LESAKA TECHNOLOGIES INC 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended June 30, 2020, and the unaudited condensed consolidated financial statements and the accompanying notes included in this Form 10-Q. Forward-looking statements Some of the statements in this Form 10-Q constitute forward-looking statements. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, implied or inferred by these forward-looking statements. Such factors include, among other things, those listed under Item 1A.—“Risk Factors” in our Annual Report on Form 10-K for the year ended June 30, 2020. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of such terms and other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we do not know whether we can achieve positive future results, levels of activity, performance, or goals. Actual events or results may differ materially. We undertake no obligation to update any of the forward-looking statements after the date of this Form 10-Q to conform those statements to reflect the occurrence of unanticipated events, except as required by applicable law. You should read this Form 10-Q and the documents that we reference herein and the documents we have filed as exhibits hereto and thereto and which we have filed with the United States Securities and Exchange Commission completely and with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Recent Developments Impact of COVID-19 The COVID-19 pandemic did not impact our South African operations as severely during the three and nine months ended March 31, 2021, compared to the last four months of the year ended June 30, 2020. South Africa has been at an adjusted Level 1 since March 1, 2021. On December 28, 2020, the country moved back to Level 3 restrictions which remained in place through to February 28, 2021. South Africa operates with a five-level COVID-19 alert system, with Level 1 being the least restrictive and Level 5 being the most restrictive. The country went into lockdown (Level 5) towards the end of March 2020 and gradually eased restrictions for the remainder of the 2020 calendar year (to Level 4 from May 1, to Level 3 from June 1, to Level 2 from August 18 and to Level 1 from September 21). The increase at the end of December 2020 back to Level 3 was in response to a second wave of infections, which was more severe than the first wave. The South Africa government commenced its vaccination program in early calendar 2021, with a stated goal of vaccinating 67% of the South African population by the end of the calendar year. With the winter months approaching, there are concerns over the potential for a third wave, particularly as there have been several delays in the vaccination program to date. Business and operations During the third quarter of fiscal 2021, our operations largely operated as normal. Most of the impact of the pandemic on our operations resulted from the indirect effect of lower economic activity in the South African economy. Our loan business has been able to originate loans normally and we have not seen any deterioration in collection levels over the period. Our insurance business has seen a higher level of benefit claims during the nine months ended March 31, 2021, with marked increases between December 2020 and February 2021, which appear to be directly linked to the second wave of the pandemic. We continue to incur direct expenditure on the purchase of sanitizers, masks and gloves for our employees and for the use of customers in our branches, but this is not significant in the context of our cost base. Employees Where possible, we have continued to provide the necessary facilities (computer equipment, data cards, etc.) for our employees to operate remotely and continue to encourage them to do so where this is practical and effective. We continue to provide the necessary protective equipment and sanitization facilities for those employees that operate within our offices and operating locations. Cash resources and liquidity We believe we have sufficient cash reserves to support us through the next twelve months. Together with our existing cash reserves, we also believe that our credit facilities are sufficient to fund our ATM network. 42 We do not believe there will be any further significant adverse effects on our liquidity from the pandemic, unless there is a resumption of the higher level of restrictions seen in April and May 2020 in South Africa. We believe that our South African insurance business is adequately capitalized and do not expect to have to provide additional funding to the business in the foreseeable future. Financial position and impairments Except for the impact on Finbond’s business in the first quarter of fiscal 2021, we do not believe that the pandemic has significantly impacted the carrying value of our long-lived assets and equity method investments to date. Control environment We do not expect the pandemic to have a significant impact on our internal control environment. While we have not incurred significant disruptions thus far from the COVID-19 outbreak, we are unable to accurately predict the impact that COVID-19 will have due to numerous uncertainties, including the severity of the disease, the duration of the outbreak, actions that may be taken by governmental authorities, the impact on our customers and other factors identified in Part I, Item 1A. “Risk Factors— The COVID-19 pandemic has disrupted our business. We are unable to ascertain the impact the pandemic will have on our future financial position, operations, cash flows and stock price” in our Annual Report on Form 10-K for the year ended June 30, 2020. We will continue to evaluate the nature and extent of the impact to our business, consolidated results of operations, and financial condition. Financial Services Activities in South Africa We continue to focus our South African financial inclusion activities on a business-to-consumer, or B2C, model. We believe our EPE bank account, known in the communities it serves as ‘the green card’, has a strong brand position in our target market and benefits from significant loyalty. We have been working on enhancing its presence through localized marketing which, when combined with some of the challenges of other service providers into this market, we expect to result in a return to growing customer numbers. The customer additions for the quarter have been disappointing and below our expectations, primarily as we have not yet launched our primary marketing initiatives. This has been delayed due to some internal management changes as well as an intention to sensitize key stakeholders to these initiatives. Gross customer additions for the quarter were approximately 52,000 compared to the 62,000 of the previous quarter, while net additions amounted to 27,000 customers compared to the 44,000 of the previous quarter. We continue to see delays in the transfer of income for a significant portion of these customers which means we are not seeing the