Data.” In addition to historical
consolidated financial information, the following discussion and analysis
contains forward-looking statements that involve risks, uncertainties and
assumptions. See Item 1A- “Risk Factors” and “Forward Looking Statements.”

Overview

We are a provider of financial technology, or fintech, products and services to
unbanked and underbanked individuals and small businesses, predominantly in
South Africa. We have developed and own most of our payment technologies, and
where possible, we utilize this technology to provide financial and value-added
services to our customers by including them in the formal financial system.

Sources of Revenue

We generate our revenues by charging transaction fees to merchants, financial
service providers, utility providers, bill issuers and consumers; by selling
pinned airtime to merchants; by providing loans to merchants and consumers, and
insurance products to consumers and by selling hardware, licensing software and
providing related technology services to merchants.

We act as a service provider whereby we own and operate the technology and apply
it in a system ourselves, charging one-time and ongoing fees for the use of the
system either on a fixed or ad valorem basis. For instance, through the
acquisition of Connect, we now provide cash management and payment services to
merchant customers through a digital vault (safe asset) which is located at the
customer’s premises and generate processing revenue from the provision of these
services. We also offer merchant customers access to platforms through which we
(a) generate revenue from the sale of prepaid airtime and (b) generate fees from
distribution of VAS, including prepaid airtime, prepaid electricity, gaming
voucher, and other services, to users of our platforms. We also generate fees
from debit and credit card transaction processing and interest revenue from
qualifying merchant customers who are able to access short-term loans. The
revenue and costs associated with these services and sales are included in our
merchant operating segment.

We provide consumers with bank accounts from which we generate a monthly fee and
also charge fees on an ad valorem basis for goods and services purchased. Usage
of our bank accounts also provides our customers with access to short-term loans
and life insurance products. We also generate fees from consumers utilizing our
ATM network. The revenue and costs associated with this approach are reflected
in our consumer operating segment.

Developments during Fiscal 2022

This year has been one of enormous change for the Company with some
transformational events occurring which we believe will set Lesaka on a new path
of exciting growth, focused on the South African market as well as some of its
neighboring countries. All of these events align with our mission of striving to
bring financial inclusion to Merchants and Consumers in South Africa and
building a world class fintech platform.

Adopting a new brand and identity

As we embarked on creating a world class financial technology platform and
repositioning ourselves for growth, it became evident we required a new identity
that would resonate with our customers and employees. It was important for our
new identity to authentically express our commitment to the local communities we
serve and our ambition to drive financial inclusion by giving ordinary people
and small businesses access to essential financial services.

For thousands of years, livestock have been seen as a symbol of security,
community and wealth and protecting one’s livestock was central to preserving
the dignity and pride of a community. To ensure the best possible protection, an
enclosure commonly known as a “kraal” in South Africa was built in the center of
the community. A kraal is seen as the social and economic heart of a village and
only the most reliable people are entrusted with its care and protection. The
word Lesaka means Kraal in Setswana and Sesotho, two of South Africa’s official
languages, and it was agreed by our shareholders that the existing company name
Net1 should change to Lesaka, which aptly represents our new group and its
vision.

As Lesaka, we are on a mission to build and protect the financial wellbeing of
our communities and our intention is to protect the vulnerable and underserved,
by providing widespread access to essential financial services.


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Acquisition of Connect

On April 14, 2022 the Company completed its acquisition of Connect in South
Africa
, for ZAR 3.8 billion. The acquisition of Connect, a profitable,
high-growth and leading South African fintech company, is transformational for
Lesaka in its journey to become South Africa’s leading fintech platform.

The acquisition of Connect significantly advances Lesaka’s vision and is truly
transformational for the Company. The acquisition adds significant scale to our
legacy B2B offering, bringing 44,000 micro, small and medium enterprises into
the Merchant business segment. We expect the complementary product offerings to
create significant growth opportunities by enabling us to address the needs of
approximately 1.4 million informal and approximately 700,000 formal micro, small
and medium enterprises in South Africa.

Connect has demonstrated its ability to deliver excellent growth and
profitability through its innovative solutions for micro, small and medium
enterprises across South Africa, and its combination with Lesaka’s existing B2B
operations creates a business with significant scale across all tiers.

Connect is highly profitable with strong unit economics – delivering an historic
three-year compound annual growth rate in EBITDA in excess of 40% for its
financial year ended February 28, 2022.

Connect has significant opportunities for continued growth within its current
addressable market, estimated at more than ZAR 100 billion ($6.6 billion), in
merchant financial services for MSMEs in South Africa. Further, this addressable
market has strong secular growth due to MSMEs shifting from manual to digitized
cash management and from physical cash to digital payment methods.

Connect fills four key gaps in Lesaka’s product offering, namely the provision
of value-added services directly to MSME’s, digitized cash management, merchant
acquiring and merchant lending. On the other hand, Net1’s legacy businesses
bring issuing, insurance and consumer financial services infrastructure to
Connect. Offering multiple products to a single customer reduces churn,
increases take-rate and improves unit economics.

Refer to Note 3 to our audited consolidated financial statements for additional
information related to the acquisition.

Our strategic focus areas

During this fiscal year, we communicated the following four key pillars which we
believe are critical to the successful transformation of our company to becoming
a leading South African full-service fintech platform:

?Rapidly growing the merchant business;
?Returning the consumer business to profitability;
?Transforming our organization into a world class fintech platform; and
?Strengthening our relationships with key stakeholders.

Focused effort throughout the year on each of these pillars has delivered
positive momentum, repositioning the business to capture the long-term growth
opportunities across both our merchant and consumer businesses.

Rapid growth of our merchant business

As discussed above, the transformational acquisition of Connect, was key in
delivering on this focus area. With market leading affordable products and
technologies, Connect is well positioned to continue its growth in the MSME
sector. Connect’s MSME offering, combined with our EasyPay platform targeting
the larger merchants, and our point-of-sale business, provides a suite of
products and services to address the needs of the entire spectrum of merchants
in South Africa.

Mr. Steve Heilbron, CEO of Connect, joined our board on April 14, 2022, and will
be responsible for heading up our Merchant business. Integrating Connect will be
a focus area for us going forward, to ensure we capitalize on the growth
opportunity delivered by this acquisition.

Returning the Consumer business to profitability

We have made significant progress in returning the Consumer segment to
profitability as is evident from our segment reporting. However, transforming
the business and culture, from one which was focused on the logistics of
efficiently distributing grants to over ten million grant recipients each month,
to a sales focused organization remains a challenge we are focused on. We have
spent a lot of time and resources on training and building our sales force, but
this remains a work in progress.



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The Consumer segment has shown considerable improvement in performance from a
year ago and the positive momentum has been achieved through focusing on three
key levers:
?Increasing active EPE account numbers, through driving customer acquisition;
?Improving ARPU, underpinned by increased cross selling; and
?Optimizing the cost structure, in line with a focus on customer centricity.

Progress on driving customer acquisition

During fiscal 2022, we grew our total customer base by approximately 157,000 net
active customers of which around 31,000 were EPE lite customers and around
126,000 were EPE customers, ending the year with just over 1.168 million active
customers. This active account growth is slower than what we had anticipated. We
did, however, register 256,000 gross account openings during the year, and have
started to see the benefits of a workstream focusing on improving account
activation and utilization that was initiated during the third quarter.

There has been enormous focus during the year on how to optimize our points of
presence and upskill our employees in order to drive these numbers. This process
has taken longer than originally expected, but with our improved data analytics
and ongoing market research we believe we have made major progress and expect to
see improvements in the next fiscal year arising from this customer centric
approach.

Progress on cross selling

ARPU remains broadly within our targeted ARPU range. We had approximately
396,000 active loans at the end of the quarter, representing a 36% penetration
of our active EPE customer base, with a total loan book of ZAR 349 million
($21.5 million) as of June 30, 2022, up 4% in ZAR compared with June 2021. The
average loan size grew to ZAR 1,461, while the portfolio loss ratio, calculated
as the loans written off during the period as a percentage of the total loan
book, remains encouragingly low at around 1.00% for the quarter (i.e.
approximately 4% per annum), as a result of our ongoing application of prudent
credit scoring and a culture of responsible lending.

Our funeral insurance product provides an important growth opportunity for our
cross-selling strategy, with penetration levels now around 19% of the active
account base. Over 40,500 new standalone policies were initiated during the
year, growing the total number of active policies to approximately 259,000, up
8.3% compared with June 2021.

Progress on cost optimization

In order to optimize the overall cost base and to move the business towards a
sales-focused and client solution driven financial services organization, we
launched Project Spring during the 2022 financial year. Project Spring focused
on the restructuring of our financial services business and the rationalization
of the distribution network. Pursuant to Project Spring, a detailed review of
the distribution network was performed to identify underperforming branches and
optimize our points of presence to meet the needs of our customer base.

We also embarked on a retrenchment process that resulted in our headcount
reducing by approximately 800 at a total cost during the third quarter of fiscal
2022 of $5.9 million. Please refer to Note 1 to our audited consolidated
financial statements for additional information.

In addition, significant progress has been made on optimizing our cash
distribution and ATM network. Our large fleet of mobile ATMs and the associated
distribution and security costs have been eliminated. Following a review of the
ATM placements, over 50% of our ATM network are now positioned in retailers,
providing greater footfall and longer operating hours compared to our branches.

We estimate that the aggregate annualized cost saving for Project Spring is over
ZAR 300.0 million.

We continue with our cost optimization efforts despite the completion of Project
Spring and its significant achievements. In particular, we are re-examining the
performance of all our points of presence and increasingly looking to partner
with various retailers, rather than having our own dedicated brick and mortar
branches. Furthermore, following the recent acquisition of Connect we are
working on how to optimize the cash movement processes of the two businesses.

Transforming our organization into a world class fintech platform

Building a world class fintech platform requires highly talented people, an
environment where they can outperform and a clear vision and strategy, where
everyone is aligned and understands their role in achieving that vision.

During the fiscal year, we brought in a significant number of experienced, high
quality executives to enhance the leadership of the organization. This has been
further enhanced by the strong management team that has driven the success of
Connect. The leadership team has deep and relevant experience to deliver on the
mission of the Company, with the necessary governance structures in place.



