Hello, everyone, and welcome to the Lesaka Fiscal Third Quarter 2022 Earnings Webcast. At this time, all participants are in listen-only mode. As a reminder, this webcast is being recorded. With me for the webcast today are Chris Meyer, Group CEO; Lincoln Mali, South African CEO; Steven Heilbron, Head Of Merchant Business, and CEO of the Connect Group; and of course, Naeem Kola, Group CFO. A reminder to everyone that we are streaming, both a webcast as well as a teleconference. Dialing into the webcast will allow you to see the management team and the presentation they will be presenting versus dialing into the teleconference, which will only stream the audio. Both links as well as our press release are available on our investor relations website. As a reminder, during this call, we will be making forward looking statements. And I ask you to look at the cautionary language contained in our form 10Q regarding the risks and uncertainties associated with forward looking statements. Our results are discussed in South African Rand, which is non-GAAP. We analyze our results of operations in our press release in Rand to assist investors in understanding the underlying trends in our business. As you know, the company results can be significantly affected by the currency fluctuations between the U.S. dollar and the South African Rand. We will address any questions you may have at the end of the presentation. For those joining us via the webcast link, you can submit your questions via the webcast page. For those joining via teleconference. You'll be given the opportunity to raise your questions at the end of the presentation. With that, it's my pleasure to hand over to your group CEO, Chris Meyer. Chris?

Thank you, Bronwyn. Good day, and welcome to our third quarter to earnings webcast. Taking a quick look at today's agenda, I'll introduce our new brand and corporate identity, provide some highlights and an overview on our FY 2022 strategic focus areas. Steve will introduce the Connect Group. Lincoln will focus on the progress we've made on our strategic focus areas, and Naeem will discuss our financial performance for the period. I would also like to take this opportunity to thank our shareholders for voting in favor of Lesaka as our new name. Lesaka marks the beginning of a new era for the group shaped by the strategy we committed to almost a year ago. [Audio/Video Presentation]

Our opening video unveils our new name Lesaka and explains how our identity as Lesaka authentically represents our commitment to the local communities we serve. This is a key milestone in the evolution of our business and is timed to coincide with the transformational acquisition of the Connect Group, which is an important building block in achieving our stated objective of establishing a leading FinTech focused on providing innovative digital solutions to merchants and consumers in Southern Africa. The combination with the Connect Group creates an exciting opportunity to integrate the 2 complimentary businesses and to provide financial inclusion for consumers and merchants in Southern Africa. We are focused on taking advantage of the significant growth opportunities that our increased scale in our key markets opens up for us. As Lesaka, we have a very clear focus on micro small and medium enterprises in the formal and informal sectors together with our underserved consumers in our country. The Connect Group will be the cornerstone of our merchant business, and we aim to leverage Connect Group's excellent track record in delivering growth and profitability through its innovative solutions for MSMEs. We believe we can make a real difference in this space, as we have the ability to not only facilitate the digitization of cash for our merchants, but we can also provide them with an end-to-end solution incorporating cash management and payment solutions, card acquiring, provision of growth, capital VA, distribution, and supplier payment integration. We estimate that together with the Connect Group, we currently have less than 1% market share in the formal space and less than 4% in the informal space. Turning to our consumer business, there are approximately 26 million people in South Africa who fall into our target market. These consumers still predominantly rely on cash for…

Thank you, Chris. At the onset, let me say how excited we are to be joining Lesaka at this stage. As we join forces to provide innovative solutions to both merchants and consumers in the last mile. We've been engaged with Lesaka now for some 15 months. And as our negotiations progressed, it became very clear to us that our mission and that of Lesaka's were so closely aligned in our quest to service the last mile and our business is so complimentary that it made perfect sense for both parties to make this deal happen. We at Connect Group are extremely pleased that today we are part of Lesaka. I'm aware that the market would've been looking forward to receiving pro former numbers for the combined group but given that the acquisition closed after the quarter and connect group prepares their financials under IFRS, we are waiting for final U.S. GOP converted numbers to be signed off by our auditors. Once this is done, these will be filed and will be available for your review. Notwithstanding I'm hopeful that I can share enough about our business, what we do, the market opportunity that exists and how we disrupt through innovation and financial technology so as to get you as excited as we are. I'd like to use this opportunity to run through our key product offerings and provide a bit more color on how our solutions aim to assist merchants with many of the pain points that they experience in their day to day business lives. When we started this journey, we believed that we could use financial technology and innovation to solve various challenges that formal and informal merchants face on a daily basis and in doing so help promote real financial inclusion at the lower end of…