full benefit of this customer growth in our financial performance. To date only approximately 50% of these gross customer additions have become active and commenced transacting on their account. We expect to be in a position to launch our new initiatives during the course of the fourth quarter and to then accelerate the growth in the customer base. Processing Activities in South Africa Our processing activities in South Africa are focused around our ATM network, which largely services a consumer base, and our transaction processing for businesses, anchored around our EasyPay offering. As articulated in respect of our revised strategy, we aim to grow our business to business, or B2B, operations through the servicing of small and micro enterprises. We continue to see a steady growth in the number of customers utilizing our ATM infrastructure over the last quarter, though transaction volumes were lower than the previous quarter. Our B2B operations performed broadly in line with expectations with volumes lower than the previous quarter in line with expected seasonal trends. Opportunities related to the expansion of the processing business into the small and micro enterprises space have been identified and are being progressed. International Activities India – MobiKwik continues to experience strong sequential monthly revenue growth, assisted by rapid growth in users of their Buy Now Pay Later product. The number of reported COVID-19 cases in India has increased significantly since the end of March 2021. It is difficult to accurately predict the impact of this on MobiKwik’s business. However, its management expects the impact to be somewhat mitigated by less stringent lockdowns in India compared with calendar 2020 and the availability of COVID-19 vaccines. During the quarter, MobiKwik raised a further $7.2 million from new external shareholders at a valuation of approximately $480 million. MobiKwik plans to use these funds to pursue an initial public offering. We have increased the carrying value of our investment in MobiKwik following this transaction, refer to Note 6 to our unaudited condensed consolidated financial statements for the methodology and inputs used in the fair value calculation for MobiKwik. Disposal of Bank Frick Bank Frick – In line with our new strategic direction, on February 3, 2021, we entered into a share sale agreement with the Frick Family Foundation, or KFS, to sell our entire interest, or 35%, in Bank Frick to KFS for $30 million. Refer to Note 6 for additional information related to this transaction. 43 Wind-down of IPG and status of Cell C recapitalization IPG – The process to close our IPG business is well-advanced, with most employees leaving the organization during the second quarter of fiscal 2021. Most processing activities also ceased during the second quarter of fiscal 2021 and we ended all activities early in the third quarter of fiscal 2021. We should be largely complete with closure, from a cost perspective, by the end of fiscal 2021. Cell C – We continued to carry the value of our Cell C investment at $0 (zero) as of March 31, 2021. Cell C remains focused on its recapitalization and implementing various initiatives to improve its operational performance. While it remains in default on its various lending arrangements, Cell C and its lenders continue to work constructively and are making steady progress towards its recapitalization. Leadership changes On May 1, 2021, Mr. Lincoln Mali joined us as CEO of Net1 Southern Africa, a new position within our organization. On March 15, 2021, Mr. Nunthakumarin Pillay resigned his position as Managing Director: Southern Africa after 21 years of service to our company in order to pursue other opportunities. Mr. Pillay’s last day of employment was April 30, 2021. We have reorganized certain of our internal business reporting lines following the resignation of Mr. Pillay, but this is not expected to impact our business or processes significantly. We continue the search for a Group CEO but there were no substantial developments regarding this process during the third quarter of fiscal 2021. Mr. Alex M.R. Smith continues in his role of interim Group CEO and will serve in this role until our board of directors finalizes the appointment of a permanent Group CEO. In order to ensure a smooth transition, our former Group CEO, Mr. Kotzé, agreed to provide consulting services to us through May 31, 2021. Restatement of revenue and cost of goods sold, IT processing, servicing and support In November 2020, we identified an error with respect to the recognition of certain revenue and related cost of goods sold, IT processing, servicing and support during our assessment and systems development of new products. The error did not impact our operating loss, net loss, balance sheet or cash flows. We determined that the error impacted our results for the period from July 1, 2018 to November 30, 2020. The error impacted our reported results and we have restated our unaudited condensed consolidated statement of operations and certain note presentation for the three and nine months ended March 31, 2020, refer to Note 1 to our unaudited condensed consolidated financial statements for additional information. The table presents the unaudited impact of the restatement on our revenue and related cost of goods sold, IT processing, servicing and support for the first quarter of fiscal 2021, fiscal 2020 and 2019, including each fiscal quarter within those fiscal years: Table 1 Revenue (unaudited) Cost of goods sold, IT processing, servicing and support (unaudited) As reported Correction As restated As reported Correction As restated $ ’000 $ ’000 $ ’000 $ ’000 $ ’000 $ ’000 Fiscal 2021: Q1 2021 37,113 (1,977) 35,136 28,437 (1,977) 26,460 Fiscal 2020: Year ended 2020 150,997 (6,698) 144,299 109,006 (6,698) 102,308 Q4 2020 25,978 (1,427) 24,551 22,400 (1,427) 20,973 Q3 2020 36,514 (1,900) 34,614 25,783 (1,900) 23,883 Q2 2020 40,567 (1,649) 38,918 28,395 (1,649) 26,746 Q1 2020 47,938 (1,722) 46,216 32,428 (1,722) 30,706 Fiscal 2019 Year ended 2019 166,227 (5,592) 160,635 129,696 (5,592) 124,104 Q4 2019 17,053 (1,692) 15,361 26,225 (1,692) 24,533 Q3 2019 36,586 (1,371) 35,215 29,423 (1,371) 28,052 Q2 2019 42,042 (1,948) 40,094 27,291 (1,948) 25,343 Q1 2019 70,546 (581) 69,965 46,757 (581) 46,176 The restatement only impacted revenue allocated to our Processing operating segment. Refer to “Presentation of quarterly revenue and operating (loss) income by segment for fiscal 2020 and 2019” below for additional information regarding our restated operating segments for fiscal 2020 and 2019, including each fiscal quarter within those fiscal years. 44 Critical Accounting Policies Our unaudited condensed 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, including the ongoing uncertainty in the current economic environment due to the outbreak of COVID-19. 