Lesaka Technologies, Inc. · NASDAQ:LSAK
Lesaka Technologies — Investor Presentation (July 2022)
31 slides from Lesaka Technologies's investor presentation, Jul 7, 2022
Slide 1: Connect Group February 2022 Results and Group Combined Statements
Connect Group Acquisition Connect Group February 2022 Results and Group Combined Statements July 7, 2022
Slide 2: Safe Harbor Statement
Connect Group Acquisition 2 SAFE HARBOR STATEMENT The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements so long as such information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying impor
Slide 3: Introduction to Lesaka
Introduction to Lesaka
Slide 4: Our Mission
INTRODUCTION Connect Group Acquisition 4 Our Mission We Strive to Bring Financial Inclusion to Consumers and Merchants in Southern Africa CONNECT STRATEGY CONNECT FINANCIALS Building a World Class Fintech Platform Re-inventing How Merchants Grow, Revolutionizing How a Large COMBINED RESULTS Manage,
Slide 5: Delivering a Dual-Sided Digital Financial Ecosystem in Southern Africa
INTRODUCTION Connect Group Acquisition 5 Delivering a Dual-Sided Digital Financial Ecosystem in Southern Africa CONNECT STRATEGY Digitization of Cash Banking Growth Capital Card Acquiring CONNECT FINANCIALS Bill and Supplier Payments MERCHANTS CONSUMERS Consumer Credit Value Added Services (VAS) +52
Slide 6: The Lesaka platform offers growth and broader reach
INTRODUCTION Connect Group Acquisition 6 The Lesaka platform offers growth and broader reach CONNECT STRATEGY Merchant Consumer TAM TAM over 26m: LSM* 1-6 58 500 CONNECT FINANCIALS Branches 700k Formal 1.4m Informal MARKET SHARE Retailer pay points MARKET ATMs COMBINED RESULTS <1% <4% SHARE Satellit
Slide 7: Led by an experienced senior leadership team with proven execution ability
INTRODUCTION Connect Group Acquisition 7 Led by an experienced senior leadership team with proven execution ability CONNECT STRATEGY CONNECT FINANCIALS COMBINED RESULTS Chris Meyer Naeem Kola Lincoln Mali Steven Heilbron Denzil Landie Basie Kok Karabo Mothibi Group Group CEO Connect Group Group Chie
Slide 8: Introduction to Connect Group
Introduction to Connect Group
Slide 9: Connect Group strategic pillars driving successful growth
INTRODUCTION 9 Connect Group strategic pillars driving successful growth CONNECT STRATEGY Retaining and winning Product innovation People Growth new merchants CONNECT FINANCIALS COMBINED RESULTS Service the Disrupt and innovate Building world- Continue to grow underserved through financial class tea
Slide 10: Strategy in action delivering double-digit growth in revenue and EBITDA
INTRODUCTION Connect Group Acquisition 10 Strategy in action delivering double-digit growth in revenue and EBITDA Strategy Execution on strategy Impact on financials CONNECT STRATEGY Merchant ** Service the underserved Nr Loans: +58%* 2022 Growth 24% Net Revenue***** CONNECT FINANCIALS Kazang device
Slide 11: Offering innovative solutions to the formal and informal sectors
INTRODUCTION Connect Group Acquisition 11 Offering innovative solutions to the formal and informal sectors CONNECT STRATEGY Informal Sector Innovating for MSME’s Formal Sector (less than R150,000 pm t/o, (higher t/o, urban, access to rural/township/spaza/trader) In Southern Africa formal bank relati
Slide 12: Connect Group Performance
Connect Group Performance
Slide 13: Connect Group: Key Revenue Drivers and 3 year CAGRs
INTRODUCTION Connect Group Acquisition 13 Connect Group: Key Revenue Drivers* and 3 year CAGRs Kazang VAS & Bill payment Card Connect & Kazang Pay Value processed: 16% 3 YEAR Value processed: 53% 3 YEAR CONNECT STRATEGY CAGR Devices: 26% CAGR Devices: 67% Value processed (Rbn) Devices Card v alue pr
Slide 14: Revenue Analysis – Reconciliation of Gross and Net Revenue
INTRODUCTION Connect Group Acquisition 14 Revenue Analysis – Reconciliation of Gross and Net Revenue (R million) R5 152 CONNECT STRATEGY R4 235 (R3 845) (R3 182) CONNECT FINANCIALS 24% yoy R1 307 R1 052 COMBINED RESULTS Revenue Face value Net Revenue Face value Net per AFS of airtime Revenue per AFS
Slide 15: Net Revenue Breakdown by Major Product Group
INTRODUCTION Connect Group Acquisition 15 Net Revenue Breakdown by Major Product Group (millions) Kazang (VAS & Bill payment) Card Connect & Kazang Pay CONNECT STRATEGY $44.7 $4.9 $31.3 28% yoy 51% $2.9 yoy CONNECT FINANCIALS R518 R665 R 48 R 73 2021 2022 2021 2022 Cash Connect Capital Connect $3.6
Slide 16: Gross Margins and EBITDA for year ended February 2022
INTRODUCTION Connect Group Acquisition 16 Gross Margins and EBITDA for year ended 28 February 2021 and 2022 (millions) CONNECT STRATEGY 43.6% Gross Profit % 39.5% $38.3 CONNECT FINANCIALS $25.2 37% yoy $25.7 R375 warranted $18.4 COMBINED RESULTS 26% yoy R416 R570 R304 R381 Gross Profit * EBITDA ** S
