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Acquisitions, Dispositions And Discontinued Operations | 12 Months Ended
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Jun. 30, 2020
Acquisitions, Dispositions And Discontinued Operations [Abstract] |
Acquisition, Dispositions And Discontinued Operations | 3. ACQUISITIONS, DISPOSITIONS AND DISCONTINUED OPERATIONS Acquisitions The Company did not make any acquisitions during the year s ended June 30, 2020 and 2019. The cash paid, net of cash received related to the Company’s acquisition of DNI during the year ended June 30, 2018, is presented in the table below:
|  |  |  |  |  |  | 2018
| DNI(1) | $ | 6 202
|  | Total cash paid, net of cash received | $ | 6 202
(1) – represents the cash paid, net of cash acquired, to acquire a further 6% voting and economic interest, which resulted in the Company obtaining a controlling stake in DNI. As described below, the acquisition of DNI occurred in stages and DNI was accounted for using the equity method until June 30, 2018, being the point at which the Company obtained control over DNI. The total cash paid, net of cash acquired, to obtain a 55% voting and economic interest in DNI was $85.7 million. 2020 acquisition None. 2019 acquisition None. 2018 acquisition DNI acquisition The Company accounted for its interest in DNI using the equity method from August 1, 2017, until June 30, 2018, the date upon which it acquired further voting and economic interest in DNI, taking its ownership to 55%. The transaction actually closed on June 28, 2018, however, for practical purposes the Company has used June 30, 2018, as the date from which it accounted for a controlling stake in DNI. Therefore, the Company consolidated DNI f rom June 30, 2018. On July 27, 2017, the Company subscribed for 44,999,999 ordinary A shares in DNI, representing a 45% voting and economic interest in DNI, for a subscription price of ZAR 945.0 million ($72.0 million) in cash. On March 9, 2018, the Company subscribed for an additional 4,000,000 ordinary A shares in DNI for a subscription price of ZAR 89.3 million ($7.5 m illion), in cash, which increased its voting and economic interest in DNI to 49%, but did not give it control. On March 9, 2018, the Company also agreed to subscribe for an additional 6,000,000 ordinary A shares in DNI for an aggregate subscription price o f ZAR 126.0 million ($9.2 million). The subscription was subject to certain suspensive conditions, including obtaining South African Competition Commission approval which was eventually obtained on June 21, 2018. Accordingly, on June 28, 2018, all conditio ns were met and the Company subscribed for 6,000,000 ordinary A shares in DNI for a subscription price of ZAR 126.0 million ($9.2 million) in cash, increasing its voting and economic interest in DNI to 55%. Under the terms of its subscription agreements wi th DNI, the Company agreed to pay to DNI an additional amount of up to ZAR 400.0 million ($29.1 million, translated at exchange rates applicable as of June 30, 2018), in cash, subject to the achievement of certain performance targets by DNI. The Company ex pected to pay the additional amount during the first quarter of the year ended June 30, 2020, and recorded an amount of ZAR 373.6 million ($27.2 million), in other long-term liabilities in its consolidated balance sheet as of June 30, 2018, which amount re presented the present value of the ZAR 400 million ($29.1 million) to be paid (amounts translated at exchange rates applicable as of June 30, 2018). The present value of ZAR 373.6 million ($27.2 million) was calculated using the following assumptions (a) t he maximum additional amount of ZAR 400 million will be paid on August 1, 2019 and (b) an interest rate of 6.3% (the rate used to calculate interest earned by the Company on its surplus South African funds) has been used to discount the ZAR 400.0 million t o its present value as of June 30, 2018. Utilization of different inputs, or changes to these inputs, may have result ed in significantly higher or lower fair value measurement. The ZAR 400 million was settled in full on March 31, 2019. As described in Note 13, on March 9, 2018, the Company obtained financing to partially fund the acquisition of the additional ordinary A DNI shares and Net1 SA pledged, among other things, its entire equity interest in DNI as security for the South African facilities described in Note 13. On March 9, 2018, the Company provided DNI with an interest-free loan of ZAR 126.0 million ($10.6 million) which was repayable at the earlier of June 30, 2018, or within twenty days of the 6,000,000 ordinary A share subscription agreement (i) becoming unconditional, (ii) lapsing because the Competition Commission prohibits the subscription, or (iii) t he agreement being cancelled for any reason. On June 28, 2018, DNI repaid the ZAR 126 million ($9.2 million) loan