Annual Report
For the period ending 31 March 2021
ikeGPS Group Limited
TABLE OF CONTENTS
Chairman's & CEO's Report
FY21 Results Highlights
Management Team
Board of Directors
Corporate Governance
Disclosures
Consolidated Financial Statements
Directory
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Chairman's &
CEO's Report
FY21 - Year in Review
Performance
The far reaching impacts of COVID-19 across North America in 2020 created a period of challenge and
high uncertainty for our business and our industry. IKE’s plan throughout this pandemic period however
has been to seek to get on the ‘front foot’ wherever possible. This has been in terms of strengthening our
people, processes, products, and financial position so to be able to execute on growth initiatives, such as
acquisitions.
These strategic objectives were executed on through the FY21 year. Positively, our customers and our
market have bounced forward strongly since January 2021 and we are pleased that IKE has emerged in the
strongest position to date; in terms of talent, an extended software product portfolio that allows more value
to be delivered to customers across new pole applications, balance sheet strength, sales performance run
rates, and sales pipeline. We are excited about the growth potential for FY22
Revenue in the year was approximately $9.3m (pcp of $9.8m). This performance was at analyst
expectations and reflects a solid outcome in the context of the Q1 and Q3 periods being disrupted
by COVID-19 impacts on customers and associated pole projects across North America. Additional
key metrics within total FY21 revenue were total subscription revenue of $4.6m, 282 total enterprise
subscription customers, total transaction revenue of $2.3m, and approximately 53,000 total number of
billed pole transactions. Gross margin was approximately $5.9m (pcp of $6.9m) with a gross margin
percentage of approximately 64% (pcp of 71%). The loss for the year was $7.5m (pcp of $6.0m), and total
cash and receivables 31 March 2021 of approximately $14m, with no debt.
Customer Development
The IKE platform allows electric utilities, communications companies, and their engineering service
providers to increase speed, quality, and safety for the construction and maintenance of distribution assets
and networks. The core revenue engine for IKE is generated from platform subscriptions and additively
when certain processes are used to analyse an asset using the IKE platform (transactions). In the Q1 period
to June 2020 and Q3 period to December 2020, materially less engineering activity occurred on certain
network projects while COVID-19 response measures were put in place. However, and positively, many
deferred contracts have transitioned to delivery and new network projects are being initiated. IKE targets
sales into North America’s approximately 200 communications companies, approximately 3,000 electric
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utilities, and their approximately 1,000 engineering service providers. Once a customer, IKE
then aims to embed and expand the use of IKE platform products inside of these accounts
over time. Several recent customer expansion examples help to explain this model and point
to larger future revenue opportunities. Examples:
+ In May 2021 IKE signed an extension to an important agreement
with a Fortune 100 U.S. electric utility group to help assess and
design its power distribution
+ The customer will utilise the IKE platform to assess
approximately of 350,000
power pole assets, a sub-segment of its network of
approximately 1.3m poles.
+ This follow-on agreement followed a successful pilot and
phase-1 programme and went live immediately.
+ This Group has five other similar electric utility companies in its
portfolio in the U.S.
+ In January 2021 IKE signed a contract with an engineering service
provider (ESP) that is delivering network projects for AT&T. AT&T
has standardized on IKE for certain pole-based engineering tasks.
+ This ESP initially contracted to use the IKE platform to deliver
analysis on approximately 100,000 poles over 12-18 months,
that will generate
approximately $420k of revenue for IKE through FY22 and FY23.
+ In April 2021, this ESP additionally contracted to the IKE Analyze
product to accelerate some advanced engineering assessment
of 3,000 poles, that will generate approximately an additional
$120k revenue for IKE over the coming approximately six
months.
+ In May 2021, IKE signed a customer contract with another AT&T-
focused ESP.
+ This ESP has initially contracted to use the IKE platform to
support pole project delivery in two states for AT&T, in California
and Arizona.
+ It is expected that this will initially generate over $300k of
transaction and subscription revenue for IKE over the coming 12
months.
+ This ESP has won multi-year contracts to deliver projects into
AT&T across 13 states.
+ In March 2021, IKE signed a material contract with an ESP linked to
Crown Castle International Inc. (CCI). CCI has standardized on the
IKE Platform for specific pole engineering applications.
+ This ESP’s use of the IKE Platform for CCI and other network
projects is expected to translate to approximately $700k
subscription and transaction revenue per annum.
+ Concurrently, CCI has continued to roll out the IKE Platform
internally for its own engineering teams. To date, CCI have
deployed approximately 55 IKE systems internally for their own
engineering operations.
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Market tailwinds
Broader market tailwinds continue to support the growth potential of IKE’s business, with
more than $300b forecast to be invested into fiber and 5G infrastructure over the next five
plus years with the potential for more the $80b of government funding for rural broadband
initiatives, and with more than 3,000 electric utilities needing to address the challenges of
network assessments, strengthening, engineering, and maintenance. The IKE platform
delivers network assessment, execution and maintenance processes that are faster, safer,
and to a higher quality data standard.
Product development milestones
A focus in 2H FY21 was the acquisition and integration of certain assets of Visual Globe LLC,
a US-based Artificial Intelligence (AI) and low code/no code software company that
specializes in the automated analysis of power poles from very large data sets:
+ This strategic acquisition complements IKE’s existing offering and aligns with the
Company’s vision to be the Pole OS company and the standard for collecting, analyzing
and managing power pole information.
+ Visual Globe’s AI platform provides the potential for IKE to grow its addressable market
within the electric utility and communication industries and to significantly increase
the number of transactions that can process efficiently on its platform. New market
applications specific to pole projects include NESC Violation assessment, Right of Way
encroachment assessment, As-builts for future change detection, Joint Use assessment,
and others.
+ The addition of Visual Globe’s technology and team will enable IKE to process and analyze
large volumes of pole data that can be collected from new additional sources including
drones and smartphones, making the Company’s platform even more attractive to electric
utilities and communications groups in the North American market.
Team and Talent. Brand and
Customer Experience.
+ In calendar 2021 IKE has made several important appointments, including;
+ Eileen Healy as non-executive director. Based in San Francisco, Eileen is a
communications industry leader and serial entrepreneur who has founded two high-
tech startups addressing the U.S. communications market: Healy & Co, an innovative
company providing outsourced engineering to the U.S. utility market. Customers include
AT&T Mobility, T-Mobile, Vodafone, Verizon Wireless,
Frontier Communications, and FirstNet. She also founded and sold Telecompetition
Inc., a data analytics company.
+ Tom DuBois as VP Product Management. Tom brings product leadership experience
from several silicon-valley based growth companies and has also held executive roles
at Electronic Arts, Google, and most recently Intel – from where he joined IKE.
+ Jareth Hosskings as Head of Engineering. Jareth has been appointed to lead all of
IKE’s engineering teams across the IKE Office, IKE Structural (PoleForeman), and IKE
Insight (formerly Visual Globe) solutions. Most recently Jareth was Head of Engineering
at AgilityCIS, where he led an engineering team of 75 developers operating across a
number of countries specializing in software products for the utility sector.
+ In September 2020, Bruce Harker however stood down as non-executive director. The
Board, and all of the IKE team, wish to thank Bruce for his considerable contribution to
the business.
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Customer Experience is a major focus across the IKE business, and meaningful brand and customer
experience milestones achieved through the FY21 period included:
+ The launch of a scalable online training, education and deployment platform, called IKE University.
+ The U.S.-based IKE team shifted to 100% remote working at the onset of the COVID-19 pandemic. The
company has worked consistently on implementing and improving remote working best practices and
performance. Although IKE
intends to return aspects of its operations to in-office – it is believed remote working excellence can be
a source of competitive advantage for attracting and retaining talent moving forward.
Momentum and Outlook
Positively, the final quarter of FY21 to March was strong, with record new contracts closed as project
deferrals through calendar 2020 were eased. Approximately $5.4m of contracts were closed in this Q4
period with the majority of the associated revenue expected to be recognized through IKE’s FY22 period to
March 2022. Momentum of new contract wins has continued in Q1 FY22, and our expectation is that this
quarter to 30 June 2021 will be stronger again than Q4 FY21.
New contracts won are supporting network projects for some important underlying customers including
AT&T Inc. (the world’s largest communications company), Crown Castle International Inc. (the largest
shared communication infrastructure company operating in the U.S.), Corning Optical Communications
Inc. (the world’s largest fiber optics manufacturer), ALLO Communications (a communications business
operating across the states of Nebraska and Colorado), and a Fortune 100 electric utility group.
Several deferred projects from Q3, as detailed above, came online as specific constraints of COVID-19
eased. Sales momentum has continued in the initial eight weeks of Q1 FY22. Approximately $3.4m of
contracts have closed in the quarter to date to 31 May. A majority of the associated revenue is expected to
be recognized through IKE’s FY22 period to March 2022.
Our plan and focus remains consistent with that over the past 24 months. We are squarely focused on
being the Pole OS platform for the North American market. Our balance sheet strength supports our plans
to continue to grow our team and our products, and ultimately support our goal to build decades long
relationships with target customers. The long tail impact of COVID-19 presents residual risk, in particular to
global supply chains. The nature of serving our very large infrastructure groups will continue to bring some
timing uncertainty and associated risk – but we are optimist about the potential to deliver a strong FY22
performance.
We continue to win customers because our products and solutions enable networks to be deployed faster,
more cost effectively, and with a higher quality data standard.
Rick Christie, Chairman, ikeGPS Group Limited
Glenn Milnes, CEO & Managing Director, ikeGPS Group Limited
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FY21 Results Highlights
+ Total recognized revenue in the year of approximately $9.3m (pcp of $9.8m).
+ Flat revenue from the core Communications & Electric Utility segment at approximately $9.0m.
+ Total revenue at market expectations, reflecting a solid outcome in the context of Q1 and Q3
periods being disrupted by COVID-19 impacts on customers and associated pole projects across
North America.
+ Gross margin of approximately $5.9m (PCP of $6.9) with a gross margin percentage
of approximately 64% (PCP of 71%).
+ Net cash flow from operating activities of approximately ($3.5m) against PCP of ($1.1m).
+ Operating loss after tax for the year of approximately ($7.5m) against PCP operating loss of
($6.0m).
+ Cash and receivables of approximately $14m, and no debt.
+ Key metrics within Operating Revenue of $9.3m;
* $4.6m of subscription revenue
* 282 enterprise subscription customers
* $2.3m of transaction revenue
* 53,000 billed pole transactions
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Overall financial momentum
+ Transition to the Platform Subscription plus Transaction business model was
continued in FY21.
+ Approximately 75% of FY21 revenue was generated from recurring subscription or transaction sources.
+ IKE's focus remains on two large markets, specifically speeding the assessment and
construction process in the Communications and Electric Utilities segment in North
America.
+ Market timing is considered optimal.
+ Multiple new customer proof points.
+ With account acceleration opportunities.
+ Strong operating momentum since January through May 2021.
+ New contract wins of approximately $8.8m.
+ Momentum across sales pipeline, brand, customer experience, and process efficiencies.
+ The right people.
+ Leadership, pole expertise, and governance in place to lead our niche.
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Positive
Overall Momentum
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Overall financial momentum
Particularly within the
Core Communications
and Utility Segment
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IKE, the Pole OS Company
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Meet some of IKE's pole experts
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IKE Solutions and Value Proposition
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Management Team
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Glenn Milnes
Chief Executive Officer & Managing Director
Leon Toorenburg
Chief Technology Officer
Glenn Milnes is the CEO and managing director at ikeGPS,
where he is accountable for the company’s overall strategy,
performance, and growth. Glenn joined ikeGPS after
more than a decade of leadership roles at international
communications group, Cable and Wireless International,
London, and at venture capital firm No 8 Ventures.
Before entering the business world, Glenn played
professional cricket in New Zealand, England, and The
Netherlands, representing New Zealand at various levels.
Glenn holds an MBA with distinction from Imperial College
London, a Bachelor of Science with first-class honors
from Oxford Brookes University and a Bachelor of physical
education from the University of Otago.
Leon Toorenburg is the Chief Technology Officer at ikeGPS,
where he leads the research department to investigate
how to leverage new technologies to simplify and speed up
ikeGPS customers’ workflow.
Leon is the founder of ikeGPS and has been instrumental
in the development of all ikeGPS’ products. He holds
numerous U.S. and international patents on measurement
technologies. Leon holds a Bachelor of Science from Victoria
University and Bachelor of Engineering with honors from
Canterbury University.
Malcolm Young
Senior VP Structural Analysis / Head of PoleForeman
Chris Birkett
Chief Operating and Financial Officer
As VP of Structural Analysis Malcolm is responsible for
the development and delivery of IKE’s structural analysis
products and for the quality control function for IKE Analyze.
Prior to joining IKE, Malcolm was founder and president of
PowerLine Technology – the developer of IKE’s PoleForeman
product – where he built the company to the position of
having some of the largest investor-owned utilities in North
America as embedded customers. Before that Malcolm held
senior engineering management positions at Alabama Power.
