So I think the adaptive nature showed us that even in a sustained period of level 6, we were able to grow. But to answer your question specifically, level 6 is an uncomfortable situation, and there’s no question that it impacts our traders’ ability to trade. It also affects consumers. It is not a sustainable — well, it’s sustainable, but it is incredibly disruptive for our merchants. Anything from level 4 down, I think we’ve become used to.
Chris Meyer: Lincoln, questions around the post office?
Lincoln Mali: Thank you, Matt. I think at the human level, the problems of the post office are affecting grant business recipients quite badly, and there’s a lot of pain and suffering out there. But there is an opportunity for consumers to make a choice, to look at alternatives. And for us, from a business point of view, the timing is perfect, because we’ve spent the last probably two years changing a cash logistics company to a customer-orientated and sales-focused organization. Now, we are ready to be able to offer a viable alternative to these customers. And what we’ve done is to invest in our marketing, both in social media, radio, and a lot of visibility out in the market. Secondly, we’ve trained our staff quite well and incentivized them to be able to bring more customers on board.
Thirdly, we’ve changed our branch network to have the look and feel that’s attractive to customers, so that grant customers can see that this is an organization that wants them and that can give them service. We also have got incentives for customers to be able to shift towards us, and that’s something that’s very, very positive for us. We’ve also re-looked at our value proposition, including pricing on ATMs, to make sure that customers can be able to transact with us or transact in any ATM or any POS device when they open our accounts. And the last thing I’ll say is that, already in these first two months, we’re starting to see that greater momentum, and we’re starting to see more customers coming towards us, and we’re starting to see some record sales for some of the days in the first two months.
So we do think that we are going to be able to take advantage of some of the challenges that the post office is having. But at a larger level, I think SASSA is creating an environment for all financial institutions to be able to go pitch what they can sell to these customers, and we are present in almost any one of those outreaches. And that is giving us another advantage because we’ve got a sales force that’s able to reach out to where the SASSA teams are and be able to present to customers.
James Starke: Thank you.
Matt Chesler: Thank you very much. I would now like to go to some of the questions that were submitted online and via the chat box. The first question is from Raj Sharma at B. Riley, who asked about the Finbond share buyback, particularly when would the cash come in? And there is an additional question that’s submitted on the same topic regarding what tax rate that investors should use for the proceeds. So if we could just combine those two in a single answer, that would be great.
Chris Meyer: Naeem, would you like to take?
Naeem Kola: Both questions? Yes. Thank you. Thanks Raj, in terms of the Finbond process, as we’ve mentioned, it is subject to some final shareholder approvals. We’re expecting those shareholder approvals to come through in about November 2023 and the cash flow to flow to come in around December 2023. And as Chris has touched on this, we’re expecting around ZAR 64 million, about $3.5 million at the current rates. In terms of the tax position on the cash flow, we’re not expecting to pay any tax on the Finbond realization at the moment.
Matt Chesler: Next question is also on the topic of the non-core assets. Can you give us a, from a different questioner, can you give us an update on a potential MobiKwik listing?
Chris Meyer: Naeem, do you want to take that as well?
Naeem Kola: Sure. So, look, I think in terms of our MobiKwik investment, we maintain fairly close relationships with the company. We have monthly calls with them. What I can say is that, the performance of the business continues to be very robust. There’s specific plans and they have been delivering on those plans of growth. I think as it’s well known, the Indian stock market, especially the IPO market, did come under pressure. We are seeing some renewed activity on the Indian stock market. And based on our discussions with the founders of MobiKwik, together with the shareholders, they would be looking at the most opportune time to do an IPO. But I think what is quite critical for them is that they want to have a few quarters of profitable cash flow, profitable performance as well as positive cash flow before they launch the IPO.
So we’re not expecting anything eminent, but I think this is constantly in the thinking process of the founders and they’re looking at the right opportunity.
Matt Chesler: Moving on to the next question. With the transition to — 2023, what is guidance for 2024 revenue and profit expansion? Particularly, will the cash flow gains driven by the forecast allow for an increase in Lesaka’s current share repurchase program?
Chris Meyer: Matt, I think we missed a small portion of the question, but hopefully I’ll address it. And if I don’t, please come back. So in terms of our growth expectations, as we said, as I said earlier, we expect revenue, medium term revenue growth to be in the range of 18% to 20%. And that should translate into EBITDA growth of between 20% to 25%. We see that as our sort of medium term expectation, which would be two to three years so beyond FY ’24. In terms of specifically use of cash and as that pertains to buybacks, our priority, if I can describe it as that, is, as a growth business, is investing for growth within our business. We have, an exciting growth path in front of us. And, we’ve touched on the point that M&A is also an important aspect of our growth journey.
So, a combination of organic and inorganic growth. And then secondly, Naeem spoke to this at length. We are prioritizing debt reduction as a core strategy. And, Naeem again mentioned the importance of our near-term target of getting our net debt to EBITDA below 2.5x, because if we can get there, there’s a meaningful savings for us in terms of interest costs. We’re very happy to see this recent 75 bps reduction that we’ve agreed in principle with our bankers that we expect to see coming-in in the next quarter. But an additional 1% is within sight over the next three quarters. And that must be one of our priorities.
Matt Chesler: Thank you, Chris, I’d like to ask one more question that was submitted before turning it back to you for concluding remarks. Sven Thordsen from Anchor Securities asks us to please elaborate on the EasyPay issues, particularly why was throughput growth so low?
Chris Meyer: Steve, take it.
Steve Heilbron: I didn’t quite get the end of the question.
Matt Chesler: The question around throughput, which was flat and issues in the questioners words, issues within EasyPay. Do you want to just elaborate a little bit on our thinking?
