v3.26.1
Fair Value Of Financial Instruments
 12 Months Ended
Jun. 30, 2026
Fair Value Of Financial Instruments [Abstract]  
Fair Value Of Financial Instruments
6.
FAIR VALUE
OF FINANCIAL INSTRUMENTS
Fair value of financial instruments
Initial recognition and measurement
Financial instruments
are recognized
when the
Company becomes
a party
to the
transaction. Initial
measurements are
at cost,
which includes transaction costs.
Risk management
The Company manages its exposure
to currency exchange, translation, interest rate,
credit, microlending credit and equity price
and liquidity risks as discussed below.
Currency exchange risk
The Company is subject to currency exchange risk because it purchases components
for its vaults, that the Company assembles,
and inventories
that it is
required to
settle in other
currencies, primarily
the euro, renminbi,
and U.S. dollar.
The Company
has used
forward contracts in order to limit its
exposure in these transactions to fluctuations
in exchange rates between the South African
rand
(“ZAR”), on the one hand, and the U.S. dollar and the euro, on the other hand.
Translation risk
Translation risk relates to
the risk that
the Company’s results of operations
will vary significantly
as the U.S.
dollar is its
reporting
currency,
but it earns a
significant amount of its
revenues and incurs a
significant amount of its
expenses in ZAR. The
U.S. dollar to
the ZAR
exchange rate
has fluctuated
significantly over
the past
three years.
As exchange
rates are
outside the
Company’s
control,
there can be no
assurance that future fluctuations will
not adversely affect the Company’s results of operations and
financial condition.
Interest rate risk
As a result of its
normal borrowing activities, the Company’s operating results are exposed to fluctuations in
interest rates, which
it manages primarily through its
financing activities. In May
2026, the SARB increased the
repurchase rate by 25
basis points to 7.00%
against a backdrop of heightened inflation risks, including
higher oil and fuel prices
associated with the ongoing conflict in the
Middle
East. The SARB subsequently maintained
the repurchase rate at 7.00% in July 2026. Inflation
risks nevertheless remain elevated and
further increases in interest rates remain possible should inflationary
pressures persist or intensify.
Accordingly,
assuming no changes
in the margins
applicable to the
Company’s
borrowings (refer to
Note 12) or
the amount of
borrowings outstanding,
an increase
in benchmark
interest rates
would result
in a
corresponding increase
in the
Company’s
cost of
borrowing.
The
Company
periodically
evaluates
the
cost
and
effectiveness
of
interest
rate
hedging
strategies
to
manage
this
risk.
The
Company
generally
maintains
surplus
cash
in
cash
equivalents
and
held-to-maturity
investments
and
has
occasionally
invested
in
marketable securities.
Credit risk
Credit
risk
relates
to
the
risk
of
loss
that
the
Company
would
incur
as
a
result
of
non-performance
by
counterparties.
The
Company
maintains
credit
risk
policies
in
respect
of
its
counterparties
to
minimize
overall
credit
risk.
These
policies
include
an
evaluation
of
a
potential
counterparty’s
financial
condition,
credit
rating,
and
other
credit
criteria
and
risk
mitigation
tools
as
the
Company’s
management deems
appropriate.
With
respect to
credit risk
on certain
financial instruments,
the Company
maintains a
policy of entering
into such transactions only
with South African
and European financial
institutions that have
a credit rating
of “B”
(or its equivalent) or better, as determined by
credit rating agencies such as Standard & Poor’s, Moody’s
and Fitch Ratings.
Consumer microlending credit
risk
The Company
is exposed
to credit
risk in
its Consumer
microlending activities,
which provides
unsecured short-term
loans to
qualifying customers.
Credit bureau
checks as
well as
an affordability
test are
conducted as
part of
the origination
process, both
of
which are in line with local regulations. The Company considers this
policy to be appropriate because the affordability test it
performs
takes into account
a variety of
factors such
as other debts
and total expenditures
on normal household
and lifestyle expenses.