Malcolm is a qualified structural engineer and is considered
to be one of the preeminent thought leaders in the U.S.A.
market related to power poles and a structural analysis
Chris Birkett is the Chief Operating and Finance Officer at
ikeGPS, where he is responsible for ensuring the company
has the correct settings for growth and profitability. A key
part of his role is supporting other team members to unleash
the value of our products for our customers.
Prior to joining ikeGPS, Chris held CFO and Managing Director
roles at General Cable New Zealand Ltd, General Cable Asia
Pacific, and Rock Shox (US). Chris is a Chartered Accountant
(CAANZ). Chris received his degree from Victoria University
of Wellington.
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Management Team Chris Ronan
Chief Marketing Officer
Chris DeJohn
SVP, Sales
Chris is IKE’s Chief Marketing Officer where he is accountable
for IKE’s marketing, communications, brand, and customer
experience. Prior to joining IKE, as the founder & president of
two leading North American digital marketing agencies, Chris
led marketing and brand initiatives for some of the world’s
leading companies including Ford Motor Company, Dell, Air
New Zealand, Emirates Team New Zealand, and SouthWest
Airlines among others, helping these businesses shape their
identities and tell their stories. He has a [Arts] degree from
Midwestern State University. Before entering the world of
commerce Chris was a semi-professional road cyclist.
Chris leads IKE's sales team and customer engagement.
He brings a wealth of experience in the enterprise and
telecommunications market, having participated in the
emergence and transformation of some of the largest
data, cellular, and voice network infrastructure in the world
throughout his career, including as Regional Vice President
of Sales at Radisys, Sales Director Strategic Accounts at
Sonus, and Director of Sales at Cabletron. Chris’ experience
puts him in a unique position at IKE to prepare our customers
for change through his proven track record, expertise, and
wholesome approach to the customer experience.
Lydia Siloka
Head of People
Lydia joined IKE in the second half of 2020 to lead our people
function and drive employee engagement. Lydia joins IKE
having been in People leadership positions across a range
of international and growth businesses including as Senior
People Manager at Amazon, Country People Director at
Thales Digital and Security, HR Manager, South Africa for
Teleperformance, and a HR leader at Victoria University.
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Management Team Board of Directors
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Board of Directors Rick Christie / (MSc (Hons) Chemistry)
Chairman and Independent Director
Glenn Milnes / (MBA (Dist.), BSc (Hons), B PhD)
CEO & Managing Director
Rick Christie is the former Chairman of Ebos Group, where
he was Chair through much of its growth to become a >$3B
business today. He has experience on a number of other
major boards, including TVNZ. Rick was previously CEO
of investment company Rangatira Ltd and had 20 years’
executive management experience in the international oil &
gas industry.
Glenn Milnes is the CEO and managing director at ikeGPS,
where he is accountable for the company’s overall strategy,
performance, and growth. Prior to leading ikeGPS, Glenn
previously held senior executive, strategy and corporate
development positions in the Communications industry with
Cable & Wireless International, and with No. 8 Ventures.
Eileen Healy / (BS Electrical Engineering)
Independent Director
Alex Knowles
Director
Serial entrepreneur of two high-tech startups addressing
the U.S. communications market including Healy & Co, the
provides outsourced engineering to the U.S. utility market.
Customers include AT&T Mobility, T-Mobile, Vodafone,
Verizon Wireless, Frontier Communications, and FirstNet.
Alex has investing and operating experience with
international companies in the information technology and
transportation industries. Based in Los Angeles, He was
formerly Chief Operating Officer of the largest international
freight forwarder and small parcel consolidator in the U.S.
Mark Ratcliffe
Independent Director
Mark joined IKE from Chorus, where he was its CEO leading
the deployment of New Zealand’s national fiber network.
Prior to Chorus Mark was CIO and COO of Spark (formerly
Telecom NZ). His other governance roles include non-
executive Director of 2Degrees Mobile, Chairman of First
Gas, Deputy Chairman of Ultra Fast Fibre, and Chairman of
Spencer Henshaw.
Fred Lax / (MSEE AND BSEE)
Independent Director
Fred Lax is an executive leader with extensive global
experience in the telecommunications industry and related
technologies. Based in California, he is a former director of
NASDAQ listed Ikanos Communications Inc. (acquired by
Qualcomm Atheros), and former Chief Executive Officer and
President of NASDAQ listed Tekelec Inc.
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Board of Directors Director's Report
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Director's Report ikeGPS Group Limited (“the Group”) is a New Zealand company. Its shares are quoted on the New Zealand Stock
Exchange (NZX) and Australian Securities Exchanges (ASX). The Group became a foreign exempt listed issuer on
the ASX in September 2016.
On our website: https://www.ikegps.com/company/ you will find the following corporate governance documents
referred to in this section:
+ Constitution
+ Corporate Governance Code
+ Code of Ethics
+ Diversity Policy
+ Securities Trading Policy
+ Continuous Disclosure Policy
+ Nominations and Remuneration Committee Charter
+ Audit and Risk Management Committee Charter
Corporate Governance Statement
Under NZX Rule 3.7.1, NZX has a set of principles and recommendations, the NZX Corporate Governance
Code that listed companies must report against. The overarching purpose of the NZX Code is to promote
good corporate governance. The Board considers that, as at 31 March 2021, the Company complies with the
recommendations set by the NZX Corporate Governance Code, except where it deems alternative measures are
more appropriate as disclosed.
NZX Code
Ethical Behaviour
Code of conduct
The Group has a Code of Ethics, setting out the ethical and behavioural standards expected of Directors and
staff. Directors and staff are also expected to uphold the Group values.
Whistle blowing
The Group Code of Ethics includes specific direction on action to be taken by a person who suspects a breach
of the Code.
Avoiding conflicts of interest
The Board is updated at each meeting on changes in Directors’ interests and any potential conflicts. The
register records relevant transactions and our disclosures of interests. A current listing of Directors’ interests is
found on page 28.
Trading in securities
The Groups Directors are restricted from trading in the Groups shares under New Zealand law and by the Groups
Security Trading Policy. The policy details “blackout periods” where trading is forbidden, as well as a process for
authorisation at other times.
Our Directors current shareholdings are set out on pages 29-30.
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Corporate Governance Board meetings
Between 1 April 2020 and 31 March 2021, 10 Board
meetings were held. All meetings were attended by
all Directors (or committee members) apart from one
meeting in March where Bill Morrow was absent.
Board composition
The Board considers its composition in accordance
with the institute of directors’ framework. The Directors
believe the respective skills and experience of
individual Directors to be complementary, appropriate
for the Company, balanced and reasonably diverse.
The Group’s Directors have expertise and experience
in strategy development, executive leadership,
acquisitions and divestment, technology, data,
corporate responsibility, governance, legal and
regulatory matters, public policy, and finance (including
the assessment of financial controls). In accordance
with the applicable listing rules, all directors are re-
elected within 3 years or on the third annual general
meeting following their appointment.
Diversity Policy
The Company fosters an inclusive working environment
that promotes employment equity and workforce
diversity at all levels, including within the executive
team and Board. The Diversity Guidelines are available
on the investor relations website.
A gender breakdown of Directors and officers of the
Company and its subsidiaries as at 31 March 2020 and
31 March 2021 are detailed below. For the purposes of
accurate disclosure Glenn Milnes is shown both as a
Director and an officer.
Directors
Male
Female
Officers
Male
Female
2021
2020
6
-
2
-
7
-
2
-
Board composition and performance
Board composition
The structure of the Group’s Board and its governance
arrangements are set out in the Company’s
Constitution, and in the Board’s written Charter
setting out the Board’s roles and responsibilities. The
management and control of the business of the Group
is vested in the Board. The Charter sets out the matters
reserved for our decision making including (amongst
other key matters) the establishment of the Company’s
overall strategic direction and strategic plans.
Management is responsible for implementing the
strategic objectives, operating within the risk appetite
the Board has set, and for all other aspects of the day-
to-day running of the Company.
The Board delegates the day-to-day leadership
and management of the Company to the CEO. The
delegations are set out in the Board Charter and in a
Delegated Authority framework, which also sets out
authority levels for types of commitments that the
Company’s management can make.
As at 31 March 2021 the Board consists of six non-
executive Directors and one executive Director.
1. Rick Christie (Independent, Non-executive Chairman,
Remuneration Committee),
2. Alex Knowles (Non-executive Director),
3. Bill Morrow (Independent, Non-executive Director),
4. Fred Lax (Independent, Non-executive Director, Audit and Risk
Committee Chairman),
5. Mark Ratcliffe (Independent, Non-executive Director, Audit and
Risk Comittee),
6. Glenn Milnes (Not Independent, Chief Executive Officer and
Managing Director)
Bruce Harker resigned as a director on 29 September
2020. Eileen Healy was apointed as a director on
1 April 2021. Bill Morrow resigned as a director on
30 April 2021.
Profiles of the Directors can be found on pages 19.
The nominations committee identifies and
recommends to the Board, individuals for nomination
as members of the Board and its Committees taking
into account such factors as it deems appropriate
including experience, qualifications, judgement and the
ability to work with other Directors.
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Corporate Governance Director independence
The Board Charter requires that at least two Directors
be independent and sets out circumstances in which a
Director will not be regarded as independent.
The Board assesses Director independence against the
criteria in the Charter. The Board consider the following
Directors to be independent at present, Rick Christie,
Bruce Harker (resigned 29 Sept 2020) Bill Morrow
(resigned 30 April 2021), Mark Ratcliffe, Fred Lax and
Eileen Healy (appointed 1 April 2021)
Director training
Each Director undertakes appropriate education to
remain current in how to best perform their duties as
Directors. Individual Directors maintain membership
of relevant bodies such as the Institute of Directors
and receive information independently and from
management in relation to specific issues relevant to
the Group, the markets in which it operates, or to NZX
and ASX listed companies generally.
Board performance
On a recurring basis the Board reviews how it is
performing. The review process comprises a group
self-evaluation relating to Board and committee
composition and performance. The board is yet to
perform this process in calendar 2021. The Board
has found this effective and believe it has helped to
refine the Group’s strategy setting processes, and
the information provided in Board papers. The Board
is satisfied that the Board and its committees are
operating well and that the performance process used
are both effective and suited to the company.
Committees
The Board committees review and consider in detail
the policies and strategies developed by management.
They examine proposals and make recommendations
to the Board. They don’t take action or make
decisions on behalf of the Board unless specifically
mandated to do so.
During FY21 year the Group’s standing Board
committees were the
+ Audit & risk management committee
+ Remuneration committee
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Corporate Governance committee makes enquiries of management and
external auditors (including requiring management
representations) so that the committee can be
satisfied as to the validity and accuracy of all aspects
of the Group’s financial reporting.
The CEO and CFO certify to the Board that the integrity
of the financial statements is founded on a sound
system of risk management and internal compliance
and control.
Non-financial reporting
The Group has not adopted a formal environmental,
social and governance (ESG) reporting framework
at this time. The Group’s assessment of exposure to
non-financial risks, including economic, environmental
and social sustainability risks, is incorporated into
the Comprehensive and Key Risk assessments that
we refer to under risk management. The Group is
predominantly an office-based software company with
minimal impact on non-financial risks.
Disclosure to the market
The Group has a written disclosure policy – the
Continuous Disclosure Policy, found on the investor
relations site. It sets out requirements for full and
timely disclosure to the market of material issues, so
all stakeholders have equal access to information. The
Board reviews and approves material announcements.
The Board specifically consider with management
at each Board meeting whether there are any issues
which might require disclosure to the market under the
NZX and ASX continuous disclosure requirements.
Information for investors
The Group’s investor relations website includes the
Company’s presentations, reports, announcements,
and media releases, as well as the Charters and
guidelines referred to in this section. The Annual
Report is available in electronic and hard copy format.
The Group’s annual meeting will be held virtually on
Thursday, 30 September 2021. A notice of the meeting
and proxy form will be circulated to shareholders
closer to the time. The external auditors, PWC,
will respond to any questions submitted prior to
the meeting.
Audit & Risk Management committee:
Fred Lax (chair), Mark Ratcliffe, Glenn Milnes
The committee members are independent Directors
with the exception of Glenn Milnes (executive director).
Due to the diversity of the business operations, it is
deemed appropriate that Glenn Milnes is a member
of the ARC. In accordance with the NZX Code the
Audit & Risk Management Committee is chaired by an
independent Director, Fred Lax, who is not the Chair of
the Board.
The committee’s Charter is set out on the investor
relations website. The committee met five times
in the year to 31 March 2021. Management attend
meetings only at the invitation of the committee, and at
least annually the committee meets with the external
auditors with management excluded.
Remuneration committee:
Rick Christie (chair), Bruce Harker (resigned
29 Sept 2020).
The committee members are independent Directors.
