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Operating Segments
 3 Months Ended
Sep. 30, 2021
Operating Segments [Abstract]  
Operating Segments

17.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 for fiscal 2021 as IPG’s activities were ceased in fiscal 2021.

 

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.

 

Corporate/Eliminations includes the Company’s head office cost center and the amortization of acquisition-related intangible assets.

17.Operating segments (continued)

 

Operating segments (continued)

 

The reconciliation of the reportable segment’s revenue to revenue from external customers for the three months ended September 30, 2021 and 2020, is as follows:

 

 

 

 

 

 

Revenue (as restated)(1)

 

 

 

 

 

 

Reportable Segment

 

 

Inter-segment

 

 

From external customers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Processing

$

21,356

 

$

1,200

 

$

20,156

 

Financial services

 

10,626

 

 

940

 

 

9,686

 

Technology

 

4,824

 

 

162

 

 

4,662

 

 

Total for the three months ended September 30, 2021

$

36,806

 

$

2,302

 

$

34,504

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Processing(1)

$

22,506

 

$

988

 

$

21,518

 

Financial services

 

8,265

 

 

745

 

 

7,520

 

Technology

 

6,211

 

 

113

 

 

6,098

 

 

 

Total for the three months ended September 30, 2020

$

36,982

 

$

1,846

 

$

35,136

(1) Processing for the three months ended September 30, 2020 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 loss before income tax expense (benefit) for the three months ended September 30, 2021 and 2020, is as follows:

 

 

 

 

 

Three months ended

 

 

 

 

 

September 30,

 

 

 

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

Reportable segments measure of profit or loss

$

(9,526)

 

$

(7,898)

 

 

Operating loss: Corporate/Eliminations

 

(1,699)

 

 

(2,877)

 

 

Interest income

 

389

 

 

611

 

 

Interest expense

 

(816)

 

 

(747)

 

 

 

Loss before income tax expense (benefit)

$

(11,652)

 

$

(10,911)

17.Operating segments (continued)

 

The following tables summarize segment information that is prepared in accordance with GAAP for the three months ended September 30, 2021 and 2020:

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

 

 

 

 

 

 

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

(as restated)(1)

 

Revenues

 

 

 

 

 

 

 

Processing

$

21,356

 

$

22,506

 

 

 

All others

 

21,356

 

 

21,297

 

 

 

IPG

 

-

 

 

1,209

 

 

Financial services

 

10,626

 

 

8,265

 

 

Technology

 

4,824

 

 

6,211

 

 

 

Total

 

36,806

 

 

36,982

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating (loss) income

 

 

 

 

 

 

 

Processing

 

(7,131)

 

 

(7,301)

 

 

 

All others

 

(7,131)

 

 

(4,529)

 

 

 

IPG

 

-

 

 

(2,772)

 

 

Financial services

 

(2,998)

 

 

(2,372)

 

 

Technology

 

603

 

 

1,775

 

 

 

Subtotal: Operating segments

 

(9,526)

 

 

(7,898)

 

 

 

Corporate/Eliminations

 

(1,699)

 

 

(2,877)

 

 

 

 

Total

 

(11,225)

 

 

(10,775)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

Processing

 

594

 

 

704

 

 

Financial services

 

90

 

 

136

 

 

Technology

 

193

 

 

2

 

 

 

Subtotal: Operating segments

 

877

 

 

842

 

 

 

Corporate/Eliminations

 

18

 

 

81

 

 

 

 

Total

 

895

 

 

923

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenditures for long-lived assets

 

 

 

 

 

 

 

Processing

 

514

 

 

246

 

 

Financial services

 

56

 

 

28

 

 

Technology

 

128

 

 

1

 

 

 

Subtotal: Operating segments

 

698

 

 

275

 

 

 

Corporate/Eliminations

 

-

 

 

-

 

 

 

 

Total

$

698

 

$

275

(1) Revenues-Processing-All others for the three months ended September 30, 2020 have been restated for the error described in Note 1.

 

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.