Slide 17: High Cash Conversion Ratio with Re-investment into Growth
INTRODUCTION Connect Group Acquisition 17 High Cash Conversion Ratio with Re-investment into Growth - 28 February 2022 CONNECT STRATEGY Invested in Growth R82 CONNECT FINANCIALS R111 R7 COMBINED RESULTS R381 R181 R181 EBITDA Working Capital Growth Capex Maintenance Capex Free Cash Flow SUMMARY Note
Slide 18: Combined Accounts
Combined Accounts
Slide 19: Basis for preparation of combined accounts
INTRODUCTION Connect Group Acquisition 19 19 Basis for preparation of combined accounts for 12 months to 28 February 2022 CONNECT STRATEGY Lesaka Adj Connect Group Lesaka combined (Pre-Connect) 12 months ended accounts CONNECT FINANCIALS 12 months ended 28 Feb 2022 12 months ended 28 Feb 2022 28 Feb
Slide 20: Combined accounts: Headline Items for months to February 2022
INTRODUCTION Connect Group Acquisition 20 Combined accounts: Headline Items for 12 months to 28 February 2022 on a US GAAP basis CONNECT STRATEGY Gross Normalised Revenue OPEX EBITDA Margin Note 1 CONNECT FINANCIALS Lesaka 134 365 40 670 (79 358) (38 688) Connect 346 719 44 096 (18 954) 25 142 COMBI
Slide 21: Normalised EBITDA for months to February 2022
INTRODUCTION Connect Group Acquisition 21 Normalised EBITDA ($’000) for 12 months to 28 February 2022 Normalised Lesaka Normalised Connect Normalised Com bined Normalised EBITDA CONNECT STRATEGY EBITDA EBITDA EBITDA Adjustments (Note 1) Combine d -$13,5 CONNECT FINANCIALS -$15,3 -$1.8 COMBINED RESUL
Slide 22: Proforma net debt position after Connect Group acquisition
INTRODUCTION Connect Group Acquisition 22 Proforma net debt position after Connect Group acquisition CONNECT STRATEGY USD (millions) March 31, 2022 Company cash on hand* 184 CONNECT FINANCIALS Connect Group Net debt on hand (70) Net cash 114 Acquisition funding (240) COMBINED RESULTS Lesaka debt rai
Slide 23: Summary
LeESaKa a TT re fe mm |i my
Slide 24: Connect Group investment offers
INTRODUCTION Connect Group Acquisition 24 Connect Group investment offers…. CONNECT STRATEGY CONNECT FINANCIALS Large addressable market Differentiated Merchant Opportunity to integrate Management team with driven by secular trends, business characterized by with Lesaka’s Consumer execution track re
Slide 25: Offering compounding value for Merchants, Consumers, and Shareholders
INTRODUCTION Connect Group Acquisition 25 25 Offering compounding value for Merchants, Consumers, and Shareholders CONNECT STRATEGY Our Business Model Enables us to: • Design innovative CONNECT FINANCIALS products to better serve our customers • Offering more value to incentivize behavior COMBINED R
Slide 26: Strategic focus areas for FY2022
INTRODUCTION Connect Group FY22Acquisition Q3 Results 26 Strategic focus areas for FY2022 CONNECT STRATEGY Return consumer business to breakeven CONNECT FINANCIALS COMBINED RESULTS Grow merchant Grow Grow Optimise Be a Engage base active EPE ARPU costs world-class fintech stakeholders organisation S
Slide 27: Thank you
Connect Group Acquisition 7 July 2022 Thank you
Slide 28: Annexure A: Combined Income Statement for 12 months to 28 February 2022
Connect Group Acquisition 28 Annexure A: Combined Income Statement for 12 months to 28 February 2022 LESAKA CONNECT ADJUSTMENTS COMBINED $ '000 $ '000 $ '000 $ '000 REVENUE 134 365 346 719 - 481 084 COST OF GOODS SOLD (93 695) (302 623) - (396 318) GROSS PROFIT 40 670 44 096 - 84 766 SELLING, GENERA
Slide 29: Annexure B: Connect Group Revenue Reconciliations
Connect Group Acquisition 29 Annexure B: Connect Group Revenue Reconciliations (R’000) NET REVENUE AND GROSS PROFIT % CALCULATION 28 FEB 2022 28 FEB 2021 COMMENTS R’000 R’000 Revenue (US GAAP) 5 151 666 378 4 234 613 920 Refer 8K-A filing Face value of Airtime included in Revenue (3 845 077 656) (3
Slide 30: Annexure C: Connect Group EBITDA Reconciliation to US GAAP
Connect Group Acquisition 30 Annexure C: Connect Group EBITDA Reconciliation to US GAAP 28 FEBRUARY 2022 28 FEBRUARY 2021 R '000 R '000 REVENUE 5 151 666 4 234 614 COST OF SALES (4 582 036) 3 819 037 GROSS PROFIT 569 631 415 577 OTHER INCOME 53 007 49 318 OPERATING EXPENSES (381 391) (293 778) ADJUS
Slide 31: Annexure D: Defined Terms
Connect Group Acquisition 31 Annexure D: Defined Terms Unless specifically noted otherwise within this presentation, the following terms are hereby defined as follows: Constant Currency: We analyze our results of operations both in U.S. dollars, as presented in the consolidated financial statements,
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