The committee met on three occasions in the year
to 31 March 2021. This committee has oversight of
matters of recruitment, retention and remuneration.
Other committee matters
The Board will occasionally appoint a committee of
Directors to consider or approve a specific proposal
or action, if the timing of meetings or availability of
Directors means the matter cannot be considered by
the full Board. Their deliberations and decisions are
reported back to the Board not later than the next
meeting following.
Takeover protocol
The Board has decided not to establish a takeover
committee or protocols documenting the procedure to
be followed in the event it receives a takeover offer. The
Board has determined that due to the current size and
make-up of the Board, it is sufficiently independent and
can manage the takeover process and any additional
issues, effectively as a whole Board.
Reporting and disclosure
Financial reporting
The Board is responsible for ensuring the integrity of
the Company’s reporting to shareholders, including
for financial statements that comply with generally
accepted accounting practice. The Board’s Audit & Risk
Management committee oversees the quality, reliability
and accuracy of the financial statements and related
documents (the Audit & Risk Management committee’s
role is described fully in its Charter). In doing so the
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Director's Report Glenn had 1,000,000 employee stock options as at 31
March 2020. On 13 May he exercised 200,000 options
which resulted in 111,141 shares being issued. On 11
February and 31 March 2021 he exercised 250,000
and 150,000 options which resulted in 132,713 and
65,786 shares being issued. On 12 December 2020
the company granted stock options of 300,000
to Glenn.
Glenn had 700,000 employee stock options as at 31
March 2021. The remaining employee stock options
have vesting dates from 2019 to 2025. Vesting at each
date is dependent on him remaining an employee at the
applicable vesting date.
Risk management
The Group has an enterprise risk management
framework in place to identify, quantify and monitor
risks. That framework categorises the enterprise
risks and sets out specific actions to effectively
manage each risk. Management reviews the enterprise
risk register . The Group doesn’t have an internal
audit function.
Remuneration
Remuneration of Directors
The total remuneration pool for Directors is set at
$420,000 per annum.
For the financial year the annual fees paid to
Directors were:
+ Chairman $90,000 (including all committee responsibilities)
+ All other Directors $257,875
The last increase in Directors’ fees was made with
effect from 01 May 2019. The Directors’ fees for FY21
are set out on page 29.
Remuneration of employees
The Group aims to have remuneration framework
and policies to attract and retain talented and
motivated people.
The Company wants to:
+ Be recognized as a great place to work, and attract, retain and
motivate high-performing individuals.
+ Align employee incentives with the achievement of good
business performance and shareholder return.
+ Recognize and reward individual success, while encouraging
teamwork and a high-performance culture.
+ Be competitive in the labour market.
+ Be fair, consistent and easy to understand.
Employee remuneration principles
The Group uses market data to determine competitive
salary and total remuneration levels for all staff. The
Group makes allowance for individual performance,
scarcity of skills, internal relativities and specific
business needs. The Group is operating in a growth
industry and has a skilled and mobile workforce.
All employees have fixed remuneration. Selected
employees have the potential to earn a Short Term
Incentive (STI) and Long Term incentive (LTI).
CEO remuneration
Glenn Milnes’s employment agreement for his role as
CEO commenced July 2010. His agreement reflects
appropriate standard conditions for a chief executive of
a listed company.
Glenn’s remuneration is a combination of fixed salary
and incentive arrangements. The incentives are an STI
component set at up to 50% of base salary, linked to
specific financial and non-financial targets set annually
by the Board, and an LTI component, in employee
stock options.
Glenn’s fixed salary for the year to 31 March 2021 was
US$350,000 and he received a bonus in calendar 2020
of US$157,500.
25
Director's Report
Shareholder rights and relations
The Group’s financial reports and corporate governance
documentation is available on the group’s website
https://www.ikegps.com/company/.
The Group keeps shareholders informed through
periodic reporting to NZX and ASX, and through its
continuous disclosure. The Group provides briefings
and presentations to media and analysts (which are
made immediately available on the investor relations
website) and communicate with shareholders through
annual and half-year reports and annual shareholder
meeting, as well as through a range of releases to
media on matters which the company believes will
interest shareholders and members. The Group
encourages shareholders to refer to the investor
relations website, and to receive annual and half-year
reports electronically but hard copies of the reports
can readily be obtained from the share registrar,
Link Market Services Ltd. The Group take care to
write all shareholder communications in a clear and
straightforward way and to limit the use of jargon.
Health and Safety Risk
The Group values the health, safety and wellness of
our people and we believe that everyone should be able
to work in an environment where risks are managed
and controlled. Management has adopted health,
safety and wellness measures to address and mitigate
identified risks.
The Group is a relatively low-risk office-based business.
However, we do have employees performing training
and in some instances field work for customers. The
Board is conscious of these risks to employees and
have viewed the actions currently in place to mitigate
these. The frequency of incidents has been very low, so
the Board has not required LTIFR reporting to date.
Auditors
The Group has an external Auditor Policy that requires
the external auditor to be independent and to be seen
as independent. The Board is satisfied that there is
no relationship between the auditor and the Group or
any related person at this time that could compromise
the auditor’s independence. The Board also obtained
confirmation of independence formally from the
auditor. To ensure full and frank dialogue amongst the
Audit & Risk Management committee and the auditors,
the auditor’s senior representatives meet separately
with the Audit & Risk Management committee (without
management present) at least once a year.
Non-audit work
The Audit Independence Policy sets out restrictions on
non-audit work that can be performed by the auditor.
26
Director's Report
Disclosures
Audit Fees
The amounts payable to PwC as auditor of the Group
are as set out in Note 7 to the financial statements.
Subsidiary company Directors
The following people held office as Directors
of subsidiary companies of the Company on
31 March 2021:
1.
ikeGPS Inc: Glenn Milnes and Alex Knowles.
2.
ikeGPS Limited: Rick Christie, Bruce Harker (resigned 29 Sept
2020)
Dividends
As part of the Group's growth plans, dividends are not
currently paid and the Board did not declare a dividend
in respect of the period ending 31 March 2021 nor does
it expect to declare any dividends during the period
ending 31 March 2022.
Net Tangible Assets
The Net Tangible Assets per security on 31 March 2021
was $0.06 (31 March 2020: $0.04).
NZX Waivers
There were no waivers obtained or relied on during the
period to 31 March 2021
Key Management
The Company’s officers as at 31 March 2021, and their
respective roles, were as follows:
Glenn Milnes Chief Executive Officer
Chris Birkett
Chief Financial Officer and Chief
Operating Officer
Annual Meeting
The Company will hold a fully virtual Annual Meeting
of shareholders on 30 September 2021. A notice
of Meeting and Proxy Form will be circulated to
shareholders closer to the time.
27
Disclosures
Entries recorded in interests register
The following are particulars of entries made in the Company’s interests register pursuant to section 140 of the
Companies Act 1993 for the period 1 April 2020 to 31 March 2021 (including in respect of those Directors who are
Directors of the Company’s subsidiaries).
Director
Rick Christie - Chairman
Solnet Group
National e-Science Infrastructure (NeSI)
Victoria University Foundation
Dr Bruce Harker - Non Executive Director (retired September 2020)
Tilt Renewables Ltd
Glenn Milnes - Executive Director
Orange Sustainability Group Ltd
Alex Knowles - Non Executive Director
Alphian Investments Ltd
A Way To Move Inc
Trinium Technologies LLC / QED LLC
Xenon FS LLC
AWA Shipping / Intelligent SCM LLC
Epe Frame Metal Spa
Framemax Systems Inc
Infrastructure Solutions Group LLC
Climate Coatings Ltd
Bill Morrow - Non Executive Director (resigned 30 Apr 2021)
2019 Daisie Ltd
Mark Ratcliffe - Non Executive Director
Mark Ratcliffe Consulting Ltd
Te Awanga Investments Ltd (Retired 31 Mar 2021)
Ratcliffe Barker Family Trust
Auckland Transport (ceased Feb 2020)
First Gas and related companies; Gas Services Ltd, Gas Services NZ, Midco Ltd, Gas Services SPV1 Ltd and
Rock Gas Ltd
2Degrees Ltd (resigned as director 31 Aug 2020)
Kaibosh Charitable Trust
The Guildford Timber Company Ltd
WilliamsWarn NZ Ltd and WilliamsWarn Holdings Ltd
Ultra Fast Fibre Ltd and related companies; First Fibre Midco Ltd, First Fibre BidCo Ltd, UFF Holdings Ltd
Interest
Declaration
No conflicting interests
No conflicting interests
No conflicting interests
No conflicting interests
No conflicting interests
No conflicting interests
Director
Chairman
Trustee
Chairman
Director
Director
Director
Board
Member
Board
Member
Board
Member
Director
Director
Board
Member
Director
Director
Director
Director
Trustee and
Beneficiary
Director
Chairman
Director
Trustee
Chairman
Chairman
Deputy
Chairman
28
Disclosures Directors remuneration and other benefits
Directors’ fees are currently set at a maximum of $420,000 for the non-executive Directors. The actual amount of
fees paid in the year to 31 March 2021 was $347,875 (2020: $335,500).
Directors fees and other remuneration and benefits (including share option expense) from the Company
recognized in profit or loss during the accounting period ended 31 March 2021 are as follows:
Director
Rick Christie
Bruce Harker
Alex Knowles
Frederick Lax
William Morrow
Mark Ratcliffe
Glenn Milnes*
Total
Salary & Board Fees
Share Option Expense and other Benefits
90,000
34,000
50,000
65,000
50,000
58,875
823,597
$1,171,472
2,218
1,420
2,219
2,219
2,219
92,547
164,608
$ 267,450
*Glenn Milnes received salary and entitlements in US$ as employees of ikeGPS Limited. Remuneration shown above, has been converted to NZ$ at the average rate
for the month each transaction took place. Glenn received no remuneration in his capacity as a Director of the Group.
Each Director is separately entitled to be reimbursed for reasonable travelling, accommodation and other
expenses incurred in performing their role as a Director.
No Director of either of the Company’s subsidiaries receives any remuneration in that capacity.
Options granted to Directors are stated below in Directors’ relevant interests.
Statement of Directors’ relevant interests
Directors (including Directors of subsidiary companies) held the following relevant interests in equity securities of
the Company as at 31 March 2021.