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The South African Competition Tribunal’s approval of the Connect acquisition was
subject to the company implementing an employee share transaction (“ESOP”) of at
least 3% of the issued shares of the company, to increase the spread of
ownership by historically disadvantaged people and workers. If within 24 months
of the implementation date of the Connect transaction, the company generates a
positive net profit for 3 consecutive quarters, the ESOP shall increase to 5% of
the issued shares. The final structure of the ESOP is contingent on shareholder
approval and relevant regulatory and governance approvals and will only be
implemented during fiscal 2023.

Strengthening our relationships with key stakeholders

We continue to build our relationship with SASSA through proactive engagement at
a local, provincial and national level, to gain a better understanding of their
needs and how we can help and improve the delivery of social grants to over 12
million grant recipients.

We have also made good progress on building relationships with our various key
stakeholders, be it shareholders, regulators, suppliers and other participants
in our sectors.

Investments

There has been no change to the carrying value of our investment in MobiKwik
during fiscal 2022. MobiKwik filed its draft red herring prospectus in July
2021
, with the original intention of completing its initial public offering in
November 2021. MobiKwik decided to delay its initial public offering given
prevailing market conditions and will reassess their options as market
conditions change. MobiKwik has been focusing on its buy now pay later (“BNPL”)
offering and has seen significant growth in that area in the last year. It
continues to grow strongly and is also considering plans for raising additional
capital privately.

On March 15, 2022, Blue Label Telecoms Limited, the largest shareholder in Cell
C, announced that it has concluded a non-binding term sheet (“Umbrella
Restructure Term Sheet”) with Cell C and various Cell C financial stakeholders.
In terms of the Umbrella Restructure Term Sheet, Cell C will be restructured and
refinanced with the purpose of deleveraging its balance sheet, providing it with
liquidity with which to operate and grow its businesses and to position itself
to achieve long term success for the benefit of its customers, employees,
creditors, shareholders, and other stakeholders. The long form agreements, which
will be binding, are currently in process of preparation and will incorporate
the terms and conditions contained in the Umbrella Restructure Term Sheet. The
latest public announcements have indicated that the recapitalization is expected
to close by the middle of September 2022. Our investment in Cell C is held at a
carrying value of $0 (zero) as of June 30, 2022.

Impact of COVID-19

During the fiscal year, we did not experience any significant disruptions from
the COVID-19 outbreak, and the risk relating to the outbreak appears to have
substantially reduced.

Critical Accounting Policies

Our audited consolidated financial statements have been prepared in accordance
with U.S. GAAP, which requires management to make estimates and assumptions
about future events that affect the reported amount of assets and liabilities
and disclosure of contingent assets and liabilities. As future events and their
effects cannot be determined with absolute certainty, the determination of
estimates requires management’s judgment based on a variety of assumptions and
other determinants such as historical experience, current and expected market
conditions and certain scientific evaluation techniques. Management believes
that the following accounting policies are critical due to the degree of
estimation required and the impact of these policies on the understanding of the
results of our operations and financial condition.

Business Combinations and the Recoverability of Goodwill

A significant component of our growth strategy is to acquire and integrate
businesses that complement our existing operations. The purchase price of an
acquired business is allocated to the tangible and intangible assets acquired
and liabilities assumed based upon their estimated fair value at the date of
purchase. The difference between the purchase price and the fair value of the
net assets acquired is recorded as goodwill. In determining the fair value of
assets acquired and liabilities assumed in a business combination, we use
various recognized valuation methods, including present value modeling. Further,
we make assumptions using certain valuation techniques, including discount rates
and timing of future cash flows.

We review the carrying value of goodwill annually or more frequently if
circumstances indicating impairment have occurred. In performing this review, we
are required to estimate the fair value of goodwill that is implied from a
valuation of the reporting unit to which the goodwill has been allocated after
deducting the fair values of all the identifiable assets and liabilities that
form part of the reporting unit. The determination of the fair value of a
reporting unit requires us to make significant judgments and estimates. In
determining the fair value of reporting units for fiscal 2022 and 2021, we
considered entity-specific growth rates, future expected cash flows to be used
in our discounted cash flow model, and the weighted-average cost of capital
applicable to peer and industry comparables of the reporting units. We base our
estimates on assumptions we believe to be reasonable but that are unpredictable
and inherently uncertain. In addition, we make judgments and assumptions in
allocating assets and liabilities to each of our reporting units.

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The results of our impairment tests during fiscal 2022 and 2021 indicated that
the fair value of our reporting units exceeded their carrying values and so did
not require impairment.

Intangible Assets Acquired Through Acquisitions

The fair values of the identifiable intangible assets acquired through
acquisitions were determined by management using the purchase method of
accounting. We completed the acquisition of Connect during fiscal 2022 where we
identified and recognized intangible assets. We used the relief from royalty
method to value identified brands and the multi-period excess earnings method to
value the integrated platform and identified customer relationships. We have
used the relief from royalty method, the multi-period excess earnings method,
the income approach and the cost approach to value other historic
acquisition-related intangible assets. In so doing, we made assumptions
regarding expected future revenues and expenses to develop the underlying
forecasts, applied contributory asset charges, discount rates, exchange rates,
cash tax charges and useful lives.

The valuations were based on information available at the time of the
acquisition and the expectations and assumptions that were deemed reasonable by
us. No assurance can be given, however, that the underlying assumptions or
events associated with such assets will occur as projected. For these reasons,
among others, the actual cash flows may vary from forecasts of future cash
flows. To the extent actual cash flows vary, revisions to the useful life or
impairment of intangible assets may be necessary. Management assess the useful
life of the acquired intangible assets upon initial recognition and revisions to
the useful life or impairment of these intangible assets may be necessary in the
future. For instance, in the recently closed Connect transaction, management has
assigned useful lives to the acquired intangible assets as follows: (a)
integrated platform – 10 years; (b) customer relationships – 8 years; and (c)
brands – 10 years.

Revenue recognition – principal versus agent considerations

We generate revenue from the provision of transaction-processing services
through our various platforms and service offerings. We use these platforms to
(a) sell prepaid airtime and (b) distribute VAS, including prepaid airtime,
prepaid electricity, gaming voucher, and other services, to users of our
platforms. The determination of whether we act as a principal or as an agent
when providing these services requires a significant amount of judgement and is
based on whether (i) we are primarily responsible for fulfilling the promise to
provide the specified goods or service, (ii) we have inventory risk before the
specified good or service has been transferred to a customer and (iii) we have
discretion in establishing the price for the specified good or service. When we
are the principal in a transaction, such as when we purchase (and thus control
and assume inventory risk) prepaid airtime before selling it to customers
utilizing our platform, revenue is reported on a gross basis. When we are an
agent in a transaction, such as when we distribute VAS on behalf of our
customers, and do not control the good or service to be provided, revenue is
recognized based on the amount that we are contractually entitled to receive for
performing the distribution service on behalf of our customers using our
platform.

Valuation of investment in Cell C

We have elected to measure our investment in Cell C, an unlisted equity
security, at fair value using the fair value option. Changes in the fair value
of this equity security are recognized in the caption “change in fair value of
equity securities” in our audited consolidated statements of operations. The tax
impact related to the change in fair value of equity securities is included in
income tax expense in our audited consolidated statements of operation. The
determination of the fair value of this equity security requires us to make
significant judgments and estimates. We base our estimates on assumptions we
believe to be reasonable but that are unpredictable and inherently uncertain.
Refer to Note 6 of our audited consolidated financial statements regarding the
valuation inputs and sensitivity related to our investment in Cell C.

We used a discounted cash flow model to determine the fair value of our
investment in Cell C as of June 30, 2022 and 2021, and valued Cell C at $0.0
(zero) as of each of June 30, 2022 and 2021. We utilized the latest approved
business plan provided by Cell C management for the period ended December 31,
2026
, for the June 30, 2022 and 2021 valuations, and the following key valuation
inputs were used:


                                     Between 16% and 24% over the period of the
Weighted Average Cost of Capital:    forecast
Long-term growth rate:               3% (3% as of June 30, 2021)
Marketability discount:              10%
Minority discount:                   15%

Net adjusted external debt – June ZAR 13.5 billion ($0.8 billion), no lease
30, 2022:(1)

                         liabilities included

Net adjusted external debt – June ZAR 11.2 billion ($0.8 billion), no lease
30, 2021:(2)

                         liabilities included



(1) translated from ZAR to U.S. dollars at exchange rates applicable as of June
30, 2022
.
(2) translated from ZAR to U.S. dollars at exchange rates applicable as of June
30, 2021
.

We believe the Cell C business plan is reasonable based on the current
performance and the expected changes in the business model. Refer to the
sensitivity analysis included in Note 6 to our audited consolidated financial
statements related to our valuation of Cell C as of June 30, 2022.

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Recoverability of equity securities and equity-accounted investments

We review our equity securities and equity-accounted investments for impairment
whenever events or circumstances indicate that the carrying amount of the
investment may not be recoverable. In performing this review, we are required to
estimate the fair value of our equity-accounted investments and other equity
securities. The determination of the fair value of these investments requires us
to make significant judgments and estimates.

Other equity securities include our investments in MobiKwik and CPS. These
equity securities do not have readily determinable fair values and therefore we
have elected to measure these investments at cost minus impairment, if any, plus
or minus changes resulting from observable price changes in orderly transactions
for the identical or a similar investment of the same issuer. If we identify an
impairment indicator related to these equity securities, we are required to
assess the carrying value of these equity securities against their fair value.
We did not identify any impairment indicators during each of fiscal 2022, 2021
and 2020, and therefore did not recognize any impairment losses related to these
equity securities during those years.

The determination of the fair value of an investment requires us to make
significant judgments and estimates. We are required to base our estimates on
assumptions which we believe to be reasonable, but these assumptions may be
unpredictable and inherently uncertain.

