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Fair Value Of Financial Instruments | 12 Months Ended
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Jun. 30, 2018
Fair Value Of Financial Instruments [Abstract] |
Fair Value Of Financial Instruments | 7. 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 managemen t The Company manages its exposure to currency exchange, translation, interest rate, customer concentration, credit and equity price and liquidity risks as discussed below. Currency exchange risk The Company is subject to currency exchange risk because it purchases inventories that it is required to settle in other currencies, primarily the euro 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, 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 most of its revenues and incurs most of its expenses in ZAR. The U.S. dollar to 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 and lending activities, the Company's operating results are exposed to fluctuations in interest rates, which it manages primarily through regular financing activities. The Company generally maintains limited investments 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 with regard to 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 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 "BB+" (or its equivalent) or better, as determined by credit rating agencies such as Standard & Poor's, Moody's and Fitch Ratings. Microlending credit risk The Company is exposed to credit risk in its microlending activities, which provide unsecured short-term loans to qualifying customers. The Company manages this risk by performing an affordability test for each prospective customer and assigning a "creditworthiness score", which takes into account a variety of factors such as other debts and total expenditures on normal household and lifestyle expenses. 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. 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. 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 these 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 financial assets and liabilities at fair value. Asset measured at fair value using significant unobservable inputs – investment in Cell C The Company's Level 3 asset represents an investment of 75,000,000 class "A" shares in Cell C, a leading mobile telecoms provider in South Africa (refer to Note 9). The Company has designated the investment in such shares to be carried at fair value, under the fair value option. Cell C shares are not listed on an exchange and there is no readily determinable market value for the shares. The Company has developed an adjusted EV/EBITDA multiple valuation model in order to determine the fair value of the Cell C shares. The primary inputs to the valuation model are Cell C's annualized adjusted EBITDA for the 11 months ended June 30, 2018, of ZAR 3.9 billion ($284.8 million, translated at exchange rates applicable as of June 30, 2018), an EBITDA multiple of 6.75, Cell C's net external debt of ZAR 8.8 billion ($641.1 million, translated at exchange rates applicable as of June 30, 2018) and a marketability discount of 10% as Cell C is not currently listed, but has a publically stated intention to list. The EBITDA multiple was determined based on an analysis of Cell C's peer group, which comprises various African and emerging market mobile telecommunications operators. The fair value of Cell C utilizing the adjusted EV/EBITDA valuation model developed by the Company is sensitive to the following inputs: (i) the Company's determination of adjusted EBITDA (ii) the EBITDA multiple used and (iii) the marketability discount used. Utilization of different inputs, or changes to these inputs, may result in significantly higher or lower fair value measurement. The following table presents the impact of a 0.50 increase and 0.50 decrease to the EBITDA multiple used in the Cell C valuation on the June 30, 2018, carrying value of the Company's Cell C investment (all amounts translated at exchange rates applicable as of June 30, 2018):
|  | Sensitivity for
|  | fair value of
|  | Cell C investment
EBITDA multiple of 6.25 times | $ | 153,724
EBITDA multiple of 6.75 times |  | 172,948
EBITDA multiple of 7.25 times | $ | 192,172
The fair value of the Cell C shares as of June 30, 2018, represented approximately 14% of the Company's total assets, including these shares. The Company expects to hold these shares for an extended period of time and it is not concerned with short-term equity price volatility with respect to these shares provided that the underlying business, economic and management characteristics of the company remain sound. 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. All of the Company's derivative exposures are with counterparties that have long-term credit ratings of "BB+" (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 or 3 of the fair value hierarchy. The Company had no outstanding foreign exchange contracts as of June 30, 2018 and 2017, respectively. The following table presents the Company's assets and liabilities measured at fair value on a recurring basis as of June 30, 2018, according to the fair value hierarchy:
|  | Quoted price in |  | Significant |  |  |  |
|  | active markets |  | other |  | Significant |  |
|  | for identical |  | observable |  | unobservable |  |
|  | assets |  | inputs |  | inputs |  |
|  | (Level 1) |  | (Level 2) |  | (Level 3) |  | Total
Assets |  |  |  |  |  |  |  |
Investment in Cell C | $ | - | $ | - | $ | 172,948 | $ | 172,948
Related to insurance business: |  |  |  |  |  |  |  |
Cash and cash equivalents (included in other |  |  |  |  |  |  |  |
long-term assets) |  | 610 |  | - |  | - |  | 610
Fixed maturity investments (included in |  |  |  |  |  |  |  |
cash and cash equivalents) |  | 8,304 |  | - |  | - |  | 8,304
Other |  | - |  | 18 |  | - |  | 18
Total assets at fair value | $ | 8,914 | $ | 18 | $ | 172,948 | $ | 181,880
Liabilities |  |  |  |  |  |  |  |
DNI contingent consideration (Note 3) | $ | - | $ | - | $ | 27,222 | $ | 27,222
Total liabilities at fair value | $ | - | $ | - | $ | 27,222 | $ | 27,222
The following table presents the Company's assets measured at fair value on a recurring basis as of June 30, 2017, according to the fair value hierarchy:
|  | Quoted |  |  |  |  |
|  | Price in |  |  |  |  |
|  | Active |  | Significant |  |  |
|  | Markets for |  | Other | Significant |  |
|  | Identical |  | Observable | Unobservable |  |
|  | Assets |  | Inputs | Inputs |  |
|  | (Level 1) |  | (Level 2) | (Level 3) |  | Total
Assets |  |  |  |  |  |  |
Related to insurance business: |  |  |  |  |  |  |
Cash and cash equivalents (included in other |  |  |  |  |  |  |
long-term assets) | $ | 627 | $ | - | $- | $ | 627
Fixed maturity investments (included in |  |  |  |  |  |  |
cash and cash equivalents) |  | 5,160 |  | - | - |  | 5,160
Other |  | - |  | 37 | - |  | 37
Total assets at fair value | $ | 5,787 | $ | 37 | $- | $ | 5,824
Changes in the Company's investment in Finbond (Level 3 that are measured at fair value on a recurring basis) were insignificant during the years ended June 30, 2016. There have been no transfers into or out of Level 3 during the year ended June 30, 2018 and 2017. During the year ended June 30, 2016, the Company determined that it was able to exert significant influence on Finbond and transferred the carrying value as of April 1, 2016, to equity-accounted investments. 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, 2018:
|  | Carrying value |
Assets |  |  |
Acquisition of investment in Cell C | $ | 151,003 |
Change in fair value of Cell C |  | 32,473 |
Foreign currency adjustment |  | (10,528 | )
Balance as of June 30, 2018 | $ | 172,948 |
Trade, finance loans and other receivables Trade, finance loans and other receivables originated by the Company are stated at cost less allowance for doubtful accounts receivable. 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 its assets at fair value on a nonrecurring basis when they are deemed to be other-than-temporarily impaired. The Company has no liabilities that are measured at fair value on a nonrecurring basis. The Company reviews the carrying values of its assets when events and circumstances warrant and considers all available evidence in evaluating when declines in fair value are other-than-temporary. The fair values of the Company's assets are determined 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. The Company has not recorded any impairment charges during the reporting periods presented herein.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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