in full and the Company used the proceeds from the repayment of the loan to fund the subscription for 6,000,000 ordinary A shares in DNI. DNI purchase price allocation During the third quarter of fiscal 2019, the Company determined that certain customer relationships of $7.0 million should not have been separately identified and recorded as intangible assets because there were no separately id entified cash flows related to these customer relationships. These customer relationships, net of deferred taxes of $2 million, should have been recorded as a component of goodwill. During the third quarter of fiscal 2019, the Company determined that DNI i s a discontinued operation. The table below presents the DNI balances included on the Company’s consolidated balance sheet as of June 30, 2018, as well as the amended purchase price allocation (“PPA”) of the DNI acquisition, translated at the foreign excha nge rates applicable on the date of acquisition:
|  |  |  |  |  | DNI - discontinued operations
|  |  |  |  |  | as of June 30, 2018
|  |  |  |  |  | Initial |  |  |  |  |  | Amended
|  |  |  |  |  | DNI PPA |  |  | Amendment |  |  | DNI PPA
Current assets: | $ | 22 482 |  | $ | - |  | $ | 22 482
| Cash and cash equivalents |  | 2 979 |  |  | - |  |  | 2 979
| Accounts receivable |  | 16 235 |  |  | - |  |  | 16 235
| Finance loans receivable |  | 742 |  |  | - |  |  | 742
| Inventory |  | 2 526 |  |  | - |  |  | 2 526
Long-term assets: |  | 242 704 |  |  | (1 951) |  |  | 240 753
| Property, plant and equipment |  | 1 317 |  |  | - |  |  | 1 317
| Equity-accounted investment |  | 339 |  |  | - |  |  | 339
| Goodwill |  | 114 161 |  |  | 5 017 |  |  | 119 178
| Intangible assets |  | 104 003 |  |  | (6 968) |  |  | 97 035
| Deferred tax assets |  | 1 536 |  |  | - |  |  | 1 536
| Other long-term assets |  | 21 348 |  |  | - |  |  | 21 348
Current liabilities: |  | (20 914) |  |  | - |  |  | (57 350)
| Accounts payables |  | (13 949) |  |  | - |  |  | (13 949)
| Other payables |  | (6 349) |  |  | - |  |  | (6 349)
| Current portion of long-term borrowings |  | (616) |  |  | - |  |  | (616)
Long-term liabilities: |  | (38 387) |  |  | 1 951 |  |  | (36 436)
| Other long-term liabilities(1) |  | (8 291) |  |  | - |  |  | (8 291)
| Deferred tax liabilities |  | (30 096) |  |  | 1 951 |  |  | (28 145)
|  | Fair value of assets and liabilities on acquisition | $ | 205 885 |  | $ | - |  |  | 205 885
|  | Less: fair value attributable to controlling interests on acquisition date |  |  |  |  |  |  |  | (94 123)
|  | Less: fair value of equity-accounted investment, comprising: |  |  |  |  |  |  |  | (100 947)
|  |  | Add: loss on re-measurement of previously held interest |  |  |  |  |  |  |  | 4 614
|  |  | Less: Contingent payment recognized related to 49% interest acquired |  |  |  |  |  |  |  | (25 589)
|  |  | Less: carrying value at the acquisition date |  |  |  |  |  |  |  | (79 972)
|  | Less: Contingent payment recognized related to 6% interest acquired |  |  |  |  |  |  |  | (1 633)
|  |  | Total purchase price |  |  |  |  |  |  | $ | 9 182
(1) – DNI concluded an acquisition in November 2017 and other long-term liabilities includes a contingent purchase consideration of ZAR 113.8 million ($8.3 million) due to the sellers and other long-term assets includes an amount due from the DNI sharehold ers, excluding the Company. DNI is obligated under the terms of this obligation to pay 50% of the purchase consideration plus or (less) a contingent amount (refund) calculated on a multiple of excess (deficit) earnings over (less) an agreed earnings amount. The other DNI shareholders have agreed to reimburse DNI the 50% consideration plus (less) the contingent amount (refund) payable in full. Therefore, other long-term asset includes the amounts due from the DNI shareholder, excluding the Company, and other long-term liabilities includes the contingent consideration due under the November 2017 acquisition. The Company expected DNI to pay, and to be reimbursed, the additional amount during the first quarter of the year ended June 30, 2020, which expected amount represe nted the present value of the ZAR 129.0 million ($9.4 million) to be paid (amounts translated at exchange rates applicable as of June 30, 2018). The present value of ZAR 113.8 million ($8.3 million) was calculated using the following assumptions (a) the max imum additional amount of ZAR 129.0 million will be paid on August 1, 2019 and (b) an interest rate of 10.0 % (the rate used to calculate interest earned by DNI on its surplus South African funds) has been used to discount the ZAR 129.0 million to its pres ent value as of June 30, 2018. Utilization of different inputs, or changes to these inputs, may have resulted in significantly higher or lower fair value measurement. The Company recorded intangible asset amortization, deferred taxes and non-controlling interest entries related to these customer relationships that should have been included in goodwill during the six months ended December 31, 2018. The Company reversed these entries during the nine months ended March 31, 2019. The table below presents the impact o f the reversal of these entries on the Company’s audited consolidated statement of operations for the year ended June 30, 2019 and the caption in which the impact is included:
|  |  |  |  |  |  | Year ended June 30, 2019 |
Reversal of intangible asset amortization - decrease depreciation and amortization | $ | 506 |
Deferred tax impact related to reversal of intangible asset amortization - decrease income tax benefit |  | 142 |
Increase in non-controlling interest | $ | 164 |
Pro forma results related to acquisition Pro forma results of operations were not presented because the effect of the DNI acquisition was not material to the Company. During the year ended June 30, 2018, the Company incurred acquisition-related expenditure of $0.5 million related to this acquisition, which has been included in selling, general and administration expenses in the consolidated statement of operations. The DNI acquisition closed on the last day of the Company’s fiscal year and therefore it has not contributed to revenue and net income as a subsidiary for the year ended June 30, 2018. 2018 Fair value of intangible assets acquired Summarized below is the fair value of the DNI intangible assets acquired and the weighted-average amortization period:
|  |  |  |  |  | Fair value as of acquisition date |  | Weighted-average amortization period (in years)
Finite-lived intangible asset: |  |  |  |
| Acquired during the year ended June 30, 2018: |  |  |  |
|  | DNI – customer relationships acquired | $ | 97 255 |  | 5 – 15
|  | DNI – software and unpatented technology |  | 2 609 |  | 5
|  | DNI – trademarks | $ | 4 139 |  | 5
On acquisition, the Company recognized deferred tax liabilities of approximately $29.1 million related to the acquisition of intangible assets during the year ended June 30, 2018. 2019 intangible asset impairment loss The Company identified and recognized certain customer relationships as part of its acquisition of DNI, which included relationships related to an agreement with Cell C under which DNI shared in revenues earned by Cell C from other mobile telecommunication s networks renting (“tenant rentals”) certain Cell C infrastructure that was constructed utilizing funding provided by DNI. Cell C expected to utilize the funding provided by DNI to construct 1,000 towers. Cell C subsequently entered into a roaming arrange ment with another South African mobile telecommunications network provider which will extend its network coverage. Cell C utilized funding from DNI to construct approximately 22% of the towers that it had originally estimated to complete, however, the conc lusion of the roaming arrangement resulted in Cell C halting the construction of further network infrastructure. The Company expect ed DNI to earn fewer tenant rentals than initially planned due to the lower number of towers constructed. During the third quarter of fiscal 2019, the Company updated the discounted cash flow model used to calculate the fair value of the customer relationships acquired on acquisition of DNI to assess the impact of the lower number of towers on its projected cash flows from the tenant rentals customer relationship. The lower number of towers significantly reduced the projected cash flows earned from tenant rentals which resulted in a lower fair value attributed to the customer relationship. The Company compared the updated fair value of the customer relationship to the carrying amount and determined that the customer relationship wa s impaired. The Company recorded an impairment loss of $5.3 million which is included in net income from discontinued operations caption on its consol idated statement of operations for the year ended June 30, 2019. The customer relationship was not allocated to an operating segment and the impairment loss is included in corporate/eliminations - discontinued. The economics of the tenant rentals arrangement between DNI and Cell C was excluded from the performance targets agreed between DNI and the Company because the arrangement was outside of DNI’s core business. Dispositions 2020 Disp ositions March 2020 disposal of KSNET On January 23, 2020, the Company, through its wholly owned subsidiary Net1 Applied Technologies Netherlands B.V. (“Net1 BV”), a limited liability private company incorporated in The Netherlands, entered into an agreement with PayletterHoldings LLC, a limit ed liability private company incorporated in the Republic of Korea, in terms of which Net1 BV agreed to sell its entire shareholding in Net1 Applied Technologies Korea Limited (“Net1 Korea”), a limited liability private company incorporated in the Republic of Korea and