UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

~~[X]~~☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, ~~2019~~2020

~~[ ]~~OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
~~For the transition period from ___________________ To_____________________~~

For the transition period from

Commission file number:000-31203

NET 1 UEPS TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Florida				98-0171860
(State or other jurisdiction				(IRS Employer
of incorporation or organization)				Identification No.)

President Place, 4^th Floor, Cnr. Jan Smuts Avenue and Bolton Road,

Rosebank, Johannesburg, 2196, South Africa

(Address of principal executive offices, including zip code)

~~Registrant's~~

Registrant’s telephone number, including area code: 27-11-343-2000

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

~~Title of each class~~

~~Trading Symbol(s)~~

~~Name of each exchange~~
~~on which registered~~

~~Common stock, par value $0.001 per share~~

~~UEPS~~

~~NASDAQ Global Select Market~~

Title of each class

Trading Symbol(s)

Name of each exchange

on which registered

Common stock, par value $0.001 per share

UEPS

NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ~~[X]~~ ☒ NO ~~[ ]~~☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ~~[X]~~ ☒ NO ~~[ ]~~☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of ~~"large~~“large accelerated filer,~~" "accelerated~~” “accelerated filer,~~" "smaller~~” “smaller reporting company,"” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act (check one):

~~[ ]~~ ☐	Large accelerated filer	~~[X]~~ ☒	Accelerated filer

~~[ ] Non-accelerated filer~~☐	~~[X]~~ Non-accelerated filer	☒	Smaller reporting company

	~~[ ]~~	☐	Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ~~[ ]~~☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ~~[ ]~~☐ NO ~~[X]~~☒

As of February ~~3, 2020~~2, 2021 (the latest practicable date), ~~56,568,425~~56,614,559 shares of the ~~registrant's~~registrant’s common stock, par value $0.001 per share, net of treasury shares, were outstanding.

~~Form 10-Q~~

~~NET 1 UEPS TECHNOLOGIES, INC~~

~~Table of Contents~~

	Form 10-Q NET 1 UEPS TECHNOLOGIES, INC Table of Contents	~~Page No.~~
		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets as of December 31, ~~2019~~2020 and June 30, ~~2019~~2020	2
	Unaudited Condensed Consolidated Statements of Operations for the three and six months ended December 31, 2020 and 2019 ~~and 2018~~(as restated)	3
	Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and six months ended December 31, ~~2019~~2020 and ~~2018~~2019	4
	Unaudited Condensed Consolidated Statement of Changes in Equity for the three and six months ended December 31, ~~2019~~2020 and ~~2018~~2019	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the three and six months ended December 31, ~~2019~~2020 and ~~2018~~2019	7
	Notes to Unaudited Condensed Consolidated Financial Statements	9 8
Item 2.	~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations	42 39
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	62 57
Item 4.	Controls and Procedures	62 57
Part II. OTHER INFORMATION
Item 1.	Legal Proceedings	63 58
Item ~~1A.~~6.	~~Risk Factors~~Exhibits	63 58
~~Item 5.~~ Signatures	~~Other Information~~	63 58
~~Item 6.~~ EXHIBIT 10.30	~~Exhibits~~	63
~~Signatures~~		64

Part I. Financial information

Item 1. Financial Statements

NET 1 UEPS TECHNOLOGIES, INC

Unaudited Condensed Consolidated Balance Sheets

						December 31,			June 30,							December 31,			June 30,
						2019			2019^(A)							2020		2020^(A)
						(In thousands, except share data)										(In thousands, except share data)
				ASSETS											ASSETS
CURRENT ASSETS	CURRENT ASSETS										CURRENT ASSETS
	Cash and cash equivalents				$	50,719		$	46,065		Cash and cash equivalents					$	206,251	$	217,671
	Restricted cash (Note 10)					84,360			75,446		Restricted cash related to ATM funding (Note 9)						60,803		14,814
	Accounts receivable, net and other receivables (Note 3)					68,565			72,494		Accounts receivable, net and other receivables (Note 3)						24,447		43,068
	Finance loans receivable, net (Note 3)					29,117			30,631		Finance loans receivable, net (Note 3)						21,620		15,879
	Inventory (Note 4)					21,196			7,535		Inventory (Note 4)						20,939		19,860
		Total current assets before settlement assets				253,957			232,171			Total current assets before settlement assets					334,060		311,292
			Settlement assets (Note 5)			55,401			63,479				Settlement assets				2,814		8,014
				Total current assets		309,358			295,650					Total current assets			336,874		319,306
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of - December: $121,584 June: $129,185						16,450			18,554
OPERATING LEASE RIGHT-OF-USE (Note 18)						7,838			-
EQUITY-ACCOUNTED INVESTMENTS (Note 7)						155,627			151,116
GOODWILL (Note 8)						148,938			149,387
INTANGIBLE ASSETS, NET (Note 8)						8,043			11,889
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of - December: $35,954 June: $29,524											PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of - December: $35,954 June: $29,524						8,687		6,656
OPERATING LEASE RIGHT-OF-USE (Note 17)											OPERATING LEASE RIGHT-OF-USE (Note 17)						5,112		5,395
EQUITY-ACCOUNTED INVESTMENTS (Note 6)											EQUITY-ACCOUNTED INVESTMENTS (Note 6)						53,126		65,836
GOODWILL (Note 7)											GOODWILL (Note 7)						28,455		24,169
INTANGIBLE ASSETS, NET (Note 7)											INTANGIBLE ASSETS, NET (Note 7)						536		612
DEFERRED INCOME TAXES	DEFERRED INCOME TAXES					2,112			2,151		DEFERRED INCOME TAXES						281		358
OTHER LONG-TERM ASSETS, including reinsurance assets (Note 7 and 9)						41,144			44,189
OTHER LONG-TERM ASSETS, including reinsurance assets (Note 6 and 8)											OTHER LONG-TERM ASSETS, including reinsurance assets (Note 6 and 8)						43,907		31,346
TOTAL ASSETS	TOTAL ASSETS					689,510			672,936		TOTAL ASSETS						476,978		453,678

				LIABILITIES											LIABILITIES
CURRENT LIABILITIES	CURRENT LIABILITIES										CURRENT LIABILITIES
	Short-term credit facilities for ATM funding (Note 10)					84,360			75,446		Short-term credit facilities for ATM funding (Note 9)						60,803		14,814
	Short-term credit facilities (Note 10)					13,906			9,544		Accounts payable						6,109		6,287
	Accounts payable					14,211			17,005		Other payables (Note 10)						25,066		23,779
	Other payables (Note 11)					69,134			66,449		Operating lease liability - current (Note 17)						2,585		2,251
	Operating lease right of use lease liability - current (Note 18)					3,534			-		Income taxes payable						984		16,157
	Current portion of long-term borrowings (Note 10)					4,063			-			Total current liabilities before settlement obligations					95,547		63,288
	Income taxes payable					5,043			6,223				Settlement obligations				2,814		8,015
		Total current liabilities before settlement obligations				194,251			174,667					Total current liabilities			98,361		71,303
			Settlement obligations (Note 5)			55,402			63,479
				Total current liabilities		249,653			238,146
DEFERRED INCOME TAXES	DEFERRED INCOME TAXES					4,503			4,682		DEFERRED INCOME TAXES						3,262		1,859
RIGHT-OF-USE OPERATING LEASE LIABILITY - LONG TERM (Note 18)						4,499			-
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities (Note 7)						2,623			3,007
OPERATING LEASE LIABILITY - LONG TERM (Note 17)											OPERATING LEASE LIABILITY - LONG TERM (Note 17)						2,715		3,312
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities (Note 8)											OTHER LONG-TERM LIABILITIES, including insurance policy liabilities (Note 8)						2,400		2,012
TOTAL LIABILITIES	TOTAL LIABILITIES					261,278			245,835		TOTAL LIABILITIES						106,738		78,486
REDEEMABLE COMMON STOCK	REDEEMABLE COMMON STOCK					107,672			107,672		REDEEMABLE COMMON STOCK						84,979		84,979

				EQUITY											EQUITY
COMMON STOCK (Note 12)
COMMON STOCK (Note 11)											COMMON STOCK (Note 11)
	Authorized: 200,000,000 with $0.001 par value;										Authorized: 200,000,000 with $0.001 par value;
	Issued and outstanding shares, net of treasury - December: 56,568,425 June: 56,568,425					80			80		Issued and outstanding shares, net of treasury - December: 56,614,559 June: 57,118,925						80		80

PREFERRED STOCK	PREFERRED STOCK										PREFERRED STOCK
	Authorized shares: 50,000,000 with $0.001 par value;										Authorized shares: 50,000,000 with $0.001 par value;
	Issued and outstanding shares, net of treasury: December: - June: -					-			-		Issued and outstanding shares, net of treasury: December: 0 June: 0						-		-
ADDITIONAL PAID-IN-CAPITAL	ADDITIONAL PAID-IN-CAPITAL					277,891			276,997		ADDITIONAL PAID-IN-CAPITAL						302,196		301,489
TREASURY SHARES, AT COST: December: 24,891,292 June: 24,891,292	TREASURY SHARES, AT COST: December: 24,891,292 June: 24,891,292					(286,951	)		(286,951	)	TREASURY SHARES, AT COST: December: 24,891,292 June: 24,891,292						(286,951)		(286,951)
ACCUMULATED OTHER COMPREHENSIVE LOSS (Note 13)						(194,439	)		(199,273	)
ACCUMULATED OTHER COMPREHENSIVE LOSS (Note 12)											ACCUMULATED OTHER COMPREHENSIVE LOSS (Note 12)						(141,242)		(169,075)
RETAINED EARNINGS	RETAINED EARNINGS					523,979			528,576		RETAINED EARNINGS						411,178		444,670
TOTAL NET1 EQUITY	TOTAL NET1 EQUITY					320,560			319,429		TOTAL NET1 EQUITY						285,261		290,213
NON-CONTROLLING INTEREST	NON-CONTROLLING INTEREST					-			-		NON-CONTROLLING INTEREST						0		0
TOTAL EQUITY	TOTAL EQUITY					320,560			319,429		TOTAL EQUITY						285,261		290,213

TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS' EQUITY					$	689,510		$	672,936
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY											TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY					$	476,978	$	453,678

											(A) – Derived from audited financial statements
											See Notes to Unaudited Condensed Consolidated Financial Statements

~~(A) - Derived from audited financial statements~~
~~See Notes to Unaudited Condensed Consolidated Financial Statements~~

NET 1 UEPS TECHNOLOGIES, INC

Unaudited Condensed Consolidated Statements of Operations

Three months ended Six months ended
December 31, December 31,
2019 2018 2019 2018
(In thousands, except per share data) (In thousands, except per share data)

REVENUE (Note 17) $ 74,080 $ 77,442 $ 154,836 $ 184,539

EXPENSE

Cost of goods sold, IT processing, servicing and support 43,160 41,231 89,954 103,335
Selling, general and administration 33,393 69,730 65,324 111,152
Depreciation and amortization 4,381 7,191 9,146 15,048
Impairment loss (Note 8) - 8,191 - 8,191

OPERATING LOSS (6,854 ) (48,901 ) (9,588 ) (53,187 )

CHANGE IN FAIR VALUE OF EQUITY SECURITIES (Note 6 and 7) - (15,836 ) - (15,836 )

GAIN ON DISPOSAL OF FIHRST (Note 2) 9,743 - 9,743 -

INTEREST INCOME 1,343 2,177 1,994 3,778

INTEREST EXPENSE 3,221 2,563 4,576 5,121

IMPAIRMENT OF CEDAR CELLULAR NOTE (Note 7) - 2,732 - 2,732

INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT) 1,011 (67,855 ) (2,427 ) (73,098 )

INCOME TAX EXPENSE (BENEFIT) (Note 20) 1,722 (4,398 ) 3,739 577

NET LOSS BEFORE EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS (711 ) (63,457 ) (6,166 ) (73,675 )

EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS (Note 7) 506 (1,291 ) 1,569 184

NET LOSS FROM CONTINUING OPERATIONS (205 ) (64,748 ) (4,597 ) (73,491 )

NET INCOME FROM DISCONTINUED OPERATIONS (Note 22) - 3,779 - 7,418

NET (LOSS) INCOME (205 ) (60,969 ) (4,597 ) (66,073 )

LESS (ADD) NET INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTEREST - 2,972 - 3,067
Continuing - 721 - (877 )
Discontinued - 2,251 - 3,944

NET (LOSS) INCOME ATTRIBUTABLE TO NET1 (205 ) (63,941 ) (4,597 ) (69,140 )
Continuing (205 ) (65,469 ) (4,597 ) (72,614 )
Discontinued $ - $ 1,528 $ - $ 3,474

Net (loss) earnings per share, in United States dollars (Note 15):
Basic (loss) earnings attributable to Net1 shareholders $ (0.00 ) $ (1.13 ) $ (0.08 ) $ (1.22 )
Continuing $ (0.00 ) $ (1.16 ) $ (0.08 ) $ (1.28 )
Discontinued $ - $ 0.03 $ - $ 0.06
Diluted (loss) earnings attributable to Net1 shareholders $ (0.00 ) $ (1.12 ) $ (0.08 ) $ (1.22 )
Continuing $ (0.00 ) $ (1.15 ) $ (0.08 ) $ (1.28 )
Discontinued $ - $ 0.03 $ - $ 0.06

See Notes to Unaudited Condensed Consolidated Financial Statements

		Three months ended					Six months ended
			December 31,				December 31,
		2020		2019		2020		2019
				(as restated)^(A)				(as restated)^(A)
		(In thousands, except per share data)				(In thousands, except per share data)

REVENUE (Note 16)		$	32,305	$	38,918	$	67,441	$	85,134

EXPENSE

	Cost of goods sold, IT processing, servicing and support		24,339		26,746		50,799		57,452
	Selling, general and administration		22,097		21,418		40,625		42,040
	Depreciation and amortization		1,074		1,174		1,997		2,498

OPERATING LOSS			(15,205)		(10,420)		(25,980)		(16,856)

CHANGE IN FAIR VALUE OF EQUITY SECURITIES (Note 5 and 6)			15,128		0		15,128		0

GAIN ON DISPOSAL OF FIHRST (Note 2)			0		9,743		0		9,743

LOSS ON DISPOSAL OF EQUITY-ACCOUNTED INVESTMENT (Note 6)			13		0		13		0

INTEREST INCOME			717		1,082		1,328		1,445

INTEREST EXPENSE			677		3,129		1,424		4,476

INCOME (LOSS) BEFORE INCOME TAX EXPENSE			(50)		(2,724)		(10,961)		(10,144)

INCOME TAX EXPENSE (Note 19)			3,468		707		2,378		1,677

NET LOSS BEFORE (LOSS) INCOME FROM EQUITY-ACCOUNTED INVESTMENTS			(3,518)		(3,431)		(13,339)		(11,821)

(LOSS) INCOME FROM EQUITY-ACCOUNTED INVESTMENTS (Note 6)			(1,016)		506		(20,153)		1,569

NET LOSS FROM CONTINUING OPERATIONS			(4,534)		(2,925)		(33,492)		(10,252)

NET INCOME FROM DISCONTINUED OPERATIONS (Note 21)			0		2,720		0		5,655

NET LOSS			(4,534)		(205)		(33,492)		(4,597)

NET (LOSS) INCOME ATTRIBUTABLE TO NET1			(4,534)		(205)		(33,492)		(4,597)
	Continuing		(4,534)		(2,925)		(33,492)		(10,252)
	Discontinued	$	0	$	2,720	$	0	$	5,655

Net (loss) earnings per share, in United States dollars (Note 14):
Basic (loss) earnings attributable to Net1 shareholders		$	(0.08)	$	0	$	(0.59)	$	(0.08)
	Continuing	$	(0.08)	$	(0.05)	$	(0.59)	$	(0.18)
	Discontinued	$	0	$	0.05	$	0	$	0.10
Diluted (loss) earnings attributable to Net1 shareholders		$	(0.08)	$	0	$	(0.59)	$	(0.08)
	Continuing	$	(0.08)	$	(0.05)	$	(0.59)	$	(0.18)
	Discontinued	$	0	$	0.05	$	0	$	0.10

(A) Certain amounts have been restated to correct the misstatement discussed in Note 1.
See Notes to Unaudited Condensed Consolidated Financial Statements

NET 1 UEPS TECHNOLOGIES, INC

Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income

Three months ended Six months ended
December 31, December 31,
2019 2018 2019 2018
(In thousands) (In thousands)

Net loss $ (205 ) $ (60,969 ) $ (4,597 ) $ (66,073 )

Other comprehensive income (loss), net of taxes
Movement in foreign currency translation reserve 19,114 (10,353 ) 1,029 (23,675 )
Release of foreign currency translation reserve related to disposal of FIHRST 1,578 - 1,578 -
Movement in foreign currency translation reserve related to equity-accounted investments (491 ) - 2,227 5,430
Total other comprehensive income (loss), net of taxes 20,201 (10,353 ) 4,834 (18,245 )

Comprehensive income (loss) 19,996 (71,322 ) 237 (84,318 )
(Less) Add comprehensive (gain) loss attributable to non-controlling interest - (1,363 ) - 1,342

Comprehensive income (loss) attributable to Net1 $ 19,996 $ (72,685 ) $ 237 $ (82,976 )

						Three months ended				Six months ended
						December 31,				December 31,
					2020		2019		2020		2019
						(In thousands)				(In thousands)

Net loss					$	(4,534)	$	(205)	$	(33,492)	$	(4,597)

Other comprehensive income (loss), net of taxes
	Movement in foreign currency translation reserve					20,003		19,114		26,145		1,029
	Release of foreign currency translation reserve related to disposal of FIHRST					0		1,578		0		1,578
	Movement in foreign currency translation reserve related to equity-accounted investments					0		(491)		1,688		2,227
			Total other comprehensive income, net of taxes			20,003		20,201		27,833		4,834

		Comprehensive income (loss)				15,469		19,996		(5,659)		237

				Comprehensive income (loss) attributable to Net1	$	15,469	$	19,996	$	(5,659)	$	237

See Notes to Unaudited Condensed Consolidated Financial Statements

~~See Notes to Unaudited Condensed Consolidated Financial Statements~~

NET 1 UEPS TECHNOLOGIES, INC

Unaudited Condensed Consolidated Statements of Changes in Equity

Net 1 UEPS Technologies, Inc. Shareholders
Number of Shares Amount Number of Treasury Shares Treasury Shares Number of shares, net of treasury Additional Paid-In Capital Retained Earnings Accumulated other comprehensive (loss) Total Net1 Equity Non-controlling Interest Total Redeemable common stock
For the three months ended December 31, 2018 (dollar amounts in thousands)

Balance - October 1, 2018 81,725,217 $ 80 (24,891,292 ) $ (286,951 ) 56,833,925 $ 276,865 $ 830,995 $ (189,630 ) $ 631,359 $ 91,477 $ 722,836 $ 107,672
Stock-based compensation charge (Note 14) 598 598 598
Dividends paid to non-controlling interest - (1,208 ) (1,208 )
Net (loss) income (63,941 ) (63,941 ) 2,972 (60,969 )
Other comprehensive loss (Note 13) (8,744 ) (8,744 ) (1,609 ) (10,353 )
Balance - December 31, 2018 81,725,217 $ 80 (24,891,292 ) $ (286,951 ) 56,833,925 $ 277,463 $ 767,054 $ (198,374 ) $ 559,272 $ 91,632 $ 650,904 $ 107,672

For the six months ended December 31, 2018 (dollar amounts in thousands)
Balance - July 1, 2018 81,577,217 $ 80 (24,891,292 ) $ (286,951 ) 56,685,925 $ 276,201 $ 836,194 $ (184,538 ) $ 640,986 $ 95,911 $ 736,897 $ 107,672

Restricted stock granted 148,000 148,000 - -
Stock-based compensation charge (Note 14) 1,185 1,185 1,185
Stock-based compensation charge related to equity accounted investment 77 77 77
Dividends paid to non-controlling interest - (2,937 ) (2,937 )
Net (loss) income (69,140 ) (69,140 ) 3,067 (66,073 )
Other comprehensive loss (Note 13) (13,836 ) (13,836 ) (4,409 ) (18,245 )
Balance - December 31, 2018 81,725,217 $ 80 (24,891,292 ) $ (286,951 ) 56,833,925 $ 277,463 $ 767,054 $ (198,374 ) $ 559,272 $ 91,632 $ 650,904 $ 107,672

	Net 1 UEPS Technologies, Inc. Shareholders
	Number of Shares		Amount	Number of Treasury Shares		Treasury Shares	Number of shares, net of treasury		Additional Paid-In Capital		Retained Earnings		Accumulated other comprehensive loss		Total Net1 Equity		Non-controlling Interest		Total		Redeemable common stock
	For the three months ended December 31, 2019 (dollar amounts in thousands)
Balance – October 1, 2019	81,459,717	$	80	(24,891,292)	$	(286,951)	56,568,425	$	277,455	$	518,636	$	(211,179)	$	298,041	$	0	$	298,041	$	107,672

Stock-based compensation charge (Note 13)									436						436				436

Net loss											(205)				(205)		0		(205)

Other comprehensive income (Note 12)													20,201		20,201		0		20,201

Balance – December 31, 2019	81,459,717	$	80	(24,891,292)	$	(286,951)	56,568,425	$	277,891	$	518,431	$	(190,978)	$	318,473	$	0	$	318,473	$	107,672

	For the six months ended December 31, 2019 (dollar amounts in thousands)

Balance – July 1, 2019	81,459,717	$	80	(24,891,292)	$	(286,951)	56,568,425	$	276,997	$	523,028	$	(195,812)	$	317,342	$	0	$	317,342	$	107,672

Stock-based compensation charge (Note 13)									823						823				823

Stock-based compensation charge related to equity accounted investment									71						71				71

Net loss											(4,597)				(4,597)		0		(4,597)

Other comprehensive income													4,834		4,834		0		4,834

Balance – December 31, 2019	81,459,717	$	80	(24,891,292)	$	(286,951)	56,568,425	$	277,891	$	518,431	$	(190,978)	$	318,473	$	0	$	318,473	$	107,672

See Notes to Unaudited Condensed Consolidated Financial Statements

NET 1 UEPS TECHNOLOGIES, INC

Unaudited Condensed Consolidated Statements of Changes in Equity

Net 1 UEPS Technologies, Inc. Shareholders
Number of Shares Amount Number of Treasury Shares Treasury Shares Number of shares, net of treasury Additional Paid-In Capital Retained Earnings Accumulated other comprehensive (loss) income Total Net1 Equity Non-controlling Interest Total Redeemable common stock
For the three months ended December 31, 2019 (dollar amounts in thousands)
Balance - October 1, 2019 81,459,717 $ 80 (24,891,292 ) $ (286,951 ) 56,568,425 $ 277,455 $ 524,184 $ (214,640 ) $ 300,128 $ - $ 300,128 $ 107,672

Stock-based compensation charge (Note 14) 436 436 436
Net loss (205 ) (205 ) - (205 )
Other comprehensive income (Note 13) 20,201 20,201 - 20,201
Balance - December 31, 2019 81,459,717 $ 80 (24,891,292 ) $ (286,951 ) 56,568,425 $ 277,891 $ 523,979 $ (194,439 ) $ 320,560 $ - $ 320,560 $ 107,672

For the six months ended December 31, 2019 (dollar amounts in thousands)
Balance - July 1, 2019 81,459,717 $ 80 (24,891,292 ) $ (286,951 ) 56,568,425 $ 276,997 $ 528,576 $ (199,273 ) $ 319,429 $ - $ 319,429 $ 107,672
Stock-based compensation charge (Note 14) 823 823 823
Stock-based compensation charge related to equity accounted investment (Note 7) 71 71 71
Net loss (4,597 ) (4,597 ) - (4,597 )
Other comprehensive income (Note 13) 4,834 4,834 - 4,834
Balance - December 31, 2019 81,459,717 $ 80 (24,891,292 ) $ (286,951 ) 56,568,425 $ 277,891 $ 523,979 $ (194,439 ) $ 320,560 $ - $ 320,560 $ 107,672

See Notes to Unaudited Condensed Consolidated Financial Statements

	Net 1 UEPS Technologies, Inc. Shareholders
	Number of Shares		Amount	Number of Treasury Shares		Treasury Shares	Number of shares, net of treasury		Additional Paid-In Capital		Retained Earnings		Accumulated other comprehensive loss		Total Net1 Equity		Non-controlling Interest		Total		Redeemable common stock

	For the three months ended December 31, 2020 (dollar amounts in thousands)

Balance – October 1, 2020	81,530,017	$	80	(24,891,292)	$	(286,951)	56,638,725	$	301,946	$	415,712	$	(161,245)	$	269,542	$	0	$	269,542	$	84,979

Exercise of stock option (Note 13)	5,834		0				5,834		18						18				18

Stock-based compensation charge (Note 13)									246						246				246

Reversal of stock-based compensation charge (Note 13)	(30,000)						(30,000)		(14)						(14)				(14)

Net loss											(4,534)				(4,534)		0		(4,534)

Other comprehensive income (Note 12)													20,003		20,003		0		20,003

Balance – December 31, 2020	81,505,851	$	80	(24,891,292)	$	(286,951)	56,614,559	$	302,196	$	411,178	$	(141,242)	$	285,261	$	0	$	285,261	$	84,979

	For the six months ended December 31, 2020 (dollar amounts in thousands)

Balance – July 1, 2020	82,010,217	$	80	(24,891,292)	$	(286,951)	57,118,925	$	301,489	$	444,670	$	(169,075)	$	290,213	$	0	$	290,213	$	84,979

Exercise of stock option (Note 13)	5,834		0				5,834		18						18				18

Stock-based compensation charge (Note 13)									928						928				928

Reversal of stock-based compensation charge (Note 13)	(510,200)						(510,200)		(297)						(297)				(297)

Stock-based compensation charge related to equity accounted investment (Note 6)									(40)						(40)				(40)

Proceeds from disgorgement of shareholders' short-swing profits (Note 22)									98						98				98

Net loss											(33,492)				(33,492)		0		(33,492)

Other comprehensive income (Note 12)													27,833		27,833		0		27,833

Balance – December 31, 2020	81,505,851	$	80	(24,891,292)	$	(286,951)	56,614,559	$	302,196	$	411,178	$	(141,242)	$	285,261	$	0	$	285,261	$	84,979

See Notes to Unaudited Condensed Consolidated Financial Statements

NET 1 UEPS TECHNOLOGIES, INC

Unaudited Condensed Consolidated Statements of Cash Flows

Three months ended Six months ended
December 31, December 31,
2019 2018 2019 2018
(In thousands) (In thousands)

Cash flows from operating activities
Net loss $ (205 ) $ (60,969 ) $ (4,597 ) $ (66,073 )
Depreciation and amortization 4,381 9,853 9,146 20,647
Impairment loss (Note 8) - 8,191 - 8,191
Movement in allowance for doubtful accounts receivable (429 ) 21,368 83 23,958
(Earnings) loss from equity-accounted investments (Note 7) (506 ) 1,247 (1,569 ) (126 )
Movement in allowance for doubtful loans 620 - 620 -
Interest on Cedar Cellular note (Note 7) - (1,216 ) - (1,372 )
Impairment of Cedar Cellular note (Note 7) - 2,732 - 2,732
Change in fair value of equity securities (Note 6 and 7) - 15,836 - 15,836
Fair value adjustment related to financial liabilities 147 83 234 1
Interest payable 526 131 1,158 241
Facility fee amortized - 68 - 155
Gain on disposal of FIHRST (Note 2) (9,743 ) - (9,743 ) -
Profit on disposal of property, plant and equipment (49 ) (139 ) (203 ) (266 )
Stock-based compensation charge (Note 14) 436 598 823 1,185
Dividends received from equity accounted investments 380 454 1,448 454
Decrease in accounts receivable, pre-funded social welfare grants receivable and finance loans receivable 8,767 18,753 3,101 28,755
(Increase) Decrease in inventory (682 ) (24 ) (12,995 ) 2,161
Increase (Decrease) in accounts payable and other payables 3,132 (11,759 ) (264 ) (19,535 )
(Decrease) increase in taxes payable (2,244 ) (7,007 ) (956 ) 1,347
Decrease in deferred taxes (117 ) (3,436 ) (205 ) (7,070 )
Net cash provided by (used in) operating activities 4,414 (5,236 ) (13,919 ) 11,221

Cash flows from investing activities
Capital expenditures (827 ) (2,547 ) (3,451 ) (5,665 )
Proceeds from disposal of property, plant and equipment 90 212 303 486
Proceeds from disposal of FIHRST (Note 2) 10,895 - 10,895 -
Investment in equity-accounted investments (Note 7) - (2,500 ) (1,250 ) (2,500 )
Loan to equity-accounted investment (Note 7) (612 ) - (612 ) -
Repayment of loans by equity-accounted investments - - 4,268 -
Acquisition of intangible assets - (1,384 ) - (1,384 )
Investment in MobiKwik - (1,056 ) - (1,056 )
Return on investment - - - 284
Net change in settlement assets 3,371 2,031 (10,138 ) 77,962
Net cash provided by (used in) investing activities 12,917 (5,244 ) 15 68,127

Cash flows from financing activities
Proceeds from bank overdraft (Note 10) 207,876 221,582 391,550 306,237
Repayment of bank overdraft (Note 10) (193,725 ) (245,726 ) (378,554 ) (245,726 )
Long-term borrowings utilized (Note 10) - 3,203 14,798 11,004
Repayment of long-term borrowings (Note 10) (11,313 ) (13,551 ) (11,313 ) (23,811 )
Guarantee fee - (258 ) (148 ) (394 )
Finance lease capital repayments (26 ) - (52 ) -
Dividends paid to non-controlling interest - (1,208 ) - (2,937 )
Net change in settlement obligations (3,371 ) (2,031 ) 10,138 (77,962 )
Net cash (used in) provided by financing activities (559 ) (37,989 ) 26,419 (33,589 )

Effect of exchange rate changes on cash 7,508 (1,823 ) 1,053 (2,772 )
Net increase (decrease) in cash and cash equivalents 24,280 (50,292 ) 13,568 42,987
Cash and cash equivalents - beginning of period 110,799 183,333 121,511 90,054
Cash and cash equivalents - end of period⁽¹⁾ $ 135,079 $ 133,041 $ 135,079 $ 133,041

See Notes to Unaudited Condensed Consolidated Financial Statements
(1) Cash, cash equivalents and restricted cash as of December 31, 2019, includes restricted cash of approximately $84.4 million related to cash withdrawn from the Company's various debt facilities to fund ATMs. This cash may only be used to fund ATMs and is considered restricted as to use and therefore is classified as restricted cash. Refer to Note 10 for additional information regarding the Company's facilities.

