Lesaka Technologies Inc (LSAK) 2025 Q4 法說會逐字稿

Welcome to Lesaka Tech's Results Webcast for the Fourth Quarter of Fiscal 2025. As a reminder, the webcast is being recorded. Management will address any questions you may have at the end of the presentation. (Operator Instructions)

Our results press release and investor presentation are available on our Investor Relations website at ir.lesakatech.com. During this call, we will be making forward-looking statements. I ask you to look at the cautionary language contained in our press release, Form 8-K and results presentation regarding the risks and uncertainties associated with forward-looking statements.

As a domestic filer in the United States, we report results in US dollars under US GAAP. However, it is important to note that our operational currency is South African rand, and as such, we analyze our performance in South African rand, which is non-GAAP. This assists investors in understanding the underlying trends in our business. I will now turn the webcast over to Ali.

Good morning, good afternoon, and welcome. FY 2025 has been a strong year for Lesaka. From a financial performance perspective, we finished the year with net revenue of ZAR5.3 billion and EBITDA of ZAR922 million, in line with our guidance for the year. Our adjusted earnings for the year of ZAR186 million was up substantially from ZAR51 million last year and resulted in adjusted earnings per share growing from ZAR0.80 to ZAR2.29.

From a balance sheet perspective, in March 2025, we refinanced our existing debt facilities and expanded our banking relationships to include both RMB and Investec. Our gross debt increased as we raised debt to fund acquisitions. And accordingly, our net debt to group adjusted EBITDA increased to 2.9 times if we use 12-month trailing EBITDA. However, if we annualize Q4 adjusted EBITDA, this would be 2.2 times, approaching our target of less than 2 times leverage ratio.

From an M&A perspective, in October 2024, we completed the ZAR1.7 billion acquisition of Adumo. In March 2025, we completed the ZAR507 million acquisition of Recharger. In June 2025, we announced the ZAR1.1 billion acquisition of Bank Zero, and we sold our entire stake in MobiKwik for ZAR290 million.

From a people perspective, we have augmented our executive team, launched our graduate recruitment program and implemented our employee share ownership plan. We strive to be the employer of choice for those driven by mission and purpose. From a stakeholder engagement perspective, in January 2025, we launched the Association of South African payment providers with Lincoln Mali assuming the association's presidency to work in closer collaboration with regulators and industry stakeholders.

In March 2025, we held our first Investor Day to better explain our business and the opportunity to the investor community. Our three business units are at different stages of evolution. Our merchant business has grown materially this year with net revenue of ZAR3 billion, up 46% year-on-year and EBITDA of ZAR657 million, up 20% year-on-year, but this has been partly driven by acquisition.

The businesses are still being integrated and the focus in the short-term will be on completing that process and the unit economics, after which we expect to see an acceleration in organic growth. Our Consumer business has had a standout year, growing net revenue by 35% to ZAR1.7 billion and EBITDA by 83% to ZAR435 million.

Our Enterprise business reported net revenue declining 9% to ZAR651 million and EBITDA declining from ZAR55 million to ZAR24 million as we closed down noncore business units and invested in building a leading enterprise business to form the third pillar of the Lesaka platform. We can already see this bearing fruit in Q4, and our Enterprise business will be a material EBITDA contributor to the group and driver of growth in the year ahead.

At the end of this presentation, I'll provide more color on the transformative Bank Zero acquisition, which we signed and is pending regulatory approval as well as looking ahead to FY26 and our guidance. I'll now hand over to Dan to give more details on our performance for the past quarter.

Thank you, Ali, and good day, everyone. As Ali has highlighted, Lesaka is going through a period of significant transformation, marked by strategic acquisitions, balance sheet optimization and internal restructuring as we continue to build out a fintech platform. Despite it being a very busy period in evolution, we have consistently delivered on our guidance.

This quarter marks our 12th consecutive period of meeting profitability guidance, underscoring the consistency and reliability of the execution of our strategy. This quarter reflects strong financial momentum with positive contributions to both net revenue and profitability from all three of our divisions.

Our Consumer division delivered another excellent quarter with robust growth in both top-line and bottom-line performance. In our Merchant division, we accelerated the integration of our micro merchant and merchant businesses as we build an integrated multiproduct platform, serving merchants of all sizes. This includes the unification of our brands under a single Lesaka identity. Some of these actions has resulted in reorganization costs being incurred as well as additional intangible amortization charges as we shortened the deemed useful lives of some of our brands.

In our Enterprise division, it's been a year of build. We've refreshed our strategy, refined our core product offering and realigned the business. These changes incurred once-off reorganization costs, but Q4 now reflects the fully scaled up Enterprise division aligned with a new strategic direction. Pleasingly, the strong performance of the recently acquired Recharger business has come through for a full quarter for the first time, leading to a growing overall contribution from our Enterprise division.

We completed the disposal of our major noncore asset, MobiKwik, for ZAR290 million with the proceeds received at the end of June. These funds have been included in our cash balances and used to partially offset our debt, in line with our stated intention. We continued to optimize our balance sheet through the refinancing of the merchant blending facility, resulting in an upsize to ZAR400 million in capacity to fund growth and a 75% basis point reduction in the overall funding cost.

Turning to the numbers. Q4 has been another positive quarter with the Lesaka shape now being represented wholly for the first time through full three-month contributions of both the Adumo and Recharger acquisitions. Net revenue was 47% higher at ZAR1.5 billion, with group adjusted EBITDA of ZAR306 million, up 61% on last year. Our adjusted earnings, which we believe is the most appropriate measure of our overall performance, has grown almost threefold to ZAR80 million this quarter. On a per share basis, adjusted earnings is up from ZAR0.32 to ZAR0.99, representing an increase of over 200%.

Our net debt to group adjusted EBITDA ratio increased from 2.5 times to 2.9 times at year-end. As mentioned by Ali, given this is the first quarter of full representation for Lesaka, annualizing our Q4 adjusted EBITDA results in a leverage ratio of 2.2 times, approaching our target of 2 times. Our focus is on net revenue as a top line KPI, which recognizes only the commissions earned on the sale of certain types of vouchers, thus eliminating volatility caused by changes in sales mix. Net revenue increased 47% year-on-year, driven primarily by the inclusion of Adumo and a stellar Consumer division performance.

Enterprise division net revenue reduced 17% for the year, reflecting the restructuring of the division and the closure of noncore lines of business. At an adjusted EBITDA level, we reported a 61% year-on-year growth for the quarter to ZAR306 million. The Merchant division's growth of 37% was primarily driven by the inclusion of Adumo this quarter compared to last year. During the quarter, we also continued to make technology investments in the micro merchant business, which are mostly recognized as operating costs and therefore, impacted our overall EBITDA growth.

In the Consumer division, we have seen standout performance with growth of 106%, reflecting the increased scale of our customer base as well as success in our insurance and lending cross-sell initiatives. We also had Adumo payouts this quarter compared to the prior year with a positive contribution. The Enterprise division adjusted EBITDA increased 66%, reflective of being a bold year with the investment in the platform, closure of unprofitable business activities and reorganization costs of ZAR8 million for the quarter. This was offset by the inclusion of recharger for the full quarter.

