Goodwill And Intangible Assets, Net

12 Months Ended

Jun. 30, 2016

Goodwill And Intangible Assets, Net [Abstract]

9	.	GOODWILL AND INTANGIBLE ASSETS, net

		Goodwill

Summarized below is the movement in the carrying value of goodwill for the years ended June 30, 2016, 2015 and 2014:

			Gross			Accumulated			Carrying
			value			impairment			value
Balance as of July 1, 2013			218,558			(42,752	)		175,806
Loss on liquidation of Net1 Universal Electronic Technologies
(Austria) GmbH and associated entities ("Net1 UTA") (Note
19	)		(44,445	)		44,445			-
Foreign currency adjustment⁽¹⁾			12,463			(1,693	)		10,770
Balance as of June 30, 2014			186,576			-			186,576
Foreign currency adjustment⁽¹⁾			(20,139	)		-			(20,139	)
Balance as of June 30, 2015			166,437			-			166,437
Acquisition of Transact24 (Note 3)			6,024			-			6,024
Acquisition of Masterpayment (Note 3)			17,084			-			17,084
Foreign currency adjustment⁽¹⁾			(10,067	)		-			(10,067	)
Balance as of June 30, 2016		$	179,478		$	-		$	179,478

(1) – the foreign currency adjustment represents the effects of the fluctuations between the South African rand, Euro and the Korean won, and the U.S. dollar on the carrying value.

Goodwill associated with the acquisition of Transact24 and Masterpayment represents the excess of cost over the fair value of acquired net assets. The Transact24 and Masterpayment goodwill is not deductible for tax purposes. See Note 3 for the allocation of the purchase price to the fair value of acquired net assets. Transact24 and Masterpayment have both been allocated to the Company's International transaction processing operating segment.

The Company assesses the carrying value of goodwill for impairment annually, or more frequently, whenever events occur and circumstances change indicating potential impairment. The Company performs its annual impairment test as of June 30 of each year. The results of our impairment tests during the year ended June 30, 2016 and 2015, indicated that the fair value of the Company's reporting units exceeded their carrying values and therefore the Company's reporting units were not at risk of potential impairment.

Goodwill has been allocated to the Company's reportable segments as follows:

		South						Financial
		African			International			inclusion and
		transaction			transaction			applied			Carrying
		processing			processing			technologies			value
Balance as of June 30, 2014	$	28,517		$	128,427		$	29,632		$	186,576
Foreign currency adjustment⁽¹⁾		(3,938	)		(12,908	)		(3,293	)		(20,139	)
Balance as of June 30, 2015		24,579			115,519			26,339			166,437
Acquisition of Transact24 (Note 3)		-			6,024			-			6,024
Acquisition of Masterpayment (Note 3)		-			17,084			-			17,084
Foreign currency adjustment⁽¹⁾		(4,154	)		(2,442	)		(3,471	)		(10,067	)
Balance as of June 30, 2016	$	20,425		$	136,185		$	22,868		$	179,478

(1) – the foreign currency adjustment represents the effects of the fluctuations between the South African rand, Euro and the Korean won, and the U.S. dollar on the carrying value.

Intangible assets, net

Summarized below is the fair value of intangible assets acquired, translated at the exchange rate applicable as of the relevant acquisition dates, and the weighted-average amortization period:


			Weighted-
		Fair value	Average
		as of	Amortization
		acquisition	period (in
		date	years)
Finite-lived intangible asset:
Transact24 customer relationships	$	3,749	5
Masterpayment customer relationships		6,595	5
Transact24 software and unpatented technology		1,225	3
Masterpayment software and unpatented technology		1,765	3
Masterpayment trademarks	$	1,068	5

The Company recognized a deferred tax liability of approximately $3.5 million related to the acquisition of the Transact24 and Masterpayment intangible assets during the year ended June 30, 2016.

The Company assesses the carrying value of intangible assets for impairment whenever events occur or circumstances change indicating that the carrying amount of the intangible asset may not be recoverable. No intangible assets have been impaired during the years ended June 30, 2016, 2015 and 2014, respectively.

Summarized below is the carrying value and accumulated amortization of intangible assets as of June 30, 2016 and 2015:


		As of June 30, 2016							As of June 30, 2015
		Gross					Net		Gross					Net
		carrying		Accumulated			carrying		carrying		Accumulated			carrying
		value		amortization			value		value		amortization			value
Finite-lived intangible assets:
Customer relationships⁽¹⁾		94,529	$	(51,557	)	$	42,972	$	88,109	$	(45,312	)	$	42,797
Software and unpatented
technology⁽¹⁾		31,452		(28,791	)		2,661		29,964		(28,323	)		1,641
FTS patent		2,592		(2,592	)		-		3,119		(3,119	)		-
Exclusive licenses		4,506		(4,506	)		-		4,506		(4,506	)		-
Trademarks⁽¹⁾		6,685		(3,762	)		2,923		6,094		(3,408	)		2,686
Total finite-lived intangible assets .	$	139,764	$	(91,208	)	$	48,556	$	131,792	$	(84,668	)	$	47,124

(1) Includes the trademarks acquired in the Masterpayment acquisition as well as the customer relationships and software and unpatented technology acquired as part of the Transact24 and Masterpayment acquisition in January 2016 and April 2016, respectively

Amortization expense charged for the years to June 30, 2016, 2015 and 2014 was $11.2 million, $19.4 million, and $16.6 million, respectively.

Future estimated annual amortization expense for the next five fiscal years, assuming exchange rates prevailing on June 30, 2016, is presented in the table below. Actual amortization expense in future periods could differ from this estimate as a result of acquisitions, changes in useful lives, exchange rate fluctuations and other relevant factors.


2017	$	11,919
2018		11,305
2019		10,686
2020		9,986
2021		4,315
Thereafter	$	345

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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