the sole shareholder of KSNET, Inc. for $237.2 million. The transaction was subject to customary closing conditions and closed on March 9, 2020. The Company no longer controls Net1 Korea and its subsidiaries and deconsolidated its investment effective Marc h 1, 2020, and will have no continued involvement going forward. KSNET was acquired in October 2010, and was a profitable and cash generative business, but operate d autonomously and in a more developed economy, with limited overlap with the Company’s other activities. The Company also believe d that the intrinsic value of KSNET was not appropriately reflected in the Company’s overall valuation. The Company’s b oard of directors commenced a strategic review of its various businesses and investments last year, and ultimately evaluated and decided to sell KSNET in January 2020 in order to focus more on the Company’s core strategy, boost liquidity and to maximize shareholde r returns. The table below presents the impact of the deconsolidation of Net1 Korea and its subsidiaries and the calculation of the net gain recognized on deconsolidation:
| Net1 Korea
|  |  |  |  |  |  | March 2020
| Proceeds from disposal of Net1 Korea, net of cash disposed | $ | 192 619
| Add: Cash and cash equivalents disposed |  | 23 473
| Add: Cash withheld by purchaser to settle South Korean taxes(1) |  | 21 128
| Fair value of consideration received |  | 237 220
| Less: carrying value of Net1 Korea, comprising |  | 200 843
|  | Cash and cash equivalents |  | 23 473
|  | Accounts receivable, net |  | 30 467
|  | Finance loans receivable, net |  | 13 695
|  | Inventory |  | 2 377
|  | Property, plant and equipment, net |  | 7 601
|  | Operating lease right of use asset |  | 181
|  | Goodwill (Note 11) |  | 107 964
|  | Intangible assets, net |  | 4 655
|  | Deferred income taxes assets |  | 1 719
|  | Other long-term assets |  | 10 984
|  | Accounts payable |  | (5 484)
|  | Other payables |  | (5 523)
|  | Operating lease lease liability - current |  | (69)
|  | Income taxes payable |  | (3 481)
|  | Deferred income taxes liabilities |  | (1 497)
|  | Operating lease liability - long-term |  | (112)
|  | Other long-term liabilities |  | (335)
|  | Released from accumulated other comprehensive income – foreign currency translation reserve (Note 16) |  | 14 228
|  | Settlement assets |  | 44 111
|  | Settlement liabilities |  | (44 111)
|  |  | Gain recognized on disposal, before transaction costs and tax |  | 36 377
|  |  | Transaction costs(2) |  | 8 644
|  |  |  | Gain recognized on disposal, before tax |  | 27 733
|  |  |  | Taxes related to gain recognized on disposal(1) |  | 15 279
|  |  |  |  | Gain recognized on disposal, after tax | $ | 12 454
(1) Represents taxes to be paid related to the disposal of Net1 Korea. The Company also agreed that the purchaser withhold capital gains taxes of $19.9 million (approximately KRW 23.8 billion) and non-refundable securities transaction taxes of $1.2 million (approximately KRW 1.4 billion), for a total withholding of $21.1 million, from the purchase price and pay such amount s, on behalf of Net1 BV, to the South Korean tax authorities. Net1 BV has commenced the process to approach the South Korean tax authorities in order to claim a refund, in full, of the capital gains taxes withheld. The Company has included the expected amount to be refunded in the caption Accounts receivable, net and other rece ivables i n its consolidated balance sheet as of June 30, 2020, refer also to Note 5. (2) Transaction costs include expenses incurred by the Company of $7.5 million directly related to the disposal of Net1 Korea and pai d in cash and a non-refundable securities transfer tax of approximately $1.2 million which was also withheld from the purchase price and paid to the South Korean tax authorities directly by the purchaser. December 2019 disposal of FIHRST In November 2019, the Company through its wholly owned subsidiary, Net1 Applied Technologies South Africa Proprietary Limited (“Net1 SA”), entered into an agreement with Transaction Capital Payment Solutions Proprietary Limited, or its nominee, a limited liab ility private company incorporated in the Republic of South Africa, pursuant to which Net1 SA agreed to sell its entire shareholding in Net1 FIHRST Holdings Proprietary Limited (“FIHRST”) for $10,9 million (ZAR 159,7 mill ion). The transaction closed in December 2019. FIHRST was deconsolidated following the closing of the transaction. Net1 SA was obliged to utilize the full purchase price received from the sale of FIHRST to partially settle its obligations under its lending arrangements and applied the proceeds received against its outstanding borrowings – refer to Note 13. The table below presents the impact of the deconsolidation of FIHRST and the calculation of the net gain recognized on deconsolidation:
| FIHRST
|  |  |  |  |  | December 31,
