Operating Segments

12 Months Ended

Jun. 30, 2014

Operating Segments [Abstract]

Operating Segments

23. OPERATING SEGMENTS

Change to internal reporting structure and restatement of previously reported information

     During June 2014, the Company's chief operating decision maker simplified its operating and internal reporting structures from five reportable segments to three. Previously reported information has been restated.

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, major customers, and the countries in which the entity holds material assets or reports material revenues.

   The Company currently has three reportable segments: South African transaction processing, International transaction processing and Financial inclusion and applied technologies. The South African transaction processing and Financial inclusion and applied technologies segments operate mainly within South Africa and the International transaction processing segment operates mainly within South Korea. The Company's reportable segments offer different products and services and require different resources and marketing strategies and share the Company's assets.

     The South African transaction processing segment currently consists mainly of a welfare benefit distribution service provided to the South African government and transaction processing for retailers, utilities, medical-related claim service customers and banks. Fee income is earned based on the number of recipient cardholders paid. Utility providers and banks are charged a fee for transaction processing services performed on their behalf at retailers. This segment has individually significant customers that each provides more than 10% of the total revenue of the Company. For the year ended June 30, 2014, there was one such customer, providing 27% of total revenue (2013: one such customer, providing 42% of total revenue; 2012: one such customer, providing 41% of total revenue).

     The International transaction processing segment consists mainly of activities in South Korea from which the Company generates revenue from the provision of payment processing services to merchants and card issuers through its VAN. This segment generates fee revenue from the provision of payment processing services and to a lesser extent from the sale of goods, primarily point of sale terminals, to customers in South Korea. The segment also generates transaction fee revenue from transaction processing of UEPS-enabled smartcards in Botswana and, until February 2013, through NUETS initiative in Iraq as well as transaction processing of medical-related claims in the United States.

     The Financial inclusion and applied technologies segment derives revenue from the provision of smart card accounts, as a fixed monthly fee per card is charged for the maintenance of these accounts, and the provision of short-term loans as a principal. This segment also includes fee income and associated expenses from merchants and card holders using the Company's merchant acquiring system, the sale of prepaid products (electricity and airtime) as well as the sale of hardware and software. Finally, the Company earns premium income from the sale of life insurance products and investment income through its insurance business.

     Corporate/eliminations includes the Company's head office cost center and the amortization of acquisition-related intangible assets. The charges related to the BEE equity instrument issued during the years ended June 30, 2014 and 2012 (refer to Note 17), and the profit related to the deconsolidation of subsidiaries and disposal of business (refer to Note 19), during the years ended June 30, 2014 and 2012, has been allocated to corporate/eliminations.

The reconciliation of the reportable segments revenue to revenue from external customers for the years ended June 30, 2014, 2013 and 2012, respectively, is as follows:

	Revenue
						From
		Reportable		Inter-		external
		Segment		segment		customers
South African transaction processing	$	261,577	$	11,543	$	250,034
International transaction processing		152,725		-		152,725
Financial inclusion and applied technologies		207,595		28,698		178,897
Total for the year ended June 30, 2014		621,897		40,241		581,656
South African transaction processing		242,739		495		242,244
International transaction processing		135,954		-		135,954
Financial inclusion and applied technologies		108,001		34,052		73,949
Total for the year ended June 30, 2013		486,694		34,547		452,147
South African transaction processing		194,630		3,011		191,619
International transaction processing		120,625		-		120,625
Financial inclusion and applied technologies		90,792		12,772		78,020
Total for the year ended June 30, 2012	$	406,047	$	15,783	$	390,264

     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 allocation of expenses allocated to Corporate/Eliminations, all under GAAP. The reconciliation of the reportable segments measure of profit or loss to income before income taxes for the years ended June 30, 2014, 2013 and 2012, respectively, is as follows:

		For the years ended June 30,
		2014			2013			2012
Reportable segments measure of profit or loss	$	144,038		$	50,383		$	94,439
Operating income: Corporate/Eliminations		(42,240	)		(27,221	)		(33,289	)
Interest income		14,817			12,083			8,576
Interest expense		(7,473	)		(7,966	)		(9,345	)
Income before income taxes	$	109,142		$	27,279		$	60,381

  The following tables summarize segment information which is prepared in accordance with GAAP for the years ended June 30, 2014, 2013 and 2012:

		For the years ended June 30,
		2014			2013			2012
Revenues
South African transaction processing	$	261,577		$	242,739		$	194,630
International transaction processing		152,725			135,954			120,625
Financial inclusion and applied technologies		207,595			108,001			90,792
Total		621,897			486,694			406,047
Operating income (loss)
South African transaction processing		61,401			(21,316	)		33,906
International transaction processing		21,952			14,208			14,649
Financial inclusion and applied technologies		60,685			57,491			45,884
Subtotal: Operating segments		144,038			50,383			94,439
Corporate/Eliminations		(42,240	)		(27,221	)		(33,289	)
Total		101,798			23,162			61,150
Depreciation and amortization
South African transaction processing		7,036			7,516			2,982
International transaction processing		15,823			14,183			13,209
Financial inclusion and applied technologies		874			678			751
Subtotal: Operating segments		23,733			22,377			16,942
Corporate/Eliminations		16,553			18,222			19,557
Total		40,286			40,599			36,499
Expenditures for long-lived assets
South African transaction processing		3,425			9,400			23,332
International transaction processing		19,393			12,490			14,994
Financial inclusion and applied technologies		1,088			857			841
Subtotal: Operating segments		23,906			22,747			39,167
Corporate/Eliminations		-			-			-
Total	$	23,906		$	22,747		$	39,167

     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.

It is impractical to disclose revenues from external customers for each product and service or each group of similar products and services.

Geographic Information   

  Revenues based on the geographic location from which the sale originated for the years ended June 30, are presented in the table below:

		2014		2013		2012
South Africa	$	428,931	$	317,916	$	272,063
South Korea		146,667		129,338		114,096
Rest of world		6,058		4,893		4,105
Total	$	581,656	$	452,147	$	390,264

Long-lived assets based on the geographic location for the years ended June 30, are presented in the table below:

				Long-lived assets
		2014		2013		2012
South Africa	$	105,627	$	117,858	$	140,308
South Korea		229,830		213,589		224,272
Rest of world		6,593		7,676		6,911
Total	$	342,050	$	339,123	$	371,491