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Equity-Accounted Investments And Other Long-Term Assets | 12 Months Ended
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Jun. 30, 2021
Equity-Accounted Investments And Other Long-Term Assets [Abstract] |
Equity-Accounted Investments And Other Long-Term Assets | 8 . EQUITY - ACCOUNTED INVESTMENTS AND OTHER LONG - TERM ASSETS Equity-accounted investments The Company’s ownership percentage in its equity-accounted investments as of June 30, 2021 and 2020, was as follows: June 30, June 30, 2021 2020 Finbond Group Limited (“Finbond”) 31 % 31 % Carbon Tech Limited (“Carbon”), formerly OneFi Limited 25 % 25 % SmartSwitch Namibia (Pty) Ltd (“SmartSwitch Namibia”) 50 % 50 % Revix (“Revix”) 15 % 25 % Bank Frick & Co AG (“Bank Frick”) - 35 % V2 Limited (“V2”) - 50 % Walletdoc Proprietary Limited (“Walletdoc”) - 20 % Finbond As of June 30, 2021, the Company owned 268,820,933 shares in Finbond representing approximately 31.47 % of its issued and outstanding ordinary shares. Finbond is listed on the Johannesburg Stock Exchange and its closing price on June 30, 2021, the last trading day of the month, was ZAR 1.59 per share. The market value of the Company’s holding in Finbond on June 30, 2021, was ZAR 427.4 million ($ 29.9 million translated at exchange rates applicable as of June 30, 2021). On or about March 9, 2020, Finbond repurchased 47 million of its shares for ZAR 2.91123 per share, or a total consideration of ZAR 136.8 million, in cash, from other Finbond shareholders which resulted in an increase in the Company’s shareholding in Finbond. On August 2, 2019, the Company, pursuant to its election, received an additional 1,148,901 shares in Finbond as a capitalization share issue in lieu of a dividend. Finbond published its half-year results to August 2020 in October 2020, which included the financial impact of the COVID-19 pandemic on its reported results during that reporting period. Finbond incurred losses during the six months to August 2020, and experienced a slow-down in its lending activities. Finbond reported that its lending activities had increased again since August 2020, albeit at a slower pace compared with the prior calendar period. Finbond’s share price declined substantially during the period from its fiscal year end (February 2020) to September 30, 2020, and the weakness in its traded share price continued post September 30, 2020. 8. EQUITY - ACCOUNTED INVESTMENTS AND OTHER LONG - TERM ASSETS (continued) Equity-accounted investments (continued) Finbond The Company considered the combination of the slow-down in business activity and the lower share price as impairment indicators. The Company performed an impairment assessment of its holding in Finbond as of September 30, 2020. The Company recorded an impairment loss of $ 16.8 million during the quarter ended September 30, 2020, related to the other-than-temporary decrease in Finbond’s value, which represented the difference between the determined fair value of the Company’s interest in Finbond and the Company’s carrying value (before the impairment). There is limited trading in Finbond shares on the JSE because it has three shareholders that own approximately 90 % of its issued and outstanding shares between them. The Company calculated a fair value per share for Finbond by applying a liquidity discount of 15 % to the September 30, 2020, Finbond closing price of ZAR 1.04 . The Company performed a further impairment assessment of its holding in Finbond as of December 31, 2020, following a modest further decline in its market price during the quarter ended December 31, 2020. The Company recorded an impairment loss of $ 0.8 million during the quarter ended December 31, 2020, related to the other-than-temporary decrease in Finbond’s value, which represented the difference between the determined fair value of the Company’s interest in Finbond and the Company’s carrying value (before the impairment). The Company calculated a fair value per share for Finbond by applying a liquidity discount of 15 % to the December 31, 2020, Finbond closing price of ZAR 0.99 . The total impairment charge for the year ended June 30, 2021, was $ 17.7 million. Bank Frick On February 3, 2021, the