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Basis Of Presentation And Summary Of Significant Accounting Policies | 9 Months Ended
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Mar. 31, 2020
Basis Of Presentation And Summary Of Significant Accounting Policies [Abstract] |
Basis Of Presentation And Summary Of Significant Accounting Policies | 1. Basis of Presentation and Summary of Significant Accounting Policies Unaudited Interim Financial Information The accompanying unaudited condensed consolidated financial statements include all majority-owned subsidiaries over which the Company exercises control and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the United States Securities and Exchange Commission for Quarterly Reports on Form 10-Q and include all of the information and disclosures required for interim financial reporting. The results of operations for the three and nine months ended March 31, 2020 and 2019, are not necessarily indicative of the results for the full year. The Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in co njunction with the financial statements, accounting policies and financial notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019. In the opinion of management, the accompanying unaud ited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments), which are necessary for a fair representation of financial results for the interim periods presented. References to the “Company” refer to Net1 and its consolidated subsidiaries, collectively, unless the context otherwise requires. References to “Net1” are references solely to Net 1 UEPS Technologies, Inc. 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 government-imposed restrictions to contain the spread of the COVID-19 pandemic. Specifically, on March 2 7, 2020, the South African gove rnment imposed certain emergency measures to combat the spread of COVID-19, including implementation of travel bans and closures of factories, schools, public buildings, and businesse s, which remain largely in place at the date of this report. 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 operations: (i) suspension of new lending and other financial services acti vities, and (ii) limitations on the amount of banking-related fees that may be charged to customers. 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 Company, its customers, suppliers or third-party business partners conduct business and as a result, the Company ha s begun to experience more pronounced disruptions to its operations. While the Company ha s not incurred significant disruptions thus far from the COVID-19 outbreak, 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 outbr eak, actions that may be taken by governmental authorities, the impact on the Company’s c ustomers and other factors identified in Part II, Item 1A. “Risk Factors” in this Form 10-Q. The Company will continue to evaluate the nature and extent of the impact on its business, consolidated results of operations, and financial condition. Refer also to Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Resolution of going concern risk As previo usly reported, t he 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 Korean business unit (refer to Note 2) and its April 2020 sale of its remaining interest in DN Invest Proprietary Limited (“DNI”) (refer to Note 7). The cash received from the disposal of its Korean business unit during the three months ended March 31, 2020 resulted in the resolution and mitigation 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 un audited condensed consolidated financial statements are issued as the Company believes it has sufficient cash reserves. Restatement of financial statements Related to DNI discontinued operations presentation 1. Basis of Presentation and Summary of Significant Accounting Policies (continued) Subsequent to 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 presentation of the discontinued operations of DNI-4P L Contracts Proprietary Limited in the unaudited condensed 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 remai ned in the unaudited condensed 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 operat ions and the details of amounts 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 unaudited condensed 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 unaudited condensed consolidat ed statements of operations 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 unaudited condensed consolidat ed statements of operations preceding 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 for continuing operations, net income f rom 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 in assessing the accounting related to the disposal of its remaining interest in DNI in April 2020. Th is 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. The Company only released a portion of the foreign currency translation reserve related to the sale of 17% of DNI in March 2019, refer to Note 2, and should have released an additional $4.0 million in March 20 19. During the three months ended June 30, 2019, the Company also sold an additional interest in DNI, refer to Note 2, and released a portion ($0.8 million) of the $4.0 million during this period, and therefore the error as of June 30, 2019, was $3.2 million. The error impacts the Company’s reported results and the Company has restated its financial statements for the three and nine months ended March 31, 2019 and June 30, 2019 to correct for the error. The tables below present the impact of the res tatement on each of the Company’s financial statements for the three and nine months ended March 31, 2019 and June 30, 2019:
|  |  | Condensed consolidated balance sheet |
|  |  | June 30, 2019 |
|  |  | As reported |  | Correction |  | As restated |
|  |  | (in thousands) |
| Accumulated other comprehensive loss | $ | (199 273) |  | $ | 3 227 |  | $ | (196 046) |
| Retained earnings | $ | 528 576 |  | $ | (3 227) |  | $ | 525 349 |
|  |  | Unaudited condensed consolidated statement of operations |
|  |  | Three months ended March 31, 2019 |  | Nine months ended March 31, 2019 |
|  |  | As reported |  | Correction |  | As restated |  | As reported |  | Correction |  | As restated |