				Three months ended				Six months ended
				December 31,				December 31,
			2020		2019		2020		2019
				(In thousands)				(In thousands)

Cash flows from operating activities
	Net loss		$	(4,534)	$	(205)	$	(33,492)	$	(4,597)
	Depreciation and amortization			1,074		4,381		1,997		9,146
	Movement in allowance for doubtful accounts receivable			100		(429)		614		83
	Loss from equity-accounted investments (Note 6)			1,016		(506)		20,153		(1,569)
	Movement in allowance for doubtful loans to equity-accounted investments			661		620		739		620
	Change in fair value of equity securities (Note 5 and 6)			(15,128)		0		(15,128)		0
	Fair value adjustment related to financial liabilities			790		147		1,676		234
	Interest payable			42		526		(21)		1,158
	Gain on disposal of FIHRST (Note 2)			0		(9,743)		0		(9,743)
	Loss on disposal of equity-accounted investment (Note 2)			13		0		13		0
	Loss (Profit) on disposal of property, plant and equipment			752		(49)		742		(203)
	Stock-based compensation charge (Note 13)			232		436		631		823
	Dividends received from equity accounted investments			68		380		125		1,448
	Decrease (Increase) in accounts receivable and finance loans receivable			6,559		8,767		(1,556)		3,101
	(Increase) Decrease in inventory			(145)		(682)		2,214		(12,995)
	(Decrease) Increase in accounts payable and other payables			(3,084)		3,132		(3,499)		(264)
	(Decrease) Increase in taxes payable			(421)		(2,244)		(15,338)		(956)
	Increase (Decrease) in deferred taxes			26		(117)		(1,729)		(205)
		Net cash (used in) provided by operating activities		(11,979)		4,414		(41,859)		(13,919)

Cash flows from investing activities
Capital expenditures				(3,023)		(827)		(3,298)		(3,451)
Proceeds from disposal of property, plant and equipment				75		90		91		303
Proceeds from disposal of DNI as equity-accounted investment (Note 3)				5,815		0		6,144		0
Proceeds from disposal of Net1 Korea, net of cash disposed (Note 2)				0		0		20,114		0
Proceeds from disposal of FIHRST, net of cash disposed (Note 2)				0		10,895		0		10,895
Investment in equity-accounted investments (Note 6)				0		0		0		(1,250)
Loan to equity-accounted investment (Note 6)				(1,160)		(612)		(1,238)		(612)
Repayment of loans by equity-accounted investments				0		0		0		4,268
Net change in settlement assets				1,377		3,371		5,445		(10,138)
	Net cash provided by investing activities			3,084		12,917		27,258		15

Cash flows from financing activities
Proceeds from bank overdraft (Note 9)				137,333		207,876		206,479		391,550
Repayment of bank overdraft (Note 9)				(88,258)		(193,725)		(165,108)		(378,554)
Proceeds from disgorgement of shareholders' short-swing profits (Note 22)				26		0		124		0
Proceeds from exercise of stock options				18		0		18		0
Long-term borrowings utilized (Note 9)				0		0		0		14,798
Repayment of long-term borrowings (Note 9)				0		(11,313)		0		(11,313)
Guarantee fee				0		0		0		(148)
Finance lease capital repayments				0		(26)		0		(52)
Net change in settlement obligations				(1,377)		(3,371)		(5,445)		10,138
	Net cash provided by (used in) financing activities			47,742		(559)		36,068		26,419

Effect of exchange rate changes on cash				12,296		7,508		13,102		1,053
Net increase in cash, cash equivalents and restricted cash				51,143		24,280		34,569		13,568
Cash, cash equivalents and restricted cash – beginning of period				215,911		110,799		232,485		121,511
Cash, cash equivalents and restricted cash – end of period (Note 15)			$	267,054	$	135,079	$	267,054	$	135,079

See Notes to Unaudited Condensed Consolidated Financial Statements

NET 1 UEPS TECHNOLOGIES, INC

Notes to the Unaudited Condensed Consolidated Financial Statements
~~For~~

for the three and six months ended December 31, ~~2019~~2020 and ~~2018~~
2019

(All amounts in tables stated in thousands or thousands of U.S. dollars, unless otherwise stated)

1. Basis of Presentation and Summary of Significant Accounting Policies

In November 2019, the Company through its wholly owned subsidiary, Net1 Applied Technologies South Africa Proprietary Limited ("Net1 SA"), entered into an agreement with Transaction Capital Payment Solutions Proprietary Limited, or its nominee, a limited liability private company duly incorporated in the Republic of South Africa, pursuant to which Net1 SA agreed to sell its entire shareholding in Net1 FIHRST Holdings Proprietary Limited ("FIHRST") for $11.7 million (ZAR 172.2 million). The transaction closed in December 2019. FIHRST was deconsolidated following the closing of the transaction. Net1 SA was obliged to utilize the full purchase price received from the sale of FIHRST to partially settle its obligations under its lending arrangements and applied the proceeds received against its outstanding borrowings - refer to Note 10.

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements include all majority-owned subsidiaries over which the Company exercises control and have been prepared in accordance with U.S. generally accepted accounting principles ~~("GAAP"~~(“GAAP”) and the rules and regulations of the United States Securities and Exchange Commission for Quarterly Reports on Form 10-Q and include all of the information and disclosures required for interim financial reporting. The results of operations for the three ~~and six~~ months ended December 31, ~~2019~~2020 and ~~2018,~~2019, are not necessarily indicative of the results for the full year. The Company believes that the disclosures are adequate to make the information presented not misleading.

These financial statements should be read in conjunction with the financial statements, accounting policies and financial notes thereto included in the ~~Company's~~Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2019.~~2020. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments), which are necessary for a fair representation of financial results for the interim periods presented.

References to “Net1” are references solely to Net 1 UEPS Technologies, Inc. References to the ~~"Company"~~“Company” refer to Net1 and its consolidated subsidiaries, collectively, unless the context otherwise requires. ~~References to "Net1" are references solely to Net 1 UEPS Technologies, Inc.~~

~~Consideration~~

Impact of ~~going concern~~COVID-19 on the Company’s business

~~Accounting guidance requires~~

The COVID-19 pandemic did not impact the ~~Company's management to assess whether there are conditions or events, considered in~~Company’s South African operations as severely during the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after its unaudited condensed consolidated financial statements are issued. The Company's management has identified certain conditions or events, which, considered in the aggregate, could raise substantial doubt about the Company's ability to continue as a going concern including the risk that the Company will be unable to:

~~deliver all or a substantial part of the financial results forecast in its fiscal~~three and six months ended December 31, 2020, ~~budget;~~
~~retain its existing borrowings and facilities, as described in Note 10, or obtain additional borrowings and facilities on commercially reasonable terms;~~
arrive at a commercial settlement with SASSA, given the September 30, 2019, Supreme Court of Appeal ruling regarding the repayment of the additional implementation costs received to SASSA (refer Note 11) and the ongoing dispute the Company has with SASSA over fees due for the six-month contract extension period in accordance with National Treasury's recommendation;
dispose of all or a portion of its remaining 30% interest in DNI-4PL Contracts Proprietary Limited ("DNI"). DNI's operations are also significantly dependent on Cell C because it is the largest distributor of Cell C starter packs in South Africa. Therefore, the inability of Cell C to continue to operate through the next 12 months could also have an adverse impact on DNI's operations; or
~~dispose of additional investments in order to realize sufficient cash flows.~~

The Company's management has implemented a number of plans to alleviate the substantial doubt about the Company's ability to continue as a going concern. These plans include disposing of its Korean business unit, KSNET, as announced in its press release of January 27, 2020, certain non-core assets (refer to Note 3compared to the ~~Company's audited consolidated financial statements included in its Annual Report on Form 10-K for~~last four months of the year ended June 30, ~~2019, for additional information regarding~~2020. However, on December 28, 2020, the country moved back to Level 3 restrictions which remain in place as of the date of this report. This level of restrictions is not as severe as that applied during April and May 2020 but is greater than was applied through most of the six months ended December 31, 2020. The increase in restrictions was in response to a ~~call option granted~~second wave of infections, which has been more severe than the first wave. While all the Company’s businesses continue to DNI), and extending its existing borrowings used to fund its ATMs through September 2020. Provided the KSNET disposal closes, as expected, in March 2020, this is expected to remove the substantial doubt about the Company's ability to continue as a going concern.

~~In addition, the Company's management believes~~operate, it has ~~a number of mitigating actions~~increased preventive measures and it ~~can pursue, including (i) limiting the expansion of~~is unclear to what extent activity levels will be affected. The Company has experienced an increase in claims in its microlending finance loans receivable book in South Africa; (ii) implementing further cost cutting measures; (iii) commencing additional asset realizations; (iv) managing its capital expenditures; and (v) accessing alternative sources of capital (including through the issuance of additional shares of its common stock), in order to generate additional liquidity.

1. ~~Basis of Presentation and Summary of Significant Accounting Policies (continued)~~

~~Consideration of going concern (continued)~~

~~The Company's management believes that these plans and mitigating actions alleviate the substantial doubt referred to above and therefore have concluded that~~life insurance business, which the Company ~~remains a going concern.~~believes is linked to the second wave.

The broader implications of COVID-19 on the Company’s results of operations and overall financial performance continue to remain uncertain. While the Company has not incurred significant disruptions thus far from the COVID-19 outbreak, apart from the two months in April and May 2020 when loan origination was curtailed, the Company is unable to accurately predict the impact that COVID-19 will have due to numerous uncertainties, including the severity and duration of the outbreak, actions that may be taken by governmental authorities, the impact on the Company’s customers and other factors. The Company will continue to evaluate the nature and extent of the impact on its business, consolidated results of operations, and financial condition.

Recent accounting pronouncements adopted

~~In February 2016, the Financial Accounting Standards Board ("FASB") issued guidance regarding~~ ~~Leases~~~~. The guidance increases transparency and comparability among organizations~~

There were no new accounting pronouncements adopted by requiring the recognition of lease assets and lease liabilities on the balance sheet. The amendments to current lease guidance include the recognition of assets and liabilities by lessees for those leases currently classified as operating leases. The guidance also requires disclosures to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. This guidance was effective for the Company ~~beginning July 1, 2019. Refer to Note 18 for~~during the ~~impact of the adoption of this guidance on our condensed consolidated financial statements.~~three and six months ended December 31, 2020.

Recent accounting pronouncements not yet adopted as of December 31, ~~2019~~2020

In June 2016, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued guidance regarding Measurement of Credit Losses on Financial Instruments. The guidance replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For trade and other receivables, loans, and other financial instruments, an entity is required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses, which reflects losses that are probable. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. This guidance is effective for the Company beginning July 1, ~~2020. Early adoption is permitted beginning July 1, 2019.~~2023. The Company is currently assessing the impact of this guidance on its financial statements and related ~~disclosures.~~disclosures, but does not expect the impact on its financial results to be material.

In August 2018, the FASB issued guidance regarding Disclosure Framework: Changes to the Disclosure Requirements for Fair Value Measurement. The guidance modifies the disclosure requirements related to fair value measurement. This guidance is effective for the Company beginning July 1, ~~2020.~~2021. Early adoption is permitted. The Company is currently assessing the impact of this guidance on its financial statement’s disclosure.

1. Basis of Presentation and Summary of Significant Accounting Policies (continued)

Recent accounting pronouncements not yet adopted as of December 31, 2020 (continued)

In November 2019, the FASB issued guidance regarding Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). The guidance provides a framework to stagger effective dates for future major accounting standards and amends the effective dates for certain major new accounting standards to give implementation relief to certain types of entities, including Smaller Reporting Companies. The Company is a Smaller Reporting Company. Specifically, the guidance changes some effective dates for certain new standards on the following topics in the FASB Codification, namely Derivatives and Hedging (ASC 815); Leases (ASC 842); Financial Instruments — Credit Losses (ASC 326); and Intangibles — Goodwill and Other (ASC 350). The guidance defers the adoption date of guidance regarding Measurement of Credit Losses on Financial Instruments by the Company from July 1, 2020 to July 1, 2023, and defers the adoption guidance regarding Disclosure Framework: Changes to the Disclosure Requirements for Fair Value Measurement by the Company from July 1, 2020 to July 1, 2021.

In January 2020, the FASB issued guidance regarding Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815. The guidance clarifies that an entity should consider observable transactions that require an entity to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with U.S GAAP guidance immediately before applying or upon discontinuing the equity method. The guidance also clarifies that, when determining the accounting for certain forward contracts and purchased options an entity should not consider, whether upon settlement or exercise, if the underlying securities would be accounted for under the equity method or fair value option. This guidance is effective for the Company beginning July 1, 2021. Early adoption is permitted. The Company is currently assessing the impact of this guidance on its financial statement’s disclosure.

Restatement of financial statements

Related to overstatement of revenue and cost of goods sold, IT processing, servicing and support

In November 2020, the Company identified an error with respect to the recognition of certain revenue and related cost of goods sold, IT processing, servicing and support during its assessment and systems development of new products. The Company incorrectly duplicated the recognition of acquiring fees in revenue and recorded an equal and opposite entry in cost of goods sold, IT processing, servicing and support in its unaudited condensed consolidated statement of operations due to the misinterpretation of certain system reports. The error did not impact on the Company’s operating income (loss), net income, balance sheet or cash flows. The Company determined that the error impacted reported results for the period from July 1, 2018 to September 30, 2020. The error impacts the Company’s reported results and the Company has restated its unaudited condensed consolidated statement of operations and certain note presentation, primarily Note 16 (Revenue) and Note 18 (Operating segments) for the three and six months ended December 31, 2019, to correct for the error.

The tables below present the impact of the restatement on the Company’s unaudited condensed consolidated statement of operations for the three months ended September 30, 2020, and the three and six months ended December 31, 2019:

Unaudited condensed consolidated statement of operations
	Three months ended September 30, 2020⁽¹⁾
	As reported		Correction		As restated
	(in thousands)
Revenue	$	37,113	$	(1,977)	$	35,136
Cost of goods sold, IT processing, servicing and support	$	28,437	$	(1,977)	$	26,460

	Three months ended December 31, 2019
	As reported		Correction		As restated
	(in thousands)
Revenue	$	40,567	$	(1,649)	$	38,918
Cost of goods sold, IT processing, servicing and support	$	28,395	$	(1,649)	$	26,746

	Six months ended December 31, 2019
	As reported		Correction		As restated
	(in thousands)
Revenue	$	88,505	$	(3,371)	$	85,134
Cost of goods sold, IT processing, servicing and support	$	60,823	$	(3,371)	$	57,452

(1) The error for the three months ended December 31, 2020, also impacted the six months ended December 31, 2020, by the same amount and the therefore the amounts reported for the six months ended December 31, 2020, include the correction of the error.

1. Basis of Presentation and Summary of Significant Accounting Policies (continued)

Restatement of financial statements ~~disclosure.~~(continued)

Related to overstatement of revenue and cost of goods sold, IT processing, servicing and support (continued)

The table below presents the impact of the restatement on the affected lines in the Processing and Total columns included in the revenue note (Note 16) for the three months ended September 30, 2020, and the three and six months ended December 31, 2019:

Three months ended

Three months ended

Six months ended

September 30, 2020⁽¹⁾

December 31, 2019

Processing

Total

Processing

Total

Processing

Total

Processing fees - as restated
$
16,330

$
16,929

$
14,938

$
16,236

$
29,132

$
31,679

As reported

18,307

18,906

16,587

17,885

32,503

35,050

Correction

(1,977)

(1,977)

(1,649)

(1,649)

(3,371)

(3,371)

South Africa - as restated

14,774

15,373

14,088

15,386

27,083

29,630

As reported

16,751

17,350

15,737

17,035

30,454

33,001

Correction

(1,977)

(1,977)

(1,649)

(1,649)

(3,371)

(3,371)

Rest of world
$
1,556

$
1,556

$
850

$
850

$
2,049

$
2,049

Total revenue, derived from the following geographic locations - as restated
$
21,518

$
35,136

$
22,847

$
38,918

$
48,940

$
85,134

As reported

23,495

37,113

24,496

40,567

52,311

88,505

Correction

(1,977)

(1,977)

(1,649)

(1,649)

(3,371)

(3,371)

South Africa - as restated

19,962

33,580

21,997

38,068

46,891

83,085

As reported

21,939

35,557

23,646

39,717

50,262

86,456

Correction

(1,977)

(1,977)

(1,649)

(1,649)

(3,371)

(3,371)

Rest of world
$
1,556

$
1,556

$
850

$
850

$
2,049

$
2,049
(1) The error for the three months ended December 31, 2020, also impacted the six months ended December 31, 2020, by the same amount and the therefore the amount reported for the six months ended December 31, 2020, includes the correction of the error.
The table below presents the impact of the restatement to the Processing operating segment revenue included in the operating segment note (Note 18) for the three months ended September 30, 2020, and the three and six months ended December 31, 2019:

Revenue (as restated)

Reportable Segment

Inter-segment

From external customers

Processing - as restated⁽¹⁾
$
22,506

$
988

$
21,518

As reported

24,483

988

23,495

Correction

(1,977)

0

(1,977)

Total for the three months ended September 30, 2020 - as restated

36,982

1,846

35,136

As reported

38,959

1,846

37,113

Correction

(1,977)

0

(1,977)

Processing - as restated
$
25,022

$
2,175

$
22,847

As reported

26,671

2,175

24,496

Correction

(1,649)

0

(1,649)

Total for the three months ended December 31, 2019 - as restated

42,180

3,262

38,918

As reported

43,829

3,262

40,567

Correction

(1,649)

0

(1,649)

Processing - as restated
$
53,317

$
4,377

$
48,940

As reported

56,688

4,377

52,311

Correction

(3,371)

0

(3,371)

Total for the six months ended December 31, 2019 - as restated

91,852

6,718

85,134

As reported

95,223

6,718

88,505

Correction
$
(3,371)

$
0

$
(3,371)
(1) The error for the three months ended December 31, 2020, also impacted the six months ended December 31, 2020, by the same amount and the therefore the amounts reported for the six months ended December 31, 2020, include the correction of the error.

2.Disposal of controlling interest in FIHRST ~~and KSNET~~

2020 Disposals

December 2019 disposal of FIHRST

In November 2019, the Company through its wholly owned subsidiary, Net1 Applied Technologies South Africa Proprietary Limited ("(“Net1 ~~SA"~~SA”), entered into an agreement with Transaction Capital Payment Solutions Proprietary Limited, or its nominee, a limited liability private company ~~duly~~ incorporated in the Republic of South Africa, pursuant to which Net1 SA agreed to sell its entire shareholding in Net1 FIHRST Holdings Proprietary Limited ~~("FIHRST"~~(“FIHRST”) for $11.7 million (ZAR 172.2 million). The transaction closed in December 2019. FIHRST was deconsolidated following the closing of the transaction. Net1 SA was obliged to utilize the full purchase price received from the sale of FIHRST to partially settle its obligations under its lending arrangements and applied the proceeds received against its outstanding ~~borrowings - refer to Note 10.~~

2.~~Disposal of controlling interest in FIHRST and KSNET (continued)~~borrowings.

~~December 2019 disposal of FIHRST (continued)~~

The table below presents the impact of the deconsolidation of FIHRST and the calculation of the net gain recognized on deconsolidation:

FIHRST
					December 31,
					2019
Fair value of consideration received					$	11,749
Less: carrying value of FIHRST, comprising						1,870
	Cash and cash equivalents					854
	Accounts receivable, net					367
	Property, plant and equipment, net					64
	Goodwill (Note 7)					599
	Intangible assets, net					30
	Deferred income taxes assets					42
	Accounts payable					(7)
	Other payables					(1,437)
	Income taxes payable					(220)
	Released from accumulated other comprehensive income – foreign currency translation reserve (Note 12)					1,578
	Settlement assets					17,406
	Settlement liabilities					(17,406)
		Gain recognized on disposal, before tax				9,879
		Taxes related to gain recognized on disposal, comprising:				0
			Capital gains tax			2,418
			Release of valuation allowance related to capital losses previously unutilized⁽¹⁾			(2,418)
		Transaction costs				136
				Gain recognized on disposal, after tax	$	9,743

Total
Fair value of consideration received $ 11,749
Less: carrying value of FIHRST, comprising 1,870
Cash and cash equivalents 854
Accounts receivable, net 367
Property, plant and equipment, net 64
Goodwill (Note 8) 599
Intangible assets, net 30
Deferred income taxes assets 42
Accounts payable (7 )
Other payables (1,437 )
Income taxes payable (220 )
Released from accumulated other comprehensive income - foreign currency translation reserve (Note 13) 1,578
Settlement assets 17,406
Settlement liabilities (17,406 )
Gain recognized on disposal, before tax 9,879
Taxes related to gain recognized on disposal, comprising: -
Capital gains tax 2,418
Release of valuation allowance related to capital gains tax previously unutilized⁽¹⁾ (2,418 )
Transaction costs 136
Gain recognized on disposal, after tax $ 9,743

(1) Net1 SA recorded a valuation allowance related to capital losses previously generated but not utilized. A portion of these unutilized capital losses was utilized as a result of the disposal of FIHRST and, therefore, the equivalent portion of the valuation allowance created was released.

~~Pro forma results of operations related to the FIHRST disposal have not been presented because the effect of the disposal was not material to the Company.~~

~~Disposal of KSNET~~

On January 23, 2020, the Company, through its wholly owned subsidiary Net1 Applied Technologies Netherlands B.V. ("Net1 BV"), a limited liability private company duly incorporated in The Netherlands, entered into an agreement with PayletterHoldings LLC, a limited liability private company duly incorporated in the Republic of Korea, in terms of which Net1 BV agreed to sell its entire shareholding in Net1 Applied Technologies Korea Limited, a limited liability private company incorporated in the Republic of Korea and the sole shareholder of KSNET, Inc. for $237.2 million. The transaction is subject to customary closing conditions and is expected to close in March 2020. The transaction is not subject to a financing condition.

1011

3.Accounts receivable, net and other receivables and finance loans receivable, net

Accounts receivable, net and other receivables

The ~~Company's~~Company’s accounts receivable, net, and other receivables as of December 31, ~~2019,~~2020, and June 30, ~~2019, is~~2020, are presented in the table below:

		December 31,		June 30,
		2020		2020

Accounts receivable, trade, net		$	10,288	$	8,458
Accounts receivable, trade, gross			10,647		8,711
Allowance for doubtful accounts receivable, end of period			359		253
	Beginning of period		253		661
	Reversed to statement of operations		0		(155)
	Charged to statement of operations		70		181
	Utilized		(11)		(151)
	Deconsolidation		0		(178)
	Foreign currency adjustment		47		(105)

Taxes refundable related to sale of Net1 Korea			0		19,796
Loans provided to Carbon			3,000		3,000
Current portion of amount outstanding related to sale of remaining interest in DNI			0		2,756
Other receivables			11,159		9,058
	Total accounts receivable, net and other receivables	$	24,447	$	43,068

December 31, June 30,
2019 2019

Accounts receivable, trade, net $ 26,568 $ 25,136
Accounts receivable, trade, gross 27,312 26,377
Allowance for doubtful accounts receivable, end of period 744 1,241
Beginning of period 1,241 1,101
Reversed to statement of operations (535 ) (24 )
Charged to statement of operations 108 3,296
Utilized (58 ) (3,059 )
Deconsolidated - (38 )
Foreign currency adjustment (12 ) (35 )

Current portion of cash payments to agents in South Korea that are amortized over the contract period 11,927 15,543
Cash payments to agents in South Korea that are amortized over the contract period 18,457 25,107
Less: cash payments to agents in South Korea that are amortized over the contract period included in other long-term assets (Note 7) 6,530 9,564
Loans provided to Carbon 3,000 3,000
Loan provided to DNI - 4,260
Other receivables 27,070 24,555
Total accounts receivable, net $ 68,565 $ 72,494

In January 2020, the Company agreed that the purchaser of Net1 Korea would withhold potential capital gains taxes of approximately $19.8 million (KRW 23.8 billion) from the Net1 Korea transaction price and pay such amounts, on behalf of Net1 BV, to the South Korean tax authorities. Net1 BV commenced a process to claim a refund from the South Korean tax authorities of the potential amount withheld and received this amount of approximately $20.1 million (KRW 23.8 billion) in September 2020.

On October 26, 2020, DNI settled the full amount outstanding of $5.7 million related to sale of the remaining interest in DNI, including the amounts included in other long-term assets, refer to Note 6. The ~~loan provided to DNI was repaid in full in July 2019.~~ Company received $0.3 million on September 30, 2020, for total receipts of $6.0 million.

Other receivables include prepayments, deposits and other receivables.

Finance loans receivable, net

The ~~Company's~~Company’s finance loans receivable, net, as of December 31, ~~2019,~~2020, and June 30, ~~2019,~~2020, is presented in the table below:

		December 31,		June 30,
		2020		2020

Microlending finance loans receivable, net		$	21,620	$	15,879
Microlending finance loans receivable, gross			24,017		17,737
Allowance for doubtful finance loans receivable, end of period			2,397		1,858
	Beginning of period		1,858		3,199
	Reversed to statement of operations		(557)		(492)
	Charged to statement of operations		1,105		1,211
	Utilized		(369)		(1,451)
	Foreign currency adjustment		360		(609)


Working capital finance loans receivable, gross			0		5,800
Allowance for doubtful finance loans receivable, end of period			0		5,800
	Beginning of period		5,800		5,800
	Utilized		(5,800)		0

	Total accounts receivable, net	$	21,620	$	15,879

December 31, June 30,
2019 2019

Microlending finance loans receivable, net $ 14,504 $ 20,981
Microlending finance loans receivable, gross 17,091 24,180
Allowance for doubtful finance loans receivable, end of period 2,587 3,199
Beginning of period 3,199 4,239
Reversed to statement of operations (601 ) -
Charged to statement of operations 1,081 28,802
Utilized (1,085 ) (29,721 )
Foreign currency adjustment (7 ) (121 )

Working capital finance loans receivable, gross 14,613 9,650
Working capital finance loans receivable, gross 20,736 15,742
Allowance for doubtful finance loans receivable, end of period 6,123 6,092
Beginning of period 6,092 12,164
Charged to statement of operations 30 712
Utilized - (6,777 )
Foreign currency adjustment 1 (7 )

Total accounts receivable, net $ 29,117 $ 30,631

Gross microlending finance loans receivable as of December 31, 2020, increased compared to June 30, 2020, following subdued lending activity due to COVID-19 restrictions in April and early May 2020. The Company was unable to originate any significant loans in April and early May 2020.

1112

3.Accounts receivable, net and other receivables and finance loans receivable, net (continued)

Finance loans receivable, net (continued)

The Company created an allowance for doubtful working capital finance receivables related to a receivable due from a customer based in the United States during the year ended June 30, 2018. The Company commenced legal proceedings against the customer in 2018. The customer is engaged in bankruptcy proceedings. In December 2020, the Company withdrew its claim lodged in the bankruptcy proceedings because it does not believe it will recover the receivable via these proceedings, or via any other process. In December 2020, the Company utilized the entire allowance for doubtful working capital finance receivables against the outstanding receivable.

4. Inventory

The ~~Company's~~Company’s inventory comprised the following categories as of December 31, ~~2019,~~2020, and June 30, ~~2019.~~2020:

	December 31,			June 30,
		2020		2020

Finished goods	$	20,939	$	15,618
Finished goods subject to sale restrictions		0		4,242
	$	20,939	$	19,860

December 31, June 30,
2019 2019

Finished goods $ 7,538 $ 7,535
Finished goods subject to sale restrictions 13,658 -
$ 21,196 $ 7,535

Finished goods subject to sale restrictions ~~represent~~represents airtime inventory purchased ~~and held for sale to customers~~in March 2020, that ~~may~~could only be sold by the Company ~~after March~~from October 1, 2020.As of December 31, 2020, ~~and only with the express permission~~finished goods includes $16.4 million of certain South African banks. As discussed in Note 10, the Company obtained additional borrowings from its existing bankers to purchase Cell C airtime from an independent distributor of Cell C airtime. The Company did not pay the vendor for the airtime inventory ~~directly because the parties (the vendor, Cell C, the Company and certain South African banks) agreed~~ that ~~the Company would pay the amount~~was previously classified as finished goods subject to Cell C to settle amounts payable to Cell C by the vendor in order to inject additional liquidity into Cell C. The Company may not return any unsold airtime inventory to either the vendor or Cell C. The Company agreed to mandatory prepayment terms, which require the Company to use the proceeds from the sale ~~of the airtime inventory to settle certain borrowings. For more information about the amended finance documents, refer to Note 10.~~restrictions.

5.~~Settlement assets and settlement obligations~~

Settlement assets comprise (1) cash received from the South African government that the Company holds pending disbursement to recipient cardholders of social welfare grants (2) cash received from credit card companies (as well as other types of payment services) which have business relationships with merchants selling goods and services via the internet that are the Company's customers and on whose behalf it processes the transactions between various parties, and (3) cash received from customers on whose behalf the Company processes payroll payments that the Company will disburse to customer employees, payroll-related payees and other payees designated by the customer.

Settlement obligations comprise (1) amounts that the Company is obligated to disburse to recipient cardholders of social welfare grants, (2) amounts that the Company is obligated to disburse to merchants selling goods and services via the internet that are the Company's customers and on whose behalf it processes the transactions between various parties and settles the funds from the credit card companies to the Company's merchant customers, and (3) amounts that the Company is obligated to pay to customer employees, payroll-related payees and other payees designated by the customer.

~~The balances at each reporting date may vary widely depending on the timing of the receipts and payments of these assets and obligations.~~

6. 5. Fair value of financial instruments

Initial recognition and measurement

Financial instruments are recognized when the Company becomes a party to the transaction. Initial measurements are at cost, which includes transaction costs.

Risk management

The Company manages its exposure to currency exchange, translation, interest rate, customer concentration, credit and equity price and liquidity risks as discussed below.

Currency exchange risk

The Company is subject to currency exchange risk because it purchases inventories that it is required to settle in other currencies, primarily the euro and U.S. dollar. The Company has used forward contracts in order to limit its exposure in these transactions to fluctuations in exchange rates between the South African rand ~~("ZAR"~~(“ZAR”), on the one hand, and the U.S. dollar and the euro, on the other hand.

6. ~~Fair value of financial instruments (continued)~~

~~Risk management (continued)~~

Translation risk

Translation risk relates to the risk that the ~~Company's~~Company’s results of operations will vary significantly as the U.S. dollar is its reporting currency, but it earns a significant amount of its revenues and incurs a significant amount of its expenses in ~~ZAR and Korean won ("KRW").~~ZAR. The U.S. dollar ~~to both the ZAR and KRW exchange rates~~ has fluctuated significantly against the ZAR over the past three years. As exchange rates are outside the ~~Company's~~Company’s control, there can be no assurance that future fluctuations will not adversely affect the ~~Company's~~Company’s results of operations and financial condition.

Interest rate risk

As a result of its normal borrowing ~~and lending~~ activities, the ~~Company's~~Company’s operating results are exposed to fluctuations in interest rates, which it manages primarily through regular financing activities. The Company generally maintains ~~limited~~ investments in cash equivalents and held to maturity investments and has occasionally invested in marketable securities.

~~Credit risk~~

Credit risk relates to the risk of loss that the Company would incur as a result of non-performance by counterparties. The Company maintains credit risk policies with regard to its counterparties to minimize overall credit risk. These policies include an evaluation of a potential counterparty's financial condition, credit rating, and other credit criteria and risk mitigation tools as the Company's management deems appropriate. With respect to credit risk on financial instruments, the Company maintains a policy of entering into such transactions only with South African, South Korean and European financial institutions that have a credit rating of "B" (or its equivalent) or better, as determined by credit rating agencies such as Standard & Poor's, Moody's and Fitch Ratings.

Microlending credit risk

The Company is exposed to credit risk in its microlending activities, which provide unsecured short-term loans to qualifying customers. The Company manages this risk by performing an affordability test for each prospective customer and assigning a ~~"creditworthiness score"~~“creditworthiness score”, which takes into account a variety of factors such as other debts and total expenditures on normal household and lifestyle expenses.

5. Fair value of financial instruments (continued)

Risk management (continued)

Credit risk

Credit risk relates to the risk of loss that the Company would incur as a result of non-performance by counterparties. The Company maintains credit risk policies in respect of its counterparties to minimize overall credit risk. These policies include an evaluation of a potential counterparty’s financial condition, credit rating, and other credit criteria and risk mitigation tools as the Company’s management deems appropriate. With respect to credit risk on financial instruments, the Company maintains a policy of entering into such transactions only with South African and European financial institutions that have a credit rating of “B” (or its equivalent) or better, as determined by credit rating agencies such as Standard & Poor’s, Moody’s and Fitch Ratings.

Equity price and liquidity risk

Equity price risk relates to the risk of loss that the Company would incur as a result of the volatility in the exchange-traded price of equity securities that it ~~holds and the risk that it may not be able to liquidate these securities.~~holds. The market price of these securities may fluctuate for a variety of reasons and, consequently, the amount that the Company may obtain in a subsequent sale of these securities may significantly differ from the reported market value.

~~Liquidity~~

Equity liquidity risk relates to the risk of loss that the Company would incur as a result of the lack of liquidity on the exchange on which ~~these~~those securities are listed. The Company may not be able to sell some or all of these securities at one time, or over an extended period of time without influencing the exchange traded price, or at all.

Financial instruments

The following section describes the valuation methodologies the Company uses to measure its significant financial assets and liabilities at fair value.

In general, and where applicable, the Company uses quoted prices in active markets for identical assets or liabilities to determine fair value. This pricing methodology would apply to Level 1 investments. If quoted prices in active markets for identical assets or liabilities are not available to determine fair value, then the Company uses quoted prices for similar assets and liabilities or inputs other than the quoted prices that are observable either directly or indirectly. These investments would be included in Level 2 investments. In circumstances in which inputs are generally unobservable, values typically reflect ~~management's~~management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques. Investments valued using such techniques are included in Level 3 investments.

6. ~~Fair value of financial instruments (continued)~~

~~Financial instruments (continued)~~

Asset measured at fair value using significant unobservable inputs -– investment in Cell C

The ~~Company's~~Company’s Level 3 asset represents an investment of 75,000,000 class ~~"A"~~“A” shares in Cell C, a significant mobile telecoms provider in South Africa. The Company used a discounted cash flow model developed by the Company to determine the fair value of its investment in Cell C as of December 31, 2020, and June 30, ~~2019,~~2020, and valued Cell C at $0.0 (zero) at December 31, ~~2019,~~2020, and June 30, 2019. As of June 30, 2019, the Company changed its valuation methodology from a Company-developed adjusted EV/ EBITDA model to a discounted cash flow approach due to anticipated changes in Cell C's business model and the current challenges faced by Cell C, which would not have been captured by the previous valuation approach.2020. The Company believes the Cell C business plan utilized in the ~~Company's~~Company’s valuation is reasonable based on the current performance and the expected changes in Cell ~~C's~~C’s business model.