Company, through its wholly-owned subsidiary, Net1 Holdings LI AG (“Net1 LI”), entered into a share sales agreement with the Frick Family Foundation (“KFS”) to sell its entire interest, or 35 %, in Bank Frick to KFS for $ 30 million. Net1 and certain entities within the IPG group also entered into an indemnity and release agreement with KFS and Bank Frick under which the parties agreed to terminate all existing arrangements with Bank Frick and settle all liabilities related to the Company’s activities with Bank Frick through the payment of $ 3.6 million to KFS. The Company received $ 15.0 million, net, on closing, which comprised $ 18.6 million less the $ 3.6 million due to KFS to terminate all existing arrangements with Bank Frick and settle all liabilities related to IPG’s activities with Bank Frick. The Company included the $ 18.6 million within cash flows from investing activities and the $ 3.6 million within cash flows from operating activities in the consolidated statement of cash flows for the year ended June 30, 2021. The outstanding balance due by KFS is expected to be paid as follows: (i) $ 7.5 million on October 30, 2021, which is included in the caption accounts receivable, net and other receivables in the Company’s consolidated balance sheet as of June 30, 2021, and (ii) the remaining amount, of $ 3.9 million on July 15, 2022, which is included in the caption other long-term assets, including reinsurance assets in the Company’s consolidated balance sheet as of June 30, 2021. The parties entered into a security and pledge agreement under which KFS pledged the Bank Frick shares purchased as security for the amounts outstanding under the share sales agreement. The Company incurred transaction costs of approximately $ 0.04 million. The following table presents the calculation of the loss on disposal of Bank Frick on February 3, 2021: February 3, 2021 Loss on sale of Bank Frick: Consideration received in cash on February 3, 2021 $ 18,600 Consideration received with note on February 3, 2021, refer to (Note 3) and other long-term assets below 11,400 Less: transaction costs (42) Less: carrying value of Bank Frick (32,892) Add: release of foreign currency translation reserve from accumulated other comprehensive loss 2,462 Loss on sale of Bank Frick (1) $ (472) (1) The Company does not expect to pay taxes related to the sale of Bank Frick because the base cost of its investment exceeds the sales consideration received. The Company does not believe that it will be able to utilize any capital loss, if any, generated because Net1 LI does not own any other capital assets. 8. EQUITY - ACCOUNTED INVESTMENTS AND OTHER LONG - TERM ASSETS (continued) Equity-accounted investments (continued) Bank Frick Payment of option termination fee in April 2020 On October 2, 2019, the Company exercised its option to acquire an additional 35 % interest in Bank Frick from the Frick Family Foundation. The Company had agreed to pay an amount, the “Option Price Consideration”, for an additional 35 % interest in Bank Frick, which represented the higher of CHF 46.4 million ($ 46.5 million at exchange rates on October 2, 2019) or 35 % of 15 times the average annual normalized net income of the Bank over the two years ended December 31, 2018. The shares would have only transferred on payment of the Option Price Consideration, which was expected to occur on the later of (i) 180 days after the date of exercise of the option; (ii) in the event of any regulatory approvals being required, 10 days after receipt of approval (either unconditionally or on terms acceptable to both parties); and (iii) 10 days after the date on which the Option Price Consideration was agreed or finally determined. On April 9, 2020, the Company, through its wholly owned subsidiary, Net1 Holdings LI AG, entered into a termination agreement pursuant to which the option to acquire a further 35 % of Bank Frick was cancelled. On April 15, 2020, the Company paid a termination fee of CHF 17.0 million ($ 17.5 million) to the Frick Family to cancel the option. Bank Frick impairment recorded during the year ended June 30, 2020 The Company considered the termination of the exercise of the option to acquire a further 35 % of Bank Frick an impairment indicator. The