And Steve, it's great to have you on board. I'm really looking forward to working with you and your team. Good day, everyone. While we're dealing with the merchant segment, I'd like to briefly run through the operating performance of the existing merchant business, which grew segment revenues by 58% year on year on an end basis. In the previous 2 quarters, the performance of our point-of-sale business was negatively impacted by the global chip shortages. Although this shortage continues in the market, we have been able to catch up on client orders during this quarter. In our EasyPay business, we saw pleasing increases in vast value processed, in prepaid electricity, and prepaid airtime of 12% and 142% respectively. Our bill payment volumes increased by 6%. Moving onto our consumer segment the last quarter. And indeed the last 9 months have been a very busy time for everyone. And we have made very good progress on a number of fronts. We realize that in order to design products and services that meet the needs of our customers, it is important to gain a deeper understanding of our customers, their spending and saving trends, why they choose us and why they leave us. We're inspired by what we have learned and continue to learn. Although a large portion of our targeted customer base is banked, there is a large cohort who are currently underbanked with limited access to formal services, such as lending and insurance. We have focused our efforts into understanding what these customers are looking for, the best channel to engage them with, what competitors are offering and where we can disrupt the space by designing the right innovative products that truly meet their needs. Utilizing the knowledge, we gained on these customers and the investment we made and…

Thank you, Lincoln. Now let's turn to the details of our financial results for Q3 as well as provide some visibility on the outlook. Overall, I'm very pleased with what has happened and has been achieved in this quarter. With the positive trends in revenue, costs, and EBITDA being reported. As has been discussed in our third quarter performance, has been characterized by strong performance in our merchant business and the continued execution of the turnaround on our consumer segment consistently showing improvements over the past 3 quarters. On a reported basis, total revenue for the quarter was $35.2 million, which was 22% increase year over year in U.S. dollars terms and 27% year on year on a Rand basis. We have seen a 34% improvement in our operating loss from $14.3 million in 2021 to $9.4 million this quarter, which is after accounting for $5.9 million in one of restructuring charges as part of project spring. We have also taken out hedging contracts as part of our currency risk management in order to protect the cash we were holding for the connect group acquisition, these matured in February, 2022. And we recognized again on these contracts of $6.1 million during this quarter. Overall, we reported a net loss position of $3.3 million for the quarter on a quarterly and a year-to-date comparison. This is an improvement, which we are very, very pleased to report. Turning to our business segments. I want to remind everyone that this segmental disclosure was initiated in our fiscal second quarter. We manage our business from a customer-centric perspective and have split it into a B2C consumer segment and a B2B merchant segment. I will start with the merchant segment, which is the main driver of the higher revenue number for the quarter. Merchant revenue…

Thank you, Naeem. During the fourth quarter, we will continue to focus on our strategic pillars for FY 2022 with the connect group acquisition. Now formally closed, we can turn our attention to the successful combination of the 2 businesses and capitalizing on the growth opportunity, which the sector presents. On the consumer segment, growing the active account base is our biggest challenge, but we continue to make progress focusing on our Salesforce product marketing initiatives and more effective distribution channels. With that, we'd like to turn the call over to Bronwyn for the Q&A session. Thank you.

Welcome to the Lesaka Q&A -- investor Q&A, and you've done a good job in presenting the results, the rebrand. You're back now for the questions from the investor community. We of course have a conference call, and we have a webcast. If you're on the conference call, to ask questions, you need to push star then one. And if you are on the webcast, simply type in your questions and we'll see those coming up on the iPad. So, I'm going to open to anybody on the conference call at this stage. Are there any questions to come through from that side?

