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Fair Value Of Financial Instruments
 3 Months Ended
Sep. 30, 2025
Fair Value Of Financial Instruments [Abstract]  
Fair Value Of Financial Instruments
5.
Fair value of financial instruments
Initial recognition and measurement
Financial instruments
are recognized
when the
Company becomes
a party
to the
transaction. Initial
measurements are
at cost,
which includes transaction costs.
Risk management
The Company manages its exposure
to currency exchange, translation, interest rate,
credit, microlending credit and equity price
and liquidity risks as discussed below.
Currency exchange risk
The Company is subject to currency exchange risk because it purchases components
for its vaults, that the Company assembles,
and inventories
that it is
required to
settle in other
currencies, primarily
the euro, renminbi,
and U.S. dollar.
The Company
has used
forward contracts in order to limit its
exposure in these transactions to fluctuations
in exchange rates between the South African
rand
(“ZAR”), on the one hand, and the U.S. dollar and the euro, on the other hand.
Translation risk
Translation risk relates to
the risk that
the Company’s results of operations
will vary significantly
as the U.S.
dollar is its
reporting
currency,
but it earns a
significant amount of its
revenues and incurs a
significant amount of its
expenses in ZAR. The
U.S. dollar to
the ZAR
exchange rate
has fluctuated
significantly over
the past
three years.
As exchange
rates are
outside the
Company’s
control,
there can be no
assurance that future fluctuations will
not adversely affect the Company’s results of operations and
financial condition.
5.
Fair value of financial instruments (continued)
Risk management (continued)
Interest rate risk
As a result of its
normal borrowing activities, the Company’s operating results are exposed to fluctuations in
interest rates, which
it
manages
primarily
through
regular
financing
activities.
Interest
rates
in
South
Africa
have
been
trending
downwards
in
recent
quarters and as of the date of this Quarterly Report, are expected to decline
by a further 25 basis points in the first quarter of calendar
2026 and stabilize
at that level
for the remainder of
that year. Therefore, ignoring the
impact of changes
to the margin on
its borrowings
(refer
to
Note
9)
and
value
of
borrowings
outstanding,
the
Company
expects
its
cost
of
borrowing
to
decline
moderately
in
the
foreseeable future, however, the Company would expect a higher cost of borrowing if interest rates were to increase in the future. The
Company
periodically
evaluates
the
cost
and
effectiveness
of
interest
rate
hedging
strategies
to
manage
this
risk.
The
Company
generally
maintains surplus
cash in
cash equivalents
and held
to maturity
investments and
has occasionally
invested in
marketable
securities.
Credit risk
Credit
risk
relates
to
the
risk
of
loss
that
the
Company
would
incur
as
a
result
of
non-performance
by
counterparties.
The
Company
maintains
credit
risk
policies
in
respect
of
its
counterparties
to
minimize
overall
credit
risk.
These
policies
include
an
evaluation
of
a
potential
counterparty’s
financial
condition,
credit
rating,
and
other
credit
criteria
and
risk
mitigation
tools
as
the
Company’s
management deems
appropriate.
With
respect to
credit risk
on certain
financial instruments,
the Company
maintains
a
policy of entering
into such transactions only
with South African
and European financial
institutions that have
a credit rating
of “B”
(or its equivalent) or better, as determined by
credit rating agencies such as Standard & Poor’s, Moody’s
and Fitch Ratings.
Consumer microlending credit
risk
The Company
is exposed
to credit
risk in
its Consumer
microlending activities,
which provides
unsecured short-term
loans to
qualifying customers.
Credit bureau
checks as
well as
an affordability
test are
conducted as
part of
the origination
process, both
of
which are in line with local regulations. The Company considers this
policy to be appropriate because the affordability test it
performs
takes into account
a variety of
factors such
as other debts
and total expenditures
on normal household
and lifestyle expenses.
Additional
allowances
may
be required
should the
ability of
its customers
to make
payments when
due
deteriorate
in the
future. Judgment
is
required to assess
the ultimate recoverability
of these finance
loan receivables, including
ongoing evaluation
of the creditworthiness
of each customer.