Company recorded an impairment loss of $ 18.3 million during the quarter ended March 31, 2020, related to the other- than-temporary decrease in Bank Frick’s value, which represented the difference between the determined fair value of the Company’s interest in Bank Frick and the Company carrying value (before the impairment). The Company, with the assistance of external consultants, considered a multiple based valuation approach in respect of the March 31, 2020 balance sheet date. The Company believes that a price to book methodology is the most appropriate for a valuing a bank, but also took into account a price earnings approach to support the primary methodology. An appropriate peer group was selected based on the activities of Bank Frick and, after applying a regression analysis to compensate for differences in the return on equity in the peer group, a price to book ratio of 1.15 times was determined, but the multiple ranged from 0.7 times to 4.7 times. The Company determined to use a price to book multiple of approximately 0.9 times to value its investment in Bank Frick as of March 31, 2020. The Company used a multiple at the lower end of the peer group range as a result of Bank Frick’s size (based on net asset value) and product mix relative to the peer group. The Company’s 35 % portion of approximately 0.9 times Bank Frick’s March 31, 2020, net asset value was lower than the Company’s carrying value in Bank Frick as of March 31, 2020. On April 13, 2020, the Company received a cash dividend of approximately CHF 1.3 million ($ 1.3 million). V2 Limited In August 2019, the Company made a further equity contribution of $ 1.3 million to V2 Limited (“V2”) and in January 2020 it made its final committed equity contribution of $ 1.3 million bringing the total equity contribution to $ 5.0 million. For its quarter ended March 2020, the Company recorded an impairment loss of $ 2.5 million, related to the other-than-temporary decrease in V2’s value. The Company believed that V2’s March 2020 net asset value represented its fair value because it did not have supportable forecasts available at that time to apply other valuation models, including a discounted cash flow. The carrying value of the Company’s investment in V2 (before the impairment) was higher than its portion of V2’s net asset value and therefore the Company recorded the impairment loss. In December 2020, the Company no longer expected to recover its carrying value in V2 and impaired its remaining interest in V2, recording an impairment loss of $ 0.5 million during the nine months ended March 31, 2021. The Company sold its investment in V2 on April 22, 2021, for one dollar. The Company had also committed to provide V2 with a working capital facility of $ 5.0 million, which was subject to the achievement of certain pre-defined objectives, and in June 2020 it provided $ 0.5 million to V2 under this facility. In September 2020, the Company and V2 agreed to reduce the $ 5.0 million working capital facility to $ 1.5 million. In October 2020, V2 drew down the remaining available $ 1.0 million of the working capital facility. The Company created an allowance for doubtful loans receivable of $ 1.5 million during the year ended June 30, 2021, related to the full amount outsta nding as of June 30, 2021. 8. EQUITY - ACCOUNTED INVESTMENTS AND OTHER LONG - TERM ASSETS (continued) Equity-accounted investments (continued) Carbon The Company recorded an impairment loss of $ 2.9 million during the fourth quarter of fiscal 2021, related to the other- than-temporary decrease in Carbon’s value. As of June 30, 2021, Carbon had a negative net book value and incurred an operating loss during the twelve months to June 30, 2021. The Company considered these operating losses and the negative net book value as impairment indicators and performed an impairment assessment as of June 30, 2021. The Company considered a variety of valuation techniques, including the revenue multiple and price to book ratio techniques, and determined to value its interest in Carbon using a price to book ratio. The Company included the price to book ratio of a number of African banks and digital banks in its peer set. However, as Carbon had a negative book value as of June 30, 