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. Critical accounting policies are those that reflect significant judgments or uncertainties and may potentially result in materially different results under different assumptions and conditions. We have identified the following critical accounting policies that are described in more detail in our Annual Report on Form 10-K for the year ended June 30, 2020:  Valuation of investment in Cell C;  Recoverability of equity-accounted investments and other equity securities;  Business combinations and the recoverability of goodwill;  Intangible assets acquired through acquisitions;  Deferred taxation;  Stock-based compensation;  Accounts receivable and allowance for doubtful accounts receivable; and  Revenue – variation in transaction price following September 2019 Supreme Court ruling. Recent accounting pronouncements adopted We did not adopt any new accounting pronouncement during the third quarter of fiscal 2021. Recent accounting pronouncements not yet adopted as of March 31, 2021 Refer to Note 1 to our unaudited condensed consolidated financial statements for a full description of recent accounting pronouncements not yet adopted as of March 31, 2021, including the expected dates of adoption and effects on our 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 2 Three months ended Nine months ended Year ended March 31, March 31, June 30, 2021 2020 2021 2020 2020 ZAR : $ average exchange rate 14.9650 15.3728 15.8390 14.9191 15.6775 Highest ZAR : $ rate during period 15.4724 17.9224 17.6866 17.9224 19.0569 Lowest ZAR : $ rate during period 14.4689 13.9996 14.4689 13.8973 13.8973 Rate at end of period 14.8278 17.8922 14.8278 17.8922 17.3326 45 Translation exchange rates for financial reporting purposes 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 three months ended March 31, 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: Three months ended Nine months ended Year ended Table 3 March 31, March 31, June 30, 2021 2020 2021 2020 2020 Income and expense items: $1 = ZAR 14.9575 15.3667 16.1174 15.9596 17.5686 Balance sheet items: $1 = ZAR 14.8278 17.8922 14.8278 17.8922 17.3326 Results of Operations The discussion of our consolidated overall results of operations is based on amounts as reflected in our unaudited condensed 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 unaudited condensed consolidated financial statements , and supplementally in ZAR, because ZAR is the functional currency of the entities which contribute the majority of our revenue 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 the 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. 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 unaudited condensed consolidated financial statements is included in Note 18 to those statements. We disposed of our Korean operation in the third quarter of fiscal 2020 and therefore it has been presented as a discontinued operation for fiscal 2020. We disposed of FIHRST during the third quarter of fiscal 2020, and deconsolidated CPS in the fourth quarter of fiscal 2020, and therefore their contributions to our reported results are not included in the three and nine months ended March 31, 2021. We analyze our business and operations in terms of three inter-related but independent operating segments: (1) Processing, (2) Financial services and (3) Technology. In addition, corporate and corporate office activities that are impracticable to allocate directly to any of the other operating segments, as well as any inter-segment eliminations, are included in Corporate/Eliminations. 46 Third quarter of fiscal 2021 compared to third quarter of fiscal 2020 The following factors had a significant impact on our results of operations during the third quarter of 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 account fee revenue;  Ongoing operating losses: Operating costs are 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 the third quarter of fiscal 2021 of $10.8 million related to the change in fair value of MobiKwik; and  Foreign exchange movements: The U.S. dollar was 3% weaker against the ZAR during the third quarter of fiscal 2021, 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 4 In United States Dollars Three months ended March 31, 2021 2020 (A) (as restated) (B) $ ’000 $ ’000 change Revenue 28,828 34,614 (17%) Cost of goods sold, IT processing, servicing and support 23,096 23,883 (3%) Selling, general and administration 18,892 17,454 8% Depreciation and amortization 1,132 1,153 (2%) Impairment loss - 6,336 nm Operating loss (14,292) (14,212) 1% Change in fair value of equity securities 10,814 - nm Loss on disposal of equity-accounted investment - Bank Frick 472 - nm Interest income 606 570 6% Interest expense 744 1,886 (61%) Loss before income tax expense (4,088) (15,528) (74%) Income tax expense 2,171 640 239% Net loss before earnings (loss) from equity-accounted investments (6,259) (16,168) (61%) Earnings (Loss) from equity-accounted investments 55 (32,193) nm Net loss from continuing operations (6,204) (48,361) (87%) Net income from discontinued operations - 747 nm Gain from disposal of discontinued operations, net of tax - 12,733 nm Net loss (6,204) (34,881) (82%) Net (loss) income attributable to us (6,204) (34,881) (82%) Continuing (6,204) (48,361) (87%) Discontinued - 13,480 nm (A) Refer to Note 21 to the unaudited condensed consolidated financial statements for discontinued operations disclosures. (B) Revenue and cost of goods sold, IT processing, servicing and support have been restated for the error described in Note 1 to the unaudited condensed consolidated financial statements . There was no impact on operating loss as a result of the restatement. 47 Table 5 In South African Rand Three months ended March 31, 2021 2020 (A) (as restated) (B) ZAR ’000 ZAR ’000 change Revenue 431,195 531,903 (19%) Cost of goods sold, IT processing, servicing and support 345,458 367,003 (6%) Selling, general and administration 282,577 268,210 5% Depreciation and amortization 16,932 17,718 (4%) Impairment loss - 97,363 nm Operating loss (213,772) (218,391) (2%) Change in fair value of equity securities 161,750 - nm Loss on disposal of equity-accounted investment - Bank Frick 7,060 - nm Interest income 9,064 8,759 3% Interest expense 11,128 28,982 (62%) Loss before income tax expense (61,146) (238,614) (74%) Income tax expense 32,473 9,835 230% Net loss before earnings (loss) from equity-accounted investments (93,619) (248,449) (62%) Earnings (Loss) from equity-accounted investments 823 (494,700) nm Net loss from continuing operations (92,796) (743,149) (88%) Net income from discontinued operations - 11,479 nm Gain from disposal of discontinued operations, net of tax - 195,664 nm Net loss (92,796) (536,006) (83%) Net (loss) income attributable to us (92,796) (536,006) (83%) Continuing (92,796) (743,149) (88%) Discontinued - 207,143 nm (A) Refer to Note 21 to the unaudited condensed consolidated financial statements for discontinued operations disclosures. (B) Revenue and cost of goods