Quoted Shares
With beneficial interest
As trustee or associated person
of registered holder
Total number of ordinary shares
31 March 2021
Unlisted options to
acquire
ordinary share
Rick Christie
Bruce Harker
Bill Morrow
Alex Knowles
Glenn Milnes
Frederick Lax
Mark Ratcliffe
Total
181,965
-
150,000
-
1,006,134
494,828
-
1,832,927
-
748,418
-
10,066,939
120,300
-
163,964
11,099,621
181,965
748,418
150,000
10,066,939
1,126,434
494,828
163,964
49,999
-
300,000
50,000
700,000
50,000
300,000
12,932,548
1,449,999
29
Disclosures
Director share dealing
Date
Director
Registered holder /
Associated entity
Class of financial
product
Acquired /
(Disposed of)
Consideration $
Notes
13/05/2020
7/07/2020
5/08/2020
5/08/2020
5/08/2020
5/08/2020
19/08/2020
19/08/2020
19/08/2020
19/08/2020
16/10/2020
11/02/2021
11/02/2021
10/03/2021
Glenn Milnes
Glenn Milnes
Mark Ratcliffe
Ratcliffe Barker
Family Trust
Ordinary shares
Ordinary shares
111,141
71,415
72,542
Exercised share option
33,480
On market purchase of
shares
Alex Knowles
BK and MK Trust
Ordinary shares
1,227,117
834,440
Placement participent
Bruce Harker
BJ & JS Harker Trust
Ordinary shares
Fred Lax
Fred Lax
Mark Ratcliffe
Ratcliffe Barker
Family Trust
Ordinary shares
Ordinary shares
Bruce harker
BJ & JS Harker Trust
Ordinary shares
Rick Christie
Richard Christie
Ordinary shares
Mark Ratcliffe
Ratcliffe Barker
Family Trust
Ordinary shares
Glenn Milnes
Glenn Milnes
Ordinary shares
Bruce Harker
BJ & JS Harker Trust
Ordinary shares
Alex Knowles
BK & MK Trust
Ordinary shares
Glenn Milnes
Glenn Milnes
Ordinary shares
Fred Lax
Fred Lax
Ordinary shares
64,366
73,530
73,530
119,995
38,269
19,019
105,000
113,492
250,000
132,713
118,366
43,769
Placement participant
50,000
Placement participant
50,000
Placement participant
81,597
Retail entitlement offer
26,023
Retail entitlement offer
12,933
Retail entitlement offer
71,400
Retail entitlement offer
103,824
Exercised share option
135,000
Exercised share option
152,620
Exercised share option
121,917
Exercised share options
Spread of security holders
Security holders as at 10 May 2021
Size of shareholding
Number of holders
% of holders
Total shares held
% of shares
1-1,000
1,001-5,000
5,001-10,000
10,001-50,000
50,001-100,000
Greater than 100,000
Total
142
307
207
334
68
100
1158
12.26%
26.51%
17.88%
28.84%
5.87%
8.64%
100%
88,883
919,284
1,625,551
7,775,001
4,900,721
118,072,237
133,381,677
0.07%
0.69%
1.22%
5.83%
3.67%
88.52%
100%
30
Disclosures
Twenty largest registered shareholders
As at 10 May 2021
Rank
Shareholder
Holding
% total shares on issue
David Jonathon Wilson & Nicola Jane Wilson
Douglas Irrevocable Descendants Trust, Douglas Family Trust & K&M Douglas Trust
Mr Scobie D Ward
Naomi Knowles Lane & Veronica Paulina Lawrie
Ellerston Capital
Ballylinch
Accident Compensation Corp
Aspiring Asset Mgt
Dongwen Xiong
NZ Growth Capital Partners
Mr Hector R Nicholls & Mrs Kerry L Prendergast
TR Harrison Securities Trust
Combes Investment Mgt
Mr Leon M L V Toorenburg
Regal Funds Mgt
Pie Funds Mgt
Mr Glenn S Milnes
Private Clients of Forsyth Barr
Mr C B Sutherland
Mr Nawal Alkhalifa & Mr Fahdi Junior
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Total
24,159,975
13,766,922
12,738,673
10,066,939
6,611,683
3,115,429
2,548,551
2,400,000
1,713,814
1,685,029
1,462,474
1,411,087
1,388,141
1,270,615
1,197,616
1,195,200
1,192,220
1,039,151
1,032,565
915,963
18.1%
10.3%
9.6%
7.5%
5.0%
2.3%
1.9%
1.8%
1.3%
1.3%
1.1%
1.1%
1.0%
1.0%
0.9%
0.9%
0.9%
0.8%
0.8%
0.7%
90,912,047
68.2%
Substantial product holders
According to notices given under the Securities Markets Act 1988 and the Financial Markets Conduct Act 2013 as
at 31 March 2021, the following were substantial product holders in respect of the 133,140,763 ordinary shares of
the Company on issue as at 31 March 2021 (being the Company’s only class of quoted voting securities):
Name
Shareholding
%
Nature of relevant interest
David Jonathan Wilson and Nicola Jane Wilson
24,159,975
18.11%
Registered holder and beneficial owner of financial
products
Douglas Irrevocable Descendants Trust, Douglas Family
Trust & K&M Douglas Trust
13,766,922
10.34%
Registered holder and beneficial owner of financial
products
Scobie Ward
12,738,673
9.57%
Registered holder and beneficial owner of financial
products
Naomi Knowles Lane & Veronica Pauline Lawrie
10,066,939
7.55%
Registered holder and beneficial owner of financial
products
31
Disclosures Employee Remuneration
The following table shows the number of current or former
employees (excluding employees holding office as Directors
of the parent or a subsidiary) who received remuneration
and other benefits in excess of $100,000 from the
subsidiary companies of the Group during the year ended
31 March 2021:
Band
$100,000 to $109,999
$110,000 to $119,999
$120,000 to $129,999
$130,000 to $139,999
$140,000 to $149,999
$150,000 to $159,999
$160,000 to $169,999
$170,000 to $179,999
$180,000 to $189,999
$190,000 to $199,999
$200,000 to $209,999
$210,000 to $219,999
$220,000 to $229,999
$230,000 to $239,999
$240,000 to $249,999
$250,000 to $259,999
Number of
employees
Band
Number of
employees
3
4
2
-
3
4
-
1
-
-
-
-
-
-
1
-
$260,000 to $269,999
$270,000 to $279,999
$280,000 to $289,999
$290,000 to $299,999
$300,000 to $309,999
$310,000 to $319,999
$320,000 to $329,999
$330,000 to $339,999
$340,000 to $349,999
$350,000 to $ 359,999
$360,000 to $ 369,999
$370,000 to $ 379,999
$380,000 to $ 389,999
$390,000 to $ 399,999
$400,000 to $ 409,999
$410,000 to $ 419,999
-
1
1
-
-
-
1
-
1
1
-
2
-
1
-
1
Total
27
Donations
No member of the Group made any significant donations
during the financial year. The Group undertakes regular
promotional sponsorship activity through a variety
of channels.
32
Disclosures Consolidated
Financial Statements
Year End // 31 March 2021
Independent Auditor's Report
Consolidated Statement of Profit or Loss and other Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
34
41
42
43
44
Notes to the Consolidated Financial Statements
45 - 93
ikeGPS Group Limited
33
Independent auditor’s report
To the Shareholders of ikeGPS Group Limited
Our opinion
In our opinion, the accompanying consolidated financial statements of ikeGPS Group Limited (the
Company), including its subsidiaries (the Group), present fairly, in all material respects, the financial
position of the Group as at 31 March 2021, its financial performance and its cash flows for the year
then ended in accordance with New Zealand Equivalents to International Financial Reporting
Standards (NZ IFRS) and International Financial Reporting Standards (IFRS).
What we have audited
The Group's consolidated financial statements comprise:
● the consolidated balance sheet as at 31 March 2021;
● the consolidated statement of profit or loss and other comprehensive income for the year then
ended;
● the consolidated statement of changes in equity for the year then ended;
● the consolidated statement of cash flows for the year then ended; and
● the notes to the consolidated financial statements, which include significant accounting
policies and other explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
(NZ)) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the consolidated financial
statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
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) (PES 1) issued by the New Zealand Auditing and Assurance Standards
Board and the International Code of Ethics for Professional Accountants (including International
Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA
Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Other than in our capacity as auditor we have no relationship with, or interests in, the Group.
Material uncertainty related to going concern
We draw attention to note 2 in the financial statements, which indicates that the Group incurred an
operating cash outflow of $3.5 million for the year ended 31 March 2021, and an investing outflow of
$6.6 million. The Group also incurred a net loss of $8.5 million for the year. The cash balance at 31
March 2021 was $11.3 million. The Directors disclose in note 2 that due to the high growth nature of
the business, historic accuracy of forecasting has been challenging and this is exacerbated in the
current economic environment caused by COVID-19. If the Group fails to achieve its FY22 business
plan (particularly forecast sales volume growth), manage costs or obtain alternative sources of
financing it may not be able to meet its obligations as they fall due. As stated in note 2, these
PricewaterhouseCoopers, PwC Centre, 10 Waterloo Quay, Wellington 6011
T: +64 4 462 7000, F: +64 4 462 7001, pwc.co.nz
conditions, along with other matters as set forth in note 2, 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 year. These matters were addressed in
the context of our audit of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Description of the key audit matter How our audit addressed the key audit matter
Impairment assessment of the carrying
value of assets
As disclosed in note 2, Basis of
preparation, the Group has undertaken an
assessment of the carrying value of its
assets. The ike suite of products’
continued operating losses and the lower
than expected revenue from the Spike
business unit are indicators of
impairment. In addition, the Group is
required to assess the carrying value of
goodwill on an annual basis.
To determine whether the carrying value
of the assets is reasonable, management
identified four cash generating units
(CGUs):
●
Ike core platform, development
assets, property, plant and equipment,
leased assets and working capital
(CGU1);
● Spike inventory, development assets
and Software Development Kit
(CGU2);
We obtained an understanding and evaluated the
Group’s processes and controls relating to the
assessment of impairment indicators of assets, the
preparation and approval process of forecasts, and the
execution of the impairment assessment.
We performed procedures to evaluate and challenge
the Group’s determination of CGUs. This included
reviewing internal management reporting to assess the
level at which the Group monitors performance,
comparing CGU’s to our knowledge of the Group’s
operations and reporting systems, and reconciling
assets allocated to CGUs to accounting records.
We obtained management’s impairment assessments
and tested the mathematical accuracy of the
impairment models. We considered and challenged
key assumptions and used our internal valuation
experts to assess the models’ compliance with NZ IAS
36, and the appropriateness of the pre-tax discount
rates and terminal growth rates, based on their
experience and external evidence.
We compared the forecast cash flows used for FY22 to
the Board approved business plan.
● Pole Forman software, customer
contracts and relationships and
training materials (CGU3); and
For CGU1, we also compared historical performance
against budget, investigated material differences and
considered the impact on future cash flow forecasts.
● Visual Globe software, customer
relationships and goodwill (CGU4).
Management assessed the performance of
CGU3 and did not identify any indicators
of impairment.
Management performed an impairment
assessment of CGU1, CGU2 and CGU4 on
a value in use (VIU) basis. These
assessments were based on discounted
cash flow models using the Board
For CGU2, we also overlaid specific considerations of
historic sales volumes over the previous three years
and management plans for the Spike product line.
For CGU3, we obtained management’s assessment
that there were no indicators of impairment and we
assessed whether indicators were present and whether
this assessment was consistent with our
understanding of the operations and environment of
the business.
PwC
approved budgets for the year ending 31
March 2022, then extrapolating cash
flows for subsequent years. The Board
approved budgets have been adjusted to
meet the requirements of NZ IAS 36
Impairment of Assets.
Key assumptions for CGU1 include:
● Average forecast annual revenue
growth of 30%;
● A growth rate of 2% to determine the
terminal value; and
● A pre-tax discount rate of 16.0%.
For CGU4, we considered the financial performance of
the business since acquisition to determine whether
this was consistent with forecast performance assessed
at acquisition date.
We consider management’s assessment that:
● The recoverable amounts of CGU1 and CGU 4 are
in excess of their carrying values is supported by
the evidence we obtained;
● The carrying value of CGU2 is impaired by $0.1
million is supported by the evidence we obtained;
and
Key assumptions for CGU2 include:
● There are no indicators of impairment for CGU3 is
supported by the evidence we obtained.
We audited the disclosures in the financial statements
to ensure they are compliant with the requirements of
the relevant accounting standards, in particular that
the key assumptions, sensitivities and reasonably
possible changes that could result in an impairment
were disclosed.
● Sales volumes returning to FY20
levels by FY23;
● Nil sales volume growth subsequent to
FY23;
● A remaining useful life of five years,
resulting in no terminal value; and
● A pre-tax discount rate of 16.0%.
Key assumptions for CGU4 include:
● Revenue of US$1.2 million in FY22
with projected growth of 175%, 103%
and 41.8% respectively in FY23 to
FY25;
● A growth rate of 1.5% to determine the
terminal value; and
● A pre-tax discount rate of 33.4%.
The impairment assessments were a key
audit matter due to the materiality of the
assets, the risk of impairment, and the
significant level of judgement applied in
estimating future cash flows and other key
assumptions in determining the
recoverable amount of a CGU.
Based on management’s assessments, an
impairment of $0.1 million was
recognised in respect to CGU2 and
attributed to development assets. Refer to
notes 2 and 16 in the financial statements
for disclosures on the impairment
assessment of the carrying value of assets.
PwC
Acquisition of the Visual Globe business
As disclosed in note 2, Basis of
preparation, the Group acquired certain
assets of Visual Globe, LLC. (VG) in
January 2021.
We obtained an understanding and evaluated the
Group’s processes and controls relating to the
accounting for business combinations and the
valuation of assets acquired and liabilities assumed.
The Group paid US$5.4 million for VG as
follows:
We completed the following audit procedures to test
the acquisition:
● US$3.3 million paid in cash at
● We used our internal technical accounting experts
acquisition date;
● US$1.5 million of estimated
contingent consideration to be paid in
cash on the achievement of certain
revenue milestones over a three-year
period; and
● US$0.6 million of estimated
contingent consideration to be paid in
shares on the achievement of certain
revenue milestones over a three year
period.
In accounting for the acquisition of VG,
management has assessed the contingent
consideration to be a financial liability on
acquisition date. Management has also
assessed the fair value of the assets
acquired at US$3.1 million. These assets
primarily comprise software and customer
relationships.
The acquisition of VG was a key audit
matter due to the significant judgement
involved in identifying the appropriate
accounting treatment of the acquisition
and in determining the fair values of the
assets acquired, liabilities assumed and
contingent consideration.
to evaluate and challenge the Group’s
determination of the components of the
consideration paid and the appropriate
recognition and measurement;
● We obtained management’s assessment of the
assets acquired and challenged whether that
assessment included all assets requiring
recognition under accounting standards;
● We obtained management’s models used to
calculate the fair value of the assets acquired and
liabilities assumed and tested the mathematical
accuracy of those models;
● We validated the assumptions and source data
underlying the models, in particular the forecast
sales profile; and
● We used our internal valuation experts to:
−
−
Challenge and assess the appropriateness
of the valuation methods used to
determine the fair values of each of the
assets acquired; and
Assess the appropriateness of the
discount rates.
We audited the disclosures in the financial statements
to ensure they are compliant with the requirements of
the relevant accounting standards.
