Hello everyone, and welcome to the Lesaka Fiscal Fourth Quarter and Year-End 2022 Earnings Webcast and Conference Call. [Operator Instructions] Additionally, the company filed its Form 10-K after the U.S. market closed on Friday, September 9, 2022, which is also available on our IR site. As a reminder, during the call, we will be making forward-looking statements and I ask you to look at the cautionary language contained in our Form 10-K regarding the risks and uncertainties associated with forward-looking statements. Also, we will discuss our results in South African Rand, which is non-GAAP. We analyze our results of operations and our press release in Rand to assist investors' understanding of the underlying trends in our business. As you know, the company's results can be significantly affected by the currency fluctuations between the U.S. dollar and the South African Rand. I would now like to turn it over to Chris Meyer, Group CEO.

Thank you, Dora. Good morning, good afternoon, and welcome to our fourth quarter and fiscal year-end 2022 earnings webcast and conference call. Taking a quick look at today's agenda, I will start with a brief business overview and will also share a few performance highlights for our fiscal year 2022. Steve will provide an update on our Merchant Business and the integration of the Connect Group. Lincoln will focus on the ongoing progress we've made in transforming our Consumer Business. And Naeem will present the audited consolidated performance of the group for the 12-months ended June 30, 2022 and the three months for the quarter ended June 30, 2022. I will then conclude the results presentation with a few thoughts on the outlook for Lesaka, before we open up for Q&A, where we would obviously welcome any questions you may have. So as I reflect on our overall performance over the past four quarters, I want to recognize and thank each and every person in the Lesaka family who has remained laser focused on executing the key strategic priorities that we are committed to as a collective. We have moved a long way over the past 12-months and the changes have been profound, they've been bold, sometimes difficult, but undoubtedly transformational as we've laid the foundation for establishing a leading fintech focused on providing innovative digital solutions to merchants and consumers in Southern Africa. So, as Lesaka, our core purpose is to improve people's lives by bringing financial inclusion to South Africa's underserved consumers by helping small businesses access the financial services they need to prosper. And we achieve this through our ability to efficiently digitize the last mile of financial inclusion and by providing a full service fintech platform across cash and digital, serving the needs of both, while…

Thank you, Chris. As highlighted in our Q3 and Connect Group presentations recently where we described our products in detail, Lesaka today has a comprehensive offering to SME merchants in South Africa and now has a distinct dual-sided ecosystem driving financial inclusion and serving both merchants and consumers. We also have assets and technology in the enterprise space, which we are leveraging for growth across the Merchant segment. Now, the Connect Group was an obvious, attractive and transformative acquisition for Lesaka, due to the alignment of vision and the complementary product and customer sets. It also is a business unit that has managed to achieve significant growth and penetration in a fast growing and underservice sector. We are incredibly pleased that the business has continued to grow in-line with expectations and in sync with historical achievements. The initial integration work between the pre-existing merchant business and Connect has been extremely encouraging and we expect synergies to exceed the expectations that we had going into the acquisition. There are some exciting developments that we are working on, which will positively impact customer acquisition and operational efficiencies, as well as improve value for our merchants. In our VAS and bill payments business, we have managed to grow our devices in the field to over 51,000 at year-end, representing a 36% year-on-year increase. Our Vault business, which effectively puts the bank in the merchant store, has grown by 13% this year to approximately 4,100 sites. Historically, we've been placing our Vaults into formal SME merchant stores, but we are now also penetrating the informal sector under the Kazang Connect Vault brand. This has provided significant operational and risk benefits for our Kazang informal merchant customer base. In our card acquiring business, we saw excellent growth rates during the year as we extend our…

Thank you, Steve, and good day everyone. Moving on to our Consumer Segment. The fourth quarter and indeed the last 12 months have been a very busy time for everyone, and we continue to make great progress on several fronts. On the consumer side, we currently provide transactional banking, short-term loans, and a digital wallet, as well as insurance and value-added services to underserved consumers in South Africa, aligning with our purpose of improving people's lives and increasing financial inclusion. We currently have a customer base of 1.14 million active EPE accounts and approximately 200,000 policyholders of our Smart Life insurance product, which has a significantly high cash collection rate of 98% and this has remained consistent quarter-after-quarter. Our loan book size as at the end of June 30, 2022 was $21 million with a loss ratio of less than 4%. Our [low loss rate] [ph] and our high cash collection rate in insurance emphasizes our compelling value proposition in offering fit for purpose solutions to millions of consumers, desperately needing financial services. Given our passion for financial inclusion, we realized that in order to design products and services that meet the needs of our customers, it is very important to gain a deeper understanding of our customers. They are spending and saving trends, why they choose us and why they leave us. It's been a year of learnings, positioning and testing to really understand our customers. Our refined value proposition is affordable and compelling as indicated before. We're inspired by what we've learned and we’re encouraged that market research that we conducted in this regard has solidified our understanding of this market. Practically, we have focused our efforts into understanding what all our consumers are looking for. What's the best [channel] [ph] to engage them? And what are the…

