What changed in this filing

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Item 1. Business

2024-09-11 compared with 2023-09-12 · 286 added, 253 removed, 198 unchanged (73% of the section changed)

At Lesaka, our

core purpose is

to improve people’s lives by

bringing financial inclusion to

South Africa’s underserved consumers

and merchants.

to efficiently

a full-service

platform serving both cash and digital, and facilitating the secular shift from

cash to digital that is currently taking place.

Lesaka uses its proprietary banking and payment technologies

to distribute low-cost financial and value-added

services to small

businesses, primarily

informal sector,

consumers, the

grant beneficiaries,

from financial services.

leading full-service

African Fintech

proprietary banking

technologies to

deliver financial

services solutions and software to consumers and merchants in Southern Africa.

Our vision is to build and operate the leading full-service fintech platform

in Southern Africa.

underserviced

people’s lives and increasing financial inclusion in the markets in which we operate.

achieve this through our ability to efficiently

digitalize the last mile

of financial inclusion,

providing a full-service

fintech platform

Africa, offering

cash management

digitization, card acquiring and payment processing, Value

Added Services (“VAS”),

and growth capital to micro, small and medium

overlapping divisions:

Merchants and Consumers.

beneficiaries,

historically been

excluded from

traditional financial

socioeconomic

market within Living

Standards Measures (“LSMs”) 1

comprises approximately 26 million

have approximately 1.3 million active consumers.

In our B2B Merchant Division we

focus on MSME operating in

the informal and formal sectors of

the South African economy.

sector merchants are

generally smaller

informal urban

traditional banking

formal merchants

are generally

larger turnovers

service providers.

We operate separate brands in these two sectors of the economy.

The informal market consists of approximately 1.4

approximately

customers using our solutions.

a comprehensive set of products and services to our consumer and merchant

In our Consumer Division, our products include transactional banking, short-term loans, a digital wallet as well as insurance and

various VAS to underserved consumers in South

Africa, aligning with

our purpose of

improving people’s lives and increasing

Our value proposition and products are designed to be simple,

relevant and cost effective for our target market.

Merchant Division,

MSME customers,

cash management

and digitization

proprietary vault technology, card acquiring, innovative growth capital, bill and supplier payment solutions, and a wide range of VAS

our merchants

enterprise level

merchants, we

through our proprietary financial switch, as well as Ingenico point of sale device and maintenance, bank and SIM card production and

other specialized technology products.

offering both cash

and digital, and

the secular shift from cash to digital that is currently taking place.

range of solutions

including transactional

accounts (banking), lending,

insurance, cash management

card acceptance, supplier payments, software services

and bill payments.

a full-service fintech platform in

our connected

ecosystem, we facilitate the digitization of commerce in our markets.

we announced the

acquisition of Adumo

Ltd (“Adumo”), an

acquisition subject to

satisfaction of customary

consolidation

fintech sector and enhances Lesaka's strengths in both the consumer and merchant

Reportable Segments

operate through

two divisions:

B2C Consumer Division

(“Consumer”) and

our B2B Merchant

Division (“Merchant”).

Within these two divisions, Lesaka has four

broad customer types:

consumers, micro-merchants, merchants, and

enterprise clients.

While there are mutually

reinforcing dynamics and overlap

between our verticals,

within each vertical, we

offer distinct brands

with unique value propositions.

Our platform addresses a wide range

of customers that are not generally serviced by our competitors,

an advantage that we use

to benefit from economies

believe that we deliver

high quality products that

provide excellent

value to our customers.

competed markets,

a comprehensive

product portfolio,

both formal and informal consumers and merchants with omnichannel

financial services through physical and digital touchpoints.

Consumer (B2C)

Through Consumer we focus

on individuals who

have historically been excluded

from traditional financial services.

are designed for consumers at the lower socioeconomic

end of the market within Living Standards Measures

(“LSMs”) 1 to 6, which

comprises approximately

(according to

Report, we have approximately 1.5 million active consumer customers.

consumers transactional accounts (banking),

insurance, lending (short-term loans),

payments solutions (digital wallet)

value-added services

to underserved

South Africa.

Our value proposition

simple, relevant and cost effective for our target

Merchant (B2B)

Through Merchant, we focus on micro-merchants, merchants and enterprises operating

in the informal and formal sectors of the

Southern African economy.

Micro-merchants, or informal sector merchants,

are often sole

proprietors, usually with lower

revenues, that operate in

or in informal urban areas and do not always have access to a full-suite of

traditional banking products.

Merchants, or

formal sector

merchants, are

Enterprises are large-scale corporate and government

organizations, including but not limited

to banks, mobile network

(“MNOs”) and municipalities.

micro-merchants

are immediately

which more than

87,000 are in

South Africa (this

impact of the

Adumo acquisition,

not effective

2024 and expected to close in October 2024).

micro-merchant

digitalization

proprietary vault

card acceptance,

supplier payments,

software services,

lending, prepaid

bill payments

empower merchants to grow their businesses and transact more efficiently.

larger enterprise

customers (B2B), we offer

bill and supplier

payments and VAS

products through

our proprietary financial

switch, as well as point of sale device and maintenance, bank and SIM card production

and other specialized technology products.