The Company changed certain valuation assumptions when preparing the December 31, 2020, valuation compared with the June 30, 2020, valuation. For the December 31, 2020, valuation, the Company incorporated the payments under the lease liabilities into the cash flow forecasts instead of including the December 31, 2020, carrying value in net debt and assumed that the deferred tax asset would be utilized over the forecast period instead of including the fair value of the deferred tax asset as of December 31, 2020, in the valuation. For the June 30, 2020, valuation, the Company included the carrying value of the lease liabilities within net debt and included the June 30, 2020, fair value of the deferred tax asset in the valuation. The Company utilized the latest approved business plan provided by Cell C management for the period ~~ending~~ended December 31, 2025, for the December 31, 2020 valuation and the period ended December 31, 2024 for the June 30, 2020 valuation, and the following key valuation inputs were used as of December 31, ~~2019~~2020 and June 30, ~~2019:~~2020:

	Weighted Average Cost of ~~Capital:~~Capital ("WACC"):	Between ~~15%~~17% and ~~20%~~22% over the period of the forecast
	Long term growth rate:	~~3 % (4,5%~~3% (3% as of June 30, ~~2019)~~2020)
~~Marketability discount:~~	Marketability discount:	10%
~~Minority discount:~~	Minority discount:	15%
	Net adjusted external debt - December 31, ~~2019:~~2020:⁽¹⁾	ZAR ~~16,4~~11.2 billion ($~~1,2~~0.8 billion), includes ~~R6 billion of~~no lease liabilities
	Net adjusted external debt - June 30, ~~2019:~~2020:⁽²⁾	ZAR ~~13,9~~15.8 billion ($10.9 billion), includes ~~R6,4~~ZAR4.4 billion of lease liabilities
	Deferred tax (incl, assessed tax losses) - December 31, ~~2019:~~2020:⁽¹⁾	ZAR ~~2,9 billion~~0 ($~~206,4 million)~~0)
	Deferred tax (incl, assessed tax losses) - June 30, ~~2019:~~2020:⁽²⁾	ZAR ~~2,9~~2.9 billion ($~~205,9~~167.3 million)

(1) translated from ZAR to U.S. dollars ~~at exchange rates applicable as of December 31, 2019.~~

~~(2) translated from ZAR to U.S. dollars at exchange rates applicable as of June 30, 2019.~~

The Company utilized the aforementioned adjusted EV/EBITDA multiple valuation model in order to determine the fair value of the Cell C shares as of December 31, 2018. The primary inputs to the valuation model as of December 31, 2018, were unchanged from June 30, 2018, except for the EBITDA multiple. The primary inputs to the valuation model were Cell C's annualized adjusted EBITDA for the 11 months ended June 30, 2018, of ZAR 3.9 billion ($270.9 million, translated at exchange rates applicable as of December 31, ~~2018), an EBITDA multiple of 6.32; Cell C's net external debt of~~2020.

(2) translated from ZAR ~~8.8 billion ($611.4 million, translated~~to U.S. dollars at exchange rates applicable as of ~~December 31, 2018); and a marketability discount~~June 30, 2020.

5. Fair value of ~~10% as~~financial instruments (continued)

Financial instruments (continued)

Asset measured at fair value using significant unobservable inputs – investment in Cell C is not listed. The EBITDA multiple was determined based on an analysis of Cell C's peer group, which comprises eight African and emerging market mobile telecommunications operators. The fair value of Cell C utilizing the adjusted EV/EBITDA valuation model developed by the Company is sensitive to the following inputs: (i) the Company's determination of adjusted EBITDA; (ii) the EBITDA multiple used; and (iii) the marketability discount used. Utilization of different inputs, or changes to these inputs, may result in significantly higher or lower fair value measurement.(continued)

The following table presents the impact on the carrying value of the ~~Company's~~Company’s Cell C investment of a ~~2.0%~~1.0% increase and ~~2.0%~~1.0% decrease in the WACC rate and the EBITDA margins used in the Cell C valuation on December 31, ~~2019,~~2020, all amounts translated at exchange rates applicable as of December 31, ~~2019:~~2020:

Sensitivity for fair value of Cell C investment		1.0% increase		1.0% decrease
WACC rate	$	0	$	1,514
EBITDA margin	$	627	$	0

Sensitivity for fair value of Cell C investment 2.0% increase(A) 2.0% decrease(A)
WACC rate $ - $ 8,238
EBITDA margin $ 1,687 $ -

~~(A) the carrying value of the Cell C investment is not impacted by a 1.0% increase or a 1.0% decrease and therefore the impact of a 2.0% increase and a 2.0% decrease is presented.~~

The fair value of the Cell C shares as of December 31, ~~2019,~~2020, represented ~~approximately~~ 0% of the ~~Company's~~Company’s total assets, including these shares. The Company expects to hold these shares for an extended period of time and that there will be short-term equity price volatility with respect to these shares particularly given the current situation of Cell ~~C's~~C’s business.

~~Liability measured at fair value using significant unobservable inputs - DNI contingent consideration~~

The salient terms of the Company's investment in DNI are described in Note 3 to the Company's audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2019. Under the terms of its subscription agreements with DNI, the Company agreed to pay to DNI an additional amount of up to ZAR 400.0 million ($27.8 million, translated at exchange rates applicable as of December 31, 2018), in cash, subject to the achievement of certain performance targets by DNI.

6. ~~Fair value of financial instruments (continued)~~

~~Financial instruments (continued)~~

~~Liability measured at fair value using significant unobservable inputs - DNI contingent consideration~~

The Company expected to pay the additional amount during the first quarter of the year ended June 30, 2020, and recorded an amount of ZAR 385.7 million ($26.8 million) and ZAR 373.6 million ($27.2 million), in other payables in its unaudited condensed consolidated balance sheet as of December 31, 2018, and in long-term liabilities as of June 30, 2018, respectively, which amount represents the present value of the ZAR 400.0 million to be paid (amounts translated at exchange rates applicable as of December 31, 2018, and June 30, 2018, respectively). The amount was settled on March 31, 2019, as described in Note 3 to the Company's audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2019.

Derivative transactions - Foreign exchange contracts

As part of the ~~Company's~~Company’s risk management strategy, the Company enters into derivative transactions to mitigate exposures to foreign currencies using foreign exchange contracts. These foreign exchange contracts are over-the-counter derivative transactions. ~~Substantially all~~All of the ~~Company's~~Company’s derivative exposures are with counterparties that have long-term credit ratings of ~~"B"~~“B” (or equivalent) or better. The Company uses quoted prices in active markets for similar assets and liabilities to determine fair value (Level 2). The Company has no derivatives that ~~require fair value measurement~~are measured under Level 1 or 3 of the fair value hierarchy. The Company had no0 outstanding foreign exchange contracts as of December 31, ~~2019,~~2020, or June 30, ~~2019.~~2020.

The following table presents the ~~Company's~~Company’s assets ~~and liabilities~~ measured at fair value on a recurring basis as of December 31, ~~2019,~~2020, according to the fair value hierarchy:

			Quoted Price in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
					Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets
Investment in Cell C		$	0	$	0	$	0	$	0
Related to insurance business:
	Cash, cash equivalents and restricted cash (included in other long-term assets)		593		0		0		593
	Fixed maturity investments (included in cash and cash equivalents)		0		0		0		0
	Total assets at fair value	$	593	$	0	$	0	$	593

Quoted Price in Active Markets for Identical Assets
(Level 1) Significant Other Observable Inputs
(Level 2) Significant Unobservable Inputs
(Level 3) Total
Assets
Investment in Cell C $ - $ - $ - $ -
Related to insurance business:
Cash, cash equivalents and restricted cash (included in other long term assets) 587 - - 587
Fixed maturity investments (included in cash and cash equivalents) 2,845 - - 2,845
Other - 414 - 414
Total assets at fair value $ 3,432 $ 414 $ - $ 3,846

The following table presents the ~~Company's~~Company’s assets ~~and liabilities~~ measured at fair value on a recurring basis as of June 30, ~~2019,~~2020, according to the fair value hierarchy:

Quoted Price in Active Markets for Identical Assets
(Level 1) Significant Other Observable Inputs
(Level 2) Significant Unobservable Inputs
(Level 3) Total

Assets
Investment in Cell C $ - $ - $ - $ -
Related to insurance business
Cash and cash equivalents (included in other long-term assets) 619 - - 619
Fixed maturity investments (included in cash and cash equivalents) 5,201 - - 5,201
Other - 413 - 413
Total assets at fair value $ 5,820 $ 413 $ - $ 6,233

				Quoted Price in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
						Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets
Investment in Cell C			$	0	$	0	$	0	$	0
Related to insurance business
	Cash and cash equivalents (included in other long-term assets)			490		0		0		490
	Fixed maturity investments (included in cash and cash equivalents)			4,198		0		0		4,198
		Total assets at fair value	$	4,688	$	0	$	0	$	4,688

5. Fair value of financial instruments (continued)

There have been no0 transfers in or out of Level 3 during the three and six months ended December 31, 2020 and 2019, ~~and 2018,~~ respectively.

There was no0 movement in the carrying value of assets measured at fair value on a recurring basis, and categorized within Level 3, during the three and six months ended December 31, 2020 and 2019.

Summarized below is the movement in the carrying value of assets and liabilities measured at fair value on a recurring basis, and categorized within Level 3, during the six months ended December 31, 2020:

			Carrying value
Assets
Balance as of June 30, 2020			$	0
	Foreign currency adjustment⁽¹⁾			0
		Balance as of December 31, 2020	$	0

(1) The foreign currency adjustment represents the effects of the fluctuations between the ZAR, and the U.S. dollar on the carrying value.

			Carrying value
Assets
Balance as at June 30, 2019			$	0
	Foreign currency adjustment⁽¹⁾			0
		Balance as of December 31, 2019	$	0

				~~Carrying value~~
~~Assets~~
~~Balance as of June 30, 2019~~				-
	~~Foreign currency adjustment~~⁽¹⁾			-
		~~Balance as of December 31, 2019~~	$	-

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

			~~Carrying value~~
~~Assets~~
~~Balance as at June 30, 2018~~			~~172,948~~
	~~Realized losses~~		~~(15,836~~	)
	~~Foreign currency adjustment~~⁽¹⁾		~~(8,054~~	)
		~~Balance as of December 31, 2018~~	~~149,058~~

~~Liabilities~~
~~Balance as at June 30, 2018~~			~~27,222~~
	~~Accretion of interest~~		~~835~~
	~~Foreign currency adjustment~~⁽¹⁾		~~(1,267~~	)
		~~Balance as of December 31, 2018~~	~~26,790~~

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

Assets measured at fair value on a nonrecurring basis

~~We measure~~

The Company measures equity investments without readily determinable fair values at fair value on a nonrecurring basis. The fair values of these investments are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow projections. An impairment charge is recorded when the cost of the asset exceeds its fair value and the excess is determined to be other-than-temporary. Refer to Note 6 for impairment charges recorded during the reporting periods presented herein. The Company has no liabilities that are measured at fair value on a nonrecurring basis.

6.Equity-accounted investments and other ~~long term~~long-term assets

Refer to Note 910 to the ~~Company's~~Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, ~~2019,~~2020, for additional information regarding its equity-accounted investments and other long-term assets.

Equity-accounted investments

The ~~Company's~~Company’s ownership percentage in its equity-accounted investments as of December 31, ~~2019~~2020, and June 30, ~~2019,~~2020, was as follows:

December 31,
June 30,

2019

2019

Bank Frick & Co AG ("Bank Frick")

35%

35%

DNI

30%

30%

Finbond Group Limited ("Finbond")

29%

29%

Carbon Tech Limited ("Carbon"), formerly OneFi Limited

25%

25%

Revix ("Revix")

25%

-

SmartSwitch Namibia (Pty) Ltd ("SmartSwitch Namibia")

50%

50%

V2 Limited ("V2")

50%

50%

Walletdoc Proprietary Limited ("Walletdoc")

20%

20%

	December 31,			June 30,
	2020			2020
Bank Frick & Co AG (“Bank Frick”)		35	%	35	%
Finbond Group Limited (“Finbond”)		31	%	31	%
Carbon Tech Limited (“Carbon”)		25	%	25	%
Revix (“Revix”)		25	%	25	%
SmartSwitch Namibia (Pty) Ltd (“SmartSwitch Namibia”)		50	%	50	%
V2 Limited (“V2”)		50	%	50	%
Walletdoc Proprietary Limited (“Walletdoc”)		0		20	%

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

Equity-accounted investments (continued)

~~DNI~~

During the three and six months ended December 31, 2019, the Company recorded earnings from DNI that resulted in the carrying value of DNI exceeding the amount that the Company could receive pursuant to the call option granted to DNI in May 2019. During the three and six months ended December 31, 2019, the Company has recorded an impairment loss of $0.8 million and $1.1 million, respectively, which represents the difference between the amount that the Company could receive pursuant to the call option and DNI's carrying value.Finbond

~~Bank Frick~~

On October 2, 2019, the Company exercised its option to acquire an additional 35% interest in Bank Frick from the Frick Family Foundation. The Company will pay an amount, the "Option Price Consideration", for the additional 35% interest in Bank Frick, which represents the higher of CHF 46.4 million ($46.5 million at exchange rates on October 2, 2019) or 35% of 15 times the average annual normalized net income of the Bank over the two years ended December 31, 2018. The shares will only transfer on payment of the Option Price Consideration, which shall occur on the later of (i) 180 days after the date of exercise of the option; (ii) in the event of any regulatory approvals being required, 10 days after receipt of approval (either unconditionally or on terms acceptable to both parties); and (iii) 10 days after the date on which the Option Price Consideration is agreed or finally determined.

~~Finbond~~

As of December 31, ~~2019,~~2020, the Company owned 268,820,933 shares in Finbond representing approximately ~~29.1%~~31% of its issued and outstanding ordinary shares. Finbond is listed on the Johannesburg Stock Exchange (“JSE”) and its closing price on December 31, ~~2019,~~2020, the last trading day of the month, was ZAR ~~3.50~~0.99 per share. The market value, using the December 31, 2020, closing price, of the ~~Company's~~Company’s holding in Finbond on December 31, ~~2019,~~2020, was ZAR ~~0.9 billion~~266.1 million ($~~67.0~~18.2 million translated at exchange rates applicable as of December 31, ~~2019)~~2020). On

Finbond published its half-year results to August ~~2, 2019,~~2020 in October 2020, which included the financial impact of the COVID-19 pandemic on its reported results during the reporting period. Finbond incurred losses during the six months to August 2020, and experienced a slow-down in its lending activities. Finbond reported that its lending activities have increased again since August 2020, albeit at a slower pace compared with the prior calendar period. Finbond’s share price declined substantially during the period from its fiscal year end (February 2020) to September 30, 2020, and the weakness in its traded share price continued post September 30, 2020. The Company ~~pursuant to~~considered the combination of the slow-down in business activity and the lower share price as impairment indicators. The Company performed an impairment assessment of its ~~election, received an additional 1,148,901 shares~~holding in Finbond as of September 30, 2020. The Company recorded an impairment loss of $16.8 million during the quarter ended September 30, 2020, 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). There is limited trading in Finbond shares on the JSE because it has 3 shareholders that own approximately 90% of its issued and outstanding shares between them. The Company calculated a ~~capitalization~~fair value per share ~~issue in lieu~~for Finbond by applying a liquidity discount of ~~a dividend.~~15% to the September 30, 2020, Finbond closing price of $1.04.

~~V2 Limited~~

~~In August 2019, the~~The Company ~~made~~performed a further ~~equity contribution~~impairment assessment of ~~$1.3~~its holding in Finbond as of December 31, 2020, following a modest decline in its market price during the quarter ended December 31, 2020. The Company recorded an impairment loss of $0.8 million during the quarter ended December 31, 2020, 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). The Company calculated a fair value per share for Finbond by applying a liquidity discount of 15% to the December 31, 2020, Finbond closing price. The total impairment charge for the six months ended December 31, 2020, was $17.6 million.

V2 Limited

In June 2020, V2 Limited ~~("V2") and in January 2020 it made its final committed equity contribution~~drew down $0.5 million of ~~$1.3~~the $5.0 million ~~bringing the total equity contribution to $5.0 million. The Company has also committed to provide V2 with a~~ working capital facility granted by the Company to V2. In September 2020, the Company agreed to grant V2 an option to acquire the Company’s entire interest in V2 for an option price of $5.0 million plus the face value of the outstanding working capital facility. The option expired on December 31, 2020. The Company and V2 also 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 does not expect to recover its carrying value in V2 and has impaired its remaining interest in V2, recording an impairment loss of $0.5 million during the three and six months ended December 31, 2020. The Company also created an allowance for doubtful loans receivable of $0.5 million during the three and six months ended December 31, 2020, related to a portion of the working capital facility outstanding as of December 31, 2020.

Other

In November 2020, the Company’s subsidiary, Net1 SA, signed an agreement with Walletdoc under which ~~is subject~~Walletdoc agreed to repay the ~~achievement~~loan due to Net1 SA in full and Net1 SA agreed to dispose of ~~certain pre-defined objectives.~~its entire interest in Walletdoc to Walletdoc.

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

Equity-accounted investments (continued)

Summarized below is the movement in equity-accounted investments and loans provided to equity-accounted investments during the six months ended December 31, 2020:

					Bank Frick		Finbond		Other⁽¹⁾		Total
Investment in equity
	Balance as of June 30, 2020				$	29,739	$	30,876	$	4,601	$	65,216
		Stock-based compensation				0		(40)		0		(40)
		Comprehensive (loss) income:				979		(18,579)		(865)		(18,465)
			Other comprehensive income			0		1,688		0		1,688
			Equity accounted (loss) earnings			979		(20,267)		(865)		(20,153)
				Share of net (loss) income		979		(2,617)		(317)		(1,955)
				Impairment		0		(17,650)		(548)		(18,198)
		Dividends received				0		0		(125)		(125)
		Disposal of equity-accounted investment				0		0		(13)		(13)
		Foreign currency adjustment⁽²⁾				2,301		3,178		74		5,553
	Balance as of December 31, 2020				$	33,019	$	15,435	$	3,672	$	52,126

Investment in loans:
	Balance as of June 30, 2020				$	0	$	0	$	620	$	620
		Loans granted				0		0		1,238		1,238
		Allowance for doubtful loans				0		0		(738)		(738)
		Loans repaid				0		0		(134)		(134)
		Foreign currency adjustment⁽²⁾				0		0		14		14
	Balance as of December 31, 2020				$	0	$	0	$	1,000	$	1,000

							Equity		Loans		Total
Carrying amount as of :
		June 30, 2020					$	65,216	$	620	$	65,836
		December 31, 2020					$	52,126	$	1,000	$	53,126

DNI Bank Frick Finbond Other⁽¹⁾ Total
Investment in equity
Balance as of June 30, 2019 $ 61,030 $ 47,240 $ 35,300 $ 7,398 $ 150,968
Acquisition of shares - - 274 1,250 1,524
Stock-based compensation - - 71 - 71
Comprehensive income (loss): 1,108 469 2,718 (499 ) 3,796
Other comprehensive loss - - 2,227 - 2,227
Equity accounted earnings (loss) 1,108 469 491 (499 ) 1,569
Share of net income 3,113 755 491 (499 ) 3,860
Amortization of acquired intangible assets (1,292 ) (376 ) - - (1,668 )
Deferred taxes on acquired intangible assets 361 90 - - 451
Impairment (1,074 ) - - - (1,074 )
Dividends received (1,110 ) - (274 ) (338 ) (1,722 )
Foreign currency adjustment⁽²⁾ 137 453 300 (48 ) 842
Balance as of December 31, 2019 $ 61,165 $ 48,162 $ 38,389 $ 7,763 $ 155,479

Investment in loans:
Balance as of June 30, 2019 $ - $ - $ - $ 148 $ 148
Loans granted - - - 612 612
Allowance for doubtful loans - - - (620 ) (620 )
Foreign currency adjustment⁽²⁾ - - - 8 8
Balance as of December 31, 2019 $ - $ - $ - $ 148 $ 148

Equity Loans Total
Carrying amount as of :
June 30, 2019 $ 150,968 $ 148 $ 151,116
December 31, 2019 $ 155,479 $ 148 155,627

(1) Includes primarily Carbon, SmartSwitch Namibia, V2 and Walletdoc;
(2) The foreign currency adjustment represents the effects of the fluctuations of the South African rand, Swiss franc, Nigerian naira and Namibian dollar, and the U.S. dollar on the carrying value.

(1) Includes Carbon, SmartSwitch Namibia, V2 and Walletdoc.

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

Other long-term assets

Summarized below is the breakdown of other long-term assets as of December 31, ~~2019,~~2020, and June 30, ~~2019:~~2020:

		December 31,			June 30,
			2020		2020

Total equity investments		$	42,121	$	26,993
	Investment in 15% of Cell C, at fair value (Note 5)		0		0
	Investment in 12% of MobiKwik		42,121		26,993
	Investment in 87.5% of CPS⁽¹⁾		0		0
Total held to maturity investments			-		-
	Investment in 7.625% of Cedar Cellular Investment 1 (RF) (Pty) Ltd 8.625% notes		0		0
Long-term portion of amount due from DNI related to sale of remaining interest in DNI			0		2,857
Policy holder assets under investment contracts (Note 8)			593		490
Reinsurance assets under insurance contracts (Note 8)			1,193		1,006
	Total other long-term assets	$	43,907	$	31,346

December 31, June 30,
2019 2019

Total equity investments $ 26,993 $ 26,993
Investment in 15% of Cell C, at fair value (Note 6) - -
Investment in 13% of MobiKwik 26,993 26,993
Total held to maturity investments - -
Investment in 7.625% of Cedar Cellular Investment 1 (RF) (Pty) Ltd 8.625% notes - -
Long-term portion of payments to agents in South Korea amortized over the contract period (Note 3) 6,530 9,564
Policy holder assets under investment contracts (Note 9) 587 619
Reinsurance assets under insurance contracts (Note 9) 1,159 1,163
Other long-term assets 5,875 5,850
Total other long-term assets $ 41,144 $ 44,189

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

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

Other long-term assets (continued)

MobiKwik

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. The Company considered this transaction to be an observable price change in an orderly transaction for similar or identical equity securities issued by MobiKwik. The Company used this 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 change in the fair value of MobiKwik of $15.1 million is included in the caption “Change in fair value of equity securities” in the unaudited condensed consolidated statement of operations for the three and six months ended December 31, 2020.

Summarized below are the components of the ~~Company's~~Company’s equity securities without readily determinable fair value and held to maturity investments as of December 31, ~~2019:~~2020:

				Cost basis		Unrealized holding		Unrealized holding		Carrying
				Cost basis		gains		losses		value
Equity securities:
	Investment in MobiKwik		$	26,993	$	15,128	$	0	$	42,121
	Investment in CPS			0		0		0		0
Held to maturity:
	Investment in Cedar Cellular notes			0		0		0		0
		Total	$	26,993	$	15,128	$	0	$	42,121

Cost basis Unrealized holding Unrealized holding Carrying
gains losses value
Equity securities:
Investment in Mobikwik $ 26,993 $ - $ - $ 26,993
Held to maturity:
Investment in Cedar Cellular notes - - - -
Total $ 26,993 $ - $ - $ 26,993

Summarized below are the components of the ~~Company's~~Company’s equity securities without readily determinable fair value and held to maturity investments as of June 30, ~~2019:~~2020:

				Cost basis		Unrealized holding		Unrealized holding		Carrying
				Cost basis		gains		losses		value
Equity securities:
	Investment in MobiKwik		$	26,993	$	0	$	0	$	26,993
	Investment in CPS			0		0		0		0
Held to maturity:
	Investment in Cedar Cellular notes			0		0		0		0
		Total	$	26,993	$	0	$	0	$	26,993

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

No interest income from the Cedar Cellular note was recorded during the three and six months ended December 31, 2019. The Company recognized interest income of $1.2 million and $1.4 million, related to the Cedar Cellular notes during the three and six months ended December 31, 2018, respectively. Interest on this investment will only be paid, at Cedar Cellular's election, on maturity in August 2022. The Company's effective interest rate on the Cedar Cellular note was 24.82% as of December 31, 2018.

As of December 31, 2018, the Company did not expect to recover the entire amortized cost basis of the Cedar Cellular notes due to a reduction in the amount of future cash flows expected to be collected from the debt security. The Company did not expect to generate any cash flows from the debt security prior to the maturity date in August 2022, and expected to recover approximately $22.0 million at maturity. As of December 31, 2018, the Company calculated the present value of the expected cash flows to be collected from the debt security by discounting the cash flows at the interest rate implicit in the security upon acquisition (at a rate of 24.82%). The present value of the expected cash flows of $9.0 million was less than the amortized cost basis recorded of $11.8 million (before the impairment) as of December 31, 2018. Accordingly, the Company recorded an other-than-temporary impairment related to a credit loss of $2.7 million during the three and six months ended December 31, 2018.

Contractual maturities of held to maturity investments

Summarized below is the contractual maturity of the ~~Company's~~Company’s held to maturity investment as of December 31, ~~2019:~~2020:

			Cost basis		Estimated fair value⁽¹⁾
Due in one year or less		$	0	$	0
Due in one year through five years⁽²⁾			0		0
Due in five years through ten years			0		0
Due after ten years			0		0
	Total	$	0	$	0

		~~Cost basis~~		~~Estimated fair value~~⁽¹⁾
~~Due in one year or less~~	$	-	$	-
~~Due in one year through five years~~ ⁽²⁾		-		-
~~Due in five years through ten years~~		-		-
~~Due after ten years~~		-		-

(1) The estimated fair value of the Cedar Cellular note has been calculated utilizing the ~~Company's~~Company’s portion of the security provided to the Company by Cedar Cellular, namely, Cedar ~~Cellular's~~Cellular’s investment in Cell C.

(2) The cost basis is zero ($0.0 million).

7.Goodwill and intangible assets, net

~~Goodwill~~

~~Impairment loss~~Goodwill

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 of June 30 of each year. During the three and six months ended December 31, 2018, the Company recognized an impairment loss of approximately $8.2 million, of which approximately $7.0 million related to goodwill allocated to its International Payment Group ("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 during the period up 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 are still in their infancy, and it is expected to generate lower cash flows than initially forecast. In order to determine the amount of goodwill impairment, the estimated fair value of the Company's IPG business assets and liabilities were compared to the carrying value of 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.

In the event that there is a deterioration in the South African transaction processing and the international transaction processing operating segments, or in any other of the Company's businesses, this may lead to additional impairments in future periods.

Summarized below is the movement in the carrying value of goodwill for the six months ended December 31, ~~2019:~~2020:

				Gross value		Accumulated impairment		Carrying value
Balance as of June 30, 2020			$	63,194	$	(39,025)	$	24,169
	Foreign currency adjustment ⁽¹⁾			5,490		(1,204)		4,286
		Balance as of December 31, 2020	$	68,684	$	(40,229)	$	28,455

Gross value Accumulated impairment Carrying value
Balance as of June 30, 2019 $ 184,544 $ (35,157 ) $ 149,387
Disposal of FIHRST (Note 2) (599 ) - (599 )
Foreign currency adjustment ⁽¹⁾ 122 28 150
Balance as of December 31, 2019 $ 184,067 $ (35,129 ) $ 148,938

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

(1) The foreign currency adjustment represents the effects of the fluctuations between the ZAR and the U.S. dollar on the carrying value.

Refer to Note 18 for additional information regarding changes to the Company’s reportable segments during the six months ended December 31, 2020. Goodwill has been allocated to the ~~Company's~~Company’s reportable segments as follows:


				Processing		Financial services		Technology		Carrying value
Balance as of June 30, 2020			$	9,989	$	0	$	14,180	$	24,169
	Foreign currency adjustment ⁽¹⁾			1,701		0		2,585		4,286
		Balance as of December 31, 2020	$	11,690	$	0	$	16,765	$	28,455

(1) The foreign currency adjustment represents the effects of the fluctuations between the ZAR and the U.S. dollar on the carrying value.

South African transaction processing International transaction processing Financial inclusion and applied technologies Carrying value
Balance as of June 30, 2019 $ 19,208 $ 112,728 $ 17,451 $ 149,387
Disposal of FIHRST (Note 2) (599 )
-
-
(599 )
Foreign currency adjustment ⁽¹⁾ 23 83 44 150
Balance as of December 31, 2019 $ 18,632 $ 112,811 $ 17,495 $ 148,938

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

8.~~Goodwill and intangible assets, net (continued)~~

Intangible assets

Carrying value and amortization of intangible assets

Summarized below is the carrying value and accumulated amortization of the intangible assets as of December 31, ~~2019~~2020, and June 30, ~~2019:~~2020:

			As of December 31, 2020						As of June 30, 2020
				Gross carrying value		Accumulated amortization		Net carrying value		Gross carrying value		Accumulated amortization		Net carrying value
Finite-lived intangible assets:
	Customer relationships		$	20,620	$	(20,467)	$	153	$	19,064	$	(18,806)	$	258
	Software and unpatented
	technology			4,190		(4,190)		0		3,931		(3,931)		0
	FTS patent			2,614		(2,614)		0		2,211		(2,211)		0
	Trademarks			3,034		(2,651)		383		2,731		(2,377)		354
	Total finite-lived intangible assets		$	30,458	$	(29,922)	$	536	$	27,937	$	(27,325)	$	612
Infinite-lived intangible assets:
	Financial institution licenses							0						0
	Total infinite-lived intangible assets							0						0

		Total intangible assets					$	536					$	612

As of December 31, 2019 As of June 30, 2019
Gross carrying value Accumulated amortization Net carrying value Gross carrying value Accumulated amortization Net carrying value
Finite-lived intangible assets:
Customer relationships $ 95,792 $ (89,273 ) $ 6,519 $ 96,653 $ (86,285 ) $ 10,368
Software and unpatented
technology 28,883 (28,598 ) 285 32,071 (31,829 ) 242
FTS patent 2,727 (2,727 ) - 2,721 (2,721 ) -
Trademarks 6,784 (6,307 ) 477 6,772 (6,265 ) 507
Total finite-lived intangible assets 134,186 (126,905 ) 7,281 138,217 (127,100 ) 11,117
Infinite-lived intangible assets:
Financial institution licenses 762 - 762 772 - 772
Total infinite-lived intangible assets 762 - 762 772 - 772

Total intangible assets $ 134,948 $ (126,905 ) $ 8,043 $ 138,989 $ (127,100 ) $ 11,889

7.Goodwill and intangible assets, net (continued)

Intangible assets (continued)

Aggregate amortization expense on the finite-lived intangible assets for the three months ended December 31, ~~2019~~2020 and ~~2018,~~2019, was approximately ~~$1.9~~$0.1 million and ~~$6.1~~$0.1 million, respectively. Aggregate amortization expense on the finite-lived intangible assets for the six months ended December 31, ~~2019~~2020 and ~~2018,~~2019, was approximately ~~$3.8~~$0.2 million and ~~$12.2~~$0.2 million, respectively.

~~Carrying value and amortization of intangible assets (continued)~~

Future estimated annual amortization expense for the next five fiscal years and thereafter, assuming exchange rates that prevailed on December 31, ~~2019,~~2020, is presented in the table below. Actual amortization expense in future periods could differ from this estimate as a result of acquisitions, changes in useful lives, exchange rate fluctuations and other relevant factors.

Fiscal 2021		$	376
Fiscal 2022			70
Fiscal 2023			70
Fiscal 2024			70
Fiscal 2025			69
Thereafter			70
	Total future estimated annual amortization expense	$	725

Fiscal 2020 $ 7,919
Fiscal 2021 2,807
Fiscal 2022 73
Fiscal 2023 73
Fiscal 2024 72
Thereafter 145
Total future estimated annual amortization expense $ 11,089

9.8.Assets and policyholder liabilities under insurance and investment contracts

Reinsurance assets and policyholder liabilities under insurance contracts

Summarized below is the movement in reinsurance assets and policyholder liabilities under insurance contracts during the six months ended December 31, ~~2019:~~2020:

				Reinsurance Assets⁽¹⁾		Insurance contracts⁽²⁾
Balance as of June 30, 2020			$	1,006	$	(1,370)
	Increase in policy holder benefits under insurance contracts			220		3,721
	Claims and policyholders’ benefits under insurance contracts			(216)		(3,729)
	Foreign currency adjustment⁽³⁾			183		(249)
		Balance as of December 31, 2020	$	1,193	$	(1,627)

Reinsurance Assets ⁽¹⁾ Insurance contracts ⁽²⁾
Balance as of June 30, 2019 $ 1,163 $ (1,880 )
Increase in policy holder benefits under insurance contracts 220 (3,232 )
Claims and policyholders' benefits under insurance contracts (227 ) 3,201
Foreign currency adjustment ⁽³⁾ 3 (5 )
Balance as of December 31, 2019 $ 1,159 $ (1,916 )

		~~(1) Included in other long-term assets.~~
		~~(2) Included in other long-term liabilities.~~
		~~(3) Represents the effects of the fluctuations between the ZAR and the U.S. dollar.~~

(1) Included in other long-term assets (refer to Note 6);

(2) Included in other long-term liabilities;

(3) Represents the effects of the fluctuations of the ZAR against the U.S. dollar.