The Company did not identify any observable transactions during the year ended
June 30, 2022, and therefore there was no change in the fair value of MobiKwik
during the year. During the year ended June 30, 2021, MobiKwik entered into a
number of separate agreements with new shareholders to raise additional capital
through the issuance of additional shares. Specifically, we used the following
transactions as the basis for our fair value adjustments to our investment in
MobiKwik during the year ended June 30, 2021: (i) in early November 2020,
$135.54 per share; (ii) in March 2021, $170.33 per share; and (iii) in June
2021
, $245.50 per share. We considered each of these transactions to be an
observable price change in an orderly transaction for similar or identical
equity securities issued by MobiKwik. Accordingly, the carrying value of our
investment in MobiKwik increased from $27.0 million as of June 30, 2020, to
$76.3 million as of June 30, 2021. The change in the fair value of MobiKwik for
the year ended June 30, 2021, of $49.3 million, is included in the caption
“Change in fair value of equity securities” in our audited consolidated
statement of operations for the year ended June 30, 2021.

We did not identify any impairment indicators during fiscal 2022 and therefore
did not recognize any impairment losses related to our equity-accounted
investments during that year. We performed impairment assessments during fiscal
2021 and 2020, for certain of our equity-accounted investments following the
identification of certain impairment indicators. The results of our impairment
tests during fiscal 2021 and 2020, resulted in impairments of $21.1 million and
$33.8 million, respectively, related to our equity-accounted investments. These
impairments are discussed in Note 9 to our audited consolidated financial
statements.

For fiscal 2021, in determining the fair value of certain of our
equity-accounted investments, we have considered (i) for Finbond specifically,
as it is listed on the Johannesburg Stock Exchange, its market price as of the
impairment assessment date, adjusted for a liquidity discount of 15%, and (ii)
the net asset value of the equity-accounted investment being assessed as a proxy
of fair value because reasonable cash flow forecasts were not available.

For fiscal 2020, in determining the fair value of certain of our
equity-accounted investments, we have considered (i) for DNI specifically, the
fair value of consideration received on April 1, 2020, adjusted for the
accumulated foreign currency translation reserve, (ii) dividend discount models
based on projected cash flows, adjusted for identified risks, (iii) various
multiples applicable to peer and industry comparables of certain of our
equity-accounted investments, and (iv) the net asset value of the
equity-accounted investment being assessed as a proxy of fair value because
reasonable cash flow forecasts were not available.

We base our estimates on assumptions we believe to be reasonable but that are
unpredictable and inherently uncertain. The fair value of our investment in
Finbond is sensitive to movements in its market price, which is quoted in ZAR,
because we use the market price as the basis of our valuation.

Deferred Taxation

We estimate our tax liability through the calculations done for the
determination of our current tax liability, together with assessing temporary
differences resulting from the different treatment of items for tax and
accounting purposes. These differences result in deferred tax assets and
liabilities which are disclosed on our balance sheet.

Management then has to assess the likelihood that deferred tax assets are more
likely than not to be realized in the foreseeable future. A valuation allowance
is created if it is determined that a deferred tax asset will not be realized in
the foreseeable future. Any change to the valuation allowance would be charged
or credited to income in the period such determination is made. In assessing the
need for a valuation allowance, historical levels of income, expectations and
risks associated with estimates of future taxable income and ongoing prudent and
practicable tax planning strategies are considered. During fiscal 2022, we
recorded a net decrease of $1.7 million, to our valuation allowance, and during
fiscal 2021 and 2020, respectively, we recorded a net increase of $1.5 million
and $13.4 million. As of June 30, 2022 and 2021, the valuation allowance related
to deferred tax assets was $117.1 million and $118.8 million, respectively.

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Stock-based Compensation

Management is required to make estimates and assumptions related to our
valuation and recording of stock-based compensation charges under current
accounting standards. These standards require all share-based compensation to
employees to be recognized in the statement of operations based on their
respective grant date fair values over the requisite service periods and also
requires an estimation of forfeitures when calculating compensation expense.

We utilize the Cox Ross Rubinstein binomial model to measure the fair value of
stock options granted to employees and directors. We have also utilized a
bespoke adjusted Monte Carlo simulation discounted cash flow model to measure
the fair value of restricted stock with market conditions granted to employees
and directors. The stock-based compensation cost related to these valuations has
been recognized on a straight-line basis. These valuation models require
estimates of a number of key valuation inputs including expected volatility,
expected dividend yield, expected term and risk-free interest rate. Our
management has estimated forfeitures based on historic employee behavior under
similar compensation plans. The fair value of stock options is affected by the
assumptions selected. The fair value calculation is especially sensitive to our
valuation assumption with respect to expected volatility. For instance, a 5%
increase (to 55%) or decrease (to 45%) in the expected volatility used (of 50%)
to value stock options granted in February 2022, would result in a charge that
was 9% higher (if 55% were used) or 9% lower (if 45% were used). Net stock-based
compensation expense from continuing operations was $3.0 million, $0.3 million
and $1.7 million for fiscal 2022, 2021 and 2020, respectively.

Accounts Receivable and Allowance for Doubtful Accounts Receivable

We maintain an allowance for doubtful accounts receivable related to our
Consumer and Merchant segments with respect to sales or rental of hardware,
support and maintenance services provided; or sale of licenses to customers; or
the provision of transaction processing services to our customers.

Our policy is to regularly review the aging of outstanding amounts due from
customers and adjust the provision based on management’s estimate of the
recoverability of the amounts outstanding.

Management considers factors including period outstanding, creditworthiness of
the customers, past payment history and the results of discussions by our credit
department (and in some cases including our sales and finance teams) with the
customer. We consider this policy to be appropriate taking into account factors
such as historical bad debts, current economic trends and changes in our
customer payment patterns. Additional provisions may be required should the
ability of our customers to make payments when due deteriorate in the future.
Judgment is required to assess the ultimate recoverability of these receivables,
including ongoing evaluation of the creditworthiness of each customer.

Lending

Consumer microlending

We maintain an allowance for doubtful finance loans receivable related to our
Consumer services segment with respect to short-term loans to qualifying
customers. Our policy is to regularly review the ageing of outstanding amounts
due from borrowers and adjust the provision based on management’s estimate of
the recoverability of finance loans receivable. We write off microlending loans
and related service fees if a borrower is in arrears with repayments for more
than three months or dies.

Credit bureau checks as well as an affordability test are conducted as part of
the origination process, both of which being in line with local regulations. We
consider this policy to be appropriate because the affordability test we perform
takes into account a variety of factors such as other debts and total
expenditures on normal household and lifestyle expenses. Additional allowances
may be required should the ability of our customers to make payments when due
deteriorates in the future. A significant amount of judgment is required to
assess the ultimate recoverability of these finance loan receivables, including
ongoing evaluation of the creditworthiness of each customer.

Merchant lending

We maintain an allowance for doubtful finance loans receivable related to our
Merchant services segment with respect to short-term loans to qualifying
merchant customers. Our policy is to regularly review the ageing of outstanding
amounts due from these merchants and an allowance is created for the full amount
outstanding if the customer is in arrears for more than 15 days. We write off
loans and related interest and fees when it is evident that reasonable recovery
procedures, including where deemed necessary, formal legal action, have failed.

Our risk management procedures include adhering to our proprietary lending
criteria which uses an online-system loan application process, obtaining
necessary customer transaction-history data and credit bureau checks. We
consider these procedures to be appropriate because it takes into account a
variety of factors such as the customer’s credit capacity and customer-specific
risk factors when originating a loan.


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Recent Accounting Pronouncements

Recent accounting pronouncements adopted

Refer to Note 2 of our audited consolidated financial statements for a full
description of recent accounting pronouncements, including the dates of adoption
and effects on financial condition, results of operations and cash flows.

Recent accounting pronouncements not yet adopted as of June 30, 2022

Refer to Note 2 of our audited consolidated financial statements for a full
description of recent accounting pronouncements not yet adopted as of June 30,
2022
, including the expected dates of adoption and effects on financial
condition, results of operations and cash flows.

Currency Exchange Rate Information

Actual exchange rates

The actual exchange rates for and at the end of the periods presented were as
follows:


Table 1                                     June 30,
                                    2022      2021      2020

ZAR : $ average exchange rate 15.2154 15.4146 15.6775
Highest ZAR : $ rate during period 16.2968 17.6866 19.0569
Lowest ZAR : $ rate during period 14.1630 13.4327 13.8973
Rate at end of period

              16.2903   14.3010   17.3326



[[Image Removed: Picture 2]]


                                       34

——————————————————————————–

Translation Exchange Rates

We are required to translate our results of operations from ZAR to U.S. dollars
on a monthly basis. Thus, the average rates used to translate this data for the
years ended June 30, 2022, 2021 and 2020, vary slightly from the averages shown
in the table above. The translation rates we use in presenting our results of
operations are the rates shown in the following table:



Table 2                                     June 30,
                                    2022      2021      2020

Income and expense items: $1 = ZAR 15.1978 15.7162 17.5686
Balance sheet items: $1 = ZAR 16.2903 14.3010 17.3326

Results of operations

The discussion of our consolidated overall results of operations is based on
amounts as reflected in our audited consolidated financial statements which are
prepared in accordance with U.S. GAAP. We analyze our results of operations both
in U.S. dollars, as presented in the audited consolidated financial statements,
and supplementally in ZAR, because ZAR is the functional currency of the
entities which contribute the majority of our results and is the currency in
which the majority of our transactions are initially incurred and measured. Due
to the significant impact of currency fluctuations between the U.S. dollar and
ZAR on our reported results and because we use the U.S. dollar as our reporting
currency, we believe that the supplemental presentation of our results of
operations in ZAR is useful to investors to understand the changes in the
underlying trends of our business.

During November 2021, our chief operating decision maker changed the Company’s
operating and internal reporting structures following the establishment of a new
management team and the Company’s decision to focus primarily on the South
African market. The chief operating decision maker decided to analyze our
operating performance primarily based on operational lines which group financial
services provided to customers (consumers) into the Consumer operating segment
and goods and services provided to corporate and other juristic entities into
the Merchant operating segment. Refer to Note 21 in our audited consolidated
financial statements for additional information.