Our audit approach
Overview
Overall group materiality: $92,000, which represents approximately 1%
of total revenue.
We chose total revenue as the benchmark because, in our view, it is the
benchmark against which the performance of the Group is most
commonly measured by users, and is a generally accepted benchmark.
PwC
We selected transactions and balances to audit based on their materiality
to the Group.
As reported above, we have two key audit matters, being:
●
Impairment assessment of the carrying value of assets
● Acquisition of the Visual Globe business
As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the consolidated financial statements. In particular, we considered where
management made subjective judgements; for example, in respect of significant accounting estimates
that involved making assumptions and considering future events that are inherently uncertain. As in
all of our audits, we also addressed the risk of management override of internal controls, including
among other matters, consideration of whether there was evidence of bias that represented a risk of
material misstatement due to fraud.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain
reasonable assurance about whether the consolidated financial statements are free from material
misstatement. Misstatements may arise due to fraud or error. They are considered material if,
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall Group materiality for the consolidated financial statements as a whole as set out
above. These, together with qualitative considerations, helped us to determine the scope of our audit,
the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both
individually and in aggregate, on the consolidated financial statements as a whole.
How we tailored our group audit scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an
opinion on the consolidated financial statements as a whole, taking into account the structure of the
Group, the accounting processes and controls, and the industry in which the Group operates.
The financial statements are a consolidation of the Company and two subsidiaries, one in New Zealand
and one in the United States of America. The Company and both subsidiaries share one centralised
group finance function.
We developed the scope of our audit procedures on a Group financial statement line item basis and
completed audit work on those Group balances at the materiality level set for the Group. All audit
procedures were conducted by the group audit team.
PwC
Other information
The Directors are responsible for the other information. The other information comprises the
information included in the Annual 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 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 on the other information
that we obtained prior to the date of this auditor’s report, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report
in this regard.
Responsibilities of the Directors for the consolidated financial
statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of
the consolidated financial statements in accordance with NZ IFRS and IFRS, and for such internal
control as the Directors determine is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Directors either intend to liquidate
the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial
statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements, as a whole, are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (NZ) and ISAs will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements is
located at the External Reporting Board’s website at:
https://www.xrb.govt.nz/assurance-standards/auditors-responsibilities/audit-report-1/
This description forms part of our auditor’s report.
Who we report to
This report is made solely to the Company’s Shareholders, as a body. Our audit work has been
undertaken so that we might state those matters which we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s Shareholders, as a body, for our
audit work, for this report or for the opinions we have formed.
PwC
The engagement partner on the audit resulting in this independent auditor’s report is Christopher
Ussher.
For and on behalf of:
Chartered Accountants
29 June 2021
Wellington
PwC
Consolidated statement of profit or loss and
other comprehensive income
Continuing operations
Operating revenue
Cost of sales
Gross profit
Other income
Foreign exchange (losses)/gains
Revaluation of contingent consideration
Total other income, gains and losses
Support costs
Sales and marketing expenses
Research and engineering expenses
Corporate costs*
Expenses
Operating loss
Net finance (expense)/income
Net loss before income tax
Income tax (expense)/credit
Loss attributable to owners of ikeGPS Group
Other comprehensive loss
Exchange differences on translation of foreign operations*
Comprehensive loss
6
6
Year ended 31 March
Group
2021
$'000's
9,324
(3,403)
5,921
915
(553)
(178)
184
(428)
(5,556)
(2,394)
(5,164)
2020
Restated*
$'000's
9,838
(2,878)
6,960
1
5
-
6
(541)
(4,697)
(3,383)
(4,344)
7
(13,542)
(12,965)
(7,437)
(5,999)
(55)
(22)
(7,492)
(6,021)
13
-
(17)
(7,492)
(6,038)
(972)
501
(8,464)
(5,537)
Basic and diluted loss per share
24
$ (0.06)
$ (0.06)
*See note 26 for details of restatement of prior period errors
The accompanying notes form part of, and should be read in conjunction with, these financial statements.
p. 41
Consolidated statement of changes in equity
Accumulated
Share based
Foreign
currency
translation
reserve
payment
reserve
Restated*
Closing balance at 31 March 2019
Prior period adjustments*
Share
capital
$'000's
55,132
-
Restated balance at 31 March 2019
55,132
losses
Restated*
$'000's
(45,846)
(398)
(46,244)
Changes in accounting policy
-
(45)
Restated balance at 1 April 2019
55,132
Loss for the year*
Currency translation differences
Total comprehensive income/(loss)
Issue of ordinary shares from share
placement and share purchase plan
Recognition of vesting of share-based
options*
Issue of shares from exercise of share
options
Share based options forfeited during the
year*
Equity movements arising from business
combinations
Total transactions with owners
-
-
-
5,940
-
37
-
389
6,366
(46,289)
(6,038)
-
(6,038)
-
-
-
2
-
2
Restated Balance at 31 March 2020
61,498
(52,325)
Opening balance at 1 April 2020
Loss for the year
Currency translation differences
Total comprehensive loss
Issue of ordinary shares from share
placement and share purchase plan
Recognition of vesting of share-based
options
Issue of shares from exercise of share
options
Share based options forfeited during the
year
Equity movements arising from business
combinations
Total transactions with owners
Balance at 31 March 2021
Share
capital
$'000's
61,498
-
-
-
18,465
-
446
-
523
19,434
80,932
losses
$'000's
(52,325)
(7,492)
-
(7,492)
-
-
-
-
-
-
(59,817)
Total
$'000's
$'000's
$'000's
192
79
271
-
271
-
-
-
-
407
(27)
(19)
121
482
753
(115)
(5)
(120)
-
9,363
(324)
9,039
(45)
(120)
8,994
-
(6,038)
501
501
501
(5,537)
-
-
-
-
-
-
5,940
407
10
(17)
510
6,850
381
10,307
$'000's
$'000's
$'000's
753
-
-
-
-
656
(311)
(36)
116
381
-
10,307
(7,492)
(972)
(972)
(972)
(8,464)
-
-
-
-
-
18,465
656
135
(36)
639
425
1,178
-
19,859
(591)
21,702
Accumulated
Foreign
Share based
currency
translation
reserve
payment
reserve
Total
*See note 26 for details of restatement of prior period errors
The accompanying notes form part of, and should be read in conjunction with, these financial statements.
p. 42
Consolidated balance sheet
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Inventory
Total current assets
Non-current assets
Property, plant and equipment*
Intangible assets*
Inventory
Lease assets
Deferred tax asset
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Employee entitlements
Provision*
Other liabilities
Lease liabilities
Deferred income
Total current liabilities
Non-current liabilities
Lease liabilities*
Other liabilities
Deferred income
Total non-current liabilities
Total liabilities
Total net assets
EQUITY
Share capital
Share based payment reserve*
Accumulated losses*
Foreign currency translation reserve*
Total equity
8
10
9
15
16
9
22
13
11
28
21
22
6
22
21
6
14
As at 31 March
Group
2019
2020
Restated*
Restated*
2021
$'000's
$'000's
$'000's
11,342
2,630
254
798
4,327
1,576
681
876
3,475
1,370
294
1,691
15,024
7,460
6,830
1,053
13,845
352
434
-
15,684
30,708
960
303
711
3,894
339
2,449
8,656
174
148
28
350
9,006
1,165
6,468
534
727
-
921
3,571
-
-
17
8,894
4,509
16,354
11,339
931
231
521
574
327
2,392
4,976
482
534
55
1,071
6,047
505
226
268
-
-
1,246
2,245
-
-
55
55
2,300
9,039
21,702
10,307
80,932
1,178
61,498
55,132
753
271
(59,817)
(52,325)
(46,244)
(591)
381
21,702
10,307
(120)
9,039
Director
Date: 29 June 2021
Director
Date: 29 June 2021
NZ (New Zealand Time)
NZ (New Zealand Time)
*See note 26 for details of restatement of prior period errors
The accompanying notes form part of, and should be read in conjunction with, these financial statements.
p. 43
Consolidated statement of cash flows
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Payment of low value and short term leases
Paycheck protection programme payments
Interest paid
Net cash used in operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Additions to intangible assets
Purchase of assets in business combination
Interest received
Net cash used in investing activities
Cash flows from financing activities
Payment of principal portion of lease liabilities
Exercising of share options
Proceeds from issuance of shares
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 1 April
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents
22
23
15
Year ended 31 March
Group
2021
$'000's
8,611
(12,869)
(59)
838
(63)
2020
$'000's
10,306
(11,303)
(73)
-
(34)
(3,542)
(1,104)
(844)
(1,192)
(4,600)
8
(781)
(683)
(2,592)
12
(6,628)
(4,044)
(271)
135
18,495
18,359
8,189
4,327
(1,174)
11,342
(161)
10
5,940
5,789
641
3,475
211
4,327
The accompanying notes form part of, and should be read in conjunction with, these financial statements.
p. 44
Notes to the consolidated financial statements
for the year ended 31 March 2021
1. Reporting Entity
ikeGPS Group Limited (the “Company”) is a limited liability company domiciled and incorporated
in New Zealand, registered under the Companies Act 1993 and listed on the New Zealand Stock
Exchange (“NZX”) and Australian Securities Exchange (“ASX”). The Company is an FMC reporting
entity for the purposes of the Financial Markets Conduct Act 2013. The consolidated financial
statements for the year ended 31 March 2021 comprise the Company and its subsidiaries
(together referred to as the “Group”) which comprises of ikeGPS Limited and ikeGPS Inc.
The principal activity of the Group is that of design, sale, and delivery of a solution for the
collection, analysis, and management of distribution assets for electric utilities and
communications companies.
The consolidated financial statements were authorised for issue by the Directors on 29 June
2021.
2. Basis of preparation
The principal accounting policies applied in the preparation of these consolidated financial
statements are set out below. These policies have been consistently applied to all the years
presented, unless otherwise stated.
Statement of compliance
The consolidated financial statements have been prepared in accordance with the requirements
of the Companies Act 1993 and Financial Reporting Act 2013.
The consolidated financial statements of the Group have been prepared in accordance with New
Zealand Generally Accepted Accounting Practice (“NZ GAAP”). The Group is a for-profit entity
for the purposes of complying with NZ GAAP. The consolidated financial statements comply
with New Zealand equivalents to International Financial Reporting Standards (“NZ IFRS”), other
New Zealand accounting standards and authoritative notices that are applicable to entities that
apply NZ IFRS. The consolidated financial statements comply with International Financial
Reporting Standards (IFRS).
Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis with the
exception of certain financial instruments which are measured in accordance with the specific
relevant accounting policy.
Critical estimates and judgments
The preparation of financial statements requires management to make judgments, estimates
and assumptions that affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from these estimates.
p. 45
Notes to the consolidated financial statements
for the year ended 31 March 2021
2. Basis of preparation (cont.)
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised and in any
future periods affected.
The material judgments and estimates used in preparation of the consolidated financial
statements are outlined below.
Impact of COVID-19
The majority of the Group’s customers operate in North America, where the economic environment
experienced a substantial slow-down over the fiscal year 2021 (“FY21”) period due to the impact of
COVID-19.
Our target customers, being communications companies, electric utilities and their associated
engineering service providers, are considered “critical businesses”. However, while these customers
have not been as impacted by restrictions as other industries, trading has been significantly more
restrictive than normal as discretionary work has been reduced. This reduction in discretionary work
is most noticeable in the electric utilities sector.
The Group acknowledges the uncertainty that COVID-19 continues to have across the US. The Group
is continuing to focus on the health and safety of staff and the resilience of its supply chain and
operational capacity.
The areas most impacted by the uncertainty caused by the COVID-19 pandemic are the assessment
of future cashflows utilised in going concern and impairment testing, and the measurement of
contingent consideration from business combinations. The Group derives revenue from customers
being out in the field collecting pole data which can be directly impacted by safety restrictions and
this can impact future cashflows.
On 1 May 2020 IKE received USD $511,594 under the US Federal Government CARES Act Paycheck
Protection Program (“PPP”) via its bank, Silicon Valley Bank. Under the PPP structure the loan is
forgivable as long as the proceeds are used to cover payroll costs and rent and utility costs over the
covered period of the loan. The Group received confirmation the loan was forgiven on 15 February
2021. In addition, the Group received NZD $81,525 on 27 March 2020 under the New Zealand COVID-
19 Wage Subsidy scheme. The funds received have been recorded as government grant income over
the period in which the costs were incurred.
p. 46
Notes to the consolidated financial statements
for the year ended 31 March 2021
2. Basis of preparation (cont.)
Going concern
These consolidated financial results have been prepared based on the Group being a going
concern, which assumes the Group has the ability and intention to continue operations for a
period of at least 12 months from the date the consolidated financial results are approved.
The Group has continued its plan for growth, investing in developing and acquiring technology
to expand the Group’s revenue generating product and service offerings. Throughout FY21,
revenue was impacted by a restricted operating environment due to the COVID-19 pandemic.
