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Description Of Business And Basis Of Presentation | 12 Months Ended
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Jun. 30, 2020
Description Of Business And Basis Of Presentation [Abstract] |
Description Of Business And Basis Of Presentation | 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATIO N 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 provider of financial technology, or fintech, products and services to the u nbanked 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 (banking, lending and insurance products), 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, and provides mobile telephone top-up transactions for the major South African mobile carriers. 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) 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 acc ounting principles generally accepted in the United States of America (“GAAP”). Impact of COVID-19 on the Company’s business On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. The Company’s operations were impacted by govern ment-imposed restrictions to contain the spread of the COVID-19 pandemic. Specifically, on March 27, 2020, the South African government imposed certain emergency measures to combat the spread of COVID-19, including implementation of travel bans and closure s of factories, schools, public buildings, and businesses. In addition to limiting movement of employees and access to the Company’s corporate head office and operating branches, the following restrictions directly impacted the Company’s South African oper ations: (i) suspension of new lending and other financial services activities, and (ii) limitations on the amount of banking-related fees that may be charged to customers. These measures continued until May 31, 2020 when the restrictions highlighted above as directly affecting the Company were eased. Nevertheless, as the date of this report, South Africa remains under various lockdown restrictions that affect the broader economy and these affect the Company to the extent they affect activity levels in the South African economy. The broader implications of COVID-19 on the Company’s results of operations and overall financial performance remain uncertain. The COVID-19 pandemic and its adverse effects have become more prevalent in the locations where the Com pany, its customers, suppliers or third-party business partners conduct business. While the Company has not incurred significant disruptions thus far from the COVID-19 outbreak, apart from the two months when loan origination was curtailed, the Company is unable to accurately predict the impact that COVID-19 will have due to numerous uncertainties, including the severity and duration of the outbreak, actions that may be taken by governmental authorities, the impact on the Company’s customers and other facto rs. The Company will continue to evaluate the nature and extent of the impact on its business, consolidated results of operations, and financial condition. Resolution of going concern risk As previously reported, the Company’s management implemented a number of plans to alleviate the substantial doubt about the Company’s ability to continue as a going concern including the disposal of its March 2020 Korean business unit (refer to Note 3) and its April 2020 sale of its remaining interest in DN Invest Proprietary Limited (“DNI”) (refer to Note 10). The cash received from the disposal of its Korean business unit in March 2020 resulted in the resolution of the going concern risk. T he Company’s management has determined that there are no 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 these consolidated financial statem ents are issued as the Company believes it has sufficient cash reserves. 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (continued) Restatement of financial statements Related to DNI discontinued operations presentation Subsequent t o the issuance of the Company’s Annual Report on Form 10-K for the year ended June 30, 2019 and its Quarterly Reports on Form 10-Q for the three months ended September 30, 2019 and the three and nine months ended March 31, 2019, it determined that its pres entation of the discontinued operations of DNI in the consolidated statements of operations included in those filings was incorrect. In these previous filings, the gross amounts of DNI’s operations upon classification as a discontinued operation remained i n the consolidated statements of operations which totalled to net (loss) income. Two captioned lines below net (loss) income were presented to show the composition of the net (loss) income between continuing and discontinued operations and the details of a mounts relating to DNI’s discontinued operations were separately disclosed in a note. The correct presentation removes the gross amounts of a discontinued operation from the consolidated statements of operations, which totals to the net (loss) income from continuing operations before presenting net income from discontinued operations and then totalling to net (loss) income. The Company has revised the previous presentations on the consolidated statements