Taken as a whole, Q4's performance with group adjusted EBITDA in excess of ZAR300 million provides a good indication of our current quarterly earnings run rate before taking into account seasonality, organic growth and cost savings we expect to extract as we consolidate and scale our platforms. Standing back, 2025 and this quarter in particular, had multiple significant anomalies in the income statement. This shifted the strong growth in group adjusted EBITDA to a significant overall net loss position.

Let me unpack this in a bit more detail. Firstly, we recorded ZAR239 million of transaction costs, of which ZAR225 million arises from the post-combination compensation charges related to the Recharger acquisition. Here, the deferred portion of the purchase price paid to the seller is required to be accounted for as a compensation charge given he is providing consulting services to Lesaka for a period of time post-acquisition. This is nonrecurring.

Secondly, we incurred additional amortization charges related to our intangible assets, specifically brand names. As a result of the unification of our Merchant division, we accelerated the amortization of the useful lives, resulting in a noncash charge of ZAR46 million for the quarter with a further ZAR160 million accelerated charge expected next year. Thirdly, we recognized ZAR335 million in noncash goodwill impairments during the quarter.

It's important to note that our assessment of goodwill in aggregate has increased across each of the acquisitions we've made relative to initial assessments at the time of each transaction. However, under accounting standards, goodwill is assessed at the level of the individual cash-generating units acquired. As a result, some of the individual CGUs required impairment with there being no equivalent mechanism to raise or write up for increases in assessed goodwill and other CGUs to offset this. This is a noncash accounting charge and does not reflect the change in our confidence of the strategic value of our acquisitions nor the price paid.

Fourthly, we realized a loss of ZAR101 million on the sale of MobiKwik. Finally, we recognized a benefit of ZAR210 million arising from the reversal of deferred tax valuation allowance. This adjustment reflects the improved profitability in our consumer lending entity, which has strengthened our confidence in the use of the significant assessed losses. This reversal is a noncash accounting benefit and it highlights the positive trajectory of our Consumer division's performance.

We believe adjusted earnings per share is the most accurate reflection of our operating performance. Adjusted earnings per share accounts for fully diluted shares, including those issued for acquisitions and related to stock-based compensation. In quarter 4, our adjusted earnings per share grew by 211% to ZAR0.99. And for the full year, it increased by 187% to ZAR2.29. This increase underscores the strength of our underlying business and the successful execution of both organic and inorganic growth strategies being value accretive for our shareholders.

We continue to see strong growth in cash generated from business operations with operating cash flow increasing by ZAR101 million quarter-on-quarter, reaching ZAR370 million in quarter 4. This is consistent with the sustained quarterly growth trajectory we have observed in prior periods. Working capital movements remain volatile, largely due to the timing of transactions around quarter ends, particularly in our Merchant and Enterprise divisions.

In quarter 4, we utilized ZAR42 million in working capital. We also saw increased funding requirements of ZAR230 million, driven by strong growth in our consumer and merchant loan books. In our micro merchant business, we took advantage of bulk discount opportunities with a net ZAR34 million investment in inventory. We paid provisional tax of ZAR49 million in the quarter. Interest paid for the quarter increased to ZAR139 million, primarily due to four months of accrued interest payments being settled in June 2025.

As you'll recall, in quarter 3, only two months of interest were payable, owing to the timing of the conclusion of our debt refinance at the end of February 2025. The net result for the quarter is net cash utilized in operating activities of ZAR116 million. While our net cash flow may fluctuate quarter-to-quarter, we remain confident in the cash-generating capacity of our business. Our net debt to adjusted EBITDA increased marginally from 2.8 to 2.9 times.

We received the proceeds from the sale of our MobiKwik shareholding this quarter, which boosted cash holdings. Our medium-term target is a net debt to adjusted EBITDA ratio of 2 times, which is comfortably serviceable and an appropriate capital structure for Lesaka.

Our gross debt at ZAR4 billion does not take into account any impacts of the proposed acquisition of Bank Zero, which we anticipate closing before the end of our 2026 financial year and from which we see significant opportunity to reduce both our cost of funding and overall gross debt levels. We spent ZAR103 million on capital expenditure this quarter and ZAR378 million for the year.

Key expenditures include the continued rollout of our new Smart Safe product, capitalized development costs and the rollout of POS acquiring devices. ZAR33 million was spent on maintenance CapEx, primarily related to POS devices and cash vaults.

Looking ahead to 2026, we expect our annual capital expenditure to remain below ZAR400 million, in line with our disciplined investment approach. This will be roughly flat compared to 2025 despite continued growth in group adjusted EBITDA.

Looking back on the quarter, we've made significant progress in establishing a scalable fintech platform. Our platform is now almost fully represented. Looking forward, we remain focused on driving sustainable growth, maintaining capital discipline and enhancing shareholder value. I will now hand over to Steve to address key developments and results in our Merchant division.

Thank you, Dan. When we announced the acquisition of Connect in 2022, which included offerings for small to medium merchants and micro merchants under the Kazang brand, we outlined a clear vision, one that remains unchanged today. In setting this vision, the opportunity presented included the inevitable digitization of South Africa's economy driven by secular trends and solving for the pain points of under-serviced merchants in Southern Africa.

We set out to build an integrated multiproduct platform serving merchants of all sizes, ranging from micro merchants to small to medium merchants. We've been involved for three years and during that time, we've made significant progress in executing on this vision. The division has scaled organically and through acquisitions, product integration and cross-selling. The merchants we serve face challenges that extend well beyond accepting card payments.

Our goal is to provide comprehensive solutions that help them manage their finances, operate their businesses more efficiently and ultimately succeed. We strive to build multiproduct relationships. The more services we layer, the more value we create for our merchants and the more efficient and scalable our merchant platform becomes as we integrate our tech stack.

Our growth strategy remains balanced between organic initiatives and inorganic initiatives being strategic acquisitions, each designed to deepen our customer base or expand our product set as we build a scalable fintech platform. In a competitive landscape where banks, retailers and MNOs are all buying for merchant engagement, we believe Lesaka stands apart.

Our comprehensive product suite spends both the formal and informal merchant sectors, giving us a differentiated value proposition with the ability to execute at scale. We are still in the early stages of our journey, but we've reached a pivotal point in the evolution of our merchant division.

Let me walk you through our four key developments that impact both the year under review and our focus for the year ahead. Firstly, scale and product augmentation through the Adumo acquisition. We acquired Adumo, South Africa's largest independent payments processor to significantly scale our merchant footprint and broaden our product offering.

This transaction added more than 23,000 merchants to our base. It expanded our geographical presence and opened new verticals, most notably hospitality point-of-sale software through GAAP. GAAP is the leading provider of integrated point-of-sale software and hardware to the hospitality sector in Southern Africa, servicing in excess of 9,600 sites with on-the-ground operations in South Africa, Botswana and Kenya.

This acquisition positions us to ultimately offer a bundled solution of software, card acquiring, cash lending and Alternative Digital Products, creating a compelling cross-sell opportunity and reinforcing Lesaka's role as a natural consolidator in Southern African fintech. By broadening our product offering, we can put more hooks into our merchant value proposition and thereby enhance the stickiness of our relationship with each merchant. Cross-selling and bundling are central to improve our unit economics and achieving operating efficiencies which supports margin expansion in the merchant division.

