10. GOODWILL AND INTANGIBLE ASSETS, net

Goodwill

Summarized below is the movement in the carrying value of goodwill for the years ended June 30, 2019, 2018 and 2017:


		Gross			Accumulated			Carrying
		value			impairment			value
Balance as of July 1, 2016	$	179,478		$	-		$	179,478
Acquisition of Ceevo FS (Note 3)		2,475			-			2,475
Foreign currency adjustment⁽¹⁾		6,880			-			6,880
Balance as of June 30, 2017		188,833			-			188,833
Impairment loss		-			(20,917	)		(20,917	)
Foreign currency adjustment⁽¹⁾		1,019			144			1,163
Balance as of June 30, 2018		189,852			(20,773	)		169,079
Impairment loss		-			(14,440	)		(14,440	)
Foreign currency adjustment⁽¹⁾		(5,308	)		56			(5,252	)
Balance as of June 30, 2019	$	184,544		$	(35,157	)	$	149,387

(1) – the foreign currency adjustment represents the effects of the fluctuations between the South African rand, the Euro and the Korean won, and the U.S. dollar on the carrying value.

Goodwill associated with the acquisition of Ceevo FS represents the excess of cost over the fair value of acquired net assets. The Ceevo FS goodwill is not deductible for tax purposes. See Note 3 for the allocation of the purchase price to the fair value of acquired net assets. Ceevo FS was allocated to the Company's International transaction processing operating segment.

Impairment loss

The Company assesses the carrying value of goodwill for impairment annually, or more frequently, whenever events occur and circumstances change indicating potential impairment. The Company performs its annual impairment test as at June 30 of each year.

Year ended June 30, 2019

During the second quarter of fiscal 2019, the Company performed an impairment analysis and recognized an impairment loss of approximately $8.2 million, of which approximately $7.0 million related to goodwill allocated to its IPG business within its international transaction processing operating segment and $1.2 million related to goodwill within its South African transaction processing operating segment. Given the consolidation and restructuring of IPG over the period to December 31, 2018, several business lines were terminated or meaningfully reduced, resulting in lower than expected revenues, profits and cash flows. IPG's new business initiatives are still in their infancy, and it is expected to generate lower cash flows than initially forecast.

Given the consolidation and restructuring of IPG over the period to December 31, 2018, several business lines were terminated or meaningfully reduced, resulting in lower than expected revenues, profits and cash flows. IPG's new business initiatives are still in their infancy, and it is expected to generate lower cash flows than initially forecast.

In order to determine the amount of the IPG goodwill impairment, the estimated fair value of the Company's IPG business assets and liabilities were compared to the carrying value of the IPG's assets and liabilities. The Company used a discounted cash flow model in order to determine the fair value of IPG. The allocation of the fair value of IPG required the Company to make a number of assumptions and estimates about the fair value of assets and liabilities where the fair values were not readily available or observable. Based on this analysis, the Company determined that the carrying value of IPG's assets and liabilities exceeded their fair value at the reporting date.

The Company also identified and recognized an impairment loss of $6.2 million related to goodwill allocated to its financial inclusion and applied technologies operating segment as a result of its June 30, 2019, annual impairment test. The June 2019 impairment loss resulted from on-going losses incurred in the latter half of the fiscal year that were greater than, and were incurred for a longer duration, than initially expected.

The estimated fair value of the business assets and liabilities were compared to the carrying value of the assets and liabilities of the reporting unit within the financial inclusion and applied technologies operating segment in order to determine the $6.2 million goodwill impairment. The Company used an EV/EBITDA multiple valuation model to determine the fair value of the reporting unit.

The allocation of the fair value of the reporting unit required the Company to make a number of assumptions and estimates about the fair value of assets and liabilities where the fair values were not readily available or observable. Based on this analysis, except for the impairments recognized, the Company determined that the carrying value of the reporting unit's assets and liabilities exceeded their fair value at the reporting date. In the event that there is deterioration in the Company's operating segments, or in any other of the Company's businesses, this may lead to additional impairments in future periods.

Year ended June 30, 2018

During the third quarter of fiscal 2018, the Company recognized an impairment loss of approximately $19.9 million related to goodwill allocated to the Masterpayment business within its international transaction processing operating segment as a result of changes to the operating model of Masterpayment. During the second quarter of fiscal 2018, the Company re-evaluated the operating performance and ongoing viability of Masterpayment's working capital financing and supply chain solutions offering and determined to exit this portion of its business. While the Company believed that it could scale this offering in the medium to long-term by focusing on customers and industries outside Masterpayment's initial target market, this standalone offering did not fit the Company's strategy of providing payment solutions and working capital to small and medium-sized merchants. In order to focus on the Company's stated international strategy, the Company decided to wind-down the traditional working capital finance book issued to non-payment solutions customers. During the third quarter of fiscal 2018, the Company evaluated Masterpayment's business strategy and following the wind-down referred to above, it determined that Masterpayment was unlikely to deliver the financial results or cash flows previously anticipated. The Company and two of Masterpayment's senior managers agreed, by mutual consent, that with effect from the end of March 2018, the managers terminated their employment with Masterpayment in order to dedicate themselves to new professional tasks. The Company also impaired goodwill of approximately $1.1 million during its June 2018 annual goodwill impairment assessment related to a business allocated to its South African transaction processing operating segment, which ceased trading during the year.