Additional
allowances
may
be required
should the
ability of
its customers
to make
payments when
due
deteriorate
in the
future. Judgment
is
required to assess
the ultimate recoverability
of these finance
loan receivables, including
ongoing evaluation
of the creditworthiness
of each customer.
6.
FAIR VALUE
OF FINANCIAL INSTRUMENTS (continued)
Risk management (continued)
Merchant lending
The Company maintains an allowance for
doubtful finance loans receivable related to
its Merchant services segment with
respect
to short-term loans to qualifying merchant customers. The
Company’s risk management procedures include adhering to its proprietary
lending criteria which uses
an online-system loan application
process, obtaining necessary customer transaction-history
data and credit
bureau checks.
The Company considers
these procedures
to be appropriate
because it takes
into account
a variety of
factors such as
the customer’s credit capacity and customer-specific
risk factors when originating a loan.
Equity price and liquidity risk
Equity price risk relates to the risk of loss that the Company would incur as a result of the volatility in the exchange-traded price
of equity
securities that
it holds
from time
to time.
The market
price of
these securities
may fluctuate
for a
variety of
reasons and,
consequently,
the
amount
that
the
Company
may
obtain
in
a
subsequent
sale of
these
securities
may
significantly
differ
from
the
reported market value.
Equity liquidity risk
relates to the risk
of loss that the
Company would incur as
a result of the
lack of liquidity on
the exchange
on
which
those
securities
are
listed.
The
Company
may
not be
able
to
sell some
or
all
of
these
securities
at
one
time,
or
over
an
extended period of time without influencing the exchange-traded price,
or at all.
Financial instruments
Fair value
is defined
as the price
that would
be received
upon sale
of an
asset or
paid upon
transfer of
a liability
in an orderly
transaction between
market participants
at the
measurement date
and in
the principal
or most
advantageous market
for that
asset or
liability. The
fair value should be calculated based
on assumptions that market participants
would use in pricing the asset
or liability,
not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk
including the Company’s own credit
risk.
Fair value measurements and inputs are categorized into a
fair value hierarchy which prioritizes the inputs into
three levels based
on the
extent to which
inputs used
in measuring
fair value
are observable
in the
market. Each fair
value measurement
is reported in
one of the three levels which is determined by the lowest level input that is significant
to the fair value measurement in its entirety.
These levels are:
●
Level 1 – inputs are based upon unadjusted quoted prices for identical instruments
traded in active markets.
●
Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar
instruments in
markets that
are not
active, and
model-based valuation
techniques for
which all
significant assumptions
are
observable
in the
market or
can be
corroborated
by observable
market
data for
substantially the
full term
of the
assets or
liabilities.
●
Level
3
–
inputs
are
generally
unobservable
and
typically
reflect
management’s
estimates
of
assumptions
that
market
participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques
that include option pricing models, discounted cash flow models, and
similar techniques.
The following
section describes
the valuation
methodologies the
Company uses
to measure
its significant
financial assets
and
liabilities at fair value.
6.
FAIR VALUE
OF FINANCIAL INSTRUMENTS (continued)
Financial instruments (continued)
Asset measured at fair value using significant observable inputs – investment in MobiKwik
The Company’s
disposed of its entire holding,
comprising
6,215,620
equity shares, in MobiKwik in
late June 2025. MobiKwik
listed on the National Stock
Exchange of India (“NSE”) on December
18, 2024. Up until its listing
MobiKwik did not have a
readily
determinable fair
value and
the Company
elected to
measure its
investment in
MobiKwik at
cost minus
impairment, if
any,
plus or
minus changes
resulting from
observable price
changes in
orderly transactions
for the
identical or
a similar
investment of
the same
issuer (“cost plus or minus changes
in observable prices equity securities”).
From the date of MobiKwik’s
listing, the Company used
MobiKwik’s closing price reported on
the NSE on the last trading day related to last day of each of the Company’s external reporting
periods
through
March
31,
2025
to
determine
the
fair
value
of
the
equity
securities
owned
by
the
Company.
Refer
to
Note
9
for
additional information.