Secondly, integration, optimization and brand consolidation. We have seen good organic growth over the past three years and have brought together Kazang and Connect and then added to Adumo and GAAP. We believe we have made some early progress in integrating our merchant businesses through extracting efficiencies and executing on cross-sell opportunities, but most of this opportunity is in front of us. Naturally, we have inherited duplication across product sets management structures and distribution channels.

As Dan mentioned, we are consolidating our brands under a single Lesaka identity. This streamlining effort is essential to reduce complexity, eliminate duplication and unify our go-to-market strategy. This isn't the first time Lesaka has faced the challenge of streamlining operations and unifying its go-to-market strategy. A few years ago, in our Consumer division, we successfully realigned our sales force, implemented targeted sales force training and deployed a new front-end platform, Bonngwe to enable a 360-degree view of the customer.

This allowed us to identify cross-sell and upsell opportunities more effectively, driving improved customer engagement and delivering better unit economics. We are now applying the same disciplined approach to our merchant division with the integration of multiple product offerings into a single and efficient platform, early but meaningful progress has been achieved. Notably, we have started to see our operating margins increase from 19% in Q3 '25 to 23% in Q4 '25. However, we recognize there's still work to be done, particularly on extracting efficiencies and executing cross-sell initiatives across Adumo and Connect.

Our integration plan is underway, and consolidating our merchant brands under the Lesaka identity is a key step towards simplifying our go-to-market strategy and unlocking the same efficiencies we achieved in our Consumer division. Key levers to enhance unit economics and support our multiproduct offering include optimizing our solution set with best-of-breed technologies, unifying our digital distribution channels to maximize reach and enhance cross-sell potential and maximizing platform efficiencies. Ultimately, it's about delivering more and better products to more merchants or from a single unified platform.

Thirdly, cross-sell momentum. We are seeing early signs of success in cross-selling across our merchant ecosystem with two key facets emerging. Firstly, we are driving cross-sell of cash and lending solutions into our merchant acquiring base and vice versa. This is early stage, but we have already seen positive results as merchants increasingly adopt bundled offerings that help them manage their business.

Secondly, we are cross-selling merchant acquiring into our GAAP software base. Although still in its early stages, the potential is considerable. Currently, only about 10% of our software customers utilize our point-of-sale acquiring solutions, compared to global benchmarks of over 50% on the front book and 100% on the back book. This creates a clear opportunity to increase product penetration and boost merchant value. We are seeing a compelling opportunity to take this even further.

Once merchant software and card acquiring are integrated, we plan to layer in lending and cash solutions. Over the medium term, we also intend to introduce an integrated banking offering, enabled by the completion of our recently announced Bank Zero transaction, further expanding the appeal of our merchant value proposition. This strategy positions Lesaka to deliver more products to more merchants, more efficiently while driving stronger unit economics and long-term growth.

Globally, the most successful fintechs have distinguished themselves not by offering the lowest price per product, but by delivering comprehensive end-to-end solutions with a clear and compelling value proposition for merchants. Hence, our focus is on solving real business problems, integrating payments, software, lending and financial services into a unified platform that drives efficiency, growth and stickiness.

And lastly, expansion into the licensed tavern market. Following on from our Touchsides acquisition, we have furthered our push into the licensed tavern market, a vibrant and underserviced segment of the micro merchant economy. The tavern base is now fully integrated into our micro merchant business, allowing for a shift in management's focus to selling more product to taverns specifically focusing on merchant acquiring through Kazang Pay, supplier payments through our wallet ecosystem and credit opportunities as these merchants manage their working capital cycles. We are seeing encouraging results as we layer additional products into the space, further deepening our reach and relevance in the tavern vertical.

Turning to our KPIs for the quarter and the year under review. Our merchant acquiring footprint expanded to 84,541 points of presence by the end of FY25, up from 51,880 a year ago, and includes devices from the Adumo acquisition. Most recently, our Q3 to Q4 '25, total points of presence grew by 4%, indicative of a 16% annualized growth.

Kazang Pay devices grew 10% organically for FY25. We expect mid-teens growth going forward driven by expansion in the licensed tavern vertical and conversion of ADP merchants to our acquiring platform. Throughput for the year reached ZAR35.5 billion, including nine months of Adumo with a 15% year-on-year growth attributable to Kazang Pay.

Looking ahead, we anticipate stronger throughput growth in our micro merchant offering supported by deeper device penetration and cross-sell initiatives. In the small to medium merchant market, our focus is on increasing volumes per device through enhanced merchant engagement. GAAP sites in field increased 5% year-on-year, exhibiting steady growth, reflecting on our GAAP revenue performance and 8% year-on-year increase in subscription or rental revenue across both Q4 and the full fiscal year represents the strength of our recurring revenue base.

These streams form the backbone of our annuity model and provide a consistent, scalable foundation for long-term growth. Our sales team is proactively moving to push unity, a more feature-rich cloud-based software solution that is priced to attract a wider customer base. This approach enables greater customer lifetime value prioritizes long-term growth and market penetration, ensuring we remain the go-to partner for restaurants looking to transform their success.

GAAP Pay card processing volumes grew 26% year-on-year with only 10% of GAAP sites currently using our integrated payment solution. This is well below the global benchmark of approximately 50%. Given this cross-sell opportunity is still nascent, we are excited about the prospects related to increasing ARPU as we scale our cross-sell efforts. Our cash business reflects a tale of two cities.

In the small to medium merchant sector, cash usage continues to decline with flat vault growth consistent with macro trends. In the micro-merchant market, cash remains prevalent, driving strong growth with our vaults digitizing cash by enabling merchants to deposit funds locally, avoiding bank fees and enabling instant wallet availability for stock purchases, supplier payments or transfers.

Micro-merchant vault deposits grew 92% year-on-year from ZAR7.2 billion to ZAR13.8 billion. Now representing more than 10% of total vault throughput for the year compared to over 5% a year ago. This result is becoming a meaningful contributor to our business and a key differentiator in informal markets. Our push into this segment has opened a new growth vector, allowing us to expand in a space often seen as declining.

Additionally, Adumo and Connect's integrated sales teams are unlocking revenue synergies, especially among large merchants with both cash and card needs, supporting our strategy of pricing the relationship, not the product. Our lending portfolio includes Connect's offering and Adumo's JV with retail capital. After a challenging macro environment, lending has returned to growth driven by an investment into a direct sales team dedicated to loan origination and customer relationship management and leveraging merchant transactional data.

We've lowered the turnover threshold for loan qualification to improve qualifying merchants accessibility to credit. We have not changed our credit scoring criteria and have, to date, not experienced any change to our risk ratios. Our net loan book closed at ZAR479 million with ZAR234 million dispersed in Q4 and ZAR917 million for FY25.

Our Alternative Digital Products offering in the Merchant division focuses in the main on the micro merchant market, offering prepaid solutions, including airtime, data, electricity, gaming, bill payments international remittances and supplier payments. The majority of our point-of-sale devices are also enabled to accept card payments, often referred to as Kazang Pay.

Devices in the field grew 8% year-on-year, now exceeding 94,000. Throughput on prepaid solutions increased 6% to ZAR19.1 billion. We believe we gained market share in that we grew by 6%, despite losses in throughput resulting from macroeconomic forces. These include direct-to-consumer digital penetration coupled with airtime volumes coming under pressure due to changing consumer behaviors and increased public Wi-Fi access.