2021, the result would always be nil regardless of the price to book ratio of the peer group. Therefore, the Company concluded that its investment in Carbon had a fair value of $ 0 (nil) and impaired the carrying value in Carbon to $ 0 (nil). Walletdoc In November 2020, the Company’s subsidiary, Net1 SA, signed an agreement with Walletdoc under which Walletdoc agreed to repay the loan due to Net1 SA in full and Net1 SA agreed to dispose of its entire interest in Walletdoc to Walletdoc. DNI As of June 30, 2019, the Company owned 30 % of the voting and economic rights of DNI. In February 2020, the Company’s ownership percentage in DNI reduced from approximately 30 % to 27 % following the issuance by DNI of additional ordinary no par value shares. The Company did not acquire additional ordinary shares in DNI and therefore its ownership percentage was diluted. The terms and conditions of the option referred to below were unaffected by the additional issuance by DNI. The Company sold its remaining interest in DNI in April 2020. Sale of remaining interest in April 2020 In May 2019, Net1 Applied Technologies South Africa Proprietary Limited (“Net1 SA”) granted an option to DNI, or its nominee, to acquire the 30,394,765 DNI shares Net1 SA held. The option strike price was calculated as ZAR 2.827 billion ($ 158.0 million, translated at exchange rates applicable as of March 31, 2020) less any special distribution made by DNI multiplied by Net1 SA’s retained interest (i.e. assuming no special distribution, the strike price for the retained interest was ZAR 859.3 million, or $ 48.0 million, translated at exchange rates applicable as of June 30, 2020). It was permissible for the call option to be split into smaller denominations, but Net1 SA could not be left with less than 20 % unless the whole remaining interest was disposed of. DNI was entitled to nominate another party to exercise the call option in the place of DNI, provided that the nominated party acquired call options representing at least 2.5 % of DNI’s voting and participation interests. The option was exercised on March 31, 2020. DNI nominated MIC Investment Holdings Proprietary Limited (“MIC”) to exercise a portion of the option to acquire 26,886,310 of the 30,394,765 DNI shares for ZAR 760.0 million ($ 42.5 million, translated at exchange rates applicable as of March 31, 2020) from Net1 SA. The transaction closed on April 1, 2020 and MIC settled the option consideration in cash. On March 31, 2020, and together with the MIC transaction, DNI exercised a portion of the option to acquire the remaining 3,508,455 DNI shares from Net1 SA for ZAR 99.2 million ($ 5.5 million, translated at exchange rates applicable as of March 31, 2020) through the issue of a note to Net1 SA. The transaction also closed on April 1, 2020. The note was unsecured. The note principal was repayable in 18 equal monthly installments of ZAR 5.5 million ($ 0.3 million, translated at exchange rates applicable as of June 30, 2020) commencing on October 31, 2020. Interest was charged at a fixed rate of 7.25 % per annum and accrued monthly from October 1, 2020 and was repayable together with the principal payments. The Company adjusted the 12-month JIBAR interest rate of 6.33 % quoted by Rand Merchant Bank by 0.30 % to derive a 24-month rate of 6.63 % which was used to determine the present value of the ZAR 99.2 million note. The present value of the note as of March 31, 2020, using the derived interest rate and the expected cash repayments was ZAR 95.7 million ($ 5.4 million, translated at exchange rates applicable as of March 31, 2020). The portion of the note that was expected to be repaid during the twelve months following June 30, 2020, was included in accounts receivable, net and other receivables in the consolidated balance sheet as of June 30, 2020 (refer to Note 3). The remaining amount (the long-term portion) was included in other long-term assets in the consolidated balance sheet as of June 30, 2020 (refer also to the section “Other long-term assets” below) . Th e Company incurred transaction costs of approximately $ 1.0 million . 