01 Chairman’s Report
02 Chief Executive’s Report
03 Directors’ Report
04 Independent Auditor’s Report
05 Consolidated Financial Statements
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
06 Governance and Disclosures
New Zealand Statutory Information
Additional Information for ASX Listed Companies
Company Directory
04
07
13
15
24
25
26
27
28
62
66
72
01
CHAIRMAN’S
REPORT
P a g e | 3
Chairman's
Report
Over the past 12 months, we have built on the momentum achieved during the 2019 financial year. At the outset, senior management
and the Board were clear on the direction and the initiatives required to take advantage of the significant opportunity the Company
has before it. The objective has been to ensure the business and technology stack are capable of operating at scale, such that we
can be a viable and attractive business partner for some of the world’s largest and most sophisticated companies, who provide
financial and other services to our target market – small to medium businesses.
9 Spokes has achieved important milestones this year, demonstrating our capabilities and potential. As well as a comprehensive
modernisation of our technology stack, we've established new relationships with major companies and built on existing ones,
entered new markets, completed two successful capital raises, and become a more closely-knit team – albeit socially distanced.
The capital raises have brought new, sophisticated and supportive technology investors into the 9 Spokes community. Welcoming
them has given us a degree of stability, as well as the means and the renewed vigour to pursue our ambitious and challenging
technology, operational and commercial goals.
While COVID-19 continues to impact many parts of the economies in which we operate, 9 Spokes remains focused on our small
business customers, banking and app partners, our suppliers, and our team. To date, 9 Spokes has been fortunate enough not to
have experienced a significant direct financial impact from COVID-19 and our transition to home-working was a smooth one.
However, this is undoubtedly a difficult time for our many small business customers, and they face hard decisions. Our banking
partners are in a position to help those small business customers with the decisions they now face, and technology can play an
important role in this effort. The 9 Spokes application is well placed to assist small businesses and their banks to better understand
their performance, therefore supporting such bank-to-customer conversations will be an ongoing part of 9 Spokes’ development
focus.
We continue to focus investment on research and development, on establishing and evolving strategic partnerships, and on
exercising effective cost-management and control.
Over the past year we have achieved a great deal:
• We won and successfully deployed Bank of America – our first US bank.
• Maintained our focus on cost control and financial management as we work towards breakeven.
• Completed our platform rebuild (referred to as V2) and released it to market, providing greater technical flexibility to rapidly
build capability into our core platform.
• We evolved our budding and mutually beneficial relationship with Microsoft. From a product perspective, cost and
functionality of our cloud data operations are much improved; from a sales perspective, we accredited two bank partner
sales as Microsoft co-sell wins.
•
•
Launched 9 Spokes Engage – our scalable, always-on marketing-as-a-service programme for banks.
Prepared for the launch of our new app marketplace, to be launched with Microsoft 365 as our launch partner.
P a g e | 4
At 9 Spokes, we are fortunate to have an experienced Board of Directors that is engaged and personally invested in the 9 Spokes
vision. This year, we had the pleasure of welcoming Shelley Ruha to the Board as an independent non-executive Director. Among
her many qualities, Shelley is a senior banker and a champion of small businesses – a perfect fit for 9 Spokes. Mark Estall has
stepped back from his executive role at 9 Spokes and now concentrates on his time as a non-executive Director, through which he
continues to share his deep knowledge of the Company, its products, and our business and banking customers.
On behalf of the Board, I would like to thank every member of the 9 Spokes family. It's been a busy year, and a prosperous one.
What we've achieved in these 12 months lays strong foundations for the next 12. In addition, I would like to thank our small business
customers, banking and app partners, and our investors for your ongoing support and confidence in 9 Spokes.
Approved for and on behalf of the Board on 15 July 2020.
Chairman
Paul Reynolds
P a g e | 5
02
CHIEF
EXECUTIVE’S
REPORT
P a g e | 6
Chief Executive's
Report
During the financial year ended 31 March 2020, we delivered and built on the decisions made at the end of the previous financial
year, including a significant pivot in and restructure of our core strategy. At that time, the Company set out several key objectives to
be delivered over the period. Against all benchmarks, progress has been strong. The Company has delivered to plan.
These objectives included:
•
Launching 9 Spokes’ new platform to the market: the Company released V2 in November 2019 and migrated its first
bank partner to the new platform.
• Continuing to implement operational and financial discipline: as demonstrated by a 33% decrease in total expenditure
over the financial year (2020: $11.2 million; 2019: $16.6 million).
• Completing capital raises: the Company completed two successful capital raises.
• Closing 9 Spokes’ first U.S contract: in August 2019, 9 Spokes closed its first US contract when the Company signed a
contract with Bank of America.
• Building strategic partnerships: The Company continues to focus on building partnerships – working closely with
existing partners, as well as developing new relationships with global players – to ensure a stronger, broader distribution
of the platform.
The Company is acutely aware of the effect COVID-19 is having on the global economy – particularly the impact on small businesses.
The Company remains focused on working with its partners to deliver a data-driven platform that can support businesses and aid
recovery. Through this period, 9 Spokes maintained close communications with our banking partners, updating them on the
Company's operational status, and prioritised the health and safety of our staff, customers, partners and suppliers by adopting
government guidelines across all countries of operation.
P a g e | 7
Revenue
Total revenue for the year was $6.9 million (2019: $8.3 million), a decrease of 17%. Revenue for this period includes implementation
fees and a full year of platform access fees from OCBC Bank (Singapore), and Bank of New Zealand (BNZ). In addition, 9 Spokes
signed a new contract with Bank of America in August 2019, which contributed to the Group’s revenue from late November
2019. Revenue from Bank of America includes a one-off
implementation fee, now received
in full, and payment of the
annual licence fee attached to the initial three-year contract. Payment of the annual licence fee commenced when implementation
was completed. Overall, the revenue decrease is attributable to changes in banking partners.
Platform access revenue for the year was $4.0 million (2019: $4.5 million). Notably, the annual recurring revenue (ARR) from
platform access fees was $4.7 million as at 31 March 2020, an increase of $0.7 million compared to the same period last
year. Recognised implementation revenue was $1.7 million (2019: $2.5 million). Implementation revenue is deferred when invoiced
and recognised over the initial term of a bank partners’ contract. The deferred revenue related to implementation fees as at 31 March
2020 was $2.5 million (2019: $1.5 million);
$1.0 million will be recognised as revenue in the next financial year ended 31 March 2021,
and the remaining $1.5 million within the following two years.
The Group generated revenue of $0.2 million
(2019: $0.2 million) from additional services provided to existing bank
partners. This relates to revenue from marketing as a service, which was subsequently commercially launched as 9 Spokes Engage,
marketing-as-a-service programme. Grant income received of $0.9 million (2019 $0.9 million) came mainly from Callaghan
Innovation, a Crown entity of New Zealand, for research and development expenditure.
Expenditure
Total expenditure for the year ended 31 March 2020 was $11.2 million (2019: $16.6 million), which represents a significant decrease
of $5.4 million, or 33% year-on-year. Cost management and control continue to be a key objective. So too is the focus on alignment
of costs to the requirements of the business. The Company was able to further optimise operating costs, including hosting, and
significantly reduce people and administrative expenses to meet business and customer requirements.
However, despite the significant drop in expenses, the Company maintained a high level of research and development expenditure
by continuing to focus on the development of the platform and additional products. Investment in research and development is a
core objective for 9 Spokes and will be prioritised over the coming year.
P a g e | 8
Cash Flow
Annual net cash outflows from operations were $2.6 million (2019: $9.4 million), down 72% on last year. The Company had a 20%
increase in receipts from banking partners and government grants and a 33% reduction in payments to employees and suppliers.
The cash flow from financing activities includes full repayment of the short-term loan taken out in the prior financial year. The cash
flows from financing activities include full repayment of the short-term loan taken out in the prior financial year. The
Company was also successful in completing two capital raises for a total of $10.5 million before cost.
Cash and bank at 31 March 2020 were $5.1 million (2019: $1.4 million).
P a g e | 9
Operational Performance
Business & Channel Developments
Bank of New Zealand: The Company continues to work closely with BNZ.
•
•
BNZ officially went live with a white-label version of the 9 Spokes platform in May 2019 and, in November of the same
year, became the first bank to migrate to 9 Spokes' new platform.
BNZ was 9 Spokes' launch partner when the Company released Engage.
Bank of America: In August 2019, 9 Spokes signed a contract with Bank of America, which marked the Company’s entry to the US
market.
•
•
•
The bank officially launched its 9 Spokes platform in February 2020, after a soft launch in December 2019.
The platform launched with app partners: Intuit QuickBooks, RUN powered by ADP, Google Analytics and G Suite.
Additional apps are in the pipeline.
The 9 Spokes platform complements Bank of America's existing cash flow management dashboard, Business Advantage
360, extending its functionality for a more complete, data-driven picture of a business' performance.
OCBC Bank: A Memorandum of Understanding (MOU) was signed by 9 Spokes and OCBC Bank (Malaysia) Berhad in October
2019, building on the existing relationship with OCBC Bank (Singapore).
•
The MOU outlines the principal terms of an agreement to provide the bank with a white-label 9 Spokes platform to OCBC
Bank (Malaysia) Berhad.
• Work with OCBC Bank (Singapore) also progressed over the period, as the Company works to migrate the bank to its
new platform.
ASEAN expansion: In addition to work with OCBC Bank, 9 Spokes established a satellite office in Singapore with the appointment
of Audrey Chia as Senior Vice President, Asia Pacific.
• Audrey will support existing banking partners in the region and seek to develop new relationships.
•
This is part of the Company's growth strategy, which sees it build its global presence with hubs in several key
jurisdictions – New Zealand, Australia, the UK, North America and now Singapore.
Microsoft: The Company has built a strong, multi-dimensional relationship with Microsoft, with significant benefits to both parties.
•
Following entry into a co-sell partnership with Microsoft under its One Commercial Partner programme, the Company has
recognised two co-sell successes with Microsoft. In June 2019 BNZ was recognised as the first, quickly followed by Bank
of America in October 2019.
• Additionally, 9 Spokes realised significant financial and operational benefits by integrating Microsoft technology from a
product and platform perspective and working on several marketing opportunities.
•
This partnership continues to evolve.
Visa: 9 Spokes is exploring an opportunity with Visa to bring the 9 Spokes platform to Visa issuing banks.
•
In November 2019, the Company signed an addendum to the Collaboration Framework Agreement signed earlier that
year.
• Discussions continued after the year ended 31 March 2020.
Direct (9Spokes.com): Following the rebuild of the platform, and establishment of key partners, the Company has refocused
attentions on its direct-to-business channel, 9 Spokes Direct.
•
•
Shortly after the year ended 31 March 2020, the Company migrated existing users to its new platform.
The Company views Direct as critical to its future strategy and continues to develop the platform in line with other
channels in preparation for a relaunch during the next financial year.
P a g e | 10
Operational Performance
Product Development
Bringing the new 9 Spokes platform through development and to the market was a primary focus during this period, as well as
further development and release of critical elements of the 9 Spokes ecosystem, such as Engage and 9 Spokes' app marketplace.
Key achievements in the last financial year include:
• Release of and migration to 9 Spokes' new platform: BNZ was the first banking partner to migrate to the platform, and
Bank of America launched on the platform shortly after. Migration of 9 Spokes Direct was completed soon after the end
of the financial year. Migration of OCBC Bank (Singapore) is underway.
• Optimised for rapid deployment: The Company has optimised its deployment cycle so that it can deploy the 9 Spokes
product to new banks with minimal effort. The technology underpinning the platform supports automation and easy
configuration, to ensure roll-out is a clean and straightforward process.
• 9 Spokes Engage: Engage, designed to support a bank’s in-house marketing team by driving customer acquisition and
engagement, launched end of October 2019. A business resource site, called Content Hub, was released as a core
feature. Work on a version for 9 Spokes Direct started.
• Progressive web app: The build of a progressive web app (PWA) using React commenced and is now in advanced
stages. With the PWA, 9 Spokes will be able to provide installable mobile apps from a single code base and manage
deployments as an app-to-web experience or an installable app.
•
Launch of monetised app marketplace: Design and development of an upgraded version of the 9 Spokes app
marketplace neared completion over the 12 months ended 31 March 2020. The launch will be a staged process.
This has been a challenging year, but the Company has significantly progressed towards our goals. The executive team and Board
are committed to ensuring that we deliver a relevant and data-driven solution that supports our small business customers and our
banking partners. Together we look forward to what the current financial year brings.
Adrian Grant
Chief Executive, Co-Founder
P a g e | 11
03
DIRECTORS’
REPORT
P a g e | 12
Reissued
Directors' Report
The Board of Directors has pleasure in presenting the reissued financial statements for 9 Spokes International Limited for the year
ended 31 March 2020.
This reissued Directors’ Report, is as a result of the re-issuance of the financial report as described in note 2b.
The reissued financial statements presented are signed for and on behalf of the Board and were authorised for issue on 15 July
2020.