Gaming throughput showed strong growth, partially offsetting airtime softness. Our supplier-enabled payments platform continues to show excellent growth as the risk and efficiency benefits of the digitization of business-to-business transaction gains traction, supply enabled payments increased 57% year-on-year to ZAR23.4 billion.

The product market fit for supplier payments is clear. Merchants benefit from instant settlement, enabling immediate use of funds for supplier payments and working capital needs. While supplier payments are lower margin, they create a positive pull-through effect encouraging adoption of our merchant acquiring solutions.

Turning to the financial performance of the Merchant division. Net revenue was up 46% to ZAR3 billion with segment adjusted EBITDA up 20% to ZAR657 million for FY25. This performance is a function of both organic and inorganic activity. FY25 includes nine months of Adumo contribution and has had a positive impact on this year's performance.

As Ali stated in the Investor Day, our expectation for the merchant business over the next 12 months is to focus on bolstering our unit economics and extracting efficiencies on our merchant platform delivering on a bundled merchant offering. Although nascent, we are pleased to see an uptick in operating margins between Q3 and Q4 '25.

In closing then, we remain well positioned to capture prevailing trends in our merchant market. Cash remains prevalent in the micro merchant market, but the shift towards digitization is accelerating. Micro merchants are increasingly recognizing the value of digital tools to enhance operational efficiency, streamline administration and mitigate risk. This growing adoption is reflected in transaction behavior with the average value per card transaction decreasing, indicating more frequent use for everyday purchases.

The digitization trend is further reinforced by changes in supplier practices. Many FMCG suppliers serving micro merchants have stopped accepting cash payments, adding momentum to the shift. The number of supplier payment transactions grew by more than 10% in FY25 compared to FY24. The average value per transaction increased by over 40% and total throughput by approximately 60% over the same period.

Ali will discuss the Bank Zero acquisition in more detail, but for the Merchant division, we are excited about what the transaction brings to our offering and capabilities. Bank Zero will enable Lesaka to offer merchant bank accounts and banking solutions tailored for small to medium merchants as well as for certain micro merchants such as taverns.

Migrating Adumo merchants to Bank Zero will allow for a more competitive and comprehensive merchant offering. In the medium-term, our vertically integrated fintech platform will offer a banking service as an added feature for our merchants. The combination of Bank Zero's digital platform with Lesaka's broad product offering aligns directly with Lesaka's mission to deliver customer-focused, low-cost financial services. The Merchant division is at a pivotal stage in its development. Our objective is to operate under a single brand and extract efficiencies as we integrate our merchant platform.

I'm pleased to welcome Kagiso Khaole and Roland Naidoo to the team. We look forward to their contribution and leadership as we take on the task of driving our merchant division through its next phase of growth.

Lincoln will now take us through the performance of the Consumer division.

Thank you, Steve. I want to take a moment to recap what has been an extremely busy and rewarding year for the consumer team. Through a combination of innovation and disciplined execution, we've seen several strategic developments that have significantly strengthened our position.

Our unwavering focus and relentless commitment have driven the continued increase in our market share within the grant beneficial market. This translated into 35% revenue growth and an 83% increase in EBITDA for this division for financial year 2025. These results are a testament to the team's dedication and strategic clarity. And they have set a strong foundation for sustained success going forward.

We launched Bonngwe at the start of the financial year. Bonngwe is our sales front engine and offers our service consultants a comprehensive view of each consumer enabling them to deliver a significantly improved service to our existing clients, supporting cross-sell efforts for lending, insurance and ADP while assisting with sign-up and onboarding new EPE customers. Bonngwe has equipped our frontline staff with the tools to serve consumers efficiently and has achieved excellent results.

In our lending business, after thorough research into our consumers' financial needs and borrowing habits, we introduced a revised loan product that has been very well received. Consumers often resorted to unregulated lenders. So we increased our maximum loan amount and extended repayment terms. We did not alter our lending criteria during this process. We also completely rebuilt the lending system. It's more customer-friendly, scalable and allows us to better manage risk.

Many of our consumers have taken advantage of the new lending product positively contributing to higher ARPUs. We have invested in our distribution capabilities, both talent and infrastructure. We've expanded our frontline teams and plan to open 50 new branches in financial year 2026 and add 50 branded service points.

All of this is part of our effort to better serve our customers and provide convenient access. We are now more present in rural communities than ever before, which is significant for both attracting new customers and serving our existing ones. We have continued investing in our digital platforms. We rebuilt our USSD platform to make it more reliable and user-friendly. This allows our customers to access our services digitally from anyway, saving them time and money. The usage of our USSD platform continues to grow exponentially.

Turning to our addressable market and future prospects. Since we repositioned our consumer business to focus on customer experience through investment in training, brand enhancement, distribution and IT platforms, we have increased our permanent grant beneficiaries by 23% year-on-year. And over a two-year period, our market share has increased from 9.1% to 13.6%.

This growth has primarily come at the expense of the Post Bank, which experienced a sub-decline in share following its various challenges. What has been encouraging for us is that we've been receiving a large share of the Post Bank migration with approximately 20% of Post Bank customers signing up to Lesaka in financial year 2025.

Moving forward, we believe we can sustain this momentum for another 12 to 18 months and attract further Post Bank customers at an accelerated rate that exceeds our market share. Lesaka is evolving rapidly along with our customer offerings. Beyond the core grant beneficiary market, we see a new opportunity in the payout business as we invest in this platform.

Also, with the success of our insurance offering, we're in the process of opening this up to non-EPE bank account holder. We have recently completed the systems work to allow for this and we anticipate commencing trial in [quarter 2].

Finally, the proposed acquisition of Bank Zero presents a significant opportunity for us to expand our consumer offering beyond the ground market, which is very exciting. During the quarter, we implemented a strategic refinement on how we report and measure our consumer base, aligning our evolving monetization strategy and increased focus on unit economics.

Historically, we segmented our grant beneficiary base into permanent and non-permanent categories. However, both segments are revenue generating. And as such, we now report them as a combined consumer base. This approach better reflects the financial and operational performance of the division as well as the revenue-generating engagement of our entire consumer base. More accurately tracking our current and future monetization strategy for the division.

While we have historically presented these metrics separately, it's worth noting that approximately 90% of our active consumer base consists of permanent grant beneficiaries. This underscores the stability of our core customer segment, which in turn strengthens our ability to drive cross-sell opportunities. An active consumer is defined as any EPE consumer permanent or temporary grant beneficiary who has completed a voluntary debit or credit transaction within the last 90 days.

Consumers who are charged a monthly bank fee, but have not made any voluntary transaction during this period are excluded from the active count. This tighter definition more accurately captures revenue-generating engagement and aligns with our monetization strategy. We will continue to show the EasyPay Payout out separately given that this follows a different monetization model.

The fourth quarter saw another rise in net active consumers to 166,000 and 348,000 for financial year 2025. A year ago, for the comparative quarter, we saw an increase of 34,000 active consumers and 235,000 for financial year 2024. We are proud of this achievement, which reflects the investment we have made in our service offering and distribution and continues the momentum in customer acquisition. Under the revised methodology, our ARPU is ZAR85 per active customer per month, representing a 23% growth over the previous three years.

