XML 47 R27.htm IDEA: XBRL DOCUMENT v3.21.2
Operating Segments
 12 Months Ended
Jun. 30, 2021
Operating Segments [Abstract]  
Operating Segments
20.
 
OPERATING
 
SEGMENTS
 
 
Change to internal reporting structure and restatement
 
of previously reported information
 
During September 2020, the Company’s chief operating decision maker
 
changed the Company’s operating and internal reporting
structures
 
following
 
the
 
Company’s
 
decisions
 
to
 
focus
 
primarily
 
on
 
the
 
South
 
African
 
market
 
and
 
to
 
exit
 
its
 
operating
 
activities
performed through IPG.
 
The chief operating decision
 
maker has decided to
 
analyze the Company’s
 
operating performance primarily
based on
 
reported information
 
for statutory
 
entities, statutory
 
groups, clustered
 
statutory entities
 
or clustered
 
statutory groups,
 
with
certain reallocations, based on the activity of the reporting unit. Previous
 
ly reported information has been restated.
 
Reallocation of certain activities among operating segments
 
During the first quarter of fiscal 2021, the Company reorganized
 
its operating segments by combining what were previously the
South African
 
transaction processing
 
segment and
 
the International
 
transaction processing
 
segment into
 
what is now
 
the Processing
segment and bifurcating what
 
was previously the Financial
 
inclusion and applied
 
technologies segment into what
 
are now the
 
Financial
services segment and the
 
Technology segment. Segment results for the
 
year ended June 30,
 
2021,
 
reflect these changes to
 
the operating
segments.
 
Operating segments
 
 
The Company discloses segment information as reflected in the management
 
information systems reports that its chief operating
decision maker uses in making decisions and to report certain entity-wide disclosures about products and services, and the countries in
which the entity holds material assets or reports material revenues.
 
The Company currently has
 
three reportable segments: Processing,
 
Financial services and Technology. All three segments operate
mainly
 
within South
 
Africa and
 
certain of
 
our activities
 
outside of
 
South Africa
 
have been
 
allocated to
 
Processing. The
 
Company’s
reportable
 
segments
 
offer
 
different
 
products
 
and
 
services
 
and
 
require
 
different
 
resources
 
and
 
marketing
 
strategies
 
but
 
share
 
the
Company’s assets.
 
 
The Processing segment includes
 
fees earned by
 
the Company from
 
processing activities performed for
 
its customers and
 
revenue
generated
 
from
 
the
 
distribution
 
of
 
prepaid
 
airtime.
 
The
 
Company
 
provides
 
its
 
customers
 
with
 
transaction
 
processing
 
services
 
that
involve the collection, transmittal and retrieval of all transaction
 
data. Customers that have a bank account managed by
 
the Company
are issued
 
cards that
 
can be
 
utilized to
 
withdraw
 
funds
 
at an
 
ATM
 
or to
 
transact at
 
a merchant
 
point
 
of sale
 
device
 
(“POS”). The
Company
 
earns
 
processing
 
fees
 
from
 
transactions
 
processed
 
for
 
these
 
customers.
 
The
 
Company
 
also
 
earns
 
fees
 
on
 
transactions
performed by other
 
banks’ customers utilizing
 
its ATM,
 
POS or bill payment
 
infrastructure. The Processing
 
segment includes IPG’s
processing activities. During
 
the years ended June 30,
 
2020 and 2019, the operating
 
segment incurred goodwill impairment
 
losses of
$
5.6
 
million and $
8.2
 
million, respectively (refer to Note 9).
 
The Financial
 
services segment
 
includes activities
 
related to
 
the provision
 
of financial
 
services to
 
customers, including
 
a bank
account,
 
loans
 
and
 
insurance
 
products.
 
The
 
Company
 
charges
 
monthly
 
administration
 
fees
 
for
 
all
 
bank
 
accounts.
 
The
 
Company
provides short-term loans to customers in South Africa for
 
which it earns initiation and monthly service fees. The
 
Company writes life
insurance contracts, primarily funeral-benefit policies, and
 
policy holders pay the Company a monthly insurance premium.
 