Market Opportunity

challenges is

of understanding

alternatives, which

financial literacy.

Adding to this

challenge are the

relatively high connectivity

costs and the

low smartphone penetration

currently South

its approximately

population and

economy (GDP,

according to IMF World

Economic Outlook Database as

of October 2023).

the acquisition of Adumo

(an acquisition subject to

regulatory approvals

and satisfaction of

customary closing conditions,

expected to close

in October 2024)

we augment our

in South Africa,

feature phones.

that although

Africans have

account, a significant majority treat them as post boxes and withdraw all their money in one

This has real implications for

both merchants and consumers.

For merchants

this means less

access to formal

merchants are able

digital payments.

For consumers, only

an estimated 20% of the approximately

26 million South African consumers in

significant majority

permanent social

grant recipients

require immediate

withdrawals of their grant.

These sources

and challenges present

a significant market

opportunity for

Lesaka to provide

innovative solutions

both merchants

and consumers,

to facilitate

wider financial

inclusion and

digitization.

time been at the forefront of providing financial inclusion and digitization

for consumers and merchants in this space.

Consumer financial

the unbanked:

Africa, which

approximately

permanent grants.

South Africa is

cash-based economy,

with approximately

60% of transactions

still conducted

In the Consumer Division, we currently have 1.3 million active account holders which represents approximately 4% share of our total

addressable market.

African government

recipients the

being inadequately

served by the current system.

Lesaka is well

placed to address the needs of these consumers with

its large informal market distribution

and affordable financial services.

Merchant payment

solutions and financial

services for MSMEs:

approximately 2.1

million MSMEs in

South Africa,

million operate

informal market,

accept digital

comprehensive

businesses to grow,

reduce cash related operating

risks and become more

underserved market and increasing

penetration is

providing solutions

that encourage

formalized and

non-cash transacting

taking market share from competitors.

While the informal market presents a major growth opportunity,

Lesaka also has a comprehensive offering to the formal MSME

and enterprise market.

our comprehensive

and merchants

Namibia, Botswana and

Zambia and expand

Together this represents

a 140 million

population addressable

market, larger than that of Mexico or Japan (GDP according to IMF

World Economic

Outlook Database as of October 2023).

significantly.

According to a report

by Genesis Analytics, between 2015

and 2023, the proportion

of low-income workers in South

Africa that had

card to transact

rose from 17%

report, between 2015

and 2021, the

proportion of

Africans accessing online

banking services increased

between 2018 and

2024, smartphone penetration

from 55% to 76%.

These favorable tailwinds

have helped position

Africa as the fastest-growing

Fintech market globally,

according to a

Boston Consulting Group that projects growth in the African Fintech revenue pool

to grow by 13 times between 2021 and 2030.

markets continue to rely on expensive and unreliable legacy systems and focus on narrow customer segments with mono-line (single-

line) products.

believe that this

presents a significant

opportunity for Lesaka

operate the leading

full-service Fintech platform

in Southern Africa, empowering underserviced consumers and merchants by delivering

innovative financial services focused on their

specific needs.

With our comprehensive offerings to

both consumers and merchants, we compete with a wide range of service providers.

competitors for

individual products and

services, although

end-to-end offering,

particularly at

socioeconomic

end of the consumer market and the informal merchant market, where we

have a significant footprint and penetration.

specific products

and services,

end-to-end solutions,

particularly in

the lower-income

market and the informal merchant market, where we have a significant footprint

and strong penetration.

Consumer Division,

12 unchanged sentences

Solutions and Spark ATM

Systems, which collectively have a market share in excess

In the informal merchant sector, there

54 unchanged sentences

training programs;

financial assistance to pursue further studies and obtain formal qualifications;

other in-house and cross-functional training to aid with career advancement;

succession planning – training interventions.

succession planning – training interventions to address scarce and critical skills.

Equal opportunity

24 unchanged sentences

69% Black, 11% two or more races, 8% Indian and 12%

female named executive officers.

female named executive officer.

inclusive workforce

3 unchanged sentences

to progress towards gender equality

positive strides towards a rewards philosophy that rewards

high performance,

is externally benchmarked and focuses on equal people

for equal work.

positive strides towards a rewards philosophy that rewards high performance, is externally benchmarked and focuses on equal pay for

work of equal value.

Employee compensation programs

10 unchanged sentences

Life and disability insurance coverage;

Financial aid to fund tertiary education for children of employees;

Employee assistance programs;

Product discounts.

documented as part of our annual performance review process.

documented as part of our annual remuneration review process.

presented in the table below:

1 unchanged sentence

Total segments

(1) Consumer includes one executive officer for each of fiscal 2023,

2022 and 2021.

Merchant includes one executive officer for

Group includes

two executive

fiscal 2022 and 2021.

On a functional basis,

four of our employees

are our named executive

332 were employed in

sales and marketing, 253

were employed in finance and administration, 221 were employed in information technology and 1,493 were employed in operations.

(1) Consumer includes one executive officer for each of fiscal 2024, 2023 and 2022.

Merchant includes one executive officer

each of fiscal 2024, 2023 and 2022.