Merchant lending
The Company maintains an allowance for
doubtful finance loans receivable related to
its Merchant services segment with
respect
to short-term loans to qualifying merchant customers. The
Company’s risk management procedures include adhering to its proprietary
lending criteria which uses
an online-system loan application
process, obtaining necessary customer transaction-history
data and credit
bureau checks.
The Company considers
these procedures
to be appropriate
because it takes
into account
a variety of
factors such
as
the customer’s credit capacity and customer-specific
risk factors when originating a loan.
Equity price and liquidity risk
Equity price risk relates to the risk of loss that the Company would incur as a result of the volatility in the exchange-traded price
of equity
securities that
it holds.
The market
price of
these securities
may fluctuate
for a
variety of
reasons and,
consequently,
the
amount that the Company may obtain in a subsequent sale of these securities may significantly differ
from the reported market value.
Equity liquidity risk
relates to the risk
of loss that the
Company would incur as
a result of the lack
of liquidity on the
exchange
on
which
those
securities
are
listed.
The
Company
may
not be
able
to
sell some
or
all
of
these
securities
at
one
time,
or
over
an
extended period of time without influencing the exchange-traded price,
or at all.
5.
Fair value of financial instruments (continued)
Financial instruments
The following
section describes
the valuation
methodologies the
Company uses
to measure
its significant
financial assets
and
liabilities at fair value.
In general, and where applicable, the Company uses quoted prices in
active markets for identical assets or liabilities
to determine
fair value.
This pricing
methodology would
apply to
Level 1
investments. If quoted
prices in
active markets
for identical
assets or
liabilities are
not available
to determine
fair value,
then the
Company uses
quoted
prices for
similar assets
and
liabilities or
inputs
other
than
the
quoted
prices
that
are
observable
either
directly
or
indirectly. These
investments
would
be included
in
Level
2
investments. In
circumstances
in
which
inputs
are
generally
unobservable,
values
typically
reflect
management’s
estimates
of
assumptions that market participants would use in pricing the asset or liability.
The fair values are therefore determined using model-
based techniques that include
option pricing models, discounted
cash flow models, and
similar techniques. Investments
valued using
such techniques are included in Level 3 investments.
Asset measured at fair value using significant unobservable inputs – investment
in Cell C
The Company’s Level 3 asset represents an investment of
75,000,000
class “A” shares in Cell
C Limited (“Cell C”), a significant
mobile telecoms provider in South Africa.
The Company used a discounted cash flow model developed by the Company to determine
the fair value
of its investment in
Cell C as of
September 30, 2025
and June 30, 2025,
respectively,
and valued Cell
C at $
0.0
(zero)
and $
0.0
(zero) as of
September 30,
2025, and
June 30,
2025, respectively.
The Company
assumes that
Cell C’s
deferred tax
assets
would
be
utilized
over
the
forecast
period.
The
Company
has
assumed
a
marketability
discount
of
15
%
(June
2025:
15%)
and
a
minority discount
of
17
% (June 2025:
17%). The Company
utilized the latest
business plan provided
by Cell C
management for
the
period ended May 31, 2030, for the September 30, 2025, and
June 30, 2025, valuations.
The following key valuation inputs were used as of September 30, 2025,
and June 30, 2025:
Weighted Average
Cost of Capital ("WACC"):
23
% (
24
% as of June 30, 2025)
Long term growth rate:
4.5
% (
4.5
% as of June 30, 2025)
Marketability discount:
15
% (
15
% as of June 30, 2025)
Minority discount:
17
% (
17
% as of June 30, 2025)
Net adjusted external debt - September 30, 2025:
(1)
ZAR
8.8
billion ($
0.5
billion), no lease liabilities included
Net adjusted external debt - June 30, 2025:
(2)
ZAR
8.3
billion ($
0.5
billion), no lease liabilities included
(1) translated from ZAR to U.S. dollars at exchange rates applicable as of
September 30, 2025.
(2) translated from ZAR to U.S. dollars at exchange rates applicable as of
June 30, 2025.