|  |  |  |  |  | 2019
| Proceeds from disposal of FIHRST, net of cash disposed | $ | 10 895
| Add: Cash and cash equivalents disposed |  | 854
| Fair value of consideration received |  | 11 749
| Less: carrying value of FIHRST, comprising |  | 1 870
|  | Cash and cash equivalents |  | 854
|  | Accounts receivable, net |  | 367
|  | Property, plant and equipment, net |  | 64
|  | Goodwill (Note 11) |  | 599
|  | Intangible assets, net |  | 30
|  | Deferred income taxes assets |  | 42
|  | Accounts payable |  | (7)
|  | Other payables |  | (1 437)
|  | Income taxes payable |  | (220)
|  | Released from accumulated other comprehensive income – foreign currency translation reserve (Note 16) |  | 1 578
|  | Settlement assets |  | 17 406
|  | Settlement liabilities |  | (17 406)
|  |  | Gain recognized on disposal, before tax |  | 9 879
|  |  | Taxes related to gain recognized on disposal, comprising: |  | -
|  |  |  | Capital gains tax |  | 2 654
|  |  |  | Release of valuation allowance related to capital losses previously unutilized(1) |  | (2 654)
|  |  | Transaction costs |  | 136
|  |  |  |  | Gain recognized on disposal, after tax | $ | 9 743
(1) Net1 SA recorded a valuation allowance related to capital losses previously generated but not utilized. A portion of these unutilized capital losses w as utilized as a result of the disposal of FIHRST and, therefore, the equivalent portion of the valuation allowance created was released. May 20 20 d econsolidation of CPS On February 5, 2020, the Constitutional Court of South Africa denied CPS’ leave to appeal lower court judgments ordering CPS to repay additional implementation costs that SASSA paid to CPS in 2014, thereby exhausting all legal recourse for CPS in the matter. As a result, CPS’ board of directors has adopted a resolution to put C PS into business rescue under South African law and has filed the required resolution with the Companies and Intellectual Property Commission. On May 18, 2020, the resolution was officially registered and business rescue practitioners were appointed. The b usiness rescue process can lead to either a compromise with creditors and a continuation of CPS’ business or the liquidation of CPS. The Company has no means of exercising any control over CPS or the business rescue process because the Company has ceded co ntrol of CPS to the business rescue practitioners on the commencement of the business rescue process. The business rescue practitioners are independent third parties and control CPS through the business rescue process. The Company no longer controls CPS an d therefore it determined to deconsolidate CPS. As a practical matter, the Company deconsolidated CPS as of May 31, 2020. T he Company does not believe that the utilization of this date, compared to May 18, 2020, has had a significant impact on its consolid ated financial statements. On March 26, 2020, CPS’ holding company, Net1 SA, submitted a filing to Gauteng Division of the High Court of South Africa (“High Court”) under which it commenced a process to place CPS into business rescue due to administrative delays experienced in the CPS business rescue application process. Net1 SA proposed in its March 2020 High Court filing that it was willing to contribute ZAR 50.0 million ($2.9 million translated at exchange rates applicable as of June 30, 2020) into CPS if CPS and SASSA reached a settlement on their claims and counterclaims. Given that SASSA is contesting the CPS business rescue process, the Company does not believe that it, through Net1 SA, will be required to make the investment of ZAR 50.0 million and therefore it has not recorded a liability as of June 30, 2020. The Company will provide accounting, tax and general administrative services to CPS while it is in business rescue. In addition, the Company has an arrangement with CPS to rent certain bespoke payment v ehicles from CPS, and this arrangement will continue while CPS is in business rescue. The value of these arrangements is not significant and has been determined on an arm’s length basis. The table below presents the impact of the deconsolidation of CPS an d the calculation of the net loss recognized on deconsolidation:
| CPS
|  |  |  |  |  | May
|  |  |  |  |  | 2020
| Fair value of consideration received | $ | -
| Less: carrying value of CPS, comprising |  | (68)
|  | Cash and cash equivalents |  | 328
|  | Accounts receivable, net |  | 303
|  | Inventory |  | 12
|  | Property, plant and equipment, net |  | 236
|  | Goodwill (Note 11) |  | -
|  | Deferred income taxes assets (Note 19) |  | -
|  | Accounts payable |  | (238)
|  | Other payables |  | (33 160)
|  | Released from accumulated other comprehensive income – foreign currency translation reserve (Note 16) |  | 32 451
|  |  | Loss recognized on deconsolidation, before tax |  | 68
|  |  | Intercompany accounts written off/ provided for(1) |  | 7 216