sold, IT processing, servicing and support have been restated for the error described in Note 1 to the unaudited condensed consolidated financial statements . There was no impact on operating loss as a result of the restatement. The decrease in revenue was primarily due to fewer prepaid airtime and hardware sales and lower account fee revenue. The decrease in cost of goods sold, IT processing, servicing and support was primarily due to lower cost of prepaid airtime and hardware sales, which was partially offset by higher costs related to transaction fees and an increase in insurance-related claims experience. In ZAR, the increase in selling, general and administration expense was primarily due to the year-over-year impact of inflationary increases on employee-related expenses and higher consulting fees. Depreciation and amortization decreased primarily due to lower overall depreciation related to tangible assets that were fully depreciated during the third quarter of fiscal 2021. During the third quarter of 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. Our operating loss margin for the third quarter of fiscal 2021 and 2020 was (49.6%) and (41.1%), respectively. We discuss the components of operating loss margin under “—Results of operations by operating segment.” The change in fair value of equity securities during the third quarter of fiscal 2021 represents a non-cash fair value gain related to MobiKwik. There was no change in the fair value of equity securities during the third quarter of fiscal 2020. We continue to carry our investment in Cell C at $0 (zero). Refer to Note 6 to our unaudited condensed consolidated financial statements for the methodology and inputs used in the fair value calculation for MobiKwik and Note 5 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 the third quarter of fiscal 2021, refer to Note 6 to our unaudited condensed consolidated financial statements for additional information regarding this transaction. In ZAR, interest on surplus cash increased slightly to $0.6 million (ZAR 9.1 million) from $0.6 million (ZAR 8.8 million), primarily due to 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 partially offset by lower rates of interest earned on surplus cash. Interest expense decreased to $0.7 million (ZAR 11.1 million) from $1.9 million (ZAR 29.0 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. 48 Fiscal 2021 tax expense was $2.2 million (ZAR 32.5 million) compared to $0.6 million (ZAR 9.8 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. Our effective tax rate for fiscal 2020, was impacted by non-deductible impairment losses, on-going 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, non-deductible expenses, including transaction-related expenditure, and tax expense recorded by our profitable businesses in South Africa. DNI was sold in the fourth quarter of fiscal 2020 and was accounted for using the equity method during the third quarter of fiscal 2020. Finbond is listed on the Johannesburg Stock Exchange and reports its six-month results during our first quarter and its annual results during our fourth quarter. The table below presents the relative (loss) earnings from our equity accounted investments: Table 6 Three months ended March 31, 2021 2020 $ % $ ’000 $ ’000 change Bank Frick 177 (18,393) nm Share of net income 177 15 1,080% Amortization of intangible assets, net of deferred tax - (147) nm Impairment - (18,261) nm DNI - (10,852) nm Share of net income - 1,563 nm Amortization of intangible assets, net of deferred tax - (419) nm Impairment - (11,996) nm Other (122) (2,948) (96%) Share of net loss (122) (448) (73%) Impairment - (2,500) nm 55 (32,193) nm 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 7 In United States Dollars (1) Three months ended March 31, 2021 % of 2020 % of % change (as restated) Operating Segment $ ’000 total $ ’000 total Consolidated revenue: Processing 18,747 65% 22,078 64% (15%) IPG 6 - 1,164 3% (99%) All others 18,741 65% 20,914 60% (10%) Financial services 10,192 35% 11,683 34% (13%) Technology 2,026 7% 4,040 12% (50%) Subtotal: Operating segments 30,965 172% 37,801 173% (18%) Corporate/Eliminations (2,137) (72%) (3,187) (73%) (33%) Total consolidated revenue 28,828 100% 34,614 100% (17%) Consolidated operating (loss) income: Processing (10,816) 76% (12,394) 87% (13%) IPG (3,332) 23% (3,175) 22% 5% All others (7,484) 52% (9,219) 65% (19%) Financial services (2,111) 15% (1,701) 12% 24% Technology 131 (1%) 945 (7%) (86%) Subtotal: Operating segments (12,796) 165% (13,150) 179% (3%) Corporate/eliminations (1,496) (65%) (1,062) (79%) 41% Total consolidated operating loss (14,292) 100% (14,212) 100% 1% (1) Consolidated revenue-Processing-All others for the three months ended March 31, 2020 has been restated for the error described in Note 1 to the unaudited condensed consolidated financial statements . There was no impact on operating loss as a result of the restatement. 49 Table 8 In South African Rand (1) Three months ended March 31, 2021 % of 2020 % of % change (as restated) Operating Segment ZAR ’000 total ZAR ’000 total Consolidated revenue: Processing 280,408 65% 339,266 64% (17%) IPG 89 - 17,887 3% (100%) All others 280,319 65% 321,379 60% (13%) Financial services 152,447 35% 179,529 34% (15%) Technology 30,304 7% 62,081 12% (51%) Subtotal: Operating segments 463,159 172% 580,876 173% (20%) Corporate/Eliminations (31,964) (72%) (48,973) (73%) (35%) Total consolidated revenue 431,195 100% 531,903 100% (19%) Consolidated operating (loss) income: Processing (161,780) 76% (190,455) 87% (15%) IPG (49,838) 23% (48,789) 22% 2% All others (111,942) 52% (141,666) 65% (21%) Financial services (31,575) 15% (26,139) 12% 21% Technology 1,959 (1%) 14,522 (7%) (87%) Subtotal: Operating segments (191,396) 165% (202,072) 179% (5%) Corporate/eliminations (22,376) (65%) (16,319) (79%) 37% Total consolidated operating loss (213,772) 100% (218,391) 100% (2%) (1) Consolidated revenue-Processing-All others for the three months ended March 31, 2020 has been restated for the error described in Note 1 to the unaudited condensed consolidated financial statements . There was no impact on operating loss as a result of the restatement. Processing Excluding IPG, segment revenue decreased primarily due to fewer prepaid airtime sales and a reduction in volume-driven transaction fees. Excluding IPG, Processing’s operating loss has been impacted by lower revenue and by an increase in transaction-based costs. Our revenue for the three months ended March 31, 2020 was adversely impacted by ZAR 8.2 million ($0.5 million) as a result of the COVID-19 pandemic as we were unable to charge certain cash withdrawal fees to customers as a result of the lockdown during the last few days of March 2020. Our operating loss for the three months ended March 31, 2020 also includes the impact of the $6.4 million impairment losses. IPG’s operating loss for the quarter primarily related to the closure of its