Turning to our KPIs. We now have 1.9 million customers, up from 1.5 million last year, representing a 23% increase. Of this space, approximately 90% are permanent grant customers, with 40% of them now holding a lending product and 34% of them having an insurance product.

As I mentioned earlier, we launched a new lending product this year, which has been very well received. While we did not modify our credit scoring criteria, we increased the maximum loan size and repayment terms, which has contributed to an 82% growth in our learning book, to ZAR996 million at the end of the year, with a total origination of ZAR2.5 billion for the year, up 48%.

The loan conversion rate continues to improve following the implementation of several targeted consumer lending campaigns and encouraging results from our digital channels. Our loan loss ratio has remained consistent at approximately 6% for the year. With the rollout of the new lending product targeting larger loans for a longer term, we expect a modest and non-material increase in the portfolio loan loss ratio going forward.

In insurance, we also saw encouraging growth with gross premiums increasing 38% for the year. We've maintained our high collection ratio and lapse rate on our insurance book, a sign of the value that our customers place on these products. These excellent operational KPIs have been reflected in our financial performance, with revenue increasing 35% annually to ZAR1.7 billion and adjusted EBITDA up 83% to ZAR435 million. I understand our consumer team for their tireless efforts and commitment.

I will hand over to my brother, Naeem, to take you through our plans and performance for the Enterprise division.

Good day, everyone, and thank you, Lincoln. Today, I'm excited to share the latest developments, key performance indicators and strategic direction for Enterprise division as we close out fiscal year 2025.

Let's begin by reflecting on some of the major milestones and key developments from this quarter and fiscal year 2025. This fiscal year has been transformative for our Enterprise division as we developed a much clearer business and strategy. There have been material developments relating to channel expansion, technology updates, inorganic strategy and business reorganization.

First, we made significant strides in expanding distribution channels for our Alternative Digital Payments or ADP solutions. We are now integrated and successfully went live with Standard Bank, Nedbank and Shoprite to provide ADP solutions. This expansion helps us further gain market share by embedding our services within trusted enterprise environment.

Second, we completed the acquisition of electricity private utility business, Recharger and are well underway with the migration of the meter hosting infrastructure into our proprietary Enterprise technologies. This acquisition strengthens our utilities vertical and demonstrates our ongoing commitment to integrating and scaling high-value infrastructure.

Third, we began the migration of the merchant acquiring volumes that have traditionally been processed through third-party providers. This strategic move will allow us to have tighter control over processing and is expected to deliver a full volume migration over the course of FY26.

Lastly, we executed the shutdown of legacy business units, sharpening our focus on our core product offering. It's important to note that this reorganization led to one-off costs of ZAR17 million. However, this step positions us for sustainable focused growth in the years ahead.

I will briefly take you through each business vertical within our enterprise business, outlining the solution and the revenue model. Our Alternative Digital Payments, or ADP business is one of the largest ADP aggregator and solutions provider in South Africa. The ADP network effect creates a powerful force multiplier by selling into downstream enterprises, we enable them to reach their own customers efficiently, which in turn improves economics and scalability of our upstream partnerships.

Our ADP product suite includes both payments, provides a platform for consumers and businesses to settle accounts or invoices through our platform. We currently have over 620 billers on our platform. These include municipal bills, DStv, all telco companies and other organizations. The significant investment and integration with billers enables us to be in a unique position to allow our clients one integration, and they have access to all our billers. This position is hard to replicate by competitors. We typically earn a fixed fee per transaction process.

ADP prepaid solutions, we are amongst the largest providers of electricity, airtime, data and gaming vouchers, primarily to banks, retailers and fintechs. Voucher sales allow consumers to purchase vouchers at retail outlets or online to top up the required services. This is a B2B product offering. Our revenue model is based on commission percentage of rand volume processed.

Utilities, our core products here are electricity voucher generation and prepaid utility meters. We service a range of clients, including private landlords, property managers and municipalities.

Currently, our primary channel is large retailers such as Builders Warehouse, Leroy Merlin, ARB and BUCO. We generate revenue both as a percentage of volume processed for voucher generation and through unit sales for meters. Once the meters is installed, the tenants recharge the meters through vouchers that they purchase through retailers or online. This is a high double-digit margin product offering, providing a predominantly recurring transaction-based revenue stream.

Payments, we are developing proprietary payment solutions such as PRISM Switch and PRISM HSM, to enable payment acceptance for both the group and external enterprises. This area is seeing growth in transaction volumes and device sales. All these products and services are delivered through robust enterprise channels, and our customers include banks, retailers, telcos and content providers.

Moving on to our financial and operational performance for the quarter and the year. Enterprise division delivered a net revenue of ZAR190 million in Q4, and ZAR651 million for fiscal 2025, and a group adjusted EBITDA of ZAR15 million in Q4 and ZAR24 million for fiscal 2025. The group adjusted EBITDA includes ZAR17 million of reorganization costs incurred in closing hardware business related to POS terminals and cards. Given the focused core offering of enterprise, we've presented our core products.

In terms of the relative contributions in Q4 2025, ADP accounted for 60% of net revenue, utilities accounted for 35% of net revenue and payments represented approximately 5% of net revenue.

In fiscal 2025, Enterprise was not a meaningful EBITDA contributor to the group. This was a year of consolidation and build to gear up for FY26, as we've mentioned in previous earnings calls. Q4's EBITDA result of ZAR15 million for the quarter includes the impact of restructuring costs, excluding these costs, Q4 2025 implies a run rate of over ZAR30 million per quarter.

In FY 2026, we're expecting the Enterprise division's contribution to total segment adjusted EBITDA to be north of 10%, thus becoming a meaningful part of the business going forward.

I will now hand back to Ali.

Thanks, Naeem. We go into FY 2026, excited at the prospects for our business. Clearly, one of the most significant events for the company is the expected completion of the Bank Zero transaction, which we signed at the end of this past financial year. Bank Zero is a South African neobank with a modern proprietary scalable technology stack with a very efficient cost structure that relies on digital onboarding.

We do not believe there is a more efficient banking operation in the country nor one that has less third-party dependencies on its platform that is primed for growth. This transaction is, in fact, more an augmentation of capabilities and team than an acquisition, in that the purchase consideration is predominantly being settled in Lesaka shares, and the Bank Zero team will be joining Lesaka.

They saw an ability for us to accelerate their growth given our distribution and complementary product offering, just as we see their ability to accelerate ours. It is an exceptional, experienced and entrepreneurial team who share our desire to change the game and better serve consumers and merchants in our country.

I've had the personal fortune of working with several members of the team in the past, and it is a delight to have the opportunity to do so again. We look forward to welcoming Michael Jordaan, former CEO of FNB to the Board; and Yatin Narsai, former CEO of Retail Banking at FNB to our executive leadership. The size of the prize is big. I think it's easiest to think of the rationale for the transaction in three buckets.

Firstly, the (inaudible) this is both in terms of the product we can offer and the cost. In terms of product, it should reduce dependencies on third parties, improve our responsiveness to clients, increase availability, reduce friction and can expand the range of customers we can address. In terms of cost, we currently have expenses we incur associated with bank sponsorship both in terms of direct fees and indirectly in foregone interest or float revenue, which have a negative drag on our P&L. We believe in a collaborative and interoperable payment ecosystem, so we intend to maintain some third-party bank relationships. However, dependencies will be reduced and our optionality will increase.

