Equity-Accounted Investments And Other Long-Term Assets

12 Months Ended

Jun. 30, 2024

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

Equity-Accounted Investments And Other Long-Term Assets

9. EQUITY-ACCOUNTED INVESTMENTS AND OTHER LONG-TERM ASSETS

Equity-accounted investments

The Company’s ownership percentage in its equity-accounted investments as of June 30, 2024 and 2023, was as follows:

June 30,

June 30,

2024

2023

Sandulela Technology Proprietary Limited ("Sandulela")

49

%

49

%

SmartSwitch Namibia (Pty) Ltd (“SmartSwitch Namibia”)

50

%

50

%

Finbond Group Limited (“Finbond”)

-

%

28

%

Finbond

In December 2023, the Company sold its entire remaining equity interest in Finbond which comprised of

220,523,358

 shares,

and which represented approximately

27.8

% of Finbond’s issued and outstanding ordinary shares immediately prior to the sale. Lesaka

SA had pledged, among other things, its entire equity interest in Finbond as security for the South African facilities described in Note

12.

Sale of Finbond shares during the years ended June 30, 2024, 2023 and 2022

On August 10, 2023, the Company, through its wholly owned subsidiary Net1 Finance Holdings (Pty) Ltd, entered into an

agreement with Finbond to sell its remaining shareholding to Finbond for a cash consideration of ZAR

64.2

 million ($

3.5

 million), or

ZAR

0.2911

 per share. The transaction was subject to certain conditions, including regulatory and shareholder approvals, which were

finalized in December 2023. The Company did

no

t record a gain or loss on the disposal because the sale proceeds were equivalent to

the net carrying value, including accumulated reserves, of the investment in Finbond as of the disposal date. The cash proceeds received

of ZAR

64.2

 million ($

3.5

 million) were used to repay capitalized interest under our borrowing facilities, refer to Note 12.

The Company sold

25,456,545

 and

22,841,030

 shares in Finbond for cash during the years ended June 30, 2023 and 2022,

respectively, and recorded a loss of $

0.4

 million and $

0.4

 million in the caption loss on equity-accounted investment in the Company’s

consolidated statement of operations for the years ended June 30, 2023 and 2022.

9. EQUITY-ACCOUNTED INVESTMENTS AND OTHER LONG-TERM ASSETS (continued)

Equity-accounted investments (continued)

Finbond (continued)

Sale of Finbond shares during the years ended June 30, 2024, 2023 and 2022 (continued)

The following table presents the calculation of the loss on disposal of Finbond shares during the years ended June 30, 2024, 2023

and 2022:

Year ended June 30,

2024

2023

2022

Loss on disposal of Finbond shares:

Consideration received in cash

$

3,508

$

265

$

865

Less: carrying value of Finbond shares sold

(2,112)

(363)

(630)

Less: release of foreign currency translation reserve from accumulated

other comprehensive loss

(1,543)

(252)

(620)

Add: release of stock-based compensation charge related to equity-

accounted investment

147

9

9

Loss on sale of Finbond shares

$

-

$

(341)

$

(376)

Finbond impairments recorded during the year ended June 30, 2024

As noted earlier, the Company entered into an agreement to exit its position in Finbond and the Company considered this an

impairment indicator. The Company is required to include any foreign currency translation reserve and other equity account amounts

in its impairment assessment if it considers exiting an equity method investment. The Company performed an impairment assessment

of its holding in Finbond, including the foreign currency translation reserve and other equity account amounts, as of September 30,

2023. The Company recorded an impairment loss of $

1.2

 million during the quarter ended September 30, 2023, which represented the

difference between the determined fair value of the Company’s interest in Finbond and the Company’s carrying value, including the

foreign currency translation reserve (before the impairment). The Company used the price of ZAR

0.2911

 referenced in the August

2023 agreement referred to above to calculate the determined fair value for Finbond.

Finbond impairments recorded during the year ended June 30, 2023

The Company considered the combination of the ongoing losses incurred and reported by Finbond and its lower share price as

impairment indicators as of September 30, 2022. The Company performed an impairment assessment of its holding in Finbond as of

September 30, 2022. The Company recorded an impairment loss of $

1.1

 million during the year ended June 30, 2023, related to the

other-than-temporary decrease in Finbond’s value, which represented the difference between the determined fair value of the

Company’s interest in Finbond and the Company’s carrying value (before the impairment). During fiscal 2023, there continued to be

limited trading in Finbond shares on the JSE because a small number of shareholders owned approximately

80

% of its issued and

outstanding shares between them. The Company calculated a fair value per share for Finbond by applying a liquidity discount of

25

%

to the September 30, 2022, Finbond closing price of ZAR

0.49

. The Company increased the liquidity discount from

15

% (used in the

previous impairment assessment) to

25

% (used in the September 30, 2022 assessment) as a result of the ongoing limited trading activity

observed on the JSE.