Asset measured at fair value using significant unobservable inputs – investment
in Cell C
The Company
held
75,000,000
class “A” shares
in Cell
C Limited
(“Cell C”), a
significant mobile
telecoms provider
in South
Africa.
In November 2025,
Cell C completed a
restructuring process in anticipation
of its listing on
the securities exchange
operated
by the JSE Limited. Under this process, a new holding company,
Cell C Holdings Limited (“Cell C Listco”), was established for Cell
C, with a transaction
step including the transfer
of shares in Cell
C by its existing
shareholders to Cell C
Listco in exchange
for Cell
C Listco issuing shares to
the existing Cell C shareholders
(the “Flip-up”). The
Company exchanged its
75,000,000
class “A” shares
in Cell C for
76,590
shares in Cell C Listco. Cell C Listco listed on November 23, 2025.
On October 31, 2025, in considering the proposed restructure
and listing of Cell C Listco, Lesaka SA entered into an agreement
with The
Prepaid Company
Proprietary Limited
(“TPC”) to
dispose of
its shares
in Cell
C (or,
after the
Flip-up is
implemented, its
shares in Cell C Listco)
(“Relevant Shares”), if certain conditions were met. Under the terms of the agreement,
if:
●
the listing
occurred by
November 30,
2025, and
the value
of Lesaka
SA’s
shares in
Cell C
was less
than ZAR
50
million,
then Lesaka SA could choose to either hold the shares, or sell the Relevant Shares to TPC for a purchase price equal to ZAR
50
million; or
●
the listing did
not occur by
November 30, 2025
(or, earlier
than this date,
it is determined
that the listing
will not proceed),
then Lesaka SA
could sell the Relevant
Shares to TPC for
ZAR
35
million. If, after
this sale and before
April 30, 2026, the
Listing occurs and the
list price per share
(“A”) is more than the
price paid to Lesaka
SA per Relevant Share
(the aggregate
ZAR
35
million) (“B”), then TPC shall pay an amount equal to the difference between A and B, multiplied by the number of
Relevant Shares to Lesaka SA as a top-up to the purchase consideration.
The value of Lesaka SA’s
shares in Cell C Listco was less than ZAR
50
million on listing and Lesaka SA elected to sell its Cell
C Listco shares to TPC for ZAR
50
million ($
3.0
million) and received the cash proceeds in December 2025.
The
Company’s
Level
3
asset
represented
an
investment
of
75,000,000
class
“A”
shares
in
Cell
C.
The
Company
used
a
discounted cash
flow model
developed by
the Company
to determine
the fair value
of its
investment in
Cell C as
of June
30, 2025,
and valued Cell C
at $
0.0
(zero) as of June
30, 2025. The Company
assumed that Cell C’s
deferred tax assets would
be utilized over
the forecast period. The Company has assumed a marketability discount of
15
% as of June 2025 and a minority discount of
17
%. The
Company utilized the latest business plan provided
by Cell C management for the period ended May 31, 2030,
for the June 30, 2025,
valuation.
The following key valuation inputs were used as of June 30, 2025:
Weighted Average
Cost of Capital ("WACC"):
24
%
Long-term growth rate:
4.5
%
Marketability discount:
15
%
Minority discount:
17
%
Net adjusted external debt - June 30, 2025:
(1)
ZAR
8.3
billion ($
0.5
billion), no lease liabilities included
(1) translated from ZAR to U.S. dollars at exchange rates applicable as of
June 30, 2025.
6.
FAIR VALUE
OF FINANCIAL INSTRUMENTS (continued)
Financial instruments (continued)
Derivative transactions - Foreign exchange contracts
As part
of the
Company’s
risk management
strategy,
the Company
enters into
derivative transactions
to mitigate
exposures to
foreign
currencies
using
foreign
exchange
contracts. These
foreign
exchange
contracts
are
over-the-counter
derivative
transactions. Substantially all of the Company’s derivative exposures are with counterparties that have long-term credit ratings of “B”
(or equivalent)
or better.
The Company
uses quoted
prices in
active markets
for similar
assets and liabilities
to determine
fair value
(Level 2). The
Company has
no derivatives
that require
fair value
measurement under
Level 1,
Level 2
or Level
3 of
the fair
value
hierarchy.