Secondly, the acquisition will increase the range of products that we can offer. Notably, we will be able to offer banking services to our merchant base and also to enterprise customers, cross-selling banking into our merchant base and supporting fintechs and others with an alliance banking offering that is poorly catered for in the South African market. In addition to this, Bank Zero is in the process of applying for an FX license, pending approval, which would open up cross-border opportunities for our customers.

Thirdly, following completion of the transaction, we believe we can reduce gross debt by about ZAR1 billion by holding a substantial portion of the consumer and merchant book in the bank. We will also have greater flexibility in expanding the book and doing so at a lower cost as we build customer deposits. Another development in the coming year will be the consolidation of our office and brand footprint. We currently have 41 offices in the group outside of our branch network, and multiple brands across the group.

We will be rationalizing this over the financial year to less than 20 offices with a particular focus on consolidating our office environments in Johannesburg, Cape Town and Durban. The three cities where we have the greatest number of employees. We are also in the process of consolidating our brands and in due course, we'll unveil a refreshed umbrella brand, aligning our representation to stakeholders, employees and customers across the segments we address and allowing us to concentrate marketing resource and spend.

The consolidation process will have the most material impact on our merchant business as has been touched on in this presentation previously. And to lead that process, we are excited that Kagiso has joined us as the CEO of our merchant business. He is an exceptional leader who's experienced SpaceX, Starlink, Uber and Samsung, ideally positions him to take the merchant business forward. We're excited and delighted that we can attract the very best in the country and on the continent to our mission.

And indeed, Kagiso will join other standout leaders in the executive team over the coming months, including Roland and Akash, who we also mentioned earlier this week will be joining us. These are three of several executive hires who we've made over the last few months, raising the depth and breadth of our bench strength.

Turning to outlook we are pleased to reaffirm our net revenue, group adjusted EBITDA and positive net income guidance for FY26. In addition to that, we are providing Q1 2026 guidance for net revenue and group adjusted EBITDA. We are also pleased to introduce, for the first time, adjusted earnings per share guidance. It is worth noting that in 2024, our adjusted earnings per share was ZAR0.80. This year, we achieved ZAR2.29.

Our guidance for FY 2026 is more than ZAR4.60 per share, an increase of more than 100% year-on-year. We have the team, the assets and the market opportunity. We look forward to executing against this potential over the coming year and continue to drive value for the consumers, merchants and enterprises we serve as well as our shareholders. We will now take any questions you have.

(Operator Instructions) We have our first question on the conference call line. Please, can we open up for Theo O'Neill from LHR.

A couple of questions. First question on the Consumer division. It looks like you have a full plate of growth opportunities, and I was wondering if you could rank or talk about the near-term opportunity between your three core products and overall market share and maybe rank where you think the strength will be in near-term?

Thanks. This is Lincoln. Firstly, the most important thing for us is always account growth. We have taken more market share from the Post Bank migration. We've taken the largest chunk than our natural market share. We've taken about 20% of those customers that are migrating. So we think that's important for us. We have also launched our lending product. We see a lot of room for that, and we think that, that's an important one.

And the third one is us growing beyond our EPE based on our insurance. There's about 4 million customers who don't have access to funeral plans who are grant beneficiaries. We see that opportunity. So we see ourselves growing within this space. And of course, in the medium-term, we do see opportunities when the Bank Zero transaction has been consummated for us to give more opportunities beyond just the grant space. So that's the way we would like to think of our business and the growth opportunities we see.

Anything else from your side Theo?

Yes. I wanted to ask the same question on the Enterprise side. If you could rank or talk about the near-term growth expectations there across the core products and market share?

Theo, as you mentioned, for the Enterprise division, this was a transition year. We invested significantly in the platform. We've also grown our distribution network and we've now fully integrated the Recharger business. As I've mentioned during my script, if you look at the last quarter, the run rate of around group adjusted EBITDA of about ZAR30 million is what we want to build on. And we're also looking at the Enterprise division will be contributing north of 10% of the guidance forecast that Ali provided for the full year.

We have another call -- another question from the Chorus Call line. This time, it's from [Ross Krieger] at Investec Securities.

Okay. Great. I have quite a few questions. Sorry, just bear with me. Just maybe I'll split -- I'll go one at a time. The first one is a two-part question just on the pending Bank Zero acquisition. I'm just wondering, so on two points here on the first, the integration of Bank Zero, I'm just wondering how you see that playing out in terms of the time it takes to integrate and the cost incurred in doing that?

And then secondly, just regard -- regarding the expectation that there will be a profitable contribution in year 1, is that net of all the factors that you mentioned earlier on the call? Or was that as a stand-alone entity? Yes, let me pause there.

Thanks, Ross. I mean on the integration, if I can ask Steven to chat too. On the profitability, Ross, obviously, we don't know exactly when the transaction will complete. But my belief is that certainly, if the business is not profitable at the time of completion, it will be close to and with synergies that can be easily and quickly realized it will be. So I don't think there'll be a material gap. That's excluding the more material, I suppose, revenue opportunities that were touched on in the presentation.

On the integration, Steve?

From an integration perspective, we've got very detailed plans, which we're busy working on and we will be ready on the day the transaction close to affect those integration plans. Clearly, we'll be putting the aspects of our consumer and merchant businesses that are engaged in banking activities into the bank. It won't change the way we ultimately report in terms of consumer and merchant.

But the integration aspects are well planned. And we think in the end, this is a business, I think we are taking on about 45 people. So it's very easily integrate-able. From a culture perspective, I think we're very well aligned. And to a large extent, much of what we are getting with Bank Zero is a part of the platform that we don't have. So it's complementary to what we do and very easy to integrate.

Thank you, Steve. Ross, do you want to shoot with your next question?

Thanks both. Okay. Just on the goodwill impairment, I was just hoping to get a bit more detail on the -- I understand the different moving parts there. And that is noncash. But just on the CGUs impacted, just wondering what those were, if you can give any more detail on that and the reasons behind that?

So goodwill, Ross, as you know, is obviously a very large number in our balance sheet, roughly $200 million, ZAR3.5 billion. And it comprises basically the excess of the price we paid relative to the fair value of the underlying assets, both tangible and intangible that we acquired.

When we bought the business, as I put them into the buckets, the Connect Group and the Adumo Group and the Recharger Group. Obviously, as integrated groups, they had a number of underlying businesses or cash-generating units. As we go through our impairment tests, we need to value each and every one of those cash-generating units. So I'll use, for example, Adumo, we bought one Adumo Group. But in effect, we've got seven different CGUs.

So as we've been iterating the businesses, the business models within those combined seven has obviously given rise to an expectation of different levels of cash flows from each of those underlying seven different business units. When we run our goodwill impairment tests, some of those then have ended up with a lower carrying value than what we originally described for that specific CGU when we bought it, giving rise to then a handful of impairments of roughly ZAR300 million in aggregate.