operations. Our operating loss margin (calculated as operating (loss) income divided by revenue) for the third quarter of fiscal 2021 and 2020 was (57.7%) and (56.1%), respectively. Excluding IPG, our operating loss margin for the Processing segment was (39.9%) and (44.1%) during the third quarter of fiscal 2021 and 2020, respectively. Excluding the impairment losses, our operating loss and operating loss margin for the Processing segment was $6.1 million and (27.4%), respectively, during the third quarter of fiscal 2020. Financial services Segment revenue decreased due to lower account fee revenue and a modest reduction in lending revenue, whilst insurance revenues increased compared to the prior period. The increase in operating loss is primarily due to the lower account fee revenue and the increase in insurance-related claims experienced this quarter attributed to the second wave of the pandemic. Our operating loss margin for the third quarter of fiscal 2021 and 2020 was (20.7%) and (14.6%), respectively. Technology Segment revenue decreased significantly due to fewer hardware sales from one product line compared to the prior period, though partially offset by increases in other hardware product lines. Operating income for the third quarter of fiscal 2021 was directly impacted by the lower revenue compared with fiscal 2020. Our operating income margin for the Technology segment was 6.5% and 23.4% during the third quarter of fiscal 2021 and 2020, respectively. 50 Corporate/Eliminations Our corporate expenses generally include acquisition-related intangible asset amortization; expenses incurred related to corporate actions; expenditure related to compliance with the Sarbanes-Oxley Act of 2002; non-employee directors’ fees; employee and executive bonuses; stock-based compensation; legal fees; audit fees; directors and officer’s insurance premiums; telecommunications expenses; and elimination entries. Our corporate expenses for fiscal 2020 includes a $0.7 million impairment loss and net unrealized foreign exchange gains of $1.9 million compared with net unrealized foreign exchange gains of $0.6 million recorded in fiscal 2021. Year to date of fiscal 2021 compared to year to date of fiscal 2020 The following factors had a significant impact on our results of operations during the year to date of 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 account fee revenue, which was partially offset by higher transaction fees;  Ongoing operating losses: Operating costs are largely in line with the prior period in ZAR due to the largely fixed cost nature of the costs base. As a result, we continue to experience operating losses because of depressed revenues; and  Non-cash increase in fair value of MobiKwik: We recorded a non-cash fair value gain during the year to date of fiscal 2021 of $25.9 million related to the change in fair value of MobiKwik. 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 9 In United States Dollars Nine months ended March 31, 2021 2020 (A) (as restated) (B) $ ’000 $ ’000 change Revenue 96,269 119,748 (20%) Cost of goods sold, IT processing, servicing and support 73,895 81,335 (9%) Selling, general and administration 59,517 59,494 0% Depreciation and amortization 3,129 3,651 (14%) Impairment loss - 6,336 nm Operating loss (40,272) (31,068) 30% Change in fair value of equity securities 25,942 - nm Gain on disposal of FIHRST - 9,743 nm Loss on disposal of equity-accounted investment - Bank Frick 472 - nm Loss on disposal of equity-accounted investment 13 - nm Interest income 1,934 2,015 (4%) Interest expense 2,168 6,362 (66%) Loss before income tax expense (15,049) (25,672) (41%) Income tax expense 4,549 2,317 96% Net loss before loss from equity-accounted investments (19,598) (27,989) (30%) Loss from equity-accounted investments (20,098) (30,624) (34%) Net loss from continuing operations (39,696) (58,613) (32%) Net income from discontinued operations - 6,402 nm Gain from disposal of discontinued operations, net of tax - 12,733 nm Net loss (39,696) (39,478) 1% Net (loss) income attributable to us (39,696) (39,478) 1% Continuing (39,696) (58,613) (32%) Discontinued - 19,135 nm (A) Refer to Note 21 to the unaudited condensed consolidated financial statements for discontinued operations disclosures. (B) Revenue and cost of goods sold, IT processing, servicing and support have been restated for the error described in Note 1 to the unaudited condensed consolidated financial statements . There was no impact on operating loss as a result of the restatement. 51 Table 10 In South African Rand Nine months ended March 31, 2021 2020 (A) (as restated) (B) ZAR ’000 ZAR ’000 change Revenue 1,551,606 1,911,130 (19%) Cost of goods sold, IT processing, servicing and support 1,190,996 1,298,074 (8%) Selling, general and administration 959,260 949,500 1% Depreciation and amortization 50,431 58,268 (13%) Impairment loss - 101,121 nm Operating loss (649,081) (495,833) 31% Change in fair value of equity securities 418,118 - nm Gain on disposal of FIHRST - 155,494 nm Loss on disposal of equity-accounted investment - Bank Frick 7,607 - nm Loss on disposal of equity-accounted investment 210 - nm Interest income 31,171 32,159 (3%) Interest expense 34,943 101,535 (66%) Loss before income tax expense (242,552) (409,715) (41%) Income tax expense 73,318 36,978 98% Net loss before loss from equity-accounted investments (315,870) (446,693) (29%) Loss from equity-accounted investments (323,928) (488,747) (34%) Net loss from continuing operations (639,798) (935,440) (32%) Net income from discontinued operations - 102,173 nm Gain from disposal of discontinued operations, net of tax - 203,214 nm Net loss (639,798) (630,053) 2% Net (loss) income attributable to us (639,798) (630,053) 2% Continuing (639,798) (935,440) (32%) Discontinued - 305,387 nm (A) Refer to Note 21 to the unaudited condensed consolidated financial statements for discontinued operations disclosures. (B) Revenue and cost of goods sold, IT processing, servicing and support have been restated for the error described in Note 1 to the unaudited condensed consolidated financial statements . There was no impact on operating loss as a result of the restatement. The decrease in revenue was primarily due to fewer prepaid airtime and hardware sales and lower account fee revenue, which was partially offset by higher transaction fees. 