The Company had
no
outstanding foreign exchange contracts as of June 30, 2026 and June 30,
2025, respectively.
The following table presents the
Company’s assets measured
at fair value on a recurring basis as of
June 30, 2026, according to
the fair value hierarchy:
Quoted Price in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Assets
Related to insurance business:
$
$
$
$
Mutual fund (included in cash,
cash equivalents and restricted
cash)
-
3,688
-
3,688
Cash, cash equivalents and
restricted cash (included in other
long-term assets)
141
-
-
141
Mutual fund
(included in other
long-term assets)
-
4,598
-
4,598
Total assets at fair value
$
141
$
8,286
$
-
$
8,427
The following table presents the Company’s
assets measured at fair value on a recurring basis as of
June 30, 2025, according to
the fair value hierarchy:
Quoted Price in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Assets
Investment in Cell C
$
-
$
-
$
-
$
-
Related to insurance business
Cash and cash equivalents
(included in other long-term
assets)
125
-
-
125
Fixed maturity investments
(included in cash and cash
equivalents)
4,739
-
-
4,739
Total assets at fair value
$
4,864
$
-
$
-
$
4,864
6.
FAIR VALUE
OF FINANCIAL INSTRUMENTS (continued)
Financial instruments (continued)
During
the year
ended
June 30,
2026,
the
Company
transferred
its investment
in
Cell C
Listco
out
of
Level 3
following
the
disposal of these
equity securities. During
the year ended
June 30, 2026,
the Company recorded
an increase in
the carrying value
of
its investment in Cell C Listco prior to the disposal of these equity securities. There have been
no
transfers in or out of Level 3 during
the year ended June 30, 2025. There was
no
movement in the carrying value of assets measured at fair value on a recurring basis, and
categorized within Level 3, during the year ended June 30, 2025.
Summarized below is
the movement in the carrying
value of assets measured
at fair value on a
recurring basis, and categorized
within Level 3, during the year ended June 30, 2026:
Carrying value
Assets
Balance as of June 30, 2025
$
-
Gain on fair value re-measurement
2,971
Disposal of investment in Cell C
(2,971)
Foreign currency adjustment
(1)
-
Balance as of June 30, 2026
$
-
(1) The
foreign currency
adjustment represents
the effects
of the fluctuations
of the South
African rand
against the
U.S. dollar
on the carrying value.
Summarized below is the movement in the carrying value of
assets and liabilities measured at fair value on a recurring
basis, and
categorized within Level 3, during the year ended June 30, 2025:
Carrying value
Assets
Balance as at June 30, 2024
$
-
Foreign currency adjustment
(1)
-
Balance as of June 30, 2025
$
-
(1) The
foreign currency
adjustment represents
the effects
of the fluctuations
of the South
African rand
against the
U.S. dollar
on the carrying value.
Trade, finance loans and other receivables
Trade, finance loans and other receivables originated by the Company are
stated at cost less allowance for credit losses. The fair
value of trade, finance loans and other receivables approximates their carrying
value due to their short-term nature.
Trade and other payables
The fair values of trade and other payables approximates their carrying amounts, due
to their short-term nature.
Assets and liabilities measured at fair value on a nonrecurring basis
The Company
measures equity
investments without
readily determinable
fair values
at fair
value on
a nonrecurring
basis. The
fair values of
these investments are
determined based on
valuation techniques using
the best information
available, and may
include
quoted market prices, market comparables, and discounted cash flow
projections. An impairment charge is recorded when the cost
of
the
asset
exceeds
its
fair
value
and
the
excess
is
determined
to
be
other-than-temporary.
Refer
to
Note
9
for
impairment
charges
recorded during the
reporting periods presented
herein. The Company
has
no
liabilities that
are measured at
fair value
on a
nonrecurring
basis.
Long-term borrowings
The fair value of long-term borrowings approximates its carrying amounts
because they represent the carrying amounts of
variable-rate borrowings that are reset quarterly.