p. 9
Independent Auditor’s Report
p. 13
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
p. 14
Consolidated Statement of Changes in Equity
p. 15
Consolidated Statement of Financial Position
p. 16
Consolidated Statement of Cash Flows
p. 17
Notes to the Consolidated Financial Statements
p. 46
New Zealand Statutory Information
p. 50
Additional Information for ASX Listed Companies
p. 57
Company directory
9 Spokes International Limited
Chairman and Chief Executive’s report
3
9 Spokes International Limited
Chairman and Chief Executive’s report
4
Dear Shareholders,
Financial Performance:
Our financial performance this year largely mirrored our prior year results, save for two cost pressures
on the business. The tech industry is experiencing significant inflationary pressure on wages which is
being exasperated by high demand across sectors for IT talent. We also received a non-binding,
indicative proposal to acquire all of the equity interests in the Company. The Board appropriately gave
this proposal its full consideration and incurred material costs in doing so. However, the exercise also
provided additional business development collateral and foundation analysis for our capital plan.
Outside of these pressures we operated in line with our expenditure plan.
Revenue
Total income for the year was $6.0 million (2021: $6.6 million). Our reported revenues comprise of
implementation fees, annual platform license fees, development fees, and other revenue.
Implementation fees are invoiced and receipted at the time of deployment and are then recognised
over the initial term of a bank partner’s contract. For the year ended 31 March 2022, recognised
implementation revenue was $1.0 million (2021: $1.0 million); deferred implementation fee revenue
was $1.9 million (2021: $1.7 million). Platform access revenue for the year was $4.2 million (2021: $4.2
million).
The Group generated revenue of $0.2 million (2021: $0.5 million) from additional services provided to
existing bank partners and development revenue. Grant income of $0.5 million (2021 $0.7 million) has
reduced due to less research and development work being completed and more iterative work being
focused on.
Expenditure
Total expenditure for the year ended 31 March 2022 was $12.2 million (2021: $11.6 million). The
increase in expenditure was due to the work completed to properly consider the non-binding,
indicative offer received and from pressures on the labour market leading to increases in the
employee benefit expense to meet the market and retain staff. Cost management and control
continue to be a key objective as we enter FY23.
Cash flow
Annual net cash outflows from operations were $5.2 million (2021: $5.0 million). The Group had an
increase in receipts from customers as a result of the implementation fees received from Virgin
2022
2021
Variance
Variance
NZ$ million
NZ$ million
NZ$ million
%
Total revenue
6.0
6.6
(0.6)
-9%
Total expenses
(12.2)
(11.6)
(0.6)
-5%
Net finance expense
0.0
(0.1)
0.1
100%
Net loss before income tax
(6.2)
(5.1)
(1.1)
-22%
9 Spokes International Limited
Chairman and Chief Executive’s report
5
Money and the early receipt of customer licence fees from one customer. The transition from the
Callaghan Growth Grant to the Research and Development Tax Incentive (“RDTI”) has resulted in a
decrease in the receipts from government grants due to differences in the schemes. The Growth
Grant was paid quarterly with the final FY21 payment being receipted in FY22 while the RDTI scheme is
a tax incentive, and any eligible payments will be receipted subsequent to filing our tax return.
Payments to employees and suppliers increased by $0.8 million due to the work completed to properly
consider the non-binding, indicative offer received with a dual focus on a future capital raise
alongside pressures on the labour market leading to the employee benefit expense increasing to
meet the market and retain staff.
Cash and bank as at 31 March 2022 was $3.0 million (2021: $8.8 million).
Other:
The Company requested voluntary suspension from the ASX on 30 May 2022.
The Company subsequently announced a AU$1.119m conditional equity placement and a proposed
debt facility to provide working capital and to undertake a Strategic Review of the Company and its
operations on 18 July 2022.
Subsequent to balance date, Paul Reynolds and Thomas Power resigned from the Board and Kevin
Phalen was elected as Chairman.
Approved for and on behalf of the Board on 29 July 2022.
Kevin Phalen
Chairman
Adrian Grant
Chief Executive Officer
9 Spokes International Limited
Director’s report
6
9 Spokes International Limited
Director’s report
7
Directors’ report
The Board of Directors is pleased to present the financial statements for 9 Spokes
International Limited for the year ended 31 March 2022.
The financial statements presented are signed for and on behalf of the Board and were
authorised for issue on 29 July 2022.
Kevin Phalen
Chairman
Adrian Grant
Chief Executive, Co-Founder
8
BDO Auckland
9
INDEPENDENT AUDITOR’S REPORT
TO THE SHAREHOLDERS OF 9 SPOKES INTERNATIONAL LIMITED
Opinion
We have audited the consolidated financial statements of 9 Spokes International Limited (“the
Company”) and its subsidiaries (together, “the Group”), which comprise the consolidated
statement of financial position as at 31 March 2022, and the consolidated statement of profit or
loss and other comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, and notes to the consolidated
financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at 31 March 2022, and its consolidated
financial performance and its consolidated cash flows for the year then ended in accordance with
New Zealand equivalents to International Financial Reporting Standards (“NZ IFRS”).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand)
(“ISAs (NZ)”). 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
are independent of the Group in accordance with Professional and Ethical Standard 1 International
Code of Ethics for Assurance Practitioners (including International Independence Standards) (New
Zealand) issued by the New Zealand Auditing and Assurance Standards Board, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other than in our capacity as auditor we have no relationship with, or interests in, the Company or
any of its subsidiaries.
Material Uncertainty Related to Going Concern
We draw attention to Note 2c to the consolidated financial statements, which indicates that the
Group incurred a net loss of $6.1 million and the net cash outflows from operating activities of $5.2
million during the year ended 31 March 2022. As stated in Note 2c, these events or conditions,
along with other matters as set forth in Note 2c, indicate that a 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.
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 period. 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.
BDO Auckland
10
Revenue from contracts with customers
Key Audit Matter
The Group receives implementation fees and platform access fees in relation to the platforms it
provides to its enterprise customers. Management has judged that these two forms of fees
represent a single performance obligation, with the fees aggregated and recognised over the
service delivery period on a straight-line basis.
Additionally, the Group receives development fees in relation to services provided for the
development of additional features, tiles or other items requested by the customer. Management
has judged that there are distinct development performance obligations in respect of these
services. Additionally, management has determined that the revenue from development fees is
recognised at a point in time on completion of the development work and the functionality being
made available to the customer.
Given the significance of the balances, the judgements involved, and the complexity of NZ IFRS 15
Revenue from Contracts with Customers, revenue from contracts with customers was considered a
key audit matter.
The Group’s revenue recognition accounting policy is disclosed in Note 4 to the financial
statements.
How The Matter Was Addressed in Our Audit
In relation to the Group's platform access and implementation revenue:
•
We obtained an understanding of the design and implementation of controls relating to the
review and approval of customer contracts, and the application of the standard.
•
We have assessed management’s rationale for concluding the platform access and
implementation fees are one performance obligation against the requirements of NZ IFRS
15 Revenue from Contracts with Customers.
•
We have reviewed management’s revenue recognition assessment for the new platform
agreements entered into during the year to the Group’s existing accounting policy and the
requirements of NZ IFRS 15 Revenue from Contracts with Customers and the underlying
customer contracts. We understood and challenged the commercial rationale against the
underlying contracts.
•
We have agreed a sample of the platform access fee revenue recognised to supporting
invoices and bank receipts, ensuring revenue was recognised only from the date when the
customer gained access to the platform.
•
To ensure completeness of revenue, we have reviewed the inputs into the implementation
fee schedules and reconciled the expected fee revenue amortisation from the schedule to
the general ledger.
In relation to the Group's development fee revenue:
•
We have reviewed management’s revenue recognition assessment for the development fee
revenue against the requirements of NZ IFRS 15 Revenue from Contracts with Customers
and the underlying customer contracts. We understood and challenged the commercial
rationale against the underlying contracts.
•
We have agreed the development fee revenue to the completed Works Statements and the
amounts received to bank statements.
•
We have reviewed the disclosures to the financial statements, including revenue
recognition accounting policy and revenue disaggregation.
BDO Auckland
11
Other Information
The directors are responsible for the other information. The other information comprises the
Annual Report and the Appendix 4E Report (but does not include the consolidated financial
statements and our auditor’s report thereon).
Our opinion on the consolidated financial statements does not cover the other information and we
do not and will not express any form of audit opinion or assurance conclusion thereon.
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, 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.
