Deconsolidation Of Businesses Sold Or Liquidated And Disposal Of Business

12 Months Ended

Jun. 30, 2014

Deconsolidation Of Businesses Sold Or Liquidated And Disposal Of Business [Abstract]

Deconsolidation Of Businesses Sold Or Liquidated And Disposal Of Business

19. DECONSOLIDATION OF BUSINESSES SOLD OR LIQUIDATED AND DISPOSAL OF BUSINESS

     The profit (loss) on deconsolidation of businesses sold or liquidated and disposal of business during the years ended June 30, 2014, 2013 and 2012 are summarized in the table below:

		2014			2013		2012
Profit on sale of MediKredit Integrated Healthcare Solutions Proprietary Limited
("MediKredit")	$	4,125		$	-	$	-
Profit on disposal of assets related to the business of Net 1 Universal Electronic
Technological Solutions (Pty) Ltd ("NUETS business")		2,081			-		-
Loss on liquidation of Net1 UTA		(6,261	)		-		-
Profit on liquidation of SmartSwitch Nigeria		-			-		3,994
Net profit (loss) for the year ended June 30,	$	(55	)	$	-	$	3,994

2014 transactions

Sale of MediKredit

     On June 17, 2014, the Company sold its MediKredit subsidiary to an unrelated third party. The Company has recorded a profit of approximately $4.1 million related to the sale in selling, general and administration expense on its consolidated statement of operations for the year ended June 30, 2014. The profit has been allocated to corporate/eliminations. The sales price will be paid in three tranches, approximately 57% on June 17, 2014, approximately 14% on June 1, 2015, and the remainder on June 1, 2016. In addition, the parties have agreed that MediKredit may continue to operate at the Company's premises at no cost to the purchaser until September 30, 2014. Furthermore, the parties have agreed that MediKredit will provide certain development, support and maintenance services (collectively "Services") related to technology used in the United States at no cost to the Company up to an amount of $0.3 million, translated at the foreign exchange rates applicable as of June 30, 2014. The Company determined that the Services comprise part of the sales price of MediKredit and have increased the profit on sale accordingly. In addition, the Company has determined that the provision of an operating area within the Company's premises represents an obligation on it, and has reduced the profit on sale accordingly. The fair value of the Services and free rental of premises has been determined using prices that would have been charged between unrelated third parties. Finally, the Company was required to release a gain of approximately $2.0 million from its foreign currency transaction reserve which has been included in the profit on sale. During the year ended June 30, 2014, the Company incurred transaction-related expenditure of $0.01 million related to the sale of MediKredit.

     The purchaser is contingently obligated to pay the Company additional amounts based on future expansion of the MediKredit business in certain circumstances. The Company has not recorded any of these amounts during the year ended June 30, 2014, as none of the contingent events have occurred as of June 30, 2014.

     Disposal of assets related to NUETS business

     On June 30, 2014, the Company sold the NUETS business, which consisted primarily of customer contracts, other than contracts for UEPS systems in Botswana and Namibia, and equipment for approximately $2.2 million in cash. The Company received $0.2 million of these cash proceeds in June 2014, and the remaining $2.0 million was received in July 2014, and is included in accounts receivable, net, as of June 30, 2014. The Company has recorded a profit of approximately $2.1 million on the sale in selling, general and administration expense on its consolidated statement of operations for the year ended June 30, 2014. The profit has been allocated to corporate/eliminations. The shareholders of the purchaser comprise a former employee of the Company, a US-based economic development equity fund and other unrelated individuals and private companies. The Company has provided the purchaser with a non-exclusive, perpetual, worldwide license to use the Company's UEPS technology. The purchaser may not use this technology in South Africa to provide payment services and specifically may not use the technology in any manner to service the Ministry of Social Development in South Africa and/or SASSA. The parties have agreed that the Company will provide certain administrative and technical support services related to the NUETS business until March 2015. During the year ended June 30, 2014, the Company incurred transaction-related expenditure of $0.06 million related to the sale of NUETS business.

Liquidation of Net1 UTA

     The Company has substantially liquidated its Net1 UTA business due to an inability to implement and expand its technology into new markets on a profitable basis. Net1 UTA's operations were streamlined a number of years ago and the Company did not incur significant cash costs to liquidate Net1 UTA. However, the Company was required to release approximately $6.3 million from its foreign currency transaction reserve which has resulted in a loss on liquidation of Net1 UTA. This non-cash loss on liquidation of Net1 UTA has been recorded in selling, general and administration expense on its consolidated statement of operations for the year ended June 30, 2014. The loss has been allocated to corporate/eliminations.

2012 transaction

Liquidation of SmartSwitch Nigeria

     The Company ceased operations in the Federation of Nigeria due to an inability to implement its technology on a profitable basis. During the year ended June 30, 2012, the Company, together with the other shareholders, agreed to liquidate SmartSwitch Nigeria, the company through which operating activities in Nigeria were performed. SmartSwitch Nigeria was capitalized primarily with shareholder loans. The shareholders of SmartSwitch Nigeria agreed to waive all outstanding capital and interest repayments related to the loan funding initially provided as part of the liquidation processes. The non-cash profit on liquidation of SmartSwitch Nigeria of $4.0 million includes the write back of all assets and liabilities, including non-controlling interest loans, of SmartSwitch Nigeria, except for expected liabilities related to the liquidation of SmartSwitch Nigeria. The Company has recorded the profit in selling, general and administration expense on its consolidated statement of operations for the year ended June 30, 2012. The profit has been allocated to corporate/eliminations.