Our operating segment revenue presented in “-Results of operations by operating
segment” represents total revenue per operating segment before intercompany
eliminations. A reconciliation between total operating segment revenue and
revenue presented in our audited consolidated financial statements is included
in Note 21 to those statements. Our chief operating decision maker evaluates
segment performance based on segment earnings before interest, tax, depreciation
and amortization (“EBITDA”), adjusted for items mentioned in the next sentence
(“Segment Adjusted EBITDA”). We do not allocate depreciation and amortization,
impairment of goodwill or other intangible assets, certain lease charges (“Lease
adjustments”), non-recurring items (including gains or losses on disposal of
investments, fair value adjustments to equity securities, fair value adjustments
to currency options), interest income, interest expense, income tax expense or
loss from equity-accounted investments to our reportable segments. The Lease
adjustments reflect lease charges excluded from the calculation of Segment
Adjusted EBITDA and are therefore reported as a reconciling item to reconcile
the reportable segments’ Segment Adjusted EBITDA to the Company’s loss before
income tax expense. A reconciliation of this Segment Adjusted EBITDA to net
income (loss) before income tax is included in Note 21 to our consolidated
financial statements. Unless otherwise stated, reference to EBITDA in the
discussion below relates to Segment Adjusted EBITDA.

Fiscal 2022 includes consolidation of Connect from April 14, 2022. We
deconsolidated CPS from June 1, 2020 and its results are excluded from that
date. We disposed of our South Korean operation in the third quarter of fiscal
2020 and it has been presented as a discontinued operation for fiscal 2020. We
used the equity method to account for DNI in fiscal 2020. We disposed of FIHRST
during the second quarter of fiscal 2020 and its contribution to our reported
results is excluded from December 1, 2019. Refer also to Note 3, Note 9 and Note
24 to the audited consolidated financial statements for additional information
regarding these transactions.

We analyze our business and operations in terms of three inter-related but
independent operating segments: (1) Consumer, (2) Merchant and (3) Other. In
addition, corporate and corporate office activities that are impracticable to
ascribe directly to any of the other operating segments, as well as any
inter-segment eliminations, are included in Corporate/Eliminations.

                                       35

——————————————————————————–

Fiscal 2022 Compared to Fiscal 2021

The following factors had a significant influence on our results of operations
during fiscal 2022 as compared with the same period in the prior year:

?Higher revenue: Our revenues increased 65% in ZAR, primarily due to the
contribution from Connect, an increase in hardware sales, an increase in
merchant transaction processing fees, and a moderate increase in lending and
insurance revenues;
?Lower operating losses: Operating losses decreased, delivering an improvement
of 28% in ZAR compared with the prior period primarily due to the positive
contribution from Connect, the closure of the loss-making IPG operations and the
implementation of various cost reduction initiatives in our Consumer business,
which was partially offset by an increase in acquisition related intangible
asset amortization and transaction costs. During fiscal 2022, we recorded a
reorganization charge of $5.9 million related to the retrenchment process we
commenced in January 2022;

?Significant transaction costs: We expensed $6.0 million of transaction costs
related to the Connect acquisition; and
?Foreign exchange movements: The U.S. dollar was 3% stronger against the ZAR
during fiscal 2022, which impacted our reported results.

Consolidated overall results of operations

This discussion is based on the amounts prepared in accordance with U.S. GAAP.

The following tables show the changes in the items comprising our statements of
operations, both in U.S. dollars and in ZAR:

Table 3                                                     In U.S. Dollars
                                                          Year ended June 30,
                                                     2022          2021         $ %
                                                    $ '000        $ '000      change
Revenue                                               222,609       130,786       70%
Cost of goods sold, IT processing, servicing and
support                                               168,317        96,248       75%
Selling, general and administration                    74,993        84,063     (11%)
Depreciation and amortization                           7,575         4,347       74%
Reorganization costs                                    5,894             -        nm
Transaction costs related to Connect acquisition        6,025             -        nm
Operating loss                                       (40,195)      (53,872)     (25%)
Gain related to fair value adjustment to currency
options                                                 3,691             -        nm
Loss on disposal of equity-accounted investment           376            13    2,792%
Gain on disposal of equity securities                     720             -        nm
Change in fair value of equity securities                   -        49,304        nm
Loss on disposal of equity-accounted investment -
Bank Frick                                                  -           472        nm
Interest income                                         2,089         2,416     (14%)
Interest expense                                        5,829         2,982       95%
Loss before income tax expense                       (39,900)       (5,619)      610%
Income tax expense                                        327         7,560     (96%)
Net loss before loss from equity-accounted
investments                                          (40,227)      (13,179)      205%
Loss from equity-accounted investments                (3,649)      (24,878)     (85%)
Net loss attributable to us                          (43,876)      (38,057)       15%



                                       36

——————————————————————————–


Table 4                                                  In South African Rand
                                                          Year ended June 30,
                                                     2022          2021        ZAR %
                                                   ZAR '000      ZAR '000     change
Revenue                                             3,383,166     2,055,459       65%
Cost of goods sold, IT processing, servicing and
support                                             2,558,047     1,512,653       69%
Selling, general and administration                 1,139,728     1,321,151     (14%)
Depreciation and amortization                         115,123        68,318       69%
Reorganization costs                                   89,576             -        nm
Transaction costs related to Connect acquisition       91,567             -        nm
Operating loss                                      (610,875)     (846,663)     (28%)
Gain related to fair value adjustment to currency
options                                                56,095             -        nm
Loss on disposal of equity-accounted investment         5,714           204    2,701%
Gain on disposal of equity securities                  10,942             -        nm
Change in fair value of equity securities                   -       774,872        nm
Loss on disposal of equity-accounted investment -
Bank Frick                                                  -         7,418        nm
Interest income                                        31,748        37,970     (16%)
Interest expense                                       88,587        46,866       89%
Loss before income tax expense                      (606,391)      (88,309)      587%
Income tax expense                                      4,970       118,814     (96%)
Net loss before loss from equity-accounted
investments                                         (611,361)     (207,123)      195%
Loss from equity-accounted investments               (55,457)     (390,988)     (86%)
Net loss attributable to us                         (666,818)     (598,111)       11%



The increase in revenue was primarily due to the inclusion of Connect, which has
substantial low margin prepaid airtime sales in addition to its core processing
revenue, an increase in hardware sales, an increase in merchant transaction
processing fees, and moderate increases in lending and insurance revenues.

The increase in cost of goods sold, IT processing, servicing and support was
primarily due to the inclusion of Connect, an increase in the cost of hardware
sales, higher costs related to transaction fees and an increase in
insurance-related claims experience, which were partially offset by the benefits
of various cost reduction initiatives in our Consumer business.

In ZAR, the decrease in selling, general and administration expenses was
primarily due to lower IPG-related expenses incurred following its closure, some
benefits from our cost reduction initiatives, as well as a recalibration, in
June 2022, of our allowance for doubtful microlending finance loans receivable,
in our Consumer business, from 10% of the lending book outstanding to 6.5% of
the lending book, which resulted in a release from the allowance in fiscal 2022.
These reductions were partially offset by the inclusion of expenses related to
Connect’s operations, higher employee-related expenses related to the expansion
of our senior management team, and the year-over-year impact of inflationary
increases on employee-related expenses.

Depreciation and amortization expense increased in fiscal 2022 compared with
fiscal 2021 due to the inclusion of acquisition-related intangible asset
amortization related to intangible assets identified pursuant to the Connect
acquisition, as well as the inclusion of depreciation expense related to
Connect’s property, plant and equipment.

We embarked on a retrenchment process on January 10, 2022, and incurred
reorganization expenses of $5.9 million during fiscal 2022.

Transaction costs related to Connect acquisition includes fees paid to external
service providers associated with the contract drafting and negotiations;
corporate finance advisory services; legal, financial and tax due diligence
activities performed; warranty and indemnity insurance related to the
transaction; and other advisory services procured; as well as our portion of the
fees paid to competition authorities related to the regulatory filings made in
various jurisdictions.

Our operating loss margin in fiscal 2022 and 2021 was (18.1%) and (41.2%),
respectively. Adjusting for the restructuring and transaction costs incurred,
the underlying operating loss margin in fiscal 2022 was (12.7%). We discuss the
components of operating loss margin under “-Results of operations by operating
segment.”

The change in fair value of equity securities during fiscal 2021 represents a
non-cash fair value adjustment gain related to MobiKwik. We continue to carry
our investment in Cell C at $0 (zero). Refer to Note 9 to our consolidated
financial statements for the methodology and inputs used in the fair value
calculation for MobiKwik and Note 6 for the methodology and inputs used in the
fair value calculation for Cell C.


                                       37

——————————————————————————–

Gain related to fair value adjustment to currency options represents the
realized gain related to foreign exchange option contracts entered into in
November 2021 in order to manage the risk of currency volatility and to fix the
USD amount to be utilized for part of the Connect purchase consideration
settlement. The foreign exchange option contracts matured on February 24, 2022.
Refer to Note 6 to our consolidated financial statements for additional
information related to these currency options.

We recorded a gain of $0.7 million related to the disposal of our entire
interest in an equity security during fiscal 2022. Refer to Note 9 to our
consolidated financial statements for additional information regarding this
gain.

We recorded a loss of $0.4 million related to the disposal of a minor portion of
our investment in Finbond during fiscal 2022. Refer to Note 9 to our
consolidated financial statements for additional information regarding these
disposals.

We recorded a loss of $0.5 million related to the disposal of Bank Frick during
fiscal 2021.

Interest on surplus cash decreased to $2.1 million (ZAR 31.7 million) from $2.4
million
(ZAR 38.0 million), primarily due to the utilization of a significant
portion of our surplus cash reserves to acquire Connect as well as lower average
daily cash balances in fiscal 2022.

Interest expense increased to $5.8 million (ZAR 88.6 million) from $3.0 million
(ZAR 46.9 million), primarily as a result of additional interest expense
incurred related to borrowings obtained to partially fund the acquisition of
Connect, interest expenses incurred in Connect to fund our cash management,
digitization and VAS offerings, and a higher utilization of our facilities to
fund our ATMs.

Fiscal 2022 tax expense was $0.3 million (ZAR 5.0 million) compared to $7.6
million
(ZAR 118.8 million) in fiscal 2021. Our effective tax rate for fiscal
2022 was impacted by the tax expense recorded by our profitable South African
operations, a deferred tax benefit related to acquisition-related intangible
asset amortization, non-deductible expenses (including transaction expenses
related to the acquisition of Connect), the on-going losses incurred by certain
of our South African businesses and the associated valuation allowances created
related to the deferred tax assets recognized regarding net operating losses
incurred by these entities.