The flip side of that is, obviously, some of the other underlying CGUs, our valuations have increased. But in terms of the accounting standards, we can't write up goodwill from over and above what we acquired at, but we are required to write down. So when I take them in aggregate, the businesses we bought, very comfortable that the valuations have appreciated but some of my parts in effect, don't equal whole from a goodwill impairment perspective.

Maybe give you one specific example would be around our ME business, where we have iterated the business model, exiting some of the unprofitable lines. That obviously is a different view we had on the business and when we acquired it. And of course, when I run it through a DCF cash flow, that then gives rise to necessity for an impairment. I use it as a specific example. When I look across the whole chain, there's a number of these instances, which give rise to the combined impairment of just over ZAR300 million.

Thank you, Dan. Ross, does that answer your question?

Yes. Thanks, Dan. That's helpful. Moving on, just -- look, I know you've been very clear in your Capital Markets Day and today in general, about your competitive advantages. But just in light of Nedbank's acquisition of [Ecokar], I think first (inaudible) today flagging their success so far in the SME space and the intention to keep pushing there.

Just an update on the competitive environment in general would be helpful.

So I mean maybe I'll start, if it's relating specifically to the SME environment, I'll also ask Steve afterwards for his thoughts. The first thing is, I think -- it's a recognition of the opportunity that exists in the market that multiple parties are highlighting it. I think we should be slightly concerned if it wasn't acknowledged that this is clearly a material growth vector in our country and indeed in our region, and that's why we are positioned for it.

So I think that if you're attracting a big opportunity, you should expect that other parties will also participate in that. I also think that more than one party will succeed in addressing that opportunity. And I think that, that's good. There can also be mutually beneficial outcomes.

As a business, we're not focused on trying to maximize our share of the pie. I think we are very focused on trying to increase the pie by providing customers with better solutions than exists today by innovating, by creating opportunity and not fighting over a legacy profit pool. And so we can work effectively with other parties in that respect.

I think we do have specific differential features associated with how we engage in the merchant business specifically, we are focused on businesses that are not seeking a single product solution. We are focused on businesses, for example, in the micro merchant space, on the informal space where we connect a collection of solutions, alternative digital payments, cash needs, supply payments needs with the merchant acquiring.

So you registered, for example, [Ecoka] as a business aspect to Nedbank. It's a narrower subset of offering. And in the more formal space, again, we are very focused on the integrated solutions. Specifically also through our software business in GAAP. And we think that we are irregular as a business in the breadth of offering that we can provide for those segments.

And ultimately, we are also regular in that while we are a technology-first business, we have our own distribution channel dedicated to those customer needs. So we differentiate ourselves in those ways. I think as we've discussed in the investor presentation. And we welcome other businesses, engaging with our customers to help us better serve those customers.

Okay. Is that it guys from your side on that?

So I think the only thing that I would add possibly is that, as Ali said, first of all, it endorses our thesis, which is the interest in the segment endorses why we've positioned ourselves there. And the other point I would simply make is that we are not a proxy for the market. We are an insurgent. We have a very small market share, a substantial TAM and so we have the ability to grow significantly based on our current positioning.

Thanks, Steve. Ross, any further questions?

Just on the last one, just on the regulatory developments. I was wondering if there's anything on the horizon through ASAPP engagements or anything -- any other channels that we should be aware of in terms of the other beneficial regulatory developments?

Thanks so much, Ross. We have had an engagement with the Reserve Bank where they had published the draft exemption to the bank's act. We, through ASAPP gave comprehensive feedback and comments. And the essence of the comments were to make sure that the regulator doesn't create many banks, doesn't create more onerous requirements to the industry and create an environment for more competition and more innovation.

The Reserve Bank convened, a few weeks ago, a session where they reported back, and there was a positive sentiment from the ASAPP members that there was positive movement that has been done that they've heard a lot of the sentiments that were coming from the fintech community. We are now waiting for something in the next few weeks where the final proposal will come out. So we are waiting with bated breath to see what that indications will be.

Obviously, we still have other engagements that we've made on other issues like the governance of the sector and meaningful participation by fintechs and we've also made representations on an interchange. So we're still waiting for feedback on those. But on the broad opening up of the payment system, directionally, it looks like the Reserve Bank is going in the right direction.

Ross, does that answer the question? Anything else? Or we're good --

Yes. Thanks, Lincoln. It does. Thanks, everyone. Appreciate your time. All the best.

I'm going to take the last question from the conference call, and then we'll move to the questions on the webcast. The next question is from Mike Steere at Avior Capital Markets.

I have a few. I think I'll just read them all out at once, and then happy to repeat if necessary. So firstly, in light of the recent Cell C news, how does the restructuring effect Lesaka's current 5% shareholding. Are you supportive of the restructuring? And do you see any benefit accruing to the group if the restructuring and listing is successful, and there is a subsequent revaluation of that business?

Next one is just around the Shoprite disruption now that they've entered the banking sector. Just any color on how you perceive this -- how you perceive this threat and how you plan on coming out on top in this competitive environment?

And then finally, a strong quarter, but please maybe unpack the impairments and PPA acceleration in a bit more detail. I understand these are noncash items, but so we got to understand how much more is to come? I think you mentioned ZAR160 million next year. But is there any anticipated increase to this number following that the Bank Zero acquisition?

All right. Thanks. Okay. So three topics, Cell C, Shoprite and PPA. On Cell C, I know, Dan, do you want to talk to briefly?

Sure, Ali. See, it's -- we currently hold a 5% stake in Cell C. We've all seen the public announcements and the path towards IPO, towards the back end of this calendar year. Are we supportive? Well, we're engaging in the underlying detail around those respective conversion steps. We currently carry the stake in our books at a zero valuation.

So of course, we'd be absolutely delighted to see the Cell C IPO get away and be able to then carry our investment in Cell C at whatever the market deems as the appropriate market valuation once listed. We, of course, need to make sure that we do preserve our rights and our valuation -- the potential valuation of our stake. And so we'll obviously work through the broader restructuring details with both Cell C management team and obviously, the sponsors.

Okay. On the Shoprite thing, I mean, I think as Steven referred to in the consumer business space, we're coming from a very low base, very low market share. Relatively Shoprite, launching their proposition, I think, has -- is another of many entrants into the market, and there's much bigger players today in the market who also have strategic relationships with them.

I don't think that we see anything other than as an opportunity to continue to ensure that what we are providing for our customers meets their expectations, focus on the differentiation that we offer. We have a different distribution model. We have specific focal areas, which are distinct from theirs. We also have good collaborations with them. And I don't expect that to change through their banking offering. I don't know, Lincoln, if you have anything to add there?

Yes. Just to again echo what Ali and Steve had said, again, this is another indication of a segment of the market that we've chosen on the consumer side, that other players are trying to come in there.

Secondly, to also echo something else that Ali and Steve said that in certain of these environments, we're going to compete. But on some of these things, we will collaborate and we have some collaborations with Shoprite, but I think the main point is that we're clear about what we offer. And we offer a much more comprehensive solution than other players in this specific market. We offer transactional account.

We are offering lending proposition, offering insurance and we offer Alternative Digital Products. And so we think that we have a comprehensive proposition and that's what we will offer to our clients. And we've got a unique distribution model for that customer base. So we will continue to do what we do and try and win the support of our customers.