Directors’ Responsibilities for the Consolidated Financial Statements
The directors are responsible on behalf of the Group for the preparation and fair presentation of
the consolidated financial statements in accordance with NZ 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 on behalf of the
Group 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) 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 decisions of users taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the financial statements is located at
the External Reporting Board’s website at: https://www.xrb.govt.nz/assurance-standards/auditors-
responsibilities/audit-report-1/.
This description forms part of our auditor’s report.
BDO Auckland
12
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.
The engagement partner on the audit resulting in this independent auditor’s report is Chris Neves.
BDO Auckland
Auckland
New Zealand
29 July 2022
9 Spokes International Limited
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31 March 2022
The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction
with the accompanying notes to the Consolidated Financial Statements
13
2022
2021
Notes
$'000
$'000
Income
Operating revenue
4a
5,510
5,728
Other operating income
4b
520
870
Total income
6,030
6,598
Expenses
Operating expenses
5a
(2,185)
(1,960)
Research and development expenses
5b
(2,811)
(3,123)
Sales, marketing and administration expenses
5c
(7,186)
(6,473)
Total expenses before finance income and
expenses
(12,182)
(11,556)
Finance income and expense
Finance income
8
95
40
Finance expense
8
(137)
(177)
Net loss before income tax
(6,194)
(5,095)
Income tax
9
-
-
Net loss for the period
(6,194)
(5,095)
Other comprehensive income
Items that may be reclassified to profit or loss:
Foreign exchange translation of international subsidiaries
213
146
Other comprehensive income for the period
213
146
Total comprehensive income attributable to
shareholders
(5,981)
(4,949)
Earnings per share
Basic and diluted earnings per share
18
($0.0041)
($0.0037)
9 Spokes International Limited
Consolidated Statement of Changes in Equity
For the year ended 31 March 2022
The Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes to
the Consolidated Financial Statements
14
Share
capital
Share based
payments
reserve
Foreign currency
translation
reserve
Accumulated
losses
Total
Notes
$'000
$'000
$'000
$'000
$'000
Balance as at 1 April 2021
69,390
1,008
(197)
(63,045)
7,156
Contributions by and
distributions to owners
Share based payments
17
-
140
-
-
140
Total contributions by and
distributions to owners
-
140
-
-
140
Other comprehensive
income - foreign currency
translation
-
-
213
-
213
Net loss for the period
-
-
-
(6,194)
(6,194)
Total comprehensive
income for the period
-
-
213
(6,194)
(5,981)
Balance as at 31 March
2022
69,390
1,148
16
(69,239)
1,315
Balance as at 1 April 2020
59,523
906
(343)
(57,950)
2,136
Contributions by and
distributions to owners
Proceeds from shares
issued
16
10,827
-
-
-
10,827
Cost of capital raise
16
(960)
-
-
-
(960)
Share based payments
17
-
102
-
-
102
Total contributions by and
distributions to owners
9,867
102
-
-
9,969
Other comprehensive
income - foreign currency
translation
-
-
146
-
146
Net loss for the period
-
-
-
(5,095)
(5,095)
Total comprehensive
income for the period
-
-
146
(5,095)
(4,949)
Balance as at 31 March
2021
69,390
1,008
(197)
(63,045)
7,156
9 Spokes International Limited
Consolidated Statement of Financial Position
As at 31 March 2022
The Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes to
the Consolidated Financial Statements
15
2022
2021
Notes
$'000
$'000
Assets
Non-current assets
Property, plant and equipment
13
93
98
Right of use asset
14
355
541
Finance lease receivables
14
-
468
Total non-current assets
448
1,107
Current assets
Cash and cash equivalents
11
3,031
8,841
Trade and other receivables
12
794
1,143
Prepayments
307
188
Finance lease receivables
14
468
443
Contract assets
4a
125
63
Total current assets
4,725
10,678
Total assets
5,173
11,785
Equity
Share capital
16
69,390
69,390
Share based payments reserve
17
1,148
1,008
Foreign currency translation reserve
16
(197)
Accumulated losses
(69,239)
(63,045)
Total equity
1,315
7,156
Non-current liabilities
Provision for make good
14
60
60
Lease liabilities
14
209
963
Contract liabilities
4a
693
554
Total non-current liabilities
962
1,577
Current liabilities
Trade and other payables
15
951
1,174
Lease liabilities
14
754
708
Contract liabilities
4a
1,191
1,170
Total current liabilities
2,896
3,052
Total equity and liabilities
5,173
11,785
9 Spokes International Limited
Consolidated Statement of Cash Flows
For the year ended 31 March 2022
The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes to the
Consolidated Financial Statements
16
2022
2021
Notes
$'000
$'000
Cash flows from operating activities
Receipts from customers
6,183
5,104
Receipts from Government grants
276
826
Payments to employees and suppliers
(11,746)
(10,945)
Interest received
35
7
Interest on net investment in lease receivables
88
9
Interest paid
(5)
(6)
Net cash (outflows) from operating activities
10
(5,169)
(5,005)
Cash flows from investing activities
Purchase of property, plant and equipment
(24)
(25)
Disposal of property, plant and equipment
-
4
Bank guarantee for sub-leased floor released
425
-
Bank guarantee for current lease entered into
(51)
-
Net cash inflows/(outflows) from investing
activities
350
(21)
Cash flows from financing activities
Proceeds from the issue of share capital
16
-
10,827
Costs of raising capital
16
-
(960)
Lease interest paid
14
(131)
(168)
Payment of principal portion of lease liability
14
(708)
(484)
Net cash (outflows)/inflows from financing
activities
(839)
9,215
Net change in cash and cash equivalents
(5,658)
4,189
8,841
4,668
(152)
(16)
Cash and cash equivalents at end of the
period
11
3,031
8,841
Cash and cash equivalents at beginning of the period
Foreign exchange gain / (loss) on cash and cash
equivalents
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
17
1.
General information
9 Spokes International Limited (the “Company” or “9Spokes”) is a company registered under the New Zealand
Companies Act 1993. The Company is listed on the Australian Securities Exchange (ASX). These financial
statements of the Company and its subsidiaries (together the “Group”) have been prepared in accordance with
the ASX Listing Rules and the requirements of the Financial Reporting Act 2013 and the Companies Act 1993.
9Spokes is a limited liability company incorporated and domiciled in New Zealand. The registered office of the
Company is Level 5, AECOM House, 8 Mahuhu Crescent, Auckland 1010, New Zealand.
9Spokes is an open data platform that aggregates meaningful data across a business, its apps, and banks.
These audited consolidated financial statements were authorised for issue by the Board of Directors on 29 July
2022.
2.
Summary of Significant Accounting Policies
These are the consolidated financial statements for the Group for the year ended 31 March 2022.
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. For the
purposes of complying with generally accepted accounting practices in New Zealand (“NZ GAAP”) the group is a
for-profit entity.
Basis of preparation
These financial statements have been prepared in accordance with NZ GAAP. They comply with New Zealand
equivalents to International Financial Reporting Standards (“NZ IFRS”) and International Financial Reporting
Standards (“IFRS”). The consolidated financial statements have been prepared on the historical cost basis. The
financial statements are presented in New Zealand dollars, which is the functional currency of the Company. All
values are rounded to the nearest thousand dollars unless otherwise stated.
Impact of COVID-19
Due to the COVID-19 coronavirus outbreak, management performed an operational risk assessment and
assessed the impact of COVID-19 on the Group.
Employees
9Spokes is a cloud-native company; all employees can operate remotely. Prior to lockdown, the Group 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 Group has put in
place policies to support and facilitate safe return to the office.
Suppliers
As a cloud software provider, 9Spokes 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
9Spokes has maintained continuous communication with all its banking partners throughout this period. Earlier
on, discussions were held to evaluate and confirm the Group’s ability to meet the obligations set out in existing
contract agreements. Therefore, the impact of COVID-19 on the Group’s existing revenue is currently considered
low.
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
18
In the wake of COVID-19, the Group expects that, as small businesses enter a sustained recovery, the value of a
data-driven overview of business performance will continue to increase. 9Spokes provides this service to small
businesses, and to its banking partners seeking to support their small business customers.
International markets
9Spokes employs people in the main markets in which it operates. With travel recommencing in the tail end of
FY22, the Group anticipates an increase in travel costs in particular to facilitate in person sales conversations.
Going concern
The Group incurred a net loss of $6.1 million for the year ended 31 March 2022 and at balance date had cash at
bank of $3.0 million and its net cash outflows from operating activities were $5.2 million during the period which
indicate the existence of factors indicating uncertainties relating to the going concern.
The consolidated financial statements have been prepared on a going concern basis which assumes the Group
has the intention and ability to continue its operations for the foreseeable future on the basis of a cashflow
forecast for the period to 31 October 2023 which indicates a minimum positive cash balance of $261,000 over this
period.
