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Disposal Of Controlling Interest In KSNET, FIHRST And DNI (Tables) | 9 Months Ended
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Mar. 31, 2020
Net1 Korea [Member] |
Impact Of Deconsolidation And Calculation Of 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 8) |  | 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 right of use lease liability - current |  | (69)
|  | Income taxes payable |  | (3 481)
|  | Deferred income taxes liabilities |  | (1 497)
|  | Right-of-use operating lease liability - long-term |  | (112)
|  | Other long-term liabilities |  | (335)
|  | Released from accumulated other comprehensive income – foreign currency translation reserve (Note 13) |  | 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) |  | 15 000
|  |  |  |  | Gain recognized on disposal, after tax | $ | 12 733
(1) The Company is currently analyzing the tax impact of the sale of Net1 Korea on its reported results and has made a preliminary estimate of its tax exposure as $15.0 million, which amount represents approximately 21% of its expected taxable gain related to the disposal. The Company also agreed that the purchaser withhold capital gains taxes of $19.9 million (approximately KRW 23.8 billion) and non-refundable securitie s 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 app roach 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 receivables i n its unaudited cond ensed consolidated balance sheet as of March 31, 2020, refer also to Note 3. (2) Transaction costs include expenses incurred by the Company of $7.5 million directly related to the disposal of Net1 Korea and paid in cash and a n on-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.
Schedule Of Major Captions That Have Not Been Separately Presented On Related To Discontinued Operation |
|  | Net1 Korea |
|  |  |  |  |  |  |  |  | Three months ended |  |  | Nine months ended |
|  |  |  |  |  |  |  |  | March 31, |  |  | March 31, |
|  |  |  |  |  |  |  |  | 2020 |  |  | 2020 |
|  | Unaudited condensed consolidated statement of operations |  |  |  |  |  |
|  |  | Discontinued: |  |  |  |  |  |
|  |  |  | Revenue | $ | 19 044 |  | $ | 85 375 |
|  |  |  | Cost of goods sold, IT processing, servicing and support |  | 8 246 |  |  | 37 377 |
|  |  |  | Selling, general and administration |  | 7 278 |  |  | 30 562 |
|  |  |  | Depreciation and amortization |  | 2 004 |  |  | 8 652 |
|  |  |  | Operating income |  | 1 516 |  |  | 8 784 |
|  |  |  | Interest income |  | 129 |  |  | 678 |
|  |  |  | Interest expense |  | 6 |  |  | 106 |
|  |  |  | Net income before tax |  | 1 639 |  |  | 9 356 |
|  |  |  | Income tax expense |  | 892 |  |  | 2 954 |
|  |  |  |  | Net income from discontinued operations | $ | 747 |  | $ | 6 402 |
|  | Gain on disposal of discontinued operation |  |  |  |  |  |
|  |  | Gain on disposal of discontinued operation | $ | 27 733 |  | $ | 27 733 |
|  |  | Taxes related to disposal of discontinued operation |  | 15 000 |  |  | 15 000 |
|  |  |  | Gain on disposal of discontinued operation after tax | $ | 12 733 |  | $ | 12 733 |
|  | Unaudited condensed consolidated statement of cash flow |  |  |  |  |  |
|  |  | Discontinued: |  |  |  |  |  |
|  |  |  | Total net cash provided by operating activities | $ | 3 758 |  | $ | 18 323 |
|  |  |  | Total net cash provided by (used in) investing activities | $ | 1 524 |  | $ | (8 281) |
Schedule Of Balances Included On Condensed Consolidated Balance Sheet |
| 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 8) |  | 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 |
FIHRST [Member] |
Impact Of Deconsolidation And Calculation Of Net Gain Recognized On Deconsolidation |
| FIHRST
|  |  |  |  |  |  | December 31,
|  |  |  |  |  |  | 2019
| 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 8) |  | 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 13) |  | 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 |  | 2 418
|  |  |  | Release of valuation allowance related to capital losses previously unutilized(1) |  | (2 418)
|  |  | 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.
DNI [Member] |
Impact Of Deconsolidation And Calculation Of Net Gain Recognized On Deconsolidation |
DNI (as restated, refer to Note 1) |
|  |  |  |  |  |  |  |  |  | Equity method investment as of March 31, 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 30% of 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, including |  |  |  |  |  |  |  |  |  |  |
| reinsurance 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 13) |  | 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, 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. The fair value of the retained interest in DNI wa s included in equity-accounted investment s on the Company’s unaudited condensed consolidated balance sheet as of March 31, 2019. (2) Other payables include a short-term loan of ZAR 60.5 million ($4.2 million, translated at exchange rates applicable as of March 31, 20 19) due to the Company and included in accounts receivable, net on the Company’s unaudited condensed consolidated balance sheet as of March 31, 2019. The loan wa s rep aid in full in Ju ly 2019. Interest on the loan was charged at the South African prime rate. (3) Amounts presented are net of a valuation allowance provided. Overall, t he disposal of DNI result ed 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 does not have any capital gains to offset against this amount. 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 resulted in a capital loss of $2.0 million ($5.3 million (8% transaction) less $3.3 million (30% transaction)). The valuati on 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).