This impacted the timing of our customers’ investment in their assets and therefore timing of
IKE revenue.
During the FY21 year the Group had cash outflows of $3,542,000 (2020: $1,104,000) relating to
operations, and $6,628,000 (2020: $4,044,000) relating to capitalised internal and acquired
development for the year ended 31 March 2021.The cash balance on 31 March 2021 was
$11,342,000 (2020: $4,327,000).
The Board of the Group has approved a business plan for FY22 which assumes material growth
from FY21 in the communications and utilities market as Federal, State and company
restrictions related to COVID-19 continue to be lifted with increased vaccinations in North
America. Transactional revenue is expected to grow above prior periods and revenue from
recently acquired technology is expected to materialise in quarter 3 and quarter 4. The FY22 plan
has been based on a strong order forecast through the fourth quarter of FY21 with a number of
large contracts closing. However, the Board acknowledges continued uncertainty related to
COVID-19 remains.
The key judgements in assessing the Group’s going concern position are:
+ Achievement of the revenue growth anticipated in the FY22 business plan through the
expected rebound in core market activity as COVID-19 restrictions are lifted
+ Continued development of technology solutions that support future revenue growth
+ The ability to reduce operating expenses if planned revenue growth is delayed
+ The ability to raise capital for future acquisitions and support operating cash flow
The FY22 business plan has been extended out to June 2022 to project cash flows for a period
of twelve months after the approval of these consolidated financial results.
Historically it has been a challenge for the Group to accurately forecast business growth, and
this is exacerbated in the current economic climate caused by COVID-19. The Group has
assessed the degree of market sensitivity, and stress testing has been performed on the FY22
plan to June 2022.The stress testing takes account of historic forecasting volatility, reducing
forecast receipts from customers by 23% in FY22, and reducing planned additional headcount
and discretionary cost in response to reduced revenue in the second half of FY22. The outcome
of this analysis shows that the Group remains in a strong cash on hand position albeit with
p. 47
Notes to the consolidated financial statements
for the year ended 31 March 2021
2. Basis of preparation (cont.)
reduced available funds. Further cost reduction measures are available to the Group if one or
more components of the plan are not realised.
The Group has also considered its ability to raise additional capital in the future. In FY21, the
Group completed an institutional placement and rights entitlement offer raising approximately
$19.7 million. This successful capital raise has put IKE in a strong position to invest in increasing
the Group’s sales and delivery capability and it provided funding for the acquisition of an artificial
intelligence and machine learning platform. The Directors believe that additional capital could be
raised through the Australian and New Zealand capital markets to enable the Group to fund
operational cash flows and pursue the growth opportunities available to the business, including
any future strategic acquisition opportunities.
However, the liquidity risk arising from the ability of the Group to meet sales growth forecasts or
reduce expenditure and raise capital should revenue growth not occur as anticipated creates a
material uncertainty that cash inflows and cash on hand may not be sufficient for the Group to
meet its obligations as they fall due. This may cast significant doubt on the ability of the Group
to continue as a going concern and, therefore, may result in the Group’s inability to realise its
assets and settle its liabilities in the normal course of business. These consolidated financial
results do not reflect adjustments in the carrying values of the assets and liabilities, the reported
revenues and expenses, and the balance sheet classifications used, that would be necessary if
the Group were unable to continue as a going concern.
While acknowledging the uncertainty that exists, the Directors believe that projected cash
inflows, combined with cash on hand at 31 March 2021 of $11.3 million, means that the Group
has sufficient funding to continue a growth trajectory for at least the next 12 months from the
date of approval of the consolidated financial results, and hence consider the use of the going
concern basis appropriate.
Impairment
The carrying amounts of the Group’s assets were reviewed to determine whether there is any
indication of impairment. The Directors identified the following cash generating units (CGUs):
+ CGU1 – IKE Core platform: intangible assets, property plant and equipment, capital work
in progress, lease assets and working capital.
+ CGU2 – Spike: intangible assets and working capital.
+ CGU3 – Pole Forman: intangible assets and working capital.
+ CGU4 – Visual Globe: intangible assets, including goodwill acquired in the business
combination, and working capital.
The Directors concluded that operating losses associated with CGU1 are an indicator of
impairment, requiring an estimate of the CGU1 recoverable amount. Additionally, they
determined that due to the lower than expected revenue from CGU2, an indicator of impairment
existed requiring an estimate of the CGU2 recoverable amount.
p. 48
Notes to the consolidated financial statements
for the year ended 31 March 2021
2. Basis of preparation (cont.)
The Directors assessed CGU3 for indicators of impairment and, taking account of its
performance including its historical and forecast positive cashflows, determined that no
impairment indicator existed. CGU4 was acquired on 4 January 2021 (refer to the Business
combinations section below). Goodwill was identified as part of the acquisition, and there is a
requirement to test this annually for impairment. The details of each impairment test are outlined
below:
CGU1 was determined to have a carrying value of $4,459,090. Future cash flows are forecast
based on a five year business model for CGU1, which included an average revenue growth rate
of 30% and operating expenses reflecting the FY21 business plan for CGU1. A pre-tax discount
rate of 16% was used to establish the recoverable amount on a value in use basis.
The forecast financial information is based on both past experience and future expectations of
operating performance and requires judgements to be made as to revenue growth, operating
cost projections and the market environment. Despite the impact of COVID-19, in the medium
term the Group remains optimistic that the CGU1 core infrastructure market will continue due to
the significant multiyear investment programmes our customers have in place. The value in use
assessment is sensitive to changes in each of these assumptions, actual results may be
substantially different. To determine terminal value the Group applied a 2% growth rate.
Sensitivity analysis was performed on key assumptions. A likely material impairment would need
to be considered if the forecast sales volume growth was lower than the forecast by greater than
20%.
The Directors have determined that no impairment is required as CGU1 continues to have a
useful life and that the current carrying value of the CGU1 does not exceed its value in use.
CGU2 was determined to have a carrying value of $586,843. Future cash flows are forecast
based on a five-year business model for CGU2 and a pre-tax discount rate of 16% was used to
establish the recoverable amount on a value in use basis.
Spike sales volumes in FY21 were COVID-19 impacted, and the Directors have assumed these
will recover to FY20 levels by FY23. Zero growth in sales volumes has been assumed
subsequently for FY24 to FY26. An estimate of the cash flows required to market and sell the
Spike products was based on the business plan for FY21. No terminal value is assumed, which
aligns with the remaining expected useful life of the assets.
The Directors have determined that an impairment of $85,000 is required as the carrying value
exceeded the value in use calculation by that amount. The impairment has been recorded against
the Spike applications and SDK software and is included in the Research and Engineering line in
the Consolidated Statement of Profit or Loss and Other Comprehensive Income.
p. 49
Notes to the consolidated financial statements
for the year ended 31 March 2021
2. Basis of preparation (cont.)
The forecast financial information is based on both past experience and future expectations of
operating performance and requires judgements to be made as to revenue growth, operating
cost projections and the market environment. It is sensitive to changes in each of the
assumptions outlined above and actual results may be substantially different. Any change in the
assumptions would likely cause a material change in the impairment recognised by the Group.
CGU4 was determined to have a carrying value of $7,881,457 including goodwill. Future cash
flow assumptions have not changed from the acquisition date and are consistent with the
assumptions referred to in the Business combinations section below. A pre-tax discount rate of
33.4% was used to establish the recoverable amount on a value in use basis. In determining the
terminal value, the Group applied a 1.5% growth rate. The Directors have concluded that no
impairment exists, however any change in these assumptions would result in an impairment
being recognised.
Sales Tax Provision
Key judgements were made in determining the sales tax provision liability. These judgments
are described in note 28.
Business Combination
On 4 January 2021 ikeGPS Inc acquired the assets, customer contracts and processes of Visual
Globe LLC. Visual Globe LLC is a software company specialising in the automated analysis of
utility poles and related database records. This strategic acquisition complements the Group’s
existing offerings and provides the potential for the Group to grow its addressable market within
the communications and utility segment.
The purchase consideration was allocated to the acquired assets based on their estimated fair
values as at the date of acquisition.
Purchase consideration
Cash Paid
Contingent consideration
Total purchase consideration
$'000's
(NZD)
4,600
2,969
7,569
$'000's
(USD)
3,300
2,130
5,430
Valuation experts were utilised to establish the fair value of the assets and liabilities recognised
as a result of the acquisition as follows:
Intangible assets
Technology
Customer relationships
Other
Net identifiable assets
Goodwill
Total net assets acquired
$'000's
(NZD)
3,988
361
21
4,370
3,199
7,569
$'000's
(USD)
2,861
259
15
3,135
2,295
5,430
p. 50
Notes to the consolidated financial statements
for the year ended 31 March 2021
2. Basis of preparation (cont.)
The goodwill recognised is attributable to the future growth potential of the acquired business.
For tax purposes ikeGPS Inc can claim amortisation on the goodwill balance. As a result, no
deferred tax liability has been recognised related to goodwill.
The methods, assumptions and critical estimates and judgments used to determine the fair
value of the assets acquired and contingent consideration paid in the business combination are
outlined below.
Contingent consideration
In the event that certain pre-determined revenue amounts are achieved in the three years
ended 31 March 2024, additional consideration of up to a total of USD $3.9 million in cash and
USD $1.7 million in Group shares may be payable.
The potential undiscounted amount payable under the agreement and revenue targets in USD
are outlined below.
Revenue target
$'000's (USD)
3,300
10,100
21,000
Cash Consideration (per
milestone reached)
Share Consideration (per
milestone reached)
$'000's (USD)
1,333
1,333
1,333
$'000's (USD)
561
561
561
Total cumulative
consideration (share and
cash)
$'000's (USD)
1,894
3,788
5,682
In addition, if revenue exceeds USD $30 million in the three-year period an additional royalty of
3% of the revenue in excess of USD $30 million is payable.
The fair value of the contingent consideration of NZD $2.96 million (USD$2.13 million) was
estimated by calculating the present value of the future expected cashflows of the business.
The estimates are based on a discount rate of 28%, with projected revenue in the first full year
(being 1 April 2021 to 31 March 2022) of USD $1.2 million, and a projected revenue growth rate
of 175%, 103% and 41.8% respectively in the following years. These have been determined
based on management’s analysis of the obtainable market share that can be achieved by the
Group. Based on these revenue growth rates the model has an assumption that revenue
targets one and two will be met in 2023 and 2024. The model has assumed revenue target
three and the royalty target will not be met and no consideration has been allocated to these
targets.
The estimates of the probability and timing of the revenue targets being met are based on
forecast cashflows and subject to both timing and achievement uncertainty, due to the early-
stage nature of the business. If the revenue targets are achieved a year earlier than forecast the
impact on profit or loss from the revaluation of contingent consideration would be a decrease
of USD $0.58 million.
p. 51
Notes to the consolidated financial statements
for the year ended 31 March 2021
2. Basis of preparation (cont.)
If the targets are achieved a year later than forecast the impact on profit or loss from the
revaluation of contingent consideration would be an increase of USD $1.17 million. If the
revenue targets are not achieved profit or loss will increase by USD $2.13 million from the
revaluation of contingent consideration.
Contingent consideration is classified as a liability and forms part of the other current liabilities
balance. Contingent consideration is recognised at fair value and remeasured at each reporting
period. At 31 March 2021 there has been no change in the fair value of the contingent
consideration (expect for the unwinding of the discount of NZD $178,000), as there has been no
change in the probability of the revenue targets being met.
Fair value of asset recognised
Intangible assets – technology
Internally generated software (the Visual Globe Platform) was acquired as part of the business
combination. The value of this software was determined as NZD $3.988 million using a relief
from royalty method.
The premise underlying the method is that the user of a developed technology and software
realises an enhanced earnings capacity from ownership of the intangible asset, equal to the
royalty they would otherwise have to pay a third party for use of the developed technology and
software if it were not owned by the company. The method requires assumptions for both future
expected revenues connected to the developed technology and a reasonable estimate of a
royalty rate. The major assumptions used in the method to arrive at a fair value for the Visual
Globe Platform are outlined below:
Projected revenue in the first full year (being 1 April 2021 to 31 March 2022) of USD $1.2 million
and a projected revenue growth rate of 175%, 103% and 41.8% respectively in the following three
years.
A revenue growth rate of 1.5% for the remaining life of the asset (assessed at 10 years)
A royalty payment rate of 14% of revenues payable
A 22% discount rate has been applied
Intangible assets – customer relationships
Customer relationships were acquired as part of the business combination. The value of these
relationships was determined to be NZD $361,000 using a multi period excess earnings method.
This method requires assumptions for future expected revenues, the average life of a customer
contract, the expected margin and operating expenses and contributory asset charges. The
major assumptions used in the method to arrive at a fair value for the customer relationships are
outlined below:
p. 52
Notes to the consolidated financial statements
for the year ended 31 March 2021
2. Basis of preparation (cont.)
Projected revenue in the first full year (being 1 April 2021 to 31 March 2022) of USD $1.2 million
and a projected revenue growth rate of 175%, 103% and 41.8% respectively in the following three
years.