Chairman
Paul Reynolds
Adrian Grant
Chief Executive, Co-Founder
P a g e | 13
04
INDEPENDENT
AUDITOR’S
REPORT
P a g e | 14
Independent auditor’s report
To the shareholders of 9 Spokes International Limited
We have audited the consolidated financial statements which comprise:
•
•
•
•
•
the consolidated statement of financial position as at 31 March 2020;
the consolidated statement of comprehensive income for the year then ended;
the consolidated statement of changes in equity for the year then ended;
the consolidated statement of cash flows for the year then ended; and
the notes to the consolidated financial statements, which include a summary of significant
accounting policies.
Our opinion
In our opinion, the accompanying consolidated financial statements of 9 Spokes International Limited
(the Company), including its subsidiaries (the Group), present fairly, in all material respects, the
financial position of the Group as at 31 March 2020, its financial performance and its cash flows for
the year then ended in accordance with New Zealand Equivalents to International Financial Reporting
Standards (NZ IFRS) and International Financial Reporting Standards (IFRS).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
(NZ)) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the consolidated financial
statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised)
Code of Ethics for Assurance Practitioners (PES 1) issued by the New Zealand Auditing and Assurance
Standards Board and the International Ethics Standards Board for Accountants’ Code of Ethics for
Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
Our firm carries out other services for the Group in the areas of Callaghan Growth Grant review and
tax compliance and advice. The provision of these other services has not impaired our independence
as auditor of the Group.
Material uncertainty related to going concern
We draw attention to note 2(d) in the consolidated financial statements, which discloses that the
Group has incurred a loss of $4.9 million and net cash outflows from operating activities of $2.6
million for the year ended 31 March 2020. At the current run rate the Group only has sufficient cash
for a further four months from the date of signing these consolidated financial statements. In order to
generate sufficient cash for at least the next 12 months from the date of signing of these consolidated
financial statements, the Group needs to secure new revenue opportunities and raise additional
capital. As stated in note 2(d), these events or conditions, along with other matters set forth in note
2(d), indicate that material uncertainty exists that may cast significant doubt on the Group’s ability to
continue as a going concern. Our opinion is not modified in respect of this matter.
PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand
T: +64 9 355 8000, F: +64 9 355 8001, pwc.co.nz
Other matter (reissue of the consolidated financial statements)
Our audit report dated 29 June 2020 contained a Disclaimer of opinion due to our inability to obtain
sufficient appropriate audit evidence to form an opinion as to whether the use of the going concern
assumption in the preparation of the consolidated financial statements was appropriate. We have
subsequently been provided with additional audit evidence relating to the Board’s plan to secure new
revenue and raise additional cash to ensure sufficient funding beyond the forecasted four month
period, for at least 12 months from the date of signing these financial statements, as disclosed in note
2(b). This evidence enabled us to form an opinion on the appropriateness of the use of the going
concern basis in the preparation of the consolidated financial statements. This reissued opinion
replaces the audit report issued on 29 June 2020.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the consolidated financial statements of the current year. These matters were addressed in
the context of our audit of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter
described in the Material uncertainty related to going concern section, we have determined the
matters described below to be the key audit matters to be communicated in our report.
PwC
16
Key audit matter
Revenue from contracts with customers
The Group’s revenue is largely derived
from system implementation fees and
platform access fees charged to customers.
Management has determined that
contracts with Enterprise Channel
Customers, including implementation fees
and platform access fees, represent one
performance obligation, which is to
provide the platform services. This is
because the customer could not benefit
from the system on its own and separately
from the platform access.
The Group aggregates the fees received
from system implementation and platform
access and recognises revenue on a
straight-line basis from the start of the
hosting period until the expected end of
the hosting services. Fees received which
relate to the implementation phase are
recognised on the statement of financial
position as contract liabilities until hosting
commences at the ‘Go live’ date.
The Group’s revenue accounting policy is
set out in note 3 of the consolidated
financial statements.
Given the significance of the balances and
the judgements involved, this was
considered to be a key audit matter.
How our audit addressed the key audit matter
To assess the appropriateness of management’s
treatment of implementation fees and platform access
fees as one performance obligation, we:
• recalculated the revenue recognised in the year.
• read management's assessment of the application
of NZ IFRS 15 Revenue from Contracts with
Customers on the Group's new revenue
arrangement which went live during the year ended
31 March 2020.
• read the new material customer contract and
analysed management’s assessment of the technical
objectives, performance obligations and the
commercial factors of this arrangement against the
requirements of NZ IFRS 15.
• confirmed the date when the Group commenced
hosting services with evidence.
We considered alternative situations for the new
revenue contract, including whether there were
separate performance obligations for implementation
and platform access services or other performance
obligations that better reflected the terms of the
Group's revenue arrangement.
We have no matters to report.
PwC
17
How our audit addressed the key audit matter
Our audit procedures included obtaining an
understanding of the processes and controls over the
recognition of research and development costs. We
discussed the nature of the research and development
work undertaken during the year with the Chief
Innovation Officer and other management staff.
On a sample basis we validated these activities through
discussions with individual team members. We
discussed the nature of the work being undertaken and
ensured that they met the definition of “research”
and/or “development” as defined by the accounting
standards.
We considered management’s assessment that the
capitalisation criteria had not been met, and therefore
why it was appropriate to expense all development
costs. Our consideration included challenging their
assessment of the certainty of funding and the
certainty of future economic benefits resulting in
management’s conclusion to expense all development
costs.
We have no matters to report.
Key audit matter
Recognition of research and development
costs
The research and development accounting
policy is contained in note 5(b) of the
consolidated financial statements. The
Group incurred $4.3 million of research
and development costs (excluding
capitalised implementation costs) during
the year, which were all expensed. There
were no development costs capitalised.
There is judgement in determining
whether particular activities meet the
definition of “research” and/or
“development” and then whether the costs
should be expensed or capitalised as
product development costs (an intangible
asset) in accordance with accounting
standards. All costs incurred as part of the
research phase are expensed. Costs
incurred in the development phase are
only capitalised if they meet the
capitalisation criteria.
Management assess the capitalisation
criteria for each project in accordance with
the Group’s accounting policy. At 31
March 2020 they determined that there
was no certainty of funding or future
economic benefits from current
development projects and therefore none
of the costs should be capitalised.
Given the significance of the balances and
the judgements involved, this was
considered to be a key audit matter.
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18
Key audit matter
Adoption of the accounting standard NZ
IFRS 16 Leases
How our audit addressed the key audit matter
The Group adopted NZ IFRS 16 Leases on
1 April 2019.
We have performed the following audit procedures:
• held discussions with management to understand
the implementation process, including the basis
for key assumptions used in the calculation of
opening balances and management’s process
including controls.
• performed testing of the accuracy of information
included in the calculations by comparing them to
the terms in the underlying lease contract.
tested completeness of the identified lease
contracts by reconciling the adoption calculations
to the operating lease note in the prior year
consolidated financial statements.
recalculated the right-of-use asset and lease
liability for the lease.
assessed the appropriateness of the lease term
including considering renewal assumptions.
reviewed the appropriateness of practical
expedients applied for exclusion of short term
lease exemptions.
reviewed the appropriateness of disclosures in
the financial statements.
•
•
•
•
•
In relation to the incremental borrowing rates, we
engaged our auditor’s valuation expert to assess the
appropriateness of the incremental borrowing rate
used.
We have no matters to report.
The standard requires the recognition of a
right of use asset and lease liability on the
balance sheet for all leases. Previously
operating leases were not recognised on
the balance sheet. The adoption of the
standard has resulted in the recognition of
a right of use asset of $1.0 million and a
lease liability of $1.2 million.
Subsequent to adoption of NZ IFRS 16, the
Group adjusted its estimate related to the
term of the lease, which was a direct result
of not exercising the early termination
clause with regards to the Auckland lease
premises. This resulted in an increase of
$0.9 million to the lease liability and right
of use asset.
As outlined in note 14, a number of
estimates and judgements have been made
by management in establishing these
opening values. These comprise:
•
•
incremental borrowing rate at the time
of adoption.
lease term, including any rights of
renewal expected to be exercised.
• application of practical expedients in
respect of short term lease exemptions.
This was considered an area of focus of
our audit due to the complexity and
number of significant judgements
involved in the calculation.
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Our audit approach
Overview
An audit is designed to obtain reasonable assurance whether the financial
statements are free from material misstatement.
Overall Group materiality: $117,800, which represents approximately 1%
of total expenses.
We chose total expenses as the benchmark because, in our view, it is the
benchmark against which the performance of the Group is most
commonly measured by users and is a generally accepted benchmark.
As previously indicated, we have determined that, in addition to the
matter described under the Material uncertainty related to going
concern section, there are three key audit matters:
• Revenue from contracts with customers
• Recognition of research and development costs
• Adoption of the accounting standard NZ IFRS 16 Leases
Materiality
The scope of our audit was influenced by our application of materiality.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall Group materiality for the consolidated financial statements as a whole as set out
above. These, together with qualitative considerations, helped us to determine the scope of our audit,
the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both
individually and in aggregate on the consolidated financial statements as a whole.
Audit scope
We designed our audit by assessing the risks of material misstatement in the consolidated financial
statements and our application of materiality. As in all of our audits, we also addressed the risk of
management override of internal controls including among other matters, consideration of whether
there was evidence of bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an
opinion on the consolidated financial statements as a whole, taking into account the structure of the
Group, the accounting processes and controls, and the industry in which the Group operates.
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Information other than the consolidated financial statements and auditor’s report
The Directors are responsible for the reissued annual report. Our opinion on the consolidated financial
statements does not cover the other information included in the reissued annual report and we do not
express any form of assurance conclusion on the other information.
In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit, or otherwise
appears to be materially misstated. If, based on the work we have performed on the other information
that we obtained prior to the date of this auditor’s report, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report
in this regard.
Responsibilities of the Directors for the consolidated financial statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of
the consolidated financial statements in accordance with NZ IFRS and IFRS, and for such internal
control as the Directors determine is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Directors either intend to liquidate
the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements, as a whole, are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (NZ) and ISAs will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements is
located at the External Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-
report-1/
This description forms part of our auditor’s report.
Who we report to
This report is made solely to the Company’s shareholders, as a body. Our audit work has been
undertaken so that we might state those matters which we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s shareholders, as a body, for our
audit work, for this report or for the opinions we have formed.
PwC
21
The engagement partner on the audit resulting in this independent auditor’s report is Jonathan
Skilton.
For and on behalf of:
Chartered Accountants
15 July 2020
Auckland
PwC
22
05
CONSOLIDATED
FINANCIAL
STATEMENTS
P a g e | 23
9 Spokes International Limited
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2020
Revenue
Operating revenue
Other operating income
Total revenue
Expenses
Operational expenses
Research and development expenses
Sales, marketing and administration
expenses
Total expenses
Finance income and expense
Finance income
Finance expense
Notes
2020
$'000
Restated*
2019
$'000
4a
4b
5a
5b
5c
8
8
5,882
7,341
977
935
6,859
8,276
(1,181)
(4,259)
(5,720)
(2,868)
(4,592)
(9,156)
(11,160)
(16,616)
604
42
(1,184)
(732)
Net loss before income tax
(4,881)
(9,030)
Income tax
9
-
-
Net loss for the year
(4,881)
(9,030)
Other comprehensive income / (loss)
Foreign exchange translation of international
subsidiaries
(200)
57
Total other comprehensive income / (loss) for the year
(200)
57
Total comprehensive loss attributable to
shareholders
Loss per share
Basic and diluted loss per share
(5,081)
(8,973)
19
($0.01)
($0.02)
* See note 27 for details of the restatement.
The above statement should be read in conjunction with the accompanying notes.
P a g e | 24
9 Spokes International Limited
Consolidated Statement of Changes in Equity
For the year ended 31 March 2020
Share
capital
$'000
Notes
Share
based
payments
reserve
$'000
Foreign
currency
translation
reserve
$'000
Accumulated
losses
$'000
Total
$'000
Balance as at 1 April 2019
(restated*)
48,984
906
(143)
(53,069)
(3,322)
Proceeds from shares issued
Costs of capital raise
Shares issued in settlement of
short-term loan
17
17
17
10,470
(1,287)
1,356
Reserve arising on conversion
of foreign currency subsidiaries
Net loss for the year
Total comprehensive loss for
the year
-
-
-
-
-
-
-
-
-
-
-
-
10,470
-
-
(1,287)
1,356
(200)
-
(200)
-
(4,881)
(4,881)
-
(200)
(4,881)
(5,081)
Balance as at 31 March 2020
59,523
906
(343)
(57,950)
2,136
Balance as at 1 April 2018
49,028
898
(200)
(44,039)
5,687
Proceeds from shares issued
Share option expense
Costs of capital raise
Reserve arising on conversion
of foreign currency subsidiaries
Net loss for the year (restated*)
Total comprehensive income / (loss) for
the year (restated*)
-
-
(44)
-
-
-
-
8
-
-
-
-
- -
- -
-
8
-
-
(44)
57
-
57
-
(9,030)
(9,030)
57
(9,030)
(8,973)
Balance as at 31 March 2019 (restated*)
48,984
906
(143)
(53,069)
(3,322)
* See note 27 for details of the restatement.