Thank you, Lincoln. As we close out the fiscal 2022 year, I continue to be very pleased with our overall performance and the progress made over the past three quarters and what has been achieved in the fourth quarter with the ongoing positive trends in revenue, cost and EBITDA being reported. With the close of the Connect Group acquisition on the 14 of April, I'm delighted to be able to provide fully audited consolidated financials for the Lesaka Group that includes Connect performance in the fourth quarter. We achieved a consolidated Group revenue of $222.6 million for the year, $86.2 million related to the revenue from Connect Group brought in for the [fourth quarter] [ph]. Positive turnaround of adjusted EBITDA loss of $20.7 million, compared to an EBITDA loss for the financial year 2021 of $49.5 million, resulting in a $29 million turnaround. We released the pro forma Connect Group numbers in June for the period ending 28 February 2022. The consolidated Lesaka Group performance includes 12 months of performance for Lesaka, excluding Connect Group and we have included Connect Group for the full month of May and June and 17 days of April from 14 of April. I will now walk you through the details of the combined entity financial performance and provide more detail on the financial contribution of the Connect Group on our business. The fourth quarter is clearly characterized by strong performance again in our Merchant Business, both on the revenue and profitability and the continued focus on the turnaround of our consumer segment consistently showing improvements over the past four quarters. Total combined revenue for the quarter was $121.8 million. This includes $86.2 million contribution from Connect. We achieved a segment adjusted fourth quarter EBITDA profit of $6.1 million as compared to an EBITDA loss…

Thank you, Naeem. So, looking ahead to FY 2023, our principal focus continues to be growing our merchant and consumer customer base. We've set up the overall market opportunity emphasizing the degree of under penetration in our market and the differentiators in our proposition that position us for growth. Our focus is on execution. And alongside client growth, we will focus on developing the merchant consumer ecosystem by developing incentives and rewards for our customers for transacting in the ecosystem and thereby developing the self-reinforcing business model and flywheel effect that I laid out earlier in this presentation. And thirdly, we will continue to develop new offerings for our clients as we identify and continue to solve for their pain points and needs. And this has been a key element of the Connect growth story and is focused on a culture of continuous innovation, which is based on data insights. And so in closing, we wanted to provide some guidance on the near term performance of the group. We have previously communicated to the market that we would start providing guidance once we had stabilized the consumer business and fully integrated the Connect acquisition, and we believe that now we are able to start providing you with high level guidance of what we expect to see in the new financial year. I mentioned earlier that the group delivered $6 million in segment adjusted EBITDA for the fourth quarter of FY 2022, and we believe that this is a reasonable indicator of the EBITDA run rate that should be achieved in the near term, excluding growth, but noting that the Connect Group was included for 2.5 months of Q4 FY 2022 and also noting that in Q4, we saw significant outperformance in our POS sales division. And as mentioned earlier, the consumer monthly EBITDA breakeven position is close. And we expect this to occur by the end of Q2 FY 2023. And within that context, Lesaka expects revenue between $130 million and $133 million for the first quarter of fiscal 2023, which is due 30 September 2022. And total segment adjusted EBITDA of between $6.1 million and $6.5 million for this period. And so with that, we'd like to turn to the Q&A session to answer your questions. Thank you.

Thank you. [Operator Instructions] First, we will take Raj Sharma from B. Riley. Raj, please unmute yourself and ask your question. Thank you.

Hi, good morning. I wanted to ask you about, just in terms of the guidance, could you clarify the segment EBITDA before corporate – is it – is that before corporate allocations? I think it seems it is – is it hard to predict corporate allocations a quarter ahead?

Thank you for your question. Thanks for being on the floor. Yes. I'm going to ask Naeem, maybe to respond to that. Have you got any other questions you want to put to us before Naeem responds? Or should we just take…

Yeah. Sure. Just and also, just the merchant is doing pretty well, if you can talk a little bit about the contribution going forward to the EBITDA between consumer and merchant, that's my next question? And then I'd like to talk about the purpose behind the shelf that was just filed this morning.

Okay. Thank you. Naeem, if you want to take those first two questions, I'll take the last one.

Yes. Hi, Raj. Thank you for the question. So Raj, we decided to put out the segment adjusted EBITDA as guidance. I mean, the corporate eliminations is fairly fixed and fairly steady because those are the costs that [indiscernible] as part of the U.S. consolidation and the U.S. listing. So, from a business operations perspective, we felt that the segment adjusted EBITDA is most closely reflects the run rate and really reflects the position of the business from a forecast perspective.