|  |  | Taxes related to loss recognized on deconsolidation, comprising: |  | -
|  |  |  | Capital loss generated upon deconsolidation(2) |  | 5 399
|  |  |  | Valuation allowance related to capital losses generated upon deconsolidation(2) |  | (5 399)
|  |  |  |  | Loss recognized on deconsolidation, after tax | $ | 7 148
(1) Certain of the Company’s subsidiaries had funds due from CPS as of May 31, 2020. The Company has written these amounts off as it does not believe that they are recoverable. (2) The Company recorded a deferred tax asset related to the capital loss generated on deconsolidation of CPS. The Company is only able to claim the capital loss for South African capital gains tax purposes once it deregisters or disposes of its interest in CPS. T he Company has recorded a valuation allowance related to the full CPS capital loss deferred tax asset recognized because it does not believe that this capital loss will be utilized in the foreseeable future. 2019 Dispositions March 2019 disposal of DNI On February 28, 2019, the Company through its wholly owned subsidiary, Net1 Applied Technologies South Africa Proprietary Limited (“Net1 SA”), entered into a transaction with JAA Holdings Proprietary Limited, a limited liability private company duly incorp orated in the Republic of South Africa, and PK Gain Investment Holdings Proprietary Limited, a limited liability private company duly incorporated in the Republic of South Africa, in terms of which Net1 SA reduced its shareholding in DNI from 55% to 38%. T he transaction closed on March 31, 2019. The parties used a cashless settlement process on closing, refer to Note 23. Net1 SA used the proceeds from the sale of the DNI shares to settle its ZAR 400 million ($27.6 million, translated at exchange rates applicable as of March 31, 2019, obligation to DNI to subscribe for an additional share as part of the contingent consideration settlement process. The Company no longer control led DNI and deconsolidated its investment in DNI effective March 31, 2019. The table below presents the impact of the deconsolidation of DNI and the calculation of the net loss recognized on deconsolidation:
DNI (as restated, refer to Note 1)
|  |  |  |  |  |  |  |  |  |  |  | Equity method investment as of June 30, 2019 |  |  |
|  |  |  |  |  | Total |  | 17% sold |  | 8% retained interest sold in May 2019 |  | 30% retained interest |  | Attributed to non-controlling interest
Fair value of consideration received |  | $ | 27 626 |  | $ | 27 626 |  | $ | - |  | $ | - |  | $ | -
Fair value of retained interest in DNI(1) |  |  | 74 195 |  |  | - |  |  | 14 849 |  |  | 59 346 |  |  | -
Carrying value of non-controlling interest |  |  | 88 934 |  |  | - |  |  | - |  |  | - |  |  | 88 934
Subtotal |  |  | 190 755 |  |  | 27 626 |  |  | 14 849 |  |  | 59 346 |  |  | 88 934
Less: carrying value of DNI, comprising |  |  | 199 930 |  |  | 38 346 |  |  | 14 540 |  |  | 58 110 |  |  | 88 934
| Cash and cash equivalents |  |  | 2 114 |  |  | 354 |  |  | 158 |  |  | 633 |  |  | 969
| Accounts receivable, net |  |  | 24 577 |  |  | 4 116 |  |  | 1 841 |  |  | 7 358 |  |  | 11 262
| Finance loans receivable, net |  |  | 1 030 |  |  | 173 |  |  | 77 |  |  | 308 |  |  | 472
| Inventory |  |  | 893 |  |  | 149 |  |  | 66 |  |  | 268 |  |  | 410
| Property, plant and equipment, net |  |  | 1 265 |  |  | 212 |  |  | 95 |  |  | 379 |  |  | 579
| Equity-accounted investments |  |  | 242 |  |  | 41 |  |  | 19 |  |  | 72 |  |  | 110
| Goodwill |  |  | 113 003 |  |  | 18 924 |  |  | 8 466 |  |  | 33 834 |  |  | 51 779
| Intangible assets, net |  |  | 80 769 |  |  | 13 526 |  |  | 6 051 |  |  | 24 183 |  |  | 37 009
| Deferred income taxes |  |  | 28 |  |  | 5 |  |  | 2 |  |  | 8 |  |  | 13
| Other long-term assets |  |  | 26 553 |  |  | 4 447 |  |  | 1 989 |  |  | 7 950 |  |  | 12 167
| Accounts payable |  |  | (5 186) |  |  | (868) |  |  | (389) |  |  | (1 553) |  |  | (2 376)
| Other payables(2) |  |  | (16 484) |  |  | (2 760) |  |  | (1 235) |  |  | (4 936) |  |  | (7 553)
| Income taxes payable |  |  | (2 482) |  |  | (416) |  |  | (186) |  |  | (743) |  |  | (1 137)
| Deferred income taxes |  |  | (22 083) |  |  | (3 698) |  |  | (1 654) |  |  | (6 612) |  |  | (10 119)
| Long-term debt |  |  | (10 150) |  |  | (1 700) |  |  | (760) |  |  | (3 039) |  |  | (4 651)
| Released from accumulated other comprehensive income – foreign currency translation reserve (as restated) (Note 1 and Note 16) |  |  | 5 841 |  |  | 5 841 |  |  | - |  |  | - |  |  | -
|  | Loss recognized on disposal, before tax, comprising |  |  | (9 175) |  |  | (10 720) |  |  | 309 |  |  | 1 236 |  |  | -
|  |  | Related to sale of 17% of DNI |  |  | (10 720) |  |  | (10 720) |  |  | - |  |  | - |  |  |
|  |  | Related to fair value adjustment of retained interest in 38% of DNI |  |  | 1 545 |  |  | - |  |  | 309 |  |  | 1 236 |  |  |
