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Goodwill And Intangible Assets, Net
 12 Months Ended
Jun. 30, 2020
Goodwill And Intangible Assets, Net [Abstract]  
Goodwill And Intangible Assets, Net

11. Goodwill and intangible assets, net

Goodwill

Summarized below is the movement in the carrying value of goodwill for the June 30, 2020, 2019 and 2018:

Gross valueAccumulated impairmentCarrying value
Balance as of July 1, 2018$75 598$-$75 598
Impairment loss-(20 917)(20 917)
Foreign currency adjustment(1)(2 026)144(1 882)
Balance as of June 30, 201873 572(20 773)52 799
Impairment loss-(14 440)(14 440)
Foreign currency adjustment(1)(1 099)56(1 043)
Balance as of June 30, 201972 473(35 157)37 316
Impairment loss-(5 589)(5 589)
Disposal of FIHRST (Note 3)(599)-(599)
Deconsolidation of CPS (Note 3)(1 346)1 346-
Foreign currency adjustment(1)(7 334)375(6 959)
Balance as of June 30, 2020$63 194$(39 025)$24 169

(1) – The foreign currency adjustment represents the effects of the fluctuations between the South African Rand and the Euro, and 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.

Year ended June 30, 2020

During the third quarter of fiscal 2020, the Company performed an impairment analysis and recognized an impairment loss of $5.6 million, related to goodwill allocated to its EasyPay business within its South African transaction processing operating segment. The impairment loss resulted from a reassessment of the business’s growth prospects given the challenging economic environment in South Africa. The impairment is included within the caption impairment loss in the consolidated statement of operations for the year ended June 30, 2020.

In order to determine the amount of the EasyPay goodwill impairment, the estimated fair value of EasyPay’s business assets and liabilities were compared to the carrying value of its assets and liabilities. The Company used a discounted cash flow model in order to determine the fair value of EasyPay. Based on this analysis, the Company determined that the carrying value of EasyPay’s assets and liabilities exceeded their fair value at the reporting date. In the event that there is deterioration in the Company’s operating segments, or in any other of the Company’s businesses, this may lead to additional impairments in future periods.

Year ended June 30, 2019

During the second quarter of fiscal 2019, the Company performed an impairment analysis and recognized an impairment loss of approximately $8.2 million, of which approximately $7.0 million related to goodwill allocated to its IPG business within its international transaction processing operating segment and $1.2 million related to goodwill within its South African transaction processing operating segment. Given the consolidation and restructuring of IPG over the period to December 31, 2018, several business lines were terminated or meaningfully reduced, resulting in lower than expected revenues, profits and cash flows. IPG’s new business initiatives were still in their infancy, and it was expected to generate lower cash flows than initially forecast.

In order to determine the amount of the IPG goodwill impairment, the estimated fair value of the Company’s IPG business assets and liabilities was compared to the carrying value of the IPG’s assets and liabilities. The Company used a discounted cash flow model in order to determine the fair value of IPG. The allocation of the fair value of IPG 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. Based on this analysis, the Company determined that the carrying value of IPG’s assets and liabilities exceeded their fair value at the reporting date.

The Company also identified and recognized an impairment loss of $6.2 million related to goodwill allocated to its financial inclusion and applied technologies operating segment as a result of its June 30, 2019, annual impairment test. The June 2019 impairment loss resulted from on-going losses incurred in the latter half of the fiscal year that were greater than, and were incurred for a longer duration, than initially expected.

The estimated fair value of the business assets and liabilities were compared to the carrying value of the assets and liabilities of the reporting unit within the financial inclusion and applied technologies operating segment in order to determine the $6.2 million goodwill impairment. The Company used an EV/EBITDA multiple valuation model to determine the fair value of the reporting unit.

The allocation of the fair value of the reporting unit 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. Based on this analysis, except for the impairments recognized, the Company determined that the carrying value of the reporting unit’s assets and liabilities exceeded their fair value at the reporting date.

Year ended June 30, 2018

During the third quarter of fiscal 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 determined that Masterpayment was unlikely to deliver the financial results or cash flows previously anticipated. The Company and two of Masterpayment’s senior managers 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. The Company also impaired goodwill of approximately $1.1 million during its June 2018 annual goodwill impairment assessment related to a business allocated to its South African transaction processing operating segment, which ceased trading during the year.

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 Company used a discounted cash flow model in order to determine the fair value of Masterpayment. 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.

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

South African transaction processingInternational transaction processingFinancial inclusion and applied technologiesCarrying value
Balance as of July 1, 2017$23 131$27 335$25 132$75 598
Impairment loss(1 052)(19 865)-(20 917)
Foreign currency adjustment(1)(1 133)198(947)(1 882)
Balance as of June 30, 201820 9467 66824 18552 799
Impairment loss(1 180)(7 011)(6 249)(14 440)
Foreign currency adjustment(1)(558)-(485)(1 043)
Balance as of June 30, 201919 20865717 45137 316
Impairment loss(5 589)--(5 589)
Disposal of FIHRST (Note 3)(599)--(599)
Foreign currency adjustment(1)(3 688)-(3 271)(6 959)
Balance as of June 30, 2020$9 332$657$14 180$24 169

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

Intangible assets

Impairment loss

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. Except as discussed below, no intangible assets have been impaired during the years ended June 30, 2020, 2019 and 2018, respectively.

Year ended June 30, 2020

During the third quarter of fiscal 2020, the Company determined that its indefinite-lived intangible asset, a Maltese e-money license, of $0,7 million was impaired. The facts and circumstances leading up to the impairment include the losses incurred by the Company’s IPG business unit. In fiscal 2019, IPG formulated a plan to return to profitability, however, it has missed a number of key deliverable deadlines and is currently reformulating its growth plans following the decision not to acquire a controlling stake in Bank Frick. The impairment is included within the caption impairment loss to the consolidated statement of operations for the year ended June 30, 2020. The intangible asset was not allocated to an operating segment and is included within corporate/ eliminations (refer to Note 22).

Carrying value and amortization of intangible assets

Summarized below is the carrying value and accumulated amortization of the intangible assets as of June 30, 2020, and June 30, 2019:

As of June 30, 2020As of June 30, 2019
Gross carrying valueAccumulated amortizationNet carrying valueGross carrying valueAccumulated amortizationNet carrying value
Finite-lived intangible assets:
Customer relationships$19 064$(18 806)$258$24 234$(23 527)$707
Software and unpatented technology3 931(3 931)-8 423(8 181)242
FTS patent 2 211(2 211)-2 721(2 721)-
Trademarks 2 731(2 377)3543 114(2 607)507
Total finite-lived intangible assets $27 937$(27 325)612$38 492$(37 036)1 456
Infinite-lived intangible assets:
Financial institution licenses -772
Total infinite-lived intangible assets -772
Total intangible assets $612$2 228