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Dispositions And Discontinued Operations | 12 Months Ended
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Jun. 30, 2022
Dispositions And Discontinued Operations [Abstract] |
Dispositions And Discontinued Operations | 24.DISPOSITIONS AND Discontinued operation S Dispositions 2020 Dispositions 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 had no continued involvement going forward. 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 calendar 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 returns. 24.DISPOSITIONS AND Discontinued operation S (continued) Dispositions (continued) 2020 Dispositions (continued) March 2020 disposal of KSNET (continued) 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 10) |  | 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 15) |  | 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) |  | 15,279
|  |  |  |  | Gain recognized on disposal, after tax | $ | 12,454
(1) Represents taxes paid related to the disposal of Net1 Korea (refer to Note 18). 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 potential 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. (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. 24.DISPOSITIONS AND DISCONTINUED OPERATIONS (continued) Dispositions (continued) 2020 Dispositions (continued) 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 $10.9 million (ZAR 159.7 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 – refer to Note 12. The table below presents the impact of the deconsolidation of FIHRST and the calculation of the net gain recognized on deconsolidation:
| FIHRST
|  |  |  |  |  | December
|  |  |  |  |  | 2019
| Proceeds from disposal of FIHRST, net of cash disposed | $ | 10,895
| Add: Cash and cash equivalents disposed |  | 854
| 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 10) |  | 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 15) |  | 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 |  | 2,654
|  |  |  | Release of valuation allowance related to capital losses previously unutilized(1) |  | (2,654)
|  |  | 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. May 2020 deconsolidation of CPS On February 5, 2020, the Constitutional Court of South Africa denied CPS’ leave to appeal lower court judgments ordering CPS to repay additional implementation costs that SASSA paid to CPS in 2014, thereby exhausting all legal recourse for CPS in the matter. As a result, CPS’ board of directors adopted a resolution to put CPS into business rescue under South African law and filed the required resolution with the Companies and Intellectual Property Commission. On May 18, 2020, the resolution was officially registered and business rescue practitioners were appointed. The business rescue process could have led to either a compromise with creditors and a continuation of CPS’ business or the liquidation of CPS. The Company had no means of exercising any control over CPS or the business rescue process because the Company has ceded control of CPS to the business rescue practitioners on the commencement of the business rescue process. The business rescue practitioners are independent third parties and controlled CPS through the business rescue process. The Company no longer controls CPS and therefore it determined to deconsolidate CPS. 24.DISPOSITIONS AND DISCONTINUED OPERATIONS Dispositions (continued) 2020 Dispositions (continued) May 2020 deconsolidation of CPS (continued) As a practical matter, the Company deconsolidated CPS as of May 31, 2020. The Company does not believe that the utilization of this date, compared to May 18, 2020, has had a significant impact on its consolidated financial statements. CPS was subsequently placed into provisional liquidation by the High Court on October 16, 2020. The Company provided accounting, tax and general administrative services to CPS while it was in business rescue and continues to provide these services during the liquidation process. In addition, the Company had an arrangement with CPS to rent certain bespoke payment vehicles from CPS, and it was expected that this arrangement would continue while CPS was in business rescue. These vehicles largely comprise the fleet of customized mobile ATMs used to deliver a service to rural communities. The value of these arrangements was not significant and was determined on an arms-length basis. On October 15, 2020, the Company purchased the bespoke vehicles from CPS for an arms-length price of ZAR 50.0 million (approximately $3.0 million, translated at the applicable exchange rate) to use in its mobile ATM business. The table below presents the impact of the deconsolidation of CPS and the calculation of the net loss recognized on deconsolidation:
| CPS
|  |  |  |  |  | May
|  |  |  |  |  | 2020
| Fair value of consideration received | $ | -
| Less: carrying value of CPS, comprising |  | (68)
|  | Cash and cash equivalents |  | 328
|  | Accounts receivable, net |  | 303
