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Operating Segments
 12 Months Ended
Jun. 30, 2023
Operating Segments [Abstract]  
Operating Segments
21.
 
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
two
 
reportable
 
segments:
 
Merchant
 
and
 
Consumer.
 
The
 
Company
 
operates
 
mainly
 
within
 
South
Africa.
 
The
 
Company’s
 
reportable
 
segments
 
offer
 
different
 
products
 
and
 
services
 
and
 
require
 
different
 
resources
 
and
 
marketing
strategies but share the Company’s
 
assets.
The Merchant segment
 
includes activities related
 
to the provision
 
of goods and
 
services provided to
 
corporate and other juristic
entities. The Company
 
earns fees from
 
processing activities performed
 
for its customers
 
and revenue generated
 
from the distribution
of prepaid airtime. The Company provides cash management and payment services to
 
merchant customers through a digital vault (safe
asset) which
 
is located
 
at the
 
customer’s
 
premises and
 
through
 
which
 
the Company
 
is able
 
to provide
 
the services
 
which
 
generate
processing
 
fee
 
revenue.
 
The
 
Company
 
provides
 
its
 
customers
 
with
 
transaction
 
processing
 
services
 
that
 
involve
 
the
 
collection,
transmittal
 
and
 
retrieval
 
of all
 
transaction
 
data. This
 
segment
 
also
 
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.
The Consumer 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.
 
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
 
or
 
POS.
 
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.
 
21.
 
OPERATING SEGMENTS
 
(continued)
Reallocation of certain activities in Other to Merchant
During
 
the second
 
quarter
 
of fiscal
 
2023,
 
certain
 
processing
 
activities
 
performed
 
outside
 
South
 
Africa
 
which
 
were within
 
the
Company’s
 
Other
 
operating
 
segment
 
commenced
 
reporting
 
to
 
management
 
within
 
its
 
Merchant
 
operating
 
segment
 
as
 
part
 
of
 
the
integration
 
of Connect.
 
The Company
 
has allocated
 
these operations
 
from the
 
Other reporting
 
segment to
 
Merchant in its
 
reportable
segments during the second quarter of
 
fiscal 2023. The Company no
 
longer reports an Other
 
reporting segment and previously reported
information has been restated.
The reconciliation
 
of the
 
reportable segment’s
 
revenue to
 
revenue from
 
external customers
 
for the
 
years ended
 
June 30,
 
2023,
2022 and 2021, respectively,
 
is as follows:
Revenue
Reportable
Segment
Inter-segment
Unallocated
From external
customers
Merchant
$
463,701
$
-
$
-
$
463,701
Consumer
62,801
-
-
62,801
Unallocated
-
-
1,469
1,469
Total for the year
 
ended June 30, 2023
$
526,502
$
-
$
1,469
$
527,971
Merchant
$
156,689
$
12
$
-
$
156,677
Consumer
65,932
-
-
65,932
Total for the year
 
ended June 30, 2022
$
222,621
$
12
$
-
$
222,609
Merchant
$
62,944
$
-
$
-
$
62,944
Consumer
66,149
-
-
66,149
Unallocated
-
-
1,693
1,693
Total for the year
 
ended June 30, 2021
$
129,093
$
-
$
1,693
$
130,786
The
 
Company
 
evaluates
 
segment
 
performance
 
based
 
on
 
segment
 
earnings
 
before
 
interest,
 
tax,
 
depreciation
 
and
 
amortization
(“EBITDA”), adjusted for items mentioned
 
in the next sentence
 
(“Segment Adjusted EBITDA”). The Company
 
does not allocate once-
off items, stock-based compensation
 
charges, certain lease
 
charges (“Lease adjustments”), depreciation
 
and amortization, impairment
of goodwill or other intangible
 
assets, other items (including gains
 
or losses on disposal
 
of investments, fair value adjustments
 
to equity
securities,
 
fair
 
value
 
adjustments
 
to
 
currency
 
options),
 
interest
 
income,
 
interest
 
expense,
 
income
 
tax
 
expense
 
or
 
loss
 
from
 
equity-
accounted
 
investments
 
to
 
its
 
reportable
 
segments.
 
