Leases

12 Months Ended

Jun. 30, 2020

9. LEASES

Adoption of new lease guidance on July 1, 2019

The Company elected to adopt the new lease guidance utilizing the modified retrospective approach and therefore, prior periods were not adjusted. The Company was not required to record a cumulative-effect adjustment to opening retained earnings as of July 1, 2019. The Company applied the package of three practical expedients available, which included the following (i) an entity need not reassess expired or existing contracts which are or contain leases (ii) an entity need not reassess the lease classification for any expired or existing leases, and (iii) an entity need not reassess initial direct costs for any existing leases. The Company also elected to not recognize right-of-use assets and lease liabilities for leases with a term of less than twelve months and to account for all components in a lease arrangement as a single combined lease component.

The Company has entered into leasing arrangements classified as operating leases under accounting guidance. These leasing arrangements relate primarily to the lease of its corporate head office, administration offices and branch locations through which the Company operates its financial services business in South Africa and its transaction processing activities in Malta. The Company’s operating leases have a remaining lease term of between one to six years. The Company’s lease of property in Malta includes five separate one-year options to extend the lease, which effectively extends the lease term from three years to eight years. At lease inception, the Company expected to exercise these options and these options are included as part of its right-of-use assets and liabilities. The Company also operates parts of its financial services business from locations which it leases for a period of less than one year. The Company’s operating lease expense during the year ended June 30, 2020, was $3,6 million. The Company does not have any significant leases that have not commenced as of June 30, 2020.

The Company has entered into short-term leasing arrangements, primarily for the lease of branch locations and other locations to operate its financial services business in South Africa. The Company’s short-term lease expense during the year ended June 30, 2020, was $4,2 million.

The following table presents supplemental balance sheet disclosure related to our right-of-use assets and our operating leases liabilities as of June 30, 2020 and July 1, 2019, the date of adoption of the new lease guidance (refer to Note 1):

	June 30,			July 1,
		2020		2019
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	2 974	$	6 739

Weighted average remaining lease term (years)		3,94		2,51
Weighted average discount rate		9%		10%

Maturities of operating lease liabilities
2021	$	2 622	$	3 608
2022		1 525		2 395
2023		961		1 269
2024		639		454
2025		320		-
Thereafter		321		-
Total undiscounted operating lease liabilities		6 388		7 726
Less imputed interest		825		842
Total operating lease liabilities, included in		5 563		6 884
Operating lease right-of-use lease liability - current		2 251		5 098
Right-of-use operating lease liability - long-term	$	3 312	$	1 786

Operating lease payments related to premises and equipment were $10.6 million and $9.6 million, respectively, for the years ended June 30, 2019 and 2018, respectively.

At June 30, 2019, the future minimum payments under operating leases consist of:

Due within 1 year	$	6 010
Due within 2 years		2 654
Due within 3 years		1 122
Due within 4 years		518
Due within 5 years	$	-