8. EQUITY - ACCOUNTED INVESTMENTS AND OTHER LONG - TERM ASSETS (continued) Equity-accounted investments (continued) DNI Sale of remaining interest in April 2020 The following table presents the calculation of the loss on disposal of DNI on April 1, 2020: April 1 2020 Consideration received in cash on April 1, 2020 - 26,886,310 shares $ 42,477 Consideration received with note on April 1, 2020 - present value of note - 3,508,455 shares 5,354 Less: transaction costs (1,010) Less: carrying value of DNI (36,508) Less: release of foreign currency translation reserve from accumulated other comprehensive loss (11,323) Loss on sale of DNI before tax (1,010) Taxes related to sale of DNI - Capital gains tax related to sale of DNI (1) 2,475 Utilization of capital loss carryforwards (1) (2,475) Loss on disposal of DNI after tax $ (1,010) (1) Net1 SA recorded a valuation allowance related to capital losses previously generated but not utilized. The Company utilized approximately $ 12.0 million of these unutilized capital losses as a result of the disposal of its remaining interest in DNI in April 2020 and, therefore, the equivalent portion of the valuation allowance created was released. Sale of 8% in May 2019 On May 3, 2019, Net1 SA entered into a transaction with FirstRand Bank Limited, acting through its Rand Merchant Bank division (“RMB”), in terms of which Net1 SA reduced its shareholding in DNI from 38 % to 30 % through the sale of 7,605,235 ordinary “A” shares in DNI for a transaction consideration of ZAR 215.0 million ($ 15.0 million) (the “RMB Disposal”). The parties used a cashless settlement process on closing. The transaction closed on May 3, 2019, and the Company used the proceeds from the sale of these DNI shares and ZAR 15.0 million of its existing cash reserves to settle its outstanding long-term borrowings of ZAR 230.0 million in full. The following table presents the calculation of the gain on disposal of the 8% retained interest in DNI on May 3, 2019: May 3, 2019 May 3, 2019 fair value of consideration received $ 15,011 Less: equity-method interest sold (14,996) Less: released from accumulated other comprehensive loss – foreign currency translation reserve (as restated) (Note 1 and Note 14) 162 May 2019 gain recognized on disposal, before tax 177 Capital loss related to disposal (1) - Gain recognized on disposal, after tax, as of May 3, 2019 $ 177 (1) The disposal of the 8 % interest in DNI resulted in a capital loss for tax purposes of approximately $ 23.9 million and the Company provided a valuation allowance of $ 23.9 million against this capital loss because it did not have any capital gains to offset against this amount at the time. DNI impairments recorded during the year ended June 30, 2020 During year ended June 30, 2020, the Company recorded impairment losses of $ 13.1 million. These impairment losses included (i) an amount of $ 11.5 million related to the difference between the fair value of consideration received on April 1, 2020 following the sale of its remaining interest, and the carrying value of DNI as of March 31, 2020, which included $ 11.3 million included in accumulated other comprehensive loss as of March 31, 2020, and (ii) an amount of $ 1.6 million representing the excess of recorded earnings from DNI over its carrying value, calculated as the amount that the Company could receive pursuant to the call option granted to DNI in May 2019 . 8. EQUITY - ACCOUNTED INVESTMENTS AND OTHER LONG - TERM ASSETS (continued) Equity-accounted investments (continued) Summarized below is the movement in equity-accounted investments during the years ended 2021 and 2020, which includes the investment in equity and the investment in loans provided to equity-accounted investees: Finbond Bank Frick DNI Other (1) Total Investment in equity Balance as of June 30, 2019 $ 32,611 $ 47,240 $ 61,030 $ 7,398 $ 148,279 Acquisition of shares 274 - - 2,500 2,774 Stock-based compensation 71 - - - 71 Comprehensive (loss) income: 4,067 (17,273) (9,744) (4,365) (27,315) Other comprehensive income 2,227 - - - 2,227 Equity accounted (loss) earnings 1,840 (17,273) (9,744) (4,365) (29,542) Share of net income (loss) 1,857 1,421 4,676 (1,865) 6,089 Amortization of acquired intangible assets - (569) (1,874) - (2,443) Deferred taxes on acquired intangible assets - 136 524 - 660 Dilution resulting from corporate transactions (17) - - - (17) Impairment - (18,261) (13,070) (2,500) (33,831) Dividends received (274) (1,308) (1,787) (454) (3,823) Sale of DNI - - (36,508) - (36,508) Foreign currency adjustment (2) (5,873) 1,080 (12,991) (478) (18,262) Balance as of June 30, 2020 30,876 29,739 - 4,601 65,216 Stock-based compensation (25) - - - (25) Comprehensive (loss) income: (23,976) 1,156 - (4,025) (26,845) Other comprehensive income (1,967) - - - (1,967) Equity accounted (loss) earnings (22,009) 1,156 - (4,025) (24,878) Share of net income (loss) (4,359) 1,156 - (531) (3,734) Impairment (17,650) - - (3,494) (21,144) Dividends received - - - (194) (194) Sale of DNI - (32,892) - (13) (32,905) Foreign currency adjustment (2) 2,947 1,997 - (187) 4,757 Balance as of June 30, 2021 $ 9,822 $ - $ - $ 182 $ 10,004 Investment in loans: Balance as of June 30, 2019 $ - $ - $ - $ 148 $ 148 Loans granted - - - 1,230 1,230 Allowance for doubtful loans - - - (730) (730) Foreign currency adjustment (2) - - - (28) (28) Balance as of June 30, 2020 - - - 620 620 Loans repaid - - - (134) (134) Loans granted - - - 1,238 1,238 Allowance for doubtful loans - - - (1,738) (1,738) Foreign currency adjustment (2) - - - 14 14 Balance as of June 30, 2021 $ - $ - $ - $ - $ - Equity Loans Total Carrying amount as of : June 30, 2020 $ 65,216 $ 620 $ 65,836 June 30, 2021 $ 10,004 $ - $ 10,004 (1) Includes Carbon, SmartSwitch Namibia, V2 and Walletdoc; (2) The foreign currency adjustment represents the effects of the fluctuations of the Swiss franc, ZAR, Nigerian naira and Namibian dollar, against the U.S. dollar on the carrying value. 8. EQUITY - ACCOUNTED INVESTMENTS AND OTHER LONG - TERM ASSETS (continued) Summary financial information of equity-accounted investments Summarized below is the financial information of equity-accounted investments (during the Company’s reporting periods in which investments were carried using the equity-method, unless otherwise noted) as of the stated reporting period of the investee and translated at the applicable closing or average foreign exchange rates (as applicable): Finbond (1) Bank Frick (2) DNI Other (3) Balance sheet, as of February 28 June 30 June 30 Various Current assets (4) 2021 $ n/a $ n/a $ n/a $ 24,066 2020 n/a n/a n/a 19,910 Long-term assets 2021 289,260 n/a n/a 4,977 2020 294,734 1,042,366 n/a 6,145 Current liabilities (4) 2021 n/a n/a n/a 26,983 2020 n/a n/a n/a 7,824 Long-term liabilities 2021 208,043 n/a n/a 5,732 2020 189,159 940,948 n/a 18,076 Non-controlling interest 2021 13,574 n/a n/a - 2020 15,795 - n/a (73) Statement of operations, for the period ended February 28 June 30 (2) June 30 (5) Various Revenue 2021 95,847 35,641 n/a 6,404 2020 161,378 37,864 68,983 7,862 2019 174,177 41,126 15,898 33,707 Operating income (loss) 2021 (18,980) 3,860 n/a (2,413) 2020 17,483 4,815 24,563 (5,064) 2019 20,355 3,633 5,814 (753) Income (loss) from continuing operations 2021 (15,466) 3,303 n/a (2,539) 2020 14,449 4,053 17,092 (5,116) 2019 17,761 3,169 4,306 (915) Net income (loss) 2021 (17,889) 3,303 n/a (2,539) 2020 6,433 4,053 15,772 (5,014) 2019 $ 9,385 $ 3,169 $ 4,481 $ (1,029) (1) Finbond balances included were derived from its publicly available information and presented for its years ended February; (2) Bank Frick disposed of in February 2021. Statement of operations information for Bank Frick is for the period from July 1, 2020 to January 31, 2021, and the full twelve months for both fiscal 2020 and 2019. (3) Includes Carbon, SmartSwitch Namibia, Revix, Walletdoc and V2, as appropriate. Balance sheet information for Carbon, SmartSwitch Namibia, Revix and V2 is as of June 30, 2021 and 2020, and Walletdoc as of February 29, 2021 and February 28, 2020, respectively. Statement of operations information for Carbon, SmartSwitch Namibia, Revix, and V2 for the year ended June 30, and Walletdoc for the year ended February 28/29 (as appropriate); (4) Bank Frick and Finbond are banks and do not present current and long-term assets and liabilities. All assets and liabilities of these two entities are included under the long-term caption; (5) Statement of operations information for DNI is for the period from July 1, 2019 to March 31, 2020, and April 1, 2019 to June 30, 2019. 