Group
 
costs
 
generally
 
include:
 
employee
 
related
 
costs
 
in
 
relation
 
to
 
employees
specifically hired
 
for group
 
roles and
 
related directly
 
to managing
 
the US-listed
 
entity; expenditures
 
related to
 
compliance with
 
the
Sarbanes-Oxley Act of
 
2002; non-employee directors’
 
fees; legal
 
fees; group and
 
US-listed related
 
audit fees; and
 
directors and officer’s
insurance premiums.
 
Once-off items
 
represents non-recurring
 
expense items,
 
including costs
 
related to
 
acquisitions and
 
transactions
consummated
 
or
 
ultimately
 
not
 
pursued.
 
Unrealized
 
loss
 
FV
 
for
 
currency
 
adjustments
 
represents
 
foreign
 
currency
 
mark-to-market
adjustments
 
on
 
certain
 
intercompany
 
accounts.
 
The
 
Lease
 
adjustments
 
reflect
 
lease
 
charges
 
and
 
the
 
Stock-based
 
compensation
adjustments reflect stock-based compensation expense
 
and are both excluded from the calculation of Segment
 
Adjusted EBITDA and
are therefore
 
reported as
 
reconciling items
 
to reconcile
 
the reportable
 
segments’ Segment
 
Adjusted EBITDA
 
to the
 
Company’s
 
loss
before income tax expense.
21.
 
OPERATING SEGMENTS
 
(continued)
The reconciliation of the reportable segments’ measures of profit or loss to loss before income taxes for the years ended June
 
30,
2023, 2022 and 2021, respectively,
 
is as follows:
2023
2022
2021
Reportable segments measure of profit or loss
 
$
36,845
$
(9,028)
$
(20,551)
Operating loss: Unallocated
-
-
(10,899)
Operating loss: Group costs
(9,109)
(8,587)
(6,965)
Once-off costs
(1,922)
(8,088)
(6,618)
Unrealized Loss FV for currency adjustments
(222)
-
-
Lease adjustments
(2,906)
(3,955)
(4,148)
Stock-based compensation charge adjustments
(7,309)
(2,962)
(344)
Depreciation and amortization
(23,685)
(7,575)
(4,347)
Impairment loss
(7,039)
-
-
Gain related to fair value adjustment to currency options
-
3,691
-
Gain on disposal of equity securities
-
720
-
Loss on disposal of equity-accounted investment (Note 9)
(205)
(376)
(13)
Change in fair value of equity securities (Note 3)
-
-
49,304
Loss on disposal of equity-accounted investment - Bank Frick (Note
 
9)
-
-
(472)
Interest income
 
1,853
2,089
2,416
Interest expense
 
(18,567)
(5,829)
(2,982)
Loss before income taxes
 
$
(32,266)
$
(39,900)
$
(5,619)
The following tables summarize segment information for the years ended
 
June 30, 2023, 2022 and 2021:
2023
2022
2021
Reportable segment revenue
Merchant
$
463,701
$
156,689
$
62,944
Consumer
62,801
65,932
66,149
Total reportable segment
 
revenue
526,502
222,621
129,093
Segment Adjusted EBITDA
Merchant
33,531
12,646
5,411
Consumer
(1)
3,314
(21,674)
(25,962)
Total Segment Adjusted
 
EBITDA
36,845
(9,028)
(20,551)
Depreciation and amortization
Merchant
7,422
2,186
866
Consumer
1,114
1,660
3,071
Subtotal: Operating segments
 
8,536
3,846
3,937
Group costs
15,149
3,729
359
Unallocated
-
-
51
Total
 
23,685
7,575
4,347
Expenditures for long-lived assets
Merchant
12,986
2,846
852
Consumer
3,170
1,712
3,433
Subtotal: Operating segments
 
16,156
4,558
4,285
Group costs
-
-
-
Total
 
$
16,156
$
4,558
$
4,285
(1) Consumer Segment Adjusted EBITDA for the year ended June 30, 2022, includes reorganization costs of $
5.9
 
million (refer also Note 1).
21.
 
OPERATING SEGMENTS
 
(continued)
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.
Long-lived assets based on their geographic location as of June 30, 2023,
 
2022 and 2021, are presented in the table below:
Long-lived assets
2023
2022
2021
South Africa
$
300,104
$
359,725
$
50,754
India - investment in MobiKwik (Note 9)
76,297
76,297
76,297
Rest of world
2,197
2,811
6,962
Total
$
378,598
$
438,833
$
134,013