Our effective tax rate for fiscal 2021 was impacted by the tax effect on the
change in the fair value of our equity securities, which is at a lower tax rate
than the South African statutory rate, the tax charge related to our profitable
South African operations, non-deductible expenses, the on-going losses incurred
by certain of our South African businesses and the associated valuation
allowances created related to the deferred tax assets recognized regarding net
operating losses incurred by these entities, which was partially offset by the
reversal of the deferred tax liability related to one of our equity-accounted
investments following its impairment.

The disposal of certain of our equity-accounted investments in fiscal 2021 and
2020, as well as a number of impairments, has impacted the comparability of our
loss from equity-accounted investments. We disposed of our investment in Bank
Frick
in fiscal 2021. The largest impairment recorded in fiscal 2021 related to
our investment in Finbond following a slow-down in its business activity and
lower listed share price. Refer to Note 9 to our audited consolidated financial
statements for additional information regarding our equity-accounted
investments, including disclosure regarding the disposals and impairments.
Finbond is listed on the Johannesburg Stock Exchange and reports its six-month
results during our first half and its annual results during our fourth quarter.
The table below presents the relative loss from our equity accounted
investments:


Table 5                                      Year ended June 30,
                                              2022         2021      $ %
                                             $ '000       $ '000    change
Finbond                                       (3,665)    (22,009)    (83%)
Share of net (loss) income                    (3,665)     (4,359)    (16%)
Impairment                                          -    (17,650)       nm
Bank Frick                                          -       1,156       nm
Share of net income                                 -       1,156       nm
Other                                              16     (4,025)       nm
Share of net income (loss)                         16       (531)       nm
Impairment                                          -     (3,494)       nm

Total loss from equity-accounted investment (3,649) (24,878) (85%)




                                       38

——————————————————————————–

Results of operations by operating segment

The composition of revenue and the contributions of our business activities to
operating (loss) income are illustrated below:

Table 6                                             In U.S. Dollars
                                                  Year ended June 30,
                                        2022     % of      2021     % of      %
Operating Segment                      $ '000    total    $ '000    total   change
Revenue:
Consumer                                65,932     30%     66,149     51%     (0%)
Merchant                               155,366     70%     61,478     47%     153%
Other                                    1,695      1%      3,318      3%    (49%)
Subtotal: Operating segments           222,993    100%    130,945    100%      70%
Corporate/Eliminations                   (384)       -      (159)       -     142%
Consolidated revenue                   222,609    100%    130,786    100%      70%
Segment Adjusted EBITDA:
Consumer                              (22,232)     78%   (26,303)     58%    (15%)
Merchant                                11,305   (39%)      4,728   (10%)     139%
Other                                      503    (2%)   (10,374)     23%       nm
Total Segment Adjusted EBITDA         (10,424)     36%   (31,949)     70%    (67%)
Corporate/eliminations                (18,241)     64%   (13,428)     30%      36%
Subtotal                              (28,665)    100%   (45,377)    100%    (37%)
Less: Lease adjustments                  3,955              4,148             (5%)
Less: Depreciation and amortization      7,575              4,347              74%
Total consolidated operating loss     (40,195)           (53,872)            (25%)



Table 7                                           In South African Rand
                                                   Year ended June 30,
                                        2022      % of      2021      % of      %
Operating Segment                     ZAR '000    total   ZAR '000    total   change
Revenue:
Consumer                              1,002,021     30%   1,039,611     51%     (4%)
Merchant                              2,361,221     70%     966,201     47%     144%
Other                                    25,760      1%      52,146      3%    (51%)
Subtotal: Operating segments          3,389,002    100%   2,057,958    100%      65%
Corporate/Eliminations                  (5,836)       -     (2,499)       -     134%
Consolidated revenue                  3,383,166    100%   2,055,459    100%      65%
Segment Adjusted EBITDA:
Consumer                              (337,877)     78%   (413,383)     58%    (18%)
Merchant                                171,811   (39%)      74,306   (10%)     131%
Other                                     7,644    (2%)   (163,040)     23%       nm
Total Segment Adjusted EBITDA         (158,422)     36%   (502,117)     70%    (68%)
Corporate/eliminations                (277,223)     64%   (211,037)     30%      31%
Subtotal                              (435,645)    100%   (713,154)    100%    (39%)
Less: Lease adjustments                  60,107              65,191             (8%)
Less: Depreciation and amortization     115,123              68,318              69%
Total consolidated operating loss     (610,875)           (846,663)            (28%)



Consumer

The underlying decrease in revenue was primarily due to lower processing fees,
partially offset by higher insurance and lending revenue and account holder
fees. We embarked on a retrenchment process during the third quarter of fiscal
2022 and recorded an expense of $5.9 million which is included in the Segment
EBITDA loss, refer to Note 1 to our consolidated financial statements for
additional information regarding this process. Segment EBITDA loss, excluding
the reorganization charge, has decreased primarily due to the implementation of
various cost reduction initiatives and a recalibration, in June 2022, of our
allowance for doubtful microlending finance loans receivable from 10% of the
lending book outstanding to 6.5% of the lending book, which resulted in a
release from the allowance in fiscal 2022, which decreases were partially offset
by an increase in insurance-related claims experience.

                                       39

——————————————————————————–

Our EBITDA loss margin in fiscal 2022 and 2021 was (33.7%) and (39.8%),
respectively. After adjusting for the reorganization charge our fiscal 2022
EBITDA loss margin was (24.8%).

Merchant

Segment revenue increased due to the inclusion of Connect for two and a half
months and an increase in hardware sales and processing fees. The increase in
segment EBITDA is primarily due to the inclusion of Connect, which was partially
offset by higher costs related to processing fees and higher employee-related
expenses. Connect records a significant proportion of its airtime sales in
revenue and cost of sales, while only earning a relatively small margin. This
depresses the EBITDA margins shown by the business.

Our EBITDA margin in fiscal 2022 and 2021 was 7.3% and 7.7%, respectively.

Other

Segment revenue decreased due to lower revenue following the closure of IPG in
fiscal 2021. We recorded an EBITDA contribution during fiscal 2022 following the
closure of our loss-making activities performed through IPG.

Our EBITDA (loss) margin for the Other segment was 29.7% and (312.7%) during
fiscal 2022 and 2021, respectively.

Corporate/ Eliminations

Our corporate expenses generally include acquisition-related intangible asset
amortization; expenses incurred related to corporate actions; expenditures
related to compliance with the Sarbanes-Oxley Act of 2002; non-employee
directors’ fees; certain employee and executive bonuses; stock-based
compensation; legal fees; audit fees; directors and officer’s insurance
premiums; elimination entries; and from fiscal 2022 our group CEO’s
compensation.

Our corporate expenses for fiscal 2022 increased compared with fiscal 2021
primarily due to transaction related expenses of $6.0 million (ZAR 91.6 million)
related to Connect, legacy processing adjustments of $1.6 million (ZAR 25.7
million
), and significantly higher stock-based compensation charges due to the
expansion of our senior management team. The legacy processing adjustments
represents amounts we identified during the current fiscal quarter related to
prior periods that are payable to third parties. Fiscal 2021 corporate expenses
included an allowance on doubtful loans receivable from equity-accounted
investments of $3.7 million.

Fiscal 2021 Compared to Fiscal 2020

The following factors had a significant influence on our results of operations
during fiscal 2021 as compared with the same period in the prior year:


?Lower revenue: Our revenues decreased 19% in ZAR primarily due to fewer prepaid
airtime and hardware sales and lower transaction and account fee revenue, which
was partially offset by modestly higher lending and insurance revenue;
?Ongoing operating losses: Operating costs were largely in line with the prior
period in ZAR due to the largely fixed cost nature of the cost base. As a
result, we continue to experience operating losses because of depressed
revenues;
?Non-cash increase in fair value of MobiKwik: We recorded a non-cash fair value
gain during fiscal 2021 of $49.3 million related to the change in fair value of
MobiKwik; and
?Foreign exchange movements: The U.S. dollar was 11% weaker against the ZAR
during fiscal 2021, which impacted our reported results.

                                       40

——————————————————————————–

The following tables show the changes in the items comprising our statements of
operations, both in U.S. dollars and in ZAR:

Table 8                                                    In U.S. Dollars
                                                         Year ended June 30,
                                                    2021         2020(1)       $ %
                                                   $ '000        $ '000      change
Revenue                                              130,786       144,299      (9%)
Cost of goods sold, IT processing, servicing and
support                                               96,248       102,308      (6%)
Selling, general and administration                   84,063        75,256       12%
Depreciation and amortization                          4,347         4,647      (6%)
Impairment loss                                            -         6,336        nm
Operating loss                                      (53,872)      (44,248)       22%
Change in fair value of equity securities             49,304             -        nm
Loss on disposal of equity-accounted investment           13             -        nm
Loss on disposal of equity-accounted investment
- Bank Frick                                             472             -        nm
Gain on disposal of FIHRST                                 -         9,743        nm
Loss on disposal of DNI                                    -         1,010        nm
Loss on deconsolidation of CPS                             -         7,148        nm
Interest income                                        2,416         2,805     (14%)
Interest expense                                       2,982         7,641     (61%)
Loss before income tax expense                       (5,619)      (65,016)     (91%)
Income tax expense                                     7,560         2,656      185%
Net loss before loss from equity-accounted
investments                                         (13,179)      (67,672)     (81%)
Loss from equity-accounted investments              (24,878)      (29,542)     (16%)
Net loss from continuing operations                 (38,057)      (97,214)     (61%)
Net income from discontinued operations                    -         6,402        nm
Gain from disposal of discontinued operations,
net of tax                                                 -        12,454        nm
Net loss attributable to us                         (38,057)      (78,358)     (51%)
Continuing                                          (38,057)      (97,214)     (61%)
Discontinued                                               -        18,856        nm


(1)Refer to Note 24 to the audited consolidated financial statements for
discontinued operations disclosures.