A revenue growth rate of 1.5% for terminal value
An average customer life of 10 years
Margins remaining constant
A 22% discount rate has been applied
During the current financial year, the Group recorded revenue of $26,000 related to the
business. If the acquisition had occurred on 1 April 2020, the revenue and net loss after tax for
the Group would have been approximately NZD $9.4 million and NZD ($9.5 million)
respectively. As this was an asset purchase this is an indicative figure based on the
extrapolated current year’s revenue and expenses.
Transactions recognised separately from the business combination
As part of the transaction the Group agreed to pay additional consideration if two key employees
remained employed for a three-year period. The additional consideration is equivalent to USD $1
million in cash, and USD $400,000 in ikeGPS Group shares. Payment (via cash or issue of shares)
is required to be made after each year of service has been completed by the employee.
The payments have been assessed as not forming part of the business combination and instead
being remuneration for future employment services. This is primarily because the payments are
reliant on the employees remaining employed by the Group, if the employees cease to be
employed by the Group during the period, unpaid consideration will be forfeited.
The payments are required to be paid after each year of employment has been completed and
employee expenses are recognised as services are rendered. Expenses of NZD $165,000 were
recognised as employee expenses in 2021.
p. 53
Notes to the consolidated financial statements
for the year ended 31 March 2021
3. New and amended standards adopted by the Group
The Group has applied the following standards and amendments for the first time for their annual
reporting period commencing 1 April 2020:
+ Definition of Material – amendments to NZ IAS 1 and NZ IAS 8
+ Definition of a Business – amendments to NZ IFRS 3
+
Interest Rate Benchmark Reform – amendments to NZ IFRS 9, NZ IAS 39 and NZ IFRS 7
+ Revised New Zealand Equivalent to the IASB Conceptual Framework for Financial Reporting
(2018 NZ Conceptual Framework)
+
2019 Omnibus Amendments to NZ IFRS
+ Going Concern Disclosures – Amendments to FRS 44
The amendments listed above did not have any impact on the amounts recognised in prior
periods and are not expected to significantly affect the current or future periods.
Certain new accounting standards and interpretations have been published that are not
mandatory for 31 March 2021 reporting periods and have not been early adopted by the Group.
These standards are not expected to have a material impact on the entity in the current or future
reporting periods and on foreseeable future transactions.
4. Significant accounting policies
Basis of consolidation
Subsidiaries
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. They are deconsolidated from the date that control ceases.
Transactions eliminated on consolidation
Intra-Group transactions, balances, and any unrealised gains arising from intra-Group
transactions, are eliminated in preparing the consolidated financial statements. Unrealised
losses are eliminated in the same way as unrealised gains, but only to the extent that there is
no evidence of impairment.
p. 54
Notes to the consolidated financial statements
for the year ended 31 March 2021
4. Significant accounting policies (cont.)
Foreign currency translation
Functional and presentation currency
Items included in the consolidated financial statements of each of the Group’s subsidiaries are
measured using the currency of the primary economic environment in which the entity operates
("the functional currency").
The functional currency of the Company is New Zealand dollars. The functional currency of the
Group's USA subsidiary is United States dollars. These consolidated financial statements are
presented in New Zealand dollars, which is the Group's presentation currency.
Transactions and balances
Foreign currency transactions are initially translated to functional currencies at the rates of
exchange prevailing at the dates of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the revaluation at year-end
exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss.
Group companies
The results and financial position of the US subsidiary are translated into the presentation
currency as follows:
+ assets and liabilities are translated at the closing rate at the date of the balance sheet;
+
income and expenses 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 dates of the transactions);
and
+ all resulting exchange differences are recognised in other comprehensive income.
+ on consolidation, exchange differences arising from the translation of any net investment in
foreign entities, and of borrowings and other financial instruments designated as hedges of
such investments, are recognised in other comprehensive income. When a foreign operation
is sold or any borrowings forming part of the net investment are repaid, the associated
exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.
Goods and Services Tax
All amounts are shown exclusive of Goods and Services Tax (“GST”) and other indirect taxes
except for trade receivables and trade payables that are stated inclusive of GST.
p. 55
Notes to the consolidated financial statements
for the year ended 31 March 2021
4. Significant accounting policies (cont.)
Financial Instruments
Financial assets and liabilities are recognised on the Group’s statement of financial position
when the Group becomes a party to the contractual provisions of the instrument.
They include trade and other receivables, trade and other payables, cash and cash equivalents,
lease liabilities and other liabilities. They are included in current assets and current liabilities,
except for loans and receivables with payment terms greater than 12 months which are included
in non-current assets.
The Group classifies its financial assets and liabilities as ‘measured at amortised cost’ or ‘fair
value through profit or loss’ at initial recognition.
The following table shows the Group’s financial assets and liabilities and their classification.
Financial instrument
Trade and other receivables and payables
Lease liabilities
Other liabilities – deferred consideration
Other liabilities – contingent consideration
Classification
Measured at amortised cost
Measured at amortised cost
Measured at amortised cost
Fair value through profit or loss
Assets that are held for collection of contractual cash flows where those cash flows represent
solely payments of principal and interest are measured at amortised cost. They are recognised
initially at their fair value and subsequently measured at amortised cost using the effective
interest method.
Interest income from these financial assets is included in finance income using the effective
interest rate method.
Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in
other gains/(losses) together with foreign exchange gains and losses. Impairment losses are
presented as separate line item in the statement of profit or loss.
Financial liabilities measured at amortised cost are recognised initially at their fair value and
subsequently measured at amortised cost using the effective interest method.
Interest expense from these financial liabilities is included in finance expense using the effective
interest rate method.
Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in
other gains/(losses) together with foreign exchange gains and losses.
Financial assets and liabilities recognised at fair value through profit or loss are originally and
subsequently remeasured to fair value, with gains/(losses) being recognised in the profit or loss.
p. 56
Notes to the consolidated financial statements
for the year ended 31 March 2021
4. Significant accounting policies (cont.)
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits.
Trade and other receivables
Trade and other receivables arise when the Group provides money, goods and services directly
to a debtor with no intention of selling the receivable. They are included in current assets, except
for those with maturities greater than 12 months after the end of the reporting period which are
classified as non-current assets.
Lease assets and liabilities
Lease assets are contracts which convey the right to use office space in both Colorado and
Wellington. Lease assets are recognised at the present value of the lease payments that are not
paid at the inception of the lease. After initial recognition the lease asset is recorded at the
amount initially recognised less amortisation and impairment.
The corresponding lease liability to the lessor is included in the balance sheet as a lease liability.
Lease payments are apportioned between finance charges and a reduction in the lease liability.
The finance charges and amortisation of the lease asset are charged directly to profit or loss.
Trade and other payables
Trade and other payables are obligations to pay for goods and services that have been acquired
in the ordinary course of business from suppliers. Accounts payable are classified as current
liabilities if payment is due within one year or less (or in the normal operating cycle of the
business if longer). If not, they are presented as non-current liabilities. They are recognised
initially at their fair value and subsequently measured at amortised cost using the effective
interest method.
Other liabilities
Other liabilities are obligations from current and prior business combinations that the Group has
entered. Other liabilities are initially recorded at their fair values and subsequently measured
either at amortised cost or fair value through profit or loss.
Other liabilities arising from business combinations that are not derivative financial instruments
and are not contingent consideration are subsequently measured at amortised cost.
Other liabilities that are the result of contingent consideration are subsequently measured at fair
value through profit or loss.
p. 57
Notes to the consolidated financial statements
for the year ended 31 March 2021
4. Significant accounting policies (cont.)
Impairment of financial assets
The Group assesses impairment on a forward-looking basis, the expected credit loss associated
with its financial assets carried at amortised cost. The Group will assess if there has been a
significant increase in credit risk by assessing market conditions, forward looking estimates and
previous financial history of counterparts.
For trade receivables the Group applies the simplified approach permitted by NZ IFRS 9, which
requires expected lifetime losses to be recognised from initial recognition of the receivables.
The expected credit losses on these financial assets are assessed using a provision matrix,
adjusted for factors that are specific to the receivables including customers’ historical credit loss
experience, individual customer characteristics, customer market segment and economic
environment.
The Group writes off a financial asset when there is information indicating default or delinquency
in payments, the probability that they will enter bankruptcy, liquidation or other financial
reorganisation and there is no real prospect of recovery.
Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and
impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset.
Depreciation
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives
of each part of an item of property, plant and equipment.
Depreciation methods, useful lives and residual values are reviewed and adjusted, if appropriate, at
each reporting date.
Office furniture and equipment
Plant and equipment
IKE rental devices
20% - 33%
20% - 50%
30%
Gain and losses on disposals are determined by comparing proceeds with the carrying amount.
These are included in profit or loss.
p. 58
Notes to the consolidated financial statements
for the year ended 31 March 2021
4. Significant accounting policies (cont.)
Intangible assets
Research and development
All research costs are recognised as an expense when they are incurred.
Capitalised development costs
The Group capitalises employee and consultants’ costs directly related to development of an
intangible asset. The Group regularly reviews (at least annually) the carrying value of
capitalised development costs to ensure they are not impaired. Management has reviewed the
expected remaining useful life of assets and concluded that the development costs for all
products are amortised over periods of 4 to 10 years to reflect the expected useful life of the
assets.
Development costs that are directly attributable to the design and testing of identifiable and
unique software products controlled by the Group are recognised as intangible assets when the
following criteria are met:
+
it is technically feasible to complete the software product so that it will be available for use;
+ management intends to complete the software product and use or sell it;
+ there is an ability to use or sell the software product;
+
it can be demonstrated how the software product will generate probable future economic
benefits;
+ adequate technical, financial and other resources to complete the development and to use or
sell the software product are available; and
+ the expenditure attributable to the software product during its development can be reliably
measured.
Other development expenditures that do not meet these criteria are recognised as an expense
as incurred. Development costs previously recognised as an expense are not recognised as an
asset in a subsequent period.
Other intangible assets
Separately purchased intangible assets (i.e. software) are recognised at cost, plus any initial
directly attributable costs. They are subsequently measured at cost less accumulated
amortisation and impairment. Purchased software has a useful life ranging from 4 -10 years.
Customer contracts, relationships, trademarks and training material are initially recognised at
fair value. They are subsequently measured at cost less accumulated amortisation and
impairment and have a useful life ranging from 4 -10 years.
p. 59
Notes to the consolidated financial statements
for the year ended 31 March 2021
4. Significant accounting policies (cont.)
Goodwill
Goodwill is measured as described in note 4 - Business Combinations. Goodwill on acquisitions
of businesses is included in intangible assets. Goodwill is not amortised but it is tested for
impairment annually, or more frequently if events or changes in circumstances indicate that it
might be impaired, and is carried at cost less accumulated impairment losses.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The
allocation is made to those cash-generating units or groups of cash-generating units that are
expected to benefit from the business combination in which the goodwill arose.
Goodwill and work in progress are not amortised and are tested for impairment annually.
Impairment of non-financial assets
Intangible assets under development are not subject to amortisation and are tested annually for
impairment, or more frequently if events or changes in circumstances indicate that they might
be impaired. The carrying amount of the Group’s other non- financial assets are reviewed at each
balance date to determine whether there is any indication of impairment or objective evidence
of impairment. If any such indication exists, the assets recoverable amount is estimated.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-
tax discount rate that reflects current market assessments for the time value of money and the
risks specific to the asset for which estimates of future cash flows have not been adjusted. If the
recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (cash generating unit) is reduced to its recoverable
amount.
An impairment loss is recognised in profit or loss immediately. Where an impairment loss
subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to
the revised estimate of its recoverable amount, but only to the extent that the increased carrying
amount does not exceed the carrying amount that would have been determined had no
impairment loss been recognised for the asset (cash generating unit) in prior years. A reversal of
an impairment loss is recognised in profit or loss immediately.
p. 60
Notes to the consolidated financial statements
for the year ended 31 March 2021
4. Significant accounting policies (cont.)
Inventory
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is
based on a weighted average cost, and includes expenditure incurred in acquiring the inventories
and bringing them to their existing location and condition. Cost comprises direct materials, direct
labour and production overhead. Net realisable value is the estimated selling price in the ordinary
course of business less the estimated costs of completion and the estimated costs necessary
to make the sale.
Government grants
Government grants are recognised at their fair value where there is reasonable assurance that
the grants will be received, and all attaching conditions will be complied with.
When the grant relates to an expense item, it is recognised as income on a systematic basis over
the periods necessary to match the grant to the costs that it is intended to compensate.
Government grants are included in ‘other income’.