|  |  | Taxes related to gain recognized on disposal(3) |  |  | - |  |  | 505 |  |  | (3 836) |  |  | 3 331 |  |  |
|  |  |  | Loss recognized on disposal of discontinued operation, after tax (as restated) |  | $ | (9 175) |  | $ | (11 225) |  | $ | 4 145 |  | $ | (2 095) |  |  |
(1) The fair value of the retained interest in 38% of DNI of $74.2 million ($14.9 million plus $59.3 million) has been calculated using the implied fair value of DNI pursuant to the RMB Disposal and has been calculated as ZAR 215.0 million divided by 7.605235% multiplied by 38%, translated to dollars at the March 31, 2019, rate of exchange. (2) Other payables include a short-term loan of ZAR 60.5 million ($4.3 million, translated at exchange rates applicable as of June 30, 2019) due to the Company. The short-term loan is included in accounts receivable, net and other receivables on the Company’s consolidated balance sheet as of June 30, 2019. The loan was repaid in full on July 31, 2019. Interest on the loan was charged at the South African prime rate. (3) Amounts presented are net of a valuation allowance provided. The disposal of DNI resulted in a capital loss for tax purposes of approximately $1.5 million and the Company provided a valuation allowance of $1.5 million against this capital loss because it d id not have any capital gains to offset against this amount at the time. On an individual basis, the transaction to dispose of 17% of DNI resulted in a capital gain of $0.5 million and the re-measurement of the retained 38% interest has resulted in a capital loss of $2.0 million ($5.3 million (8% transaction) less $3.3 million (30% transaction)). The valuation allowance of $1.5 million was provided against the $5.3 million, for a net amount presented in the table above of $3.8 million ($5.3 million less $1.5 million). 2018 Dispositions None. Discontinued operations Discontinued operation s – Net1 Korea and DNI The Company determined that, following the disposal of its controlling interest in Net1 Korea and DNI, these entities should be classified as a discontinued operation because they individually represented a strategic shift in the Company business that would have a major effect on the Company’s operations and financial results. The facts and circumstances leading to the disposal of Net1 Korea and DNI are described above. T he gain related to the disposal of Net1 Korea and the loss related to the disposal of DNI are presented above. Net1 Korea, as a stand-alone holding company, and the amortization of intangible assets identified and recognized related to the KSNET acquisition, were allocated to corporate/eliminations and Net1 Korea’s subsidiaries, including KSNET, w ere allocated to the Company’s international transaction processing operating segment. Net1 Korea did not have any equity method investments or any non-controlling interests. DNI was allocated to the Company’s financial inclusion and applied technologies operating segment and the amortization of intangible assets identified and recognized related to the DNI acquisition were allocated to corporate/eliminations. The impact of the disposal of a controlling interest in Net1 Korea and DNI on the Company’s operating segments is presented in Note 24. The Company retained a continuing involvement in DNI through its 38% interest in DNI (refer to Note 10) following the March 31, 2019, transaction disclosed above. As disclosed in Note 10, the Company sold an 8% interest in DNI in May 2019, and entered into an agreement under which it provided a call option to DNI to repurchase the then remaining 30% interest in DNI. The Company recorded earnings under the equity method related to its retained investment in DNI during the three months ended J une 30, 2019, refer to Note 10. The table below presents revenues and expenses between the Company and DNI, after the DNI disposal transaction, during the year ended June 30, 2020 (i.e. for the nine months ended March 31, 2020), and 2019 (i.e. for the three months ended June 30, 2019), respectively:
|  | DNI |
|  |  |  |  |  |  |  |  |  |  | Years ended June 30, |
|  |  |  |  |  |  |  |  |  | 2020 |  | 2019 |
|  | Revenue generated from transactions with DNI |  |  |  |  |  |  |  | $ | - |  | $ | - |
|  | Expenses incurred related to transactions with DNI |  |  |  |  |  |  |  | $ | 2 902 |  | $ | 63 |
Refer t o Note 10 for the dividends received from DNI and accounted for under the equity method during the year ended June 30, 2020 and 2019. The table below presents the Net1 Korea balances included on the Company’s consolidated balance sheet as of June 30, 201 9, translated at the foreign exchange rates applicable as of June 30, 2019:
| Net1 Korea |
|  |  |  |  |  | June 30, |
|  |  |  |  |  | 2019 |
| Current assets of discontinued operation | $ | 117 842 |
|  | Cash and cash equivalents |  | 26 051 |
|  | Accounts receivable, net |  | 41 359 |