Forecasts by their nature are inherently uncertain due to unanticipated events (both positive and negative) and
management note the headroom in the positive cash balance is sensitive to the following assumptions in
addition to the operating cashflows:
-
The receipt of c. $1.2 million from a capital raise (refer note 24) which is conditional on the company
lodging a transaction specific cleansing prospectus with ASIC and there not being a determination
under the Corporations Act by ASIC in force at the time of issue of the shares;
-
The receipt of $353,000 (before costs) of working capital facility currently under negotiation but which
has yet to be contractually agreed; and
-
The receipt of prepaid revenue, implementation fees and licence fee renewals from existing
counterparties which have not yet been contractually agreed. These receipts are forecast to exceed
the revenue reported for FY22. Should these receipts not eventuate, without any other changes to the
cashflows, there would no longer be a positive cash balance in December 2022.
The Board have also initiated a Strategic Review of the Group and its operations. The Strategic Review has not
yet been completed and any potential outcomes (which may also be subject to shareholder approvals) have not
been incorporated in the forecast cashflow other than its estimated costs.
The Board, having tested all assumptions and assessed execution risk, are of the view the Group will be in a
position to achieve cash flows as forecast and an appropriate outcome from the Strategic Review will eventuate.
Therefore, the Board consider it appropriate to continue to adopt the going concern basis in preparing these
consolidated financial statements.
However, the cashflow forecast and the outcome of the Strategic Review are material uncertainties that may
cast significant doubt on the Group’s ability to continue as a going concern. Therefore, the Group may be unable
to realise its assets and discharge its liabilities in the normal course of business.
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
recognized in the period in which the estimates are revised and in any future periods affected.
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
19
Critical accounting policies and estimates in the year are:
•
going concern (note 2c);
•
the timing of revenue recognition (note 4a);
•
expensing of research and development costs (note 5b);
•
the non-recognition of deferred tax assets (note 9);
•
the incremental borrowing rate selected for discounting lease liabilities (note 14).
At reporting 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.
Changes in accounting policies
All significant accounting policies have been applied on a basis consistent with those used in the audited
financial statements of the Group for the year ended 31 March 2021.
Standards issued but not yet effective
There are no standards that have been issued but are not yet effective that are expected to have a significant
impact on the Group. The Group has not adopted, and currently does not anticipate adopting, any standards
prior to their effective dates.
Foreign currency
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. Foreign
exchange gains and losses resulting from the settlement of foreign currency transactions and from the
translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognized in profit or loss.
Please refer to note 20 for further information on the Group’s policy regarding the translation of foreign
operations.
3.
Segment reporting
The Group operates as a single business operating segment, providing an open data platform.
At an operational level, the chief operating decision makers, consisting of the Chief Executive Officer and the
Finance Manager, 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.
The Group’s non-current assets are in New Zealand.
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
20
Revenue was sourced from the following geographical locations:
During the year ended 31 March 2022 the Group had four (2021: four) banking partners. Revenue from banking
partners is currently the Group’s primary source of revenue and accounted for 90% of the Group’s revenue and
other income (2021: 82%). In the year ended 31 March 2022 four of the banking partners each accounted for 9%
or more of the Group’s revenue while one had yet to go-live as at 31 March 2022.
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
Recognition of operating revenue from contracts with customers
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 9Spokes’ platform to
these customers. Platform access fees are charged to customers throughout the term of the service.
2022
2021
$'000
$'000
Europe
523
83
North America
3,881
3,819
Asia Pacific
1,626
2,696
Total operating income
6,030
6,598
Comprising:
Total operating revenue
5,510
5,728
Other income
520
870
2022
2021
$'000
$'000
Implementation revenue
1,045
977
Platform access revenue
4,228
4,245
Development revenue
222
316
Other revenue from customers
15
190
Total operating revenue
5,510
5,728
Comprising:
Revenue recognised over time
5,273
5,222
Revenue recognised at a point in time
237
506
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
21
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 recognized
as revenue in the profit or loss on a straight-line basis over the expected term of the service, starting when the
system has been deployed.
Development fees
The Group receives development fees in relation to customized development work and functionality within the
platform it provides to its enterprise customers. These fees are charged to customers as part of the
development and delivery of the bespoke features and form additional source of revenue for the Group.
The table below provides further information on revenue recognition across the three main revenue categories in
the Group. The revenue streams detailed below represent 99% of the Group’s total revenue for the year ended 31
March 2022 (2021: 97%).
Revenue type
Description
Key judgements
Outcome
Timing of revenue
recognition
Implementation
Revenue
Deployment of
9Spokes’
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.
Over time – while cash is
received on completion
of implementation,
revenue is recognized
on a straight-line basis,
equally over the
expected license
period, once the system
has been deployed.
Platform
Access
Revenue
The right to
access 9Spokes’
platform.
Determining
whether the
platform access is
a distinct
performance
obligation.
As above.
Over time – recognized
monthly, on a straight-
line basis, recurring over
the expected license
period.
Development
Revenue
Development of
additional
features, tiles,
or other items as
requested by
the customer
Determining
whether the
additional
functionality is a
distinct
performance
obligation.
The customer benefits
from the additional
functionality from the
point of completion of
the development work.
At a point in time — on
completion of
development work and
the functionality being
made available to the
customer.
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 $4.2 million (2021: $4.2 million). The contracted annual recurring
platform access fee revenue for the year ending 31 March 2022 is $4.4 million at year end exchange rates. This is
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
22
an increase of 7% compared to the same period last year (2021: $4.1 million). This increase in annual recurring
revenue includes new revenue from the commencement of the contract with Virgin Money while the prior year
figure includes revenue from the contract with OCBC prior to its cessation.
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 Consolidated Statement of Financial Position and amortised on a straight-line basis over
the same period that the implementation revenues are recognized. The Group had no contract assets relating to
costs to fulfil its obligations as at 31 March 2022 (2021: $0.02 million). $0.02 million of costs included in the
contract assets as at 31 March 2021 were recognized in the profit or loss for the year ended 31 March 2022 (2021:
$0.03 million).
A number of the Group’s contracts are payable in arrears. As a result, where access has been granted for a period
of time which has yet to be invoiced or paid for, the revenue due under the contract is recognized in the
Consolidated Statement of Financial Position as a contract asset. As at 31 March 2022 the Group had $0.13 million
(2021: $0.04 million) of contract assets relating to access provided and not yet invoiced or paid. $0.04 million of
revenues included in the contract assets as at 31 March 2021 were recognized in the profit or loss for the year
ended 31 March 2022 (2021: nil).
Contract liabilities
Implementation and platform access fees received prior to deployment of the 9Spokes system are recognized in
the Consolidated Statement of Financial Position as contract liabilities. The Group had contract liabilities as at 31
March 2022 of $1.9 million (2021: $1.7 million). $0.9 million of implementation revenue included in contract
liabilities at 31 March 2021 was recognized in the profit or loss for the year ended 31 March 2022 (2021: $1.0
million).
b) Other operating income
Government grants
Grants from the Government are recognized 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
recognized 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 recognized relates to research and
development.
In the year ended 31 March 2021, the Group was eligible for the Callaghan Innovation Growth Grant. During the
year ended 31 March 2022, this Growth Grant was replaced by the R&D Tax Incentive scheme which allows claims
of 15% tax credit on eligible research and development costs. As the Group does not have a tax expense rather
than using the credits to reduce the tax payment the Group is able to get a cash payment for the eligible
research and development costs. As at 31 March 2022, the Group had accrued income of $0.50 million relating to
the R&D Tax Incentive which has applied for but not yet been received (2021: $0.22 million relating to the Growth
Grant).
2022
2021
$'000
$'000
Government grants
450
707
Other income
70
163
Total other operating income
520
870
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
23
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
Third party contractor costs had a decreased allocation to operational expenses and an increased allocation to
research and development costs due to the nature of the work being completed shifting away from product
refinement and more towards developing our most recent product offerings.
The cost of platform hosting and tools has increased in correlation to growth in our platform.
b) Research and development expenses
Research expenditure is recognized as the expense is incurred. Development costs that are directly attributable
to the design and testing of an identifiable product are recognized 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;
2022
2021
Notes
$'000
$'000
Employee benefit expenses
6
1,526
1,130
Other operating expenses
11
43
Platform hosting and tools
598
522
Third party contractors
50
265
Total operating expenses
2,185
1,960
2022
2021
Notes
$'000
$'000
Amortisation of previously capitalised contract
assets
4a
21
28
Depreciation expense
13
15
50
Depreciation - Right of use asset
14
67
195
Employee benefit expenses
6
1,954
2,327
Other research and development expenses
444
408
Third party contractors
310
115
Total research and development expenses
2,811
3,123
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
24
•
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, based on normal operating capacity.
c) Sales, marketing and administration expenses
Resident director’s fees are fees paid to third parties in jurisdictions where a resident director is required and
there is no Group representative available.