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. The increase in selling, general and administration expense was primarily due to the year-over-year impact of inflationary increases on employee-related expenses, an allowance on doubtful loans receivable from equity-accounted investments created during the second quarter of fiscal 2021 and an increase in consulting fees. Depreciation and amortization decreased primarily due to lower overall depreciation related to tangible assets that were fully depreciated during the year to date of fiscal 2021. During the year to date 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. Our operating loss margin for the year to date of fiscal 2021 and 2020 was (41.8%) and (25.9%), respectively. We discuss the components of operating loss margin under “—Results of operations by operating segment.” The change in fair value of equity securities during the year to date of fiscal 2021 represents a non-cash fair value gain related to MobiKwik. There was no change in the fair value of equity securities during the year to date of fiscal 2020. We continue to carry our investment in Cell C at $0 (zero). Refer to Note 6 to our unaudited condensed consolidated financial statements for the methodology and inputs used in the fair value calculation for MobiKwik and Note 5 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 the year to date fiscal 2021, refer to Note 6 to our unaudited condensed consolidated financial statements for additional information regarding this transaction. We recorded a gain of $9.7 million related to the disposal of FIHRST during the year to date of fiscal 2020. Interest on surplus cash was $1.9 million (ZAR 31.2 million) compared to $2.0 million (ZAR 32.2 million) in the prior period, 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. 52 Interest expense decreased to $2.2 million (ZAR 34.9 million) from $6.4 million (ZAR 101.5 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 $4.5 million (ZAR 73.3 million) compared to $2.3 million (ZAR 37.0 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 disposal of FIHRST, non-deductible impairment losses, the on-going 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, non-deductible expenses, including transaction-related expenditure, and the tax expense recorded by our profitable businesses, primarily in South Africa. DNI was sold in the fourth quarter of fiscal 2020 and was accounted for using the equity method during the year to date of fiscal 2020. Finbond is listed on the Johannesburg Stock Exchange and reports its six-month results during our first quarter and its annual results during our fourth quarter. The table below presents the relative (loss) earnings from our equity accounted investments: Table 11 Nine months ended March 31, 2021 2020 $ % $ ’000 $ ’000 change Bank Frick 1,156 (17,924) nm Share of net income 1,156 770 50% 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 Finbond (20,267) 491 nm Share of net (loss) income (2,617) 491 nm Impairment (17,650) - nm Other (987) (3,447) (71%) Share of net loss (439) (947) (54%) Impairment (548) (2,500) (78%) (20,098) (30,624) (34%) Refer to Note 6 to our unaudited condensed consolidated financial statements for additional information related to the impairment of Finbond and our other equity-accounted investments. 53 Results of operations by operating segment The composition of revenue and the contributions of our business activities to operating loss are illustrated below: Table 12 In United States Dollars (1) Nine months ended March 31, 2021 % of 2020 % of % change (as restated) Operating Segment $ ’000 total $ ’000 total Consolidated revenue: Processing 61,243 64% 75,395 63% (19%) IPG 1,693 2% 2,389 2% (29%) All others 59,550 62% 73,006 61% (18%) Financial services 28,166 29% 38,119 32% (26%) Technology 12,846 13% 16,139 13% (20%) Subtotal: Operating segments 102,255 170% 129,653 171% (21%) Corporate/Eliminations (5,986) (70%) (9,905) (71%) (40%) Total consolidated revenue 96,269 100% 119,748 100% (20%) Consolidated operating (loss) income: Processing (28,498) 71% (23,747) 76% 20% IPG (10,751) 27% (8,068) 26% 33% All others (17,747) 44% (15,679) 50% 13% Financial services (5,554) 14% (2,605) 8% 113% Technology 2,984 (7%) 2,679 (9%) 11% Subtotal: Operating segments (31,068) 149% (23,673) 151% 31% Corporate/eliminations (9,204) (49%) (7,395) (51%) 24% Total consolidated operating loss (40,272) 100% (31,068) 100% 30% (1) Consolidated revenue-Processing-All others for the nine months ended March 31, 2020 has been restated for the error described in Note 1 to the unaudited condensed consolidated financial statements . There was no impact on operating loss as a result of the restatement. Table 13 In South African Rand (1) Three months ended March 31, 2021 % of 2020 % of % change (as restated) Operating Segment ZAR ’000 total ZAR ’000 total Consolidated revenue: Processing 987,078 64% 1,203,274 63% (18%) IPG 27,287 2% 38,127 2% (28%) All others 959,791 62% 1,165,147 61% (18%) Financial services 453,963 29% 608,364 32% (25%) Technology 207,044 13% 257,572 13% (20%) Subtotal: Operating segments 1,648,085 170% 2,069,210 171% (20%) Corporate/Eliminations (96,479) (70%) (158,080) (71%) (39%) Total consolidated revenue 1,551,606 100% 1,911,130 100% (19%) Consolidated operating (loss) income: Processing (459,314) 71% (378,993) 76% 21% IPG (173,279) 27% (128,762) 26% 35% All others (286,035) 44% (250,231) 50% 14% Financial services (89,516) 14% (41,575) 8% 115% Technology 48,094 (7%) 42,756 (9%) 12% Subtotal: Operating segments (500,736) 149% (377,812) 151% 33% Corporate/eliminations (148,345) (49%) (118,021) (51%) 26% Total consolidated operating loss (649,081) 100% (495,833) 100% 31% (1) Consolidated revenue-Processing-All others for the nine months ended March 31, 2020 has been restated for the error described in Note 1 to the unaudited condensed consolidated financial statements . There was no impact on operating loss as a result of the restatement. 54 Processing Excluding IPG, segment revenue decreased primarily due to fewer prepaid airtime sales, which was partially offset by higher volume-driven transaction fees. Excluding IPG, Processing operating loss has been impacted by lower revenue and by an increase in transaction-based costs. Our operating loss for the nine months ended March 31, 2020 also includes the impact of the $6.4 million impairment losses. IPG incurred an operating loss but is in the process of being closed down. Our operating loss margin for the year to date of fiscal 2021 and 2020 was (46.5%) and (31.5%), respectively. Excluding IPG, our operating loss margin for the Processing segment was (29.8%) and (21.5%) during the year to date of fiscal 2021 and 2020, respectively. Excluding the impairment losses, our operating loss and operating loss margin for the Processing segment was $17.4 million and (23.1%), respectively, during the third quarter of fiscal 2020. Financial services Segment revenue decreased due to lower account fee revenue and a modest reduction in lending revenue, whilst insurance revenues increased compared to the prior period. The segment incurred an 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 operating loss margin for the year to date of fiscal 2021 and 2020 was (19.7%) and (6.8%), respectively. Technology Segment revenue was lower than in fiscal 2021 due to fewer hardware sales. Operating income for the year to date of fiscal 2021 improved compared with fiscal 2020 due to improved margins on the sale of various product lines within the segment. Our operating income margin for the Technology segment was 23.2% and 16.6% during the year to date of fiscal 2021 and 2020, respectively. Corporate/Eliminations Our corporate expenses increased primarily due to an allowance on doubtful loans receivable from equity-accounted investments created during the year to date of fiscal 2021, and higher legal and consulting fees, which were partially offset by lower audit fees and an unrealized foreign exchange gain recognized in year to date fiscal 2020. 