The above statement should be read in conjunction with the accompanying notes.
P a g e | 25
9 Spokes International Limited
Consolidated Statement of Financial Position
As at 31 March 2020
Notes
2020
$'000
Restated*
2019
$'000
Assets
Non-current assets
Property, plant and equipment
Right of use asset
13
14
206
1,398
346
-
Total non-current assets
1,604
346
Current assets
Cash and bank
Trade and other receivables
Contract assets
11
12
4a
5,093
631
50
1,360
890
475
Total current assets
5,774
2,725
Total assets
7,378
3,071
Equity
Share capital
Share based payments reserve
Foreign currency translation reserve
Accumulated losses
Equity attributable to the owners of the
Company
17
18
59,523
906
(343)
(57,950)
48,984
906
(143)
(53,069)
2,136
(3,322)
Total equity
2,136
(3,322)
Non-current liabilities
Provision for make good
Lease liabilities
Contract liabilities
14
14
4a
60
1,112
1,490
-
-
281
Total non-current liabilities
2,662
281
Current liabilities
Trade and other payables
Short-term loan
Fair value of loan conversion option
Lease liabilities
Contract liabilities
15
16
16
14
4a
1,107
-
-
486
987
1,685
2,637
585
-
1,205
Total current liabilities
2,580
6,112
Total equity and liabilities
7,378
3,071
* See note 27 for details of the restatement.
The above statement should be read in conjunction with the accompanying notes.
P a g e | 26
9 Spokes International Limited
Consolidated Statement of Cash Flows
For the year ended 31 March 2020
Cash flows from operating activities
Receipts from customers
Receipts from Government grants
Payments to employees and suppliers
Interest received
Interest paid
Lease interest paid
Notes
2020
$'000
2019
$'000
7,427
1,423
(11,326)
6,518
839
(16,821)
(2,476)
(9,464)
15
(8)
(133)
82
-
-
Net cash (outflows) from operating activities
10
(2,602)
(9,382)
Cash flows from investing activities
Purchase of property, plant and equipment
Transfer from term deposits
- (67)
- 1,000
Net cash inflows from investing activities
-
933
Cash flows from financing activities
Proceeds from the issue of share capital
(Repayment) / receipt of short-term loan
Costs of raising capital
Principal portion of lease liability
17
16
17
10,470
(2,321)
(1,280)
(500)
-
2,500
(44)
-
Net cash inflows from financing activities
6,369
2,456
Net change in cash and bank
Cash and bank at beginning of the year
Foreign exchange (loss) / gain on cash and bank
3,767
1,360
(34)
(5,993)
7,297
56
Cash and bank at end of the year
5,093
1,360
The above statement should be read in conjunction with the accompanying notes.
P a g e | 27
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
1. General information
9 Spokes International Limited (“the Company” or “9 Spokes”) is a company registered under the New
Zealand Companies Act 1993. The Company is listed on the Australian Securities Exchange (ASX) and
is required to be treated as a FMC Reporting Entity under the Financial Markets Conduct Act 2013 and
the Financial Reporting Act 2013. These financial statements of the Company and its subsidiaries
(together “the Group”) have been prepared in accordance with the ASX Listing Rules.
9 Spokes is a limited liability company incorporated and domiciled in New Zealand. The registered
office of the Company is Level 4, AECOM House, 8 Mahuhu Crescent, Auckland 1010, New Zealand.
9 Spokes is a digital ecosystem that aggregates meaningful data across a business, its apps and banks.
The Company’s operations do not follow a seasonal or cyclical pattern.
These audited consolidated financial statements were authorised for issue by the Board of Directors on
15 July 2020.
2. Summary of Significant Accounting Policies
These are the consolidated financial statements for the Group for the year ended 31 March 2020.
The principal accounting policies applied in the preparation of these financial statements are set out
below. These policies have been consistently applied to all the periods presented, unless otherwise
stated.
a. Basis of preparation
These financial statements have been prepared in accordance with Generally Accepted Accounting
Practice (“GAAP”). They comply with New Zealand equivalents to International Financial Reporting
Standards (NZ IFRS) and International Financial Reporting Standards (IFRS), as appropriate for for-profit
entities.
The Group has adopted External Reporting Board Standard A1 “Accounting Standards Framework (For-
profit Entities Update)” (“XRB A1”). XRB A1 establishes a for-profit tier structure and outlines which suite
of accounting standards entities in different tiers must follow. The Group is a Tier 1 for-profit entity.
The consolidated financial statements have been prepared in accordance with the requirements of the
Financial Reporting Act 2013 and the Companies Act 1993.
The consolidated financial statements have been prepared on the historical cost basis.
All amounts disclosed in the financial statements and notes have been rounded to the nearest
thousand units of the presentation currency unless otherwise stated.
b. Reissued financial statements
The Group’s previously issued consolidated financial statements for the year ended 31 March 2020,
dated 29 June 2020, have been withdrawn and replaced by these consolidated financial statements.
The previously issued consolidated financial statements were issued with a disclaimer of opinion as the
independent auditors considered they did not have sufficient evidence to support the Directors’ view
that the consolidated financial statements should be prepared on a going concern basis. Following the
release of the consolidated financial statements to the Australian Securities Exchange (ASX), the
P a g e | 28
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
Company’s securities were suspended from official quotation. Subsequently, the ASX advised the
Company that the securities would not be reinstated to official quotation until the Company was able to
provide audited consolidated financial statements with an independent auditor’s report that did not
contain either a disclaimer of opinion or an adverse opinion.
Accordingly, the Board has received additional evidence to support its view on going concern. In
particular, the Board maintains its confidence and belief, that the Company can raise new capital as
required, in accordance with the plan in place. For further explanation of the assessment on going
concern, refer to note 2(d).
These reissued consolidated financial statements contain no other changes from the consolidated
financial statements issued on 29 June 2020, apart from the update in note 6 and note 2(d), which
explain additional remuneration to the auditor and updated going concern disclosures, respectively, as
a result of the reissuance of these consolidated financial statements.
c.
Impact of COVID-19 outbreak
Due to the recent COVID-19 coronavirus outbreak (“COVID-19”), management performed an
operational risk assessment and assessed the impact of COVID-19 on the Group.
Employees
9 Spokes is a cloud-native company; all employees can operate remotely. Prior to lockdown, the
Company tested its capacity to work from home to ensure no technical or operational issues
presented. To date no issues have occurred, and as lockdown restrictions have eased in many of the
jurisdictions we operate, the Company has put in place policies to support and facilitate safe return to
the office.
Suppliers
As a cloud software provider, 9 Spokes relies on other technology companies, mainly for the provision
of hosting services. Based on conversations with these companies, COVID-19 has not significantly
affected their operations, and they continue to operate as usual.
Banking partners
9 Spokes has maintained continuous communication with all its banking partners throughout this
period. Earlier on, discussions were held to evaluate and confirm the Company’s ability to meet the
obligations set out in existing contract agreements. Therefore, the impact of COVID-19 on the
Company’s existing revenue is currently considered low.
In the wake of COVID-19, the Company expects that, as small businesses enter a sustained recovery,
the value of a data-driven overview of business performance will continue to increase. 9 Spokes
provides this service to small businesses, and to its banking partners seeking to support their small
business customers.
International markets
9 Spokes employs people in the main markets in which it operates. It currently remains unclear when
international business travel can recommence. As a result, the Company expects the current reduction
in expenditure towards events, travel and entertainment to be maintained.
P a g e | 29
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
d. Going concern
The consolidated financial statements have been prepared on a going concern basis, which assumes
that the Group has the intention and ability to continue its operations for the foreseeable future. The
Group incurred a net loss of $4.9 million for the year ended 31 March 2020 and, at balance date, had
cash and bank of $5.1 million, consisting of available cash of $4.7 million and other deposits of $0.4
million.
The Group’s net cash outflows from operating activities was $2.6 million during the period (2019: $9.4
million), down 72%. The Group continues to carefully monitor all expenditure, which has resulted in a
significant improvement for this period versus the prior year. Tight controls remain in place over all
cash spending; this will continue to be a priority for the Group over the current financial year ended 31
March 2021.
Given available cash and the current cashflow run rate, the Group has sufficient cash for four months
from the date of signing these financial statements. The Group, therefore, will need to secure new
revenue opportunities and raise additional capital, in accordance with the plan in place, to continue
operations beyond the forecast four-month period and for at least 12 months from the date of signing
these financial statements.
Over the past year, the Group has been able to successfully access capital from the ASX to meet its
short-term capital requirements and has raised $10.5 million from a rights issue and placements.
Although existing operations and customer relationships were not significantly impacted by COVID-19,
the Company has experienced delays in closing some ongoing negotiations with potential customers
and partners. The Group has several revenue opportunities that it is actively progressing.
The requirement to secure new revenue and raise additional cash to ensure funding beyond the
forecast four-month period indicates a material uncertainty that may cast doubt on the Group’s ability to
continue as a going concern and, therefore, the Group may be unable to realise its assets and
discharge its liabilities in the normal course of business. These consolidated financial statements do
not reflect adjustments in the carrying value of the assets and liabilities, the reported revenues and
expenses, and the balance sheet classifications used, that would be necessary if the Group were
unable to continue as a going concern.
Despite the current economic uncertainty caused by COVID-19, management and the Board believe
the Group is in a strong position to secure new revenues. They are confident the Group will also be
able to raise additional capital, in accordance with the plan in place. Therefore, they consider it
appropriate to continue to adopt the going concern basis in preparing these financial statements.
e. Use of estimates and judgements
The preparation of the financial statements in conformity with NZ IFRS requires management to make
judgements, estimates and assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities, income and expenses. All judgements, estimates and
assumptions made are believed to be reasonable based on the most current set of circumstances
available to the Group. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimates are revised and in any future periods
affected.
P a g e | 30
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
Critical accounting policies and estimates in the year are:
the timing of revenue recognition of implementation fees (note 4a)
•
• expensing of research and development costs (note 5b)
•
the non-recognition of deferred tax assets (note 9).
At balance date the Group has no other significant estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying amount of assets and liabilities within the next
financial year.
f. Changes in accounting policies
NZ Equivalent to International Financial Reporting Standard 16: Leases
NZ IFRS 16: Leases replaces NZ IAS 17: Leases. It introduces a single lessee accounting model and
requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months
unless the underlying asset is of low value. Under the standard a right of use asset is recognised,
representing the lessee’s right to use the underlying leased asset and a corresponding lease liability is
recognised, representing the obligation to make lease payments.
Prior to 31 March 2019, leases of property, plant and equipment were classified as operating leases.
Payments made under operating leases (net of any incentives received from the lessor) were expensed
through the Consolidated Statement of Comprehensive Income on a straight-line basis over the period
of the lease.
The Group has adopted NZ IFRS 16 retrospectively from 1 April 2019 but has not restated comparatives
for the year ended 31 March 2019, as permitted under the specific transitional provisions in the
standard. The reclassifications and adjustments arising from the new leasing rules are therefore
recognised in the opening statement of financial position as at 1 April 2019.
From 1 April 2019, leases with term over 12 months are recognised as a right of use asset and a
corresponding lease liability at the date at which the leased asset is available for use by the Group.
Each lease payment is allocated between the liability and finance cost. The finance cost is expensed
through the Consolidated Statement of Comprehensive Income over the lease period. The right of use
asset is depreciated on a straight-line basis over the shorter of the asset’s useful life and the lease
term.
In applying NZ IFRS 16 for the first time, the Group has used the following practical expedients
permitted by the standard:
• Reliance on previous assessments on whether leases are onerous
• The accounting for operating leases with a remaining lease term of less than 12 months as at 1
April 2019 as short-term leases
• The exclusion of initial direct costs for the measurement of the right-of-use asset at the date of
initial application
• The use of hindsight in determining the lease term where the contract contains options to
extend or terminate the lease.
The Group has also elected not to reassess whether a contract is or contains a lease at the date of
initial application. Instead, for contracts entered into before the transition date, the Group relied on its
assessment made applying IAS 17 and IFRIC 4: Determining whether an Arrangement contains a Lease.
P a g e | 31
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
The adoption of NZ IFRS 16: Leases also resulted in a reclassification in the Consolidated Statement of
Cash Flows between operating cash flows and financing cash flows. The reclassification resulted in a
$0.5 million increase to operating cash flows and a corresponding decrease to financing cash flows.
The impact of this transition on the year ended 31 March 2019 would result in a $0.5 million increase to
operating cash flows and a corresponding decrease to financing cash flows.
g. Foreign currency
Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic
environment in which the entity operates (“the functional currency”). The financial statements are
presented in New Zealand dollars, which is the Group's presentation currency.
Items presented with A$ represent Australian dollars.
Foreign currency transactions
Transactions in foreign currencies are translated to the functional currencies of the Group’s companies
at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in
foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate
at that date.