|  |  | (in thousands, except per share data) |  | (in thousands, except per share data) |
| Loss on disposal of discontinued operation, net of tax | $ | 5 140 |  | $ | 4 035 |  | $ | 9 175 |  | $ | 5 140 |  | $ | 4 035 |  | $ | 9 175 |
| Net loss |  | 55 512 |  |  | 4 035 |  |  | 59 547 |  |  | 121 585 |  |  | 4 035 |  |  | 125 620 |
| Net (loss) income attributable to Net1 |  | (54 784) |  |  | (4 035) |  |  | (58 819) |  |  | (123 924) |  |  | (4 035) |  |  | (127 959) |
|  | Continuing |  | (51 050) |  |  | - |  |  | (51 050) |  |  | (127 441) |  |  | - |  |  | (127 441) |
|  | Discontinued | $ | (3 734) |  | $ | (4 035) |  | $ | (7 769) |  | $ | 3 517 |  | $ | (4 035) |  | $ | (518) |
| Basic (loss) income per share attributable to Net1 shareholders | $ | (0,96) |  | $ | (0,07) |  | $ | (1,03) |  | $ | (2,18) |  | $ | (0,07) |  | $ | (2,25) |
|  | Continuing | $ | (0,90) |  | $ | - |  | $ | (0,90) |  | $ | (2,24) |  | $ | - |  | $ | (2,24) |
|  | Discontinued | $ | (0,06) |  | $ | (0,07) |  | $ | (0,13) |  | $ | 0,06 |  | $ | (0,07) |  | $ | (0,01) |
| Diluted (loss) income per share attributable to Net1 shareholders | $ | (0,96) |  | $ | (0,07) |  | $ | (1,03) |  | $ | (2,18) |  | $ | (0,07) |  | $ | (2,25) |
|  | Continuing | $ | (0,90) |  | $ | - |  | $ | (0,90) |  | $ | (2,24) |  | $ | - |  | $ | (2,24) |
|  | Discontinued | $ | (0,06) |  | $ | (0,07) |  | $ | (0,13) |  | $ | 0,06 |  | $ | (0,07) |  | $ | (0,01) |
|  |  | Unaudited condensed consolidated statement of comprehensive (loss) income |
|  |  | Three months ended March 31, 2019 |  | Nine months ended March 31, 2019 |
|  |  | As reported |  | Correction |  | As restated |  | As reported |  | Correction |  | As restated |
|  |  | (in thousands) |  | (in thousands) |
| Net loss | $ | 55 512 |  | $ | 4 035 |  | $ | 59 547 |  | $ | 121 585 |  | $ | 4 035 |  | $ | 125 620 |
| Release of foreign currency translation reserve related to disposal of DNI |  | 1 806 |  |  | 4 035 |  |  | 5 841 |  |  | 1 806 |  |  | 4 035 |  |  | 5 841 |
| Total other comprehensive income (loss), net of taxes | $ | (6 545) |  | $ | 4 035 |  | $ | (2 510) |  | $ | (24 790) |  | $ | 4 035 |  | $ | (20 755) |
|  |  | Unaudited condensed consolidated statement of changes in equity |
|  |  | Three months ended March 31, 2020 |  | Nine months ended March 31, 2020 |
|  |  | As reported |  | As restated |  | As reported |  | As restated |
|  |  | (in thousands) |  | (in thousands) |
| As reported – beginning of period | $ | 523 979 |  | $ | (194 439) |  | $ | 528 576 |  | $ | (199 273) |
| Correction of misstatement |  | (3 227) |  |  | 3 227 |  |  | (3 227) |  |  | 3 227 |
| As restated – beginning of period | $ | 520 752 |  | $ | (191 212) |  | $ | 525 349 |  | $ | (196 046) |
|  |  | Unaudited condensed consolidated statement of cash flows |
|  |  | Three months ended March 31, 2019 |  | Nine months ended March 31, 2019 |
|  |  | As reported |  | Correction |  | As restated |  | As reported |  | Correction |  | As restated |
|  |  | (in thousands) |  | (in thousands) |
| Net loss | $ | 55 512 |  | $ | 4 035 |  | $ | 59 547 |  | $ | 121 585 |  | $ | 4 035 |  | $ | 125 620 |
| Loss on disposal of discontinued operation, net of tax | $ | 5 140 |  | $ | 4 035 |  | $ | 9 175 |  | $ | 5 140 |  | $ | 4 035 |  | $ | 9 175 |
Recent accounting pronouncements adopted In February 2016, the Financial Accounting Standards Board (“FASB”) issued guidance regarding Leases. The guidance increases transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities on the balanc e sheet. The amendments to current lease guidance include the recognition of assets and liabilities by lessees for those leases currently classified as operating leases. The guidance also requires disclosures to meet the objective of enabling users of fina ncial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. This guidance was effective for the Company beginning July 1, 2019. Refer to Note 18 for the impact of the adoption of this guidance on its condensed co nsolidated financial statements. Recent accounting pronouncements not yet adopted as of March 31, 2020 In June 2016, the FASB issued guidance regarding Measurement of Credit Losses on Financial Instruments. The guidance replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For trade and other receiv ables, loans, and other financial instruments, an entity is required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses, which reflects losses that are probable. Credit losses relating to availabl e-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. This guidance is effective for the Company beginning July 1, 2020. Early adoption is permitted beginning July 1, 2019. The Company is currently assessing the impact of this guidance on its financial statements and related disclosures. In August 2018, the FASB issued guidance regarding Disclosure Framework: Changes to the Disclosure Requirements fo r Fair Value Measurement. The guidance modifies the disclosure requirements related to fair value measurement. This guidance is effective for the Company beginning July 1, 2020. Early adoption is permitted. The Company is currently assessing the impact of this guidance on its financial statements disclosure. In January 2020, the FASB issued guidance regarding Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815. The guidance clarifies that an entity should consider observable transactions that require an entity to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with U.S GAAP guidan ce immediately before applying or upon discontinuing the equity method. The guidance also clarifies that, when determining the accounting for certain forward contracts and purchased options an entity should not consider, whether upon settlement or exercise, if the underlying securities would be accounted for under the equity method or fair value option. This guidance is effective for the Company beginning July 1, 2021. Early adoption is permitted. The Company is currently assessing the impact of this guidan ce on its financial statements disclosure.

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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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