Equity-Accounted Investments And Other Long-Term Assets

9 Months Ended

Mar. 31, 2022

Equity-Accounted Investments And Other Long-Term Assets [Abstract]

Equity-Accounted Investments And Other Long-Term Assets

5.Equity-accounted investments and other long-term assets

Refer to Note 8 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2021, for additional information regarding its equity-accounted investments and other long-term assets.

Equity-accounted investments

The Company’s ownership percentage in its equity-accounted investments as of March 31, 2022, and June 30, 2021, was as follows:

	March 31,			June 30,
	2022			2021
Finbond Group Limited (“Finbond”)		29.0	%	31.5	%
Carbon Tech Limited (“Carbon”)		25.0	%	25.0	%
SmartSwitch Namibia (Pty) Ltd (“SmartSwitch Namibia”)		50.0	%	50.0	%

Finbond

As of March 31, 2022, the Company owned 247,438,164 shares in Finbond representing approximately 29.0% of its issued and outstanding ordinary shares. Finbond is listed on the Johannesburg Stock Exchange (“JSE”) and its closing price on March 31, 2022, the last trading day of the month, was ZAR 0.50 per share. The market value, using the March 31, 2022, closing price, of the Company’s holding in Finbond on March 31, 2022, was ZAR 123.7 million ($8.5 million translated at exchange rates applicable as of March 31, 2022).

The Company sold 21,382,769 shares in Finbond for cash during the three and nine months ended March 31, 2022, and recorded a loss of $0.3 million in the caption loss on equity-accounted investment in the Company’s unaudited condensed consolidated statements of operations. The following table presents the calculation of the loss on disposal of Finbond shares during the three and nine months ended March 31, 2022:

		Three and nine months ended March 31,
		2022
Loss on disposal of Finbond shares:
Consideration received in cash		$	819
Less: carrying value of Finbond shares sold			(591)
Less: release of foreign currency translation reserve from accumulated other comprehensive loss			(583)
Add: release of stock-based compensation charge related to equity-accounted investment			9
	Loss on sale of Finbond shares	$	(346)

Summarized below is the movement in equity-accounted investments and loans provided to equity-accounted investments during the nine months ended March 31, 2022:

					Finbond		Other(1)		Total
Investment in equity
	Balance as of June 30, 2021				$	9,822	$	182	$	10,004
		Stock-based compensation				9		-		9
		Comprehensive loss:				(1,800)		-		(1,800)
			Other comprehensive loss			(644)		-		(644)
			Equity accounted loss			(1,156)		-		(1,156)
				Share of net loss		(1,156)		-		(1,156)
		Dividends received				-		(137)		(137)
		Disposal of Finbond shares				(591)		-		(591)
		Foreign currency adjustment(2)				(206)		(4)		(210)
	Balance as of March 31, 2022				$	7,234	$	41	$	7,275
					Equity		Loans		Total
Carrying amount as of :
		June 30, 2021			$	10,004	$	-	$	10,004
		March 31, 2022			$	7,275	$	-	$	7,275

(1) Includes Carbon and SmartSwitch Namibia.

(2) The foreign currency adjustment represents the effects of the fluctuations of the ZAR, Nigerian naira and Namibian dollar against the U.S. dollar on the carrying value.

5.Equity-accounted investments and other long-term assets (continued)

Other long-term assets

Summarized below is the breakdown of other long-term assets as of March 31, 2022, and June 30, 2021:

		March 31,			June 30,
			2022		2021
Total equity investments		$	76,297	$	76,297
	Investment in 15% of Cell C, at fair value (Note 4)		-		-
	Investment in 10% of MobiKwik (June 30, 2021: 12%)		76,297		76,297
	Investment in 87.5% of CPS(1)		-		-
Total held to maturity investments			-		-
	Investment in 7.625% of Cedar Cellular Investment 1 (RF) (Pty) Ltd 8.625% notes(2)		-		-
Long-term portion of amount due related to sale of interest in Bank Frick(3)			-		3,890
Policy holder assets under investment contracts (Note 7)			411		381
Reinsurance assets under insurance contracts (Note 7)			1,284		1,298
	Total other long-term assets	$	77,992	$	81,866

(1) On October 16, 2020, the High Court of South Africa, Gauteng Division, Pretoria ordered that CPS be placed into liquidation.

