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Disposal Of Controlling Interest In KSNET And FIHRST | 9 Months Ended
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Mar. 31, 2021
Disposal of controlling interest in KSNET and FIHRST [Abstract] |
Disposal Of Controlling Interest In KSNET And FIHRST | 2.Disposal of controlling interest in KSNET and FIHRST 2020 Disposals 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 limited 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 March 1, 2020, and has had no continued involvement since that date. KSNET was acquired in October 2010, and was a profitable and cash generative business, but operated autonomously and in a more developed economy, with limited overlap with the Company’s other activities. The Company also believed that the intrinsic value of KSNET was not appropriately reflected in the Company’s overall valuation. The Company’s board of directors commenced a strategic review of its various businesses and investments during 2019, 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 shareholder value. 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 7) |  | 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 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 12) |  | 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) Represents taxes that the Company expected to pay related to the disposal of Net1 Korea as of March 31, 2020. The Company also agreed that the purchaser withhold potential 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 amounts, on behalf of Net1 BV, to the South Korean tax authorities. Net1 BV commenced a process to claim a refund from the South Korean tax authorities of the amount withheld and received this amount of approximately $20.1 million (KRW 23.8 billion) in September 2020. The Company included the expected amount to be refunded in the caption Accounts receivable, net and other receivables in its consolidated balance sheet as of June 30, 2020, refer also to Note 3. 2.Disposal of controlling interest in KSNET and FIHRST (continued) 2020 Disposals (continued) March 2020 disposal of KSNET (continued) (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 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 liability 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 $11.7 million (ZAR 172.2 million). 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. 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
| 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 7) |  | 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 12) |  | 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 was utilized as a result of the disposal of FIHRST and, therefore, the equivalent portion of the valuation allowance created was released.

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