                                       41

——————————————————————————–


                                                        In South African Rand
Table 9                                                       (US GAAP)
                                                         Year ended June 30,
                                                    2021         2020(1)      ZAR %
                                                  ZAR '000      ZAR '000      change
Revenue                                            2,055,459     2,535,131      (19%)
Cost of goods sold, IT processing, servicing and
support                                            1,512,653     1,797,408      (16%)
Selling, general and administration                1,321,151     1,322,142       (0%)
Depreciation and amortization                         68,318        81,641      (16%)
Impairment loss                                            -       111,315         nm
Operating loss                                     (846,663)     (777,375)         9%
Change in fair value of equity securities            774,872             -         nm
Loss on disposal of equity-accounted investment          204             -         nm
Loss on disposal of equity-accounted investment
- Bank Frick                                           7,418             -         nm
Gain on disposal of FIHRST                                 -       171,171         nm
Loss on disposal of DNI                                    -        17,744         nm
Loss on deconsolidation of CPS                             -       125,580         nm
Interest income                                       37,970        49,280      (23%)
Interest expense                                      46,866       134,242      (65%)
Loss before income tax expense                      (88,309)   (1,142,239)      (92%)
Income tax expense                                   118,814        46,662       155%
Net loss before loss from equity-accounted
investments                                        (207,123)   (1,188,901)      (83%)
Loss from equity-accounted investments             (390,988)     (519,012)      (25%)
Net loss from continuing operations                (598,111)   (1,707,913)      (65%)
Net income from discontinued operations                    -       112,474         nm
Gain from disposal of discontinued operations,
net of tax                                                 -       218,799         nm
Net loss attributable to us                        (598,111)   (1,376,640)      (57%)
Continuing                                         (598,111)   (1,707,913)      (65%)
Discontinued                                               -       331,273         nm


(1)Refer to Note 24 to the audited consolidated financial statements for
discontinued operations disclosures.

The decrease in revenue was primarily due to fewer prepaid airtime and hardware
sales and lower transaction and account fee revenue, which was partially offset
by modestly higher lending and insurance revenue.

The decrease in cost of goods sold, IT processing, servicing and support was
primarily due to lower cost of prepaid airtime sales, which was partially offset
by higher costs related to transaction fees and an increase in insurance-related
claims experience.

In ZAR, the decrease in selling, general and administration expense was
primarily due to the impact of a weaker U.S. dollar on U.S. dollar-denominated
expenses measured in ZAR and lower stock-based compensation charges, which was
partially offset by the year-over-year impact of inflationary increases on
employee-related expenses, and allowances for doubtful loans receivable from
equity-accounted investments created during fiscal 2021.

Depreciation and amortization decreased primarily due to lower overall
depreciation related to tangible assets that were fully depreciated during
fiscal 2021.

During fiscal 2020, we recorded an impairment loss of $5.6 million related to
the impairment of a portion of our EasyPay business unit’s allocated goodwill
and a $0.7 million impairment loss related to our Maltese e-money license. Refer
to Note 10 of our audited consolidated financial statements for additional
information regarding these impairment losses.

Our operating loss margin for fiscal 2021 and 2020 was (41.2%) and (30.7%),
respectively. We discuss the components of operating (loss) income margin under
“-Results of operations by operating segment.”

The change in fair value of equity securities during fiscal 2021 represents a
non-cash fair value gain related to MobiKwik. There was no change in the fair
value of equity securities during fiscal 2020. We continue to carry our
investment in Cell C at $0 (zero). Refer to Note 9 to our audited consolidated
financial statements for the methodology and inputs used in the fair value
calculation for MobiKwik and Note 6 for the methodology and inputs used in the
fair value calculation for Cell C.

We recorded a loss of $0.5 million related to the disposal of Bank Frick during
fiscal 2021, refer to Note 9 to our audited consolidated financial statements
for additional information regarding this transaction.


                                       42

——————————————————————————–

We recorded a gain of $9.7 million related to the disposal of FIHRST during
fiscal 2020, which was partially offset by a $1.0 million loss on the disposal
of our remaining interest in DNI and a $7.1 million loss on the deconsolidation
of CPS. We also paid a termination fee of $17.5 million in respect of our
decision not to exercise our option to acquire control of Bank Frick

Interest on surplus cash decreased to $2.4 million (ZAR 38.0 million) from $2.8
million
(ZAR 49.3 million), due primarily to the higher average daily cash
balances following the increase in our cash reserves as a result of the disposal
of certain business in fiscal 2020, which was more than offset by lower rates of
interest earned on surplus cash.

Interest expense decreased to $3.0 million (ZAR 46.9) million from $7.6 million
(ZAR 134.2 million), primarily as a result of lower borrowings, a reduction in
South African interest rates and lower utilization of our ATM facilities because
we used our cash reserves to fund our ATMs.

Fiscal 2021 tax expense was $7.6 million (ZAR 118.8 million) compared to $2.7
million
(ZAR 46.7 million) in fiscal 2020. Our effective tax rate for fiscal
2021 was impacted by the tax effect on the change in the fair value of our
equity securities, which is at a lower tax rate than the South African statutory
rate, the tax charge related to our profitable South African operations,
non-deductible expenses, the on-going losses incurred by certain of our South
African businesses and the associated valuation allowances created related to
the deferred tax assets recognized regarding net operating losses incurred by
these entities, which was partially offset by the reversal of the deferred tax
liability related to one of our equity-accounted investments following its
impairment.

Our effective tax rate for fiscal 2020, was impacted by the tax-neutral
disposals of FIHRST and DNI, the tax-neutral deconsolidation of CPS,
non-deductible impairment losses, the option termination fee paid, the ongoing
losses incurred by IPG and certain of our South African businesses and the
associated valuation allowances created related to the deferred tax assets
recognized regarding those net operating losses, other non-deductible expenses,
including certain corporate transactions-related expenditure, and the tax
expense recorded by our profitable businesses, primarily in South Africa.

The disposal of certain of our equity-accounted investments in the fiscal 2021
and 2020, as well as a number of impairments, has impacted the comparability of
our loss from equity-accounted investments. We disposed of our investment in Bank Frick in fiscal 2021 and disposed of our investment in DNI in fiscal 2020.
The largest impairment recorded in fiscal 2021 related to our investment in
Finbond following a slow-down in its business activity and lower listed share
price. The largest impairment recorded in fiscal 2020 related to our investment
in Bank Frick following our decision not to exercise our option to take control
of the bank. Refer to Note 9 to our audited consolidated financial statements
for additional information regarding our equity-accounted investments, including
disclosure regarding the disposals and impairments. Finbond is listed on the
Johannesburg Stock Exchange and reports its six-month results during our first
half and its annual results during our fourth quarter. The table below presents
the relative loss (earnings) from our equity accounted investments:

Table 10                                                  Year ended June 30,
                                                    2021          2020
                                                   $ '000        $ '000      $ % change
Finbond                                             (22,009)         1,840           nm
Share of net (loss) income                           (4,359)         1,840           nm
Impairment                                          (17,650)                         nm
Bank Frick                                             1,156      (17,273)           nm
Share of net income                                    1,156         1,421        (19%)
Amortization of intangible assets, net of
deferred tax                                               -         (433)           nm
Impairment                                                 -      (18,261)           nm
DNI                                                        -       (9,744)           nm
Share of net income                                        -         4,676           nm
Amortization of intangible assets, net of
deferred tax                                               -       (1,350)           nm
Impairment                                                 -      (13,070)           nm
Other                                                (4,025)       (4,365)         (8%)
Share of net loss                                      (531)       (1,865)        (72%)
Impairment                                           (3,494)       (2,500)          40%

Total loss from equity-accounted investments (24,878) (29,542) (16%)




                                       43

——————————————————————————–

Results of operations by operating segment

The composition of revenue and the contributions of our business activities to
operating income are illustrated below:

Table 11                                            In U.S. Dollars
                                                  Year ended June 30,
                                        2021     % of      2020     % of      %
Operating Segment                      $ '000    total    $ '000    total   change
Revenue:
Consumer                                66,149     51%     70,998     49%     (7%)
Merchant                                61,478     47%     68,659     48%    (10%)
Other                                    3,318      3%      5,041      3%    (34%)
Subtotal: Operating segments           130,945    101%    144,698    100%    (10%)
Corporate/Eliminations                   (159)    (1%)      (399)       -    (60%)
Consolidated revenue                   130,786    100%    144,299    100%     (9%)
Segment Adjusted EBITDA:
Consumer                              (26,303)     58%   (13,989)     47%      88%
Merchant                                 4,728   (10%)      5,176   (17%)     (9%)
Other                                 (10,374)     23%   (12,015)     41%    (14%)
Total Segment Adjusted EBITDA         (31,949)     71%   (20,828)     71%      53%
Corporate/eliminations                (13,428)     29%    (8,773)     29%      53%
Subtotal                              (45,377)    100%   (29,601)    100%      53%
Less: Lease adjustments                  4,148              3,664              13%
Less: Depreciation and amortization      4,347              4,647             (6%)
Less: Impairments                            -              6,336               nm
Total consolidated operating loss     (53,872)           (44,248)              22%



Table 12                                          In South African Rand
                                                   Year ended June 30,
                                        2021      % of      2020      % of      %
Operating Segment                     ZAR '000    total   ZAR '000    total   change
Revenue:
Consumer                              1,039,610     51%   1,247,336     49%    (17%)
Merchant                                966,200     47%   1,206,242     48%    (20%)
Other                                    52,147      3%      88,563      3%    (41%)
Subtotal: Operating segments          2,057,957    100%   2,542,141    100%    (19%)
Corporate/Eliminations                  (2,498)       -     (7,010)       -    (64%)
Consolidated revenue                  2,055,459    100%   2,535,131    100%    (19%)
Segment Adjusted EBITDA:
Consumer                              (413,383)     58%   (245,767)     47%      68%
Merchant                                 74,306   (10%)      90,935   (17%)    (18%)
Other                                 (163,040)     23%   (211,087)     41%    (23%)
Total Segment Adjusted EBITDA         (502,117)     70%   (365,919)     70%      37%
Corporate/eliminations                (211,037)     30%   (154,129)     30%      37%
Subtotal                              (713,154)    100%   (520,048)    100%      37%
Less: Lease adjustments                  65,191              64,371               1%
Less: Depreciation and amortization      68,318              81,641            (16%)
Less: Impairments                             -             111,315               nm
Total consolidated operating loss     (846,663)           (777,375)               9%



Consumer

Segment revenue decreased due to lower account fee revenue, while lending and
insurance revenues were moderately higher compared to the prior period. The
segment incurred a higher operating loss compared with fiscal 2020 primarily due
to the reduction in account fee revenue as well as higher employee-related costs
and an increase in insurance claims experience.