The Company has agreements with reinsurance companies in order to limit its losses from ~~large~~various insurance contracts, however, if the reinsurer is unable to meet its obligations, the Company retains the liability. The value of insurance contract liabilities is based on the best estimate assumptions of future experience plus prescribed margins, as required in the markets in which these products are offered, namely South Africa. The process of deriving the best estimates assumptions plus prescribed margins includes assumptions related to claim reporting delays (based on average industry experience).

Assets and policyholder liabilities under investment contracts

Summarized below is the movement in assets and policyholder liabilities under investment contracts during the six months ended December 31, ~~2019:~~2020:

			Assets⁽¹⁾		Investment contracts⁽²⁾
Balance as of June 30, 2020			$	490	$	(490)
	Increase in policy holder benefits under investment contracts			13		(13)
	Foreign currency adjustment ⁽³⁾			90		(90)
		Balance as of December 31, 2020	$	593	$	(593)

Assets ⁽¹⁾ Investment contracts ⁽²⁾
Balance as of June 30, 2019 $ 619 $ (619 )
Increase in policy holder benefits under investment contracts 2 (2 )
Claims and policyholders' benefits under investment contracts (36 ) 36
Foreign currency adjustment ⁽³⁾ 2 (2 )
Balance as of December 31, 2019 $ 587 $ (587 )

		~~(1) Included in other long-term assets.~~
		~~(2) Included in other long-term liabilities.~~
		~~(3) Represents the effects of the fluctuations between the ZAR and the U.S. dollar.~~

(1) Included in other long-term assets (refer to Note 6);

(2) Included in other long-term liabilities;

(3) Represents the effects of the fluctuations of the ZAR against the U.S. dollar.

The Company does not offer any investment products with guarantees related to capital or returns.

~~10.~~9.Borrowings

Refer to Note 1213 to the ~~Company's~~Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, ~~2019,~~2020, for additional information regarding its borrowings.

South Africa

~~The amounts below have been translated at exchange rates applicable as of the dates specified.~~

~~July 2017 Facilities, as amended, comprising a short-term facility and long-term borrowings~~

~~Short-term facility - Facility E~~

On September 26, 2018, Net1 SA further revised its amended July 2017 Facilities agreement with RMB to include an overdraft facility ("Facility E") of up to ZAR 1.5 billion ($106.8 million, translated at exchange rates applicable as of December 31, 2019) to fund the Company's ATMs. The available Facility E overdraft facility was subsequently reduced to ZAR 1.2 billion ($85.4 million, translated at exchange rates applicable as of December 31, 2019) in September 2019. Interest on the overdraft facility is payable on the last day of each month and on the final maturity date based on the South African prime rate. The overdraft facility will be reviewed in September 2020. The overdraft facility amount utilized must be repaid in full within one month of utilization and at least 90% of the amount utilized must be repaid with 25 days.

~~10.~~~~Borrowings (continued)~~

~~South Africa (continued)~~

~~July 2017 Facilities, as amended, comprising a short-term facility and long-term borrowings (continued)~~

~~Short-term facility - Facility E (continued)~~

The overdraft facility is secured by a pledge by Net1 SA of, among other things, cash and certain bank accounts utilized in the Company's ATM funding process, the cession of an insurance policy with Senate Transit Underwriters Managers Proprietary Limited, and any rights and claims Net1 SA has against Grindrod Bank Limited. As at December 31, 2019, the Company had utilized approximately ZAR 1.0 billion ($72.7 million) of this overdraft facility.

This ZAR 1.2 billion overdraft facility may only be used to fund ATMs and therefore the overdraft utilized and converted to cash to fund the Company's ATMs is considered restricted cash. The prime rate on December 31, 2019, was 10.00% and reduced to 9.75% on January 17, 2020, following a reduction in the South African repo rate.

~~Long-term borrowings facility - Facility F~~

On September 4, 2019, Net1 SA further amended its amended July 2017 Facilities agreement with RMB and Nedbank to include an overdraft facility ("Facility F") of up to ZAR 300.0 million ($21.4 million, translated at exchange rates applicable as of December 31, 2019) for the sole purpose of funding the acquisition of airtime from Cell C. Net1 SA may not dispose of the airtime acquired from Cell C prior to April 1, 2020, without the prior consent of RMB, Absa Bank Limited and Investec Asset Management Proprietary Limited. Facility F comprises (i) a first Senior Facility F loan of ZAR 220.0 million (ii) a second Senior Facility F loan of ZAR 80.0 million, or such lesser amount as may be agreed by the facility agent. Facility F is required to be repaid in full within nine months following the first utilization of the facility. Net1 SA is required to prepay Facility F subject to customary prepayment terms. Interest on Facility F is based on JIBAR plus a margin of 5.50% per annum and is due in full on repayment of the loan. JIBAR was 6.80% on December 31, 2019. The margin on the Facility F increased by 1% on November 1, 2019, because we had not disposed of our remaining shareholding in DNI and FIHRST by that date. Net1 SA paid a non-refundable structuring fee of ZAR 2.2 million ($0.1 million) to the Lenders in September 2019, and the Company expensed this amount in full during the first quarter of fiscal 2020.

Nedbank facility, comprising short-term facilities

On November 2, 2020, the Company amended its short-term South African credit facility with Nedbank Limited to increase the indirect and derivative facilities component of the facility from ZAR 150.0 million to ZAR 159.0 million. As of December 31, ~~2019,~~2020, the aggregate amount of the ~~Company's~~Company’s short-term South African credit facility with Nedbank Limited was ZAR ~~450.0~~459.0 million ($~~32.0~~31.3 million). The credit facility comprises an overdraft facility of (i) up to ZAR 300.0 million ($~~21.4~~20.5 million), which is further split into (a) a ZAR 250.0 million ($~~17.8~~17.1 million) overdraft facility which may only be used to fund mobile ATMs and (b) a ZAR 50.0 million ($~~3.6~~3.4 million) general banking facility and (ii) indirect and derivative facilities of up to ZAR ~~150.0~~159.0 million ($~~10.7~~10.8 million), which include ~~letters of~~ guarantees, letters of credit and forward exchange contracts. ~~The ZAR 250.0 million component~~

Movement in short-term credit facilities

Summarized below are the Company’s short-term facilities as of December 31, 2020, and the movement in the Company’s short-term facilities from as of June 30, 2020 to as of December 31, 2020, as well as the respective interest rates applied to the borrowings as of December 31, 2020:

						South Africa				Total
					RMB		Nedbank
Short-term facilities available as of December 31, 2020					$	81,852	$	31,310	$	113,162
	Overdraft					0		3,410		3,410
	Overdraft restricted as to use for ATM funding only					81,852		17,052		98,904
	Indirect and derivative facilities					0		10,848		10,848

Interest rate (%), based on South African prime rate						7.00
Interest rate (%), based on South African prime rate less 1.15%								5.85

Movement in utilized overdraft facilities:
	Balance as of June 30, 2020					14,756		58		14,814
		Utilized				189,928		16,551		206,479
		Repaid				(155,670)		(9,438)		(165,108)
		Foreign currency adjustment⁽¹⁾				4,720		(102)		4,618
			Balance as of December 31, 2020			53,734		7,069		60,803
				Restricted as to use for ATM funding only		53,734		7,069		60,803

Movement in utilized indirect and derivative
facilities:
	Balance as of June 30, 2020⁽²⁾					0		5,398		5,398
		Utilized				0		3,826		3,826
		Foreign currency adjustment⁽¹⁾				0		1,455		1,455
			Balance as of December 31, 2020⁽²⁾		$	0	$	10,679	$	10,679

(1) Represents the effects of the ~~primary amount may only be used to fund ATMs~~fluctuations between the ZAR and ~~therefore this component of~~ the primary amount utilized and converted to cash to fund the Company's ATMs is considered restricted cash. The short-term facility provides Nedbank with the right to set off funds held in certain identified Company bank accounts with Nedbank against any amounts owed to Nedbank under the facility.U.S. dollar.

(2) As of December 31, 2019, the Company had total funds of $2.7 million in bank accounts with Nedbank which have been set off against $14.4 million drawn under the Nedbank facility, for a net amount drawn under the facility of $11.7 million. As of December 31, 2019, the interest rate on the overdraft facility was 8.85%,2020 and ~~reduced to 8.60% on January 17,~~June 30, 2020, ~~following a reduction in the South African repo rate.~~

~~As of December 31, 2019,~~ the Company had utilized approximately ZAR ~~164.3~~156.6 million ($11.7 million) of its ZAR 300.0 million overdraft facility to fund ATMs, and none of its ZAR 50.0 million general banking facility. As of December 31, 2019 and June 30, 2019, the Company had utilized approximately ZAR 93.6 million ($6.710.7 million) and ZAR 93.6 million ($~~6.6~~5.4 million), respectively, of its indirect and derivative facilities of ZAR 159.0 million (June 30, 2020: ZAR 150 ~~million~~million) to enable the bank to issue guarantees, letters of credit and forward exchange contracts, in order for the Company to honor its obligations to third parties requiring such guarantees (refer to Note ~~21)~~20).

~~United States, a short-term facility~~

On September 14, 2018, the Company renewed its $10.0 million overdraft facility from Bank Frick and on February 4, 2019, the Company increased the overdraft facility to $20.0 million. The interest rate on the facilities is 4.50% plus 3-month US dollar LIBOR and interest is payable on a quarterly basis. The 3-month US dollar LIBOR rate was 1.91% on December 31, 2019. The facility has no fixed term, however, it may be terminated by either party with six weeks written notice. The facility is secured by a pledge of the Company's investment in Bank Frick. As of December 31, 2019, the Company had utilized approximately $13.9 million of this facility.

2322

~~10.~~~~Borrowings (continued)~~

~~South Korea, a short-term facility~~

The Company obtained a one year KRW 10.0 billion ($8.7 million) short-term overdraft facility from Hana Bank, a South Korean bank, in January 2019. The interest rate on the facility is 1.98% plus the 3-month CD rate. The CD rate as of December 31, 2019 was 1.53%. The facility expires in January 2021, however can be renewed. The facility is unsecured with no fixed repayment terms. As of December 31, 2019, the Company had not utilized this facility.

~~Movement in short-term credit facilities~~

~~Summarized below are the Company's short-term facilities as of December 31, 2019, and the movement in the Company's short-term facilities from as of June 30, 2019 to as of December 31, 2019:~~

South Africa United States South Korea Total
Amended July 2017 Nedbank Bank Frick Hana
Short-term facilities available as of
December 31, 2019 $ 85,419 $ 32,032 $ 20,000 $ 8,654 $ 146,105
Overdraft - 3,559 20,000 8,654 32,213
Overdraft restricted as to use for ATM funding only 85,419 17,796 - - 103,215
Indirect and derivative facilities - 10,677 - - 10,677

Movement in utilized overdraft facilities:
Balance as of June 30, 2019 69,566 5,880 9,544 - 84,990
Utilized 349,466 33,722 8,362 - 391,550
Repaid (346,525 ) (28,029 ) (4,000 ) - (378,554 )
Foreign currency adjustment⁽¹⁾ 157 123 - - 280
Balance as of December 31, 2019⁽²⁾ 72,664 11,696 13,906 - 98,266
Restricted as to use for ATM funding only 72,664 11,696 - - 84,360
No restrictions as to use - - 13,906 - 13,906

Movement in utilized indirect and derivative
facilities:
Balance as of June 30, 2019 - 6,643 - - 6,643
Foreign currency adjustment⁽¹⁾ - 17 - - 17
Balance as of December 31, 2019 $ - $ 6,660 $ - $ - $ 6,660

~~(1) Represents the effects of the fluctuations between the ZAR and the U.S. dollar.~~

(2) Nedbank balance as of December 31, 2019, of $11.7 million comprises the net of total overdraft facilities withdrawn of $14.4 million offset against funds in bank accounts with Nedbank of $2.7 million.

~~Movement in long-term borrowings~~

~~Summarized below is the movement in the Company's long term borrowing from as of June 30, 2019 and December 31, 2019:~~

South Africa
Amended July 2017 Total
Balance as of June 30, 2019 $ - $ -
Current portion of long-term borrowings - -
Long-term borrowings - -
Utilized 14,798 14,798
Repaid (11,313 ) (11,313 )
Foreign currency adjustment⁽¹⁾ 578 578
Balance as of December 31, 2019 4,063 4,063
Current portion of long-term borrowings 4,063 4,063
Long-term borrowings $ - $ -

~~(1) Represents the effects of the fluctuations between the ZAR and the U.S. dollar.~~

10.~~Borrowings (continued)~~

Interest expense incurred under the Company's South African long-term borrowing during the three months ended December 31, 2019 and 2018, was $0.4 million and $0.9 million, respectively. Interest expense incurred during the six months ended December 31, 2019 and 2018, was $0.6 million and $2.1 million, respectively. There were no prepaid facility fee amortization during the three and six months ended December 31, 2019. Prepaid facility fees amortized during the three and six months ended December 31, 2018, was $0.1 million and $0.2 million, respectively.

~~11.~~Other payables

Summarized below is the breakdown of other payables as of December 31, ~~2019~~2020, and June 30, ~~2019:~~2020:

	December 31,			June 30,
		2020		2020
Accruals	$	7,073	$	6,045
Provisions		3,048		4,926
Other		13,140		11,329
Value-added tax payable		215		129
Payroll-related payables		1,039		887
Participating merchants' settlement obligation		551		463
	$	25,066	$	23,779

December 31, June 30,
2019 2019
Accrual of implementation costs to be refunded to SASSA $ 35,270 $ 34,039
Accruals 15,376 10,620
Provisions 4,390 6,074
Other 8,801 10,814
Value-added tax payable 3,624 3,234
Payroll-related payables 1,131 1,113
Participating merchants settlement obligation 542 555
$ 69,134 $ 66,449

Refer to Note 13 to the Company's audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2019, for additional information regarding Accrual of implementation costs to be refunded to SASSA. As of December 31, 2019, this accrual of $35.3 million (ZAR 495.5 million, translated at exchange rates applicable as of December 31, 2019, comprised a revenue refund of $19.8 million (ZAR 277.6 million), accrued interest of $12.6 million (ZAR 177.6 million), unclaimed indirect taxes of $2.8 million (ZAR 38.9 million) and estimated costs of $0.1 million (ZAR 1.4 million)). As of June 30, 2019, this accrual of $34.0 million (ZAR 479.4 million, translated at exchange rates applicable as of June 30, 2019, comprised a revenue refund of $19.7 million (ZAR 277.6 million), accrued interest of $11.4 million (ZAR 161.0 million), unclaimed indirect taxes of $2.8 million (ZAR 39.4 million) and estimated costs of $0.1 million (ZAR 1.4 million)).

Other includes transactions-switching funds payable, deferred income, client deposits and other payables.

~~12.~~

11.Capital structure

The following table presents a reconciliation between the number of shares, net of treasury, presented in the unaudited condensed consolidated statement of changes in equity during the six months ended December 31, ~~2019~~2020 and ~~2018,~~2019, respectively, and the number of shares, net of treasury, excluding non-vested equity shares that have not vested during the six months ended December 31, 2020 and 2019, ~~and 2018,~~ respectively:

		December 31,	December 31,
		2020	2019

Number of shares, net of treasury:
	Statement of changes in equity	56,614,559	56,568,425
	Non-vested equity shares that have not vested as of end of period	294,000	583,908
Number of shares, net of treasury, excluding non-vested equity shares that have not vested		56,320,559	55,984,517

December 31, December 31,
2019 2018

Number of shares, net of treasury:
Statement of changes in equity 56,568,425 56,833,925
Non-vested equity shares that have not vested as of end of period 583,908 860,817
Number of shares, net of treasury, excluding non-vested equity shares that have not vested 55,984,517 55,973,108

~~13.~~12.Accumulated other comprehensive loss

The table below presents the change in accumulated other comprehensive (loss) income per component during the three months ended December 31, 2020:

			Three months ended
			December 31, 2020
				Accumulated foreign currency translation reserve		Total
Balance as of October 1, 2020			$	(161,245)	$	(161,245)
	Movement in foreign currency translation reserve			20,003		20,003
		Balance as of December 31, 2020	$	(141,242)	$	(141,242)

The table below presents the range of assumptions used to value stock options granted during the six months ended December 31, ~~2019~~2020 and ~~2018:~~2019:

The following table presents supplemental cash flow disclosures for the three and six months ended December 31, 2020 and 2019:

Cash, cash equivalents and restricted cash included on the Company’s unaudited condensed consolidated statement of cash flows includes restricted cash related to cash withdrawn from the Company’s various debt facilities to fund ATMs. This cash may only be used to fund ATMs and is considered restricted as to use and therefore is classified as restricted cash. Refer to Note 9 for additional information regarding the Company’s facilities. The following table presents the disaggregation of cash, cash equivalents and restricted cash as of December 31, 2020 and 2019, and ~~2018:~~June 30, 2020:

The following table presents supplemental cash flow disclosure related to leases for the three and six months ended December 31, 2020 and 2019:

18.Operating segments (continued)

Operating segments (continued)

The reconciliation of the reportable segments measures of profit or loss to income before income taxes for the three and six months ended December 31, ~~2019~~2020 and ~~2018,~~2019, is as follows:

				Three months ended				Six months ended
				December 31,				December 31,
			2020		2019		2020		2019
Reportable segments measure of profit or loss			$	(10,374)	$	(6,508)	$	(18,272)	$	(10,523)
	Operating loss: Corporate/Eliminations			(4,831)		(3,912)		(7,708)		(6,333)
	Change in fair value of equity securities			15,128		0		15,128		0
	Gain on disposal of FIHRST			0		9,743		0		9,743
	Loss on disposal of equity-accounted investment			(13)		0		(13)		0
	Interest income			717		1,082		1,328		1,445
	Interest expense			(677)		(3,129)		(1,424)		(4,476)
		Income (Loss) before income taxes	$	(50)	$	(2,724)	$	(10,961)	$	(10,144)

Three months ended Six months ended
December 31, December 31,
2019 2018 2019 2018

Reportable segments measure of profit or loss $ (1,048 ) $ (34,411 ) $ 858 $ (23,860 )
Less: Discontinued operations: reportable segments measure of profit or loss - (8,429 ) - (16,261 )
Continuing operations: reportable segments measure of profit or loss (1,048 ) (42,840 ) 858 (40,121 )
Continuing operations: Operating income - Corporate/Eliminations (5,806 ) (6,061 ) (10,446 ) (13,066 )
Change in fair value of equity securities - (15,836 ) - (15,836 )
Gain on disposal of FIHRST 9,743 - 9,743 -
Interest income 1,343 2,177 1,994 4,277
Interest expense (3,221 ) (2,563 ) (4,576 ) (5,537 )
Impairment of Cedar Cellular Note - (2,732 ) - (2,732 )
Income (Loss) before income taxes $ 1,011 $ (67,855 ) $ (2,427 ) $ (73,098 )

~~19.~~~~Operating segments (continued)~~

The following tables summarize segment information that is prepared in accordance with GAAP for the three and six months ended December 31, 2020 and 2019:

				Three months ended				Six months ended
				December 31,				December 31,
				2020		2019		2020		2019
						(as restated)⁽¹⁾				(as restated)⁽¹⁾
Revenues
	Processing			$	19,990	$	25,022	$	42,496	$	53,317
		All others			19,512		24,590		40,809		52,092
		IPG			478		432		1,687		1,225
	Financial services				9,709		12,268		17,974		26,436
	Technology				4,609		4,890		10,820		12,099
		Total			34,308		42,180		71,290		91,852

Operating (loss) income
	Processing				(10,381)		(5,848)		(17,682)		(11,353)
		IPG			(4,647)		(2,920)		(7,419)		(4,893)
		All others			(5,734)		(2,928)		(10,263)		(6,460)
	Financial services				(1,071)		(1,249)		(3,443)		(904)
	Technology				1,078		589		2,853		1,734
		Subtotal: Operating segments			(10,374)		(6,508)		(18,272)		(10,523)
		Corporate/Eliminations			(4,831)		(3,912)		(7,708)		(6,333)
			Total		(15,205)		(10,420)		(25,980)		(16,856)

Depreciation and amortization
	Processing				707		847		1,411		1,670
	Financial services				116		216		252		434
	Technology				163		2		165		168
		Subtotal: Operating segments			986		1,065		1,828		2,272
		Corporate/Eliminations			88		109		169		226
			Total		1,074		1,174		1,997		2,498

Expenditures for long-lived assets
	Processing				106		246		352		2,314
	Financial services				23		52		51		131
	Technology				2,894		(2)		2,895		0
		Subtotal: Operating segments			3,023		296		3,298		2,445
		Corporate/Eliminations			0		0		0		0
			Total	$	3,023	$	296	$	3,298	$	2,445

(1) Revenues-Processing-All others for the three and six months ended December 31, 2019 ~~and 2018, with~~have been restated for the ~~impact of the deconsolidation of DNI included~~error described in ~~discontinued operations:~~Note 1.

Three months ended Six months ended
December 31, December 31,
2019 2018 2019 2018
Revenues
South African transaction processing $ 20,350 $ 21,970 $ 39,749 $ 59,719
International transaction processing 34,363 38,124 68,380 77,511
Financial services 21,986 38,755
52,131 91,961
Continuing 21,986 19,047
52,131 53,466
Discontinued - 19,708
- 38,495
Total 76,699 98,849 160,260 229,191
Continuing 76,699 79,141 160,260 190,696
Discontinued - 19,708 - 38,495

Operating (loss) income

South African transaction processing (2,981 ) (11,830 ) (6,366 ) (15,343 )
International transaction processing 2,811 (4,043 )
6,601 (1,281 )
Financial services (878 ) (18,538 )
623 (7,236 )
Continuing (878 ) (26,967 )
623 (23,497 )
Discontinued - 8,429
- 16,261
Subtotal: Operating segments (1,048 ) (34,411 )
858 (23,860 )
Corporate/Eliminations (5,806 ) (8,664 ) (10,446 ) (18,319 )
Continuing (5,806 ) (6,061 ) (10,446 ) (13,066 )
Discontinued - (2,603 ) - (5,253 )
Total (6,854 ) (43,075 ) (9,588 ) (42,179 )
Continuing (6,854 ) (48,901 ) (9,588 ) (53,187 )
Discontinued - 5,826 - 11,008

Depreciation and amortization
South African transaction processing 664 921 1,325 1,862
International transaction processing 1,481 2,511
3,377 5,570
Financial services 383 405
767 1,041
Continuing 383 346
767 695
Discontinued - 59
- 346
Subtotal: Operating segments 2,528 3,837
5,469 8,473
Corporate/Eliminations 1,853 6,016 3,677 12,174
Continuing 1,853 3,413 3,677 6,921
Discontinued - 2,603 - 5,253
Total 4,381 9,853 9,146 20,647
Continuing 4,381 7,191 9,146 15,048
Discontinued - 2,662 - 5,599

Expenditures for long-lived assets

South African transaction processing 157 1,047
2,021 2,333
International transaction processing 616 841
1,293 1,641
Financial services 54 659 137 1,691
Continuing 54 475
137 1,368
Discontinued - 184
- 323
Subtotal: Operating segments 827 2,547 3,451 5,665
Corporate/Eliminations - - - -
Total 827 2,547 3,451 5,665
Continuing 827 2,363
3,451 5,342
Discontinued $ - $ 184 $ - $ 323

3835

~~19.~~

18.Operating segments (continued)

Operating segments (continued)

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.

~~20.~~

19.Income tax

Income tax in interim periods

For the purposes of interim financial reporting, the Company determines the appropriate income tax provision by first applying the effective tax rate expected to be applicable for the full fiscal year to ordinary income. This amount is then adjusted for the tax effect of significant unusual items, for instance, changes in tax law, valuation allowances and non-deductible transaction-related expenses that are reported separately, and have an impact on the tax charge. The cumulative effect of any change in the enacted tax rate, if and when applicable, on the opening balance of deferred tax assets and liabilities is also included in the tax charge as a discrete event in the interim period in which the enactment date occurs.

For the three months ended December 31, 2020, the Company’s effective tax rate was impacted by the tax effect of the change in the fair value of our equity securities (refer to Note 6), which is at a lower tax rate than the South African statutory rate, which was partially offset by the tax expense recorded by the Company’s profitable South African operations, non-deductible expenses, the on-going losses incurred by IPG and certain of the Company’s South African businesses and the associated valuation allowances created related to the deferred tax assets recognized regarding net operating losses incurred by these entities.

For the six months ended December 31, 2020, the Company’s effective tax rate was impacted by the tax effect of the change in fair value referred to above, tax expense recorded by the Company’s profitable South African operations, non-deductible expenses, the on-going losses incurred by IPG and certain of the Company’s South African businesses and the associated valuation allowances created related to the deferred tax assets recognized regarding net operating losses incurred by these entities, which was partially offset by the reversal of the deferred tax liability related to one of the Company’s equity-accounted investments following its impairment (refer to Note 6).

For the three and six months ended December 31, 2019, the ~~Company's~~Company’s effective tax rate was impacted by the on-going losses incurred by certain of its South African businesses and the associated valuation allowances created related to the deferred tax assets recognized regarding net operating losses incurred by the ~~Company's~~Company’s South African businesses and non-deductible expenses, including transaction-related expenditure, which was partially offset by tax expense recorded by the ~~Company's~~Company’s profitable businesses in South ~~Africa and South Korea.~~Africa.

For the three and six months ended December 31, 2018, the Company's effective tax rate was adversely impacted by the valuation allowances created related to the deferred tax assets recognized regarding net operating losses incurred by the Company's South African businesses, the non-deductible goodwill impairment losses, and non-deductible expenses, including transaction-related expenditure and non-deductible interest on its South African long-term debt facility, which was partially offset by tax expense recorded by the Company's profitable businesses in South Africa and South Korea. The deferred tax impact of the change in the fair value of the Company's equity security also impacted the Company's effective rate for fiscal 2019, as this amount is recorded at a lower rate (at a capital gains rate) than the South African statutory rate.

Uncertain tax positions

~~There were~~

The Company had no significant ~~changes in the Company's~~ uncertain tax positions during the three ~~and six~~ months ended December 31, ~~2019. As of December 31, 2019,~~2020, and therefore, the Company had no accrued interest related to uncertain tax positions ~~of approximately $0.1 million~~ on its balance sheet.

The Company does not expect changes related to its unrecognized tax benefits will have a significant impact on its results of operations or financial position in the next 12 months.

~~As of December 31, 2019 and June 30, 2019, the~~

The Company ~~had~~has no unrecognized tax ~~benefits of $1.6 million and $1.2 million, respectively, all of which would impact the Company's effective tax rate.~~benefits. The Company files income tax returns mainly in South Africa, ~~South Korea,~~ Germany, Hong Kong, India, the United Kingdom, Botswana and in the U.S. federal jurisdiction. As of December 31, ~~2019,~~2020, the ~~Company's~~Company’s South African subsidiaries are no longer subject to income tax examination by the South African Revenue Service for periods before June 30, 2016. The Company is subject to income tax in other jurisdictions outside South Africa, none of which are individually material to its financial position, statement of cash flows, or results of ~~operations~~operations.

~~21.~~

20.Commitments and contingencies

~~Guarantees~~

Guarantees

The South African Revenue Service and certain of the ~~Company's~~Company’s customers, suppliers and other business partners have asked the Company to provide them with guarantees, including standby letters of credit, issued by a South African bank. The Company is required to procure these guarantees for these third parties to operate its business.

Nedbank has issued guarantees to these third parties amounting to ZAR ~~93.6~~156.6 million ($~~6.7~~10.7 million, translated at exchange rates applicable as of December 31, ~~2019) and~~2020) thereby utilizing part of the ~~Company's~~Company’s short-term ~~facility. The Company in turn has provided nonrecourse, unsecured counter-guarantees to Nedbank for ZAR 93.6 million ($6.7 million, translated at exchange rates applicable as of December 31, 2019).~~facilities. The Company pays commission of between 0.4% per annum to 1.94% per annum of the face value of these guarantees and does not recover any of the commission from third parties.

3936

~~21.~~

20.Commitments and contingencies (continued)

The Company has not recognized any obligation related to these ~~counter-guarantees~~guarantees in its consolidated balance sheet as of December 31, ~~2019.~~2020. The maximum potential amount that the Company could pay under these guarantees is ZAR ~~93.6~~156.6 million ($~~6.7~~10.7 million, translated at exchange rates applicable as of December 31, ~~2019)~~2020). The guarantees have reduced the amount available for borrowings under the ~~Company's~~Company’s short-term credit facility described in Note ~~10.~~9.

~~Contingencies~~

Contingencies

The Company is subject to a variety of other insignificant claims and suits that arise from time to time in the ordinary course of business. Management currently believes that the resolution of these other matters, individually or in the aggregate, will not have a material adverse impact on the ~~Company's~~Company’s financial position, results of operations or cash flows.

~~22.~~

21.Discontinued ~~operation - DNI~~operations

The Company determined that, following the disposal of its controlling interest, inNet1 Korea (in fiscal 2020) and DNI ~~is a~~(in fiscal 2019) should be classified as discontinued ~~operation~~operations because itthe disposal of these businesses represented a strategic shift that ~~will~~would have a major effect on the Company’s operations and financial ~~results as a result of the sale of a significant portion of its investment in DNI.~~results. Refer to Note 3 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, ~~2019,~~2020, for additional information regarding the deconsolidation of Net1 Korea and DNI.

The table below presents certain major captions to the Company’s unaudited condensed consolidated statement of operations and unaudited condensed consolidated statement of cash flows for three and six months ended December 31, ~~2018,~~2019, that have not been separately presented on those ~~statements:~~statements related to the presentation of Net1 Korea as a discontinued operation:

Net1 Korea
	Three months ended		Six months ended
	December 31, 2019		December 31, 2019
Unaudited condensed consolidated statement of operations
Discontinued:
Revenue	$	33,513	$	66,331
Cost of goods sold, IT processing, servicing and support		14,765		29,131
Selling, general and administration		11,975		23,284
Depreciation and amortization		3,207		6,648
Operating income		3,566		7,268
Interest income		261		549
Interest expense		92		100
Net income before tax		3,735		7,717
Income tax expense		1,015		2,062
Net income from discontinued operations	$	2,720	$	5,655
Unaudited condensed consolidated statement of cash flows
Discontinued:
Total net cash provided by operating activities	$	4,371	$	14,565
Total net cash used in investing activities	$	(12,893)	$	(9,805)

DNI
December 31, 2018
Three months ended Six months ended
Unaudited condensed consolidated statement of operations
Discontinued:
Revenue $ 19,708 $ 38,495
Cost of goods sold, IT processing, servicing and support 9,954 20,166
Selling, general and administration 1,266 1,722
Depreciation and amortization 2,662 5,599
Operating income 5,826 11,008
Interest income 224 499
Interest expense 215 416
Net income before tax 5,835 11,091
Income tax expense 2,100 3,615
Net income before earnings from equity-accounted investments 3,735 7,476
Earnings from equity-accounted investments (1) 44 (58 )
Net income from discontinued operations $ 3,779 $ 7,418

Unaudited condensed consolidated statement of cash flows
Discontinued:
Total net cash (used in) provided by operating activities $ 10,546 $ 7,028
Total net cash (used in) provided by investing activities (172 ) (197 )
(1) Earnings from equity-accounted investments for the three and six months ended December 31, 2018, represents earnings attributed to equity-accounted investments owned by DNI and included in the Company's results as a result of the consolidation of DNI.

~~22.~~~~Discontinued operation - DNI (continued)~~

The Company retained a continuing involvement in DNI ~~through its 30%~~following the disposal of the Company’s controlling interest ~~in DNI (refer to Note 7). The Company expects to retain an interest in DNI for less than 12 months.~~during the year ended June 30, 2019. The Company recorded earnings under the equity method related to its retained investment in DNI during the ~~three and~~ six months ended December 31, ~~2019, refer to Note 7.~~2019. The table below presents revenues and expenses between the Company and DNI, after the DNI disposal transaction, during the six months ended December 31, 2019:

DNI
	Three months ended		Six months ended
	December 31, 2019		December 31, 2019
Revenue generated from transactions with DNI	$	0	$	0
Expenses incurred related to transactions with DNI	$	333	$	2,607

The Company received dividends of $0.4 million and $1.1 million from DNI during the three and six months ended December 31, ~~2019:~~2019, respectively.