The foreign currency gains or losses on monetary items is the difference between amortised cost in the
functional currency at the beginning of the year, adjusted for effective interest and payments during the
year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year.
3. Segment reporting
The Group operates as a single business operating segment, providing a digital ecosystem that
aggregates meaningful data across a business, its apps and banks.
At an operational level, the chief operating decision makers, consisting of the Chief Executive Officer
and the Chief Financial Officer, currently assess the Group as a whole, with revenue reported at a
geographical level based on the location of the customer. However, as the Group is investing in
regional global hubs in Europe, North America and Asia, future reporting will include more emphasis on
the regional results.
P a g e | 32
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
Revenue was sourced from the following geographical locations:
Notes
2020
$'000
Restated
2019
$'000
Europe
North America
Asia Pacific
2,663
1,383
2,813
4,210
2,475
1,591
Total operating revenue and other income
6,859
8,276
Comprising:
Total operating revenue
Other income
4a
4b
5,882
977
7,341
935
The Group’s non-current assets are in New Zealand.
During the year ended 31 March 2020 the Group had four (2019: six) banking partners. Revenue from
banking partners is currently the Group’s primary source of revenue and accounted for 86% of the
Group’s revenue and other income (2019: 89%). In the year ended 31 March 2020 all four banking
partners (2019: two) each accounted for 10% or more of the Group’s revenue.
4. Revenue
All revenues and income are stated net of goods and services tax and/or value added tax.
a. Operating revenue from contracts with customers
2020
$'000
2019
$'000
Implementation revenue
Platform access revenue – recurring
Other revenue from enterprise customers
Other revenue
2,446
1,646
4,532
4,011
225
161
- 202
Total operating revenue
5,882
7,341
Recognition of operating revenue from contracts with customers
The Group adopts the five-step method in accordance with NZ IFRS 15 to the revenue contracts with
the Group’s enterprise customers to assess the impact on revenue recognition. The five-step method
for recognising revenue from contracts with customers involves consideration of the following:
Identifying the contract with the customer
Identifying performance obligations
1.
2.
3. Determining the transaction price
4. Allocating the transaction price to distinct performance obligations
5. Recognising revenue.
P a g e | 33
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
The accounting policy and key judgements are outlined below.
Implementation fees and platform access fees
The Group receives implementation fees and platform access fees in relation to the platforms it
provides to its enterprise customers. Implementation fees are received as part of the deployment of the
9 Spokes’ platform to these customers. Platform access fees are charged to customers throughout the
term of the service.
Together, these fees form most of the Group’s revenue. While there are two forms of fees, there is only
one performance obligation, which is to provide the platform services to the enterprise customer over
the contracted period. The implementation and platform access fees are aggregated (based on the
expected total fees over the expected period of service including the most probable outcome of
variable arrangements) and then recognised as revenue in the Consolidated Statement of
Comprehensive Income on a straight-line basis over the expected term of the service, starting when
the system has been deployed.
The table on the following page provides further information on the application of NZ IFRS 15 across
the two main revenue categories in the Group. The revenue streams detailed below represent 82% of
the Group’s total revenue for the year ended 31 March 2020 (2019: 84%).
Revenue type
Description
Key judgements
Outcome
Implementation
Revenue
Deployment of 9
Spokes’
systems.
Determining whether
the deployment is a
distinct performance
obligation.
The customer could not
benefit from deployment
of the system on its own
and separately from the
platform access and as
such there is no distinct
performance obligation.
Platform Access
Revenue
The right to
access 9
Spokes’
platform.
Determining whether
the platform access is
a distinct performance
obligation.
As above.
Timing of revenue
recognition
Over time – while
cash is received at the
time of
implementation,
revenue is recognised
on a straight-line
basis, equally over the
expected licence
period, once the
system has been
deployed.
Over time –
recognised monthly,
on a straight-line
basis, recurring over
the expected licence
period.
NZ IFRS 15 requires the disaggregation of revenue from contracts with customers to be presented in the
financial statements to provide clear and meaningful information. Management concluded that
presentation of revenue by revenue stream is most appropriate.
Platform access revenue for the year was $4.0 million (2019: $4.5 million). Notably, the annual recurring
revenue from platform access fees was $4.7 million as at 31 March 2020, an increase of $0.7 million
compared to the same period last year.
P a g e | 34
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
Contract assets
During the implementation process the Group incurs costs directly related to fulfilling its obligations in
the contract and expects to recover these costs against implementation revenue. These costs are
capitalised as contract assets on the statement of financial position and amortised on a straight-line
basis over the same period that the implementation revenues are recognised. The Group had contract
assets as at 31 March 2020 of $0.1 million (2019: $0.5 million). $0.4 million of costs included in the
contract assets as at 31 March 2019 was recognised in the Consolidated Statement of Comprehensive
Income for the year ended 31 March 2020.
Contract liabilities
Implementation and platform access fees received prior to deployment of the 9 Spokes system are
recognised in the Consolidated Statement of Financial Position as contract liabilities. The Group had
contract liabilities as at 31 March 2020 of $2.5 million (2019: $1.5 million). $1.2 million of implementation
revenue included in contract liabilities at 31 March 2019 was recognised in the Consolidated Statement
of Comprehensive Income for the year ended 31 March 2020.
Long-term contracts not yet fulfilled
Aggregate amount of the transaction price allocated
to long-term platform licence fees that are
not yet fulfilled as at 31 March.
2020
$'000
2019
$'000
11,773
4,075
40% of the transaction price allocated to not yet fulfilled performance obligations as at 31 March 2020
is expected to be recognised as revenue during the next reporting period ending 31 March 2021. 37%
of the transaction price allocated to not yet fulfilled performance obligations as at 31 March 2020 is
expected to be recognised as revenue during the next reporting period ending 31 March 2022. The
remaining 23% is expected to be recognised as revenue during the year ending 31 March 2023. The
amounts disclosed above do not include variable consideration, which is constrained.
b. Other operating income
2020
$'000
Restated
2019
$'000
Government grants
Other income
930
47
886
49
Total other operating income
977
935
Government grants
Grants from the Government are recognised at fair value where there is reasonable assurance that the
grant will be received, and the Group will comply with the grant conditions. When a grant relates to an
expense item, it is recognised as income over the period necessary to match the grant on a systematic
basis to the costs that it is intended to compensate. The majority of Government grant income
recognised relates to research and development.
P a g e | 35
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
Other income
Other income comprises income that is not part of the Group’s normal operating activities.
5. Expenses by nature
The Group operates as a single business operating segment with costs predominately incurred in New
Zealand.
All expenses are stated net of goods and services tax and/or value added tax.
a. Operational expenses
Employee benefit expenses
Other operational expenses
Platform hosting and tools
Third-party contractors
2020
$'000
Restated
2019
$'000
731
1,899
- 179
325
790
125
-
Total operational expenses
1,181
2,868
Operational expenses represent infrastructure and technical operations not classified as research and
development.
Employee benefit expenses decreased significantly during the year ended 31 March 2020 compared to
the prior year mainly due to a lower average number of employees compared to the prior year, as well
as allocating more resources into research and development work.
b. Research and development expenses
Notes
4a
4a
Amortisation of previously capitalised
contract assets
Capitalisation of contract assets
Depreciation expense
Employee benefit expenses
Other research and development expenses
Third-party contractors
2020
$'000
Restated
2019
$'000
426
185
- (54)
66
3,312
721
362
378
2,670
527
258
Total research and development expenses
4,259
4,592
Research expenditure is recognised as the expense is incurred.
P a g e | 36
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
Development costs that are directly attributable to the design and testing of an identifiable product are
recognised as intangible assets where they meet the following recognition criteria:
it is technically feasible to complete the software product so that it will be available for use;
•
• management intends to complete the software product and use or sell it;
•
•
there is an ability to use or sell the software product;
it can be demonstrated how the software product will generate probable future economic
benefits;
adequate technical, financial and other resources to complete the development and to use or
sell the software product are available; and
the expenditure attributable to the software product during its development can be reliably
measured.
•
•
Identifiable costs incurred in fulfilling contracts with customers are capitalised as a contract asset and
amortised on a systematic basis over the enterprise customer’s initial licence term. The expenditure
capitalised includes payroll expenses, external contractor fees and overhead costs that are directly
attributable to the implementation activities.
c. Sales, marketing and administration expenses
Depreciation expense
Directors' fees
Directors' consultancy services
Remuneration of auditors
Employee benefit expenses
Marketing expenses
Travel
Professional, rent, office costs and other
administration expenses
Foreign exchange (gain) / loss arising from
translating intra group balances
Notes
25a
25a
6
2020
$'000
2019
$'000
317
272
5
247
3,526
175
402
123
169
136
215
4,464
361
793
1,000
2,855
(224)
40
Total sales, marketing and administration expenses
5,720
9,156
Increase in depreciation expense relates to recognition and depreciation of a right of use asset starting
1 April 2019 (note 14).
P a g e | 37
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
6. Remuneration of auditors
Audit and review of financial statements by PwC
Audit of the annual financial statements
Review of the half year financial statements
Other services performed by PwC
Callaghan Growth Grant review
Tax compliance and advice
2020
$'000
2019
$'000
102
86
104
53
12
47
12
31
Total fees paid and payable to PwC
247
200
Audit of subsidiary financial statements by
subsidiary auditors (Oury Clark)
Audit of the UK Financial Statements
- 15
Total fees paid and payable to auditors
247
215
The Audit and Risk Committee oversees the relationship with the Group’s auditor, PwC, and considers
PwC’s independence as part of this process. The Committee is satisfied that PwC is currently
independent of the Group and the other services have not impaired their independence.
Additional fees of $25,000 are now payable to PwC for work related the re-issued financial statements.
Based on UK legislation, the UK subsidiary company does not qualify for a separate statutory audit for
the year ended 31 March 2020 and therefore no fees have been accrued.
7. Employee benefit expenses
Wages and salaries
Share option expense
Other benefits
Note
18
2020
$'000
6,641
9,429
- 8
238
286
2019
$'000
Total employee benefit expenses
6,927
9,675
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be
settled within 12 months of the reporting date are recognised in other payables and are measured at
the amounts expected to be paid when the liabilities are settled.
P a g e | 38
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
8. Finance income and expense
Notes
2020
$'000
2019
$'000
Finance income
Fair value gain on loan conversion option
Interest receivable on short term bank deposits
16
585
19
-
42
Total finance income
604
42
Finance expense
Finance expense on short term loan
Interest on lease liabilities
Bank interest payable
Fair value loss on loan conversion option
16
14
16
1,040
133
11
683
-
11
- 38
Total finance expense
1,184
732
9. Income and deferred tax
Income tax is represented as follows:
Current tax
Total current tax
Deferred tax expense
Origination of temporary timing differences
Tax (income) / deduction of research and
development expenses deferred
Tax losses
Deferred tax assets not recognised
Total deferred tax
Total income tax
2020
$'000
Restated
2019
$'000
-
-
-
-
(473)
62
(23)
(1,017)
1,513
(150)
(2,424)
2,512
-
-
-
-
The tax expense for the year comprises current and deferred tax. Current tax and deferred tax are
recognised in the Consolidated Statement of Comprehensive Income, except to the extent that it
relates to items recognised in other comprehensive income or directly in equity.
The current tax charge is calculated based on the tax laws enacted or subsequently enacted at balance
date.
P a g e | 39
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
Deferred tax is recognised on temporary differences between the tax bases of assets and liabilities and
their carrying amounts in the financial statements. Deferred tax is determined using tax rates and laws
that have been enacted or subsequently enacted by the balance date and expected to apply when the
related deferred income tax asset or liability is realised or settled. Deferred tax is also not accounted
for if it arises from initial recognition of an asset or liability in a transaction other than a business
combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if
it is probable that future taxable amounts will be available to utilise those temporary differences and
losses.
During the year, the New Zealand Inland Revenue Department (IRD) completed a review of the
Company’s tax treatment of implementation revenues, described in note 4. The IRD concluded that
implementation revenue for tax purposes should be recognised in the year invoiced. While the
Company did not agree with the interpretation of the tax legislation by the IRD, it was considered that
the cost to challenge the IRD would be too high and there would be no consequent tax liabilities, nor
cash outflow as a result of this change. The change has been implemented in prior year tax returns and
will be reflected in the tax calculations for this year.
Tax losses
Due to changes in tax treatment, available tax losses for the Company arising as a result of the revision
of prior year tax returns are $35.0 million, previously reported as $31.2 million. Considering the
changes in tax treatment of implementation revenue, the Company has tax losses available to carry
forward at 31 March 2020 of $35.6 million, subject to shareholder continuity being maintained. The
Group has deferred research and development deductions of $0.08 million after offsetting related
revenue.
The change also impacted the Company’s deferred research and development deduction at 31 March
2019. The change resulted in a utilisation of all available deductions to that date, previously reported to
be $6.0 million.