 
The Technology segment includes sales of hardware and licenses to customers. Hardware includes the sale of POS devices, SIM
cards and other
 
consumables which can
 
occur on an
 
ad hoc basis.
 
Licenses include
 
the right to
 
use certain technology
 
developed by
the Company. During the year ended June 30, 2019,
 
the operating segment incurred goodwill impairment losses of $6.2 million (refer
to Note 9).
 
Corporate/Eliminations
 
includes the
 
Company’s
 
head office
 
cost center
 
and the
 
amortization
 
of
 
acquisition-related
 
intangible
assets. The
 
$
17.5
 
million termination
 
fee paid
 
to terminate
 
the Bank
 
Frick option
 
(refer to
 
Note 8)
 
during the
 
year ended
 
June 30,
2020,
 
has
 
been
 
allocated
 
t
o
 
corporate/
 
elimination.
 
 
20.
 
OPERATING
 
SEGMENTS
 
(continued)
 
 
Operating segments (continued)
 
 
The reconciliation
 
of the
 
reportable segment’s
 
revenue to
 
revenue from
 
external customers
 
for the
 
years ended
 
June 30,
 
2021,
2020 and 2019, respectively,
 
is as follows:
Revenue (as restated)
(1)
Reportable
Segment
Corporate/
Elimination
s
Inter-
segment
From
external
customers
Processing
$
82,435
$
-
$
4,773
$
77,662
Financial services
38,996
-
3,391
35,605
Technology
17,751
-
232
17,519
Total for the years
 
ended June 30, 2021
$
139,182
$
-
$
8,396
$
130,786
Processing
(1)
$
91,786
$
-
$
8,158
$
83,628
Financial services
46,870
-
3,546
43,324
Technology
18,071
-
724
17,347
Total for the years
 
ended June 30, 2020
$
156,727
$
-
$
12,428
$
144,299
Processing
(1)
$
118,088
$
-
$
10,666
$
107,422
Financial services
57,034
-
5,861
51,173
Technology
20,115
-
(1,634)
21,749
Reportable segments
195,237
-
14,893
180,344
Corporate/Eliminations – revenue refund (Note 15)
-
(19,709)
-
(19,709)
Total for the years
 
ended June 30, 2019
$
195,237
$
(19,709)
$
14,893
$
160,635
(1) Processing for the years ended June 30, 2020 and 2019, has been restated
 
for the error described in Note 1.
 
The Company does not allocate interest income, interest
 
expense or income tax expense to
 
its reportable segments. The Company
evaluates
 
segment
 
performance
 
based
 
on
 
segment
 
operating
 
income
 
before
 
acquisition-related
 
intangible
 
asset
 
amortization
 
which
represents operating income before acquisition-related intangible asset amortization and expenses allocated to Corporate/Eliminations,
all under GAAP.
 
The reconciliation of
 
the reportable segments
 
measures of profit or
 
loss to income before
 
income taxes for the
 
years ended June
30, 2021, 2020 and 2019, respectively,
 
is as follows:
2021
2020
(1)
2019
Reportable segments measure of profit or loss
 
$
(40,085)
$
(34,642)
$
(86,937)
Operating loss: Corporate/Eliminations
 
(13,787)
(9,606)
(47,995)
Change in fair value of equity securities (Note 23)
49,304
-
(167,459)
Loss on disposal of equity-accounted investment - Bank Frick (Note
 
8)
(472)
-
-
Loss on disposal of equity-accounted investment (Note 8)
(13)
-
-
Gain on disposal of FIHRST (Note 23)
-
9,743
-
(Loss) Gain on disposal of DNI interest as an equity method investment
(Note 23)
-
(1,010)
177
Loss on deconsolidation of CPS (Note 23)
-
(7,148)
-
Termination
 
fee to cancel Bank Frick option
-
(17,517)
-
Interest income
 
2,416
2,805
5,424
Interest
 
expense
 
(2,982)
(7,641)
(9,860)
Impairment of Cedar Cellular Note
-
-
(12,793)
Loss before income taxes
 
$
(5,619)
$
(65,016)
$
(319,443)
(1)
 
-
 
Operating
 
loss:
 
Corporate/Eliminations
 
includes
 
$
34.0
 
million
 
related
 
to
 
an
 
accrual
 
CPS
 
recorded
 
at
 
June
 
30,
 
2019,
comprising a revenue refund of $
19.7
 
million (ZAR
277.6
 
million), accrued interest of $
11.4
 
million (ZAR
161.0
 
million), unclaimed
indirect
 
taxes
 
of
 
$
2.8
 
million
 
(ZAR
 
39.4
 
million)
 
and
 
estimated
 
costs
 
of
 
$
0.1
 
million
 
(ZAR
 
1.4
 
million)
.
 