Schedule Of Revenues And Expenses After DNI Disposal Transaction |
|  | DNI |
|  |  |  |  |  |  |  |  |  |  | March 31, 2020 |
|  |  |  |  |  |  |  |  |  |  | Three months ended |  |  | Nine months ended |
|  | Revenue generated from transactions with DNI |  |  |  |  |  |  |  | $ | - |  | $ | - |
|  | Expenses incurred related to transactions with DNI |  |  |  |  |  |  |  | $ | 295 |  | $ | 2 902 |
DNI And Net1 Korea [Member] |
Schedule Of Major Captions That Have Not Been Separately Presented On Related To Discontinued Operation |
|  |  |  | Three months ended March 31, 2019 |  | Nine months ended March 31, 2019 |
|  |  |  | Net1 Korea |  | DNI |  | Total |  | Net1 Korea |  | DNI |  | Total |
|  | Unaudited condensed consolidated statement of operations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Discontinued: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Revenue |  | $ | 32 056 |  | $ | 17 842 |  | $ | 49 898 |  | $ | 104 007 |  | $ | 56 337 |  | $ | 160 344 |
|  | Cost of goods sold, IT processing, servicing and support |  |  | 13 254 |  |  | 7 502 |  |  | 20 756 |  |  | 42 541 |  |  | 27 668 |  |  | 70 209 |
|  | Selling, general and administration |  |  | 13 270 |  |  | 1 935 |  |  | 15 205 |  |  | 41 015 |  |  | 3 657 |  |  | 44 672 |
|  | Depreciation and amortization |  |  | 4 112 |  |  | 2 427 |  |  | 6 539 |  |  | 13 418 |  |  | 8 026 |  |  | 21 444 |
|  | Impairment loss |  |  | - |  |  | 5 305 |  |  | 5 305 |  |  | - |  |  | 5 305 |  |  | 5 305 |
|  | Operating income |  |  | 1 420 |  |  | 673 |  |  | 2 093 |  |  | 7 033 |  |  | 11 681 |  |  | 18 714 |
|  | Interest income |  |  | 251 |  |  | 208 |  |  | 459 |  |  | 797 |  |  | 707 |  |  | 1 504 |
|  | Interest expense |  |  | 5 |  |  | 396 |  |  | 401 |  |  | 17 |  |  | 812 |  |  | 829 |
|  | Net income before tax |  |  | 1 666 |  |  | 485 |  |  | 2 151 |  |  | 7 813 |  |  | 11 576 |  |  | 19 389 |
|  | Income tax expense |  |  | 915 |  |  | 146 |  |  | 1 061 |  |  | 3 285 |  |  | 3 761 |  |  | 7 046 |
|  | Net income before earnings from equity-accounted investments |  |  | 751 |  |  | 339 |  |  | 1 090 |  |  | 4 528 |  |  | 7 815 |  |  | 12 343 |
|  | Earnings from equity-accounted investments(1) |  |  | - |  |  | 73 |  |  | 73 |  |  | - |  |  | 15 |  |  | 15 |
|  | Net income from discontinued operations |  | $ | 751 |  | $ | 412 |  | $ | 1 163 |  | $ | 4 528 |  | $ | 7 830 |  | $ | 12 358 |
|  | Loss on disposal of discontinued operation (as restated, refer to Note 1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Loss on disposal of discontinued operation (as restated) |  | $ | - |  | $ | (9 175) |  | $ | (9 175) |  | $ | - |  | $ | (9 175) |  | $ | (9 175) |
|  | Taxes related to disposal of discontinued operation |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |
|  | Loss on disposal of discontinued operation after tax (as restated) |  | $ | - |  | $ | (9 175) |  | $ | (9 175) |  | $ | - |  | $ | (9 175) |  | $ | (9 175) |
|  | Unaudited condensed consolidated statement of cash flows |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Discontinued: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Total net cash provided by (used in) operating activities |  | $ | 5 341 |  | $ | (393) |  | $ | 4 948 |  | $ | 19 161 |  | $ | 6 635 |  | $ | 25 796 |
|  | Total net cash used in investing activities |  | $ | (6 300) |  | $ | (319) |  | $ | (6 619) |  | $ | (14 328) |  | $ | (516) |  | $ | (14 844) |
(1) Earnings from equity-accounted investments for the three and nine months ended March 31, 2019, represents earnings attributed to equity-accounted investments owned by DNI and included in the Company’s results as a result of the consolidation of DNI.

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