Tax losses available to subsidiary companies of the Group (note 21) are $4.9 million (2019: $3.6 million)
of which $0.49 million will expire on the following future dates:
Tax year
31 March 2018
31 March 2019
31 March 2020
Date of expiry
31 March 2038
31 March 2039
31 March 2040
$'000
116
195
177
488
The deferred tax assets have not been recognised as it is uncertain whether the Group will maintain
shareholder continuity or when it will generate sufficient taxable profits to utilise these tax losses.
There are no imputation credits available, as the Group is yet to generate taxable profits in New
Zealand.
P a g e | 40
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
Reconciliation of effective tax rate:
2020
$'000
Restated
2019
$'000
Loss before income tax
(4,881)
(9,030)
Prima facie taxation at 28%
Expenses not deductible for tax purposes
Temporary timing differences
Research & development expenditure
deferred (net of income)
Total losses not recognised
(1,367)
(146)
473
(2,529)
17
(62)
23
1,017
150
2,424
Total tax (expense) / benefit
-
-
10. Reconciliation of reported loss after income tax with cash flows from operating
activities
2020
$'000
Restated
2019
$'000
Loss after income tax
(4,881)
(9,030)
Non-cash items:
Depreciation expense
Share option expense
Finance expense on short-term loan
Fair value gain on loan conversion option
Foreign exchange loss on monetary assets
Changes in working capital:
Decrease in trade and other receivables
Decrease in contract assets
(Decrease) in trade and other payables
Increase / (decrease) in contract liabilities
190
695
- 8
683
1,040
(585)
38
32
-
259
425
(578)
991
1,200
185
(866)
(1,790)
Net cash flow from operating activities
(2,602)
(9,382)
P a g e | 41
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
11. Cash and bank
2020
$'000
2019
$'000
Cash at bank
Term deposits with maturities of three months or less
Other deposits
1,668
3,000
425
935
-
425
Total cash and bank
5,093
1,360
Cash comprises cash balances and deposits held at call with banks. Cash equivalents are short-term
highly liquid investments that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value.
Other deposits
As at 31 March 2020, the Company continues to provide a guarantee of $0.4 million (2019: $0.4 million)
for the operating lease on its Auckland premises, held by ASB Bank Limited.
12. Trade and other receivables
2020
$'000
Restated
2019
$'000
Trade receivables
Prepayments and accrued income
Other receivables
166
415
50
367
486
37
Total trade and other receivables
631
890
Trade and other receivables are initially recognised at the fair value of the amounts to be received, plus
transaction costs (if any). They are subsequently measured at amortised cost (using the effective interest
method) less expected credit losses. The Group applies the NZ IFRS 9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss allowance for all trade receivables and
contract assets.
Customer invoices are paid on terms ranging from 20 to 30 days.
P a g e | 42
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
13. Property, plant and equipment
2020
2020
2020
2019
2019
2019
Office and
computer
equipment
$'000
Leasehold
improvements
$'000
Total
$'000
Office and
computer
equipment
$'000
Leasehold
improvements
$'000
Total
$'000
Carrying amount at start
of the year
157
189
346
219
261
480
Additions
-
-
-
23
33
56
Disposals
(27)
-
(27)
-
-
-
Depreciation expense
(52)
(87)
(139)
(85)
(105)
(190)
Depreciation on disposals
26
-
26
-
-
-
Carrying amount at the
end of the year
At cost at the end of the
year
Accumulated
depreciation at the end
of the year
Recognition and measurement
104
102
206
157
189
346
405
383
788
432
383
815
301
281
582
275
194
469
Property, plant and equipment are stated at historical cost less accumulated depreciation.
Significant leasehold improvements undertaken over the term of the lease contract, that are expected
to have significant economic benefit for the Group, are recognised at cost and include
decommissioning or similar costs if the lease contract requires the property to be returned at the end
of the lease in its original state. Gains and losses on disposals are determined by comparing proceeds
with carrying amounts and are recognised in the Consolidated Statement of Comprehensive Income.
Depreciation
Depreciation is recognised in profit or loss on a diminishing value basis over the estimated useful life of
each component of an item of property, plant and equipment, with the exception of leasehold
improvements which are depreciated on a straight-line basis over the term of the lease.
The estimated useful lives for the current and comparative years of significant items of property, plant
and equipment are as follows:
P a g e | 43
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
Office and computer equipment
Leasehold improvements
2-10 years
Over the term of the lease
Depreciation methods, useful lives and residual values are reviewed at each financial year-end and
adjusted if appropriate.
14. Right of use assets and lease liabilities
The Group has identified two contracts containing leases:
•
•
leased office premises in Auckland, New Zealand, 6-years term
leased office premises in London, United Kingdom, 1-year term.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and
conditions. The lease agreements do not impose any covenants, but leased assets may not be used as
security for borrowing purposes.
Right of use assets
Leased assets are measured at cost comprising the initial measurement of lease liability less any lease
incentives received and make good provisions. Key movements during the period, relating to right of
use assets are presented below:
Opening balance
Additions due to first-time adoption of NZ IFRS 16
Remeasurement during the year
Additions during the year
Depreciation expense
Closing balance
Remeasurement
2020
$'000
-
1,043
911
-
(556)
1,398
Since the Group released Consolidated Interim Financial Statements for the 6 months ended 30
September 2019, it has adjusted its estimate related to the term of the lease, which was a direct result
of not exercising an early termination clause with regards to the Auckland lease premises. As this is a
change in accounting estimate, it has been applied prospectively and resulted in an increase of the
lease liability of $0.9 million with corresponding increase in the cost of the right of use asset.
Lease liabilities
Under NZ IFRS 16: Leases, the Group is required to recognise lease liabilities for contracts identified as
containing a lease, except when the lease is for 12 months or less or the underlying asset is of low
value. Payments associated with short-term leases have been recognised on a straight-line basis as an
expense in the Consolidated Statement of Comprehensive Income. The expense relating to short-term
leases for the year ended 31 March 2020 was $0.2 million (2019: $0.3 million).
P a g e | 44
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
Lease liabilities are initially measured at the present value of the remaining lease payments, which
include:
fixed payments less any incentives receivable, and
•
• payments of penalties for terminating the lease, if the lease term reflects the lessee exercising
that option.
The lease payments are discounted using the Group’s incremental borrowing rate, being the rate that
the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a
similar economic environment with similar terms and conditions. The weighted average lessee’s
incremental borrowing rate applied to the lease liabilities as at 1 April 2019 was 12%. Subsequently the
carrying value of the liability is adjusted to reflect interest and lease payments made.
The maturity of the lease liabilities is as follows:
Less than one year
One to five years
Total lease liabilities
Reconciliation of lease commitments to lease liabilities
Operating lease commitments as at 31 March 2019
Less: short-term leases not recognised as a liability
Long-term lease commitments as at 31 March 2019
As at 1 April 2019
Discounted at the incremental borrowing rate at the date of
initial application
Value of future lease options expected to be exercised at the
date of initial application
Net present value of future lease liability
Current lease liability
Non-current lease liability
Total lease liabilities as at 1 April 2019
Make good provision
2020
$'000
486
1,112
1,598
$'000
1,506
(159)
1,347
1,048
139
1,187
594
593
1,187
The Company is required, at the expiry of the lease, to make good on the condition of its leased
premises. The provision is based on estimates obtained from third-parties for the expected work
required.
P a g e | 45
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
15. Trade and other payables
Trade payables
Other payables and accruals
Deferred rent
Deferred Government grant
2020
$'000
2019
$'000
136
728
469
1,012
- 204
243
-
Total trade and other payables
1,107
1,685
The Group recognises trade and other payables initially at fair value and subsequently measured at
amortised cost using the effective interest method. Trade and other payables are unsecured, non-
interest bearing and are usually paid within 45 days of recognition.
Included in trade payables and other payables and accruals are amounts owing to related parties (refer
to note 25).
Deferred Government grant
As at 31 March 2020 the Group had received the New Zealand government COVID-19 wage subsidy.
No portion of the subsidy was utilised during the year ended 31 March 2020. The Company has
committed to refund the subsidy.
16. Short-term loan and fair value of conversion option
During the year ended 31 March 2019, the Company entered into a short-term funding facility to
provide the Company with working capital to allow time to conclude a capital raise.
The terms of the facility included a conversion option, which entitled the lenders to convert any portion
of the loan to ordinary shares, which under certain conditions could be exercised at a discount to the
current market price of the shares. As a result, at 31 March 2019, the loan was accounted for as two
separate components, pure debt portion and the loan conversion option.
Settlement of the short-term loan
Following completion of an entitlement offer and placement on 24 May 2019 (note 17), the loan
including fees and interest was settled on that date, discharged by the payment of $2.3 million and the
issue of 80.1 million shares at the offer price of A$0.016 per share. This repaid the outstanding amount
and the lenders security was released.
Finance expense of the debt portion
The finance expense is made up of interest plus completion and work fees over the life of the loan. The
finance expense is accounted for using the amortised cost basis method and recognised in the
Consolidated Statement of Comprehensive Income as finance expense on short-term loan.
Derivative conversion option
On the date of settlement of the loan, the lenders opted to exercise a portion of the loan at the offer
price of A$0.016 per share. There was no discount on the issue of these shares, so the conversion
P a g e | 46
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
option was not exercised. As a result, the fair value of the conversion option was revalued to $nil and
recognised in the Consolidated Statement of Comprehensive Income as fair value gain on loan
conversion option.
17. Share capital
On 24 May 2019 the Company issued 330.1 million ordinary shares at A$0.016 per share following the
announcement of a fully underwritten pro rata renounceable entitlement offer on 18 April 2019. As a
consequence of demand from shareholders and sub-underwriters, on the same date, the Company
secured a placement of a further 43.5 million ordinary shares at A$0.016 per share.
On 24 May 2019, the Company issued 80.1 million ordinary shares at A$0.016 per share as partial
settlement of the short-term loan (note 16).
On 28 January 2020, the Company announced a successful capital raise of A$4.0 million via
placement to sophisticated and institutional investors through the issue of 266.7 million new ordinary
shares at an issue price of A$0.015 per share. The placement was completed in two tranches:
• Tranche 1, completed on 4 February 2020 and consisting of 233.3 million shares issued within
the Company’s placement capacity,
• Tranche 2, completed on 5 March 2020 and consisting of 33.3 million shares issued at
additional capacity, following Shareholder approval at a Special Meeting of Shareholders held
on 26 February 2020.
Note
Share capital
$'000
Authorised,
issued and
fully-paid
Shares
000's
Balance at 1 April 2019
Shares issued for cash at A$0.016 per share ($0.017)
Shares issued for cash at A$0.015 per share ($0.016)
Shares issued as partial settlement of short-term loan at
A$0.016 per share ($0.017)
Costs of capital raise
48,984
6,310
4,160
495,271
373,548
266,667
16
1,356
(1,287)
80,074
-
Balance at 31 March 2020
59,523
1,215,560
Balance as at 1 April 2018
Costs of capital raise
Balance at 31 March 2019
49,028
(44)
495,271
-
48,984
495,271
The Company holds one class of ordinary shares, the shares have no par value. There are no
restrictions on the distribution of dividends, nor the repayment of capital.
P a g e | 47
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
18. Share-based payments
Note
2020
$'000
2019
$'000
Share-based payments reserve at the beginning of the year
906
898
Share option expense
Pre-IPO employee share options (a)
Employee ESOPs (c) (i)
NEDs ESOPs (c) (ii)
- 8
-
-
-
-
Total share option expense
7
0
8
Share-based payments reserve at the end of the year
906
906
The fair value of share options issued as part of the share-based payment arrangement is measured at
grant date and expensed over the vesting period. At the end of each reporting period, the Company
revises its estimates of the number of options that are expected to vest. Revisions to original estimates,
if any, are recognised in the Consolidated Statement of Comprehensive Income, with a corresponding
adjustment to equity.
a) Pre-IPO employee share options (December 2015)
In December 2015, the Board approved an employee share option scheme to issue options to selected
employees. One-third of the options granted to an employee vest to the employee on each of the first
three anniversaries of continuous employment with the Group. The vested options can be exercised at
any time up to 21 December 2025. Each option entitles the holder on payment of the exercise price
(NZ$0.16) to one ordinary share in the capital of the Group. If employment ceases, the options
automatically terminate unless the Board determines otherwise. Payment must be made in full for all
options exercised on the dates they are exercised. No further options were issued.
The fair value of each option was calculated to be $0.08 on the grant date. This fair value is being
expensed over the vesting periods for each tranche up to December 2016, December 2017 and
December 2018.
The weighted average contractual life of the options at 31 March 2020 is 68 months (2019: 80 months).
At 31 March 2020, there were 1,476,968 options on issue, all of which have vested.
b)
IPO advisors share options (June 2016)
In June 2016, the Company issued additional options to its advisors over an aggregate 8,750,000 shares,
at an exercise price of A$0.20 per share treated as share-based payments.