6.
Employee benefit expenses
2022
2021
Notes
$'000
$'000
Depreciation expense
13
14
70
Depreciation - Right of use asset
14
119
273
Directors' consultancy services
23
-
20
Directors' fees
22
405
385
Resident directors' fees
9
9
Employee benefit expenses
6
3,718
3,399
Insurance
479
322
Remuneration of auditors
7
163
176
Foreign exchange loss / (gain)
201
327
Marketing expenses
367
221
Professional, office costs and other
administration expenses
1,659
1,077
Short term and low value lease rental
14
22
165
Travel
30
29
Total sales, marketing and administration expenses
7,186
6,473
2022
2021
Notes
$'000
$'000
Short-term employee benefits
6,837
6,508
Share option expense
17
140
102
Employer contribution to pension schemes
221
246
Total employee benefit expenses
7,198
6,856
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
25
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled
wholly within 12 months of the reporting date are recognized in other payables and are measured at the amounts
expected to be paid when the liabilities are settled.
7.
Remuneration of auditors
The Audit and Risk Committee oversees the relationship with the Group’s auditor, BDO, and considers BDO’s
independence as part of this process. The Committee is satisfied that BDO is currently independent of the Group
and the other services have not impaired their independence.
Employee benefit expenses were recorded in the following
Operating
1,526
1,130
Research and Development
1,954
2,327
Sales, Marketing and Administration
3,718
3,399
Total employee benefit expenses
7,198
6,856
Consolidated Statement of Profit or Loss captions:
2022
2021
$'000
$'000
Audit and review of financial statements by BDO
Audit of the annual financial statements
115
88
Review of the half year financial statements
48
51
Other services performed by BDO
Callaghan Growth Grant review
-
8
Total fees paid and payable to BDO
163
147
Audit and review of financial statements by PwC
Audit of the annual financial statements FY20
-
23
Other services performed by PwC
Tax compliance and advice
-
6
Total fees paid and payable to PwC
-
29
Total fees paid and payable to auditors
163
176
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
26
8.
Finance income and expenses
9.
Income and deferred tax
Income tax is represented as follows:
The tax expense for the year comprises current and deferred tax. Current tax and deferred tax are recognized in
the profit or loss, except to the extent that it relates to items recognized in other comprehensive income or
directly in equity.
The current tax charge is calculated based on the tax laws enacted or subsequently enacted at reporting date.
Deferred tax is recognized 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 substantively enacted by the reporting 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
2022
2021
Notes
$'000
$'000
Finance income
Interest on short term bank deposits - financial
assets at amortised cost
7
31
Interest on finance lease receivable
88
9
Total finance income
95
40
Finance expense
Interest on lease liabilities
14
131
168
Finance interest - financial liabilities at
amortised cost
6
9
Total finance expense
137
177
2022
2021
$'000
$'000
Current tax
-
-
Total current tax
-
-
Deferred tax expense
Origination of temporary timing differences
367
165
Tax losses
1,375
(1,631)
Deferred tax assets not recognised
(1,742)
1,466
Total deferred tax
-
-
Total income tax
-
-
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
27
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 recognized 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.
Tax losses
The Company had tax losses available to carry forward to the year ended 31 March 2022 of $40.0. million, subject
to shareholder continuity being maintained (2021: $35.8 million).
Tax losses available to subsidiary companies of the Group, as disclosed in note 20, are $5.4 million (2021: $5.2
million) of which $1.0 million will expire on the following future dates:
The deferred tax assets have not been recognized 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.
Reconciliation of effective tax rate:
Tax year
Date of expiry
$'000
31 March 2018
31 March 2038
115
31 March 2019
31 March 2039
192
31 March 2020
31 March 2040
182
31 March 2021
31 March 2021
341
31 March 2022
31 March 2042
174
Total
1,004
2022
2021
$'000
$'000
Loss before income tax
(6,194)
(5,095)
Prima facie taxation at 28%
(1,734)
(1,427)
Expenses not deductible for tax purposes
(8)
(39)
Temporary timing differences
367
(165)
Tax losses not recognised
1,375
1,631
Total tax
-
-
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
28
10.
Reconciliation of reported loss after income tax with cash flows from
operating activities
11.
Cash and bank
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.
As at 31 March 2022, the Group held no term deposits. As at 31 March 2021, the Group had a term deposit with an
interest rate 1.10% and a maturity date of September 2021. The term deposit matured during the current financial
year.
2022
2021
$'000
$'000
Net loss for the period
(6,194)
(5,095)
Non-cash items:
Depreciation expense
215
589
Share option expense
140
102
Foreign exchange differences
35
148
Loss on sale of asset
-
57
Bank revaluations
(44)
-
Interest expense on lease liabilities
131
168
Changes in working capital:
(Increase)/Decrease in trade and other receivables
349
(187)
(Increase)/Decrease in prepayments
(119)
(88)
(Increase)/Decrease in finance lease receivables
443
-
(Increase)/Decrease in contract assets
(62)
(13)
(Decrease)/Increase in trade and other payables
(223)
67
(Decrease)/Increase in contract liabilities
160
(753)
Net cash flow from operating activities
(5,169)
(5,005)
2022
2021
$'000
$'000
Cash at bank
3,031
4,841
Term deposits with maturities of three months or less
-
4,000
Total cash and bank
3,031
8,841
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
29
12.
Trade and other receivables
As at 31 March 2022, the Company continues to provide a guarantee of $0.05 million (2021: $0.43 million) for the
operating lease on its Auckland premises, held by ASB Bank Limited.
Trade and other receivables are initially recognized 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.
13.
Property, plant and equipment
Recognition and measurement
Property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated
impairment losses.
Significant leasehold improvements undertaken over the term of the lease contract, that are expected to have
significant economic benefit for the Group, are recognized at cost and include decommissioning or similar costs
2022
2021
$'000
$'000
Trade receivables
304
377
Accrued income
432
222
Lease guarantee
51
432
Other receivables
7
112
Total trade and other receivables
794
1,143
2022
2022
2022
2021
2021
2021
Office and
computer
equipment
Leasehold
improve-
ments
Total
Office and
computer
equipment
Leasehold
improve-
ments
Total
$'000
$'000
$'000
$'000
$'000
$'000
Carrying amount at start of the year
88
10
98
104
102
206
Additions
24
-
24
29
-
29
Disposals
-
-
-
(17)
-
(17)
Depreciation expense
(19)
(10)
(29)
(28)
(92)
(120)
Depreciation on disposals
-
-
-
-
-
-
Carrying amount at end of the year
93
-
93
88
10
98
At cost at the end of the year
441
383
824
417
383
800
Accumulated depreciation at the end of
the year
(348)
(383)
(731)
(329)
(373)
(702)
Carrying amount at end of the year
93
-
93
88
10
98
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
30
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 recognized in the
profit or loss.
Depreciation
Depreciation is recognized 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:
Office and computer equipment
2 – 10 years
Leasehold improvements
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-year term;
•
leased office premises in Auckland, New Zealand, 3-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.
Lease as a lessee
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. The right of use asset is subsequently depreciated using the
straight-line method from the commencement date to the earlier of the end of the useful life of the right of use
asset or the end of the lease term. Key movements during the period, relating to right of use assets are
presented below:
Lease liabilities
2022
2021
$'000
$'000
Opening balance 1 April
541
1,398
Additions during the year
-
556
Derecognition of subleased asset
-
(945)
Depreciation expense
(186)
(468)
Closing balance 31 March
355
541
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
31
Under NZ IFRS 16: Leases, the Group is required to recognize 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 and low value leases have been recognized on a straight-line basis as an expense in
the profit or loss. The expense relating to short-term and low value leases for the year ended 31 March 2022 was
$0.02 million (2021: $0.2 million).
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.