|  | Finance loans receivable, net |  | 9 650 |
|  | Inventory |  | 1 826 |
|  | Settlement assets |  | 38 956 |
| Long-term assets of discontinued operation |  | 149 390 |
|  | Property, plant and equipment, net |  | 10 327 |
|  | Goodwill (Note 11) |  | 112 071 |
|  | Intangible assets, net |  | 9 661 |
|  | Deferred income taxes assets |  | 1 917 |
|  | Other long-term assets |  | 15 414 |
| Current liabilities of discontinued operation |  | 57 815 |
|  | Accounts payable |  | 7 139 |
|  | Other payables |  | 6 827 |
|  | Income taxes payable |  | 4 893 |
|  | Settlement liabilities |  | 38 956 |
| Long-term liabilities of discontinued operation |  | 3 264 |
|  | Deferred income taxes liabilities |  | 2 756 |
|  | Other long-term liabilities | $ | 508 |
The table below presents certain major captions to the Company’s consolidated statement of operations and consolidated statement of cash flows for the years ended June 30, 2020, 2019 and 2018, that have not been separately presented on those statements related to the presentation of Net1 Korea and DNI as discontinued operations:
|  |  |  |  |  | 2020 |  | 2019 |  |  | 2018 |
|  |  |  |  |  | Total (Net1 Korea) |  | Total |  |  | Net1 Korea |  | DNI |  |  | Total |  |  | Net1 Korea |  | DNI |
|  | Consolidated statement of operations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  | Discontinued: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  | Revenue | $ | 85 375 |  | $ | 194 763 |  |  | $ | 138 426 |  | $ | 56 337 |  |  | $ | 153 314 |  |  | $ | 153 314 |  | $ | - |
|  |  |  | Cost of goods sold, IT processing, servicing and support |  | 37 377 |  |  | 85 652 |  |  |  | 57 984 |  |  | 27 668 |  |  |  | 60 982 |  |  |  | 60 982 |  |  | - |
|  |  |  | Selling, general and administration |  | 30 562 |  |  | 57 136 |  |  |  | 53 479 |  |  | 3 657 |  |  |  | 57 567 |  |  |  | 57 567 |  |  | - |
|  |  |  | Depreciation and amortization |  | 8 652 |  |  | 25 246 |  |  |  | 17 220 |  |  | 8 026 |  |  |  | 25 011 |  |  |  | 25 011 |  |  | - |
|  |  |  | Impairment loss |  | - |  |  | 5 305 |  |  |  | - |  |  | 5 305 |  |  |  | - |  |  |  | - |  |  | - |
|  |  |  | Operating income |  | 8 784 |  |  | 21 424 |  |  |  | 9 743 |  |  | 11 681 |  |  |  | 9 754 |  |  |  | 9 754 |  |  | - |
|  |  |  | Interest income |  | 678 |  |  | 1 805 |  |  |  | 1 098 |  |  | 707 |  |  |  | 1 040 |  |  |  | 1 040 |  |  | - |
|  |  |  | Interest expense |  | 106 |  |  | 864 |  |  |  | 52 |  |  | 812 |  |  |  | 372 |  |  |  | 372 |  |  | - |
|  |  |  | Net income before tax |  | 9 356 |  |  | 22 365 |  |  |  | 10 789 |  |  | 11 576 |  |  |  | 10 422 |  |  |  | 10 422 |  |  | - |
|  |  |  | Income tax expense |  | 2 954 |  |  | 8 750 |  |  |  | 4 989 |  |  | 3 761 |  |  |  | 2 868 |  |  |  | 2 868 |  |  | - |
|  |  |  | Net income before earnings from equity-accounted investments |  | 6 402 |  |  | 13 615 |  |  |  | 5 800 |  |  | 7 815 |  |  |  | 7 554 |  |  |  | 7 554 |  |  | - |
|  |  |  | Earnings from equity-accounted investments(1) |  | - |  |  | 15 |  |  |  | - |  |  | 15 |  |  |  | 7 005 |  |  |  | - |  |  | 7 005 |
|  |  |  | Net income from discontinued operations | $ | 6 402 |  | $ | 13 630 |  |  | $ | 5 800 |  | $ | 7 830 |  |  | $ | 14 559 |  |  | $ | 7 554 |  | $ | 7 005 |
|  | Consolidated statement of cash flows |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  | Discontinued: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  | Total net cash provided by operating activities(2)(3) | $ | 3 758 |  | $ | 11 976 |  |  | $ | 5 341 |  | $ | 6 635 |  |  | $ | 25 939 |  |  | $ | 24 174 |  | $ | 1 765 |
|  |  |  | Total net cash provided by (used) in investing activities(3) | $ | 1 524 |  | $ | (6 816) |  |  | $ | (6 300) |  | $ | (516) |  |  | $ | (8 270) |  |  | $ | (8 270) |  | $ | - |
(1) Earnings from equity-accounted investments for the year ended June 30, 2018, represents DNI earnings (net of amortization of acquired intangibles and related deferred tax) attributed to the Company as a result of the Company using the equity method to account for its investment in DNI during the period (refer to Note 10). (2) Total net cash (used in) provided by operating activities for the year ended June 30, 2019, includes dividends received of $0.9 million (refer to Note 10) from DNI while it was accounted for using the equity method during t he three months ended June 30, 2019. (3) Total net cash (used in) provided by operating activities for the year ended June 30, 2018, represents dividends received from DNI during the period. The Company retained a continuing involvement in DNI following the March 2019 disposal, refer to Note 10. The Company recorded earnings under the equity method related to its retained investment in DNI during the nine months ended March 31, 2020, and the three months ended June 30, 2019, refer to Note 10.

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