of operations for the years ended June 30, 2019, an d June 30, 2018, and corrected them in this filing where these amounts are presented as comparative prior period amounts. The impact of these revisions has reduced each of the previously-presented line items in the consolidated statements of operations pre ceding net income by the amounts shown in the note disclosure for DNI’s discontinued operations. The revisions had no effect on previously presented net (loss) income, net (loss) income from continuing operations, net income from discontinued operations or the note disclosures for DNI’s discontinued operations, excluding the effects of the disposal of Net1 Korea and the error relating to the release of the foreign currency translation reserve on deconsolidation of DNI. Related to error identified – release of entire foreign currency translation reserve on deconsolidation of DNI in March 2019 In May 2020, the Company identified an error during its assessment of the accounting related to the disposal of its remaining interest in DNI in April 2020. The error relates to the misapplication of U.S. GAAP as the Company was required to release the full amount of DNI’s foreign currency translation reserve from accumulated other comprehensive loss to net income when it deconsolidated DNI in March 2019. The Com pany only released a portion of the foreign currency translation reserve related to the sale of 17% of DNI in March 2019, refer to Note 3, and should have released an additional $4.0 million in March 2019. During the three months ended June 30, 2 019, the Company also sold an additional interest in DNI, refer to Note 3, and released a portion ($0.8 million) of the $4.0 million during this period. Therefore, the error as of June 30, 2019, was $3.2 million. The error impacts the Company’s r eported results and the Company has restated its financial statements for the year ended June 30, 2019 to correct for the error. Related to Finbond error reported in its fiscal 2020 annual report On May 29, 20 20, Finbond released its February 20 20 summarized annual results and announced that it had identified a number of error s in its previously issued audited financial statements and had restated those audited financial statements. The Finbond restatement impacts the Comp any’s reported results and the Company has restated its 201 9 and 201 8 financial statements to correct for the Finbond restatement. The errors identified by Finbond relate to (i) an ageing issue within one of its subsidiary’s loan management system, which p rompted a broader review of its management systems and which further resulted in the identification of a lending book that was incorrectly recognized; (ii) the impairment of goodwill following the identification of errors in (i); and (iii) the identificati on of certain liabilities that should have been recognized in prior periods. 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (continued) The tables below present the impact of the restatement s on each of the Company’s financial statement s for the
| Consolidated balance sheet |
|  |  | June 30, 2019 |
|  |  | As reported |  | Correction - DNI |  | Correction - Finbond |  | As restated |
|  |  | (in thousands) |
| Equity-accounted investments | $ | 151 116 |  | $ | - |  | $ | (2 689) |  | $ | 148 427 |
| Total assets |  | 672 936 |  |  | - |  |  | (2 689) |  |  | 670 247 |
| Deferred tax liabilities |  | 1 926 |  |  | - |  |  | (602) |  |  | 1 324 |
| Total liabilities |  | 245 835 |  |  | - |  |  | (602) |  |  | 245 233 |
| Accumulated other comprehensive loss |  | (199 273) |  |  | 3 227 |  |  | 234 |  |  | (195 812) |
| Retained earnings |  | 528 576 |  |  | (3 227) |  |  | (2 321) |  |  | 523 028 |
| Total equity | $ | 319 429 |  | $ | - |  | $ | (2 087) |  | $ | 317 342 |
| Consolidated statement of operations |
|  |  | Year ended June 30, 2019 |
|  |  | As reported |  | Correction - DNI |  | Correction - Finbond |  | As restated |
|  |  | (in thousands, except per share data) |
| Gain on disposal of DNI | $ | (631) |  | $ | 808 |  | $ | - |  | $ | 177 |
| Loss before income tax |  | (320 251) |  |  | 808 |  |  | - |  |  | (319 443) |
| Income tax benefit |  | (5 025) |  |  | - |  |  | (47) |  |  | (5 072) |
| Net loss before earnings from equity-accounted investments |  | (315 226) |  |  | 808 |  |  | 47 |  |  | (314 371) |
| Earnings from equity-accounted investments |  | 1 467 |  |  | - |  |  | (209) |  |  | 1 258 |
| Net loss from continuing operations |  | (313 759) |  |  | 808 |  |  | (162) |  |  | (313 113) |
| Loss on disposal of discontinued operation, net of tax |  | (5 140) |  |  | (4 035) |  |  | - |  |  | (9 175) |
| Net loss |  | (305 269) |  |  | (3 227) |  |  | (162) |  |  | (308 658) |
| Net loss attributable to Net1 |  | (307 618) |  |  | (3 227) |  |  | (162) |  |  | (311 007) |
|  | Continuing |  | (312 407) |  |  | 808 |  |  | (162) |  |  | (311 761) |
|  | Discontinued | $ | 4 789 |  | $ | (4 035) |  | $ | - |  | $ | 754 |
| Basic (loss) income per share attributable to Net1 shareholders | $ | (5,42) |  | $ | (0,06) |  | $ | (0,00) |  | $ | (5,48) |
|  | Continuing | $ | (5,50) |  | $ | 0,01 |  | $ | (0,00) |  | $ | (5,49) |