In assessing the discount rate, the Group first considered whether there was an inherent rate present in the
lease. As there was no inherent rate, 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. For recognition of the
lease liabilities in February 2021 an incremental borrowing rate of 5.5% has been applied. 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:
Key movements during the period, relating to lease liability are presented below:
2022
2021
$'000
$'000
Less than one year
754
708
One to five years
209
963
Total lease liabilities
963
1,671
2022
2021
$'000
$'000
Opening balance 1 April
1,671
1,598
Additional leases entered into during the year
-
556
Interest expense
131
168
Repayments
(839)
(651)
Closing balance 31 March
963
1,671
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
32
The following table sets out a maturity analysis of lease liabilities, showing the undiscounted lease payments to
be made after the reporting date:
Rent concessions
In the prior year, due to COVID-19 lockdowns in New Zealand the landlord of the Auckland lease provided rent
relief in the form of a 30% rent reduction for the period 25 March 2020 to 13 May 2020. The Group has elected to
apply the practical expedient introduced by the amendments to NZ IFRS 16 to all rent concessions that satisfy
the criteria. Substantially all of the rent concessions entered into during FY21 satisfied the criteria to apply the
practical expedient. The application of the practical expedient resulted in the reduction of total lease liabilities
of $35,350. The effect of this reduction has been recorded in profit or loss in the period in which the event or
condition that triggers those payments occurred, being the year ended 31 March 2021.
During the year ended 31 March 2022, no rent concessions were received.
Make good provision
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.
Finance lease as a lessor
For the year ended 31 March 2022, the maturity for lease receivables is one year (2021: two years).
In the prior year, the Group sub-leased buildings that had been presented as part of a right of use asset. When
assets are leased out under a finance lease, the present value of the minimum lease payment is recognized as a
receivable. Lease income is recognized over the term of the lease using the net investment method, which
reflects an actuarial periodic rate of return.
An assets’ carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount
is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing
proceeds with the carrying amount. These are included in the profit and loss component of the profit or loss.
2022
2021
$'000
$'000
Up to 1 year
803
839
Between 1 and 2 years
214
803
Between 2 and 3 years
-
214
Total undiscounted lease liabilities
1,017
1,856
Unpaid finance expense
(54)
(185)
Total lease liabilities
963
1,671
2022
2021
$'000
$'000
Current
468
443
Non-current
-
468
Total lease receivable
468
911
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
33
15.
Trade and other payables
The Group recognizes trade and other payables initially at fair value and subsequently measured at amortised
cost using the effective interest method. Trade and other payables are unsecured, non-interest bearing and
are usually paid within 45 days of recognition.
Included in trade payables and other payables and accruals are amounts owing to related parties (refer to
note 23).
16.
Share capital
Items presented with A$ represent Australian dollars.
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. All shares have equal dividend and voting rights and upon
winding up rank equally with regards to the Company’s residual assets.
2022
2021
$'000
$'000
Trade payables
190
254
Other payables and accruals
761
872
Other deferred income
-
48
Total trade and other payables
951
1,174
Share capital
Authorised, issued and
fully paid shares
Notes
$'000
000's
Balance as at 1 April 2021
69,390
1,493,337
Balance as at 31 March 2022
69,390
1,493,337
Balance as at 1 April 2020
59,523
1,215,560
Shares issued for cash at A$0.036 per share ($0.039)
10,827
277,777
Costs of capital raise
(960)
-
Balance as at 31 March 2021
69,390
1,493,337
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
34
17.
Share-based payments
Items presented with A$ represent Australian dollars.
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
recognized in the profit or loss, 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 ($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 was expensed in previous years,
fully expensed by December 2018.
The weighted average contractual life of the options at 31 March 2022 is 44 months (2021: 56 months).
At 31 March 2022, there were 1,476,968 options on issue, all of which have vested.
b) 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.
Key provisions of the ESOP include:
a.
the options are to vest in accordance with the employee’s letter of offer;
b.
the expiry date of the options will be as set out in the employee’s letter of offer; and
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.
2022
2021
Note
$'000
$'000
Share based payments reserve at beginning of the year
1,008
906
Share option expense
CEO Options (October 2020)
70
35
Employee Options (March 2021)
70
67
Total share option expense
6
140
102
Share based payments reserve at the end of the year
1,148
1,008
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
35
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 2022 is 5 months (2021: 17 months).
At 31 March 2022, there were 1,007,035 options on issue, all of which have vested.
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 volume average weighted price; and
•
the expiry date of the options will be five years after the date of issue.
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 2022 is 5 months (2021: 17 months).
As at 31 March 2022, there were 1,143,413 options on issue.
c) CEO share options (October 2020)
At the Annual Meeting of Shareholders held on 25 September 2020 the shareholders approved the issue of
8,455,613 options under the ESOP to the CEO on the following terms:
•
an exercise price of A$0.036 per share;
•
one-third of the Director Options shall each vest on 31 March 2023, 31 March 2024 and 31 March 2025,
subject to Adrian Grant remaining CEO at time of vesting; and
•
the expiry date of the options will be five years after date of issue.
The fair value of each option is A$0.025 under the Black Scholes valuation model resulting in a charge to the
Company of A$211,833 ($230,728) which will be expensed over the vesting period through to 31 March 2025.
The significant inputs into the model were a share price of A$0.032 at the grant date, exercise price A$0.036,
volatility of 113%, based on daily share price movements since the Company listed on 9 July 2016, no dividend,
expected option life of five years and a risk-free interest rate of 0.334%. These options were issued in 12
October 2020.
The weighted average contractual life of the options at 31 March 2022 is 42 months (2021: 54 months).
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
36
As at 31 March 2022, there were 8,455,613 options on issue, of which 2,818,538 have vested.
d) Employee share options (March 2021)
On the 1 March 2021 the Board approved the offer of 5,210,000 options under the ESOP to employees on the
following terms:
•
70% of the options (3,647,000) with an exercise price of A$0.032 per share and 30% of the options
(1,563,000) with an exercise price of A$0.05 per share;
•
the options vest in three equal instalments: on issue, on 31 March 2021 and on 31 March 2022;
•
70% of each instalment will be at the exercise price of A$0.032 per share and 30% will be at an exercise
price of A$0.05 per share; and
•
the expiry date of the options will be five years after date of issue.
The weighted average fair value of the options is A$0.017 under the Black Scholes valuation model resulting in a
charge to the Company of A$89,298 ($97,264) which will be expensed over the vesting period through to 31
March 2022. The significant inputs into the model were a share price of A$0.023 at the grant date, exercise prices
of A$0.032 and A$0.05, volatility of 112%, based on daily share price movements since the Company listed on 9
July 2016, no dividend, expected option life of five years and a risk-free interest rate of 0.697%. These options
were issued in 2 March 2021.
The weighted average contractual life of the options at 31 March 2022 is 42 months (2021: 54 months).
As at 31 March 2022, there are 3,647,000 A$0.032 options on issue, all of which have vested and 1,563,000 A$0.05
options on issue, all of which have vested.
e) Employee share options (June 2021)
On the 28 June 2021 the Board approved the grant of 4,000,000 options under the ESOP to employees on the
following terms:
•
an exercise price of A$0.016 per share;
•
one-third of the options shall each vest on 28 June 2021, 31 March 2022 and 31 March 2023, subject to
the employees remaining with the Company; and
•
the expiry date of the options will be five years after date of issue.
The fair value of each option is A$0.0116 under the Black Scholes valuation model resulting in a charge to the
Company of A$46,440 (NZ$49,886) which will be expensed over the vesting period through to 31 March 2023.
The significant inputs into the model were a share price of A$0.015 at the grant date, exercise price A$0.016,
volatility of 109%, based on daily share price movements since the Company listed on 9 July 2016, no dividend,
expected option life of five years and a risk-free interest rate of 0.865%. These options were issued in 28 June
2021.
Movements in the number of share options outstanding and their related weighted average exercise prices are
as follows:
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
37
18.
Earnings per share
Basic earnings per share is calculated by dividing the 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 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 loss per share.
Potential ordinary shares deriving from the exercise of share options (note 17) are antidilutive in nature. The
diluted earnings per share is therefore the same as the undiluted earnings per share.
Pre-IPO
employee
share options
Employee
ESOPs
NEDs
ESOPs
CEO Options
Employee
Options
Employee
Options
Employee
Options
Total
Dec 2015
Aug 2017
Sep 2017
Oct 2020
Mar 2021
Mar 2021
June 2021
Exercise
price
NZ$0.16
A$0.20
A$0.225
A$0.036
AU$0.032
AU$0.05
AU$0.016
000's
000's
000's
000's
000's
000's
000's
000's
$ per
option
Balance
outstanding
at 1 April
2021
1,477
1,007
1,143
8,456
3,647
1,563
-
17,293
0.07
Granted
-
-
-
-
-
-
4,000
4,000
0.02
Forfeited
(728)
(355)
-
-
-
-
-
(1,083)
0.18
Balance
outstanding
at 31 March
2022
749
652
1,143
8,456
3,647
1,563
4,000
20,210
0.06
Balance
exercisable
at 31 March
2022
749
652
-
2,819
3,647
1,563
2,666
12,096
0.05
Balance
outstanding
at 1 April
2020
1,477
1,123
1,143
-
-
-
-
3,743
0.20
Granted
-
-
-
8,456
3,647
1,563
-
13,666
0.04
Forfeited
-
(116)
-
-
-
-
-
(116)
0.22
Balance
outstanding
at 31 March
2021
1,477
1,007
1,143
8,456
3,647
1,563
-
17,293
0.07
Balance
exercisable
at 31 March
2021
1,477
1,007
-
-
2,431
1,042
-
5,957
0.10
Weighted
average
exercise
price
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
38
19.