I think ultimately, our principal competitor is always going to be inefficiency. Our principal competitor is always going to be what we are capable of delivering for our customers rather than other parties. And as long as we maintain that as our access and our true north, I think we'll continue to be successful. I think when other businesses are there, we can learn, and that is helpful but it shouldn't be our focus.

The third question you asked was on the PPA. I think there was quite a lot that was provided before. I don't know, Dan, if there's anything you want to add to what you did before?

Happy to recap the principles around PPA --

Mike, is there anything specific that would be helpful?

I think you actually did capture it (inaudible). No worries. Yes, that's all from my side. And thanks for the opportunity to ask questions, and congrats on the results.

Thanks, Mike. Appreciate it, and thank you for the questions.

I'm going to move to the questions. We've got 10 minutes left. There are four questions on the webcast chat. So let me start with the first one. It's from Viwe Kupiso at RMB Morgan Stanley. The question is -- and I'm going to break this question into parts because there's four aspects to it.

First one, what are the main risks to achieving greater than 100% growth in EPS and achieving positive net income in FY26, especially given the macroeconomic environment? That's the first question. Should we go with that first?

Yes, sure. Let's take that first. I mean, what I'd say is, again, we're not a proxy for the macroeconomic environment. I think we are positioning ourselves where there's tailwinds and the digitization of society and serving the underserved. But ultimately, I think our growth represents the fact that clearly, we have a different trajectory. We've been consistent in our ability to deliver on our profitability guidance as I think was mentioned in the presentation, over 12 consecutive quarters, and we have every expectation to continue to do so.

When we set the EPS guidance with a minimum bound, which means that clearly, we have an expectation of exceeding that, the same with the net profit guidance. So we have every expectation that we will do that. If you're asking where would I be concerned?

We obviously can always be subject to exogenous shocks to things that we today don't recognize or don't see and this can come in different contexts. I think you could also have potentially certain noncash impairments like we have experienced through the integration process of our merchant business.

But on the flip side, there's other things that could positively impact, for example, there was the mention of our position in Cell C, which we value at 0. So we are certainly very, very hopeful that when we have this conversation in a year's time, it is by exceeding those targets.

Thanks, Ali. The next part of Viwe's question is, what are the current trends in credit quality and loss rates in both the consumer and merchant lending books? Are you seeing any warning -- early warning signs of stress?

I think on the consumer, I'll go to Lincoln and then maybe, Steve, on the merchant.

We have not seen any stress in the quality of our book. We have had the same loan loss ratio of below 6%. We monitor that book very, very closely. And even with the changes that we've made, we've not seen any change in the quality of the book. And we think that the changes we've made, which is a longer term from six to nine months, more from 2,000 to 4,000, all of that augurs well for the quality of the book forward. So we don't see any of the things that are happening in the economy directly translating into a change or deteriorating of quality in that book.

From the merchant perspective, likewise, for the year that we've just had, our impairment ratios are sitting at about 1.4% of all originated debt, which is pretty consistent with the history. If anything, we are starting to see a slight improvement, it feels like some of the stress in the SME space is coming off. And I think our biggest challenge is really focusing more on getting the origination and scaling into those -- into the space. But impairments is certainly not an issue for us at this point.

Anything else, guys, on that one? Okay. I've got -- we can -- we have time for two last questions. The first one is from [Frank Yang] at [Brywood]. Some strong guidance provided here please unpack your FY26 guidance drivers speaking specifically to each of the divisions and please confirm that it excludes Bank Zero.

Thanks, Frank. So yes, it excludes Bank Zero. And obviously, once that regulatory approval happens in the transaction, hopefully completes, we will have to reassess. But we don't have an expectation that it would materially impact FY26. In terms of the guidance, I mean, the EBITDA at the midpoint of the range guidance that we provided is a 46% year-on-year growth. Clearly, you can't grow at that rate without there being growth, I think, through all three, frankly, of the pillars of our business: Consumer, Enterprise and Merchant.

And our expectation is that all of those pillars, they will grow at different rates, but certainly north of 20% in each case and in some instances, materially more than that. I don't know if the guys want to mention any of the particular dynamics in the Consumer, Merchant, Enterprise business, but I think we don't break down the specific segment growth.

The general principle, I would say is that in each context, we have a driver associated with the number of consumers in the consumer business and the ARPU. In our consumer business, we expect both the consumer base continue to increase as we take share and the ARPU to continue to increase as we cross-sell.

In the Merchant business, likewise, we expect to see growth in our merchant base as our value proposition is distinctive. And we expect to see the growth in our ARPU as we cross-sell increasingly the products through the integration of those businesses. And in the Enterprise business, where the drivers is really processed volume and a take rate. We have seen material contract wins over the course of this last quarter.

And so we expect to see the growth in volumes attributable to that. And the take rate, we expect to also be increasing through the mix effect as our utility business is growing the fastest and it has a higher margin, relatively speaking to the ADP business. So on each of the key KPIs against each of the key segments, we expect to see good growth, leading in the aggregate to the midpoint of the growth that we've articulated.

I'd say, maybe just as a final point, as a business, we actually have an enormous amount of resilience in terms of the contributions. We have these three segments, all of which are pointing in the right direction and each of which has a number of customers, our Consumer business, close to 2 million end customers. Our Merchant business north of 100,000 customers and our Enterprise business also a material footprint in terms of customer base. So we don't have single points of dependency in that respect.

And then the last question for today, and for the people whose questions we didn't get to, I will respond to you separately after the call. I'm going to take a question from Craig Smith at Anchor Securities.

Thank you for your time today. Exciting transaction, so I presume you're referring to Bank Zero. What is still required for the transaction to close? And what is the expected timing on this? Any updates you can provide. He then asks, does this transaction mean that Lesaka is now becoming a bank? And how quickly can we expect the Consumer and Merchant loan books to move across to Bank Zero and retire the ZAR1 billion of gross debt?

So I'll let Steve talk to the completion timeline. But just on the specific point of Lesaka becoming a bank. So I think -- I don't think we're becoming a bank any more than we've become an insurance company. We have an insurance business, which is a subsidiary, and that helps provide insurance propositions to our customers. I think having a bank as a subsidiary of part of the group will help enable us to provide consumers and merchants with better solutions. But as the transaction structure is the bank as a subsidiary of Lesaka Technologies. I don't know, Steven, if you want to talk to the timelines or?

Just in terms of timelines, we -- clearly, the transaction is subject to PA approval and also competition commission approval. We have finserv approval, but from a timeline perspective, we are hopeful that by the end of March, April, we should be in a position that the transaction goes unconditional. But we're factoring that we expect this transaction to close before June '26.

If I can just say, we're incredibly excited about this acquisition. As I mentioned earlier, we'll be integrating our issuing business and our credit businesses into the banking business. This is a well-engineered neobank. We are excited not just about the synergies that will flow from this transaction, but also some of the very creative organic strategies that sit within the bank.

In terms of funding the loan books that currently sit within our consumer business and our merchant business, the answer to that question will be as quickly as we possibly can. And to a larger extent, it will depend on the size of the deposit book when the transaction closes. We do anticipate though that the majority will be able to be exercised when the deal closes and the rest is just a timing difference as we grow the retail deposit base.

I think that's it in terms of time. If anyone has additional questions, please reach out to me. Thank you for listening today, and thank you to the team.