(2) The note is included in accounts receivable, net and other receivables as of March 31, 2022 (refer to Note 2).

(3) Long-term portion of amount due related to sale of interest in Bank Frick as of June 30, 2021, represents the amount due from the purchaser in July 2022 and is included in accounts receivable, net, and other receivables as of March 31, 2022 (refer to Note 2).

MobiKwik

In October 2021, the Company converted its 310,781 shares of compulsorily convertible cumulative preferences shares to 6,215,620 equity shares in anticipation of MobiKwik’s initial public offering. The Company’s investment percentage remained unchanged following the conversion. The Company’s investment percentage as of March 31, 2022, was 10.2%. The Company did not identify any observable transactions during the three and nine months ended March 31, 2022, and therefore there was no change in the fair value of MobiKwik during these periods. The Company used a transaction, at a price of $245.50 per share in June 2021, as the basis for a fair value adjustment to its investment in MobiKwik during the fourth quarter of fiscal 2021. This fair value adjustment increased the carrying value of its investment in MobiKwik by $23.4 million from $52.9 million to $76.3 million as of June 30, 2021.

In early November 2020, MobiKwik entered into an agreement to raise additional capital through the issuance of additional shares to a new shareholder at a valuation of $135.54 per share. In mid-March 2021, MobiKwik raised additional capital through the issuance of shares to new shareholders at a valuation of $170.33 per share. The Company considered each of these transactions to be an observable price change in an orderly transaction for similar or identical equity securities issued by MobiKwik. The Company used the November 2020 valuation as the basis for its adjustment to increase the carrying value in its investment in MobiKwik by $15.1 million from $27.0 million to $42.1 million as of December 31, 2020. The Company used the March 2021 valuation as the basis for its adjustment to increase the carrying value in its investment in MobiKwik by $10.8 million from $42.1 million to $52.9 million as of March 31, 2021. The change in the fair value of MobiKwik for the three and nine months ended March 31, 2021, of $10.8 million and $25.9 million, respectively, is included in the caption “Change in fair value of equity securities” in the unaudited condensed consolidated statement of operations for the three and nine months ended March 31, 2021.

5.Equity-accounted investments and other long-term assets (continued)

Other long-term assets (continued)

Revix

In February 2022, the Company sold its entire interest in Revix UK Limited for cash of $0.7 million because the Company did not consider the investment core to its strategy to operate primarily in Southern Africa. The Company had previously written this investment to $0 (nil) and recognized a gain on disposal of $0.7 million, which is included in the caption gain on disposal of equity securities in the Company’s unaudited condensed consolidated statements of operations for the three and nine months ended March 31, 2022.

Summarized below are the components of the Company’s equity securities without readily determinable fair value and held to maturity investments as of March 31, 2022:

				Cost basis		Unrealized holding		Unrealized holding		Carrying
						gains		losses		value
Equity securities:
	Investment in MobiKwik		$	26,993	$	49,304	$	-	$	76,297
	Investment in CPS			-		-		-		-
Held to maturity:
	Investment in Cedar Cellular notes (Note 2)			-		-		-		-
		Total	$	26,993	$	49,304	$	-	$	76,297

Summarized below are the components of the Company’s equity securities without readily determinable fair value and held to maturity investments as of June 30, 2021:

				Cost basis		Unrealized holding		Unrealized holding		Carrying
						gains		losses		value
Equity securities:
	Investment in MobiKwik		$	26,993	$	49,304	$	-	$	76,297
	Investment in CPS			-		-		-		-
Held to maturity:
	Investment in Cedar Cellular notes			-		-		-		-
		Total	$	26,993	$	49,304	$	-	$	76,297