Financial instruments and financial risk management
Financial instruments are recognized in the statement of financial position when the Group becomes party to a
financial contract. They include cash and cash equivalents, trade and other receivables, term deposits and trade
and other payables.
Financial assets and liabilities are classified into the following categories:
Financial assets held at amortised cost
A financial asset is measured at amortised cost if it meets both of the following conditions, and is not designated
as at fair value through Profit or Loss (FVTPL):
•
The asset is held within a business model whose objective is to hold assets to collect contractual cash
flows; and
•
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the amounts outstanding.
Financial assets held at amortised cost are initially measured at the fair value plus directly attributable
transaction costs and are subsequently measured at amortised cost using the effective interest method.
The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and
impairment are recognized in the profit or loss. Any gain or loss on derecognition is recognized in the profit
or loss.
Financial assets held at amortised cost comprise: cash and cash equivalents, trade and other receivables and
term deposits.
Financial liabilities held at amortised cost
Financial liabilities not designated as at FVTPL on initial recognition are classified as at amortised cost. Financial
liabilities at amortised cost are initially measured at fair value plus directly attributable transaction costs and are
subsequently measured at amortised cost using the effective interest method. Interest expense and foreign
exchange gains and losses are recognized in the profit or loss. Any gain or loss on derecognition is recognized in
the profit or loss.
Financial liabilities held at amortised cost comprise: trade and other payables.
Impairment – financial assets
The Group recognizes loss allowances for expected credit losses (ECLs) on financial assets measured at
amortised cost.
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all
cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and
the cash flows that the Group expects to receive).
2022
2021
'000
'000
Total loss attributable to shareholders
($6,194)
($5,095)
Ordinary number of shares
1,493,337
1,493,337
Weighted average number of shares on issue
1,493,337
1,365,998
Basic and diluted earnings per share
($0.0041)
($0.0037)
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
39
The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of
recovering a financial asset in its entirety or a portion thereof. There has been no impairment of financial assets
and there were no past due not impaired financial assets as at 31 March 2022.
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 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 counterparty fails to meet its contractual obligations and
arises principally from the Group’s receivables from customers and cash and cash equivalents held with financial
institutions.
Financial instruments which potentially subject the Group to credit risk, principally consist of:
1.
Trade receivables – the maximum exposure to credit risk at reporting date to recognized 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 and the lease
guarantee. As at 31 March 2022, the Group had trade receivables and lease guarantees of $355,000
(2021: $809,000). Refer to note 12 for further details;
2.
Cash and cash equivalents – the maximum potential exposure to credit risk at reporting date is
$3.0million (2021: $8.8 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 12 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.
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:
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
40
The amounts disclosed in the table are the contractual undiscounted cash flows.
Foreign exchange risk
Foreign exchange risk is the risk that cash flows or fair values of assets and liabilities will change as a result of
exchange rate movements. The Group is exposed to foreign exchange risk currently arising as a result of
commercial transactions involving the AUD, GBP, CAD, SGD and USD. The policy requires the Group to manage
foreign exchange risk within set parameters.
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 2022, 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:
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 cash position 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 approximates their carrying amount.
Up to 1 year
Between 1 and 2 years
Between 2 and 3 years
$'000
$'000
$'000
Trade and other payables
951 - -
Total
951 - -
Contractual maturities of financial
liabilities as at 31 March 2022
Up to 1 year
Between 1 and 2 years
Between 2 and 3 years
$'000
$'000
$'000
Trade and other payables
1,174 - -
Total
1,174 - -
Contractual maturities of financial
liabilities as at 31 March 2021
2022
2021
2022
2021
$'000
$'000
$'000
$'000
Impact on net loss before income tax:
Balances in GBP (net)
0
0
0
(0)
Balances in AUD (net)
(11)
2
11
(2)
Balances in CAD (net)
(3)
0
3
0
Balances in USD (net)
(102)
(7)
102
7
Balances in SGD (net)
(2)
0
2
0
10% decrease
10% increase
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
41
20.
Consolidation
The Group had the following subsidiaries as at 31 March 2022:
All subsidiaries have a reporting date of 31 March.
The Group had the following subsidiaries as at 31 March 2021:
Name
Country of
incorporation and
place of business
Nature of business
% of ordinary shares
held by parent
Date of incorporation
9 Spokes Asia Pte Limited
Singapore
Trading operation
100%
2 April 2019
9 Spokes Australia Pty Limited
Australia
Trading operation
100%
10 April 2014
9 Spokes Canada Limited
Canada
Trading operation
100%
16 August 2017
9 Spokes Knowledge Limited
New Zealand
Holder of provisional
patent
100%
5 May 2015
9 Spokes Operations Limited
New Zealand
Trading operation
100%
1 September 2020
9 Spokes Trustee Limited
New Zealand
Non-trading
100%
16 July 2015
9 Spokes UK Limited
United Kingdom
Trading operation
100%
21 December 2015
9 Spokes US Holdings Limited
New Zealand
Holding Company
100%
12 November 2014
9 Spokes US, Inc
United States
Non-trading
100%
11 May 2017
Name
Country of
incorporation and
place of business
Nature of business
% of ordinary shares
held by parent
Date of incorporation
9 Spokes Asia Pte Limited
Singapore
Trading operation
100%
2 April 2019
9 Spokes Australia Pty Limited
Australia
Trading operation
100%
10 April 2014
9 Spokes Canada Limited
Canada
Trading operation
100%
16 August 2017
9 Spokes Knowledge Limited
New Zealand
Holder of provisional
patent
100%
5 May 2015
9 Spokes Operations Limited
New Zealand
Trading operation
100%
1 September 2020
9 Spokes Trustee Limited
New Zealand
Non-trading
100%
16 July 2015
9 Spokes UK Limited
United Kingdom
Trading operation
100%
21 December 2015
9 Spokes US Holdings Limited
New Zealand
Holding Company
100%
12 November 2014
9 Spokes US, Inc
United States
Non-trading
100%
11 May 2017
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
42
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. To date, all Subsidiaries have been established by the
Group, no acquisitions of existing Subsidiaries has occurred.
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:
1.
assets and liabilities for each statement of financial position presented are translated at the closing rate
at the date of that statement of financial position;
2.
income and expenses for each statement of profit or loss and statement of changes in equity, are
translated at average exchange rates (unless this average is not a reasonable 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
3.
all resulting exchange differences are recognized in other comprehensive income in the foreign
currency translation reserve.
The ultimate holding company of the Group is 9 Spokes International Limited.
21.
Contingencies
During the period September 2018 to May 2019, the Directors and members of the executive team at that time
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 with breakdown provided below:
As at reporting date, the Company did not make any recommendation with regards to the repayment plan and
therefore has not recognized this arrangement as a liability. It is currently uncertain when and if the repayment
will happen. As the Group 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.
$'000
Directors
Paul Reynolds (resigned 18 July 2022)
103
Thomas Power (resigned 18 July 2022)
53
Mark Estall (resigned 30 September 2020)
103
Adrian Grant
106
Executive employees
154
Total amount of contingency
519
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
43
22.
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 relate to salaries and other benefits paid to the executive team.
23.
Related party transactions and balances
a) Transactions with related parties during the year
1. Non-executive Director, Mark Estall is a Director and shareholder of Te Arai Advisory
2. A member of Executive Director, Adrian Grant’s family is a Director and shareholder of Mint Recruitment Limited.
b) Amounts owed by the Group to related parties
Balances payable to related parties as at 31 March were payable on the 20th of the following month.