8. EQUITY - ACCOUNTED INVESTMENTS AND OTHER LONG - TERM ASSETS (continued) Other long-term assets Summarized below is the breakdown of other long-term assets as of June 30, 2021, and June 30, 2020: June 30, June 30, 2021 2020 Total equity investments $ 76,297 $ 26,993 Investment in 11 % (2020: 12 %) of MobiKwik (1) 76,297 26,993 Investment in 15 % of Cell C, at fair value (Note 5) - - Investment in 87.50 % of CPS (Note 23) (1)(2) - - Total held to maturity investments - - Investment in 7.625 % of Cedar Cellular Investment 1 (RF) (Pty) Ltd 8.625 % notes - - Long-term portion of amount due related to sale of interest in Bank Frick (3) 3,890 - Long-term portion of amount due from DNI related to sale of remaining interest in DNI - 2,857 Policy holder assets under investment contracts (Note 10) 381 490 Reinsurance assets under insurance contracts (Note 10) 1,298 1,006 Total other long-term assets $ 81,866 $ 31,346 (1) The Company determined that MobiKwik and CPS do not have readily determinable fair values and therefore elected to record these investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. (2) On October 16, 2020, the High Court of South Africa, Gauteng Division, Pretoria ordered that CPS be placed into liquidation. (3) Long-term portion of amount due related to sale of interest in Bank Frick represents the amount due by the purchaser in July 2022. MobiKwik The Company signed a subscription agreement with MobiKwik, which is one of India’s largest independent mobile payments networks, with over 100 million users and 2.3 million merchants. Pursuant to the subscription agreement, the Company agreed to make an equity investment of up to $ 40.0 million in MobiKwik over a 24 -month period. The Company made an initial $ 15.0 million investment in August 2016 and a further $ 10.6 million investment in June 2017, under this subscription agreement. During the year ended June 30, 2019, the Company paid $ 1.1 million to subscribe for additional shares in MobiKwik. As of June 30, 2021 and 2020, respectively, the Company owned approximately 11 % and 12 % of MobiKwik’s issued share capital. During the year ended June 30, 2021, MobiKwik entered into a number of separate agreements with new shareholders to raise additional capital through the issuance of additional shares. Specifically, the Company used the following transactions as the basis for its fair value adjustments to its investment in MobiKwik during the year ended June 30, 2021: (i) in early November 2020, $ 135.54 per share; March 2021, $ 170.33 per share; and June 2021, $ 245.50 per share. The Company considered each of these transactions to be an observable price change in an orderly transaction for similar or identical equity securities issued by MobiKwik. The Company used the November 2020 valuation as the basis for its adjustment to increase the carrying value in its investment in MobiKwik by $ 15.1 million from $ 27.0 million to $ 42.1 million as of December 31, 2020. The Company used the March 2021 valuation as the basis for its adjustment to increase the carrying value in its investment in MobiKwik by $ 10.8 million from $ 42.1 million to $ 52.9 million as of March 31, 2021. The Company used the June 2021 valuation as the basis for its adjustment to increase the carrying value in its investment in MobiKwik by $ 24.0 million from $ 52.9 million to $ 76.3 million as of June 30, 2021. The change in the fair value of MobiKwik for the year ended June 30, 2021, of $ 49.3 million, is included in the caption “Change in fair value of equity securities” in the consolidated statement of operations for the year ended June 30, 2021. Cell C On August 2, 2017, the Company, through its subsidiary, Net1SA, purchased 75,000,000 class “A” shares of Cell C for an aggregate purchase price of ZAR 2.0 billion ($ 151.0 million) in cash. The Company funded the transaction through a combination of cash and a borrowing facility. Net1 SA has pledged, among other things, its entire equity interest in Cell C as security for the South African facilities described in Note 11 used to partially fund the acquisition of Cell C. The Company’s investment in Cell is carried at fair value. Refer to Note 5 for additional information regarding changes in the fair value of Cell C. 8. EQUITY - ACCOUNTED