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Description Of Business And Basis Of Presentation | 12 Months Ended
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Jun. 30, 2019
Description Of Business And Basis Of Presentation [Abstract] |
Description Of Business And Basis Of Presentation | 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Description of Business Net 1 UEPS Technologies, Inc. ("Net1" and collectively with its consolidated subsidiaries, the "Company") was incorporated in the State of Florida on May 8, 1997. The Company is a leading provider of financial technology, or fintech, products and services to the unbanked and underbanked in a number of emerging and developed economies. Its universal electronic payment system ("UEPS") uses biometrically secure smart cards that operate in real-time but offline, which allows users to enter into transactions at any time with other card holders in even the most remote areas. The Company also develops and provides secure transaction technology solutions and services, and offers transaction processing and financial solutions. The Company's technology is widely used in South Africa today, where it provides financial services, processes debit and credit card payment transactions on behalf of retailers through its EasyPay system, processes value-added services such as bill payments and prepaid electricity for the major bill issuers and local councils in South Africa, processes third-party and associated payroll payments for employees and provides mobile telephone top-up transactions for the major South African mobile carriers. Through KSNET, the Company offers card processing, payment gateway ("PG") and banking value-added network services ("VAN") in South Korea. The Company has card issuing and acquiring capabilities in Hong Kong and Malta and provides value added payment services to online retailers across Europe through its International Payments Group ("IPG"). The Company leverages its strategic equity investments in Finbond Group Limited ("Finbond") and Bank Frick & Co. AG ("Bank Frick") (both regulated banks), and Cell C Proprietary Limited ("Cell C") to introduce products to new customers and geographies. Basis of presentation The accompanying consolidated financial statements include subsidiaries over which Net1 exercises control and have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Consideration of going concern Accounting guidance requires the Company's management to assess whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after its audited consolidated financial statements are issued. The Company's management has identified certain conditions or events, which, considered in the aggregate, could raise substantial doubt about the Company's ability to continue as a going concern including the risk that the Company will be unable to: deliver all or a substantial part of the financial results forecast in its fiscal 2020 budget; retain its existing borrowings and facilities, as described in Note 12, or obtain additional borrowings and facilities on commercially reasonable terms; arrive at a commercial settlement with SASSA, given the September 30, 2019, Supreme Court of Appeal ruling regarding the repayment of the additional implementation costs received back to SASSA (refer Note 13) and the ongoing dispute the Company has with SASSA over fees due for the six-month contract extension period in accordance with National Treasury's recommendation (refer Note 2—Revenue recognition—Significant judgments and estimates); dispose of all or a portion of its remaining 30% interest in DNI-4PL Contracts Proprietary Limited ("DNI"). DNI's operations are also significantly dependent on Cell C because it is the largest distributor of Cell C starter packs in South Africa. Therefore, the inability of Cell C to continue to operate through the next 12 months could also have an adverse impact on DNI's operations; or dispose of investments in order to realize sufficient cash flows. The Company's management has implemented a number of plans to alleviate the substantial doubt about the Company's ability to continue as a going concern. These plans include disposing of certain non-core assets (refer to Note 3 for additional information regarding a call option granted to DNI), engaging FT Partners to advise on the KSNET business, and extending its existing borrowings used to fund its ATMs through September 2020. In addition, the Company's management believes it has a number of mitigating actions it can pursue, including (i) limiting the expansion of its microlending finance loans receivable book in South Africa; (ii) implementing further cost cutting measures; (iii) commencing additional asset realizations; (iv) manage our capital expenditures; and (v) accessing alternative sources of capital (including through the issuance of additional shares of its common stock), in order to generate additional liquidity. The Company's management believes that these actions alleviate the substantial doubt referred to above and therefore have concluded that the Company remains a going concern. Restatement of financial statements resulting from Finbond error On May 31, 2019, Finbond released its year end February 2019 summarized annual results and announced that it had identified an error in its previously issued audited financial statements and had restated those audited financial statements. The Finbond restatement impacts the Company's reported results and the Company has restated its 2018 and 2017 financial statements to correct for the Finbond restatement. The error identified by Finbond relates to the misapplication of a valuation technique to determine the fair value of a written-off portfolio of loans receivable that were designated at fair value through profit or loss. The tables below present the impact of the restatement on each of the Company's financial statements for the years ended June 30, 2018:
Consolidated balance sheet
|  |  |  |  |  | As of June 30, 2018 |  |  |  |
|  |  | As |  |  |  |  |  | As |
|  |  | reported |  |  | Correction |  |  | restated |
|  |  |  |  |  | (in thousands) |  |  |  |
Equity-accounted investments |  | $ | 87,992 |  | $ | (1,976 | ) | $ | 86,016 |
Total assets |  |  | 1,219,290 |  |  | (1,976 | ) |  | 1,217,314 |
Deferred tax liabilities |  |  | 16,510 |  |  | (443 | ) |  | 16,067 |
Total liabilities |  |  | 373,188 |  |  | (443 | ) |  | 372,745 |
Accumulated other comprehensive loss |  |  | (184,436 | ) |  | (102 | ) |  | (184,538 | )
Retained earnings |  |  | 837,625 |  |  | (1,431 | ) |  | 836,194 |
Total equity |  | $ | 738,430 |  | $ | (1,533 | ) | $ | 736,897 |
Consolidated statement of operations
|  |  | Year ended June 30, 2018
|  |  |  | As |  |  |  |  | As
|  |  |  | reported |  | Correction |  |  | restated
|  |  |  | (in thousands, except per share data)
|  | Income tax expense | $ | 48,627 | $ | (30 | ) | $ | 48,597
|  | Net income before earnings from equity-accounted investments |  | 51,739 |  | 30 |  |  | 51,769
|  | Earnings from equity-accounted investments |  | 11,730 |  | (133 | ) |  | 11,597
|  | Net income |  | 63,469 |  | (103 | ) |  | 63,366
|  | Net income attributable to Net1 | $ | 64,349 | $ | (103 | ) | $ | 64,246
|  | Net income per share, in United States dollars: |  |  |  |  |  |  |
|  | Basic earnings attributable to Net1 shareholders | $ | 1.13 | $ | (0.00 | ) | $ | 1.13
|  | Diluted earnings attributable to Net1 shareholders | $ | 1.13 | $ | (0.00 | ) | $ | 1.13
|  |  | Year ended June 30, 2017
|  |  |  | As |  |  |  |  | As
|  |  |  | reported |  | Correction |  |  | restated
|  |  |  | (in thousands, except per share data)
|  | Income tax expense | $ | 42,472 | $ | 34 |  | $ | 42,506
|  | Net income before earnings from equity-accounted investments |  | 71,984 |  | (34 | ) |  | 71,950
|  | Earnings from equity-accounted investments |  | 2,664 |  | 150 |  |  | 2,814
|  | Net income |  | 74,648 |  | 116 |  |  | 74,764
|  | Net income attributable to Net1 | $ | 72,954 | $ | 116 |  | $ | 73,070
|  | Net income per share, in United States dollars: |  |  |  |  |  |  |
|  | Basic earnings attributable to Net1 shareholders | $ | 1.34 | $ | 0.00 |  | $ | 1.34
|  | Diluted earnings attributable to Net1 shareholders | $ | 1.33 | $ | 0.00 |  | $ | 1.33
Consolidated statement of comprehensive (loss) income
| Year ended June 30, 2018
|  | As |  |  |  |  |  | As |
|  | reported |  |  | Correction |  |  | restated |
|  |  |  |  | (in thousands) |  |  |  |
Net income | $ | 63,469 |  | $ | (103 | ) | $ | 63,366 |
Movement in foreign currency translation reserve |  | (19,539 | ) |  | 65 |  |  | (19,474 | )
Total other comprehensive (loss) income |  | (21,965 | ) |  | 65 |  |  | (21,900 | )
Comprehensive income |  | 41,504 |  |  | (38 | ) |  | 41,466 |
Comprehensive income attributed to Net1 | $ | 42,482 |  | $ | (38 | ) | $ | 42,444 |
| Year ended June 30, 2017
|  | As |  |  |  |  |  | As |
|  | reported |  |  | Correction |  |  | restated |
|  |  |  |  | (in thousands) |  |  |  |
Net income | $ | 74,648 |  | $ | 116 |  | $ | 74,764 |
Movement in foreign currency translation reserve |  | 30,466 |  |  | (175 | ) |  | 30,291 |
Total other comprehensive income (loss) |  | 27,769 |  |  | (175 | ) |  | 27,594 |
Comprehensive income |  | 102,417 |  |  | (59 | ) |  | 102,358 |
Comprehensive income attributed to Net1 | $ | 100,085 |  | $ | (59 | ) | $ | 100,026 |
Consolidated statement of changes in equity
|  |  |  |  | Accumulated |
|  |  |  |  | other |
|  | Retained |  |  | comprehensive |
|  | earnings |  |  | loss |
|  | (in thousands) |
As reported – July 1, 2016 | $ | 700,322 |  | $ | (189,700 | )
Correction of misstatement |  | (1,444 | ) |  | 8 |
As restated – July 1, 2016 | $ | 698,878 |  | $ | (189,692 | )
As reported – June 30, 2017 | $ | 773,276 |  | $ | (162,569 | )
Correction of misstatement |  | (1,328 | ) |  | (167 | )
As restated – June 30, 2017 | $ | 771,948 |  | $ | (162,736 | )
As reported – June 30, 2018 | $ | 837,625 |  | $ | (184,436 | )
Correction of misstatement |  | (1,431 | ) |  | (102 | )
As restated – June 30, 2018 | $ | 836,194 |  | $ | (184,538 | )
Consolidated statement of cash flows
| Year ended June 30, 2018
|  | As |  |  |  |  |  | As |
|  | reported |  |  | Correction |  |  | restated |
|  |  |  |  | (in thousands) |  |  |  |
Net income | $ | 63,469 |  | $ | (103 | ) | $ | 63,366 |
Earnings from equity-accounted investment |  | (11,730 | ) |  | 133 |  |  | (11,597 | )
Increase (Decrease) in deferred taxes |  | 5,966 |  |  | (30 | ) |  | 5,936 |
Net cash provided by operating activities | $ | 132,305 |  | $ | - |  | $ | 132,305 |
| Year ended June 30, 2017
|  | As |  |  |  |  |  | As |
|  | reported |  |  | Correction |  |  | restated |
|  |  |  |  | (in thousands) |  |  |  |
Net income | $ | 74,648 |  | $ | 116 |  | $ | 74,764 |
Earnings from equity-accounted investment |  | (2,664 | ) |  | (150 | ) |  | (2,814 | )
Increase (Decrease) in deferred taxes |  | (220 | ) |  | 34 |  |  | (186 | )
Net cash provided by operating activities | $ | 97,161 |  | $ | - |  | $ | 97,161 |

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