2022
2021
$'000
$'000
Wages and salaries
1,923
1,838
Employee contribution to pension schemes
124
124
Directors' fees
405
385
Share based payments
17
105
81
Total employee benefit expenses
2,557
2,428
Nature of
2022
2021
relationship
Transaction
$'000
$'000
Director
Directors' fees
(170)
(170)
Kevin Phalen
Director
Directors' fees
(60)
-
Shelley Ruha
Director
Directors' fees
(95)
(95)
Director
Directors' fees
(80)
(80)
Director
Directors' fees
-
(40)
Te Arai Advisory Limited (1)
Director
Consultancy
-
(20)
Mint Recruitment Limited (2)
Family member of Director Provision of
recruitment
services
(183)
(151)
Name of related party
Mark Estall (resigned 30
September 2020)
Thomas Power (resigned 18 July
2022)
Paul Reynolds (resigned 18 July
2022)
Nature of
2022
2021
Name of related party
relationship
Balance type
$'000
$'000
Mint Recruitment Limited
Family member of Director Trade and other
payables
5
18
Net amounts owed to related parties
5
18
9 Spokes International Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
44
24.
Events after the reporting period
Subsequent to balance date 9 Spokes International have entered into subscription agreements for the
placement of 373,000,000 shares at a price of A$0.003 per share with a number of existing individual
shareholders.
9 Spokes International Limited
Notes to the Consolidated Financial Statements
9 Spokes International Limited
New Zealand Statutory Information
As at 31 March 2022
46
1.
Board of Directors and sub-committees
The Directors in office at the date of this Annual Report were:
a) Board meetings
The Board met formally 24 times during the financial year ended 31 March 2022. Normally the Board would meet
up to 12 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 2022 to
consider matters relating to capital raising.
b) Board committees
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:
9spokes.com/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.
During the financial year, the Audit and Risk Committee met three times to review the Interim and Annual
Financial Reports. Other risk matters were dealt with either at Board meetings or through direct communications
with Committee members.
Name
Position
Date appointed to the board
Paul Reynolds
Independent, Non-Executive Chairman
10 September 2014
Shelley Ruha
Independent, Non-Executive Director
14 October 2019
Thomas Power
Independent, Non-Executive Director
7 October 2014
Kevin Phalen
Independent, Non-Executive Director
27 June 2021
Adrian Grant
Executive Director and Chief Executive Officer
17 August 2017
Name
Position
Number of meetings
eligible to attend
Number of meetings
attended
Paul Reynolds
Independent, Non-Executive Chairman
24
23
Shelley Ruha
Independent, Non-Executive Director
24
23
Thomas Power
Independent, Non-Executive Director
24
24
Kevin Phalen
Independent, Non-Executive Director
20
17
Adrian Grant
Executive Director and Chief Executive Officer
24
23
9 Spokes International Limited
New Zealand Statutory Information
As at 31 March 2022
47
The members of the Committee at the date of this Annual Report are Shelly Ruha (Chair), Paul Reynolds, Thomas
Power and Kevin Phalen.
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 meet two times during the financial year to review the committee
Charter, executive remuneration and share options. The members of the Committee at the date of this Annual
Report are Paul Reynolds (Chair), Thomas Power, Shelley Ruha and Kevin Phalen.
2.
Shareholding of Directors
3.
Entries recorded in the Directors’ Interests Register
The Company maintains an interest register in accordance with Companies Act 1993 (New Zealand).
The Company’s Directors disclosed the following relevant interest, or cessation of interest during the year ended
31 March 2022:
Audit and Risk Committee meetings
Name
Position
Number of meetings
eligible to attend
Number of meetings
attended
Paul Reynolds
Independent, Non-Executive Chairman
3
3
Shelley Ruha
Independent, Non-Executive Director
3
3
Thomas Power
Independent, Non-Executive Director
3
3
Kevin Phalen
Independent, Non-Executive Director
2
1
Remuneration and Nomination Committee meetings
Name
Position
Number of meetings
eligible to attend
Number of meetings
attended
Paul Reynolds
Independent, Non-Executive Chairman
2
2
Shelley Ruha
Independent, Non-Executive Director
2
2
Thomas Power
Independent, Non-Executive Director
2
2
Kevin Phalen
Independent, Non-Executive Director
0
0
2022
2021
Shares
Shares
Adrian Grant
66,680,151
66,680,151
Paul Reynolds
4,423,625
4,423,625
Thomas Power
1,843,784
1,843,784
Kevin Phalen
4,000,000
-
Shelley Ruha
1,120,000
1,120,000
9 Spokes International Limited
New Zealand Statutory Information
As at 31 March 2022
48
Director/Entity
Relationship
Paul Reynolds
9 Spokes International Limited
Chairman, Director & Shareholder
9 Spokes UK Limited
Director
Computershare Limited
Director
STV Group PLC
Director, appointed Chair April 2021
STV Children's Appeal
Trustee & Chairman
Tightline Advisory Limited
Director
Tosca IOM Limited
Director
Shelley Ruha
9 Spokes International Limited
Director & Shareholder
Analey Holdings Limited
Director & Shareholder
Analey Investments Limited
Director & Shareholder
Heartland Bank
Director
Hobson Wealth Holdings Limited
Director
Hobson Wealth Partners Limited
Director
IT & Business Consulting Limited
Director
New Zealand Rural Land Management Limited
Director
Partners Group Holdings Limited
Director
Partners Life Limited
Director
Paysauce Limited
Chairman and Director, appointed February 2022
Taxgift Limited
Chairman, Director and Shareholder, appointed February
2022
Thomas Power
9 Spokes International Limited
Director & Shareholder
SA Vortex Limited
Chairman, Director & Shareholder
Social Power (Surrey) Limited
Director & Shareholder
The Business Café Limited
Director & Shareholder
Adrian Grant
9 Spokes Asia Pte Limited
Director, resigned March 2022
9 Spokes Australia Pty Limited
Director, resigned March 2022
9 Spokes Canada Limited
Director, resigned March 2022
9 Spokes International Limited
Director & Shareholder
9 Spokes Operations Limited
Director
9 Spokes US, Inc.
Director
Aminoex Property Fund No 1 Limited
Director & Shareholder
DWDA Holdings Limited
Shareholder
Franc Holdings Limited
Removed from Companies Register October 2021
RewardPay (Aus) Limited
Shareholder
Kevin Phalen
Paymate
Director , appointed December 2021
9 Spokes International Limited
Director and Shareholder, appointed July 2021
9 Spokes International Limited
New Zealand Statutory Information
As at 31 March 2022
49
4.
Donations
The total value of donations made by the Group during the year ended 31 March 2022 was $nil (2021: $nil).
5.
Directors’ remuneration
The remuneration receivable by Directors in office during the financial year ended 31 March 2022 was:
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:
7.
Amounts payable to auditors
Refer to note 7 of the Consolidated Financial Statements.
Directors' fees
Directors'
consultancy
Employment
remuneration
Short term
incentive
Share based
payments
$'000
$'000
$'000
$'000
$'000
Adrian Grant
-
-
420
-
70
Paul Reynolds
170
-
-
-
-
Shelley Ruha
95
-
-
-
-
Thomas Power
80
-
-
-
-
Kevin Phalen
60
-
-
-
-
Totals
405
-
420
-
70
2022
2021
No.
No.
$100,000 - $109,999
7
6
$110,000 - $119,999
3
5
$120,000 - $129,999
6
10
$130,000 - $139,999
2
1
$150,000 - $159,999
1
1
$160,000 - $169,999
2
1
$170,000 - $179,999
1
-
$180,000 - $189,999
1
1
$190,000 - $199,999
1
-
$200,000 - $209,999
-
1
$210,000 - $219,999
3
1
$250,000 - $259,999
-
1
$300,000+
3
4
9 Spokes International Limited
Additional Information for ASX Listed Companies
As at 30 June 2022
50
The following information is current as at 30 June 2022 and is included for the benefit of shareholders and for
compliance with the Australian Securities Exchange (ASX) Listing Rules.
1.
Corporate Governance Statement
In accordance with ASX Listing Rule 4.10.3, a copy of the Company’s Corporate Governance Statement can be
obtained on the Company’s website:
9spokes.com/corporate-governance.
2.
Substantial Holders
The Financial Markets Conduct Act 2013 (NZ) (FMCA) includes substantial holder disclosure requirements for
persons with a 5% or more holding in a New Zealand listed company. These requirements are similar to those
under the Corporations Act 2001 (Cth) (Corporations Act), which is applicable in Australia. However, the FMCA
requirements are not applicable to the Company because the Company is not listed on a New Zealand Exchange.
Furthermore, Chapter 6C of the Corporations Act does not apply to the Company. However, the Company is
aware of the following information regarding substantial shareholdings in the Company:
3.
Numbers of Holders in each Class of Equity Security
Voting Rights Attaching to each Class
The voting rights attaching to the fully paid ordinary shares is that each share is entitled to one vote when a poll
is called, otherwise each member present (or represented by their proxy, attorney or other representative) has
one vote on a show of hands.