55 Presentation of quarterly revenue and operating (loss) income by segment for fiscal 2020 and 2019 The tables below present quarterly revenue and operating (loss) income generated by our three reportable segments for fiscal 2020 and 2019, 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 14 Fiscal 2020 (1) In United States Dollars Quarter 1 Quarter 2 Quarter 3 Quarter 4 F2020 $ '000 $ '000 $ '000 $ '000 $ '000 Revenues Processing 28,295 25,022 22,078 16,391 91,786 IPG 793 432 1,164 921 3,310 All Other 27,502 24,590 20,914 15,470 88,476 Financial services 14,168 12,268 11,683 8,751 46,870 Technology and Other 7,209 4,890 4,040 1,932 18,071 Subtotal: Operating segments 49,672 42,180 37,801 27,074 156,727 Corporate/Eliminations (3,456) (3,262) (3,187) (2,523) (12,428) Total 46,216 38,918 34,614 24,551 144,299 Operating (loss) income Processing (5,505) (5,848) (12,394) (10,089) (33,836) IPG (1,973) (2,920) (3,175) (4,280) (12,348) All Other (3,532) (2,928) (9,219) (5,809) (21,488) Financial services 345 (1,249) (1,701) (1,016) (3,621) Technology and Other 1,145 589 945 136 2,815 Subtotal: Operating segments (4,015) (6,508) (13,150) (10,969) (34,642) Corporate/Eliminations (2,421) (3,912) (1,062) (2,211) (9,606) Total (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 (1) Revenues-Processing-All others has been restated for the error described in Note 1 to the unaudited condensed consolidated financial statements . There was no impact on operating loss as a result of the restatement. Table 15 Fiscal 2019 (1) In United States Dollars Quarter 1 Quarter 2 Quarter 3 Quarter 4 F2019 $ '000 $ '000 $ '000 $ '000 $ '000 Revenues Processing 45,658 26,807 21,959 23,664 118,088 IPG 2,404 2,300 1,892 1,561 8,157 All Other 43,254 24,507 20,067 22,103 109,931 Financial services 25,442 11,779 10,550 9,263 57,034 Technology and Other 4,748 4,796 5,277 5,294 20,115 Subtotal: Operating segments 75,848 43,382 37,786 38,221 195,237 Corporate/Eliminations (5,883) (3,288) (2,571) (22,860) (34,602) Total 69,965 40,094 35,215 15,361 160,635 Operating (loss) income Processing (7,091) (23,481) (15,431) (5,572) (51,575) IPG (2,238) (9,425) (1,877) (2,561) (16,101) All Other (4,853) (14,056) (13,554) (3,011) (35,474) Financial services 4,038 (25,144) (4,477) (4,485) (30,068) Technology and Other 210 335 164 (6,003) (5,294) Subtotal: Operating segments (2,843) (48,290) (19,744) (16,060) (86,937) Corporate/Eliminations (4,492) (3,175) (4,032) (36,296) (47,995) Total (7,335) (51,465) (23,776) (52,356) (134,932) Income and expense items: $1 = ZAR 14.8587 14.3236 14.1703 14.2884 14.2695 (1) Revenues-Processing-All others has been restated for the error described in Note 1 to the unaudited condensed consolidated financial statements . There was no impact on operating loss as a result of the restatement. 56 Liquidity and Capital Resources At March 31, 2021, our cash and cash equivalents were $207.8 million and comprised of U.S. dollar-denominated balances of $171.2 million, ZAR-denominated balances of ZAR 0.5 billion ($34.1 million), and other currency deposits, primarily Botswana pula, of $2.4 million, all amounts translated at exchange rates applicable as of March 31, 2021. The decrease in our unrestricted cash balances from June 30, 2020, was primarily due to the payment of Federal income taxes, weak trading activities and an increase in our lending book, which was partially offset by the receipt of the outstanding proceeds related to the sale of our Korean business, receipt of proceeds related to the disposal of Bank Frick and the receipt of the outstanding loan related to the disposal of our remaining interest in DNI. 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. Available short-term borrowings Summarized below are our short-term facilities available and utilized as of March 31, 2021: Table 16 RMB Nedbank $ ’000 ZAR ’000 $ ’000 ZAR ’000 Total short-term facilities available, comprising: Overdraft - - 3,372 50,000 Overdraft restricted as to use (1) 80,929 1,200,000 16,860 250,000 Total overdraft 80,929 1,200,000 20,232 300,000 Indirect and derivative facilities (2) - - 10,726 159,037 Total short-term facilities available 80,929 1,200,000 30,958 459,037 Utilized short-term facilities: Overdraft restricted as to use (1) 10,519 155,966 876 13,002 Indirect and derivative facilities (2) - - 10,558 156,556 Interest rate, based on South African prime rate 7.00% Interest rate, based on South African prime rate less 1.15% 5.85% (1) Overdraft may only be used to fund mobile 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 Nedbank to various third parties on our behalf. Restricted cash We have credit facilities with RMB and Nedbank in order to access cash to fund our ATMs in South Africa. Our cash, cash equivalents and restricted cash presented in our unaudited condensed consolidated statement of cash flows as of March 31, 2021, includes restricted cash of approximately $11.4 million related to cash withdrawn from our various debt facilities 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 unaudited condensed consolidated balance sheet. We have also entered into cession and pledge agreements with Nedbank related to certain of 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 unaudited condensed consolidated statement of cash flows as of March 31, 2021, includes restricted cash of approximately $7.6 million that has been ceded and pledged. 57 Cash flows from operating activities Third quarter Net cash used in operating activities during the third quarter of fiscal 2021 was $8.3 million (ZAR 123.5 million) compared to $4.2 million (ZAR 64.5 million) during the third quarter of fiscal 2020 . Excluding the impact of income taxes, our cash used in operating activities during the third quarter of 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 6). Our net cash provided by operating activities during the third quarter of fiscal 2020 includes the contribution from our Korean operations for January and February 2020 of $4.4 million (refer to Note 21). Our cash used in operating activities during the third quarter of fiscal 2020 was also impacted by the pandemic because we were unable to originate loans towards the end of March 2020 due to the temporary COVID-19 restrictions imposed on our lending activities in late March 2020. This had a positive result on net cash used in operating activities during the third quarter of fiscal 2020. Our operating cash flows for the third quarter of fiscal 2020 were also adversely