8,500,000 of the options issued will vest on the date the price per share of the Company on the ASX is
equal to A$0.30. The remaining 250,000 options will vest based on the following conditions; if the price
per share of the Company on the ASX achieves a 30 day volume weighted average price (VWAP) of a
50% premium to the issue price of A$0.20 (30 day VWAP) on or before the date that is two years after
the date the Company lists on the ASX (Second Anniversary), the Options will vest on the Second
Anniversary. These options are exercisable on or before 30 June 2019.
P a g e | 48
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
The weighted average of the fair value of each option is A$0.066 under the Black Scholes valuation
model resulting in a charge to the Company of A$579,375 (NZ$618,711) during the year ended 31 March
2017. The significant inputs into the model were a share price of A$0.20 at the grant date, vesting price
A$0.30, volatility of 50%, no dividend, expected option life of three years and a risk-free interest rate of
2.51%.
As the options were not exercised by 30 June 2019, they expired.
c) Current Employee share options plan
Effective from 10 May 2016, the Company adopted a new employee share option plan (ESOP) which
replaces the Pre IPO employee share option scheme. The ESOP has no impact on the Pre IPO employee
share options.
the options are to vest in accordance with the employee’s letter of offer;
the expiry date of the options will be as set out in the employee’s letter of offer; and
Key provisions of the ESOP include:
a)
b)
c) should the relevant employee cease to be employed by the Company, all options not yet vested
will be cancelled and, all options vested must be exercised within three months following the
relevant employee’s leaving date, unless the Board determines otherwise.
(i)
Employee share options (August 2017)
On the 6 June 2017 the Board approved the offer of options under the ESOP to employees on the
following terms:
•
•
•
an exercise price of A$0.20 per share;
the options vest in full on the date of issue; and
the expiry date of the options will be five years after date of issue.
The weighted average of the fair value of each option is A$0.037 under the Black Scholes valuation
model resulting in a charge to the Company of A$101,478 ($109,980) at the time they were granted.
The significant inputs into the model were a share price of A$0.12 at the grant date, exercise price
A$0.20, volatility of 50%, no dividend, expected option life of five years and a risk-free interest rate of
2.17%. These options were issued in August 2017.
The weighted average contractual life of the options at 31 March 2020 is 29 months (2019: 41 months).
At 31 March 2020, there were 1,122,913 options on issue, all of which have vested.
(ii)
Non-Executive Directors (NEDs) share options (September 2017)
At the Annual Meeting of Shareholders held on 12 September 2017 the shareholders approved the
issue of options under the ESOP to the NEDs on the following terms:
•
•
•
an exercise price of A$0.225 per share;
the options vest on the price of the quoted shares reaching A$0.30 per share, calculated on a
10-trading day VWAP; and
the expiry date of the options will be five years after the date of issue.
P a g e | 49
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
The weighted average of the fair value of each option is A$0.023 under the Black Scholes valuation
model resulting in a charge to the Company of A$40,268 ($44,383) at the time they were granted. The
significant inputs into the model were a share price of A$0.10 at the grant date, exercise price
A$0.225, volatility of 50%, no dividend, expected option life of five years and a risk-free interest rate of
2.19%. These options were issued in September 2017.
The weighted average contractual life of the options at 31 March 2020 is 29 months (2019: 41 months).
As at 31 March 2020, there were 1,143,413 options on issue, all of which have vested.
d) SLT Employee share options 2020
During the year, options were offered to members of the senior leadership team (SLT) under the
employee share option plan (ESOP). Approval was granted to the SLT by the Board, while those
members of the SLT on the Board were approved by shareholders at the Annual General Meeting held
on 29 July 2019. At 31 March 2020, the share options have not yet vested in accordance with the plan.
Movements in the number of share options outstanding and their related weighted average exercise
prices are as follows:
Pre-IPO
employee
share
options
Dec 2015
NZ$0.16
IPO
advisor
share
options
Jan 2016
A$0.20
Employee
ESOPs
Aug 2017
NEDs
ESOPs
Sep 2017
A$0.20 A$0.225
Total
000's
000's
000's
000's
000's
Weighted
average
exercise
price
$ per
option
1,533
8,750
1,352
1,143
12,778
0.21
(56)
-
(229)
-
(8,750)
-
-
-
(285)
(8,750)
0.21
0.21
1,477
-
1,123
1,143
3,743
0.20
1,477
-
1,123
1,143
3,743
0.20
Exercise price
Balance outstanding at 1
April 2019
Forfeited
Expired
Balance outstanding at 31
March 2020
Balance exercisable at 31
March 2020
P a g e | 50
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
Balance outstanding at 1
April 2018
Granted
Forfeited
Balance outstanding at 31
March 2019
Balance exercisable at 31
March 2019
19. Loss per share
1,533
8,750
1,715
1,713
13,711
0.22
-
-
-
-
-
-
-
-
(363)
(570)
(933)
0.24
1,533
8,750
1,352
1,143
12,778
0.21
1,533
-
1,352
-
2,885
0.19
Basic earnings per share is calculated by dividing the comprehensive profit or loss attributable to ordinary
shareholders of the Group by the weighted average number of ordinary shares on issue during the year.
Diluted earnings per share is determined by adjusting the comprehensive profit or loss attributable to
ordinary shareholders and the weighted average number of ordinary shares on issue for the effects of
all dilutive potential ordinary shares, which comprise share options. Potential ordinary shares are treated
as dilutive when, and only when, their conversion to ordinary shares would decrease earnings per share
or increase the loss per share.
Potential ordinary shares deriving from the exercise of share options (note 18) are anti-dilutive in nature.
The diluted loss per share is therefore the same as the undiluted loss per share. The number of shares
and weighted average number of shares has been adjusted for the dilutive impact of bonus shares that
arise from the rights issue completed in May 2019.
2020
$'000
Restated
2019
$'000
Total comprehensive loss attributable to shareholders
Ordinary number of shares
Weighted average number of shares on issue
($5,081)
1,215,559
921,198
($8,973)
518,301
518,301
Basic and diluted loss per share
($0.01)
($0.02)
The Group’s application of NZ IFRS 16: Leases had no material impact on loss per share calculation.
20. Financial instruments and financial risk management
Financial assets
Classification
The Group’s financial assets comprise cash and bank, and trade and other receivables which are
measured at amortised cost. Financial assets at amortised cost are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active market.
P a g e | 51
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
Recognition and measurement
Regular purchases and sales of financial assets are recognised on the trade date which is the date on
which the Group commits to purchase or sell the asset.
Impairment of financial assets
Assets carried at amortised cost
At each reporting date, the Group assesses whether there is any indication that a financial asset (or group
of financial assets) is impaired. A financial asset is impaired based on the probability-weighted estimate
of credit losses that are expected to result from all possible default events over the expected life of a
financial instrument. There has been no impairment of financial assets and there were no past due not
impaired financial assets as at 31 March 2020.
Financial liabilities
The Group’s financial liabilities comprise trade and other payables, which are measured at amortised
cost.
Financial risk management
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk
management framework. The Board of Directors has established an Audit and Risk Committee, which is
responsible for developing and monitoring the Group’s risk management policies. The Committee
reports regularly to the Board of Directors on its activities.
The Group’s risk management policies are established to identify and analyse the risks faced by the
Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk
management policies and systems are reviewed regularly to reflect changes in market conditions and
the Group’s activities. The Group, through its training and management standards and procedures, aims
to maintain a disciplined and constructive control environment in which all employees understand their
roles and obligations.
The Audit and Risk Committee oversees how management monitors compliance with the Group’s risk
management policies and procedures and reviews the adequacy of the risk management framework in
relation to the risks faced by the Group.
As a result of the Group’s operations and sources of finance, it is exposed to credit risk, liquidity risk and
foreign exchange risk. These risks are described below:
Credit risk
Credit risk is the risk of financial loss to the Group if a customer fails to meet its contractual obligations
and arises principally from the Group’s receivables from customers.
Financial instruments which potentially subject the Group to credit risk, principally consist of:
a) Trade receivables – the maximum exposure to credit risk at balance date to recognised financial
assets is the carrying amount, net of any credit losses for impairment of those assets, as disclosed
in the statement of financial position. These predominantly relate to trade receivables. Refer to note
12 for further details.
P a g e | 52
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
b) Cash and bank – the maximum potential exposure to credit risk at balance date is $5.1 million (2019:
$1.4 million). The Group monitors the credit quality of its major financial institutions that are
counterparties to its financial statements and does not anticipate non-performance by the counter-
parties.
The Group has not provided collateral and has no securities registered against it. Note 11 of these
Financial Statements provides details of guarantees held by its financial institutions. The Group does not
have any significant concentrations of credit risk apart from its deposits with large and reputable banks.
The Group has no credit facilities, other than trade creditors.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with
its financial liabilities that are settled by delivering cash or another financial asset. Management and the
Board monitor cash forecasts of the Group’s liquidity reserve on the basis of expected cash flow, to
enable the Board to determine the funding needs and to ensure the Group meets its future operating
requirements.
The contractual cash flows of the Group’s financial liabilities are as follows:
Contractual maturities of financial
liabilities
as at 31 March 2020
Up to
1 year
$'000
Between
1 - 2 years
$'000
Between
2 - 3 years
$'000
Trade and other payables
Lease liabilities
Provision for make good
1,107
882
-
-
904
769
- 60
-
Total
1,989
904
829
Contractual maturities of financial
liabilities
as at 31 March 2019
Up to
1 year
$'000
Between
1 - 2 years
$'000
Between
2 - 3 years
$'000
Trade and other payables
Short-term loan
1,685
2,321
-
-
-
-
Total
4,006
-
-
The amounts disclosed in the table are the contractual undiscounted cash flows.
Foreign exchange risk
Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are
denominated in a currency that is not the entity's functional currency. The Group is exposed to foreign
exchange risk currently arising as a result of commercial transactions involving the Australian dollar,
British pound, Canadian dollar, Singapore dollar and US dollar. The policy requires the Group to manage
foreign exchange risk against its functional currency (New Zealand dollar).
P a g e | 53
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
The Group’s exposure to monetary foreign currency financial instruments (in currencies other than each
entity’s functional currency) is outlined below in New Zealand dollars.
As at 31 March 2020, a movement of 10% in the New Zealand dollar would impact the Consolidated
Statement of Comprehensive Income and Consolidated Statement of Changes in Equity as detailed in
the table below:
10% decrease
2020
$'000
2019
$'000
10% increase
2020
$'000
2019
$'000
0
2
0
(7)
0
0
7
0
(15)
0
(0)
(2)
0
7
0
0
(7)
0
15
0
Impact on net loss before income tax:
Balances in GBP (net)
Balances in AUD (net)
Balances in CAD (net)
Balances in USD (net)
Balances in SGD (net)
Capital risk management
The capital structure of the Group consists of equity raised by the issue of ordinary shares in the
Company.
The Group’s aim is to maintain a sufficient capital base to sustain future growth and development of the
business and to maintain investor and creditor confidence.
The Group’s strategy in respect of capital management is reviewed regularly by the Board of Directors.
There has been no material change in the Group’s management of capital during the year.
Fair values
The fair value of the Group’s financial assets and liabilities is considered approximately equal to their
carrying amount. The carrying value of the Group’s financial instruments do not materially differ from their
fair value, accordingly, information on the fair value hierarchy is not required for those instruments.
Information on the fair value and carrying value of the short-term loan is in note 16.
Fair value hierarchy
This explains the judgements and estimates made in determining the fair values of the financial
instruments that are recognised and measured at fair value in the financial statements. To provide an
indication about the reliability of the inputs used in determining fair value, the Group classifies its financial
instruments into the three levels prescribed under the accounting standards. An explanation of each
level is below.
Level 1: Financial instruments traded in active markets (such as publicly traded derivatives and equity
securities) whose fair value is based on quoted market prices at the end of the reporting period.
Level 2: Financial instruments that are not traded in an active market (for example, over-the-counter
derivatives) where the fair value is determined using valuation techniques which maximise the use of
P a g e | 54
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
observable market data and rely as little as possible on entity-specific estimates. If all significant inputs
required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: Financial instruments that have one or more of the significant inputs that is not based on
observable market data.
21. Consolidation
The Group had the following subsidiaries as at 31 March 2020:
Name
Country of
incorporation
and place of
business
Nature of business
Singapore
9 Spokes Asia Pte Limited
9 Spokes Australia Pty Limited Australia
Canada
9 Spokes Canada Limited
New Zealand
9 Spokes Knowledge Limited
New Zealand
9 Spokes Trustee Limited
Trading operation
Trading operation
Trading operation
Holder of provisional patent
Non-trading
9 Spokes UK Limited
United Kingdom Trading operation
9 Spokes US Holdings Limited New Zealand
Holding Company
9 Spokes US, Inc.
United States
Non-trading
% of
ordinary
shares
held by
parent
100%
100%
100%
100%
100%
100%
100%
100%
Date of
incorporation
2 April 2019
10 April 2014
16 August 2017
5 May 2015
16 July 2015
21 December
2015
12 November
2014
11 May 2017
Subsidiary companies
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group
controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries
are fully consolidated from the date on which control is transferred to the Group.