DNI
December 31, 2019
Three months ended Six months ended
Revenue generated from transactions with DNI $ - $ -
Expenses incurred related to transactions with DNI $ 333 $ 2,607

~~Refer~~22.Related party transactions

Disgorgement proceeds from VCP

In late September 2020, Value Capital Partners (Pty) Ltd (“VCP”), a significant shareholder, notified the Company that it would make payment to ~~Note 7~~the Company related to the disgorgement of short-swing profits from the purchase of common stock by VCP pursuant to Section 16(b) of the Securities Exchange Act of 1934, as amended and the Company’s insider trading policy. The Company recognizes these proceeds as a capital contribution from shareholders and recorded an increase of $0.1 million, net of taxes of $0.02 million, to additional paid-in capital in its unaudited condensed consolidated statement of changes in equity for the ~~dividends~~three months ended September 30, 2020. As the purchase transactions occurred in late September 2020, $0.02 million of the $0.12 million proceeds were received in early October 2020 and these amounts were recorded within cash flows from ~~DNI and accounted~~financing activities in the Company’s unaudited condensed consolidated statement of cash flow for ~~under~~ the ~~equity method during the six~~three months ended December 31, ~~2019.~~2020. The Company expects to pay the taxes due of $0.02 million in calendar 2021.

4123. Subsequent events

Disposal of entire 35% interest in Bank Frick

On February 3, 2021, the Company 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. The parties also agreed that the Company will pay $3.6 million to KFS to terminate all existing arrangements with Bank Frick and settle all liabilities related to IPG’s activities with Bank Frick, and this amount will be set off against the first payment made by KFS in February 2021. KFS will pay $15.0 million within two days from signing, which comprises $18.6 million less the $3.6 million referred to earlier, $7.5 million on October 30, 2021, and the remaining amount, of $3.9 million on July 15, 2022. The parties entered into a security and pledge agreement under which KFS pledged the Bank Frick shares purchased as security for the amounts outstanding under the share sales agreement.

Item 2. ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended June 30, ~~2019,~~2020, and the unaudited condensed consolidated financial statements and the accompanying notes included in this Form 10-Q.

Forward-looking statements

Some of the statements in this Form 10-Q constitute forward-looking statements. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our or our ~~industry's~~industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, implied or inferred by these forward-looking statements. Such factors include, among other things, those listed under Item ~~1A.-"~~1A.—“Risk ~~Factors" and elsewhere~~Factors” in our Annual Report on Form 10-K for the year ended June 30, ~~2019.~~2020. In some cases, you can identify forward-looking statements by terminology such as ~~"may," "will," "should," "could," "would," "expects," "plans," "intends," "anticipates," "believes," "estimates," "predicts," "potential"~~“may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or ~~"continue"~~“continue” or the negative of such terms and other comparable terminology.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we do not know whether we can achieve positive future results, levels of activity, performance, or goals. Actual events or results may differ materially. We undertake no obligation to update any of the forward-looking statements after the date of this Form 10-Q to conform those statements to reflect the occurrence of unanticipated events, except as required by applicable law.

You should read this Form 10-Q and the documents that we reference herein and the documents we have filed as exhibits hereto and thereto and which we have filed with the United States Securities and Exchange Commission completely and with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

Recent Developments

Impact of COVID-19

The COVID-19 pandemic did not impact our South African operations as severely during the three and six months ended December 31, 2020, compared to the last four months of the year ended June 30, 2020. However, on December 28, 2020, the country moved back to Level 3 restrictions which remain in place at the date of this report. South Africa operates with a five-level COVID-19 alert system, with Level 1 being the least restrictive and Level 5 being the most restrictive. The country went into lockdown (Level 5) towards the end of March 2020 and gradually eased restrictions for the remainder of the 2020 calendar year (to Level 4 from May 1, to Level 3 from June 1, to Level 2 from August 18 and to Level 1 from September 21). The increase at the end of December 2020 back to Level 3 was in response to a second wave of infections, which has been more severe than the first wave. While all our businesses continue to operate, we have increased preventive measures and it is unclear to what extent business activity levels will be affected. We have already seen an increase in claims in our life insurance business, which we believe is linked to the second wave and there is a risk of increased credit losses in our micro lending business as a result of increased mortality rates. Over the course of the pandemic to date, it is estimated that 2.2 million jobs have been lost in South Africa.

Business and operations

During the second quarter of fiscal 2021, our operations largely operated as normal. Most of the impact of the pandemic on our operations resulted from the indirect effect of lower economic activity in the South African economy.

Our loan business has been able to originate loans normally and we have not seen any deterioration in collection levels over the period. Our insurance business has seen a higher level of benefit claims during the six months ended December 31, 2020, with a marked increase in December, which appears to be directly linked to the second wave of the pandemic.

We continue to incur direct expenditure on the purchase of sanitizers, masks and gloves for our employees and for the use of customers in our branches, but this is not significant in the context of our cost base.

Employees

Where possible, we have continued to provide the necessary facilities (computer equipment, data cards, etc.) for our employees to operate remotely and continue to encourage them to do so where this is practical and effective. We continue to provide the necessary protective equipment and sanitization facilities for those employees that operate within our offices and operating locations. Regrettably, three of our employees passed away during the second quarter of fiscal 2021 due to COVID-19.

Cash resources and liquidity

We believe we have sufficient cash reserves to support us through the next twelve months. Together with our existing cash reserves, we also believe that our credit facilities are sufficient to fund our ATM network.

We do not believe there will be any further significant adverse effects on our liquidity from the pandemic, unless there is a resumption of the higher level of restrictions seen in April and May 2020 in South Africa.
We believe that our South African insurance business is adequately capitalized and do not expect to have to provide additional funding to the business in the foreseeable future.
Financial ~~Inclusion~~position and impairments
Except for the impact on Finbond’s business, we do not believe that the pandemic has significantly impacted the carrying value of long-lived assets and equity method investments to date.
Control environment
We do not expect the pandemic to have a significant impact on our internal control environment.
While we have not incurred significant disruptions thus far from the COVID-19 outbreak, we are unable to accurately predict the impact that COVID-19 will have due to numerous uncertainties, including the severity of the disease, the duration of the outbreak, actions that may be taken by governmental authorities, the impact on our customers and other factors identified in Part I, Item 1A. “Risk Factors— The COVID-19 pandemic has disrupted our business. We are unable to ascertain the impact the pandemic will have on our future financial position, operations, cash flows and stock price” in our Annual Report on Form 10-K for the year ended June 30, 2020. We will continue to evaluate the nature and extent of the impact to our business, consolidated results of operations, and financial condition.

Financial Services Activities in South Africa

~~Having taken dramatic steps~~

We continue to ~~reduce costs in our South African operations in fiscal 2019, our~~ focus ~~in fiscal 2020 has been to transition~~on transitioning our South African financial inclusion activities towards a business-to-consumer, or B2C, model. We believe our EPE bank account, known in the communities it serves as ‘the green card’, has a strong brand position in our target market and benefits from significant loyalty. We have ~~developed new banking products~~been working on enhancing its presence through localized marketing which, when combined with some of the challenges of other service providers into this market, we expect to result in ~~cooperation with Finbond and stabilized~~a return to growing customer numbers.

The first signs of progress in this regard were evident in the most recent quarter, as we achieved gross customer additions of approximately 62,000. Net additions were approximately 44,000 customers though not all of these are income generating as yet due to delays in processing the transfer of grant income. Our focus is now on accelerating the rate of customer acquisition to build critical mass. These customers, many of whom are returning customers, will then have access to our suite of associated financial services ~~offerings, while continuing~~products, which we expect to ~~make~~lift activity levels across many of our ~~distribution and infrastructure more efficient.~~ operations.

Processing Activities in South Africa

Our ~~ability to expand~~processing activities in South Africa are focused around our ~~account~~ATM network, which largely services a consumer base, and ~~financial services offerings have been constrained by the availability of sufficient liquidity thus far. We completed a soft launch~~our transaction processing for businesses, anchored around our EasyPay offering. As articulated in respect of our ~~new banking products on October 1, 2019~~revised strategy, we aim to grow this business to business, or B2B, operation through the servicing of small and ~~without any marketing, we opened~~micro enterprises. We have seen ongoing increases in ~~excess~~the utilization of ~~13,000 new accounts by December 31, 2019.~~

~~Our loan book has remained fairly steady~~our ATM infrastructure over the last ~~two quarters,~~quarter, while our B2B operations have also performed in line with expectations. Planning around the expansion of the processing business into the small and micro enterprises space is ongoing.

International Activities

Bank Frick – Bank Frick exceeded expectations and performed well during the quarter. While they have increased provisioning against some of their loan portfolio, the performance of the bank in other areas has been strong. Nevertheless, with Europe in the grip of a second wave of infections, the performance of the bank is likely to face headwinds in the second half of fiscal 2021. The recent performance of cryptocurrencies has assisted the bank’s performance as it benefits from higher transaction volumes in those markets. In line with our new strategic direction, on February 3, 2021, we entered into a share sales agreement with the Frick Family Foundation, or KFS, to sell our entire interest, or 35%, in Bank Frick to KFS for $30 million. Refer to Note 23 for additional information related to this transaction.

Carbon – Carbon continues to see the normalization of their lending business as the effects of the pandemic and the associated restrictions in Nigeria have ~~had additional conversations with third-party lenders, including Finbond,~~reduced. While revenue remains below the levels seen before the start of the pandemic, this is primarily due to ~~leverage~~lower disbursements on tighter lending criteria. Disbursements are recovering, but the focus is on improved credit quality. They are also benefiting from increased funding in the Nigerian market, resulting in lower cost of funding and less currency risk. This should further be aided by the recent award of a micro-finance banking license, which will facilitate deposit taking that should further lower their ~~balance sheets~~cost of funding.

India – MobiKwik reported a strong sequential recovery during the December quarter driven by a confluence of strong festive spending and a robust secular adoption of electronic transactions following the impacts of Covid-19. They continue to ~~provide loans~~manage costs effectively and held the cash EBITDA loss under $1.0 million for the quarter once again. We expect them to return towards breakeven as we proceed through calendar year 2021. During the quarter, MobiKwik also raised approximately $7 million from new external shareholders at a valuation of approximately $375 million. We have increased the carrying value of our investment in MobiKwik following this transaction, refer to Note 6 to our ~~customers as a mechanism~~unaudited condensed consolidated financial statements for the methodology and inputs used in the fair value calculation for MobiKwik.

Wind-down of IPG and status of Cell C recapitalization

IPG – The process to ~~accelerate growth in~~close our ~~financial inclusion offerings. During~~IPG business is well-advanced, with most employees leaving the organization during the second quarter of fiscal ~~2019,~~2021. Most processing activities also ceased and we launched new loan products in collaboration with Finbond utilizing their balance sheet. These loans are to the higher LSM customers and therefore the first of our efforts to move up to a higher income customer segment. We issued in excess of 60,000 of these new loans during the second quarter. We continue to work with Grindrod Bank on our ATM and other acquiring initiatives.

~~The majority of our South African operations were stable though modestly lower compared to the first quarter of fiscal 2020. We~~ expect to ~~drive meaningful growth following an injection of additional liquidity into the businesses.~~

~~International Activities~~

IPG – IPG has completed its restructuring, and its newly developed issuing, acquiring and processing products, together with its new brand are ready for deployment. IPG remains somewhat dependent on Bank Frick to bring these new solutions to market, whichend all activities early in turn will be able to support IPG’s activities once it is authorized to conclude a Payment Facilitator agreement with IPG. Visa has provided conditional approval to Bank Frick with the last remaining Visa requirement being an onsite assessment of our operations in Malta, which occurred in late November 2019. We await final approval from Visa and upon receipt, we will be able to launch our new model with Bank Frick in earnest. In the interim, to accelerate our go-to-market strategy we have engaged with other financial institutions, which have progressed well, though with less strategic support or favorable commercials than our agreements with Bank Frick. We are currently completing final tests on our first product in the crypto-currency/ blockchain market, which is expected to launch toward the end of the third quarter of fiscal ~~2020~~2021 and ~~additional products are expected to follow later in the year.~~

~~Bank Frick~~ ~~- Bank Frick is systematically pursuing its strategy of working closely~~should be largely complete with financial intermediaries, offering products for alternative asset classes and fund services, and becoming an internationally recognized leading partner in the blockchain sector. With this strategy in mind, the bank evaluated and acted on various strategic opportunities during the last quarter.

Bank Frick is now the principal bank for more than 200 blockchain-based business clients in "Crypto Valley" of the Zug district along the border of Liechtenstein and Switzerland. The bank's activities have been further supportedclosure, from a cost perspective, by the new Blockchain Act implemented in Liechtenstein, which came into effect on January 1, 2020. The Act has created Europe's most comprehensive blockchain regulation, pioneering regulation for the token economy. Unlike many countries who amend existing legislation to accommodate blockchain, Liechtenstein has opted for a universal approach and creating a single law.

~~In October 2019, Net1 exercised its option to increase ownership in Bank Frick to 70% from 35% currently. The transaction is awaiting approval from Liechtenstein's Financial Market Authority.~~

~~Carbon~~ - Carbon continues to report exponential sequential growth across all the key indicators of its business - number of app installations, unique customers, loans disbursed and number of value-added transactions. For its year ended December 31, 2019, Carbon reported a full year net profit for the first time. Carbon's continued growth will be driven by its ability to access capital and/or funding in order to meet the demand for its expanding suite of products.

~~India~~ - MobiKwik received central bank approval to be a direct issuer during Q2 2020. We are working with MobiKwik and the card networks to re-launch our virtual card offering for both prepaid and credit with MobiKwik as the issuer. Once launched, we intend to offer the solutions to their entire qualified customer base, which is in excess of ten million users. MobiKwik itself continues to perform ahead of expectations, primarily due to its successful transition to being a digital financial services provider. For the quarter ended December 31, 2019, MobiKwik recorded unaudited annualized revenue of $66 million, up from $28 million for the quarter ended December 31, 2018. It has been contribution margin positive since October 2018 and achieved cash EBITDA breakeven in the month of August 2019. Digital financial services now account for approximately 25% of MobiKwik's total monthly revenue, compared to zero during the previous fiscal year and it is currently disbursing in excess of 110,000 new loans per month.

~~Progress on corporate activities~~

~~As part of the extensive strategic review of all of our businesses and investments, we have made progress on multiple fronts:~~

~~Sale of KSNET in Korea~~ - On January 23, 2020, we agreed to sell 100% of KSNET to PayletterHoldings LLC for approximately $237 million. The transaction, which is not subject to a financing condition, is expected to close in March 2020.

~~Sale of FIHRST~~ - In December 2019, the Company sold its payroll processing business FIHRST to Transaction Capital Payments Solutions Proprietary Ltd. for approximately ZAR 172.2 million, or $11.7 million at prevailing exchange rates. The transaction closed on December 12, 2019 and resulted in a capital gain of approximately ZAR 158.2 million, or $10.8 million. Net1 SA was required to utilize the full purchase price received from the sale of FIHRST to settle its obligations under its lending arrangements - refer to Net1's 2019 Form 10-K and Note 10 to its Q2 2020 Form 10-Q.

~~Disposal of DNI~~ ~~- During the first quarter~~end of fiscal 2020, DNI announced the acquisition of two related businesses that would provide further diversification of its revenue sources, and meaningfully scale its operations. We believe these acquisitions will expand the appeal of DNI to prospective investors and ultimately result in the exercise of the call option to acquire our remaining 30% at a strike price of ZAR 859.0 million, or $61.2 million translated at exchange rates applicable as of December 31, 2019. We have extended the validity of the call option to March 31, 2020.2021.

Cell C - – We continued to carry the value of our Cell C investment at $0 (zero) as of December 31, ~~2019.~~2020. Cell C ~~has concluded its infrastructure sharing agreement with MTN, and~~ is ~~now~~ focused on its ~~recapitalization.~~recapitalization and its operational reorganization given its revised commercial model. While it remains in default on its various lending arrangements, Cell C and its lenders are working constructively and continue to make good progress towards ~~formulating~~ a recapitalization intended to ensure its long-term sustainability and allow Cell C to focus on its core business.

~~SASSA Contract Expiration~~

~~Although~~Succession plan for CEO

There were no substantial developments during the second quarter of fiscal 2021. Mr. Alex M.R. Smith assumed the role of interim CEO on October 1, 2020, following the departure of Mr. Herman G. Kotzé on September 30, 2020. Mr. Smith will serve in this role until our board of directors finalizes the appointment of a permanent CEO. In order to ensure a smooth transition, Mr. Kotzé agreed to provide consulting services to us through May 31, 2021.

Restatement of revenue and cost of goods sold, IT processing, servicing and support

In November 2020, we identified an error with respect to the recognition of certain revenue and related cost of goods sold, IT processing, servicing and support during our assessment and systems development of new products. The error did not impact our operating income (loss), net income, balance sheet or cash flows. We determined that the error impacted reported results for the period from July 1, 2018 to November 30, 2020. The error impacted our reported results and we have ~~not been involved operationally with SASSA since September 30, 2018, we have been actively trying~~restated our unaudited condensed consolidated statement of operations and certain note presentation for the three and six months ended December 31, 2019, refer to ~~resolve all legal and legacy outstanding items~~Note 1 to ~~allow us to focus~~our unaudited condensed consolidated financial statements for additional information.

The table presents the unaudited impact of the restatement on our ~~core business.~~

~~Supreme Court Ruling on refund~~revenue and related cost of ~~implementation costs from 2014~~ ~~- On September 30, 2019, the Supreme Court dismissed CPS's appeal against the whole order~~goods sold, IT processing, servicing and judgment of the High Court of the Republic of South Africa Gauteng Division, Pretoria and ordered it to pay Corruption Watch's costs, including that of two legal counsel. On October 23, 2019, we filed our leave to appeal the Supreme Court's order with the Constitutional Court of South Africa. However, we cannot predict whether leave to appeal will be granted or if granted, how the Constitutional Court would rule on the matter.

~~Settlement of payment of fees due~~support for the ~~last six months~~first quarter of ~~the SASSA contract~~ ~~- Following the March 23, 2018 Constitutional Court order~~fiscal 2021, fiscal 2020 and 2019, including each fiscal quarter within those fiscal years:

Table 1	Revenue (unaudited)			Cost of goods sold, IT processing, servicing and support (unaudited)
	As reported	Correction	As restated	As reported	Correction	As restated
	$ ’000	$ ’000	$ ’000	$ ’000	$ ’000	$ ’000
Fiscal 2021:
Q1 2021	37,113	(1,977)	35,136	28,437	(1,977)	26,460

Fiscal 2020:
Year ended 2020	150,997	(6,698)	144,299	109,006	(6,698)	102,308
Q4 2020	25,978	(1,427)	24,551	22,400	(1,427)	20,973
Q3 2020	36,514	(1,900)	34,614	25,783	(1,900)	23,883
Q2 2020	40,567	(1,649)	38,918	28,395	(1,649)	26,746
Q1 2020	47,938	(1,722)	46,216	32,428	(1,722)	30,706

Fiscal 2019
Year ended 2019	166,227	(5,592)	160,635	129,696	(5,592)	124,104
Q4 2019	17,053	(1,692)	15,361	26,225	(1,692)	24,533
Q3 2019	36,586	(1,371)	35,215	29,423	(1,371)	28,052
Q2 2019	42,042	(1,948)	40,094	27,291	(1,948)	25,343
Q1 2019	70,546	(581)	69,965	46,757	(581)	46,176

The restatement only impacted revenue allocated to our Processing operating segment. Refer to “Presentation of quarterly revenue and operating (loss) income by segment for ~~a six-month extension of~~fiscal 2020 and 2019” below for additional information regarding our ~~contract with SASSA~~restated operating segments for payment of grants in cash at pay points only, we were allowed to charge our monthly fee based on the previously contracted rate of ZAR 16.44 (including VAT) per cash pay point recipient. Given that we only serviced the highest-cost beneficiaries, the Constitutional Court allowed us to approach the National Treasury in order for them to make a fair determination of the price we should be paid for services rendered. National Treasury recommended a rate of ZAR 51.00 (including VAT) per cash pay point recipient per month to the Constitutional Court. Contrary to SASSA's stance, the Constitutional Court on December 5, 2018, ruled that they are not required to ratify the Treasury recommended rate,fiscal 2020 and ~~that CPS and SASSA must agree on the pricing. We have commenced legal proceedings to receive an amount in accordance with the National Treasury's recommendation.~~2019, including each fiscal quarter within those fiscal years.

4341

Critical Accounting Policies

Our unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions about future events that affect the reported amount of assets and liabilities and disclosure of contingent assets and ~~liabilities.~~liabilities, including the ongoing uncertainty in the current economic environment due to the outbreak of COVID-19. As future events and their effects cannot be determined with absolute certainty, the determination of estimates requires ~~management's~~management’s judgment based on a variety of assumptions and other determinants such as historical experience, current and expected market conditions and certain scientific evaluation techniques.

Critical accounting policies are those that reflect significant judgments or uncertainties and may potentially ~~may~~ result in materially different results under different assumptions and conditions. We have identified the following critical accounting policies that are described in more detail in our Annual Report on Form 10-K for the year ended June 30, ~~2019:~~2020:

Valuation of investment in Cell C;
Recoverability of equity-accounted investments and other equity securities;
Business combinations and the recoverability of goodwill;
Intangible assets acquired through acquisitions;
Deferred taxation;
Stock-based compensation;
Accounts receivable and allowance for doubtful accounts receivable; and
~~Accounting for transactions~~
Revenue – variation in transaction price following September 2019 Supreme Court ruling.

Recent accounting pronouncements adopted

~~Refer to Note 1 to our unaudited condensed consolidated financial statements for a full description~~

We did not adopt any new accounting pronouncement during the second quarter of ~~recent accounting pronouncements adopted, including the dates of adoption and the effects on our unaudited condensed consolidated financial statements.~~fiscal 2021.

Recent accounting pronouncements not yet adopted as of December 31, ~~2019~~2020

Refer to Note 1 to our unaudited condensed consolidated financial statements for a full description of recent accounting pronouncements not yet adopted as of December 31, ~~2019,~~2020, including the expected dates of adoption and effects on our financial condition, results of operations and cash flows.

Currency Exchange Rate Information

Actual exchange rates

The actual exchange rates for and at the end of the periods presented were as follows:

Table 1 Three months ended Six months ended Year end
December 31, December 31, June 30,
2019 2018 2019 2018 2019
ZAR : $ average exchange rate 14.6969 14.3043 14.6947 14.1863 14.1926
Highest ZAR : $ rate during period 15.3017 14.8463 15.3860 15.4335 15.4335
Lowest ZAR : $ rate during period 14.0304 13.6911 13.8973 13.1528 13.1528
Rate at end of period 14.0483 14.3960 14.0483 14.3960 14.0840

KRW : $ average exchange rate 1,175 1,127 1,185 1,124 1,135
Highest KRW : $ rate during period 1,205 1,141 1,218 1,141 1,195
Lowest KRW : $ rate during period 1,155 1,109 1,155 1,108 1,108
Rate at end of period 1,155 1,114 1,155 1,114 1,156

Table 2	Three months ended		Six months ended		Year ended
	December 31,		December 31,		June 30,
	2020	2019	2020	2019	2020
ZAR : $ average exchange rate	15.6252	14.6969	16.2666	14.6947	15.6775
Highest ZAR : $ rate during period	16.6447	15.3017	17.6866	15.3860	19.0569
Lowest ZAR : $ rate during period	14.5456	14.0304	14.5456	13.8973	13.8973
Rate at end of period	14.6606	14.0483	14.6606	14.0483	17.3326

4442

Translation exchange rates for financial reporting purposes

We are required to translate our results of operations from ZAR ~~and KRW~~ to U.S. dollars on a monthly basis. Thus, the average rates used to translate this data for the three ~~and six~~ months ended December 31, ~~2019~~2020 and ~~June 30,~~ 2019, vary slightly from the averages shown in the table above. The translation rates we use in presenting our results of operations are the rates shown in the following table:

Three months ended Six months ended Year end
Table 2 December 31, December 31, June 30,
2019 2018 2019 2018 2019
Income and expense items: $1 = ZAR 14.6022 14.3236 14.4023 14.3378 14.2688
Income and expense items: $1 = KRW 1,174 1,124 1,184 1,122 1,136

Balance sheet items: $1 = ZAR 14.0483 14.3960 14.0483 14.3960 14.0840
Balance sheet items: $1 = KRW 1,155 1,114 1,155 1,114 1,156


	Three months ended		Six months ended		Year ended
Table 3	December 31,		December 31,		June 30,
	2020	2019	2020	2019	2020
Income and expense items: $1 = ZAR	15.4653	14.6022	16.4675	14.4023	17.5686
Balance sheet items: $1 = ZAR	14.6606	14.0483	14.6606	14.0483	17.3326

Results of ~~operations~~Operations

The discussion of our consolidated overall results of operations is based on amounts as reflected in our unaudited condensed consolidated financial statements which are prepared in accordance with U.S. GAAP. We analyze our results of operations both in U.S. dollars, as presented in the unaudited condensed consolidated financial statements, and supplementally in ZAR, because ZAR is the functional currency of the entities which contribute the majority of our revenue and is the currency in which the majority of our transactions are initially incurred and measured. Due to the significant impact of currency fluctuations between the U.S. dollar and the ZAR on our reported results and because we use the U.S. dollar as our reporting currency, we believe that the supplemental presentation of our results of operations in ZAR is useful to investors to understand the changes in the underlying trends of our business.

Our operating segment revenue presented in ~~"-Results~~“—Results of operations by operating ~~segment"~~segment” represents total revenue per operating segment before intercompany eliminations. A reconciliation between total operating segment revenue and revenue presented in our unaudited condensed consolidated financial statements is included in Note 1918 to those statements.

We ~~used~~disposed of our Korean operation in the ~~equity method to account for DNI in~~third quarter of fiscal 2020 and ~~accounted for DNI~~therefore it has been presented as a discontinued operation infor fiscal ~~2019.~~2020. We disposed of FIHRST during the second quarter of fiscal 2020, and ~~its contribution~~deconsolidated CPS in the fourth quarter of fiscal 2020, and therefore their contributions to our reported results ~~is excluded from~~are not included in the three and six months ended December ~~1, 2019.~~31, 2020.

We analyze our business and operations in terms of three inter-related but independent operating segments: (1) ~~South African transaction processing,~~Processing, (2) ~~International transaction processing~~Financial services and (3) ~~Financial inclusion and applied technologies.~~Technology. In addition, corporate and corporate office activities that are impracticable to ascribe directly to any of the other operating segments, as well as any inter-segment eliminations, are included in ~~corporate/eliminations.~~Corporate/Eliminations.

Second quarter of fiscal ~~2020~~2021 compared to second quarter of fiscal ~~2019~~2020

The following factors had a significant impact on our results of operations during the second quarter of fiscal ~~2020~~2021 as compared with the same period in the prior year:

• ~~Decline in~~

Lower revenue: Our revenues ~~declined 2%~~decreased 12% in ZAR primarily due to the decline in EPE account numbers driven by SASSA’s auto-migration of accounts to SAPO, and a reduction in EPE-related financial and value-added services and transaction fees due to a smaller customer base, but partially offset by higher ad hoc terminal andfewer prepaid airtime ~~sales;~~sales and lower account fee revenue;

• Ongoing operating losses: WeOperating costs are largely in line with the prior period in ZAR due to the largely fixed cost nature of the costs base. As a result, we continue to experience operating losses ~~primarily in South Africa~~ as a result of ~~lower revenues, coupled with a high-fixed cost infrastructure;~~depressed revenues; and

• ~~Gain on disposal of FIHRST:~~ ~~We recorded a gain of $9.7 million related to the disposal of FIHRST in December 2019;~~

• ~~Higher net interest expense:~~Net interest expense increased due to lower average cash balances and higher short-term borrowing to fund ATMs and utilization of our overdrafts, but was partially offset by the repayment of our long-term debt in the second half of fiscal 2019; and

• Adverse foreign exchange movements: The U.S. dollar ~~appreciated 2%~~was 6% stronger against the ZAR ~~and 4% against the KRW~~ during the second quarter of fiscal ~~2020,~~2021, which adversely impacted our reported results.

Consolidated overall results of operations

This discussion is based on the amounts prepared in accordance with U.S. GAAP.

The following tables show the changes in the items comprising our statements of operations, both in U.S. dollars and in ZAR:

Table 3	In United States Dollars (US GAAP)
Table 4						In United States Dollars
						Three months ended December 31,
	Three months ended December 31,					2020	2019^(A)
	2019		2018^(A)		$ %		(as restated)^(B)
	$ '000		$ '000		change	$ ’000	$ ’000	change
Revenue	74,080		77,442		(4%)	32,305	38,918	(17%)
Cost of goods sold, IT processing, servicing and support	43,160		41,231		5%	24,339	26,746	(9%)
Selling, general and administration	33,393		69,730		(52%)	22,097	21,418	3%
Depreciation and amortization	4,381		7,191		(39%)	1,074	1,174	(9%)
Impairment loss	-		8,191		nm
Operating loss	(6,854	)	(48,901	)	(86%)	(15,205)	(10,420)	46%
Change in fair value of equity securities	-		(15,836	)	nm	15,128	-	nm
Gain on disposal of FIHRST	9,743		-		nm	-	9,743	nm
Loss on disposal of equity-accounted investment						13	-	nm
Interest income	1,343		2,177		(38%)	717	1,082	(34%)
Interest expense	3,221		2,563		26%	677	3,129	(78%)
Impairment of Cedar Cellular note	-		2,732		nm
Income (Loss) before income taxes	1,011		(67,855	)	nm
Income tax expense (benefit)	1,722		(4,398	)	nm
Net loss before earnings (loss) from equity-accounted investments	(711	)	(63,457	)	(99%)
Earnings (Loss) from equity-accounted investments	506		(1,291	)	nm
Income (Loss) before income tax (benefit) expense						(50)	(2,724)	(98%)
Income tax expense						3,468	707	391%
Net loss before (loss) earnings from equity-accounted investments						(3,518)	(3,431)	3%
(Loss) earnings from equity-accounted investments						(1,016)	506	nm
Net loss from continuing operations	(205	)	(64,748	)	(100%)	(4,534)	(2,925)	55%
Net income from discontinued operations	-		3,779		nm	-	2,720	nm
Net (loss) income	(205	)	(60,969	)	(100%)
Less net income attributable to non-controlling interest	-		2,972		nm
Continuing	-		721		nm
Discontinued	-		2,251		nm
Net loss						(4,534)	(205)	2,112%
Net (loss) income attributable to us	(205	)	(63,941	)	(100%)	(4,534)	(205)	2,112%
Continuing	(205	)	(65,469	)	(100%)	(4,534)	(2,925)	55%
Discontinued	-		1,528		nm	-	2,720	nm

(A) Refer to Note 2221 to the unaudited condensed consolidated financial statements for discontinued operations disclosures.

(B) Revenue and cost of goods sold, IT processing, servicing and support have been restated for the error described in Note 1 to the unaudited condensed consolidated financial statements. There was no impact on operating loss as a result of the restatement.