 
20.
 
OPERATIN
G
 
SEGMENTS
 
(continued)
 
 
Operating segments (continued)
 
 
The following tables summarize segment information for the years
 
ended June 30, 2021, 2020 and 2019:
2021
2020
2019
(as restated)
(1)
(as restated)
(1)
Revenues
Processing
$
82,435
$
91,786
$
118,088
All others
80,742
88,476
109,931
IPG
1,693
3,310
8,157
Financial services
38,996
46,870
57,034
Technology
17,751
18,071
20,115
Total
 
139,182
156,727
195,237
Operating (loss) income
Processing
(2)
(34,283)
(33,836)
(51,575)
All others
(2)
(23,556)
(21,488)
(35,474)
IPG
(10,727)
(12,348)
(16,101)
Financial services
(2)
(8,429)
(3,621)
(30,068)
Technology
2,627
2,815
(5,294)
Subtotal: Operating segments
(2)
(40,085)
(34,642)
(86,937)
Corporate/Eliminations
 
(13,787)
(9,606)
(47,995)
Total
(2)
(53,872)
(44,248)
(134,932)
Depreciation and amortization
Processing
2,900
3,298
3,915
Financial services
473
790
1,002
Technology
615
168
90
Subtotal: Operating segments
 
3,988
4,256
5,007
Corporate/Eliminations
 
359
391
7,096
Total
 
4,347
4,647
12,103
Expenditures for long-lived assets
Processing
1,173
4,297
4,419
Financial services
174
138
1,142
Technology
2,938
-
181
Subtotal: Operating segments
 
4,285
4,435
5,742
Corporate/Eliminations
 
-
-
-
Total
 
$
4,285
$
4,435
$
5,742
(1) Revenues-Processing
 
-All others
 
for the
 
years ended
 
June 30,
 
2020 and
 
2019, have
 
been restated
 
for the
 
error described
 
in
Note 1.
 
(2)
 
Processing
 
and
 
Financial
 
services
 
include
 
retrenchment
 
costs
 
for
 
the
 
year
 
ended
 
June
 
30,
 
2019,
 
of:
 
$
4,665
 
and
 
$
1,604
,
respectively,
 
for total retrenchment costs for the
 
year ended June 30, 2019, of $
6,269
. The retrenchment costs are included
 
in selling,
general and administration expense on the consolidated statement of operations
 
for the year ended June 30, 2019.
 
The segment
 
information as
 
reviewed by
 
the chief
 
operating decision
 
maker does
 
not include
 
a measure
 
of segment
 
assets per
segment as all of
 
the significant assets are
 
used in the operations
 
of all, rather than
 
any one, of the
 
segments. The Company does
 
not
have dedicated assets
 
assigned to a
 
particular operating
 
segment. Accordingly,
 
it is not meaningful
 
to attempt an arbitrary
 
allocation
and
 
segment
 
asset
 
allocation
 
is
 
therefore
 
not
 
presented.
 
 
20.
 
OPERATING
 
SEGMENTS
 
(continued)
 
 
Geographic Information
 
Long-lived assets based on the geographic location
 
for the years ended June 30, 2021, 2020 and 2019, are presented
 
in the table
below:
Long-lived assets
2021
2020
2019
South Africa
$
50,754
$
68,521
$
141,235
Liechtenstein - investment in Bank Frick (Note 8)
-
29,739
47,240
India - investment in MobiKwik (Note 8)
76,297
26,993
26,993
South Korea (Note 23)
-
-
149,390
Rest of world
6,962
9,119
9,739
Total
$
134,013
$
134,372
$
374,597