Bulk VAS purchases sold down over the quarter released ZAR 188 million of cash, compared to an outflow of ZAR 135 million in the prior quarter. Adjusting for the effect of the bulk VAS purchases, the business has cumulatively generated approximately ZAR 123 million of positive cash flow before CapEx over the three financial quarters to June 2023. In our merchant card business, working capital requirements are relatively small. We estimate that approximately every ZAR 100 million in throughput growth requires ZAR 3 million in additional working capital. Our net debt adjusted for short-term funding of bulk VAS purchases to EBITDA ratio is calculated as annualized group-adjusted EBITDA divided by the net debt at a specific date. The fourth quarter of FY ’23 annualized group-adjusted EBITDA is based on Q4 2023 results annualized for the year, and has improved to 3.2x as compared to 3.5x in Q3 2023.
As Chris mentioned earlier, we are very pleased with the conclusion of our new funding arrangements. In addition, our lenders have agreed in principle to reduce the margin on facilities G and H by 75 basis points, on the basis of improvement in our net debt to EBITDA ratio. We expect to conclude on this during Q1 FY ’24. Reducing our net debt remains a strategic objective for the group. If we achieve a net debt to EBITDA ratio of below 2.5x, this will result in a further ZAR 100 million reduction in the margin on facilities G and H. Capital expenditure in Q4 FY ’23 amounted to ZAR 55 million. As we previously highlighted, this remains mainly growth-related and in the merchant division. As set out on the slide, we believe our growth CapEx delivers a strong IRR on amounts invested.
In conclusion, our robust performance in Q4 2023 is evidence of the successful execution of the strategy we have consistently communicated over the last two years. We will continue this focus on execution, and are optimistic about delivering another positive performance for FY ’24. With that, I would like to now hand over back to Chris, who will address the group’s outlook.
Chris Meyer: Thank you, Naeem. I would like to now set out our revenue and EBITDA guidance for Q1 ’24 and FY ’24. We will be providing guidance at a group level this year and not at a divisional level for EBITDA, as we did for FY 2023. So for FY 2024, we anticipate revenue to be within a range of ZAR 10.7 billion to ZAR 11.7 billion. This implies a growth rate of between 14% and 24% on FY 2023. At a group-adjusted EBITDA level, we expect to deliver between ZAR 680 million and ZAR 740 million, implying a 37% to 49% growth rate for FY 2024. This means that at a divisional level, we expect the merchant division-adjusted EBITDA to grow between 15% and 20%, and the consumer division-adjusted EBITDA to grow over 300% in FY 2024. For Q1 2024, we expect group revenue to be between ZAR 2.5 billion and ZAR 2.55 billion, a quarter-on-quarter growth rate of between 1% and 3%, compared to Q4 2023.
This represents a year-on-year growth of between 17% and 19%, compared to Q1 2023. We anticipate group-adjusted EBITDA to be between ZAR 160 million and ZAR 165 million for Q1 2024. This is a quarter-on-quarter growth rate of between 1% and 4%, and a year-on-year growth rate of between 122% and 129%. We believe our income before tax, excluding PPA amortization and the impact of any changes in our non-core investments, will turn positive in the first quarter of FY 2024, marking another important milestone in the growth trajectory of Lesaka. I would like to outline our medium-term growth targets and what we see as achievable given our market position and the secular trends. We anticipate that a revenue growth rate of approximately 18% to 20% per annum is achievable over the medium term.
Assuming gradual improvement of EBITDA margins, this would lead to a 20% to 25% growth per annum in group-adjusted EBITDA over the same period. These are very exciting numbers that we are challenging ourselves to achieve and to surpass. As we continue to innovate in the Merchant Division and start to grow our account base in the Consumer Division, we believe that Lesaka is positioned to deliver exceptional performance over the coming years. Our outlook provided does not include the impact of any potential business acquisition opportunities we may be evaluating. So thank you for attending the presentation of our annual and fourth quarter results for the period ending 30, June 2023. I would like to invite you to ask any questions you have at this stage.
A – Matt Chesler: Thank you, Chris. We’re now going to open up the Q&A session. From Zoom, there are two ways you can participate. The first is to use the raise your hand icon, which is at the bottom of your screen. Clicking this will alert the operator that you want to be called on to ask a live question, and so you’ll be placed into queue and called on. Just note, you’re going to be on mute until you’re called on. The second way to participate in Q&A is to use the Q&A widget, which will allow you to type in and text the question. We’ll then take questions from there as well. But just note here as well, if we run into a time constraint, someone from the IR team will get back to you if your question is not asked on today’s call. With that, we now begin and pause for a moment to build the queue. The first question here is going to be a live question. It’s going to be Theodore O’Neill from Litchfield Hills Research.
Theodore O’Neill: Thank you, and congratulations on the good quarter, particularly given the economic headwinds. My first question is for Steve. Slide 10, talking about the revenue drivers. If I look on — could you just help me with the dynamics on this? On the card acquiring chart, it shows the devices employed grew 98% and the throughput grew similarly, while for the value-added services and supplier payments, the devices deployed grew 47%, while the throughput was 30%, so it was lower than. I just wonder if you could talk me through the dynamics of how that works.