4744

Table 4 In South African Rand
(US GAAP)
Three months ended December 31,
2019 2018^(A) ZAR %
ZAR '000 ZAR '000 change
Revenue 1,081,731 1,109,248 (2%)
Cost of goods sold, IT processing, servicing and support 630,231 590,576 7%
Selling, general and administration 487,611 998,784 (51%)
Depreciation and amortization 63,972 103,001 (38%)
Impairment loss - 117,325 nm
Operating loss (100,083 ) (700,438 ) (86%)
Change in fair value of equity securities - (226,829 ) nm
Gain on disposal of FIHRST 142,269 - nm
Interest income 19,611 31,182 (37%)
Interest expense 47,034 36,711 28%
Impairment of Cedar Cellular note - 39,132 nm
Income (Loss) before income taxes 14,763 (971,928 ) nm
Income tax expense (benefit) 25,145 (62,995 ) nm
Net loss before earnings (loss) from equity-accounted investments (10,382 ) (908,933 ) (99%)
Earnings (Loss) from equity-accounted investments 7,389 (18,492 ) nm
Net loss from continuing operations (2,993 ) (927,425 ) (100%)
Net income from discontinued operations - 54,129 nm
Net (loss) income (2,993 ) (873,296 ) (100%)
Less net income attributable to non-controlling interest - 42,570 nm
Continuing - 10,328 nm
Discontinued - 32,242 nm
Net (loss) income attributable to us (2,993 ) (915,866 ) (100%)
Continuing (2,993 ) (937,753 ) (100%)
Discontinued - 21,887 nm

Table 5	In South African Rand
	Three months ended December 31,
	2020	2019^(A)
		(as restated)^(B)
	ZAR ’000	ZAR ’000	change
Revenue	499,607	568,289	(12%)
Cost of goods sold, IT processing, servicing and support	376,410	390,551	(4%)
Selling, general and administration	341,736	312,750	9%
Depreciation and amortization	16,610	17,143	(3%)
Operating loss	(235,149)	(152,155)	55%
Change in fair value of equity securities	233,959	-	nm
Gain on disposal of FIHRST	-	142,269	nm
Loss on disposal of equity-accounted investment	201	-	nm
Interest income	11,089	15,800	(30%)
Interest expense	10,470	45,690	(77%)
Income (Loss) before income tax (benefit) expense	(772)	(39,776)	(98%)
Income tax expense	53,634	10,324	420%
Net loss before (loss) earnings from equity-accounted investments	(54,406)	(50,100)	9%
(Loss) earnings from equity-accounted investments	(15,713)	7,389	nm
Net loss from continuing operations	(70,119)	(42,711)	64%
Net income from discontinued operations	-	39,718	nm
Net loss	(70,119)	(2,993)	2,243%
Net (loss) income attributable to us	(70,119)	(2,993)	2,243%
Continuing	(70,119)	(42,711)	64%
Discontinued	-	39,718	nm

(A) Refer to Note 2221 to the unaudited condensed consolidated financial statements for discontinued operations disclosures.

The decrease in revenue was primarily due to the decline in EPE account numbers driven by SASSA's auto-migration of accounts to SAPO, and a reduction in EPE-related financial and value-added services and transaction fees due to a smaller customer base, but partially offset by higher ad hoc terminal andfewer prepaid airtime ~~sales.~~sales and lower account fee revenue.

The ~~increase~~decrease in cost of goods sold, IT processing, servicing and support was primarily due to lower cost of prepaid airtime sales, which was partially offset by higher costs related to ~~ad hoc terminal and prepaid airtime sales, but partially offset by fewer SASSA Grindrod-account grant recipients utilizing~~transaction fees.

In ZAR, the ~~South African National Payment System which resulted in lower transaction costs incurred by us.~~

~~The decrease~~increase in selling, general and administration expense was primarily due to the ~~increase in our allowance for doubtful finance loans receivable recorded during the second quarter~~year-over-year impact of ~~fiscal 2019 of approximately $23.4 million (resulting from SASSA's auto-migration of EPE accounts),~~inflationary increases on employee-related expenses and lower costs incurred by our South Africa business as we transition our business strategy in South Africa. We continue to incur committed fixed and variable costs (including premises and staff costs) related to the maintenance of our financial inclusion initiatives in South Africa.consulting fees.

Depreciation and amortization decreased primarily due to lower overall ~~amortization of intangible assets that are fully amortized and~~depreciation related to tangible assets that ~~are~~were fully depreciated during the second quarter of fiscal 2020.

~~During the second quarter of fiscal 2019, we recognized an impairment loss of approximately $8.2 million, which included $7.0 million related to the entire amount of IPG goodwill.~~

Our operating loss margin for the second quarter of fiscal 2021 and 2020 ~~and 2019~~ was ~~(9.3%~~(47.1%) and ~~(63.1%~~(26.8%), respectively. We discuss the components of operating ~~income~~loss margin under ~~"-Results~~“—Results of operations by operating segment."”

The change in fair value of equity securities during the second quarter of fiscal 2021 represents a non-cash fair value adjustment gain related to MobiKwik. There was no change in the fair value of equity securities during the second quarter of fiscal ~~2020 with~~2020. We continue to carry our investment in Cell C ~~carried~~ at $0 (zero). ~~The change in fair value of equity securities during the second quarter of fiscal 2019 represented a non-cash fair value adjustment loss related to Cell C.~~ Refer to Note 6 ofto our unaudited condensed consolidated financial statements for the methodology and inputs used in the fair value ~~calculation.~~calculation for MobiKwik and Note 5 for the methodology and inputs used in the fair value calculation for Cell C.

We recorded a gain of $9.7 million related to the disposal of FIHRST during the second quarter of fiscal 2020.

Interest on surplus cash decreased to ~~$1.3~~$0.7 million (ZAR ~~19.6~~11.1 million) from ~~$2.2~~$1.1 million (ZAR ~~31.2~~15.8 million), primarily due ~~primarily~~ to ~~the~~ lower rates of interest earned on surplus cash, which was partially offset by higher average daily cash balances following the increase in our cash reserves as a result of the disposal of certain business in fiscal 2020.

Interest expense decreased to $0.7 million (ZAR 10.5 million) from $3.1 million (ZAR 45.7 million), primarily as a result of lower borrowings, a reduction in South African interest rates and lower interest expense as a result of lower utilization of our ATM facilities because we used our cash ~~used~~reserves to fund our ATMs.

Fiscal 2021 tax expense was $3.5 million (ZAR 53.6 million) compared to $0.7 million (ZAR 10.3 million) in fiscal 2020. Our effective tax rate for fiscal 2021 was impacted by the ~~operating losses~~tax effect on the change in the fair value of our equity securities, which is at a lower tax rate than the South African ~~operations.~~

Interest expense increased to $3.2 million (ZAR 47.0 million) from $2.6 million (ZAR 36.7 million), due to interest expense related to cash borrowed to stock our ATMs and utilization of our overdraft facilities, but partially offset by a reduction in our long-term South African debt.

~~During~~statutory rate, the ~~second quarter of fiscal 2019, we recorded an impairment loss of $2.7 million~~tax charge related to our ~~Cedar Cellular note as discussed in Note 7~~profitable South African operations, non-deductible expenses, the on-going losses incurred by certain of our ~~unaudited condensed consolidated financial statements.~~South African businesses and the associated valuation allowances created related to the deferred tax assets recognized regarding net operating losses incurred by these entities.

~~Fiscal 2020 tax expense was $1.7 million (ZAR 25.1 million) compared to an income tax benefit of $(4.4) million (ZAR (63.0) million) in fiscal 2019.~~ Our effective tax rate for fiscal 2020 was impacted by the on-going losses incurred by certain of our South African businesses and the associated valuation allowances created related to the deferred tax assets recognized regarding net operating losses incurred by these South African businesses and non-deductible ~~expenses, including transaction-related expenditure, which was partially offset by~~expenses. The charge represents the tax expense recorded by our profitable businesses in South ~~Africa and South Korea. Our effective tax rate for fiscal 2019,~~Africa.

DNI was adversely impacted by the valuation allowances created related to the deferred tax assets recognized regarding net operating losses incurred by our South African businesses, the non-deductible goodwill impairment losses, and non-deductible expenses, including transaction-related expenditure and non-deductible interest on our South African long-term debt facility, which was partially offset by tax expense recorded by our profitable businesses in South Africa and South Korea. The deferred tax impact of the changesold in the ~~fair value~~fourth quarter of ~~our equity security also impacted our effective rate for~~ fiscal ~~2019, as this amount is recorded at a lower rate (at a capital gains rate) than the South African statutory rate.~~

~~DNI~~2020 and was accounted for using the equity method during the second quarter of fiscal 2020. Finbond is listed on the Johannesburg Stock Exchange and reports its six-month results during our first quarter and its annual results during our fourth quarter. The table below presents the relative (loss) earnings ~~(loss)~~ from our equity accounted investments:

Table 5 Three months ended December 31,
2019 2018 $ %
$ '000 $ '000 change
DNI 380 - nm
Share of net income 1,650 - nm
Amortization of intangible assets, net of deferred tax (465 ) - nm
Impairment (805 ) - nm
Bank Frick 494 (1,217 ) nm
Share of net income 636 402 58%
Amortization of intangible assets, net of deferred tax (142 ) (141 ) 1%
Other - (1,478 ) nm
Other (368 ) (74 ) 397%
506 (1,291 ) nm

Table 6	Three months ended December 31,
	2020	2019	$ %
	$ ’000	$ ’000	change
Bank Frick	498	494	1%
Share of net income	498	636	(22%)
Amortization of intangible assets, net of deferred tax	-	(142)	nm
DNI	-	380	nm
Share of net income	-	1,650	nm
Amortization of intangible assets, net of deferred tax	-	(465)	nm
Impairment	-	(805)	nm
Finbond	(806)	-	nm
Impairment	(806)	-	nm
Other	(708)	(368)	92%
Share of net loss	(160)	(368)	(57%)
Impairment	(548)	-	nm
	(1,016)	506	nm

Refer to Note 6 to our unaudited condensed consolidated financial statements for additional information related to the impairment of Finbond and our other equity-accounted investments.

Results of operations by operating segment

The composition of revenue and the contributions of our business activities to operating (loss) income are illustrated below:

Table 6 In United States Dollars (US GAAP)

Three months ended December 31,
2019 % of 2018 % of % change
Operating Segment $ '000 total $ '000 total
Consolidated revenue:
South African transaction processing 20,350 27% 21,970 23% (7%)
International transaction processing 34,363 46% 38,124 39% (10%)
Financial inclusion and applied technologies 21,986 30% 38,755 40% (43%)
Continuing 21,986 30% 19,047 20% 15%
Discontinued - - 19,708 20% nm
Subtotal: Operating segments 76,699 103% 98,849 102% (22%)
Corporate/Eliminations (2,619 ) (3%) (1,699 ) (2%) 54%
Total consolidated revenue 74,080 100% 97,150 100% (24%)
Continuing 74,080 100% 77,442 80% (4%)
Discontinued - - 19,708 20% nm
Consolidated operating (loss) income: nm
South African transaction processing (2,981 ) 43% (11,830 ) 27% (75%)
International transaction processing 2,811 (41%) (4,043 ) 9% nm
Financial inclusion and applied technologies (878 ) 13% (18,538 ) 43% (95%)
Continuing (878 ) 13% (26,967 ) 63% (97%)
Discontinued - - 8,429 (20%) nm
Subtotal: Operating segments (1,048 ) 15% (34,411 ) 79% (97%)
Corporate/eliminations (5,806 ) 85% (8,664 ) 21% (33%)
Continuing (5,806 ) 85% (6,061 ) 15% (4%)
Discontinued - - (2,603 ) 6% nm
Total consolidated operating (loss) income (6,854 ) 100% (43,075 ) 100% (84%)
Continuing (6,854 ) 100% (48,901 ) 114% (86%)
Discontinued - - 5,826 (14%) nm

Table 7	In United States Dollars⁽¹⁾

	Three months ended December 31,
	2020	% of	2019	% of	% change
			(as restated)
Operating Segment	$ ’000	total	$ ’000	total
Consolidated revenue:
Processing	19,990	62%	25,022	64%	(20%)
IPG	478	1%	432	1%	11%
All others	19,512	60%	24,590	63%	(21%)
Financial services	9,709	30%	12,268	32%	(21%)
Technology	4,609	14%	4,890	13%	(6%)
Subtotal: Operating segments	34,308	167%	42,180	173%	(19%)
Corporate/Eliminations	(2,003)	(67%)	(3,262)	(73%)	(39%)
Total consolidated revenue	32,305	100%	38,918	100%	(17%)
Consolidated operating (loss) income:
Processing	(10,381)	68%	(5,848)	56%	78%
IPG	(4,647)	31%	(2,920)	28%	59%
All others	(5,734)	38%	(2,928)	28%	96%
Financial services	(1,071)	7%	(1,249)	12%	(14%)
Technology	1,078	(7%)	589	(6%)	83%
Subtotal: Operating segments	(10,374)	137%	(6,508)	118%	59%
Corporate/eliminations	(4,831)	(37%)	(3,912)	(18%)	23%
Total consolidated operating loss	(15,205)	100%	(10,420)	100%	46%

(1) Consolidated revenue-Processing-All others for the six months ended December 31, 2019 has been restated for the error described in Note 1 to the unaudited condensed consolidated financial statements. There was no impact on operating loss as a result of the restatement.

5046

Table 7 In South African Rand (US GAAP)

Three months ended December 31,
2019 % of 2018 % of % change
Operating Segment ZAR '000 total ZAR '000 total
Consolidated revenue:
South African transaction processing 297,155 27% 314,689 23% (6%)
International transaction processing 501,775 46% 546,073 39% (8%)
Financial inclusion and applied technologies 321,044 30% 555,111 40% (42%)
Continuing 321,044 30% 272,821 20% 18%
Discontinued - - 282,290 20% nm
Subtotal: Operating segments 1,119,974 103% 1,415,873 102% (21%)
Corporate/Eliminations (38,243 ) (3%) (24,335 ) (2%) 57%
Total consolidated revenue 1,081,731 100% 1,391,538 100% (22%)
Continuing 1,081,731 100% 1,109,248 80% (2%)
Discontinued - - 282,290 20% nm
Consolidated operating (loss) income: nm
South African transaction processing (43,529 ) 43% (169,448 ) 27% (74%)
International transaction processing 41,047 (41%) (57,910 ) 9% nm
Financial inclusion and applied technologies (12,821 ) 13% (265,531 ) 43% (95%)
Continuing (12,821 ) 13% (386,265 ) 63% (97%)
Discontinued - - 120,734 (20%) nm
Subtotal: Operating segments (15,303 ) 15% (492,889 ) 79% (97%)
Corporate/eliminations (84,780 ) 85% (124,100 ) 21% (32%)
Continuing (84,780 ) 85% (86,816 ) 15% (2%)
Discontinued - - (37,284 ) 6% nm
Total consolidated operating (loss) income (100,083 ) 100% (616,989 ) 100% (84%)
Continuing (100,083 ) 100% (700,439 ) 114% (86%)
Discontinued - - 83,450 (14%) nm

~~South African transaction processing~~

Table 8	In South African Rand⁽¹⁾

	Three months ended December 31,
	2020	% of	2019	% of	% change
			(as restated)
Operating Segment	ZAR ’000	total	ZAR ’000	total
Consolidated revenue:
Processing	309,151	62%	365,376	64%	(15%)
IPG	7,392	1%	6,308	1%	17%
All others	301,759	60%	359,068	63%	(16%)
Financial services	150,153	30%	179,140	32%	(16%)
Technology	71,280	14%	71,405	13%	(0%)
Subtotal: Operating segments	530,584	167%	615,921	173%	(14%)
Corporate/Eliminations	(30,977)	(67%)	(47,632)	(73%)	(35%)
Total consolidated revenue	499,607	100%	568,289	100%	(12%)
Consolidated operating (loss) income:
Processing	(160,545)	68%	(85,394)	56%	88%
IPG	(71,867)	31%	(42,639)	28%	69%
All others	(88,678)	38%	(42,755)	28%	107%
Financial services	(16,563)	7%	(18,238)	12%	(9%)
Technology	16,672	(7%)	8,601	(6%)	94%
Subtotal: Operating segments	(160,436)	137%	(95,031)	118%	69%
Corporate/eliminations	(74,713)	(37%)	(57,124)	(18%)	31%
Total consolidated operating loss	(235,149)	100%	(152,155)	100%	55%

~~The decrease in~~

Processing

Excluding IPG, segment revenue ~~was~~decreased primarily due to fewer ~~transactions performed at our ATM base~~prepaid airtime sales and ~~lower fees as~~ a ~~result of fewer EPE and SASSA accounts. Our South African~~modest reduction in volume-driven transaction ~~processing~~fees. Excluding IPG, Processing operating ~~segment~~loss has been impacted by lower revenue and by an increase in transaction-based costs. IPG incurred an operating loss ~~have been adversely impacted by~~but is in the ~~loss~~process of ~~EPE customers as a result of SASSA's auto-migration of accounts to SAPO. The reduced~~being closed down.

Our operating loss inmargin (calculated as operating (loss) income divided by revenue) for the second quarter of fiscal 2021 and 2020 was (51.9%) and (23.4%), respectively. Excluding IPG, our operating loss margin for the Processing segment iswas (29.4%) and (11.9%) during the second quarter of fiscal 2021 and 2020, respectively.

Financial services

Segment revenue decreased due to lower account fee revenue whilst lending and insurance revenues increased modestly, in ZAR, compared to the ~~cost cutting that has occurred over the last 12 months.~~prior period. The reduction in operating loss is primarily due to an improvement of operating margin on certain products offered.

Our operating loss margin for the second quarter of fiscal 2021 and 2020 ~~and 2019~~ was ~~(14.6%~~(11.0%) and ~~(53.8%~~(10.2%), respectively.

~~International transaction-based activities~~

Technology

Segment revenue was ~~lower~~in line with 2020. Operating income for the second quarter of fiscal 2021 improved compared with fiscal 2020 due to improved margins on various product lines within the segment.

Our operating income margin for the Technology segment was 23.4% and 12.0% during the second quarter of fiscal 2021 and 2020, primarily due to an ongoing contraction in IPG transactions processed, specifically meaningfully lower crypto-exchange and China processing activity, modestly lower KSNET revenue as a result of lower transaction values processed and the impact of the weaker KRW/ USD exchange rate on reported KSNET revenue. Operating income during the second quarter of fiscal 2020 has improved compared with fiscal 2019 due to improved profitability of KSNET and the impairment loss recorded in fiscal 2019.respectively.

Operating income (loss) margin for the second quarter of fiscal 2020 and 2019 was 8.2% and (10.6%), respectively. Excluding the goodwill impairment, segment operating income and margin for fiscal 2019 were $3.0 million and 7.8%, respectively.

~~Financial inclusion and applied technologies~~Corporate/Eliminations

Segment revenue increased primarily due to higher ad hoc terminal and prepaid airtime sales, partially offset by lower lending revenue as a result of a moderate contraction in our lending book and lower insurance revenue as a result of fewer customers, and a decrease in inter-segment revenues. Excluding the impact of the allowance for doubtful finance loans recorded in the second quarter of fiscal 2019, the operating loss from continuing operations for the second quarter of fiscal 2020 was better than fiscal 2019 due to the contribution from the ad hoc terminal and airtime sales. Operating income during the second quarter of fiscal 2019 was significantly impacted by an allowance for doubtful finance loans receivable of $23.4 million (ZAR 335.1 million).

~~Operating income margin from continuing operations for the Financial inclusion and applied technologies segment was (4.0%) and (141.6%) during the second quarter of fiscal 2020 and 2019, respectively.~~

~~Corporate/Eliminations~~

Our corporate expenses generally include acquisition-related intangible asset amortization; expenses incurred related to ~~acquisitions and investments pursued;~~corporate actions; expenditure related to compliance with the Sarbanes-Oxley Act of 2002; non-employee ~~directors'~~directors’ fees; employee and executive bonuses; stock-based compensation; legal fees; audit fees; directors and ~~officer's~~officer’s insurance premiums; telecommunications expenses; and elimination entries.

Our corporate expenses ~~decreased~~increased primarily due to ~~lower acquired intangible asset amortization expense related to intangible assets that~~an allowance on doubtful loans receivable from equity-accounted investments created during the second quarter of fiscal 2021, and higher legal and consulting fees, which were ~~fully amortized during fiscal 2019,~~ partially offset by ~~higher transaction-related expenditures.~~lower audit fees.

First half of fiscal ~~2020~~2021 compared to first half of fiscal ~~2019~~2020

The following factors had a significant impact on our results of operations during the first half of fiscal ~~2020~~2021 as compared with the same period in the prior year:

• ~~Decline in~~

Lower revenue: Our revenues ~~declined 16%~~decreased 9% in ZAR primarily due to ~~the expiration of our SASSA contract, the decline in EPE~~fewer prepaid airtime sales and lower account ~~numbers driven by SASSA's auto-migration of accounts to SAPO, and a reduction in EPE-related financial and value-added services and transaction fees due to a smaller customer base, but~~fee revenue, which was partially offset by higher ~~ad hoc terminal and prepaid airtime sales;~~transaction fees;

• ~~Gain on disposal of FIHRST:~~ ~~We recorded a gain of $9.7 million related to the disposal of FIHRST in December 2019;~~

• Adverse foreign exchange movements: The U.S. dollar ~~appreciated 6%~~was 14% stronger against the ~~KRW~~ ZARduring the first half of fiscal ~~2020,~~2021, which adversely impacted our reported results.

Consolidated overall results of operations

This discussion is based on the amounts prepared in accordance with U.S. GAAP.

The following tables show the changes in the items comprising our statements of operations, both in U.S. dollars and in ZAR:

Table 8	In United States Dollars (US GAAP)
Table 9						In United States Dollars
						Six months ended December 31,
	Six months ended December 31,					2020	2019^(A)
	2019		2018^(A)		$ %		(as restated)^(B)
	$ '000		$ '000		change	$ ’000	$ ’000	change
Revenue	154,836		184,539		(16%)	67,441	85,134	(21%)
Cost of goods sold, IT processing, servicing and support	89,954		103,335		(13%)	50,799	57,452	(12%)
Selling, general and administration	65,324		111,152		(41%)	40,625	42,040	(3%)
Depreciation and amortization	9,146		15,048		(39%)	1,997	2,498	(20%)
Impairment loss	-		8,191		nm
Operating loss	(9,588	)	(53,187	)	(82%)	(25,980)	(16,856)	54%
Change in fair value of equity securities	-		(15,836	)	nm	15,128	-	nm
Gain on disposal of FIHRST	9,743		-		nm	-	9,743	nm
Loss on disposal of equity-accounted investment						13	-	nm
Interest income	1,994		3,778		(47%)	1,328	1,445	(8%)
Interest expense	4,576		5,121		(11%)	1,424	4,476	(68%)
Impairment of Cedar Cellular note	-		2,732		nm
Loss before income taxes	(2,427	)	(73,098	)	(97%)
Loss before income tax expense						(10,961)	(10,144)	8%
Income tax expense	3,739		577		548%	2,378	1,677	42%
Net loss before earnings from equity-accounted investments	(6,166	)	(73,675	)	(92%)
Earnings from equity-accounted investments	1,569		184		753%
Net loss before (loss) earnings from equity-accounted investments						(13,339)	(11,821)	13%
(Loss) earnings from equity-accounted investments						(20,153)	1,569	nm
Net loss from continuing operations	(4,597	)	(73,491	)	(94%)	(33,492)	(10,252)	227%
Net income from discontinued operations	-		7,418		nm	-	5,655	nm
Net (loss) income	(4,597	)	(66,073	)	(93%)
Less (Add) net income (loss) attributable to non-controlling interest	-		3,067		nm
Continuing	-		(877	)	nm
Discontinued	-		3,944		nm
Net loss						(33,492)	(4,597)	629%
Net (loss) income attributable to us	(4,597	)	(69,140	)	(93%)	(33,492)	(4,597)	629%
Continuing	(4,597	)	(72,614	)	(94%)	(33,492)	(10,252)	227%
Discontinued	-		3,474		nm	-	5,655	nm

(A) Refer to Note 2221 to the unaudited condensed consolidated financial statements for discontinued operations disclosures.

5348

Table 9 In South African Rand
(US GAAP)
Six months ended December 31,
2019 2018^(A) ZAR %
ZAR '000 ZAR '000 change
Revenue 2,229,994 2,645,884 (16%)
Cost of goods sold, IT processing, servicing and support 1,295,544 1,481,596 (13%)
Selling, general and administration 940,815 1,593,675 (41%)
Depreciation and amortization 131,723 215,755 (39%)
Impairment loss - 117,441 nm
Operating loss (138,088 ) (762,583 ) (82%)
Change in fair value of equity securities - (227,053 ) nm
Gain on disposal of FIHRST 140,322 - nm
Interest income 28,718 54,168 (47%)
Interest expense 65,905 73,424 (10%)
Impairment of Cedar Cellular note - 39,171 nm
Loss before income taxes (34,953 ) (1,048,063 ) (97%)
Income tax expense 53,850 8,273 551%
Net loss before earnings from equity-accounted investments (88,803 ) (1,056,336 ) (92%)
Earnings from equity-accounted investments 22,597 2,638 757%
Net loss from continuing operations (1,053,698 (94%)
Net income from discontinued operations 106,358 nm
Net (loss) income (66,206 ) (947,340 ) (93%)
Less (Add) net income (loss) attributable to non-controlling interest - 43,974 nm
Continuing - (12,574 ) nm
Discontinued - 56,548 nm
Net (loss) income attributable to us (66,206 ) (991,314 ) (93%)
Continuing (66,206 ) (1,041,124 ) (94%)
Discontinued - 49,810 nm

Table 10	In South African Rand
	Six months ended December 31,
	2020	2019^(A)
		(as restated)^(B)
	ZAR ’000	ZAR ’000	change
Revenue	1,110,585	1,226,124	(9%)
Cost of goods sold, IT processing, servicing and support	836,532	827,440	1%
Selling, general and administration	668,992	605,472	10%
Depreciation and amortization	32,886	35,977	(9%)
Operating loss	(427,825)	(242,765)	76%
Change in fair value of equity securities	249,120	-	nm
Gain on disposal of FIHRST	-	140,322	nm
Loss on disposal of equity-accounted investment	214	-	nm
Interest income	21,869	20,812	5%
Interest expense	23,450	64,464	(64%)
Loss before income tax expense	(180,500)	(146,095)	24%
Income tax expense	39,160	24,153	62%
Net loss before (loss) earnings from equity-accounted investments	(219,660)	(170,248)	29%
(Loss) earnings from equity-accounted investments	(331,870)	22,597	nm
Net loss from continuing operations	(551,530)	(147,651)	274%
Net income from discontinued operations	-	81,445	nm
Net loss	(551,530)	(66,206)	733%
Net (loss) income attributable to us	(551,530)	(66,206)	733%
Continuing	(551,530)	(147,651)	274%
Discontinued	-	81,445	nm

(A) Refer to Note 2221 to the unaudited condensed consolidated financial statements for discontinued operations disclosures.

The decrease in revenue was primarily due to ~~the expiration of our SASSA contract, the decline in EPE~~fewer prepaid airtime sales and lower account ~~numbers driven by SASSA's auto-migration of accounts to SAPO, and a reduction in EPE-related financial and value-added services and transaction fees due to a smaller customer base, but~~fee revenue, which was partially offset by higher ~~ad hoc terminal and prepaid airtime sales.~~transaction fees.

The decrease in cost of goods sold, IT processing, servicing and support was primarily due to ~~fewer SASSA Grindrod-account grant recipients utilizing the South African National Payment System~~lower cost of prepaid airtime sales, which ~~resulted in lower transaction costs incurred by us, but~~was partially offset by higher costs related to ~~terminal and prepaid airtime sales.~~transaction fees.

~~The decrease~~

In ZAR, the increase in selling, general and administration expense was primarily due to ~~the increase in our~~an allowance ~~for~~on doubtful ~~finance~~ loans receivable ~~recorded~~from equity-accounted investments created during the second quarter of fiscal ~~2019 of approximately $23.4 million (resulting from SASSA's auto-migration of EPE accounts), lower costs incurred by IPG~~2021 and ~~by our South Africa business as we transition our business strategy~~an increase in ~~South Africa.~~consulting fees.

~~During the first half of fiscal 2019, we recorded an impairment loss of $8.2 million, which included $7.0 million related to the entire amount of IPG goodwill.~~

Our operating loss margin for the first half of fiscal 2021 and 2020 ~~and 2019~~ was ~~(6.2%~~(38.5%) and ~~(28.8%~~(19.8%), respectively. We discuss the components of operating ~~income~~loss margin under ~~"-Results~~“—Results of operations by operating segment."”

The change in fair value of equity securities during the first half of fiscal 2021 represents a non-cash fair value adjustment ~~loss~~gain related to ~~Cell C~~MobiKwik. There was no change in the fair value of equity securities during the first half of fiscal ~~2019.~~2020. We continue to carry our investment in Cell C at $0 (zero). Refer to Note 6 ofto our unaudited condensed consolidated financial statements for the methodology and inputs used in the fair value ~~calculation.~~calculation for MobiKwik and Note 5 for the methodology and inputs used in the fair value calculation for Cell C.

We recorded a gain of $9.7 million related to the disposal of FIHRST during the first half of fiscal 2020.

Interest on surplus cash ~~decreased to $2.0~~was $1.3 million (ZAR ~~28.7~~21.9 million) ~~from $3.8~~compared to $1.4 million (ZAR ~~54.2~~20.8 million), in the prior period, due primarily to the ~~lower~~higher average daily cash balances ~~and~~following the increase in our cash ~~used to fund~~reserves as a result of the ~~operating losses~~disposal of certain business in ~~the South African operations.~~fiscal 2020, which was partially offset by lower rates of interest earned on surplus cash.

Interest expense decreased to ~~$4.6~~$1.4 million (ZAR ~~65.9~~23.5 million) from ~~$5.1~~$4.5 million (ZAR ~~73.4~~64.5 million), ~~due to~~primarily as a result of lower borrowings, a reduction in ~~our long-term~~ South African ~~debt,~~interest rates and lower interest expense as a result of lower utilization of our ATM facilities because we used our cash reserves to fund our ATMs.

Fiscal 2021 tax expense was $2.4 million (ZAR 39.2 million) compared to $1.7 million (ZAR 24.2 million) in fiscal 2020. Our effective tax rate for fiscal 2021 was impacted by the tax effect on the change in the fair value of our equity securities, which is at a lower tax rate than the South African statutory rate, the tax charge related to our profitable South African operations, non-deductible expenses, the on-going losses incurred by certain of our South African businesses and the associated valuation allowances created related to the deferred tax assets recognized regarding net operating losses incurred by these entities, which was partially offset by ~~interest expense~~the reversal of the deferred tax liability related to ~~cash borrowed to stock our ATMs and utilization~~one of our ~~overdraft facilities.~~equity-accounted investments following its impairment.

During the first half of fiscal 2019, we recorded an impairment loss of $2.7 million related to our Cedar Cellular note as discussed in Note 7 of our unaudited condensed consolidated financial statements.

~~Fiscal 2020 tax expense was $3.7 million (ZAR 53.9 million) compared to $0.6 million (ZAR 8.3 million) in fiscal 2019.~~ Our effective tax rate for fiscal 2020 was impacted by the on-going losses incurred by certain of our South African businesses and the associated valuation allowances created related to the deferred tax assets recognized regarding net operating losses incurred by these South African businesses and non-deductible ~~expenses, including transaction-related expenditure, which was partially offset by~~expenses. The charge represents the tax expense recorded by our profitable businesses in South ~~Africa and South Korea. Our effective tax rate for fiscal 2019,~~Africa.

DNI was (6.8%) and was impacted by the valuation allowances created related to the deferred tax assets recognized regarding net operating losses incurred by our South African businesses, the non-deductible goodwill impairment losses, and non-deductible expenses, including transaction-related expenditure and non-deductible interest on our South African long-term debt facility, which was partially offset by tax expense recorded by our profitable businesses in South Africa and South Korea. The deferred tax impact of the changesold in the ~~fair value~~fourth quarter of ~~our equity security also impacted our effective rate for~~ fiscal ~~2019, as this amount is recorded at a lower rate (at a so-called capital gains rate) than the South African statutory rate.~~

~~DNI~~2020 and was accounted for using the equity method ~~during the first half of fiscal 2019. The accounting for DNI as a discontinued operation has adversely impacted the comparability of our (loss) earnings from equity-accounted investments~~ during the first half of fiscal 2020. Finbond is listed on the Johannesburg Stock Exchange and reports its six-month results during our first ~~half~~quarter and its annual results during our fourth quarter. The table below presents the relative (loss) earnings ~~(loss)~~ from our equity accounted investments:

Table 10 Six months ended December 31,
2019 2018
$ '000 $ '000 $ % change
DNI 1,108 - nm
Share of net income 3,113 - nm
Amortization of intangible assets, net of deferred tax (931 ) - nm
Impairment (1,074 ) - nm
Bank Frick 469 (1,805 ) nm
Share of net income 755 564 34%
Amortization of intangible assets, net of deferred tax (286 ) (285 ) 0%
Other - (2,084 ) nm
Finbond 491 1,875 (74%)
Other (499 ) 114 nm
1,569 184 nm

Table 11	Six months ended December 31,
	2020	2019	$ %
	$ ’000	$ ’000	change
Bank Frick	979	469	109%
Share of net income	979	755	30%
Amortization of intangible assets, net of deferred tax	-	(286)	nm
DNI	-	1,108	nm
Share of net income	-	3,113	nm
Amortization of intangible assets, net of deferred tax	-	(931)	nm
Impairment	-	(1,074)	nm
Finbond	(20,267)	491	nm
Share of net (loss) income	(2,617)	491	nm
Impairment	(17,650)	-	nm
Other	(865)	(499)	73%
Share of net loss	(317)	(499)	(36%)
Impairment	(548)	-	nm
	(20,153)	1,569	nm

Refer to Note 6 to our unaudited condensed consolidated financial statements for additional information related to the impairment of Finbond and our other equity-accounted investments.

