Ross Krige

Ross Krige inquired about the integration timeline and costs for the pending BankZero acquisition, its year-one profitability contribution, details on the goodwill impairment (specifically impacted CGUs and reasons), an update on the competitive environment (including Nedbank's Equoka acquisition and FirstRand's SME success), and any beneficial or adverse regulatory developments from ASAPP engagements.

Answer

Ali Mazanderani (Executive Chairman, Lesaka technologies) stated BankZero is expected to be profitable or near-profitable upon completion, with quick synergy realization. Steven Heilbron (CEO, Connect Group South Africa) confirmed detailed integration plans for the complementary platform and small team. Dan Smith (Group CFO, Lesaka technologies) explained goodwill impairment resulted from re-evaluating individual cash-generating units (CGUs) within acquired groups, leading to write-downs for some (e.g., EPE's unprofitable lines) despite overall appreciation of acquired businesses. Ali Mazanderani and Steven Heilbron acknowledged the competitive landscape as validation of market opportunity, emphasizing Lesaka's differentiated integrated solutions and insurgent market position. Lincoln Mali (CEO, Lesaka technologies) reported positive sentiment from ASAPP members regarding the Reserve Bank's response to feedback on the draft Banks Act exemption, indicating a move towards more competition and innovation.

Ross Krige asked about the pending BankZero acquisition, specifically regarding the time and costs associated with its integration, and whether its year-one profitability contribution would be net of all factors or as a standalone entity. He also sought more details on the goodwill impairment, the competitive environment in light of Nedbank's and FirstRand's moves in the SME space, and any beneficial or adverse regulatory developments from the Association of South African Payment Providers.

Answer

Ali Mazanderani, Executive Chairman, stated that BankZero is expected to be profitable or near-profitable upon completion, with quick synergy realization. Steven Heilbron, Head - Mergers, Acquisitions & Corporate Development & Director, confirmed detailed integration plans, noting the small team size and complementary nature of BankZero's platform. Dan Smith, Group CFO & Director, explained goodwill impairment as an accounting adjustment at the cash-generating unit (CGU) level, where some CGUs required write-downs despite overall valuation appreciation. Ali Mazanderani and Steven Heilbron addressed the competitive landscape, emphasizing the market opportunity, Lesaka's differentiated multi-product offering, focus on underserved segments, and unique distribution. Lincoln Mali, CEO - Southern Africa & Director, provided an update on engagements with the Reserve Bank regarding the Banks Act exemption, noting positive sentiment and ongoing discussions on interchange and fintech participation.

Ross Krige asked about the integration timeline and associated costs for the BankZero acquisition, as well as the expectation for its first-year profitability. He also sought more details on the goodwill impairment, specifically the impacted Cash Generating Units (CGUs) and the reasons behind the write-downs. Finally, Krige inquired about any upcoming beneficial or challenging regulatory developments, particularly through the Association of South African Payment Providers.

Answer

Ali Mazanderani (Executive Chairman, Lesaka technologies) stated that BankZero is expected to be profitable or near-profitable upon completion, with quick synergy realization. Steven Heilbron (CEO, Connect Group South Africa) detailed that integration plans are well-developed, involving about 45 people, and the complementary nature of BankZero's platform makes integration straightforward. Dan Smith (Group CFO, Lesaka technologies) explained that goodwill impairment of roughly R300 million resulted from re-evaluating individual CGUs within acquired groups (e.g., Adumo's seven CGUs), where some had lower carrying values than initially ascribed, despite the overall valuation of acquired businesses appreciating. Lincoln Mali (CEO, Lesaka technologies) provided an update on engagements with the Reserve Bank regarding the draft exemption to the Banks Act, noting positive sentiment from fintechs and ongoing discussions on interchange and sector governance.