impacted by the purchase of additional Cell C prepaid airtime that was subject to sale restrictions. During the third quarter of fiscal 2021, we paid our first provisional South African tax payments of $0.2 million (ZAR 2.6 million) related to our 2021 tax year. During the third quarter of fiscal 2020, we paid our first provisional South African tax payments of $0.1 million (ZAR 0.9 million) related to our 2020 tax year. We also paid taxes totaling $1.9 million in other tax jurisdictions, primarily South Korea. Taxes paid during the third quarter of fiscal 2021 and 2020 were as follows: Table 17 Three months ended March 31, 2021 2020 2021 2020 $ $ ZAR ZAR ‘000 ‘000 ‘000 ‘000 First provisional payments 176 60 2,596 890 Second provisional payments - 26 - 388 Tax refund received - (1,311) - (18,853) Total South African taxes paid (received) 176 (1,225) 2,596 (17,575) Foreign taxes paid 35 1,870 525 28,190 Total tax paid 211 645 3,121 10,615 Year to date Net cash used in operating activities during the year to date of fiscal 2021 was $50.1 million (ZAR 807.7 million) compared to $18.1 million (ZAR 289.1 million) during the year to date of fiscal 2020 . Excluding the impact of income taxes, our cash used in operating activities during the year to date of 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 6). Our net cash used in operating activities during the year to date of fiscal 2020 includes the contribution from our Korean operations for eight months of $14.6 million (refer to Note 21). During the year to date of fiscal 2021, we paid our first provisional South African tax payments of $0.9 million (ZAR 12.7 million) related to our 2021 tax year. During the year to date of fiscal 2021, we paid South African tax of $0.2 million (ZAR 3.4 million) related to our 2020 tax year. We also paid taxes totaling $15.3 million in other tax jurisdictions, primarily in the U.S. During the year to date of fiscal 2020, we paid our first provisional South African tax payments of $0.8 million (ZAR 11.5 million) related to our 2020 tax year. During the year to date of fiscal 2020 , we paid South African tax 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 the year to date of fiscal 2021 and 2020 were as follows: Table 18 Nine months ended March 31, 2021 2020 2021 2020 $ $ ZAR ZAR ‘000 ‘000 ‘000 ‘000 First provisional payments 853 800 12,680 11,547 Second provisional payments - 26 - 388 Taxation paid related to prior years 205 782 3,423 11,620 Tax refund received (12) (1,339) (205) (19,245) Total South African taxes paid 1,046 269 15,898 4,310 Foreign taxes paid 15,336 4,263 256,366 62,302 Total tax paid 16,382 4,532 272,264 66,612 58 Cash flows from investing activities Third quarter Cash used in investing activities for the third quarter of fiscal 2021 included capital expenditures of $0.6 million (ZAR 9.7 million), primarily due to the acquisition of computer equipment. During the third quarter of fiscal 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 will be received in fiscal 2022 and 2023. Cash used in investing activities for the third quarter of fiscal 2020 included capital expenditures of $1.0 million (ZAR 16.0 million), primarily due to the acquisition of computer equipment in South Korea to maintain operations and leasehold improvements in Malta. During the third quarter of fiscal 2020, we received a net $192.6 million from the sale of Net1 Korea and paid transaction costs of $7.5 million related to this disposal. We also invested a further $1.3 million in V2 Limited. Year to date Cash used in investing activities for the year to date of fiscal 2021 included capital expenditures of $3.9 million (ZAR 63.6 million), primarily due to the acquisition of motor vehicles, which largely comprises a fleet of customized mobile ATMs used to deliver a service to rural communities , computer equipment and leasehold improvements in South Africa. We received $20.1 million related to the sale of our Korean business following the successful refund application of the amounts withheld and paid to the South Korean tax authorities pursuant to that transaction. We received $18.6 million related to the disposal of Bank Frick and the amount due on the deferred sale proceeds related to the April 2020 sale of DNI, which has now been paid in full. We also extended loan funding of $1.0 million to V2 and $0.2 million to Revix. Cash used in investing activities for the year to date of fiscal 2020 included capital expenditures of $4.5 million (ZAR 71.7 million), primarily due 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 the year to date fiscal 2020, we received a net $192.6 million from the sale of Net1 Korea, paid transaction costs of $7.5 million related to this disposal, received $10.9 million from the sale of FIHRST and received $4.3 million from DNI related to the settlement of a ZAR 60.0 million loan outstanding. We also made a further equity contribution of $2.5 million to V2 and extended loan funding of $0.7 million to Revix. Cash flows from financing activities Third quarter During the third quarter of fiscal 2021 , we utilized approximately $55.3 million from our South African overdraft facilities to fund our ATMs and repaid $103.2 million of these facilities. During the third quarter of fiscal 2020, we utilized approximately $184.7 million from our South African overdraft facilities, primarily to fund our ATMs, and repaid $203.8 million of these facilities. We also utilized $9.0 million of our Bank Frick overdraft to fund our operations and repaid $22.9 million towards this facility, including the final payment to settle the facility in full. Year to date During the year to date of fiscal 2021 , we utilized approximately $261.8 million from our South African overdraft facilities to fund our ATMs and repaid $268.3 million of these facilities. During the year to date fiscal 2020, we utilized approximately $567.9 million from our South African overdraft facilities, primarily to fund our ATMs, and repaid $578.3 million of these facilities. We utilized approximately $14.8 million of our borrowings to fund the purchase of Cell C prepaid airtime that is subject to sale restrictions. We prepaid approximately $11.3 million of these borrowings (Facility F) utilizing the proceeds received from the disposal of FIHRST. We also repaid $26.9 million of our Bank Frick overdraft and utilized $17.4 million of this overdraft to fund our operations. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements. Capital Expenditures We expect capital spending for the fourth quarter of fiscal 2021 to primarily include limited investments into our vehicle fleet, our ATM infrastructure and branch network in South Africa. Our capital expenditures for the third quarter of fiscal 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. We had outstanding capital commitments as of March 31, 2021, of $0.1 million. We expect to fund these expenditures through internally generated funds and available facilities. 59