8. Goodwill and intangible assets, net

Goodwill

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 of June 30 of each year. During the three and six months ended December 31, 2018, the Company recognized an impairment loss of approximately $8.2 million, of which approximately $7.0 related to goodwill allocated to its International Payment Group ("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 past year, 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 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.

In the event that there is a deterioration in the South African transaction processing and the international transaction processing operating segment, or in any other of the Company's businesses, may lead to additional impairments in future periods.

Summarized below is the movement in the carrying value of goodwill for the six months ended December 31, 2018:


					Accumulated			Carrying
		Gross value			impairment			value
Balance as of June 30, 2018	$	304,013		$	(20,773	)	$	283,240
Impairment of goodwill		-			(8,191	)		(8,191	)
Foreign currency adjustment⁽¹⁾		(7,187	)		102			(7,085	)
Balance as of December 31, 2018	$	296,826		$	(28,862	)	$	267,964

(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 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 June 30, 2018	$	20,946		$	123,948		$	138,346		$	283,240
Impairment of goodwill		(1,180	)		(7,011	)		-			(8,191	)
Foreign currency adjustment⁽¹⁾		(974	)		64			(6,175	)		(7,085	)
Balance as of December 31, 2018	$	18,792		$	117,001		$	132,171		$	267,964

(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

Carrying value and amortization of intangible assets

Summarized below is the carrying value and accumulated amortization of the intangible assets as of December 31, 2018 and June 30, 2018:


		As of December 31, 2018							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	$	193,225	$	(85,689	)	$	107,536	$	197,676	$	(76,237	)	$	121,439
Software and unpatented technology		33,956		(32,630	)		1,326		35,730		(32,342	)		3,388
FTS patent		2,662		(2,662	)		-		2,792		(2,792	)		-
Exclusive licenses		4,506		(4,506	)		-		4,506		(4,506	)		-
Trademarks and brands		12,185		(6,574	)		5,611		11,101		(5,589	)		5,512
Total finite-lived intangible assets		246,534		(132,061	)		114,473		251,805		(121,466	)		130,339
Indefinite-lived intangible assets:
Financial institution license		777		-			777		793		-			793
Total indefinite-lived intangible assets		777		-			777		793		-			793
Total intangible assets	$	247,311	$	(132,061	)	$	115,250	$	252,598	$	(121,466	)	$	131,132

Aggregate amortization expense on the finite-lived intangible assets for the three months ended December 31, 2018 and 2017, was approximately $6.1 million and $2.9 million, respectively. Aggregate amortization expense on the finite-lived intangible assets for the six months ended December 31, 2018 and 2017, was approximately $12.2 million and $5.8 million, respectively.

Future estimated annual amortization expense for the next five fiscal years and thereafter, assuming exchange rates that prevailed on December 31, 2018, 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.


Fiscal 2019	$	24,393
Fiscal 2020		19,342
Fiscal 2021		13,885
Fiscal 2022		10,693
Fiscal 2023		10,693
Thereafter		47,730
Total future estimated annual amortization expense	$	126,736