Our EBITDA loss margin for fiscal 2021 and 2020 was (39.8%) and (19.7%),
respectively.

                                       44

——————————————————————————–

Merchant

Segment revenue decreased primarily due to fewer prepaid airtime sales and lower
volume-driven processing fees. The reduced revenue had a similar impact on costs
resulting in the operating profit from Merchant reducing largely in line with
the drop in revenue. The loss for fiscal 2020 includes a $1.3 million inventory
write-down related to prepaid airtime inventory.

Our EBITDA margin for fiscal 2021 and 2020 was 7.7% and 7.5%, respectively.

Other

Segment revenue decreased due to lower revenue following the closure of IPG in
fiscal 2021. Our EBITDA loss in this segment decreased during fiscal 2021
compared with fiscal 2020 due to the closure of IPG, however, we did incur
significant costs in fiscal 2021 to exit these activities.

Our EBITDA (loss) margin for the Other segment was (312.7%) and (238.3%) during
fiscal 2021 and 2020, respectively.

Corporate/ Eliminations

Our corporate expenses increased primarily due to allowances for doubtful loans
receivable from equity-accounted investments created during fiscal 2021 of $3.7
million
, higher legal fees, and foreign exchange losses, which were partially
offset by lower audit fees in fiscal 2021 and an unrealized foreign exchange
gain recognized in fiscal 2020.

Presentation of Quarterly Revenue and Operating (Loss) Income by Segment for
Fiscal 2021 and 2020

During the second quarter of fiscal 2022, our chief operating decision maker
changed our operating and internal reporting structures following the
establishment of a new management team and our decision to focus primarily on
the South African market. We have restated previously reported segment
information. The tables below present quarterly revenue and operating (loss)
income generated by our three reportable segments for fiscal 2021 and 2020, and
reconciliations to consolidated revenue and operating (loss) income, as well as
the U.S. dollar/ ZAR exchange rates applicable per fiscal quarter and year:


Table 13                                           Fiscal 2021
                                             In United States Dollars
                          Quarter 1    Quarter 2    Quarter 3    Quarter 4      F2021
                            $ '000       $ '000       $ '000       $ '000       $ '000
Consolidated revenue:
Consumer                      15,372       16,259       16,236       18,282       66,149
Merchant                      18,246       15,206       12,171       15,855       61,478
Other                          1,556          878          421          463        3,318
Subtotal: Operating
segments                      35,174       32,343       28,828       34,600      130,945
Corporate/Eliminations          (38)         (38)            -         (83)        (159)
Total consolidated
revenue                       35,136       32,305       28,828       34,517      130,786

Segment Adjusted EBITDA:
Consumer                     (6,571)      (5,214)      (7,610)      (6,908)     (26,303)
Merchant                       2,971        1,227          273          257        4,728
Other                        (2,631)      (4,339)      (3,315)         (89)     (10,374)
Total Segment Adjusted
EBITDA                       (6,231)      (8,326)     (10,652)      (6,740)     (31,949)
Corporate/eliminations       (2,796)      (4,743)      (1,404)      (4,485)     (13,428)
Subtotal                     (9,027)     (13,069)     (12,056)     (11,225)     (45,377)
Less: Lease adjustments          825        1,062        1,104        1,157        4,148
Less: Depreciation and
amortization                     923        1,074        1,132        1,218        4,347
Total consolidated
operating loss              (10,775)     (15,205)     (14,292)     (13,600)     (53,872)

Income and expense items:
$1 = ZAR                     16.7738      15.4653      14.9575      14.1687      15.7162



                                       45

——————————————————————————–



Table 14                                           Fiscal 2020
                                             In United States Dollars
                          Quarter 1    Quarter 2    Quarter 3    Quarter 4      F2020
                            $ '000       $ '000       $ '000       $ '000       $ '000
Consolidated revenue:
Consumer                      21,674       18,618       18,491       12,215       70,998
Merchant                      23,564       19,502       14,677       10,916       68,659
Other                          1,199          850        1,564        1,428        5,041
Subtotal: Operating
segments                      46,437       38,970       34,732       24,559      144,698
Corporate/Eliminations         (221)         (52)        (118)          (8)        (399)
Total consolidated
revenue                       46,216       38,918       34,614       24,551      144,299

Segment Adjusted EBITDA:
Consumer                     (2,784)      (2,809)      (3,889)      (4,507)     (13,989)
Merchant                       2,778        1,471        1,710        (783)        5,176
Other                        (1,969)      (2,979)      (3,043)      (4,024)     (12,015)
Total Segment Adjusted
EBITDA                       (1,975)      (4,317)      (5,222)      (9,314)     (20,828)
Corporate/eliminations       (2,304)      (3,931)        (510)      (2,028)      (8,773)
Subtotal                     (4,279)      (8,248)      (5,732)     (11,342)     (29,601)
Less: Lease adjustments          833          998          991          842        3,664
Less: Depreciation and
amortization                   1,324        1,174        1,153          996        4,647
Less: Impairments                  -            -        6,336            -        6,336
Total consolidated
operating loss               (6,436)     (10,420)     (14,212)     (13,180)     (44,248)

Income and expense items:
$1 = ZAR                     14.7520      14.6022      15.3667      17.2810      17.5686


Liquidity and Capital Resources

At June 30, 2022, our cash and cash equivalents were $43.9 million and comprised
of ZAR-denominated balances of ZAR 0.5 billion ($32.8 million), U.S.
dollar-denominated balances of $9.6 million, and other currency deposits,
primarily Botswana pula, of $1.5 million, all amounts translated at exchange
rates applicable as of June 30, 2022. The decrease in our unrestricted cash
balances from June 30, 2021 was primarily due to utilization of cash reserves to
fund a portion of the Connect purchase consideration that was payable in cash,
and to fund our operations and payment of reorganization costs, which was
partially offset by the receipt of $11.4 million related to the sale of Bank
Frick
in fiscal 2021 and a $3.7 million gain on foreign currency options.

We generally invest any surplus cash held by our South African operations in
overnight call accounts that we maintain at South African banking institutions,
and any surplus cash held by our non-South African companies in U.S.
dollar-denominated money market accounts.

Historically, we have financed most of our operations, research and development,
working capital, and capital expenditures, as well as acquisitions and strategic
investments, through internally generated cash and our financing facilities.
When considering whether to borrow under our financing facilities, we consider
the cost of capital, cost of financing, opportunity cost of utilizing surplus
cash and availability of tax efficient structures to moderate financing costs.
For instance, in fiscal 2022, we obtained loan facilities from RMB to fund a
portion of our acquisition of Connect. Following the acquisition of Connect, we
now utilize a combination of short and long-term facilities to fund our
operating activities and a long-term asset-backed facility to fund the
acquisition of POS devices and safe assets. Refer to Note 12 to our consolidated
financial statements for the year ended June 30, 2022, for additional
information related to our borrowings.




                                       46

——————————————————————————–

Available short-term borrowings

Summarized below are our short-term facilities available and utilized as of June
30, 2022
:


Table 15            RMB Facility E       RMB Indirect         RMB Connect           Nedbank
                  $ '000   ZAR '000    $ '000   ZAR '000   $ '000   ZAR '000   $ '000   ZAR '000
Total short-term
facilities
available,
comprising:
Overdraft              -           -        -          -   15,221    247,954        -          -
Overdraft
restricted as to
use(1)            85,941   1,400,000        -          -        -          -        -          -
Total overdraft   85,941   1,400,000        -          -   15,221    247,954        -          -
Indirect and
derivative
facilities(2)          -           -    8,287    135,000        -          -    9,610    156,566
Total short-term
facilities
available         85,941   1,400,000    8,287    135,000   15,221    247,954    9,610    156,566

Utilized
short-term
facilities:
Overdraft              -           -        -          -   14,880    242,399        -          -
Overdraft
restricted as to
use(1)            51,338     836,310        -          -        -          -        -          -
Indirect and
derivative
facilities(2)          -           -      313      5,097        -          -    5,654     92,099

RMB interest
rate, based on
South African
prime rate                     8.25%                                   8.15%


(1) Overdraft may only be used to fund ATMs and upon utilization is considered
restricted cash.
(2) Indirect and derivative facilities may only be used for guarantees, letters
of credit and forward exchange contracts to support guarantees issued by RMB and
Nedbank to various third parties on our behalf.

Long-term borrowings

We obtained long-term borrowings of ZAR 1.1 billion to partially fund the
acquisition of Connect. In contemplation of the Connect transaction, Connect
obtained total facilities of ZAR 1.3 billion which were utilized to repay its
existing borrowings and to fund a portion of its capital expenditures and to
settle obligations under the transaction documents. We also have a long-term
borrowing facility, a revolving credit facility, of ZAR 150.0 million which is
utilized to fund a portion of our merchant finance loans receivable book. Our
total long-term borrowings following the acquisition of Connect are ZAR 2.1
billion
, comprising the ZAR 1.0 billion and ZAR 1.1 billion of Connect’s total
facilities of ZAR 1.3 billion. Refer to Note 12 to our consolidated financial
statements for additional information related to these borrowings.

Restricted cash

We have credit facilities with RMB in order to access cash to fund our ATMs in
South Africa. Our cash, cash equivalents and restricted cash presented in our
consolidated statement of cash flows as of June 30, 2022, includes restricted
cash of approximately $51.3 million related to cash withdrawn from our debt
facility to fund ATMs. This cash may only be used to fund ATMs and is considered
restricted as to use and therefore is classified as restricted cash on our
consolidated balance sheet.

We have also entered into cession and pledge agreements with Nedbank related to
our Nedbank credit facilities and we have ceded and pledged certain bank
accounts to Nedbank. The funds included in these bank accounts are restricted as
they may not be withdrawn without the express permission of Nedbank. Our cash,
cash equivalents and restricted cash presented in our consolidated statement of
cash flows as of June 30, 2022, includes restricted cash of approximately $9.5
million
that has been ceded and pledged. On June 30, 2022, a ZAR 60.0 million
bank guarantee issued by Nedbank to a third party expired, and on July 1, 2022
we replaced it with a ZAR 28.0 million bank guarantee issued by RMB to the same
third party. In July 2022, we were able to release ZAR 60.0 million in cash held
in a pledged bank account with Nedbank which was held as security against the
bank guarantee issued by Nedbank, and the ZAR 28.0 million replacement bank
guarantee did not require a cash underpin.