Yes, we do have questions on the line. The first question is from Ngozi Dozie from Kaizen Venture.

Congrats on the presentation and the acquisition. Question to Naeem Kola. I'm a Co-Founder of Carbon. Just wanted to clarify your comments, we're very keen to have a legitimate exit and we've been trying to do this for some time. And what would it take for us to exit from carbon? Similar to your other investors that have written off.

Can I take that one?

Yes, of course you can, Chris.

Nice to hear from you. Thank you for taking the time to listen to us today. As we've spoken in the past, we've been a supporter of yours. Our strategy here in South Africa has changed fundamentally in terms of our focus and new direction as Lesaka and happy to continue to engage. We'll take it outside of this and pick up your question directly, but thank you for taking the time.

Any other questions coming through on conference call?

Yes. Our next question is from [Raj Sharma.]

Thank you for a solid presentation of the new business and the combination. Is there anything you can talk about in terms of how the connect group did individually and how it's--what kind of revenue or growth we can foresee going forward? If you could give some more color on that, that'd be very helpful. And I've got a few more questions after that.

Raj, as we've said so far, as much as we want to share today, and Steve said it earlier some of the numbers around the connect group, we are waiting for a few things. In particular just to get audited and signed off financials and then consolidated proformas. And we've got 75 days from date of close of the transaction to release those performers. So, we are very eager to share some information with you. You've seen what we've been able to disclose thus far. I think, maybe the one number I'd point to again, is the EBITDA for February 2022 was warranted at ZAR 375 million. So, that's an important point. And then I maybe ask, Steve might comment a little bit around some of the historical performance that might give you a sense of where we are.

Sure. Raj, I think historically the business has returned a 40%, 5-year compound growth rate in EBITDA. So, that's from 2017 to 2022. We did share with you some of the fundamental through points, which are historic numbers, which underpin the cash card capital and various payment offerings. And essentially these fundamentals continue to underpin the business. As Chris said, I think when we get to the fourth quarter, you'll then see our combined numbers. And as soon as our conversion for my RFRS is complete to U.S. GAAP we'll, those will be filed, and we'll share them directly with you. But I think the fundamentals, as we said, historic do underpin where we sit today.

Raj, you've got additional questions. Go ahead, please.

Yes, thank you for that, Steve and Chris. Can we talk a little bit, maybe this is for more for Lincoln? What are the strategies and can you give more color around SASA any traction with SASA accounts, any marketing, any developments there on the consumers side?

Yes, sir. Thank you for your call. I think that the fundamental principle that SASA has adopted is to give customers choice or grant beneficiaries choice so that they can go to any financial institution. And because we are primarily focused on these customers, we see ourselves as heavily in advantage in that. And so, we've spent a lot of time building our relationship with SASA, going through with them at provincial NA local level, to see how we can turn many of the open accounts into active accounts and to reduce the friction that's there. So, we are making good progress on that. And we want to see in the coming few months more of that progress coming through.

Thanks very much to Raj Sharma there. So we've got a question from Ben Pula from Signal Asset management, and he's asking on CELC. The CELC investment has been written down to 0, assuming ZAR 11 billion in debt. However, the proposed restructure cuts of station half significantly benefiting the owners of the equity. Why was this proposed reduction in debt not taken into account when valuing CELC? And two, do you think there will be any recovery in value if the current restructuring plan is finalized? I mean, I also want to include Philip Short, who also wants a quick update on CELC recap and when you can expect it to be concluded.