The fair value of
Cell C as
of September 30, 2025, utilizing
the discounted cash flow
valuation model developed by the
Company
is sensitive to
the following
inputs: (i) the
ability of Cell
C to achieve
the forecasts in
their business case;
(ii) the
WAC
C
rate used;
and
(iii)
the
minority
and
marketability
discount
used.
Utilization
of
different
inputs,
or
changes
to
these
inputs,
may
result
in
a
significantly higher or lower fair value measurement.
The following table presents the impact on the carrying value of the Company’s
Cell C investment of a
2.5
% decrease and
2.5
%
increase in the
WACC
rate and
the EBITDA margins
respectively used
in the Cell
C valuation
on September
30, 2025, all
amounts
translated at exchange rates applicable as of September 30, 2025:
Sensitivity for fair value of Cell C investment
2.5% increase
2.5% decrease
WACC
rate
$
-
$
64
EBITDA margin
$
1,720
$
-
The
aggregate
fair
value
of
the
Cell
C’s
shares
as
of
September
30,
2025,
represented
0.0
%
of
the
Company’s
total
assets,
including these
shares. The
Company expects
that there
will be
short-term equity
price volatility
with respect
to these
shares given
t
hat Cell C remains in a turnaround process.
5.
Fair value of financial instruments (continued)
The
following
table
presents
the
Company’s
assets
measured
at
fair
value
on
a
recurring
basis
as
of
September
30,
2025,
according to the fair value hierarchy:
Quoted Price in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Assets
Investment in Cell C
$
-
$
-
$
-
$
-
Related to insurance
business:
Cash, cash equivalents and
restricted cash (included
in other long-term assets)
130
-
-
130
Fixed maturity
investments (included in
cash and cash equivalents)
2,633
-
-
2,633
Total assets at fair value
$
2,763
$
-
$
-
$
2,763
The following table presents the
Company’s assets measured
at fair value on a recurring basis as of
June 30, 2025, according to
the fair value hierarchy:
Quoted Price in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Assets
Investment in Cell C
$
-
$
-
$
-
$
-
Related to insurance business
Cash and cash equivalents
(included in other long-term
assets)
125
-
-
125
Fixed maturity investments
(included in cash and cash
equivalents)
4,739
-
-
4,739
Total assets at fair value
$
4,864
$
-
$
-
$
4,864
There have been
no
transfers in or out of Level 3 during the three months ended September 30, 2025 and 2024,
respectively.
There was
no
movement in the carrying value of assets measured at fair value on a recurring basis, and categorized within Level
3, during the three months ended September 30, 2025 and 2024.
Summarized below is the movement in the carrying value of
assets and liabilities measured at fair value on a recurring
basis, and
categorized within Level 3, during the three months ended September
30, 2025:
Carrying value
Assets
Balance as of June 30, 2025
$
-
Foreign currency adjustment
(1)
-
Balance as of September 30, 2025
$
-
(1) The foreign currency adjustment represents the effects of the fluctuations of the
South African rand against the U.S. dollar on
the carrying value.
5.
Fair value of financial instruments (continued)
Summarized below is the movement in the carrying value
of assets and liabilities measured at fair value on
a recurring basis, and
categorized within Level 3, during the three months ended September
30, 2024:
Carrying value
Assets
Balance as of June 30, 2024
$
-
Foreign currency adjustment
(1)
-
Balance as of September 30, 2024
$
-
(1) The
foreign currency
adjustment represents the
effects of
the fluctuations
of the South
African rand
against the U.S.
dollar
on the carrying value.
Assets measured at fair value on a nonrecurring basis
The Company
measures equity
investments without
readily determinable
fair values
at fair value
on a
nonrecurring basis.
The
fair values of
these investments
are determined
based on
valuation techniques
using the best
information available
and may include
quoted market prices, market comparables, and discounted cash flow
projections. An impairment charge is recorded when the cost
of
the
asset
exceeds
its
fair
value
and
the
excess
is
determined
to
be
other-than-temporary.
The
Company
has
no
liabilities
that
are
measured at fair value on a nonrecurring basis.