Carbon

In September 2022, the Company, through its wholly-owned subsidiary, Net1 Applied Technologies Netherlands B.V. (“Net1

BV”), entered into a binding term sheet with the Etobicoke Limited (“Etobicoke”) to sell its entire interest, or

25

%, in Carbon to

Etobicoke for $

0.5

 million and a loan due from Carbon, with a face value of $

3

 million, to Etobicoke for $

0.75

 million. Both the equity

interest and the loan had a carrying value of $

0

 (zero) at June 30, 2022. The parties agreed that Etobicoke pledge the Carbon shares

purchased as security for the amounts outstanding under the binding term sheet. 

The Company received $

0.25

 million on closing and the outstanding balance due by Etobicoke was expected to be paid as

follows: (i) $

0.25

 million on September 30, 2023 (the amount was received in October 2023), and (ii) the remaining amount, of $

0.75

million in March 2024 (the amount has not been received as of June 30, 2024 (refer to Note 4)). Both amounts were included in the

caption accounts receivable, net and other receivables in the Company’s consolidated balance sheet as of June 30, 2023. The Company

has allocated the $

0.25

 million received on closing to the sale of the equity interest and allocated the subsequent funds received first

to the sale of the equity interest and then to the loans.

9. EQUITY-ACCOUNTED INVESTMENTS AND OTHER LONG-TERM ASSETS (continued)

Equity-accounted investments (continued)

Carbon (continued)

The Company believed that the fair value of the Carbon shares provided as security was $

0

 (zero), which was in line with the

carrying value as of June 30, 2022, and created an allowance for doubtful loans receivable related to the $

1.0

 million previously due

from Etobicoke. The Company did not incur any significant transaction costs. The Company has included the gain of $

0.25

 million

related to the sale of the Carbon equity interest in the caption net gain on disposal of equity-accounted investments in the Company’s

consolidated statements of operations.

The following table presents the calculation of the gain on disposal of Carbon during the year ended June 30, 2023:

Year ended

June 30,

2023

Gain on disposal of Carbon shares:

Consideration received in cash in September 2022

$

250

Less: carrying value of Carbon

-

Gain on disposal of Carbon shares:

(1)

$

250

(1) The Company did not pay taxes related to the sale of Carbon because the base cost of its investment exceeds the sales

consideration received. The Company does not believe that it will be able to utilize the loss generated because Net1 BV does not

generate taxable income.

Bank Frick

Sale of entire interest in Bank Frick in February 2021 – receipt of cash proceeds during the year ended June 30, 2022

On February 3, 2021, the Company, through its wholly-owned subsidiary, Net1 Holdings LI AG (“Net1 LI”), entered into a share

sales agreement with the Frick Family Foundation (“KFS”) to sell its entire interest, or

35

%, in Bank Frick to KFS for $

30

 million.

Lesaka and certain entities within the IPG group also entered into an indemnity and release agreement with KFS and Bank Frick under

which the parties agreed to terminate all existing arrangements with Bank Frick and settle all liabilities related to the Company’s

activities with Bank Frick through the payment of $

3.6

 million to KFS. The Company received $

15.0

 million, net, on closing, which

comprised $

18.6

 million less the $

3.6

 million due to KFS to terminate all existing arrangements with Bank Frick and settle all liabilities

related to IPG’s activities with Bank Frick. The outstanding balance due by KFS of $

11.4

 million was received in full during the year

ended June 30, 2022.

V2 Limited

The Company sold its investment in V2 Limited, now named VantagePay, (“V2”), an equity accounted investment, on April 22,

2021, for one dollar. The Company had also committed to provide V2 with a working capital facility of $

5.0

 million, which was

subject to the achievement of certain pre-defined objectives, and in June 2020 it provided $

0.5

 million to V2 under this facility. In

September 2020, the Company and V2 agreed to reduce the $

5.0

 million working capital facility to $

1.5

 million. In October 2020, V2

drew down the remaining available $

1.0

 million of the working capital facility. The Company created an allowance for doubtful loans

receivable of $

1.5

 million during the year ended June 30, 2021, related to the full amount outstanding as of June 30, 2021. This amount

was still outstanding as of June 30, 2024.

