Our opinion on the current state of LSK

Previously known a Net1 UEP Technologies, Lesaka is listed on the Nasdaq and the JSE (LSK). It is a provider of fintech products in a number of countries. Its universal electronic payment system (“UEPS”) uses biometrically secure smart cards that operate in real-time but offline, which allows users to enter into transactions at any time. In its results for the year to 30th June 2022 the company reported revenue up 70% due to the inclusion of Connect from 14th April. The company said, "The Group’s operating loss of $40.2 million for the year reflects a 25% improvement compared to the operating loss of $53.9 million reported for the year ended June 30, 2021". On 20th September 2022 the company published guidance for its 2023 year projecting revenue of between $565m and $600m with earnings before interest, taxation depreciation and amortisation (EBITDA) of between 31M and $34m. The company said, "Strong fundamentals that underpin the growth of Connect remain unchanged. FY22 revenue in the pre-existing Lesaka Merchant business benefited from large one- off sales during the year, due to a catch up on back-order fulfilment in the POS division as a result of the global chip shortage". In a report on the quarter to 30th September 2022 the company said that revenue was up 262% and the company made a loss of 8c (US) per share compared with a loss of 22c in the comparable quarter. The company said, "Segment Adjusted EBITDA for Q1 2023 improved to income of ZAR 111 million ($6.5 million) compared to a loss of ZAR 106 million ($7.3 million) in Q1 2022. • Our operating loss of $4.7 million (ZAR 80 million)1 in Q1 2023 improved significantly from an operating loss of $11.2 million (ZAR 164 million)1 for Q1 2022". In a report on its second quarter the company reported revenue 4% above guidance and an operating loss of $2,2m compared with a loss of $9,4m in the previous period. The company said it had, ..."positive net cash provided by operating activities of $3.4 million (ZAR 59.9 million) in Q2 2023, compared to an outflow of $13.8 million (ZAR 212.0 million) in Q2 2022". In a report on its 3rd quarter to 1st March 2023 the company said, "Group Adjusted EBITDA of $7.6 million (ZAR 137.1 million) 1, within guidance, and a significant improvement compared to the Q3 2022 reported Group Adjusted EBITDA loss of $7.2 million (ZAR 112.7 million)1". In a report on the 4th quarter the company said, "The significant financial turnaround is demonstrated by a narrowing of the net loss to $11.9 million". The share is thinly traded with many days when there is no trade at all which makes it risky for private investors.