No voting rights attach to any of the options over the fully paid ordinary shares.
4.
Distribution Schedules
Items presented with A$ represent Australian dollars.
Shareholders
Number of Ordinary Shares
Voting Power
HSBC Custody Nominees (Australia) Limited - A/C 2
160,387,114
10.74%
Harrogate Trustee Limited
92,311,270
6.18%
Number of Holders
2,118
22
Class of Equity Security
Fully Paid Ordinary Shares (quoted)
Options over Fully Paid Ordinary Shares (unquoted), see note 12 below
9 Spokes International Limited
Additional Information for ASX Listed Companies
As at 30 June 2022
51
a) Ordinary Shares
The distribution schedule for fully-paid ordinary shares is as follows:
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:
Employee Share Options (August 2017)
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:
Holding Ranges
Holders
Total Units
%
1-1,000
44
6,098
0.00%
1,001-5,000
34
133,587
0.01%
5,001-10,000
89
765,002
0.05%
10,001-100,000
1066
47,467,434
3.18%
100,001-9,999,999,999
885
1,444,965,112
96.76%
Total
2118
1,493,337,233
100%
Holding Ranges
Holders
Total Units
%
1-1,000
0
0
0.00%
1,001-5,000
0
0
0.00%
5,001-10,000
0
0
0.00%
10,001-100,000
0
0
0.00%
100,001-9,999,999,999
2
749,277
100.00%
Total
2
749,277
100%
Holding Ranges
Holders
Total Units
%
1-1,000
0
0
0.00%
1,001-5,000
0
0
0.00%
5,001-10,000
0
0
0.00%
10,001-100,000
4
138,206
21.20%
100,001-9,999,999,999
3
513,796
78.80%
Total
7
652,002
100%
9 Spokes International Limited
Additional Information for ASX Listed Companies
As at 30 June 2022
52
Non-Executive Directors Share Options
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:
CEO share options
Issued to the Chief Executive officer in October 2020 under the Company’s ESOP (the details of which are set out
in the Explanatory Memorandum attached to the Company’s Annual Meeting of Shareholders dated 10
September 2020), the distribution schedule for options over fully-paid ordinary shares, each with an exercise
price of A$0.036, is as follows:
Employee Share Options (March 2021)
Issued in March 2021 to certain employees under the Company’s current ESOP 5210000 options 70% of the
options (3,647,000) with an exercise price of A$0.032 per share and 30% of the options (1,563,000) with an
exercise price of A$0.05 per share. The distribution schedule for options over fully paid ordinary shares, each
with an exercise price of A$0.032, is as follows:
Holding Ranges
Holders
Total Units
%
1-1,000
0
0
0.00%
1,001-5,000
0
0
0.00%
5,001-10,000
0
0
0.00%
10,001-100,000
0
0
0.00%
100,001-9,999,999,999
2
1,143,413
100.00%
Total
2
1,143,413
100%
Holding Ranges
Holders
Total Units
%
1-1,000
0
0
0.00%
1,001-5,000
0
0
0.00%
5,001-10,000
0
0
0.00%
10,001-100,000
0
0
0.00%
100,001-9,999,999,999
1
8,455,613
100.00%
Total
1
8,455,613
100%
Holding Ranges
Holders
Total Units
%
1-1,000
0
0
0.00%
1,001-5,000
0
0
0.00%
5,001-10,000
0
0
0.00%
10,001-100,000
0
0
0.00%
100,001-9,999,999,999
4
3,647,000
100.00%
Total
4
3,647,000
100%
9 Spokes International Limited
Additional Information for ASX Listed Companies
As at 30 June 2022
53
The distribution schedule for options over fully paid ordinary shares, each with an exercise price of A$0.05, is as
follows:
Employee Share Options (June 2021)
Issued in June 2021 to certain employees under the Company’s current ESOP, the distribution schedule for
options over fully-paid ordinary shares, each with an exercise price of A$0.016, is as follows:
5.
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$0.004
as at 30 June 2022 was 1,296.
Holding Ranges
Holders
Total Units
%
1-1,000
0
0
0.00%
1,001-5,000
0
0
0.00%
5,001-10,000
0
0
0.00%
10,001-100,000
0
0
0.00%
100,001-9,999,999,999
4
1,563,000
100.00%
Total
4
1,563,000
100%
Holding Ranges
Holders
Total Units
%
1-1,000
0
0
0.00%
1,001-5,000
0
0
0.00%
5,001-10,000
0
0
0.00%
10,001-100,000
0
0
0.00%
100,001-9,999,999,999
2
4,000,000
100.00%
Total
2
4,000,000
100%
9 Spokes International Limited
Additional Information for ASX Listed Companies
As at 30 June 2022
54
6.
20 Largest Holders
As at 30 June 2022, 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:
7.
Company Secretary
For the purposes of the ASX Listing Rules, the Company Secretary is currently Martin Montague.
8.
Address
The Company’s principal administrative office is:
Level 5, 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.
Holder name
Number of Shares
% Holding
HSBC Custody Nominees (Australia) Limited - A/C 2
160,387,114
10.74%
Harrogate Trustee Limited
92,311,270
6.18%
Citicorp Nominees Pty Limited
69,676,684
4.67%
G&S Capital Limited
37,617,886
2.52%
Te Arai Advisory Limited
37,239,721
2.49%
Sekots Group Limited
32,029,452
2.15%
Scribani Rossi Shooting Pty Ltd
25,000,000
1.67%
Custodial Services Limited
21,421,991
1.44%
Byron Carl Thomas
19,695,434
1.32%
Mr Hien Quang Trinh
14,642,396
0.98%
Dr Vipul Bansal
13,023,812
0.87%
PEH Nominees (NSW) Pty Ltd
12,500,000
0.84%
Scintilla Strategic Investments Limited
12,000,000
0.80%
Sharesies Nominee Limited
11,554,816
0.77%
Mr Bhagwanji Bhula Rama
9,462,500
0.63%
Mr Andrew Mark Jones
9,307,000
0.62%
18,000,000
1.21%
Adrian David Grant & AJ Trustee Services Limited
CS Third Nominees Pty Limited
Brendan Paul Roberts & ML Trustees 3287 Limited
Graham E Jackson & Donald M Gibson & Kristin M Jackson
66,622,863
14,779,609
0.99%
4.46%
64,536,240
4.32%
9 Spokes International Limited
Additional Information for ASX Listed Companies
As at 30 June 2022
55
9.
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
10.
Stock Exchanges
The Company’s securities are not quoted on any stock exchange other than the ASX.
11.
Restricted Securities
None of the Company’s securities are currently restricted.
12.
Unquoted Securities
The following unquoted securities are on issue:
13.
Review of Operations
A review of the operations and activities of the Company for the year ended 31 March 2022 is provided in the
Chairman’s report and Chief Executive’s report sections of this Annual Report.
Class
Number of Holders
Number of Issue
Options over Ordinary Shares.
2
749,277
7
652,002
2
1,143,413
1
8,455,613
4
3,647,000
4
1,563,000
2
4,000,000
Pre-IPO Employee Share Options issued in December
2015: exercise price of NZ$0.16.
Options issued to Employees under ESOP in August
2017: exercise price of A$0.20
Director Options under the ESOP issued September
2017: exercise price of A$0.225
Director Options under the ESOP issued to CEO October
2020: exercise price of A$0.036
Options issued to Employees under ESOP in March 2021:
exercise prices of A$0.032
Options issued to Employees under ESOP in March 2021:
exercise prices of A$0.05.
Options issued to Employees under ESOP in June 2021:
exercise prices of A$0.016.
9 Spokes International Limited
Additional Information for ASX Listed Companies
As at 30 June 2022
56
14.
Buy-Back
There is no current on-market buy-back being conducted by the Company.
15.
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.
9 Spokes International Limited
Company directory
57
Registered Office
Level 5, 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
Kevin Phalen (Non-executive & Independent
Chairman)
Shelley Ruha (Non-executive & Independent
Director)
Adrian Grant (Executive Director & CEO)
Australian Lawyers
Bird & Bird Lawyers
Level 11, 68 Pitt Street
Sydney, NSW 2000, Australia
Group Auditors
BDO Auckland
Level 4, Building A,
BDO Centre, 4
Graham Street,
Auckland 1010, New Zealand
Share Registrar
Boardroom Pty Limited
Level 12, 225 George Street
Sydney, NSW 2000, Australia
ASX
The Company’s ordinary shares are listed on the
ASX, under code ASX:9SP
Website
www.9spokes.com
9 Spokes International Limited
Additional Information for ASX Listed Companies
As at 31 March 2022