The
Company
has
entered
into leasing
arrangements
classified
as operating
leases under
accounting
guidance.
These leasing
arrangements
relate
to
the
lease
of
its
corporate
head
office
and
sales
and
administration
offices
of
its
Merchant,
Consumer
and
Enterprise businesses. The Company’s operating leases have remaining lease terms of between
one
five years
. The Company also
operates parts
of its
consumer business
from locations
which it
leases for
a period
of less
than
one year
. The
Company’s
operating
lease expense during
the three
months ended March
31, 2026 and
2025 was $
1.5
1.3
million, respectively. The Company’s
operating lease expense during the nine months ended March 31, 2026 and 2025
was $
4.3
3.5
The
Company
has
also
entered
into
short-term
leasing
arrangements,
primarily
for
the
lease
of
branch
locations
and
other
locations,
to operate its consumer
business in South Africa.
The Company’s
short-term lease expense during
the three months ended
March 31, 2026 and 2025,
was $
0.6
1.1
million, respectively.
The Company’s
short-term lease expense during
the nine
months ended March 31, 2026 and 2025, was $
1.4
3.4
In December
2025, the
Company,
through Lesaka
SA, entered
into a
leasing arrangement
for
a new
corporate head
office
in
Rosebank, Gauteng,
South Africa
with Oxford
Parks Proprietary
Limited, a
limited liability
private company
incorporated in
South
Africa. The lease
commences on July 1,
2026 and is
for a period
of
10 years
two
five years
has secured
beneficial occupation
from April
1, 2026,
and is required
to deliver
a bank
guarantee or
cash of
$
0.4
7.5
million, translated at exchange rates applicable as of March 31,
2026). The Company expects to pay an annual basic lease expense of
$
1.5
25.1
million, translated at exchange rates applicable as of March 31, 2026), which increases
by
6.25
% per annum.
The Company has
not recorded an
operating lease right
-of-use (“ROU”) asset
or a operating
lease liability related
to this lease
in its
unaudited condensed
consolidated balance
sheet as
of March
31, 2026,
because the
Company determined
it did
not have
beneficial
occupation as of March 31, 2026.
The Company
determined that its
existing operating
lease arrangements
for its corporate
head office
and certain
related leased
facilities will
no longer
be utilized
as originally
intended as
a result
of the
new lease
arrangement
and the
planned transition
of its
corporate head office and
other operating activities
to the new
premises. Accordingly, the Company identified
indicators of impairment
for the related ROU assets and certain items of property,
plant and equipment.
The Company evaluated the impacted ROU assets for impairment. The asset
groups consisted of operating lease ROU assets and
related
leasehold
improvements
associated
with
the
affected
locations
as
well
as
certain
items
of
property,
plant
and
equipment,
including furniture
and office
equipment. The
recoverability test
indicated that
the carrying
amounts of
these asset
groups were
not
recoverable, as the undiscounted future cash flows were insufficient
to recover their carrying values.
The Company measured
these operating lease
ROU assets and
related leasehold improvements
at fair value
on a non-recurring
basis during the three and nine months ended March 31, 2026, as a result of impairment. These fair value measurements are classified
within Level
3 of
the fair
value hierarchy.
Fair value
was estimated
using a
discounted cash
flow methodology,
which incorporates
significant unobservable inputs, including
assumptions related to remaining
lease terms, expected sublease income
and market rental
rates.
As a
result, the
Company recorded
an impairment
charge of
$
1.5
million during
the three
and nine
months ended
March 31,
2026,
representing
the
excess
of
the
carrying
amount
of
the
affected
ROU
assets
and
related
leasehold
improvements
over
their
estimated fair value. The impairment charge is included in the
caption impairment loss (refer to Note 7) in the
condensed consolidated
statement of
operations for
the three
and nine
months ended
March 31,
2026. The
impairment did
not impact
the related
operating
lease liabilities.