                                       47

——————————————————————————–

Cash flows from operating activities

Net cash used in operating activities during fiscal 2022 was $37.2 million (ZAR
565.3 million
) compared to $58.4 million (ZAR 917.4 million) during fiscal 2021.
Excluding the impact of income taxes, our cash used in operating activities
during fiscal 2022 was impacted by the cash losses incurred by the majority of
our continuing operations, the reorganization costs paid during the third
quarter of fiscal 2022, and transactions costs paid related to our acquisition
of Connect. In fiscal 2022, we absorbed $5 million into working capital compared
to a $4.7 million release from working capital in fiscal 2021.

Net cash used in operating activities during fiscal 2021 was $58.4 million (ZAR
917.4 million
) compared to $46.0 million (ZAR 723.7 million) generated during
fiscal 2020. Excluding the impact of income taxes, our cash used in operating
activities during fiscal 2021 was impacted by the cash losses incurred by the
majority of our continuing operations and the payment of a $3.6 million
settlement (refer to Note 9). Our net cash used in operating activities during
fiscal 2020 includes the contribution from our South Korean operations for eight
months of $14.6 million (refer to Note 24).

During fiscal 2022, we paid our first provisional South African tax payments of
$0.6 million (ZAR 9.1 million) related to our 2022 tax year. During fiscal 2022,
we also made our second provisional South African tax payments of $0.7 million
(ZAR 10.9 million related to our 2021 tax year and received tax refunds of $0.3
million
(ZAR (4.5) million).

During fiscal 2021, we made our first provisional South African tax payments of
$0.9 million (ZAR 12.7 million) related to our 2021 tax year. During fiscal
2021, we also made our second provisional South African tax payments of $0.2
million
(ZAR 2.9 million related to our 2021 tax year and made an additional tax
payment of $0.2 million (ZAR 3.4 million) related to our 2020 tax year. We also
paid taxes totaling $15.4 million in other tax jurisdictions, primarily in the
U.S.

During fiscal 2020, we made our first provisional South African tax payments of
$0.8 million (ZAR 11.9 million) related to our 2020 tax year. During fiscal
2020, we also made our second provisional South African tax payments of $0.5
million
(ZAR 8.0 million) related to our 2020 tax year and made an additional
tax payment of $0.8 million (ZAR 11.6 million) related to our 2019 tax year. We
also paid taxes totaling $4.3 million in other tax jurisdictions, primarily
South Korea.

Taxes paid during fiscal 2022, 2021 and 2020 were as follows:

Table 16                                       Year ended June 30,
                           2022       2021       2020       2022       2021       2020
                            $          $          $         ZAR        ZAR        ZAR
                           '000       '000       '000       '000       '000       '000
First provisional
payments                      585        853        825      9,142     12,680     11,934
Second provisional
payments                      691        209        470     10,929      2,907      8,038
Taxation paid related to
prior years                     1        205        782         19      3,423     11,620
Tax refund received         (300)       (13)    (1,339)    (4,542)      (225)   (19,245)
Total South African
taxes paid                    977      1,254        738     15,548     18,785     12,347
Foreign taxes paid            161     15,354      4,263      2,482    256,616     62,302
Total tax paid              1,138     16,608      5,001     18,030    275,401     74,649


We expect to make additional provisional income tax payments in South Africa
related to our 2022 tax year in the first quarter of fiscal 2023, however, the
amount was not quantifiable as of the date of the filing of this Annual Report
on Form 10-K.

Cash flows from investing activities

Cash used in investing activities for fiscal 2022 included capital expenditures
of $4.6 million (ZAR 69.3 million), primarily due to the roll out of our new
express branches, acquisitions of ATMs and the acquisition of computer
equipment. During fiscal 2022, we paid approximately $202.2 million (ZAR 2.9
billion
), net of cash acquired, for 100% of Connect. We also received funds
totaling approximately $11.4 million related to the sale of Bank Frick in fiscal
2021, proceeds from sale of property, plant and equipment of $4.2 million, and
proceeds of $0.9 million and $0.7 million, respectively, related to the sale of
minor positions in Finbond and from the disposal of our entire interest in Revix
in fiscal 2022.

During fiscal 2021, we paid approximately $4.3 million (ZAR 67.3 million),
primarily for the acquisition of motor vehicles, which largely comprised a fleet
of customized mobile ATMs used to deliver a service to rural communities,
computer equipment and leasehold improvements in South Africa. In February 2021,
we disposed of our investment in Bank Frick and received $18.6 million of the
$30.0 million sales proceeds, the remainder of which was expected to be received
in fiscal 2022 and 2023. We received $20.1 million in September 2020 related to
the sale of our South Korean business in fiscal 2020 following the successful
refund application of the amounts withheld and paid to the South Korean tax
authorities pursuant to that transaction. We received $6.0 due on the remaining
deferred sale proceeds related to the fiscal 2020 sale of DNI. We also extended
loan funding of $1.0 million to V2 and $0.2 million to Revix.


                                       48

——————————————————————————–

During fiscal 2020, we paid approximately $5.9 million (ZAR 93.3 million),
related to capital expenditures, primarily related to the acquisition of ATMs
and computer equipment in South Africa, leasehold improvements in Malta and
processing equipment in South Korea to maintain operations. During fiscal 2020,
we received a net $192.6 million from the sale of our South Korean business,
paid transaction costs related to this disposal of $7.5 million, and received
$10.9 million from the sale of FIHRST. We also received $42.5 million related to
the sale of the majority of our remaining interest in DNI. We also made a
further equity contribution of $2.5 million to V2, extended loan funding of $1.5
million
to our equity-accounted investments, and received $4.3 million from DNI
related to the settlement of a ZAR 60.0 million loan outstanding as of June 30,
2019
.

Cash flows from financing activities

During fiscal 2022, we utilized approximately $570.9 million from our South
African overdraft facilities to fund our ATMs and our cash management business
through Connect, and repaid $525.5 million of these facilities. We utilized
approximately $78.9 million of our long-term borrowings to fund a portion of the
acquisition of Connect, to fund our merchant finance loans receivable business,
and to fund the acquisition of certain capital expenditures. We repaid
approximately $5.6 million of these long-term borrowings. We also received $0.8
million
from the exercise of stock options.

During fiscal 2021, we utilized approximately $360.1 million from our South
African overdraft facilities to fund our ATMs and repaid $365.4 million of these
facilities.

During fiscal 2020, we utilized approximately $672.4 million from our South
African overdraft facilities, primarily to fund our ATMs, and repaid $721.0
million
of these facilities. We utilized approximately $14.8 million of our
borrowings to fund the purchase of Cell C prepaid airtime that was subject to
sale restrictions. We repaid the amount in full, paying $14.5 million, with the
difference of $0.3 million reflecting the impact of changes in ZAR against the
U.S dollar. We also repaid $26.9 million of our Bank Frick overdraft and
utilized $17.4 million of this overdraft to fund our operations.

Contractual Obligations

The following table sets forth our contractual obligations as of June 30, 2022:


Table 17                          Payments due by Period, as of June 30, 2022 (in $ '000s)
                                               Less
                                              than 1
                                   Total       year     2-3 years   3-5 years   Thereafter
Short-term credit facilities(A)     66,218     66,218           -           -            -
Long-term borrowings
Principal repayments(A)(B)         141,646      6,804      86,628      48,214            -
Interest payments(A)(B)             29,701     10,745      11,964       6,992            -
Operating lease liabilities,
including imputed interest(C)        9,819      2,896       3,207       1,991        1,725
Purchase obligations                10,998     10,998           -           -            -
Capital commitments                     33         33           -           -            -
Other long-term obligations
reflected on our balance
sheet(D)(E)                          2,466          -           -           -        2,466
Total                              260,881     97,694     101,799      57,197        4,191



(A) -  Refer to Note 12 to our audited consolidated financial statements.
(B) -  Long-term borrowings principal repayments for the 3-5 year period
includes all unamortized fees as of June 30, 2022. Interest payments based on
applicable interest rates as of June 30, 2022, and expected outstanding
long-term borrowings over the period. All amounts converted from ZAR to USD
using the June 30, 2022, USD/ ZAR exchange rate.
(C) -  Refer to Note 8 to our audited consolidated financial statements.
(D) -  Includes policyholder liabilities of $2.3 million related to our
insurance business. All amounts are translated at exchange rates applicable as
of June 30, 2022.
(E) -  We have excluded cross-guarantees in the aggregate amount of $5.7 million
issued as of June 30, 2022, to RMB and Nedbank to secure guarantees it has
issued to third parties on our behalf as the amounts that will be settled in
cash are not known and the timing of any payments is uncertain.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

                                       49

——————————————————————————–

Capital Expenditures

Capital expenditures for the years ended June 30, 2022, 2021 and 2020 were as
follows:

2022 2021 2020 2022 2021 2020

           $     $     $    ZAR    ZAR    ZAR
         '000  '000  '000   '000   '000   '000
Consumer 1,712 3,433 2,540 26,019 53,954 39,919
Merchant 2,811   829 1,193 42,721 13,029 18,749
Other       35    23   702    532    361 11,033
Total    4,558 4,285 4,435 69,272 67,344 69,701


Our capital expenditures for fiscal 2022, 2021 and 2020, are discussed under
“-Liquidity and Capital Resources-Cash flows from investing activities.”

All of our capital expenditures for the past three fiscal years were funded
through internally-generated funds, except for certain capital expenditures of
POS devices and safe assets, made by Connect which were funded through the
utilization of asset-backed borrowings. We had outstanding capital commitments
as of June 30, 2022, of $0.03 million. We expect to fund these expenditures
through internally-generated funds. In addition to these capital expenditures,
we expect that capital spending for fiscal 2023 will include limited investments
into our ATM infrastructure and branch network in South Africa as well as IT
equipment, and through Connect, spending for POS devices, safe assets, vehicles,
computer and office equipment. These assets will be funded through the use of
internally-generated funds and our asset-backed borrowing arrangement.

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