5550

Results of operations by operating segment

The composition of revenue and the contributions of our business activities to operating ~~income~~loss are illustrated below:

Table 11 In United States Dollars (US GAAP)

Six months ended December 31,
2019 % of 2018 % of %
Operating Segment $ '000 total $ '000 total change
Consolidated revenue:
South African transaction processing 39,749 26% 59,719 27% (33%)
International transaction processing 68,380 44% 77,511 35% (12%)
Financial inclusion and applied technologies 52,131 34% 91,961 41% (43%)
Continuing 52,131 34% 53,466 24% (2%)
Discontinued - - 38,495 17% nm
Subtotal: Operating segments 160,260 104% 229,191 103% (30%)
Corporate/Eliminations (5,424 ) (4%) (6,157 ) (3%) (12%)
Total consolidated revenue 154,836 100% 223,034 100% (31%)
Continuing 154,836 100% 184,539 83% (16%)
Discontinued - - 38,495 17% nm
Consolidated operating (loss) income: nm
South African transaction processing (6,366 ) 66% (15,343 ) 36% (59%)
International transaction processing 6,601 (69%) (1,281 ) 3% nm
Financial inclusion and applied technologies 623 (6%) (7,236 ) 17% nm
Continuing 623 (6%) (23,497 ) 56% nm
Discontinued - - 16,261 (39%) nm
Subtotal: Operating segments 858 (9%) (23,860 ) 56% nm
Corporate/eliminations (10,446 ) 109% (18,319 ) 44% (43%)
Continuing (10,446 ) 109% (13,066 ) 32% (20%)
Discontinued - - (5,253 ) 12% nm
Total consolidated operating (loss) income (9,588 ) 100% (42,179 ) 100% (77%)
Continuing (9,588 ) 100% (53,187 ) 126% (82%)
Discontinued - - 11,008 (26%) nm

Table 12 In South African Rand (US GAAP)

Six months ended December 31,
2019 % of 2018 % of % change
Operating Segment ZAR '000 total ZAR '000 total
Consolidated revenue:
South African transaction processing 572,477 26% 856,239 27% (33%)
International transaction processing 984,829 44% 1,111,337 35% (11%)
Financial inclusion and applied technologies 750,806 34% 1,318,518 41% (43%)
Continuing 750,806 34% 766,584 24% (2%)
Discontinued - - 551,934 17% nm
Subtotal: Operating segments 2,308,112 104% 3,286,094 103% (30%)
Corporate/Eliminations (78,118 ) (4%) (88,276 ) (3%) (12%)
Total consolidated revenue 2,229,994 100% 3,197,818 100% (30%)
Continuing 2,229,994 100% 2,645,884 83% (16%)
Discontinued - - 551,934 17% nm
Consolidated operating (loss) income: nm
South African transaction processing (91,685 ) 66% (219,985 ) 36% (58%)
International transaction processing 95,070 (69%) (18,367 ) 3% nm
Financial inclusion and applied technologies 8,973 (6%) (103,748 ) 17% nm
Continuing 8,973 (6%) (336,895 ) 56% nm
Discontinued - - 233,147 (39%) nm
Subtotal: Operating segments 12,358 (9%) (342,100 ) 56% nm
Corporate/eliminations (150,446 ) 109% (262,654 ) 44% (43%)
Continuing (150,446 ) 109% (187,338 ) 32% (20%)
Discontinued - - (75,316 ) 12% nm
Total consolidated operating (loss) income (138,088 ) 100% (604,754 ) 100% (77%)
Continuing (138,088 ) 100% (762,585 ) 126% (82%)
Discontinued - - 157,831 (26%) nm

Table 12	In United States Dollars⁽¹⁾

	Six months ended December 31,
	2020	% of	2019	% of	% change
			(as restated)
Operating Segment	$ ’000	total	$ ’000	total
Consolidated revenue:
Processing	42,496	63%	53,317	63%	(20%)
IPG	1,687	3%	1,225	1%	38%
All others	40,809	61%	52,092	61%	(22%)
Financial services	17,974	27%	26,436	31%	(32%)
Technology	10,820	16%	12,099	14%	(11%)
Subtotal: Operating segments	71,290	170%	91,852	170%	(22%)
Corporate/Eliminations	(3,849)	(70%)	(6,718)	(70%)	(43%)
Total consolidated revenue	67,441	100%	85,134	100%	(21%)
Consolidated operating (loss) income:
Processing	(17,682)	68%	(11,353)	67%	56%
IPG	(7,419)	29%	(4,893)	29%	52%
All others	(10,263)	40%	(6,460)	38%	59%
Financial services	(3,443)	13%	(904)	5%	281%
Technology	2,853	(11%)	1,734	(10%)	65%
Subtotal: Operating segments	(18,272)	139%	(10,523)	129%	74%
Corporate/eliminations	(7,708)	(39%)	(6,333)	(29%)	22%
Total consolidated operating loss	(25,980)	100%	(16,856)	100%	54%

~~(A) Refer to~~(1) Consolidated revenue-Processing-All others for the six months ended December 31, 2019 has been restated for the error described in Note 22 1 to the unaudited condensed consolidated financial statements. There was no impact on operating loss as a result of the restatement.

Table 13	In South African Rand⁽¹⁾

	Three months ended December 31,
	2020	% of	2019	% of	% change
			(as restated)
Operating Segment	ZAR ’000	total	ZAR ’000	total
Consolidated revenue:
Processing	699,803	63%	767,887	63%	(9%)
IPG	27,781	3%	17,642	1%	57%
All others	672,022	61%	750,245	61%	(10%)
Financial services	295,987	27%	380,739	31%	(22%)
Technology	178,178	16%	174,253	14%	2%
Subtotal: Operating segments	1,173,968	170%	1,322,879	170%	(11%)
Corporate/Eliminations	(63,383)	(70%)	(96,755)	(70%)	(34%)
Total consolidated revenue	1,110,585	100%	1,226,124	100%	(9%)
Consolidated operating (loss) income:
Processing	(291,178)	68%	(163,509)	67%	78%
IPG	(122,172)	29%	(70,470)	29%	73%
All others	(169,006)	40%	(93,039)	38%	82%
Financial services	(56,698)	13%	(13,020)	5%	335%
Technology	46,982	(11%)	24,974	(10%)	88%
Subtotal: Operating segments	(300,894)	139%	(151,555)	129%	99%
Corporate/eliminations	(126,931)	(39%)	(91,210)	(29%)	39%
Total consolidated operating loss	(427,825)	100%	(242,765)	100%	76%

(1) Consolidated revenue-Processing-All others for ~~discontinued operations disclosures.~~the six months ended December 31, 2019 has been restated for the error described in Note 1 to the unaudited condensed consolidated financial statements. There was no impact on operating loss as a result of the restatement.

~~South African transaction processing~~

~~The decrease in~~Processing

Excluding IPG, segment revenue ~~was~~decreased primarily due to fewer ~~transactions performed at our ATM base and~~prepaid airtime sales, which was partially offset by higher volume-driven transaction fees. Excluding IPG, Processing operating loss has been impacted by lower ~~fees as a result of fewer EPE and SASSA accounts. Our South African transaction processing operating segment~~ revenue and by an increase in transaction-based costs. IPG incurred an operating loss ~~have been adversely impacted by the loss of EPE customers as a result of SASSA's auto-migration of accounts to SAPO. The reduction in operating losses~~but is in the ~~segment is a reflection~~process of ~~the cost reductions that have occurred over the last 12 months.~~being closed down.

Our operating loss margin for the first half of fiscal 2021 and 2020 ~~and 2019~~ was ~~(16.0%~~(41.6%) and ~~(25.7%~~(21.3%), respectively. Excluding IPG, our operating loss margin for the Processing segment was (25.1%) and (12.4%) during the first half of fiscal 2021 and 2020, respectively.

~~International transaction-based activities~~

Financial services

Segment revenue ~~was~~decreased due to lower ~~during~~account fee revenue, whilst lending revenues were relatively flat, and insurance revenues were moderately higher compared to the ~~second quarter of~~prior period. The segment incurred an operating loss compared with fiscal 2020 primarily due to ~~an ongoing contraction~~the reduction in ~~IPG transactions processed, specifically meaningfully lower crypto-exchange and China processing activity, modestly lower KSNET~~account fee revenue as a result of the impact of the weaker KRW/ USD exchange rate on reported KSNET revenue. Operating income during the second quarter of fiscal 2020 has improved compared with fiscal 2019 due to improved profitability of KSNETwell as higher employee-related costs and ~~the impairment~~an increase in insurance claims experience.

Our operating loss ~~recorded in fiscal 2019.~~

~~Operating income (loss)~~ margin for the first half of fiscal 2021 and 2020 was (19.2%) and ~~2019 was 9.7% and (1.7%~~(3.4%), ~~respectively, due to improving profitability at KSNET. Excluding the goodwill impairment, segment operating income and margin for fiscal 2019 were $5.7 million and 7.4%,~~ respectively.

~~Financial inclusion and applied technologies~~

Technology

Segment revenue ~~decreased primarily due to lower lending revenue and insurance revenue as a result of fewer customers, and a decrease~~was modestly higher than in inter-segment revenues, partially offset by higher ad hoc terminal and prepaid airtime and value-added services sales. The improved operating income reflects the stabilization of the lending and insurance books, the positive contribution from the ad hoc terminal sales as well as our cost reduction efforts of the last 12 months.fiscal 2020. Operating income for the first half of fiscal ~~2019 includes an allowance for doubtful finance loans receivable~~2021 improved compared with fiscal 2020 due to improved margins on the sale of ~~$23.4 million (ZAR 335.5 million).~~various product lines within the segment.

~~Operating loss~~Our operating income margin ~~from continuing operations~~ for the ~~Financial inclusion and applied technologies~~Technology segment was ~~1.2%~~26.4% and ~~(43.9%)~~14.3% during the first half of fiscal 2021 and 2020, respectively.

Corporate/Eliminations

Our corporate expenses increased primarily due to an allowance on doubtful loans receivable from equity-accounted investments created during the first half of fiscal 2021, and higher legal and consulting fees, which were partially offset by lower audit fees.

Presentation of quarterly revenue and operating (loss) income by segment for fiscal 2020 and 2019

The tables below present quarterly revenue and operating (loss) income generated by our three reportable segments for fiscal 2020 and 2019, ~~respectively.~~and reconciliations to consolidated revenue and operating (loss) income, as well as the U.S. dollar/ ZAR exchange rates applicable per fiscal quarter and year:

~~Corporate/Eliminations~~

Table 14	Fiscal 2020⁽¹⁾
	In United States Dollars
	Quarter 1	Quarter 2	Quarter 3	Quarter 4	F2020
	$ '000	$ '000	$ '000	$ '000	$ '000
Revenues
Processing	28,295	25,022	22,078	16,391	91,786
IPG	793	432	1,164	921	3,310
All Other	27,502	24,590	20,914	15,470	88,476
Financial services	14,168	12,268	11,683	8,751	46,870
Technology and Other	7,209	4,890	4,040	1,932	18,071
Subtotal: Operating segments	49,672	42,180	37,801	27,074	156,727
Corporate/Eliminations	(3,456)	(3,262)	(3,187)	(2,523)	(12,428)
Total	46,216	38,918	34,614	24,551	144,299

Operating (loss) income
Processing	(5,505)	(5,848)	(12,394)	(10,089)	(33,836)
IPG	(1,973)	(2,920)	(3,175)	(4,280)	(12,348)
All Other	(3,532)	(2,928)	(9,219)	(5,809)	(21,488)
Financial services	345	(1,249)	(1,701)	(1,016)	(3,621)
Technology and Other	1,145	589	945	136	2,815
Subtotal: Operating segments	(4,015)	(6,508)	(13,150)	(10,969)	(34,642)
Corporate/Eliminations	(2,421)	(3,912)	(1,062)	(2,211)	(9,606)
Total	(6,436)	(10,420)	(14,212)	(13,180)	(44,248)

Income and expense items: $1 = ZAR	14.7520	14.6022	15.3667	17.2810	17.5686

(1) Revenues-Processing-All others has been restated for the error described in Note 1 to the unaudited condensed consolidated financial statements. There was no impact on operating loss as a result of the restatement.

~~Our corporate expenses decreased primarily due~~

Table 15	Fiscal 2019⁽¹⁾
	In United States Dollars
	Quarter 1	Quarter 2	Quarter 3	Quarter 4	F2019
	$ '000	$ '000	$ '000	$ '000	$ '000
Revenues
Processing	45,658	26,807	21,959	23,664	118,088
IPG	2,404	2,300	1,892	1,561	8,157
All Other	43,254	24,507	20,067	22,103	109,931
Financial services	25,442	11,779	10,550	9,263	57,034
Technology and Other	4,748	4,796	5,277	5,294	20,115
Subtotal: Operating segments	75,848	43,382	37,786	38,221	195,237
Corporate/Eliminations	(5,883)	(3,288)	(2,571)	(22,860)	(34,602)
Total	69,965	40,094	35,215	15,361	160,635

Operating (loss) income
Processing	(7,091)	(23,481)	(15,431)	(5,572)	(51,575)
IPG	(2,238)	(9,425)	(1,877)	(2,561)	(16,101)
All Other	(4,853)	(14,056)	(13,554)	(3,011)	(35,474)
Financial services	4,038	(25,144)	(4,477)	(4,485)	(30,068)
Technology and Other	210	335	164	(6,003)	(5,294)
Subtotal: Operating segments	(2,843)	(48,290)	(19,744)	(16,060)	(86,937)
Corporate/Eliminations	(4,492)	(3,175)	(4,032)	(36,296)	(47,995)
Total	(7,335)	(51,465)	(23,776)	(52,356)	(134,932)

Income and expense items: $1 = ZAR	14.8587	14.3236	14.1703	14.2884	14.2695

(1) Revenues-Processing-All others has been restated for the error described in Note 1 to ~~lower acquired intangible asset amortization expense related to intangible assets that were fully amortized during fiscal 2019, partially offset by higher transaction-related expenditures.~~the unaudited condensed consolidated financial statements. There was no impact on operating loss as a result of the restatement.

Liquidity and Capital Resources

At December 31, ~~2019,~~2020, our cash and cash equivalents were ~~$50.7~~$206.3 million and comprised of ~~KRW-denominated~~U.S. dollar-denominated balances of ~~KRW 36.2 billion ($31.3 million),~~$156.8 million, ZAR-denominated balances of ZAR ~~197.0 million~~0.7 billion ($~~14.0~~45.5 million), ~~U.S. dollar-denominated balances of $1.8 million,~~ and other currency deposits, primarily Botswana pula, of ~~$3.6~~$3.9 million, all amounts translated at exchange rates applicable as of December 31, ~~2019.~~2020. The ~~increase~~decrease in our unrestricted cash balances from June 30, ~~2019,~~2020, was primarily due to ~~utilization~~the payment of Federal income taxes, weak trading activities and an increase in our ~~short-term borrowings and repayment of a loan outstanding by DNI,~~lending book, which was partially offset by ~~weaker trading activities, capital expenditures,~~the receipt of the outstanding proceeds related to the sale of our Korean business and ~~an additional investment~~the receipt of the outstanding loan related to the disposal of our remaining interest in ~~V2.~~DNI.

We generally invest any surplus cash held by our South African operations in overnight call accounts that we maintain at South African banking institutions, and any surplus cash held by our non-South African companies in U.S. dollar denominated money market accounts. ~~We have invested surplus cash in Korea in KRW-dominated short-term investment accounts at Korean banking institutions.~~

Historically, we have financed most of our operations, research and development, working capital, and capital expenditures, as well as acquisitions and strategic investments, through internally generated cash and our financing facilities. When considering whether to borrow under our financing facilities, we consider the cost of capital, cost of financing, opportunity cost of utilizing surplus cash and availability of tax efficient structures to moderate financing costs. ~~Recently, we have been required to utilize~~

Available short-term borrowings

Summarized below are our short-term ~~financing~~ facilities ~~to fund our daily cash requirements~~available and utilized as ~~we adapt to the expiration~~ of the SASSA contract in September 2018 and the transition of our business model. The board is actively managing our liquidity in the light of the significant changes underway in our business and we currently believe that our cash and credit facilities are sufficient to fund our future operations for at least the next four quarters.December 31, 2020:

~~Consideration of going concern~~

Table 16	RMB		Nedbank
	$ ’000	ZAR ’000	$ ’000	ZAR ’000
Total short-term facilities available, comprising:
Overdraft	-	-	3,410	50,000
Overdraft restricted as to use⁽¹⁾	81,852	1,200,000	17,052	250,000
Total overdraft	81,852	1,200,000	20,462	300,000
Indirect and derivative facilities⁽²⁾	-	-	10,848	159,037
Total short-term facilities available	81,852	1,200,000	31,310	459,037

Utilized short-term facilities:
Overdraft restricted as to use⁽¹⁾	53,734	787,779	7,069	103,632
Indirect and derivative facilities⁽²⁾	-	-	10,679	156,556

RMB interest rate, based on South African prime rate		7.00%
Interest rate, based on South African prime rate less 1.15%				5.85%

Accounting guidance requires our management to assess whether there are conditions or events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after our unaudited condensed consolidated financial statements are issued. Our management has identified certain conditions or events, which, considered in the aggregate, could raise substantial doubt about our ability to continue as a going concern including the risk that we will be unable to:

~~deliver all or a substantial part of the financial results forecast in our fiscal 2020 budget;~~
retain our existing borrowings and facilities, as described below and in Note 10 of our condensed consolidated financial statements, or obtain additional borrowings and facilities on commercially reasonable terms;
arrive at a commercial settlement with SASSA, given the September 30, 2019, Supreme Court ruling regarding the repayment of the additional implementation costs received to SASSA (refer Note 11 of our condensed consolidated financial statements) and the ongoing dispute we have with SASSA over fees due for the six-month contract extension period in accordance with National Treasury's recommendation;
dispose of all or a portion of our remaining 30% interest in DNI. DNI's operations are also significantly dependent on Cell C because it is the largest distributor of Cell C starter packs in South Africa. Therefore, the inability of Cell C to continue to operate through the next 12 months could also have an adverse impact on DNI's operations; or
~~dispose of additional investments in order to realize sufficient cash flows.~~

Our management has implemented a number of plans to alleviate the substantial doubt about our ability to continue as a going concern. These plans include disposing of our Korean business unit, KSNET, as announced in our press release of January 27, 2020, certain non-core assets (refer to Note 3 of our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended June 30, 2019, for additional information regarding a call option granted to DNI), and extending our existing borrowings used to fund our ATMs through September 2020. Provided the KSNET disposal closes, as expected, in March 2020, this is expected to remove the substantial doubt about our ability to continue as a going concern.

In addition, our management believes there are a number of mitigating actions it can pursue, including (i) limiting the expansion of our microlending finance loans receivable book in South Africa; (ii) implementing further cost cutting measures; (iii) commencing additional asset realizations; (iv) managing our capital expenditures; and (v) accessing alternative sources of capital (including through the issuance of additional shares of our common stock), in order to generate additional liquidity. Our management believes that these plans and mitigating actions alleviate the substantial doubt referred to above and, therefore, has concluded that we remain a going concern.

~~Available short-term borrowings~~

We have a short-term South African credit facility with Nedbank of up to ZAR 450.0 million ($32.0 million), which is comprised of an overdraft facility of (i) up to ZAR 300.0 million ($21.4 million), which is further split into (a) a ZAR 250.0 million ($17.8 million) overdraft facility which(1) Overdraft may only be used to fund mobile ATMs and ~~(b) a ZAR 50.0 million ($3.6 million) general banking facility and (ii) indirect~~upon utilization is considered restricted cash.

(2) Indirect and derivative facilities ~~of up to ZAR 150.0 million ($10.7 million), which include letters of guarantee,~~may only be used for guarantees, letters of credit and forward exchange contracts. The ZAR 250.0 million component of the primary amount may only be used to fund ATMs and therefore this component of the primary amount utilized and converted to cash to fund our ATMs is considered restricted cash. As of December 31, 2019, the interest rate on the overdraft facility was 8.85%, and reduced to 8.60% on January 17, 2020, following a reduction in the South African repo rate. As of December 31, 2019, we had utilized approximately ZAR 164.3 million ($11.7 million) of our ZAR 250.0 million overdraft facility to fund ATMs, and none of our ZAR 50.0 million general banking facility. As of December 31, 2019, we had utilized approximately ZAR 93.6 million ($6.7 million) of the indirect and derivative facilitiescontracts to support guarantees issued by Nedbank to various third parties on our behalf.

We also have a short-term South African credit facility with RMB of ZAR 1.2 billion ($85.4 million) which may only be used to fund our fixed ATMs in South Africa. As of December 31, 2019, the interest rate on the facility was 10.00% (South African prime) and reduced to 9.75% on January 17, 2020, following a reduction in the South African repo rate. As of December 31, 2019, we had utilized approximately ZAR 1.0 billion ($72.7 million) of this facility.

We have a short-term U.S. dollar-denominated overdraft facility with Bank Frick of $20.0 million. As of December 31, 2019, we had utilized approximately $13.9 million of this facility. The interest rate on the facility is 4.50% plus 3-month US dollar LIBOR and interest is payable on a quarterly basis. The 3-month US dollar LIBOR rate was 1.91% on December 31, 2019. The facility has no fixed term, however, it may be terminated by either party with six weeks written notice.

We also have a one-year KRW 10.0 billion ($8.7 million) short-term overdraft facility from Hana Bank, a South Korean bank. The interest rate on the facilities is 1.98% plus the 3-month CD rate. The 3-month CD rate as of December 31, 2019 was 1.53%. The facility expires in January 2021, however can be renewed. The facility is unsecured with no fixed repayment terms. As of December 31, 2019, we had not utilized this facility.

~~Available long-term borrowings~~

On September 4, 2019, we further amended our amended July 2017 Facilities agreement with RMB and Nedbank to include an overdraft facility ("Facility F") of up to ZAR 300.0 million ($21.4 million, translated at exchange rates applicable as of December 31, 2019) for the sole purpose of funding the acquisition of airtime from Cell C. We may not dispose of the airtime acquired from Cell C prior to April 1, 2020, without the prior consent of RMB, Absa Bank Limited and Investec Asset Management Proprietary Limited. Facility F comprises (i) a first Senior Facility F loan of ZAR 220.0 million (ii) a second Senior Facility F loan of ZAR 80.0 million, or such lesser amount as may be agreed by the facility agent. Facility F is required to be repaid in full within nine months following the first utilization of the facility. We are required to prepay Facility F and any outstanding interest subject to customary prepayment terms. In December 2019, we disposed of our entire shareholding in FIHRST and used the proceeds from the disposal to prepay interest and principal outstanding on Facility F. Outstanding interest on Facility F is payable upon maturity of the facility and is calculated based on JIBAR plus a margin of 5.50% per annum. JIBAR was 6.80% on December 31, 2019. The margin on the Facility F increased by 1% on November 1, 2019, because we had not disposed of our remaining shareholding in DNI and FIHRST by that date.

Restricted cash

We have credit facilities with RMB and Nedbank in order to access cash to fund our ATMs in South Africa. Our cash, cash equivalents and restricted cash presented in our unaudited condensed consolidated statement of cash flows as of December 31, ~~2019,~~2020, includes restricted cash of approximately ~~$84.4~~$60.8 million related to cash withdrawn from our various debt facilities to fund ATMs. This cash may only be used to fund ATMs and is considered restricted as to use and therefore is classified as restricted cash on our ~~audited~~unaudited condensed consolidated balance sheet.

Cash flows from operating activities

Second quarter

Net cash used in operating activities during the second quarter of fiscal 2021 was $12.0 million (ZAR 185.3 million) compared to net cash provided by operating activities of $4.4 million (ZAR 64.5 million) during the second quarter of fiscal 2020. Excluding the impact of income taxes, our cash used in operating activities during the second quarter of fiscal 2021 was impacted by the cash losses incurred by the majority of our continuing operations and the growth in our lending book. Our net cash provided by operating activities during the second quarter of fiscal 2020 ~~was $4.4 million (ZAR 64.5 million) compared to $(5.2) million (ZAR (75.0) million) of net cash used in operating activities during~~includes the second quarter of fiscal 2019. The increase in cash provided is primarily due to the repayment of finance loans receivable at the end of December 2019. These finance loans receivable are typically settled at the beginning of the new month (in this case January 2020) but were settled in December 2019, due to the opening of the January 2020 grant distribution file in December 2019.contribution from our Korean operations.

During the second quarter of fiscal ~~2020,~~ 2021, we paid our first provisional South African tax payments of $0.7 million (ZAR 10.1 million) related to our 2021 tax year. During the second quarter of fiscal 2020, we paid our first provisional South African tax payments of $0.7 million (ZAR 10.7 million) related to our 2020 tax year. We also paid taxes totaling $1.3 million in other tax jurisdictions, primarily South Korea. During the second quarter of fiscal 2019, we paid South African tax of $6.2 million (ZAR 89.1 million) related to our 2019 tax year. We also paid taxes totaling $2.6 million in other tax jurisdictions, primarily South Korea.

Taxes paid during the second quarter of fiscal ~~2020~~2021 and ~~2019~~2020 were as follows:

Table 13 Three months ended December 31,
2019 2018 2019 2018
$ $ ZAR ZAR
'000 '000 '000 '000
First provisional payments 740 6,245 10,657 89,144
Tax refund received - (34 ) - (475 )
Total South African taxes paid 740 6,211 10,657 88,669
Foreign taxes paid: Korea 1,264 2,568 18,205 36,624
Total tax paid 2,004 8,779 28,862 125,293

Table 17
Three months ended December 31,

2020

2019

2020

2019
$
$
ZAR
ZAR
‘000
‘000
‘000
‘000
First provisional payments
677

740

10,084

10,657
Total South African taxes paid
677

740

10,084

10,657
Foreign taxes paid
88

1,264

1,391

18,205
Total tax paid
765

2,004

11,475

28,862
We expect to pay additional provisional payments in South Africa of approximately $0.2 million (ZAR 2.4 million translated at exchange rates applicable as of December 31, 2020) related to our 2021 tax year in the third quarter of fiscal 2021.

First half

Net cash used in operating activities during the first half of fiscal ~~2020~~ 2021 was ~~$(13.9)~~$41.9 million (ZAR ~~(200.5)~~689.3 million) compared to ~~$11.2~~$13.9 million (ZAR ~~160.9~~200.5 million) ~~provided by~~during the first half of fiscal 2020. Excluding the impact of income taxes, our cash used in operating activities during the first half of fiscal ~~2019. The change is primarily due to weaker trading activity during fiscal 2020 compared to 2019, as well as~~2021 was impacted by the ~~purchase~~cash losses incurred by the majority of ~~$12.3 million of Cell C prepaid airtime that is subject to sale restrictions utilizing~~ our ~~borrowings (refer below under financial activities and to Note 4 to our unaudited condensed consolidated financial statements),~~continuing operations, which was partially offset by the ~~repayment~~unwind in our lending book during the quarter. Our net cash used in operating activities during the first half of ~~finance loans receivable at~~fiscal 2020 includes the ~~end of December 2019.~~contribution from our Korean operations.

During the first half of fiscal ~~2020,~~ 2021, we paid our first provisional South African tax payments of $0.7 million (ZAR 10.1 million) related to our 2021 tax year. During the first half of fiscal 2021, we paid South African tax of $0.2 million (ZAR 3.4 million) related to our 2020 tax year. We also paid taxes totaling $15.3 million in other tax jurisdictions, primarily in the U.S. During the first half of fiscal 2020, we paid our first provisional South African tax payments of $0.7 million (ZAR 10.7 million) related to our 2020 tax ~~year and~~year. During the first half of fiscal 2020, we paid South African tax of $0.8 million (ZAR 11.6 million) related to our 2019 tax year. We also paid taxes totaling $2.4 million in other tax jurisdictions, primarily South Korea. ~~During~~

Taxes paid during the first half of fiscal 2019, we paid South African tax of $6.2 million (ZAR 89.1 million) related to our 2019 tax year. During the first half of fiscal 2019, we made an additional tax payment of $1.4 million (ZAR 20.5 million) related to our 2018 tax year in South Africa. We also paid taxes totaling $2.6 million in other tax jurisdictions, primarily South Korea.

~~Taxes paid during the year to date fiscal~~ ~~2020~~2021 and ~~2019~~2020 were as follows:

Table 14 Six months ended December 31,
2019 2018 2019 2018
$ $ ZAR ZAR
'000 '000 '000 '000
First provisional payments 740 6,245 10,657 89,144
Taxation paid related to prior years 782 1,399 11,620 20,488
Tax refund received (28 ) (96 ) (392 ) (1,377 )
Total South African taxes paid 1,494 7,548 21,885 108,255
Foreign taxes paid: Korea 2,393 2,574 34,112 36,712
Total tax paid 3,887 10,122 55,997 144,967

Table 18
Six months ended December 31,

2020

2019

2020

2019
$
$
ZAR
ZAR
‘000
‘000
‘000
‘000
First provisional payments
677

740

10,084

10,657
Taxation paid related to prior years
205

782

3,423

11,620
Tax refund received
(12)

(28)

(205)

(392)
Total South African taxes paid
870

1,494

13,302

21,885
Foreign taxes paid
15,301

2,393

255,841

34,112
Total tax paid
16,171

3,887

269,143

55,997
Cash flows from investing activities

Second quarter

Cash used in investing activities for the second quarter of fiscal 2021 included capital expenditures of $3.0 million (ZAR 46.8 million), primarily due to the acquisition of motor vehicles, which largely comprises a fleet of customized mobile ATMs used to deliver a service to rural communities. During the second quarter of fiscal 2021 we received the outstanding amounts due on the deferred sale proceeds related to the April 2020 sale of DNI, which has now been paid in full. We also extended loan funding of $1.0 million to V2 and $0.2 million to Revix.

Cash used in investing activities for the second quarter of fiscal 2020 included capital expenditures of $0.8 million (ZAR 12.1 million), primarily due to the acquisition of processing equipment in South Korea to maintain operations. During the second quarter of fiscal 2020, we received $10.9 million from the sale of FIHRST. We also extended loan funding of $0.6 million to Revix.

Cash used in investing activities for the second quarter of fiscal 2019 included capital expenditures of $2.5 million (ZAR 36.5 million), primarily due to the acquisition of ATMs in South Africa and the expansion of our branch network. We also paid $2.5 million for a 50% interest in V2 Limited, acquired customer bases in DNI for $1.4 million, and made a further equity contribution of $1.1 million to MobiKwik.

6055

First half

Cash used in investing activities for the first half of fiscal ~~2020~~ 2021 included capital expenditures of ~~$3.5~~$3.0 million (ZAR ~~49.7~~46.8 million), primarily due to the acquisition of motor vehicles, which largely comprises a fleet of customized mobile ATMs used to deliver a service to rural communities, computer equipment and leasehold improvements in South Africa. We received $20.1 million related to the sale of our Korean business in March 2020 following the successful refund application of the amounts withheld and paid to the South Korean tax authorities pursuant to that transaction. We received the amount due on the deferred sale proceeds related to the April 2020 sale of DNI, which has now been paid in full. We also extended loan funding of $1.0 million to V2 and $0.2 million to Revix.

Cash used in investing activities for the first half of fiscal 2020 included capital expenditures of $0.8 million (ZAR 12.1 million), primarily due to the acquisition of ATMs in South Africa and processing equipment in South Korea to maintain operations. During the first half of fiscal 2020, we received $10.9 million from the sale of FIHRST. We also made a further equity contribution of $1.3 million to V2, extended loan funding of $0.6 million to Revix, and received $4.3 million from DNI related to the settlement of a ZAR 60.0 million loan outstanding.

Cash used in investing activities for the first half of fiscal 2019 included capital expenditures of $5.7 million (ZAR 81.2 million), primarily due to the acquisition of ATMs in South Africa and the expansion of our branch network. We also paid $2.5 million for a 50% interest in V2 Limited, acquired customer bases in DNI for $1.4 million, and made a further equity contribution of $1.1 million to MobiKwik.

Cash flows from financing activities

Second quarter

During the second quarter of fiscal 2021, we utilized approximately $137.3 million from our South African overdraft facilities to fund our ATMs and repaid $88.3 million of these facilities.

During the second quarter of fiscal 2020, we utilized approximately $200.7 million from our South African overdraft facilities, primarily to fund our ATMs, and repaid $193.8 million of these facilities. We prepaid approximately $11.3 million of ~~Facility F~~borrowings (Facility F) utilizing the proceeds received from the disposal of FIHRST. We also utilized $7.2 million of our Bank Frick overdraft to fund our operations.

