Operating Segments

9 Months Ended

Mar. 31, 2020

19. 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. A description of the Company’s operating segments is contained in Note 21 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2019. As discussed in Note 2, the Company has presented Net1 Korea and DNI as discontinued operations.

The reconciliation of the reportable segment’s revenue to revenue from external customers for the three months ended March 31, 2020 and 2019, is as follows:


				Revenue
				Reportable Segment			Inter-segment		From external customers

South African transaction processing				$	19 883	$	2 071	$	17 812
International transaction processing					20 608		-		20 608
	Continuing				1 564		-		1 564
	Discontinued				19 044		-		19 044
Financial inclusion and applied technologies					17 651		513		17 138
	Total for the three months ended March 31, 2020				58 142		2 584		55 558
		Continuing			39 098		2 584		36 514
		Discontinued		$	19 044	$	-	$	19 044

South African transaction processing				$	17 374	$	1 300	$	16 074
International transaction processing					34 358		-		34 358
	Continuing				2 302		-		2 302
	Discontinued				32 056		-		32 056
Financial inclusion and applied technologies					36 650		598		36 052
	Continuing				18 808		598		18 210
	Discontinued				17 842		-		17 842

		Total for the three months ended March 31, 2019			88 382		1 898		86 484
			Continuing		38 484		1 898		36 586
			Discontinued	$	49 898	$	-	$	49 898

19. Operating segments (continued)

The reconciliation of the reportable segment’s revenue to revenue from external customers for the nine months ended March 31, 2020 and 2019, is as follows:

				Revenue
				Reportable Segment		Inter-segment		From external customers

South African transaction processing				$	59 632	$	6 450	$	53 182
International transaction processing					88 988		-		88 988
	Continuing				3 613		-		3 613
	Discontinued				85 375		-		85 375
Financial inclusion and applied technologies					69 782		1 558		68 224
	Total for the nine months ended March 31, 2020				218 402		8 008		210 394
		Continuing			133 027		8 008		125 019
		Discontinued		$	85 375	$	-	$	85 375

South African transaction processing				$	77 093	$	5 753	$	71 340
International transaction processing					111 869		-		111 869
	Continuing				7 862		-		7 862
	Discontinued				104 007		-		104 007
Financial inclusion and applied technologies					128 611		2 302		126 309
	Continuing				72 274		2 302		69 972
	Discontinued				56 337		-		56 337

		Total for the nine months ended March 31, 2019			317 573		8 055		309 518
			Continuing		157 229		8 055		149 174
			Discontinued	$	160 344	$	-	$	160 344

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 measures of profit or loss to income before income taxes for the three and nine months ended March 31, 2020 and 2019, is as follows:

				Three months ended				Nine months ended
				March 31,				March 31,
				2020		2019		2020		2019

Reportable segments measure of profit or loss			$	(10 010)	$	(7 818)	$	(9 152)	$	(31 678)
	Less: Discontinued operations: reportable segments measure of profit or loss			(2 753)		(11 986)		(14 568)		(38 796)
	Continuing operations: reportable segments measure of profit or loss			(12 763)		(19 804)		(23 720)		(70 474)
	Continuing operations : Operating income - Corporate/Eliminations			(1 449)		(3 972)		(7 348)		(12 102)
	Change in fair value of equity securities			-		(26 263)		-		(42 099)
	Gain on disposal of FIHRST			-		-		9 743		-
	Interest income			570		1 204		2 015		4 436
	Interest expense			(1 886)		(3 092)		(6 362)		(8 201)
	Impairment of Cedar Cellular Note			-		(2 622)		-		(5 354)
		Loss before income taxes	$	(15 528)	$	(54 549)	$	(25 672)	$	(133 794)

19. Operating segments (continued)

The following tables summarize segment information that is prepared in accordance with GAAP for the three and nine months ended March 31, 2020 and 2019, with the impact of the deconsolidation of Net1 Korea and DNI included in discontinued operations:


								Three months ended				Nine months ended
								March 31,				March 31,
								2020		2019		2020		2019
Revenues
	South African transaction processing						$	19 883	$	17 374	$	59 632	$	77 093
	International transaction processing							20 608		34 358		88 988		111 869
		Continuing						1 564		2 302		3 613		7 862
		Discontinued						19 044		32 056		85 375		104 007
	Financial inclusion and applied technologies							17 651		36 650		69 782		128 611
		Continuing						17 651		18 808		69 782		72 274
		Discontinued						-		17 842		-		56 337

				Total				58 142		88 382		218 402		317 573
						Continuing		39 098		38 484		133 027		157 229
						Discontinued		19 044		49 898		85 375		160 344

Operating (loss) income
	South African transaction processing ⁽¹⁾							(8 668)		(12 954)		(15 034)		(28 297)
	International transaction processing							(415)		1 909		6 186		628
		Continuing						(3 168)		(1 939)		(8 382)		(13 768)
		Discontinued						2 753		3 848		14 568		14 396
	Financial inclusion and applied technologies⁽¹⁾							(927)		3 227		(304)		(4 009)
		Continuing ⁽¹⁾						(927)		(4 911)		(304)		(28 409)
		Discontinued						-		8 138		-		24 400

			Subtotal: Operating segments					(10 010)		(7 818)		(9 152)		(31 678)
			Corporate/Eliminations					(2 686)		(13 865)		(13 132)		(32 184)
				Continuing				(1 449)		(3 972)		(7 348)		(12 102)
				Discontinued				(1 237)		(9 893)		(5 784)		(20 082)

					Total ⁽¹⁾			(12 696)		(21 683)		(22 284)		(63 862)
						Continuing ⁽¹⁾		(14 212)		(23 776)		(31 068)		(82 576)
						Discontinued		1 516		2 093		8 784		18 714

Depreciation and amortization
	South African transaction processing							631		914		1 956		2 776
	International transaction processing							917		2 367		4 294		7 937
		Continuing						125		106		391		256
		Discontinued						792		2 261		3 903		7 681
	Financial inclusion and applied technologies							329		616		1 096		1 657
		Continuing						329		349		1 096		1 044
		Discontinued						-		267		-		613

			Subtotal: Operating segments					1 877		3 897		7 346		12 370
			Corporate/Eliminations					1 280		5 984		4 957		18 158
				Continuing				68		1 973		208		5 008
				Discontinued				1 212		4 011		4 749		13 150

					Total			3 157		9 881		12 303		30 528
						Continuing		1 153		3 342		3 651		9 084
						Discontinued		2 004		6 539		8 652		21 444

Expenditures for long-lived assets
	South African transaction processing							44		434		2 065		2 767
	International transaction processing							985		712		2 278		2 353
		Continuing						488		32		775		343
		Discontinued						497		680		1 503		2 010
	Financial inclusion and applied technologies							13		469		150		2 160
		Continuing						13		61		150		1 429
		Discontinued						-		408		-		731

			Subtotal: Operating segments					1 042		1 615		4 493		7 280
			Corporate/Eliminations					-		-		-		-
					Total			1 042		1 615		4 493		7 280
						Continuing		545		527		2 990		4 539
						Discontinued	$	497	$	1 088	$	1 503	$	2 741

19. Operating segments (continued)

(1) South African transaction processing and Financial inclusion and applied technologies include retrenchment costs for the three months ended March 31, 2019 of: $2,972 (nine months: $3,673) and $1,570 (nine months: $1,570), respectively, for total retrenchment costs for the three months of $4,542 (nine months: $5,243). The retrenchment costs are included in selling, general and administration expense on the unaudited condensed consolidated statement of operations for the three and nine months ended March 31, 2019.

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.