Steve Heilbron: Our strategy is first to put out the terminal, so when we talk about our VAS devices growing, and I think we say we grow to 75,000. We went from 51,000 devices to 75,000. That represents the 47% growth. Our strategy is then to activate those devices into card processing. So when we refer to the fact that we grew to 44,900, that is off a prior number of roughly 21,000 odd devices, where we were able to convert the VAS devices into card processing devices. So, in summary, we grew the VAS base by 47%, but within that base, we were able to increase the card acquiring devices by 97%.
Theodore O’Neill: That explains it. Thank you. And my next question is for Naeem. Your target for net debt to EBITDA of 2.5x, do you have a date in mind for when you would get to that target, or if not, how do you think about the dynamics that will get you to that number?
Naeem Kola: Thank you for the question. I think the key point for us is in terms of optimizing our debt, so there are specific plans as part of our cash generation to reduce debt over a period of time. The 2.5x target is our near-term target that we are hoping to achieve, because as we mentioned, this gives us an additional $100 of saving on our Facility G and H, and it’s quite meaningful in terms of the reduction of interest costs. We will be looking, and our targets indicate that we should get to that level by Q3 or Q4, FY ’24.
Theodore O’Neill: Thank you very much. That completes my questions.
Matt Chesler: The next live question is from James Starke from RMB Morgan Stanley.
James Starke: Good afternoon, gentlemen. Thanks for the opportunity. I’ve got a few questions. I think the first are for Steve regarding the Merchant Division, and then I’ve got one or two for Lincoln on the consumer side. On the Merchant Division, if you could just give us some color, Steve, perhaps around how you view the momentum from — ?
Steve Heilbron: Yes. We’ve lost the question. I’m not sure if you can hear it on your end.
James Starke: Hi. Can you hear me?
Steve Heilbron: Yes, we can hear you.
James Starke: Right. Yes, so the first question for Steve is around VAS and card acquiring devices, the outlook from a tempo perspective, some color if you can maintain this sort of tempo of rollout. The other one is quite a high-level one regarding load shedding. Throughout the presentation, reference was made to the impact of load shedding, particularly in your client segment. Can you give us a sense of where you feel the level of adaptation has got to? Are your clients able to cope with sort of Stage 2 comfortably or is the Stage 4? Where are we and how far do you think they can actually build that resilience? Then on consumer for Lincoln, you mentioned the post office. Clearly, events are unfolding there quite rapidly. Perhaps you can give us some color on how you see that opportunity potentially to dislodge or take on some of those clients that may have worked with the post office in the past.
Steve Heilbron: Great. So I think, first of all, let me say that for the year ahead. We – merchant division for an EBITDA growth of somewhere between 15% and 20%. Our expectation would be closer to the upper end of that. Having said that, I think it’s very important to remember that the merchant division just completed a year in which it grew its EBITDA by north of 40% and it also grew its revenue by more than 25%. So, again, this is very strong growth on top of growth. Let me also say there were some one-off items in the year that we’ve just had which gave us that more than expected growth, that north of 40%, and, therefore, the 15% to 20% is tempered in that regard. Now, having said that, we have fairly aggressive targets to continue that rollout in terms of the broader platform of VAS devices and then, of course, the conversion to Kazang Pay and additional products.
Remember, our philosophy has always been to spin off the core. So, in other words, we had our VAS business and Kazang Pay was a spin-off of VAS, and then the spin-off for deposit advance or Kazang Pay Advance was a spin-off from Kazang Pay. So, these obviously were growing off a much bigger base today. So if you go back a year, we had 21,000 card acquiring devices. We’re now at 45,000. We have strong growth targets off that, but it’s a smaller percentage because it’s off a bigger base and, likewise, off the 75,000. All of those growth trends underpin the 15% to 20% that I started off by answering, and, as I said, our expectation is closer towards the 20% growth end. And, again, let me remind you that that is off a prior year growth number of in excess of 40% growth from a EBITDA perspective.
Our momentum actually in Q1 for FY ’24 also supports continued strong momentum in terms of device rollout.
Chris Meyer: The second question, Steve, was load shedding. You want to touch on that?
Steve Heilbron: Yes, so load shedding, first of all, it’s a difficult question to answer. I mean, I’d be more comfortable if you asked me a question on financial services than on load shedding. But let me say what we’ve observed is that when we start getting beyond Stage 4 and we have periods where we have up to 10 hours, not consecutive, but three sessions a day, we then start to find that there is more disruption in the market than our merchants are comfortable with. Having said that, let me also say that, our merchants are incredibly resilient. And, the last quarter of FY ’24 was very testing. You’ll see that in our commentary we talk about the fact that despite sustained periods of level 6 and up to 10 hours a day, we still grew our VAS throughput for that quarter, if you ignore IMTs, and there’s a specific narrative we give on IMT, by more than 3%.