INVESTMENTS AND OTHER LONG - TERM ASSETS (continued) Other long-term assets (continued) CPS The Company deconsolidated its investment in CPS in May 2020, refer to Note 23. As of June 30, 2021 and 20 20, respectively, the Company owned 87.5 % of CPS’ issued share capital. Cedar Cellular No interest income from the Cedar Cellular note was recorded during the years ended June 30, 2021 and 2020, respectively. The Company recognized interest income of $ 2.4 million related to the Cedar Cellular notes during the year ended June 30, 2019. Interest on this investment will only be paid, at Cedar Cellular’s election, on maturity in August 2022. The Company’s effective interest rate on the Cedar Cellular note was 24.82 % as of June 30, 2019. The Company does not expect to recover the amortized cost basis of the Cedar Cellular notes due to a reduction in the amount of future cash flows expected to be collected from the debt security compared to previous expectations. The Company does not expect to generate any cash flows from the debt security at maturity in August 2022 or prior to the maturity date due to the current challenges facing the business and the uncertainties over the future value of the current equity in Cell C. Accordingly, the Company believes it is unlikely that Cedar Cellular will generate sufficient cash inflows to settle any outstanding accumulated interest and principal due to the note holders on maturity in August 2022. The Company cannot calculate an effective interest rate on the Cedar Cellular note because the carrying value is currently zero ($ 0.0 million) as of June 30, 2021 and 2020. The Company therefore cannot calculate the present value of the expected cash flows to be collected from the debt security by discounting these cash flows at the interest rate implicit in the security upon acquisition (at a rate of 24.82 %) because there are no future cash flows to discount. The present value of the expected cash flows of zero ($ 0.0 million) is less than the amortized cost basis recorded of $ 12.8 million (before the cumulative 2019 impairments for the year ended June 30, 2019). Accordingly, the Company recorded an other-than-temporary impairment related to a credit loss of $ 12.8 million during the year ended June 30, 2019. The impairment of $ 12.8 million is included in the caption “Impairment of Cedar Cellular note” in the consolidated statement of operations for the year ended June 30, 2019. Summarized below are the components of the Company’s equity securities without readily determinable fair value and held to maturity investments as of June 30, 2021: Cost basis Unrealized holding Unrealized holding Carrying gains losses value Equity securities: Investment in Mobikwik $ 26,993 $ 49,304 $ - $ 76,297 Investment in CPS - - - - Held to maturity: Investment in Cedar Cellular notes - - - - Total $ 26,993 $ 49,304 $ - $ 76,297 Summarized below are the components of the Company’s equity securities without readily determinable fair value and held to maturity investments as of June 30, 2020: Cost basis Unrealized holding Unrealized holding Carrying gains losses value Equity securities: Investment in MobiKwik $ 26,993 $ - $ - $ 26,993 Investment in CPS - - - - Held to maturity: Investment in Cedar Cellular notes - - - - Total $ 26,993 $ - $ - $ 26,993 8. EQUITY - ACCOUNTED INVESTMENTS AND OTHER LONG - TERM ASSETS (continued) Contractual maturities of held to maturity investments Summarized below is the contractual maturity of the Company’s held to maturity investment as of June 30, 2021: Cost basis Estimated fair value (1) Due in one year or less $ - $ - Due in one year through five years (2) - - Due in five years through ten years - - Due after ten years - - Total $ - $ - (1) The estimated fair value of the Cedar Cellular note has been calculated utilizing the Company’s portion of the security provided to the Company by Cedar Cellular, namely, Cedar Cellular’s investment in Cell C. (2) The cost basis is zero ($ 0.0 million).

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- References No definition available. + Details
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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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