In order to determine the amount of goodwill impairment, the estimated fair value of the Company's Masterpayment business was allocated to the individual fair value of the assets and liabilities of Masterpayment as if it had been acquired in a business combination, which resulted in the implied fair value of the goodwill. The Company used a discounted cash flow model in order to determine the fair value of Masterpayment. The allocation of the fair value of Masterpayment required the Company to make a number of assumptions and estimates about the fair value of assets and liabilities where the fair values were not readily available or observable.

Goodwill has been allocated to the Company's reportable segments as follows:


		South						Financial
		African			International			inclusion and
		transaction			transaction			applied			Carrying
		processing			processing			technologies			value
Balance as of July 1, 2016	$	20,425		$	136,185		$	22,868		$	179,478
Acquisition of Ceevo FS (Note 3)		-			2,475			-			2,475
Foreign currency adjustment⁽¹⁾		2,706			1,910			2,264			6,880
Balance as of June 30, 2017		23,131			140,570			25,132			188,833
Impairment loss		(1,052	)		(19,865	)		-			(20,917	)
Foreign currency adjustment⁽¹⁾		(1,133	)		3,243			(947	)		1,163
Balance as of June 30, 2018		20,946			123,948			24,185			169,079
Impairment of goodwill		(1,180	)		(7,011	)		(6,249	)		(14,440	)
Foreign currency adjustment⁽¹⁾		(558	)		(4,209	)		(485	)		(5,252	)
Balance as of June 30, 2019	$	19,208		$	112,728		$	17,451		$	149,387

(1) – the foreign currency adjustment represents the effects of the fluctuations between the South African rand, the Euro and the Korean won, and the U.S. dollar on the carrying value.

Intangible assets, net

Summarized below is the fair value of intangible assets acquired, translated at the exchange rate applicable as of the relevant acquisition dates, and the weighted-average amortization period:


			Weighted-
		Fair value as	Average
		of acquisition	Amortization
		date	period (in years)
Finite-lived intangible asset:
Acquired during the year ended June 30, 2017
Pros Software – customer relationships	$	2,311	0.75
Ceevo FS – customer relationships		186	0.65
Ceevo FS – software and unpatented technology		147	1.25

Indefinite-lived intangible asset:
Acquired during the year ended June 30, 2017
Ceevo FS – Financial institution license	$	745	n/a

On acquisition, the Company recognized deferred tax liabilities of approximately $0.7 million related to the acquisition of intangible assets during the year ended June 30, 2017.

The Company assesses the carrying value of intangible assets for impairment whenever events occur or circumstances change indicating that the carrying amount of the intangible asset may not be recoverable. Except as discussed in Note 3, no intangible assets have been impaired during the years ended June 30, 2019, 2018 and 2017, respectively.

Summarized below is the carrying value and accumulated amortization of intangible assets as of June 30, 2019 and 2018:


		As of June 30, 2019							As of June 30, 2018
		Gross					Net		Gross					Net
		carrying		Accumulated			carrying		carrying		Accumulated			carrying
		value		amortization			value		value		amortization			value
Finite-lived intangible assets:
Customer relationships	$	96,653		$(86,285	)	$	10,368	$	100,421	$	(76,237	)	$	24,184
Software and unpatented
technology		32,071		(31,829	)		242		33,121		(32,342	)		779
FTS patent		2,721		(2,721	)		-		2,792		(2,792	)		-
Exclusive licenses		-		-			-		4,506		(4,506	)		-
Trademarks		6,772		(6,265	)		507		6,962		(5,589	)		1,373
Total finite-lived intangible
assets		138,217		(127,100	)		11,117		147,802		(121,466	)		26,336
Indefinite-lived intangible assets:
Financial institution license		772		-			772		793		-			793
Total indefinite-lived
intangible assets		772		-			772		793		-			793
Total intangible assets	$	138,989	$	(127,100	)	$	11,889	$	148,595	$	(121,466	)	$	27,129

Amortization expense charged for the years to June 30, 2019, 2018 and 2017 was $22.1 million, $11.8 million, and $14.0 million, respectively.

Future estimated annual amortization expense for the next five fiscal years, assuming exchange rates prevailing on June 30, 2019, is presented in the table below. Actual amortization expense in future periods could differ from this estimate as a result of acquisitions, changes in useful lives, exchange rate fluctuations and other relevant factors.


2020	$	7,955
2021		2,803
2022		72
2023		71
2024		71
Thereafter		145
Total future estimated amortization expense	$	11,117