|  | Discontinued | $ | 0,08 |  | $ | (0,07) |  | $ | - |  | $ | 0,01 |
| Diluted (loss) income per share attributable to Net1 shareholders | $ | (5,42) |  | $ | (0,06) |  | $ | (0,00) |  | $ | (5,48) |
|  | Continuing | $ | (5,50) |  | $ | 0,01 |  | $ | (0,00) |  | $ | (5,49) |
|  | Discontinued | $ | 0,08 |  | $ | (0,07) |  | $ | - |  | $ | 0,01 |
|  |  | Year ended June 30, 2018 |
|  |  | As reported |  | Correction - DNI |  | Correction - Finbond |  | As restated |
|  |  | (in thousands, except per share data) |
| Income tax expense | $ | 45 729 |  | $ | - |  | $ | (623) |  | $ | 45 106 |
| Net income before earnings from equity-accounted investments |  | 48 829 |  |  | - |  |  | 623 |  |  | 49 452 |
| Earnings from equity-accounted investments |  | 4 592 |  |  | - |  |  | (2 782) |  |  | 1 810 |
| Net income from continuing operations |  | 53 421 |  |  | - |  |  | (2 159) |  |  | 51 262 |
| Net income |  | 63 366 |  |  | - |  |  | (2 159) |  |  | 61 207 |
| Net income attributable to Net1 |  | 64 246 |  |  | - |  |  | (2 159) |  |  | 62 087 |
|  | Continuing |  | 54 301 |  |  | - |  |  | (2 159) |  |  | 52 142 |
|  | Discontinued | $ | 9 945 |  | $ | - |  | $ | - |  | $ | 9 945 |
| Basic income (loss) per share attributable to Net1 shareholders | $ | 1,13 |  | $ | - |  | $ | (0,04) |  | $ | 1,10 |
|  | Continuing | $ | 0,95 |  | $ | - |  | $ | (0,04) |  | $ | 0,92 |
|  | Discontinued | $ | 0,18 |  | $ | - |  | $ | - |  | $ | 0,18 |
| Diluted income (loss) per share attributable to Net1 shareholders | $ | 1,13 |  | $ | - |  | $ | (0,04) |  | $ | 1,09 |
|  | Continuing | $ | 0,96 |  | $ | - |  | $ | (0,04) |  | $ | 0,92 |
|  | Discontinued | $ | 0,17 |  | $ | - |  | $ | - |  | $ | 0,17 |
| Consolidated statement of comprehensive (loss) income |
|  |  | Year ended June 30, 2019 |
|  |  | As reported |  | Correction - DNI |  | Correction - Finbond |  | As restated |
|  |  | (in thousands) |
| Net loss | $ | (305 269) |  | $ | (3 227) |  | $ | (162) |  | $ | (308 658) |
| Movement in foreign currency translation reserve |  | (26 194) |  |  | - |  |  | 46 |  |  | (26 148) |
| Release of foreign currency translation reserve related to disposal of DNI |  | 2 452 |  |  | 3 227 |  |  | - |  |  | 5 679 |
| Total other comprehensive loss |  | (19 491) |  |  | 3 227 |  |  | 46 |  |  | (16 218) |
| Comprehensive loss |  | (324 760) |  |  | - |  |  | (116) |  |  | (324 876) |
| Comprehensive loss attributed to Net1 | $ | (322 353) |  | $ | - |  | $ | (116) |  | $ | (322 469) |
|  |  | Year ended June 30, 2018 |
|  |  | As reported |  | Correction - DNI |  | Correction - Finbond |  | As restated |
|  |  | (in thousands) |
| Net income | $ | 63 366 |  | $ | - |  | $ | (2 159) |  | $ | 61 207 |
| Comprehensive income |  | 41 466 |  |  | - |  |  | (1 971) |  |  | 39 495 |
| Comprehensive income attributed to Net1 | $ | 42 444 |  | $ | - |  | $ | (1 971) |  | $ | 40 473 |
| Consolidated statement of changes in equity |
|  |  | Retained earnings |  | Accumulated other comprehensive loss |
|  |  | (in thousands) |
| As reported – June 30, 2018 | $ | 836 194 |  | $ | (184 538) |
| Correction of misstatement - Finbond |  | (2 159) |  |  | 188 |
| As restated – June 30, 2018 |  | 834 035 |  |  | (184 350) |
| As reported – June 30, 2019 |  | 528 576 |  |  | (199 273) |
| Correction of misstatement - DNI |  | (3 227) |  |  | 3 227 |
| Correction of misstatement - Finbond |  | (2 321) |  |  | 234 |
| As restated – June 30, 2019 | $ | 523 028 |  | $ | (195 812) |
| Consolidated statement of cash flows |
|  |  | Year ended June 30, 2019 |
|  |  | As reported |  | Correction - DNI |  | Correction - Finbond |  | As restated |
|  |  | (in thousands) |
| Net loss | $ | (305 269) |  | $ | (3 227) |  | $ | (162) |  | $ | (308 658) |
| Loss from equity-accounted investment |  | (1 482) |  |  | - |  |  | 209 |  |  | (1 273) |
| Loss on disposal of discontinued operation |  | 5 140 |  |  | 4 035 |  |  | - |  |  | 9 175 |
| Gain on disposal of DNI |  | 631 |  |  | (808) |  |  | - |  |  | (177) |
| (Decrease) Increase in deferred taxes | $ | (11 705) |  | $ | - |  | $ | (47) |  | $ | (11 752) |
|  |  | Year ended June 30, 2018 |
|  |  | As reported |  | Correction - DNI |  | Correction - Finbond |  | As restated |
|  |  | (in thousands) |
| Net income | $ | 63 366 |  | $ | - |  | $ | (2 159) |  | $ | 61 207 |
| Earnings from equity-accounted investment |  | (11 597) |  |  | - |  |  | 2 782 |  |  | (8 815) |
| Increase (Decrease) in deferred taxes | $ | 5 936 |  | $ | - |  | $ | (623) |  | $ | 5 313 |

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- Definition The entire disclosure for the organization, consolidation and basis of presentation of financial statements disclosure, and significant accounting policies of the reporting entity. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -URI http://asc.fasb.org/topic&trid=2122149 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -URI http://asc.fasb.org/topic&trid=2197479 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -URI http://asc.fasb.org/topic&trid=2134479 + Details
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