Goodwill And Intangible Assets, Net

9 Months Ended

Mar. 31, 2018

Goodwill And Intangible Assets, Net [Abstract]

7. Goodwill and intangible assets, net

Goodwill

Summarized below is the movement in the carrying value of goodwill for the nine months ended March 31, 2018:

				Accumulated			Carrying
		Gross value		impairment			value
Balance as of June 30, 2017	$	188,833	$	-		$	188,833
Impairment of goodwill		-		(19,865	)		(19,865	)
Foreign currency adjustment⁽¹⁾		13,566		-			13,566
Balance as of March 31, 2018	$	202,399	$	(19,865	)	$	182,534

(1) - Represents the effects of the fluctuations of the South African rand, euro and the Korean won, against the U.S. dollar on the carrying value.

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, 2017	$	23,131	$	140,570		$	25,132	$	188,833
Impairment of goodwill		-		(19,865	)		-		(19,865	)
Foreign currency adjustment⁽¹⁾		2,404		9,155			2,007		13,566
Balance as of March 31, 2018	$	25,535	$	129,860		$	27,139	$	182,534

(1) - Represents the effects of the fluctuations of the South African rand, euro and the Korean won, against the U.S. dollar on the carrying value.

Impairment loss

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 at June 30 of each year. During the three and nine months ended March 31, 2018, the Company recognized an impairment loss of approximately $19.9 million related to goodwill allocated to the Masterpayment business within its international transaction processing operating segment as a result of changes to the operating model of Masterpayment. During the second quarter of fiscal 2018, the Company re-evaluated the operating performance and ongoing viability of Masterpayment's working capital financing and supply chain solutions offering and determined to exit this portion of its business. While the Company believed that it could scale this offering in the medium to long-term by focusing on customers and industries outside Masterpayment's initial target market, this standalone offering did not fit the Company's strategy of providing payment solutions and working capital to small and medium-sized merchants. In order to focus on the Company's stated international strategy, the Company decided to wind-down the traditional working capital finance book issued to non-payment solutions customers. During the third quarter of fiscal 2018, the Company evaluated Masterpayment's business strategy and following the wind-down referred to above, it has determined that Masterpayment is unlikely to deliver the financial results or cash flows previously anticipated. The Company and two of Masterpayment's senior managers have agreed, by mutual consent, that with effect from the end of March 2018, the managers terminated their employment with Masterpayment in order to dedicate themselves to new professional tasks.

In order to determine the amount of goodwill impairment, the estimated fair value of the Company's Masterpayment business was allocated to the individual fair value of the assets and liabilities of Masterpayment as if it had been acquired in a business combination, which resulted in the implied fair value of the goodwill. The allocation of the fair value of Masterpayment required the Company to make a number of assumptions and estimates about the fair value of assets and liabilities where the fair values were not readily available or observable.

A further deterioration in the international transaction processing operating segment, or in any other of the Company's businesses, may lead to additional impairments in future periods.

Carrying value and amortization of intangible assets

Summarized below is the carrying value and accumulated amortization of the intangible assets as of March 31, 2018 and June 30, 2017:


		As of March 31, 2018						As of June 30, 2017
		Gross					Net		Gross					Net
		carrying		Accumulated			carrying		carrying		Accumulated			carrying
		value		amortization			value		value		amortization			value
Finite-lived intangible assets:
Customer relationships	$	106,620	$	(78,746	)	$	27,874	$	99,209	$	(65,595	)	$	33,614
Software and unpatented
technology		35,265		(34,242	)		1,023		33,273		(31,112	)		2,161
FTS patent		3,240		(3,240	)		-		2,935		(2,935	)		-
Exclusive licenses		4,506		(4,506	)		-		4,506		(4,506	)		-
Trademarks		7,493		(5,799	)		1,694		6,972		(4,759	)		2,213
Total finite-lived intangible
assets		157,124		(126,533	)		30,591		146,895		(108,907	)		37,988
Indefinite-lived intangible assets:
Financial institution license		837		-			837		776		-			776
Total indefinite-lived
intangible assets		837		-			837		776		-			776
Total intangible assets	$	157,961	$	(126,533	)	$	31,428	$	147,671	$	(108,907	)	$	38,764

Aggregate amortization expense on the finite-lived intangible assets for the three months ended March 31, 2018 and 2017, was approximately $3.0 million and $3.7 million, respectively. Aggregate amortization expense on the finite-lived intangible assets for the nine months ended March 31, 2018 and 2017, was approximately $8.8 million and $10.2 million, respectively.

Future estimated annual amortization expense for the next five fiscal years and thereafter, assuming exchange rates that prevailed on March 31, 2018, 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.


Fiscal 2018	$	12,915
Fiscal 2019		11,445
Fiscal 2020		10,727
Fiscal 2021		4,620
Fiscal 2022		85
Thereafter		345
Total future estimated annual amortization expense	$	40,137

- 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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