First half

During the ~~second quarter~~first half of fiscal ~~2019,~~2021, we utilized approximately ~~$221.6~~$206.5 million from our South African overdraft facilities ~~primarily~~ to fund our ATMs and repaid ~~$245.7~~$165.1 million of these facilities, including amounts utilized in September 2018. We also utilized approximately $3.2 million of DNI's revolving credit facility to lend funds to Cell C to finance the acquisition and/or requisition of telecommunication towersand other specific uses pre-approved by the lender. We also made a scheduled South African debt facility payment of $10.6 million and paid a non-refundable origination fee of approximately $0.2 million related to DNI's revolving credit facility.facilities.

~~First half~~

During the first half of fiscal 2020, we utilized approximately $383.2 million from our South African overdraft facilities, primarily to fund our ATMs, and repaid $374.6 million of these facilities. We utilized approximately $14.8 million of our borrowings to fund the purchase of Cell C prepaid airtime that iswas subject to sale restrictions. We prepaid approximately $11.3 million of these borrowings (Facility F) utilizing the proceeds received from the disposal of FIHRST. We also repaid $4.0 million of our Bank Frick overdraft and utilized $8.4 million of this overdraft to fund our operations.

During the first half of fiscal 2019, we utilized approximately $306.2 million from our overdraft facilities, primarily to fund our ATMs, and repaid $245.7 million of these facilities. We also utilized approximately $11.0 million of DNI's revolving credit facility to lend funds to Cell C to finance the acquisition and/or requisition of telecommunication towers and other specific uses pre-approved by the lender. We also made a scheduled South African debt facility payment of $20.9 million, repaid $2.8 million under DNI's revolving credit facility and paid non-refundable origination fees of approximately $0.4 million related to the credit facilities.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Capital Expenditures

We expect capital spending for the third quarter of fiscal ~~2020~~2021 to primarily include limited investments into our ATM infrastructure and branch network in South Africa.

Our capital expenditures for the second quarter of fiscal ~~2020~~2021 and ~~2019~~2020 are discussed under ~~"-Liquidity~~“—Liquidity and Capital ~~Resources-Cash~~Resources—Cash flows from investing activities."” All of our capital expenditures for the past three fiscal years were funded through internally generated funds. We had outstanding capital commitments as of December 31, ~~2019,~~2020, of ~~$0.1 million related mainly to the procurement of ATMs.~~$0.6 million. We expect to fund these expenditures through internally generated funds and available facilities.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

In addition to the tables below, see Note 75 to the unaudited condensed consolidated financial statements for a discussion of market risk.

We have short-term borrowings which attract interest at rates that fluctuate based on changes in ~~benchmark interest rates such as~~ the South ~~Africa~~African prime interest ~~rate, JIBAR and LIBOR.~~rate. The following table illustrates the effect on our annual expected interest charge, translated at exchange rates applicable as of December 31, ~~2019,~~2020, as a result of changes in ~~(i)~~ the South African prime interest rate, assuming hypothetical short-term borrowings of ZAR 1.0 billion as of December 31, ~~2019, and (ii) JIBAR, using our December 31, 2019, borrowings of ZAR 57.1 million.~~2020. The effect of a hypothetical 1% (i.e. 100 basis points) increase and a 1% decrease in the South African prime interest rate ~~and JIBAR rate~~ as of December 31, ~~2019,~~2020, are shown. The selected 1% hypothetical change does not reflect what could be considered the best or worst case scenarios.

Table 15 As of December 31, 2019
Annual expected interest charge
($ '000) Hypothetical change in interest rates Estimated annual expected interest charge after hypothetical change in interest rates
($ '000)
Interest on South Africa overdraft (South African prime interest rate) 7,118 1% 7,830
(1%) 6,406

Interest on South Africa borrowings (JIBAR) 500 1% 540
(1%) 459

Table 19	As of September 30, 2020
	Annual expected interest charge ($ ’000)	Hypothetical change in interest rates	Estimated annual expected interest charge after hypothetical change in interest rates ($ ’000)
Interest on South Africa overdraft (South African prime interest rate)	4,775	1%	5,457

Item 4. Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, ~~(the "Exchange Act"),~~ as of December 31, ~~2019.~~2020. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, and in light of the insufficient ~~time~~instances to assess the effectiveness of the procedures we have adopted to remediate the material weakness ~~discussed~~in our internal control over financial reporting in our Annual Report on Form 10-K for our fiscal year ended June 30, ~~2019,~~2020, our interim chief executive ~~officer and the chief financial~~ officer concluded that our disclosure controls and procedures were not effective as of December 31, ~~2019.~~2020.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the most recent fiscal quarter ended December 31, ~~2019,~~2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We continue to monitor the effectiveness of our internal control over financial reporting in the areas affected by the material weakness described in our Annual Report on Form 10-K for our fiscal year ended June 30, ~~2019,~~2020, and we have and will continue to perform additional procedures, including the use of manual mitigating control procedures and employing any additional tools and resources deemed necessary, to ensure that our consolidated financial statements are fairly stated in all material respects.

Part II. Other Information

Item 1. Legal Proceedings

Withdrawal of legal proceedings against a PG Purchasing customer regarding non-payment of working capital finance loans receivable

In January 2019, we filed a Petition with the District Court of Dallas County, Texas (“Texas district court lawsuit”), naming Permian Crude Transport, LP, f/k/a Permian Crude Transport, LLC, d/b/a Permian Transport & Trading (“PCT”), and Centurion Marketing, LLC d/b/a Jupiter Marketing & Trading, LLC (“Centurion” and collectively with PCT, “PCT/Centurion”) as defendants regarding the recovery of working capital finance loans receivable made to PCT/Centurion by our wholly-owned subsidiary, PG Purchasing. This lawsuit was in its initial stages and trial was set for December 5,2, 2019. However, the Texas district court lawsuit was administratively closed following PCT’s filing for bankruptcy in June 2019 ~~securities class action complaint~~and Centurion’s filing for bankruptcy in July 2019. The Texas district court lawsuit may be re-opened if the PCT/Centurion bankruptcy matters are lifted.

However, on December ~~5, 2019,~~3, 2020, we filed a ~~putative securities class action complaint was filed in~~notice with the United States ~~District~~Bankruptcy Court for the ~~Southern~~Northern District of ~~New York against~~Texas, Dallas Division withdrawing our company, Herman G. Kotzé and Alex M.R. Smith. The complaint seeks damages based on alleged material misrepresentations and omissions concerning our internal controls over financial reporting, classification of an investment in Cell C Proprietary Limited, and our company's consolidated financial statements for fiscal 2018. The complaint asserts claims for violations of Sections 10(b)claim as we do not believe we will be able to successfully recover all or a part of the ~~Exchange Act~~receivable outstanding within a reasonable period of time and ~~Rule 10b-5,~~without further undue cost and ~~Section 20(a) of the Exchange Act. The proposed class period is September 12, 2018, through November 8, 2018, inclusive. None of the defendants have been served.~~effort.

~~Item 1A. Risk Factors~~

See "Item 1A RISK FACTORS" in Part I of our Annual Report on Form 10-K for the fiscal year ended June 30, 2019, for a discussion of risk factors relating to (i) our business, (ii) operating in South Africa and other foreign markets, (iii) government regulation, and (iv) our common stock. Except as set forth below, there have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2019.

~~We may be unable to recover the carrying value of certain Cell C airtime that we own which is subject to resale restrictions.~~

In September 2019, we acquired a substantial amount of Cell C airtime inventory ($13.7 million translated at exchange rates applicable as of December 31, 2019). The terms of our South African borrowings, as amended, provide that we may not sell this inventory until after March 31, 2020, and then only with the consent of certain South African banks, which also own Cell C inventory. We may be unable to recover the carrying value of this airtime inventory as a result of the business failure of Cell C or if the South African banks that are required to approve the sale of our Cell C restricted airtime fail to approve the sale for any reason. Failure to recover the carrying value of this inventory may have a material adverse effect on our results of operations or financial condition.

~~Item 5. Other Information~~

Subsequent to the issuance of our Form 10-K for the year ended June 30, 2019 and our Form 10-Qs for the three months ended September 30, 2019 and the three and nine months ended March 31, 2019, we determined that our presentation of the discontinued operations of DNI-4PL Contracts Proprietary Limited, or DNI, in the condensed consolidated statements of operations included in those filings was incorrect. In these previous filings, the gross amounts of DNI's operations upon classification as a discontinued operation remained in the condensed consolidated statements of operations which totalled to net (loss) income. Two captioned lines below net (loss) income were presented to show the composition of the net (loss) income between continuing and discontinued operations and the details of amounts relating to DNI's discontinued operations were separately disclosed in a note. The correct presentation removes the gross amounts of a discontinued operation from the condensed consolidated statements of operations, which totals to the net (loss) income from continuing operations before presenting net income from discontinued operations and then totalling to net (loss) income.

We will revise the above referenced previous presentations on the condensed consolidated statements of operations to correct them in future filings the next time these amounts are presented as comparative prior period amounts. The impact of these revisions will reduce each of the previously presented line items in the condensed consolidated statements of operations preceding net income by the amounts shown in the note disclosure for DNI's discontinued operations. The revisions will have no effect on previously presented net (loss) income, net (loss) income for continuing operations, net income from discontinued operations or the note disclosures for DNI's discontinued operations.

We further considered the impact on our control environment and note that the control designed to detect and prevent the misstatement was considered to be ineffective and remains unremediated. A material weakness was reported at June 30, 2019. Refer to Item 4-"Controls and Procedures" for further information.

Item 6. Exhibits

The following exhibits are filed as part of this Form 10-Q:

			~~Incorporated by Reference Herein~~
~~Exhibit No.~~	~~Description of Exhibit~~	~~Included Herewith~~	~~Form~~	~~Exhibit~~	~~Filing Date~~

~~31.1~~	~~Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under the Exchange Act~~	X
~~31.2~~	~~Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Exchange Act~~	X
32	~~Certification pursuant to 18 USC Section 1350~~	X
~~101.INS~~	~~XBRL Instance Document~~	X
~~101.SCH~~	~~XBRL Taxonomy Extension Schema~~	X
~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Linkbase~~	X
~~101.DEF~~	~~XBRL Taxonomy Extension Definition Linkbase~~	X
~~101.LAB~~	~~XBRL Taxonomy Extension Label Linkbase~~	X
~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase~~	X

~~SIGNATURES~~

			Incorporated by Reference Herein
Exhibit No.	Description of Exhibit	Included Herewith	Form	Exhibit	Filing Date

10.30	Amendment No. 1 to Cooperation Agreement, dated December 9, 2020, by and between Net 1 UEPS Technologies, Inc. and Value Capital Partners (Pty) Ltd	X	8-K	10.1	December 10, 2020
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under the Exchange Act	X
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Exchange Act	X
32	Certification pursuant to 18 USC Section 1350	X
101.INS	XBRL Instance Document	X
101.SCH	XBRL Taxonomy Extension Schema	X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase	X
101.DEF	XBRL Taxonomy Extension Definition Linkbase	X
101.LAB	XBRL Taxonomy Extension Label Linkbase	X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase	X

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February ~~10, 2020.~~4, 2021.

NET 1 UEPS TECHNOLOGIES, INC.

~~By: /s/ Herman G. Kotzé~~

~~Herman G. Kotzé~~
~~Chief Executive Officer~~

By: /s/ Alex M.R. Smith

Alex M.R. Smith

Interim Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary

6458

	For the six months ended December 31, 2018 (dollar amounts in thousands)
Balance - July 1, 2018	81,577,217	$	80	(24,891,292	)	$	(286,951	)	56,685,925	$	276,201	$	836,194		$	(184,538	)	$	640,986		$	95,911		$	736,897		$	107,672

Restricted stock granted	148,000								148,000										-						-
Stock-based compensation charge (Note 14)											1,185								1,185						1,185
Stock-based compensation charge related to equity accounted investment											77								77						77
Dividends paid to non-controlling interest																			-			(2,937	)		(2,937	)
Net (loss) income													(69,140	)					(69,140	)		3,067			(66,073	)
Other comprehensive loss (Note 13)																(13,836	)		(13,836	)		(4,409	)		(18,245	)
Balance - December 31, 2018	81,725,217	$	80	(24,891,292	)	$	(286,951	)	56,833,925	$	277,463	$	767,054		$	(198,374	)	$	559,272		$	91,632		$	650,904		$	107,672

	For the six months ended December 31, 2019 (dollar amounts in thousands)
Balance - July 1, 2019	81,459,717	$	80	(24,891,292	)	$	(286,951	)	56,568,425	$	276,997	$	528,576		$	(199,273	)	$	319,429		$	-	$	319,429		$	107,672
Stock-based compensation charge (Note 14)											823								823					823
Stock-based compensation charge related to equity accounted investment (Note 7)											71								71					71
Net loss													(4,597	)					(4,597	)		-		(4,597	)
Other comprehensive income (Note 13)																4,834			4,834			-		4,834
Balance - December 31, 2019	81,459,717	$	80	(24,891,292	)	$	(286,951	)	56,568,425	$	277,891	$	523,979		$	(194,439	)	$	320,560		$	-	$	320,560		$	107,672

See Notes to Unaudited Condensed Consolidated Financial Statements

		Revenue (as restated)
		Reportable Segment		Inter-segment		From external customers

Processing - as restated⁽¹⁾		$	22,506	$	988	$	21,518
	As reported		24,483		988		23,495
	Correction		(1,977)		0		(1,977)
Total for the three months ended September 30, 2020 - as restated			36,982		1,846		35,136
	As reported		38,959		1,846		37,113
	Correction		(1,977)		0		(1,977)

Processing - as restated		$	25,022	$	2,175	$	22,847
	As reported		26,671		2,175		24,496
	Correction		(1,649)		0		(1,649)
Total for the three months ended December 31, 2019 - as restated			42,180		3,262		38,918
	As reported		43,829		3,262		40,567
	Correction		(1,649)		0		(1,649)

Processing - as restated		$	53,317	$	4,377	$	48,940
	As reported		56,688		4,377		52,311
	Correction		(3,371)		0		(3,371)
Total for the six months ended December 31, 2019 - as restated			91,852		6,718		85,134
	As reported		95,223		6,718		88,505
	Correction	$	(3,371)	$	0	$	(3,371)

Sensitivity for fair value of Cell C investment		2.0% increase(A)		2.0% decrease(A)
WACC rate	$	-	$	8,238
EBITDA margin	$	1,687	$	-

		Quoted Price in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets
Investment in Cell C	$	-	$	-	$	-	$	-
Related to insurance business:
Cash, cash equivalents and restricted cash (included in other long term assets)		587		-		-		587
Fixed maturity investments (included in cash and cash equivalents)		2,845		-		-		2,845
Other		-		414		-		414
Total assets at fair value	$	3,432	$	414	$	-	$	3,846

					DNI			Bank Frick			Finbond			Other⁽¹⁾			Total
Investment in equity
	Balance as of June 30, 2019				$	61,030		$	47,240		$	35,300		$	7,398		$	150,968
		Acquisition of shares				-			-			274			1,250			1,524
		Stock-based compensation				-			-			71			-			71
		Comprehensive income (loss):				1,108			469			2,718			(499	)		3,796
			Other comprehensive loss			-			-			2,227			-			2,227
			Equity accounted earnings (loss)			1,108			469			491			(499	)		1,569
				Share of net income		3,113			755			491			(499	)		3,860
				Amortization of acquired intangible assets		(1,292	)		(376	)		-			-			(1,668	)
				Deferred taxes on acquired intangible assets		361			90			-			-			451
				Impairment		(1,074	)		-			-			-			(1,074	)
		Dividends received				(1,110	)		-			(274	)		(338	)		(1,722	)
		Foreign currency adjustment⁽²⁾				137			453			300			(48	)		842
	Balance as of December 31, 2019				$	61,165		$	48,162		$	38,389		$	7,763		$	155,479

Investment in loans:
	Balance as of June 30, 2019				$	-		$	-		$	-		$	148		$	148
		Loans granted				-			-			-			612			612
		Allowance for doubtful loans				-			-			-			(620	)		(620	)
		Foreign currency adjustment⁽²⁾				-			-			-			8			8
	Balance as of December 31, 2019				$	-		$	-		$	-		$	148		$	148

											Equity				Loans			Total
Carrying amount as of :
		June 30, 2019									$	150,968		$	148		$	151,116
		December 31, 2019									$	155,479		$	148			155,627

(1) Includes primarily Carbon, SmartSwitch Namibia, V2 and Walletdoc;
(2) The foreign currency adjustment represents the effects of the fluctuations of the South African rand, Swiss franc, Nigerian naira and Namibian dollar, and the U.S. dollar on the carrying value.


					South African transaction processing			International transaction processing		Financial inclusion and applied technologies		Carrying value
Balance as of June 30, 2019				$	19,208		$	112,728	$	17,451	$	149,387
			Disposal of FIHRST (Note 2)		(599	)		-		-		(599	)
			Foreign currency adjustment ⁽¹⁾		23			83		44		150
		Balance as of December 31, 2019		$	18,632		$	112,811	$	17,495	$	148,938

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

			As of December 31, 2019							As of June 30, 2019
				Gross carrying value		Accumulated amortization			Net carrying value		Gross carrying value		Accumulated amortization			Net carrying value
Finite-lived intangible assets:
	Customer relationships		$	95,792	$	(89,273	)	$	6,519	$	96,653	$	(86,285	)	$	10,368
	Software and unpatented
	technology			28,883		(28,598	)		285		32,071		(31,829	)		242
	FTS patent			2,727		(2,727	)		-		2,721		(2,721	)		-
	Trademarks			6,784		(6,307	)		477		6,772		(6,265	)		507
	Total finite-lived intangible assets			134,186		(126,905	)		7,281		138,217		(127,100	)		11,117
Infinite-lived intangible assets:
	Financial institution licenses			762		-			762		772		-			772
	Total infinite-lived intangible assets			762		-			762		772		-			772

		Total intangible assets	$	134,948	$	(126,905	)	$	8,043	$	138,989	$	(127,100	)	$	11,889

Fiscal 2020		$	7,919
Fiscal 2021			2,807
Fiscal 2022			73
Fiscal 2023			73
Fiscal 2024			72
Thereafter			145
	Total future estimated annual amortization expense	$	11,089

				Reinsurance Assets ⁽¹⁾			Insurance contracts ⁽²⁾
Balance as of June 30, 2019			$	1,163		$	(1,880	)
	Increase in policy holder benefits under insurance contracts			220			(3,232	)
	Claims and policyholders' benefits under insurance contracts			(227	)		3,201
	Foreign currency adjustment ⁽³⁾			3			(5	)
		Balance as of December 31, 2019	$	1,159		$	(1,916	)

			Assets ⁽¹⁾				Investment contracts ⁽²⁾
Balance as of June 30, 2019			$	619		$	(619	)
	Increase in policy holder benefits under investment contracts			2			(2	)
	Claims and policyholders' benefits under investment contracts			(36	)		36
	Foreign currency adjustment ⁽³⁾			2			(2	)
		Balance as of December 31, 2019	$	587		$	(587	)

						South Africa						United States			South Korea		Total
						Amended July 2017			Nedbank			Bank Frick			Hana
Short-term facilities available as of
December 31, 2019					$	85,419		$	32,032		$	20,000		$	8,654	$	146,105
	Overdraft					-			3,559			20,000			8,654		32,213
	Overdraft restricted as to use for ATM funding only					85,419			17,796			-			-		103,215
	Indirect and derivative facilities					-			10,677			-			-		10,677

Movement in utilized overdraft facilities:
	Balance as of June 30, 2019					69,566			5,880			9,544			-		84,990
		Utilized				349,466			33,722			8,362			-		391,550
		Repaid				(346,525	)		(28,029	)		(4,000	)		-		(378,554	)
		Foreign currency adjustment⁽¹⁾				157			123			-			-		280
			Balance as of December 31, 2019⁽²⁾			72,664			11,696			13,906			-		98,266
				Restricted as to use for ATM funding only		72,664			11,696			-			-		84,360
				No restrictions as to use		-			-			13,906			-		13,906

Movement in utilized indirect and derivative
facilities:
	Balance as of June 30, 2019					-			6,643			-			-		6,643
		Foreign currency adjustment⁽¹⁾				-			17			-			-		17
			Balance as of December 31, 2019		$	-		$	6,660		$	-		$	-	$	6,660

			Three months ended
			December 31, 2018
				Accumulated foreign currency translation reserve			Total
Balance as of October 1, 2018			$	(189,630	)	$	(189,630	)
	Movement in foreign currency translation reserve			(8,744	)		(8,744	)
		Balance as of December 31, 2018	$	(198,374	)	$	(198,374	)


			Number of shares	Weighted average exercise price ($)	Weighted average remaining contractual term (in years)	Aggregate intrinsic value ($'000)	Weighted average grant date fair value ($)

Outstanding - June 30, 2020			1,331,651	5.83	7.56	0	2.01
	Granted - August 2020		150,000	3.50	3.00	166	1.11
	Granted - November 2020		560,000	3.01	10.00	691	1.23
	Exercised		(5,834)	3.07	-	21	0
	Forfeited		(456,033)	7.03	-	-	2.26
		Outstanding - December 31, 2020	1,579,784	4.28	8.04	2,104	1.59

Outstanding - June 30, 2019			864,579	7.81	7.05	-	2.62
	Granted – October 2019		561,000	3.07	10.00	676	1.20
		Outstanding - December 31, 2019	1,425,579	5.94	7.81	365	2.07


			Number of shares		Weighted average exercise price ($)	Weighted average remaining contractual term (in years)	Aggregate intrinsic value ($'000)	Weighted average grant date fair value ($)

Outstanding - June 30, 2019			864,579		7.81	7.05	-	2.62
	Granted - September 2019		561,000		3.07	10.00	676	1.20
		Outstanding - December 31, 2019	1,425,579		5.94	7.81	365	2.07

Outstanding - June 30, 2018			809,274		13.99	2.67	370	4.20
	Granted - September 2018		600,000		6.20	10.00	1,212	2.02
	Forfeited		(200,000	)	24.46	-	-	7.17
		Outstanding - December 31, 2018	1,209,274		8.41	6.15	72	2.62

	Number of shares			Weighted average exercise price ($)			Weighted average remaining contractual term (in years)			Aggregate intrinsic value ($'000)
Vested and expecting to vest - December 31, 2019	1,425,579			5.94			7.81			365

				Number of shares of restricted stock	Weighted average grant date fair value ($’000)




Non-vested – June 30, 2020				1,115,500	5,354
	Total vested			(311,300)	(1,037)
		Vested – August 2020		(244,500)	(812)
		Vested – September 2020 - accelerated vesting		(66,800)	(225)
Forfeitures				(510,200)	(1,766)
		Non-vested – December 31, 2020		294,000	994

Non-vested – June 30, 2019				583,908	3,410
			Non-vested – December 31, 2019	583,908	3,410

			Number of shares of restricted stock		Weighted average grant date fair value ($'000)




Non-vested - June 30, 2019			583,908		3,410
	Non-vested - December 31, 2019		583,908		3,410

Non-vested - June 30, 2018			765,411		6,162
Granted - September 2018			148,000		114
Vested - August 2018			(52,594	)	459
		Non-vested - December 31, 2018	860,817		5,785

			Total charge		Allocated to cost of goods sold, IT processing, servicing and support		Allocated to selling, general and administration
Three months ended December 31, 2020
	Stock-based compensation charge		$	246	$	-	$	246
	Reversal of stock compensation charge related to stock options and restricted stock forfeited			(14)		-		(14)
		Total - three months ended December 31, 2020	$	232	$	0	$	232

Three months ended December 31, 2019
	Stock-based compensation charge		$	436	$	-	$	436
		Total - three months ended December 31, 2019	$	436	$	0	$	436

					Allocated to cost of goods sold,		Allocated to
					IT processing,		selling, general
			Total		servicing and		and
			charge		support		administration
Three months ended December 31, 2019
Stock-based compensation charge		$	436	$	-	$	436
	Total - three months ended December 31, 2019	$	436	$	-	$	436

Three months ended December 31, 2018
Stock-based compensation charge		$	598	$	-	$	598
	Total - three months ended December 31, 2018	$	598	$	-	$	598

		December 31, 2019
		Three months ended		Six months ended
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,108	$	2,028

Right-of-use assets obtained in exchange of lease obligations
Operating leases	$	2,260	$	2,490

				South Africa		Korea		Rest of the world		Total
South African transaction processing
	Processing fees		$	17,035	$	-	$	-	$	17,035
	Other			1,136		-		-		1,136
		Subtotal		18,171		-		-		18,171
International transaction processing
	Processing fees			-		32,000		851		32,851
	Other			-		1,512		-		1,512
		Subtotal		-		33,512		851		34,363
Financial inclusion and applied technologies
	Telecom products and services			6,639		-		-		6,639
	Account holder fees			3,103		-		-		3,103
	Lending revenue			5,384		-		-		5,384
	Technology products			5,042		-		-		5,042
	Insurance revenue			1,372		-		-		1,372
	Other			6		-		-		6
		Subtotal		21,546		-		-		21,546

			$	39,717	$	33,512	$	851	$	74,080

	December 31,		��	June 30,
	2020			2020
Operating leases:
Operating lease right-of-use asset	$	5,112		$	5,395

Weighted average remaining lease term (years)		2.83			3.94
Weighted average discount rate (percent)		10			9

	December 31,
		2020
Maturities of operating lease liabilities
2021 (for December 31, 2020 excluding six months to December 31, 2020)	$	1,719
2022		2,401
2023		1,071
2024		573
2025		195
Thereafter		0
Total undiscounted operating lease liabilities		5,959
Less imputed interest		659
Total operating lease liabilities, included in		5,300
Operating lease liability - current		2,585
Operating lease liability - long-term	$	2,715

	December 31,			July 1,
		2019		2019
Operating lease right-of-use	$	7,838	$	6,739
Weighted average remaining lease term (years)		3.60		2.51
Weighted average discount rate		10%		10%

Maturities of operating lease liabilities
2020 (for December 31, 2019 excluding six months to December 31, 2019)	$	2,334	$	3,608
2021		3,281		2,395
2022		1,850		1,269
2023		1,011		454
2024		598		-
Thereafter		204		-
Total undiscounted operating lease liabilities		9,278		7,726
Less imputed interest		1,245		842
Total operating lease liabilities, included in		8,033		6,884
Operating lease right-of-use lease liability - current		3,534		5,098
Right-of-use operating lease liability - long-term	$	4,499	$	1,786

			Revenue (as restated)⁽¹⁾
			Reportable Segment			Inter-segment		From external customers

Processing			$	19,990	$	1,178	$	18,812
Financial services				9,709		814		8,895
Technology				4,609		11		4,598
	Total for the three months ended December 31, 2020		$	34,308	$	2,003	$	32,305

Processing⁽¹⁾			$	25,022	$	2,175	$	22,847
Financial services				12,268		951		11,317
Technology				4,890		136		4,754
		Total for the three months ended December 31, 2019	$	42,180	$	3,262	$	38,918


	Three months ended		Six months ended		Year end
Table 2	December 31,		December 31,		June 30,
	2019	2018	2019	2018	2019
Income and expense items: $1 = ZAR	14.6022	14.3236	14.4023	14.3378	14.2688
Income and expense items: $1 = KRW	1,174	1,124	1,184	1,122	1,136

Balance sheet items: $1 = ZAR	14.0483	14.3960	14.0483	14.3960	14.0840
Balance sheet items: $1 = KRW	1,155	1,114	1,155	1,114	1,156


Table 4	In South African Rand (US GAAP)
	Three months ended December 31,
	2019		2018^(A)		ZAR %
	ZAR '000		ZAR '000		change
Revenue	1,081,731		1,109,248		(2%)
Cost of goods sold, IT processing, servicing and support	630,231		590,576		7%
Selling, general and administration	487,611		998,784		(51%)
Depreciation and amortization	63,972		103,001		(38%)
Impairment loss	-		117,325		nm
Operating loss	(100,083	)	(700,438	)	(86%)
Change in fair value of equity securities	-		(226,829	)	nm
Gain on disposal of FIHRST	142,269		-		nm
Interest income	19,611		31,182		(37%)
Interest expense	47,034		36,711		28%
Impairment of Cedar Cellular note	-		39,132		nm
Income (Loss) before income taxes	14,763		(971,928	)	nm
Income tax expense (benefit)	25,145		(62,995	)	nm
Net loss before earnings (loss) from equity-accounted investments	(10,382	)	(908,933	)	(99%)
Earnings (Loss) from equity-accounted investments	7,389		(18,492	)	nm
Net loss from continuing operations	(2,993	)	(927,425	)	(100%)
Net income from discontinued operations	-		54,129		nm
Net (loss) income	(2,993	)	(873,296	)	(100%)
Less net income attributable to non-controlling interest	-		42,570		nm
Continuing	-		10,328		nm
Discontinued	-		32,242		nm
Net (loss) income attributable to us	(2,993	)	(915,866	)	(100%)
Continuing	(2,993	)	(937,753	)	(100%)
Discontinued	-		21,887		nm


Table 6	In United States Dollars (US GAAP)

	Three months ended December 31,
	2019		% of	2018		% of	% change
Operating Segment	$ '000		total	$ '000		total	% change
Consolidated revenue:
South African transaction processing	20,350		27%	21,970		23%	(7%)
International transaction processing	34,363		46%	38,124		39%	(10%)
Financial inclusion and applied technologies	21,986		30%	38,755		40%	(43%)
Continuing	21,986		30%	19,047		20%	15%
Discontinued	-		-	19,708		20%	nm
Subtotal: Operating segments	76,699		103%	98,849		102%	(22%)
Corporate/Eliminations	(2,619	)	(3%)	(1,699	)	(2%)	54%
Total consolidated revenue	74,080		100%	97,150		100%	(24%)
Continuing	74,080		100%	77,442		80%	(4%)
Discontinued	-		-	19,708		20%	nm
Consolidated operating (loss) income:							nm
South African transaction processing	(2,981	)	43%	(11,830	)	27%	(75%)
International transaction processing	2,811		(41%)	(4,043	)	9%	nm
Financial inclusion and applied technologies	(878	)	13%	(18,538	)	43%	(95%)
Continuing	(878	)	13%	(26,967	)	63%	(97%)
Discontinued	-		-	8,429		(20%)	nm
Subtotal: Operating segments	(1,048	)	15%	(34,411	)	79%	(97%)
Corporate/eliminations	(5,806	)	85%	(8,664	)	21%	(33%)
Continuing	(5,806	)	85%	(6,061	)	15%	(4%)
Discontinued	-		-	(2,603	)	6%	nm
Total consolidated operating (loss) income	(6,854	)	100%	(43,075	)	100%	(84%)
Continuing	(6,854	)	100%	(48,901	)	114%	(86%)
Discontinued	-		-	5,826		(14%)	nm

Table 7	In South African Rand (US GAAP)

	Three months ended December 31,
	2019		% of	2018		% of	% change
Operating Segment	ZAR '000		total	ZAR '000		total	% change
Consolidated revenue:
South African transaction processing	297,155		27%	314,689		23%	(6%)
International transaction processing	501,775		46%	546,073		39%	(8%)
Financial inclusion and applied technologies	321,044		30%	555,111		40%	(42%)
Continuing	321,044		30%	272,821		20%	18%
Discontinued	-		-	282,290		20%	nm
Subtotal: Operating segments	1,119,974		103%	1,415,873		102%	(21%)
Corporate/Eliminations	(38,243	)	(3%)	(24,335	)	(2%)	57%
Total consolidated revenue	1,081,731		100%	1,391,538		100%	(22%)
Continuing	1,081,731		100%	1,109,248		80%	(2%)
Discontinued	-		-	282,290		20%	nm
Consolidated operating (loss) income:							nm
South African transaction processing	(43,529	)	43%	(169,448	)	27%	(74%)
International transaction processing	41,047		(41%)	(57,910	)	9%	nm
Financial inclusion and applied technologies	(12,821	)	13%	(265,531	)	43%	(95%)
Continuing	(12,821	)	13%	(386,265	)	63%	(97%)
Discontinued	-		-	120,734		(20%)	nm
Subtotal: Operating segments	(15,303	)	15%	(492,889	)	79%	(97%)
Corporate/eliminations	(84,780	)	85%	(124,100	)	21%	(32%)
Continuing	(84,780	)	85%	(86,816	)	15%	(2%)
Discontinued	-		-	(37,284	)	6%	nm
Total consolidated operating (loss) income	(100,083	)	100%	(616,989	)	100%	(84%)
Continuing	(100,083	)	100%	(700,439	)	114%	(86%)
Discontinued	-		-	83,450		(14%)	nm