The Group applies the acquisition method to account for business combinations. The consideration
transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities
incurred to the former owners of the acquiree and the equity interests issued by the Group.
Inter-company transactions, balances and unrealised gains and losses on transactions between Group
companies are eliminated. All subsidiaries conform to Group accounting policies.
The Group
The results and financial position of all Group entities (none of which have the currency of a hyper-
inflationary economy) that have a functional currency different from the presentation currency are
translated into the presentation currency as follows:
a) assets and liabilities for each statement of financial position presented are translated at the closing
b)
rate at the date of that statement of financial position;
income and expenses for each statement of comprehensive income and statement of changes in
equity, are translated at average exchange rates (unless this average is not a reasonable
P a g e | 55
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case
income and expenses are translated at the rate on the dates of the transactions); and
c) all resulting exchange differences are recognised in other comprehensive income.
The ultimate holding company of the Group is 9 Spokes International Limited.
22. Commitments
Lease commitments
Less than one year
One to five years
2020
$'000
2019
$'000
-
-
793
713
Total lease commitments
-
1,506
From 1 April 2019, the Group has recognised right of use assets for these leases, except for short-term
leases, see note 14 for further information.
23. Contingencies
Repayment of remuneration
During the period September 2018 to May 2019, the Directors and members of the executive team took
a voluntary reduction in their remuneration recognising the cash constraints of the Company at that
time. The total amount of the reduction amounted to approximately $0.52 million.
The Board, recognising the commitment of the Directors and executive team, has since decided that
this amount should be repaid at some stage in the future, subject to a clear cash runway of twelve
months.
The total amount of salary reductions by directors and some executives is:
Directors
Paul Reynolds
Thomas Power
Mark Estall
Adrian Grant
Executive employees
$'000
103
53
103
106
154
Total amount of contingency
519
As at the balance date the Company did not meet the criteria for payment and therefore has not
recognised this arrangement as a liability. It is currently uncertain when and if the repayment will
P a g e | 56
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
happen. As the Company works towards achieving breakeven, it will re-evaluate the suitability of
repayment based on latest cash forecasts. Any repayment will be subject to Board approval.
24. Key management personnel
Key management personnel are defined as those persons having authority and responsibility for
planning, directing and controlling the activities of the Group, directly or indirectly and include the
Directors and the Chief Executive Officer, and his direct reports.
The following table summarises remuneration paid to key management personnel:
Short-term employee benefits
Directors' fees
Share based payments
2020
$'000
2,456
272
2019
$'000
2,641
169
- 3
Total
2,728
2,813
Short-term employee benefits relate to salaries and other benefits paid to the executive team.
25. Related party transactions and balances
a. Transactions with related parties during the year
Name of related party
Nature of
relationship
Transaction
2020
$'000
2019
$'000
Paul Reynolds
Tightline Advisory Limited (1)
Shelley Ruha
Thomas Power
Social Power (Surrey) Limited (2)
Director
Director
Director
Director
Director
Directors' fees
155
77
Consulting services
5
27
Directors' fees
44
-
Directors' fees
73
-
Directors' fees
- 40
Consulting services
- 96
Mint Recruitment Limited (3)
Family
Member of
Director
Kestrel Corporate Advisory, Inc.(4) Director
Provision of
recruitment
services
Directors' fees
71
138
- 40
Consulting services
- 23
1. Non-executive Director, Paul Reynolds is a Director and shareholder of Tightline Advisory Limited.
2. Non-executive Director, Thomas Power is a Director and shareholder of Social Power (Surrey) Limited.
3. A member of Executive Director, Adrian Grant’s family is a Director and shareholder of Mint Recruitment Limited.
4. Non-executive Director, Wendy Webb is a Director and shareholder of Kestrel Corporate Advisory, Inc. Wendy resigned
from the Board on 21 September 2018
During the prior year, the non-executive Directors voluntarily reduced their Directors’ fees and ceased
charging for consultancy services.
P a g e | 57
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
b. Amounts owed by the Group to related parties
Name of related party
Nature of
relationship
Balance type
2020
$'000
2019
$'000
Family
Member of
Director
Mint Recruitment Limited
Paul Reynolds
Director
Social Power (Surrey) Limited Director
Trade and other payables
Trade and other payables
Trade and other payables
- 8
- 13
- 7
Net amounts owed to related parties
- 28
26. Events after the reporting period
There have been no reportable events arising after the end of the reporting period.
27. Restatement of previously reported 31 March 2019 Consolidated Financial Statements
During the process of preparing these consolidated financial statements, the Company has made the
following adjustments to the Consolidated Statement of Financial Position as at 31 March 2019 and the
Consolidated Statement of Comprehensive Income for the year ended 31 March 2019 following a
reassessment taking into account the implications to the financial position and performance for the
year ended 31 March 2020.
Included below are reconciliations of the amounts previously reported in the 31 March 2019
Consolidated Statement of Financial Position to the restated amounts reported in the Consolidated
Statement of Financial Position, and explanations of the adjustments, as well the reconciliation of the
Consolidated Statement of Comprehensive Income for the year ended 31 March 2019. The Group’s
Consolidated Statement of Cash Flows is not affected by the restatement and so is not re-presented.
These adjustments have been identified during the audit of financial statements for the year ended 31
March 2019, however, they were not considered material. After the reassessment of these accounts,
the Directors decided to record these adjustments in order to provide the most accurate presentation
of Group’s financial position and performance. The adjustments relate to the following:
• $0.1 million accrual of additional grant income based on the grant funds received after the
issue of the audited financial statements;
• $0.2 million of contract assets, costs related to the implementation of platforms for customers,
that will be recovered in future periods against recognised implementation revenues; and
• $0.3 million adjustment to the cost allocation between research and development expenses
and operational expenses.
Prior year restatement had no material impact on the loss per share calculations for the year ended 31
March 2019.
P a g e | 58
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
Reconciliation from the 31 March 2019 Consolidated Statement of Financial Position to the restated
comparative Consolidated Statement of Financial Position as at 31 March 2019:
2019
$'000
Adjustment
$'000
Restated
2019
$'000
Assets
Non-current assets
Property, plant and equipment
Right of use asset
346
-
-
-
346
-
Total non-current assets
346
-
346
Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets
1,360
805
266
- 1,360
890
475
85
209
Total current assets
2,431
294
2,725
Total assets
2,777
294
3,071
Equity
Share capital
Share based payments reserve
Foreign currency translation reserve
Accumulated losses
Equity attributable to the owners of the
company
48,984
906
(143)
(53,363)
- 48,984
- 906
- (143)
(53,069)
294
(3,616)
294
(3,322)
Total equity
(3,616)
294
(3,322)
Non-current liabilities
Provision for make good
Lease Liabilities
Contract Liabilities
-
-
281
-
-
-
-
-
281
Total non-current liabilities
281
- 281
Current liabilities
Trade and other payables
Short-term loan
Fair value of loan conversions option
Lease Liabilities
Contract liabilities
1,685
2,637
585
-
- 1,685
2,637
-
585
-
-
-
1,205
-
1,205
Total current liabilities
6,112
-
6,112
Total equity and liabilities
2,777
294
3,071
P a g e | 59
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
Reconciliation from the 31 March 2019 Consolidated Statement of Comprehensive Income for the year
ended 31 March 2019 to the restated comparative Consolidated Statement of Comprehensive Income
for the year ended 31 March 2019:
Revenue:
Operating revenue
Other operating income
Total revenue
Expenses:
Operational expenses
Research and development expenses
Sales, marketing and administration expenses
2019
$'000
Adjustment
$'000
Restated
2019
$'000
7,341
850
8,191
(3,146)
(4,523)
(9,156)
-
85
85
278
(69)
-
7,341
935
8,276
(2,868)
(4,592)
(9,156)
Total expenses
(16,825)
209
(16,616)
Operating loss
(8,634)
294
(8,340)
Net finance expense
-
(690)
(690)
Net loss before income tax
(9,324)
294
(9,030)
Income tax credit / (expense)
- - -
Net loss from continuing operations
(9,324)
294
(9,030)
Other comprehensive income:
Foreign exchange translation of international
subsidiaries
Total comprehensive loss attributable to
shareholders
Loss per share
Basic and diluted loss per share
57
-
57
(9,267)
294
(8,973)
($0.02)
$0.00
($0.02)
P a g e | 60
9 Spokes International Limited
New Zealand Statutory Information
As at 31 March 2020
GOVERNANCE AND DISCLOSURE COVER
06
GOVERNANCE
&DISCLOSURES
P a g e | 61
9 Spokes International Limited
New Zealand Statutory Information
As at 31 March 2020
1. Board of Directors and sub-committees
The Directors in office at the date of this Annual Report were:
Name
Position
Date appointed to the Board
Executive Director and Chief Executive Officer
Paul Reynolds Non-Executive Chairman
Adrian Grant
Thomas Power Non-Executive Director
Non-Executive Director
Mark Estall
Non-Executive Director
Shelley Ruha
10 September 2014
17 August 2017
7 October 2014
19 September 2011
14 October 2019
On 1 April 2020 Mark Estall transitioned from Executive Director to Non-Executive Director.
a) Board meetings
The Board met formally 14 times during the financial year ended 31 March 2020. Normally the Board
would meet up to 10 times a year during which meetings the Board considers key financial and
operational information, as well as matters of strategic importance. Additional meetings were held during
the year ended 31 March 2020 to consider matters relating to capital raising and the COVID-19 outbreak.
Name
Position
Paul Reynolds
Adrian Grant
Mark Estall
Thomas Power
Shelley Ruha
Non-Executive Chairman
Executive Director and Chief Executive Officer
Non-Executive Director
Non-Executive Director
Non-Executive Director
b) Board committees
Number of
meetings
eligible to
attend
Number of
meetings
attended
14
14
14
14
8
14
13
14
13
8
The Board currently has two committees to perform certain functions of the Board and to provide the
Board with recommendations and advice, namely the Audit and Risk Committee and the Remuneration
and Nomination Committee. The Charters for each committee are available on the Company’s website
at: https://www.9spokes.com/hubs/investors/corporate-governance/.
c) Audit and Risk Committee
The role of the Audit and Risk Committee is to assist the Board to meet its oversight responsibilities in
relation to the Company’s financial reporting systems, the systems of internal control and risk
management and internal and external audit functions. In fulfilling these roles, the Audit and Risk
Committee is responsible for maintaining free and open communication between the Board,
management, and auditors.
The Audit and Risk Committee provides advice to the Board and reports on the status and management
of the risks to the Company. The purpose of the Committee’s risk management process is to assist the
Board in relation to risk management policies, procedures and systems and ensure that risks are
identified, assessed, and appropriately managed.
P a g e | 62
9 Spokes International Limited
New Zealand Statutory Information
As at 31 March 2020
During the financial year, the Audit and Risk Committee met twice to review the results prior to the
release of the Interim Financial Statements for the six months ended 30 September 2019. Other matters
were dealt with either at Board meetings or through direct communications with Committee members.
The members of the Committee at the date of this Annual Report are Shelly Ruha (Chair), Paul Reynolds,
Thomas Power and Mark Estall.
d) Remuneration and Nomination Committee
The role of the Remuneration and Nomination Committee is to review and make recommendations to
the Board on remuneration packages and policies related to the Directors and senior executives and to
ensure that the remuneration policies and practices are consistent with the Group’s strategic goals and
human resources objectives. The Remuneration and Nomination Committee is also responsible for
reviewing and making recommendations in relation to the composition and performance of the Board
and its Committees and ensuring that adequate succession plans are in place (including for the
recruitment and appointment of Directors and senior management). Independent advice will be sought
where appropriate.
The Remuneration and Nomination Committee did not meet specifically during last financial year as all
relevant matters were dealt with either at Board meetings or through direct communications between
the Committee members. These included changes to the executive team and remuneration matters. The
members of the Committee at the date of this Annual Report are Paul Reynolds (Chair), Thomas Power,
Shelley Ruha and Mark Estall.