Group includes two executive officers

for fiscal 2024 and 2023 and three for fiscal 2022.

On a functional basis, four of our employees are our named

executive officers, 1,350 were employed in sales and marketing, 500

were employed in finance and administration, 266 were employed in information

technology and 411 were employed in operations.

Health and safety laws and regulations

26 unchanged sentences

ages and their titles:

Group Chief Executive Officer and Director

Group Chief Financial Officer, Treasurer,

Secretary, and Director

Ali Mazanderani

Executive Chairman and Director

Group Chief Financial Officer and Director

Chief Executive Officer:

1 unchanged sentence

Executive and Director

Chief Executive

the Head of Corporate & Investment Banking and Joint Managing Director at Investec Bank Plc (“Investec”), an LSE-listed specialist

director for various international and regional subsidiaries of Investec Bank Plc.

Meyer is a member of the

South African Institute

of Chartered Accountants, holds an MSc Finance from the London

Business School and a Post Graduate Diploma in Accounting from

the University of Cape Town.

Financial Officer,

and Secretary

progressively

(“EMP”), a high-growth

fintech business that grew

Ali Mazanderani

has been our Executive

Chairman since February

a fintech investor and

entrepreneur.

a pan-European

a non-executive

several companies

including Thunes (Singapore based

private fintech), Kushki (Latin

American payments company) and

is the president

of The European

Digital Payments Industry Alliance

He was previously

on the board of

several other leading payments

companies globally

International

formerly a Partner at Actis, a London-based emerging market private equity firm, where

he led multiple landmark fintech investments

Prior to his career at Actis, Mr.

Mazanderani advised private equity and corporate clients for OC&C Strategy Consultants in

Johannesburg.

Economics from

the University of

Pretoria, Oxford University

and the London

School of Economics,

Masters in Business Law from the University of St Gallen.

a has been our Group Chief Financial Officer since March 1, 2022.

Kola has progressively held senior finance

Chief Financial

Markets Payments

Group (“EMP”),

a high-growth

business that grew

materially and successfully

concluded and integrated

five acquisitions during his

Investments, Strategy and

Business Planning at

Since the acquisition

of EMP by Network

International in 2017,

been an Operations Director

and Strategic Advisor to

the emerging market private equity

firm Actis, where he

again focused on fintech

five acquisitions during

six-year tenure as Chief

Business Planning at EMP.

Since the acquisition of EMP by Network International in 2017, Mr.

Kola has been an

Operations Director

and Strategic Advisor to the emerging market private

equity firm Actis, where he again focused on fintech businesses.

executive with over 25 years in the

1 unchanged sentence

Card and Payments at Standard Bank

and previously served

in many different

roles within that

organization since

Mali chaired the

board of directors

Club South Africa until

April 2021, and was

a member of the Central

and Eastern Europe, Middle

East and Africa Business

Mali holds Bachelor of Arts (BA) and Bachelor of Laws (LLB) degrees from Rhodes University,

an MBA from Henley

that organization

Europe, Middle

Africa Business

(LLB) degrees

Management College, various diplomas and attended an Advanced

4 unchanged sentences

following the acquisition

of Connect in April 2022

in the same capacity.

Heilbron has two

decades of financial services experience,

having spent 19 years

Private Banking

Officer of Investec.

He led a private consortium that acquired Cash Connect

Management Solutions (Pty) Ltd (“CCMS”) in 2013.

presided over

significant organic

the rebranded Connect,

as spearheading

the successful

EFTpos acquired

Institute of Chartered Accountants.

Financial Information about Geographical Areas and Operating Segments

same capacity.

services experience,

Investec in South Africa

where he served as

Global Head of Private

Banking and Joint Chief

Executive Officer of Investec

He led a private consortium that acquired Cash Connect Management Solutions (Pty) Ltd (“CCMS”) in 2013.

has presided over significant

organic growth in the

rebranded Connect Group, as

well as spearheading the

successful acquisition and

integration of Kazang and EFTpos acquired from the Paycorp Group in February 2020.

He is a member of the South African Institute

of Chartered Accountants.

Financial Information about Geographical Areas and Operating

information about our operating segments for fiscal 2024, 2023 and 2022.

4 unchanged sentences

Rest of the world

audited consolidated

financial statements

Annual Report

which contains

financial information about our revenue for fiscal 2024, 2023

16 unchanged sentences

Available information

We maintain a website at

www.lesakatech.com.

Our annual report on Form

10-K, quarterly reports on

Form 10-Q, current

on Form 8-K, and amendments to those

as well as our proxy statements,

are available free of charge through the

“SEC filings”

portion of our website, as soon

as reasonably practicable after they are filed

We maintain a website at www.

lesakatech.com.

Our Annual Report, Quarterly Reports on Form 10-Q, Current Reports on Form

8-K, and amendments to those reports, as well as our proxy statements, are available free of charge through the “SEC filings” portion

of our website,

reasonably practicable after

they are filed

with the SEC.

1 unchanged sentence

on, or accessible

through, our website is not incorporated into this Annual Report on Form 10-K.

our website is not incorporated into this Annual Report.

that contains

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business