Got it. Thank you. And then, just a little bit of the breakdown between consumer and merchant going forward, in terms of the EBITDA performance?

Yes. Look, I think in terms of the forecasted guidance that we've given, with regards to the consumer business as Chris has highlighted is that we're getting close to a very – we're getting very close to a breakeven position. I mean, our long-term view on this would be to have a much more balanced contribution between the consumer and the EBITDA going forward. And I think that would most probably be in the range of between [70% – 30%] [ph], but I think the first goal for us is to deliver on the breakeven and then build up on that as part of the cost savings and the revenue growth.

Yes. Thank you. And so, I just wanted to, sort of clarify the guidance shows higher revenues, but flat EBITDA given that Connect is going to be three months instead of 2.5, and then you're also seeing progress in cost cutting on the consumer group. So, is it fair to assume that EBITDA guidance seems a little conservative?

If I could respond to that and Naeem will probably come in. Raj, what we were trying to convey to you is that, Q4, that's the $6.1 million is a reasonable run rate if you adjust for a number of things. We spoke about, yes, the Connect Group is not in there for a full period, so that would be maybe a positive adjustment to that number, but we also spoke about [indiscernible], which is our POS sales and servicing business had a very strong quarter, which we wouldn't expect to repeat. And there are a couple of others smaller things. So, we don't believe that it's overly conservative. We think that's the right range to express. And I think if you adjust it on the whole for these examples that I have just given, we'd have come in slightly below the 6 million, probably closer to about 5.8, mid-5s?

Got it. Thank you. And then the…

And Raj, you question around the shelf registration, that's just a very – if I can call it standard renewal of an existing shelf, it's the shelf that's always in place for any potential capital issuance. So, nothing untoward or new or different. It's just – it comes up every – I think it's every three years or so that that we have to just renew a pre-existing mechanism for [calculations] [ph].

Got it. Thank you for answering my questions. Great clarity on the results.

Thanks, Raj.

Thank you, Raj. Next, we'll take Jarred Houston from All Weather Capital. Jared, please unmute yourself and ask your question. Thank you. And Jared, you just have to unmute yourself?

Hi, guys. Sorry. I just got a couple of questions with regards to your selling and administration expenses. So, I noticed that it was quite high. What percentage of [yourselves] [ph] is commission based for new businesses? And what do you expect the trend to be? And then on top of the commission base, I'm guessing there's because I'm sure that was included in one-line item. How do you recognize the commission expense? Is that recognized as a payment, cash outflow to guys once off to your [sales stop] [ph] and then you recognize it on the books separately over the – a peer contract period or am I not understanding something here? I hope that sort of makes sense.

So, hi, Jarred. I think – and I'll pass on to Steve, just to give a bit more understanding of how the remuneration of the Connect Group is, but largely for the consumer business, there isn't a significant amount of commission. There are incentive targets and performance targets that are in place for the sales staff in terms of delivery and performance management, but a very small percentage is paid as a commission. It's more incentive per account, which is a fairly small amount, and these are generally [once off] [ph] amounts that are paid. I think broadly speaking, if you're looking at the SG&A or the OpEx ratio that we've showed, the benefit and the saving coming through, as I've highlighted, is really from the rightsizing of our consumer business and the elimination of a significant amount of cost related to the branch and ATM network that we are now starting to see the benefits come through and that's really reducing the cost on that side. Steve, in terms of the Connect remuneration?

So again, I think commissions are expensed when a sale is actually made, so they're not deferred. So, when a sale is made, the individuals are paid their commissions and right across all the product sets the commissions are nowhere near the fixed costs of individuals. Hopefully, that answers the question. Generally commissions would not make up a very big portion of the reward mechanism.

So, I just don't understand [Technical Difficulty].

Just one last point, it would obviously correlate. So, we've had a very strong – if you remember, we showed you a March to June cumulative performance for the business. And clearly, you can see if the sales have ramped quite significantly and then the correlative commissions for those sales would obviously have gone up proportionately.

Okay. Now that's fine. I just wanted to understand the [indiscernible] new businesses. There might be a lot of sales staff and that might be quite high. But, yeah, that helped a lot.

Okay. And I do not believe we have any more questions in the queue. So, I will turn it over to Chris to wrap up.

Great. So, thank you, Dora. Thank you very much. And, yeah, just to conclude, I'd like to say thank you to everybody for joining us on the call today and thank you for the questions and thank you for the interest shown in our business. Many ways it's been a watershed year for us at Lesaka. A lot of change, but we've been proud of what we've achieved over the last 12 months. And we remain entirely committed and focused to building the leading fintech platform in South Africa focused on the underserved, [indiscernible]. So, thank you once again and we look forward to interact with you all in the future. Thank you.