2. Shareholdings of Directors
Adrian Grant
Mark Estall
Paul Reynolds
Thomas Power
Shelley Ruha
2020
Shares
66,680,151
66,754,863
4,423,625
1,843,784
1,120,000
2019
Shares
66,680,151
66,754,863
4,423,625
1,843,784
-
P a g e | 63
9 Spokes International Limited
New Zealand Statutory Information
As at 31 March 2020
3. Entries recorded in the Directors’ Interests Register
The following are entries made in the Interests Register during the year ended 31 March 2020:
Director / Entity
Adrian Grant
Aminoex Property Fund No 1 Limited
DWDA Holdings Limited
Franc Holdings Limited
9 Spokes International Limited
RewardPay (Aus) Limited
Mark Estall
9 Spokes International Limited
9 Spokes Australia Pty Limited
9 Spokes Asia Pte Limited
9 Spokes Knowledge Limited
9 Spokes Trustee Limited
9 Spokes UK Limited
9 Spokes US Holdings Limited
9 Spokes Canada Limited
9 Spokes US, Inc.
Franc Holdings Limited
M & M No.1 Limited
M & M No.2 Limited
Te Arai Coast Lodge Limited
Waiere Limited
Paul Reynolds
Relationship
Director & Shareholder
Shareholder
Director & Shareholder
Director & Shareholder
Shareholder
Director & Shareholder
Director
Director
Director
Director
Director
Director
Director
Director
Director & Shareholder
Director & Shareholder
Director & Shareholder
Director & Shareholder
Director & Shareholder
9 Spokes UK Limited
9 Spokes International Limited
Computershare Limited
Tightline Advisory Limited
XConnect Global Networks Limited (Resigned 8 August 2019)
Director
Chairman, Director & Shareholder
Director
Director & Shareholder
Director
Thomas Power
9 Spokes International Limited
Digital Entrepreneur Limited
Electric Dog Limited (Retired 24 September 2019)
SA Vortex Limited
Social Power (Surrey) Limited
Teamblockchain Limited
The Business Café Limited
Shelley Ruha
9 Spokes International Limited
Analey Holdings Limited
IT & Business Consulting Limited
The Icehouse Limited
Heartland Bank Limited
Director & Shareholder
Director & Shareholder
Director & Shareholder
Director & Shareholder
Director & Shareholder
Director & Shareholder
Director & Shareholder
Director & Shareholder
Director & Shareholder
Director
Director
Director
P a g e | 64
9 Spokes International Limited
New Zealand Statutory Information
As at 31 March 2020
4. Donations
The total value of donations made by the Group during the year ended 31 March 2020 was $nil (2019:
$140).
5. Directors’ remuneration
The remuneration receivable by Directors in office during the financial year ended 31 March 2020 was:
Directors' fees
$'000
Employment
remuneration
Consultancy
services
Share-based
payments
$'000
$'000
$'000
Adrian Grant
Mark Estall
Paul Reynolds
Thomas Power
Shelley Ruha
- 332
- 303
155
73
44
- 5
-
-
-
-
-
-
-
-
-
-
-
272
635
5
-
6. Employee remuneration
The number of employees or former employees, not being Directors of the Group, who received
remuneration and other benefits in their capacity as employees, the value of which exceeds $100,000 is
set out below:
$100,000 - $109,999
$110,000 - $119,999
$120,000 - $129,999
$130,000 - $139,999
$140,000 - $149,999
$150,000 - $159,999
$170,000 - $179,999
$180,000 - $189,999
$190,000 - $199,999
$200,000 - $209,999
$210,000 - $219,999
$220,000 - $229,999
$250,000 - $259,999
$260,000 - $269,999
$270,000 - $279,999
$280,000 - $289,999
$290,000 - $299,999
2020
No.
5
7
5
-
1
1
1
-
-
1
-
1
-
-
-
3
-
2019
No.
10
2
6
2
3
1
1
1
1
-
1
-
2
1
1
1
1
P a g e | 65
9 Spokes International Limited
Additional Information for ASX Listed Companies
As at 12 June 2020
The following information is current as at 12 June 2020 and is included for the benefit of shareholders
and for compliance with the Australian Securities Exchange (ASX) Listing Rules.
1. Corporate Governance Statement
In accordance with ASX Listing Rule 4.10.3, a copy of the Company's Corporate Governance Statement
can be obtained on the Company's website: https://www.9spokes.com/investors.
2. Substantial Holders
The Financial Markets Conduct Act 2013 (NZ) (FMCA) includes substantial holder disclosure
requirements for persons with a 5% or more holding in a New Zealand listed company. These
requirements are similar to those under the Corporations Act 2001 (Cth) (Corporations Act), which is
applicable in Australia. However, the FMCA requirements are not applicable to the Company because
the Company is not listed on a New Zealand Exchange. Furthermore, Chapter 6C of the Corporations
Act does not apply to the Company. However, the Company is aware of the following information
regarding substantial shareholdings in the Company:
Substantial Holder (Consolidated)
Mark Estall
Adrian Grant
Associates
Associates
M & M No. 2 Limited
Franc Holdings Limited
Adrian David Grant & AJ
Trustee Services Limited
Franc Holdings Limited
Adrian David Grant
Number of
Ordinary
Shares
82,064,998
Voting Power
6.75%
81,990,286
6.75%
Number of
Ordinary
Shares
Voting Power
Cs Third Nominees Pty Limited
106,000,000
8.72%
HSBC Custody Nominees
Harrogate Trustee Limited
86,850,000
7.14%
72,866,826
5.99%
Represents 100% of the holdings in the Associates listed in the table.
P a g e | 66
9 Spokes International Limited
Additional Information for ASX Listed Companies
As at 12 June 2020
3. Number of Holders in each Class of Equity Security
Class of Equity Security
Fully-Paid Ordinary Shares (quoted)
Options over Fully-Paid Ordinary Shares (unquoted)
4. Voting Rights Attaching to each Class
Number of Holders
1,681
See paragraph 13 below
The voting rights attaching to the fully-paid ordinary shares is that each share is entitled to one vote when
a poll is called, otherwise each member present (or represented by their proxy, attorney or other
representative) has one vote on a show of hands.
No voting rights attach to any of the options over the fully-paid ordinary shares.
5. Distribution Schedules
a) Ordinary Shares
The distribution schedule for fully-paid ordinary shares is as follows:
Holdings Ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-9,999,999,999
Holders
33
39
105
811
693
Total Units
5,608
153,362
892,538
37,485,968
1,177,021,979
%
0.00%
0.01%
0.08%
3.08%
96.83%
Total
1,681
1,215,559,455
100.00%
b) Unquoted Share Options
Pre-IPO Employee Share Options:
Originally issued in December 2015, the distribution schedule for options over fully-paid ordinary shares
issued to employees, under the Pre-IPO Employee Share Option Scheme (the details of which are set
out in the Company's Replacement Prospectus dated 17 May 2016), is as follows:
Holders
Total Units
Holdings Ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-99,999,999,999
Total
All options have vested.
0
0
0
1
3
4
0
0
0
63,505
1,413,463
%
0.00%
0.00%
0.00%
4.30%
95.70%
1,476,968
100.00%
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9 Spokes International Limited
Additional Information for ASX Listed Companies
As at 12 June 2020
Current Employee Share Options:
Originally issued in August 2017, the distribution schedule for options over fully-paid ordinary shares
issued to employees under the Company's current ESOP, each with an exercise price of A$0.20, is as
follows:
Holdings Ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-99,999,999,999
Total
All the options issued in August 2017 vested on issue.
Non-Executive Directors Share Options:
Holders
Total Units
0
0
1
9
5
15
0
0
6,294
265,111
817,534
%
0.00%
0.00%
0.58%
24.35%
75.07%
1,088,939
100.00%
Originally issued in September 2017, the distribution schedule for options over fully-paid ordinary shares
issued to NEDs under the Company's ESOP (the details of which are set out in the Explanatory
Memorandum attached to the Company's Notice of Annual Meeting of Shareholders dated 28 August
2017) is as follows:
Holdings Ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-99,999,999,999
Total
Holders
Total Units
%
0
0
0
0
2
2
0
0
0
0
1,143,413
0.00%
0.00%
0.00%
0.00%
100.00%
1,143,413
100.00%
None of the options issued under the NEDs Share Options Scheme have vested.
6. Marketable Securities
The number of holders holding less than a marketable parcel (i.e. the value of a parcel that is less than
A$500) of the Company's main class of securities (fully-paid ordinary shares), based on the closing
market price of A$0.02 as at 12 June 2020 was 401.
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9 Spokes International Limited
Additional Information for ASX Listed Companies
As at 12 June 2020
7. 20 Largest Holders
As at 12 June 2020, the names on the share register of the 20 largest holders of fully-paid ordinary
shares, the number of those shares held, and the percentage of capital held, is as follows:
Holder Name
CS Third Nominees Pty Limited
HSBC Custody Nominees
Harrogate Trustee Limited
M & M No.2 Limited
Mr Adrian David Grant
Citicorp Nominees Pty Limited
Custodial Services Limited
G&S Capital Limited
Sekots Group Limited
Franc Holdings Limited
Optimum Holdings Limited
Altor Capital Management
Mr Brendan Paul Roberts
Mr Byron Carl Thomas
Mr Blair Richard Tallott
Mr Alistair Richard Louis Kight
Mr Hien Quang Trinh
Tappenden Holdings Limited
Rubi Holdings Pty Ltd
Mr Andrew Mark Jones
8. Company Secretary
Number of Shares % Holding
106,000,000
86,850,000
72,866,826
51,444,727
51,312,727
46,132,019
38,720,324
37,617,886
32,029,452
30,620,271
25,072,440
20,365,489
14,779,609
13,653,900
10,000,000
9,185,000
9,100,144
8,572,349
8,000,000
7,972,215
8.72%
7.14%
5.99%
4.23%
4.22%
3.80%
3.19%
3.09%
2.63%
2.52%
2.06%
1.68%
1.22%
1.12%
0.82%
0.76%
0.75%
0.71%
0.66%
0.66%
For the purposes of the ASX Listing Rules, the Company Secretary is currently Melisa Beight.
9. Address
The Company's principal administrative office is:
Level 4, AECOM House, 8 Mahuhu Crescent, Auckland, 1010, New Zealand
The Company's registered office in Australia is:
Level 22, 19 Martin Place, Sydney, NSW, 2000
The Company does not have a contact telephone number in either New Zealand or Australia. The
Company is contactable at investors@9spokes.com.
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9 Spokes International Limited
Additional Information for ASX Listed Companies
As at 12 June 2020
10. Register of Securities
The register of securities is held at the following address:
Boardroom Pty Limited,
Level 12, 225 George Street, NSW, 2000, Australia
Telephone: +61 1300 737 760
11. Stock Exchanges
The Company’s securities are not quoted on any stock exchange other than the ASX.
12. Restricted Securities
None of the Company's securities are currently restricted.
13. Unquoted Securities
The following unquoted securities are on issue:
Class
Number of Holders
Number on Issue
A - Options over Ordinary Shares 1
B - Options over Ordinary Shares 2
C - Options over Ordinary Shares 3
4
15
2
1,476,698
1,088,939
1,143,413
1
2
3
Pre-IPO Employee Share Options: exercise price is NZ$0.16.
Options issued to Employees under ESOP: exercise price A$0.20
NEDs Options under the ESOP: exercise price A$0.225
14. Review of Operations
A review of the operations and activities of the Company for the year ended 31 March 2020 is provided
in the Chairman’s report and Chief Executive’s report sections of this Annual Report.
15. Buy-Back
There is no current on-market buy-back being conducted by the Company.
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9 Spokes International Limited
Additional Information for ASX Listed Companies
As at 12 June 2020
16. Further Information
The Company is incorporated in New Zealand.
The Company is not subject to Chapters 6, 6A, 6B and 6C of the Corporations Act dealing with the
acquisition of its shares (including substantial holdings and takeovers).
In general, securities in the Company can be transferred freely, with restrictions or limitations applying
only in relation to takeovers, overseas investment and competition. Limitations on the acquisition of the
securities imposed by the law in which the Company is incorporated (New Zealand) are as follows:
• The New Zealand Takeovers Code and the FMCA prescribe a general 20% threshold under
which a person is prevented from increasing the percentage of voting rights held or controlled
by them in excess of that threshold or from becoming the holder or controller of an increased
percentage of voting rights if they already hold or control more than 20% of the voting rights,
subject to some exceptions. Under the New Zealand Takeovers Code, compulsory acquisitions
are also permitted by persons who hold or control 90% or more of the voting rights in the
Company.
• Generally, the consent of the New Zealand Overseas Investment Office is required where an
overseas person acquires shares in the Company that amount to more than 25% of the total
shares issued by the Company, or if the person already holds 25% or more of the shares, the
acquisition increases such holding and the value of the shares, or of the Company's and its
subsidiaries' assets, exceeds $100 million.
• Under the Commerce Act 1986 (NZ), a person may be prevented from acquiring shares in the
Company if the acquisition would have, or would be likely to have, the effect of substantially
lessening competition in the market.
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9 Spokes International Limited
Company Directory
Registered Office
Level 4, AECOM House
8 Mahuhu Crescent
Auckland 1010, New Zealand
New Zealand Company Number
3538758
New Zealand Business Number
9429030957862
Australian Registered Business Number
610 518 075
Directors
Paul Reynolds (Chairman)
Australian Lawyers
Adrian Grant
Mark Estall
Thomas Power
Shelley Ruha
Bird & Bird Lawyers
Level 11, 68 Pitt Street
Sydney, NSW 2000, Australia
New Zealand Lawyers
Webb Henderson
Level 3, 110 Customs Street West
Auckland 1010 New Zealand
Group Auditors
PricewaterhouseCoopers
Share Registrar
ASX
Website
188 Quay Street
Private Bag 92162
Auckland 1142, New Zealand
Boardroom Pty Limited
Level 12, 225 George Street
Sydney, NSW 2000, Australia
The Company’s ordinary shares are
listed on the ASX, under ASX code
ASX:9SP
www.9spokes.com
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