9. EQUITY-ACCOUNTED INVESTMENTS AND OTHER LONG-TERM ASSETS (continued)

Equity-accounted investments (continued)

Summarized below is the movement in equity-accounted investments during the years ended June 30, 2024 and 2023, which

includes the investment in equity and the investment in loans provided to equity-accounted investees:

Finbond

Other

(1)

Total

Investment in equity

Balance as of June 30, 2022

$

5,760

$

101

$

5,861

Stock-based compensation 

28

-

28

Comprehensive loss:

(1,271)

89

(1,182)

Other comprehensive income 

3,935

-

3,935

Equity accounted (loss) earnings

(5,206)

89

(5,117)

Share of net (loss) income

(4,096)

89

(4,007)

Impairment

(1,110)

-

(1,110)

Dividends received 

-

(42)

(42)

Sale of shares in equity-accounted investment

(506)

-

(506)

Foreign currency adjustment

(2)

(971)

(17)

(988)

Balance as of June 30, 2023

3,040

131

3,171

Stock-based compensation 

14

-

14

Comprehensive (loss) income:

(956)

166

(790)

Other comprehensive income 

489

-

489

Equity accounted (loss) earnings

(1,445)

166

(1,279)

Share of (loss) net income

(278)

166

(112)

Impairment

(1,167)

-

(1,167)

Dividends received 

-

(95)

(95)

Sale of shares in equity-accounted investment

(2,096)

-

(2,096)

Foreign currency adjustment

(2)

(2)

4

2

Balance as of June 30, 2024

$

-

$

206

$

206

Investment in loans:

Balance as of June 30, 2022

$

-

$

-

$

-

Loans repaid

-

(112)

(112)

Loans granted

-

112

112

Balance as of June 30, 2023

-

-

-

Balance as of June 30, 2024

$

-

$

-

$

-

Equity

Loans

Total

Carrying amount as of :

June 30, 2023

$

3,171

$

-

$

3,171

June 30, 2024

$

206

$

-

$

206

(1) Includes Carbon, Sandulela 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.

June 30,

June 30,

2024

2023

Total equity investments 

$

76,297

$

76,297

Investment in

10

% (June 30, 2023:

10

%) of MobiKwik

(1)

76,297

76,297

Investment in

5

% of Cell C (June 30, 2023:

5

%) at fair value (Note 6)

-

-

Investment in

87.50

% of CPS (June 30, 2023:

87.50

%) at fair value

(1)(2)

-

-

Policy holder assets under investment contracts (Note 11)

216

257

Reinsurance assets under insurance contracts (Note 11)

1,469

1,040

Total other long-term assets

$

77,982

$

77,594

(1) The Company determined that MobiKwik and CPS do not have readily determinable fair values and therefore elected to

record these investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly

transactions for the identical or a similar investment of the same issuer.

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

MobiKwik

The Company signed a subscription agreement with MobiKwik, which is one of India’s largest independent mobile payments

networks and buy now pay later businesses. Pursuant to the subscription agreement, the Company agreed to make an equity investment

of up to $

40.0

 million in MobiKwik over a

24

-month period. The Company made an initial $

15.0

 million investment in August 2016

and a further $

10.6

 million investment in June 2017, under this subscription agreement. During the year ended June 30, 2019, the

Company paid $

1.1

 million to subscribe for additional shares in MobiKwik. As of each of June 30, 2024 and 2023, respectively, the

Company owned approximately

10

% of MobiKwik’s issued share capital.

In October 2021, the Company converted (at a rate of approximately

20

 for 1) 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 did not identify any observable transactions

during the years ended June 30, 2024, 2023 and 2022, respectively, and therefore there was no change in the fair value of MobiKwik

during these years. Change in the fair value of MobiKwik are included in the caption “Change in fair value of equity securities” in the

consolidated statement of operations. During the year ended June 30, 2021, MobiKwik entered into a number of separate agreements

with new shareholders to raise additional capital through the issuance of additional shares. The Company used the valuation from

MobiKwik’s June 2021 capital raise as the basis for its fair value determination of $

76.3

 million. 

Cell C

On August 2, 2017, the Company, through its subsidiary, Net1SA, purchased

75,000,000

 class “A” shares of Cell C for an

aggregate purchase price of ZAR

2.0

 billion ($

151.0

 million) in cash. The Company funded the transaction through a combination of

cash and a borrowing facility. Net1 SA has pledged, among other things, its entire equity interest in Cell C as security for the South

African facilities described in Note 12. On September 30, 2022, Cell C completed its recapitalization process which included the

issuance of additional equity instruments by Cell C. The Company’s effective percentage holding in Cell C’s equity has reduced from

15

% to

5

% following the recapitalization. The Company’s investment in Cell C is carried at fair value. Refer to Note 6 for additional

information regarding changes in the fair value of Cell C.

CPS

The Company deconsolidated its investment in CPS in May 2020. As of June 30, 2024 and 2023, respectively, the Company

owned

87.5

% of CPS’ issued share capital.

9. 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 consolidated statements of operations for the year ended June 30, 2022.

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, 2024:

Cost basis

Unrealized

holding gains

Unrealized

holding losses

Carrying

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

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, 2023:

Cost basis

Unrealized

holding gains

Unrealized

holding losses

Carrying

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