Thanks, Bronwyn. I'll take that. So, I mean, I think the most important thing is the fact that the recap, the restructure has not formally closed or been approved at this point. And so, our valuation is based on the current situation, which is pre the restructure and if, and when that restructure comes through we will look at it again and I, with our auditors and take a view. So, I think that's the most important thing to make. To Phillip's question around timing, I think we know as much as you do in terms of the timeframes we know, and we've seen and participated in the broad term sheet being released and announced would have indicated the broad terms of the restructuring. And we know that there are few final steps to take place, before CELC the exact details thereof we are not fully aware of. We are reasonably confident that we are getting close to an end here. I know we've said similar in the past. We watch the situation carefully and just to repeat, we have written it down to, to 0 on our balance sheet and try to be as prudent as possible with the position and managing it from here.

I believe we've got some additional calls on conference call.

Yes, we do. Our next question is from [indiscernible] from Standard Bank.

Chris, Steve, Lincoln and Naeem, think the turnaround is going strong, so, congrats on that. The question may be more for Steve. What do you think the impact of RPP will be on Kazang and the connect group if it's launched this year? And do you have any plans on how you roll that forward or that sort of strategy?

Yes. So it's nice to say we've spent a fair amount of time focusing on that impact. I think we would probably prefer to take the answer to this question with you offline Specifically, I think we feel that there'll be a fair impact in both the digital card space, as well as cash, but I would rather want to focus on the fact that RPP also plays into our hands in some regard and breaks open the private club. And so, I'm very excited about what this presents from a FinTech perspective. And we've got some exciting ideas of how we can use that to leverage our position. So, perhaps we can give you a little bit more info on that but offline.

We're staying with conference call, any additional questions?

No further questions at this moment.

We'll come back to you shortly. What is the timing for producing the proforma numbers that include connect group? And that's from Rob Besinger, he's from Valorian Capital.

Rob, so we've got 75 days from dates of closing the transaction, which, the close date was the 14th of April. So, I think that takes us to the end of June. That's the time period that we're working with.

You've launched a few new products in the consumer business over the past few quarters. How are they doing? That's from Judson Taphagen from Plough Penny Partners.

We are looking at very good progress. We think we're gathering good momentum, and we think that all of those results will start to come through as the months come through. But we're quite satisfied with the momentum that the team is displaying on the ground. So, watch this space.

Paul Whitburn from Rosendale partners; recently, a similar FinTech deal was closed by Ethos of Crossfin at a substantial discount to what Net1 paid for connect are the businesses. So meaningfully different that the connect multiple with 2 times higher than Crossfin, and 2 is reasonable to value MobiQuick at the last funding round where many tech businesses have fallen 50 to 70% over the last year?

Maybe I'll take the second one first, we come back to the cross one. So, MobiQuick, we value that in line with IFRS and GAAP. Yes, we have it on our balance sheet at the last round, of funding, and nothing material has happened since then that's observable cetera. And so, we continue to hold a position at that level. We stay close to the business, we stay close to their performance, and continue to monitor the situation. I think in terms of Crossfin and, and the connect group, 2 very different businesses in our sense. And there's some degree of overlap, for sure, but we look at the connect group as an end to end, provider of solutions across cash and digital into the merchant space. And by end to end, we mean smart cash management card, acquiring capital and growth through to the provision of various services. And I don't think when you look at Crossfin that you're seeing that entire ecosystem and as we all know, there are other drivers of valuation growth, etcetera. And then I think you would start to compare apples with apples or apples with pears, but rather on these sorts of things. So, Steve, I don't know if you want to come in and comment on it, but that's kind of how we I think we're looking at 2 different things.

Great. And very difficult to compare. As we said, the underlying growth rate that you bought into was a 40%, 5-year compound growth rate. And if I can say that it hasn't been in the easiest trading environment over the last 24 months period. So again, the excitement around that growth based on the pain points that we solve in a better market. But as you said, Chris, I think it's an apples and pears comparison.

Now I have got no more questions coming through on the webcast. Are there any further questions on the conference call?

Thank you. No further questions on the lines at the moment.

Do you want to give it a little bit more time, or should we wrap? Fantastic. Thank you very much. You have had a long day. Great presenting across the board. It's been fantastic. Lincoln, Steve, Chris, and Naeem. thanks very much for your time. You have been watching the Lesaka investor question-and-answer session. This is the third quarter results for Lesaka Group.