|  | Inventory |  | 12
|  | Property, plant and equipment, net |  | 236
|  | Goodwill (Note 10) |  | -
|  | Deferred income taxes assets (Note 18) |  | -
|  | Accounts payable |  | (238)
|  | Other payables |  | (33,160)
|  | Released from accumulated other comprehensive income – foreign currency translation reserve (Note 15) |  | 32,451
|  |  | Gain recognized on deconsolidation, before tax |  | 68
|  |  | Intercompany accounts written off/ provided for(1) |  | 7,216
|  |  | Taxes related to loss recognized on deconsolidation, comprising: |  | -
|  |  |  | Capital loss generated upon deconsolidation(2) |  | 5,399
|  |  |  | Valuation allowance related to capital losses generated upon deconsolidation(2) |  | (5,399)
|  |  |  |  | Loss recognized on deconsolidation, after tax | $ | 7,148
(1) Certain of the Company’s subsidiaries had funds due from CPS as of May 31, 2020. The Company wrote these amounts off as it did not believe that they were recoverable. (2) The Company recorded a deferred tax asset related to the capital loss generated on deconsolidation of CPS. The Company is only able to claim the capital loss for South African capital gains tax purposes once it deregisters or disposes of its interest in CPS. The Company has recorded a valuation allowance related to the full CPS capital loss deferred tax asset recognized because it does not believe that this capital loss will be utilized in the foreseeable future. Discontinued operations Discontinued operations – Net1 Korea and DNI The Company determined that Net1 Korea should be classified as discontinued operations because the disposal of its controlling interest in this business represented a strategic shift that would have a major effect on the Company’s operations and financial results. The facts and circumstances leading to the disposal of Net1 Korea are described above. The gain related to the disposal of Net1 Korea is presented above. 24.DISPOSITIONS AND DISCONTINUED OPERATIONS Discontinued operations Discontinued operations – Net1 Korea and DNI Net1 Korea, as a stand-alone holding company, and the amortization of intangible assets identified and recognized related to the KSNET acquisition, were allocated to corporate/eliminations and Net1 Korea’s subsidiaries, including KSNET, were allocated to the Company’s international transaction processing operating segment prior to the re-segmentation of the Company’s operating segments during the years ended June 30, 2022 and 2021. Net1 Korea did not have any equity method investments or any non-controlling interests. Net1 Korea is not included in the operating segments presented in Note 21 because it is a discontinued operation and the disclosure in Note 21 only presents operating segment information for continuing operations. The Company disposed of its controlling interest in DNI-4PL (Pty) Ltd (“DNI”) in March 2019, and determined that DNI should be classified as a discontinued operation for fiscal 2019 and comparative periods. The Company retained a continuing involvement in DNI through its 38% interest in DNI following the March 2019, transaction. The Company sold an 8% interest in DNI in May 2019, and entered into an agreement under which it provided a call option to DNI to repurchase the then remaining 30% interest in DNI. The Company recorded earnings under the equity method related to its retained investment in DNI during the nine months ended March 31, 2020, refer to Note 9. Refer to Note 9 for the dividends received from DNI and accounted for under the equity method during the year ended June 30, 2020. The table below presents certain major captions to the Company’s consolidated statement of operations and consolidated statement of cash flows for the year ended June 30, 2020, that have not been separately presented on those statements related to the presentation of Net1 Korea as a discontinued operation:
|  |  |  |  | 2020
|  |  |  |  | Total (Net1 Korea)
|  | Consolidated statement of operations |  |
|  |  | Discontinued: |  |
|  |  |  | Revenue | $ | 85,375
|  |  |  | Cost of goods sold, IT processing, servicing and support |  | 37,377
|  |  |  | Selling, general and administration |  | 30,562
|  |  |  | Depreciation and amortization |  | 8,652
|  |  |  | Impairment loss |  | -
|  |  |  | Operating income |  | 8,784
|  |  |  | Interest income |  | 678
|  |  |  | Interest expense |  | 106
|  |  |  | Net income before tax |  | 9,356
|  |  |  | Income tax expense |  | 2,954
|  |  |  | Net income before earnings from equity-accounted investments |  | 6,402
|  |  |  | Earnings from equity-accounted investments |  | -
|  |  |  | Net income from discontinued operations | $ | 6,402
|  | Consolidated statement of cash flows |  |
|  |  | Discontinued: |  |
|  |  |  | Total net cash provided by operating activities | $ | 3,758
|  |  |  | Total net cash provided by (used) in investing activities | $ | 1,524

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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