Employee benefits
Liabilities for wages and salaries, including non-monetary benefits and accumulating sick leave
that are expected to be settled wholly within 12 months after the end of the period in which the
employees render the related service are recognised in respect of employees’ services up to the
end of the reporting period and are measured at the amounts expected to be paid when the
liabilities are settled. The liabilities are presented as current employee benefit obligations in the
consolidated balance sheet.
For defined contribution plans, the group pays contributions to publicly or privately administered
pension insurance plans on a mandatory, contractual or voluntary basis. The group has no
further payment obligations once the contributions have been paid. The contributions are
recognised as employee benefit expense when they are due. Prepaid contributions are
recognised as an asset to the extent that a cash refund or a reduction in the future payments is
available.
p. 61
Notes to the consolidated financial statements
for the year ended 31 March 2021
4. Significant accounting policies (cont.)
Share-based payment
The Group operates an employee option scheme (equity-settled) under which employees receive
the option to acquire shares at a predetermined exercise price. The options are measured at fair
value at grant date using the Black Scholes model with the fair value recognised as an employee
benefit expense in profit or loss with a corresponding increase in equity. The total expense is
recognised over the vesting period, which is the period over which all of the specified vesting
conditions are to be satisfied. At the end of each period, the Group revises its estimate of the
number of options that are expected to vest based on the service conditions. It recognises the
impact of the revision to original estimates, if any, in share-based payment reserve with a
corresponding change to share based compensation reserve in equity.
In addition, the Group provides share-based payments to employees related to business
combination. The employees are required to perform service conditions and an expense is
recognised over the vesting period. The rewards are considered equity settled and recognised
as an employee benefit expense and an increase to either share capital or share based
compensation reserve.
Revenue
The Group derives its revenue from the sale of product and related services, subscription
revenue, software licenses, providing access to hardware and software platform and technical
pole data analysis. Revenue is recognised when performance obligations have been satisfied. A
performance obligation has been satisfied when control of the good or service associated with
the performance obligation has been transferred to the customer.
Revenue is recognised using the five-step model to account for revenue arising from contracts with
customers. Under NZ IFRS 15, revenue is recognised at an amount that reflects the consideration to
which an entity expects to be entitled in exchange for transferring goods or services to a customer.
The standard requires entities to exercise judgement, taking into consideration all of the relevant facts
and circumstances when applying each step of the model to contracts with their customers. The five-
step model for recognising revenue from contracts with customers requires consideration of the
following steps:
+
+
Identifying the contract
Identifying the individual performance obligations within the contract
+ Determining the transaction price
+ Allocating the transaction price to distinct performance obligations
+ Recognising revenue
p. 62
Notes to the consolidated financial statements
for the year ended 31 March 2021
4. Significant accounting policies (cont.)
We have provided the table below that provides the key judgements made on the application of
NZ IFRS 15 across each revenue type with standardised terms and conditions. The Group has
applied a practical expedient permitted by the standard; therefore, no significant financing
component exists on deferred income.
Other business
Revenue
Type
Spike Device
Description
Key Judgements
Outcome
ikeGPS sells Spike devices
through direct orders and
online software.
No major judgement required.
N/A
Timing of revenue
recognition
Point in time
Recognised when the unit is
received by the customer.
Utility and communications
Description
Key Judgements
Outcome
Revenue
Type
IKE Device
Solution
The IKE Solution is marketed
to the utility & communications
market as an all-in-one
package which includes the
IKE4 device, preconfigured
IKE Field Android mobile
application and online access
to IKE Office - a cloud-based
software platform that enables
customers to measure and
analyse assets captured with
the IKE device.
The contract for an IKE Device, IKE Field
and IKE Office is generally sold as a
packaged solution. Management has
determined the individual performance
obligations within the contract. The total
contract price is allocated to each
performance obligation. Where possible
management uses external comparatives
to identify standalone performance
obligations and respective price. Where
an external comparative is not available,
management’s judgement is applied.
Subscription
Customers are required to
renew software subscriptions
to allow continued access to
the IKE Office online cloud
functionality and the ability to
customise and add new forms
onto the IKE device.
Determining when each performance
obligation is fulfilled.
Services
Service revenue is made up of
training, deployment, and
replacement unit revenue.
Determining when the performance
obligation is delivered.
Management has determined
that the IKE Device, Software
licence (IKE Field) and
Subscription (IKE Office) are
distinct performance
obligations of the IKE Solution.
In determining this
management has relied on
market comparables to
establish standalone
performance obligations.
Customers use the IKE Field
and IKE Office solution to store
and analyse data, customise
and add new forms. Along with
integration capability these
performance obligations can
be described as ‘stand ready’
services which can be
recognised over time.
Revenue is recognised when
the service is performed for the
customer. For example, when
the training to the customer is
performed.
Timing of
revenue
recognition
Point in time
Both the IKE device and
IKE Field mobile
application are recognised
at the point in time when
the device is sent to the
customer.
Over time
IKE Office is recognised
over the term of the
contract.
Over time
Subscription software
recognised over time.
Point in time
Service revenue is
recognised when the
service is delivered.
p. 63
Notes to the consolidated financial statements
for the year ended 31 March 2021
4. Significant accounting policies (cont.)
Utility and communications
Description
Key Judgements
Outcome
Revenue
Type
IKE Platform
subscription
revenue
Customers subscribe to the
Platform subscription to
access both an IKE device
and the functionality of IKE
Office. This subscription
enables customers to go out
in the field and collect data via
our platform where IKE or the
customer can analyze the
data online.
The subscription is in two parts; 1. The
lease of the IKE device under NZ IFRS
16, 2. The subscription to IKE Office. This
requires management to allocate the
contract price to each performance
obligation and determine when each
performance obligation is fulfilled.
IKE Analyze
Providing either an end-to-end
technical solution for
customers; performing pole
loading analysis and make
ready engineering
assessments or customers
capturing pole data and
transacting on our platform.
Pole loading
software
license
IKE sells a license of its pole
loading software to
customers.
Determining when each performance
obligation is fulfilled.
Initially the customer performs data
collection, the customer also receives an
annual subscription to access IKE Field
and Office.
Once customer data is collected it is
uploaded into IKE Office where IKE either
performs the analysis and completes
requested reports or when the data is
uploaded onto the platform.
Management has determined the
individual performance obligations of the
contract. The total contractual price
allocated to each performance obligation
using the stand-alone selling price.
Pole loading
maintenance
and support
subscription
Ongoing software support,
maintenance and software
updates through an annual
subscription.
Determining when each performance
obligation is fulfilled.
IKE Insight
revenue
IKE Insight revenue is derived
from our IKE Insight AI &
machine learning platform
processing pole data and
delivering an agreed output to
the customer.
Determining when each performance
obligation is fulfilled.
Once customer data is collected it is
uploaded onto the IKE Insight platform
where analysis is completed based on the
statement of work agreed.
Timing of
revenue
recognition
Point in time
The lease of the IKE
device is recognised at a
point in time in accordance
with NZ IFRS 16.
Over time
IKE Office is recognised
over the term of the
contract.
Point in time
Each transaction
(completed record) is
recognised when the
performance obligation has
been completed.
Management has determined
the contract price allocated to
the lease and subscription
portion of the platform
subscription is on the same
basis as the IKE Solution
discussed above (IKE Device
and IKE Office).
The performance obligations
for the subscription portion of
the IKE Platform subscription is
consistent with the treatment
above under subscription.
The business is required to
perform certain activities as per
the scoping document for each
customer. Once the activity is
complete the Group will
recognise the revenue.
Management has determined
that the perpetual license and
first year of maintenance and
support are separate
performance obligations. IKE
has used the stand-alone
selling price to allocate the
contractual price.
Customers use the
maintenance and support to
have the latest pole loading
software and calculations
available. These performance
obligations occur at any time
during the subscription period.
The business is required to
perform certain analysis as per
the scoping document for each
customer. Once the activity is
complete the Group will
recognise the revenue.
Point in time
The pole loading software
license is recognised at the
point in time when the
software is transferred.
Over time
The annual maintenance
and support is recognised
over the first year.
Over time
Pole loading software
maintenance and support
are recognised over time.
Point in time
Each transaction
(completed record) is
recognised when the
performance obligation has
been completed.
p. 64
Notes to the consolidated financial statements
for the year ended 31 March 2021
4. Significant accounting policies (cont.)
Sale of product
Revenue from the sale of product is derived from the sale of the Group’s laser measurement
devices, associated software and accessories. Revenue is recognised when the products are
shipped to the customer being the point at which control is considered to have transferred to the
customer.
IKE Platform subscription revenue
IKE platform as a service revenue is when the Group provides a customer with an IKE unit and
access to IKE Field and Office cloud platform. This product enables the customer to capture data
out in the field and process that data through transactions on the platform. Revenue is derived
from fees charged to customer on an annual or a monthly basis. Consideration received in
advance (of the service being provided), is recognised in the balance sheet as deferred income.
The transactions associated with the customers collected data is recognised as IKE Analyze
revenue.
By providing an IKE unit as part of the service the revenue is considered an operating lease as
the Group retains the significant portion of the risks and rewards of ownership. Platform
payments received (net of any incentives) are recognised as lease revenue in profit or loss on a
straight-line basis over the period of the lease.
Subscription revenue for access to IKE Field and Office is recognised in accordance with the
policy below on subscription revenue.
Subscription revenue
Subscription revenue is recognised as the services are provided to the customers. Consideration
received in advance (of the service being provided), is recognised in the balance sheet as
deferred income.
IKE Analyze revenue
IKE Analyze revenue is derived from transactions captured and analysed through our platform.
The IKE Anlayze offering ranges from customers self-performing analysis on the platform
through to IKE completing annotation analysis, pole loading analysis or performing make ready
engineering analysis for the customer. Revenue is recognised either when the data has been
analysed and the customer requirements outlined in the engagement statement of work have
been completed or when the pole data is captured and uploaded onto the platform.
IKE Insight revenue
IKE Insight revenue is derived from our IKE Insight AI & machine learning platform processing
pole data and delivering an agreed output to the customer. Revenue is recognised when the data
has been analysed through the platform and the output information is delivered to the customer
as outlined in the engagement statement of work completed.
p. 65
Notes to the consolidated financial statements
for the year ended 31 March 2021
4. Significant accounting policies (cont.)
Pole loading software license and services
Revenue is derived from selling a software program for performing structure analysis of utility
poles. Revenue is recognised when the software is transferred to the customer or when any initial
configuration and training service is provided.
Pole loading maintenance and support subscription
Revenue is derived from providing customers with an annual subscription to receive software
updates, maintenance and ongoing support for the software. Revenue is recognised over the
period in which the service is available to customers.
Other operating revenue
Other operating revenue includes consulting, unit repairs and training revenue. Revenue is
recognised when the services are performed.
Consideration received prior to the service being provided is recognised in the balance sheet as
deferred income.
Finance income and expenses
Interest income is recognised as it accrues, using the effective interest method. Finance
expenses comprise interest expense on borrowings, recognised using the effective interest
method.
Current and deferred income tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively
enacted at the balance sheet date in the countries where the Company and its subsidiaries
operate and generate taxable income. Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate on the basis of amounts expected to be paid to the
tax authorities.
Deferred income tax is recognised on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the consolidated financial statements.
Deferred income tax is determined using tax rates (and laws) that have been enacted or
substantively enacted by the balance sheet date and are expected to apply when the related
deferred income tax asset is realised, or the deferred income tax liability is settled.
p. 66
Notes to the consolidated financial statements
for the year ended 31 March 2021
4. Significant accounting policies (cont.)
Deferred income tax assets are recognised only to the extent that it is probable that future
taxable profit will be available against which the temporary differences can be utilised.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity. In this case, the tax is also
recognised in other comprehensive income or directly in equity, respectively.
Earnings per share
The Group presents earnings per share (“EPS”) data for its ordinary shares.
Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the
Company by the weighted average number of ordinary shares outstanding during the year.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders
and the weighted average number of shares that would be issued on conversion of all of the
dilutive potential ordinary shares into ordinary shares.
Other reserves
Share-based payments reserve
The share-based payments reserve is used to recognise both the grant date fair value of options
issued to employees but not exercised and contractual share payments to be made to
employees based on the period of employment.
Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entity are recognised in
other comprehensive income as described in the foreign currency translation accounting policy
and accumulated in a separate reserve within equity. The cumulative amount is reclassified to
profit or loss when the net investment is disposed of.
Business combinations
The acquisition method of accounting is used to account for all business combinations,
regardless of whether equity instruments or other assets are acquired. The consideration
transferred for the acquisition of a subsidiary comprises the:
+ fair values of the assets transferred
+
liabilities incurred to the former owners of the acquired business
+ equity interests issued by the group
+ fair value of any asset or liability resulting from a contingent consideration arrangement, and
+ fair value of any pre-existing equity interest in the subsidiary.
p. 67
Notes to the consolidated financial statements
for the year ended 31 March 2021
4. Significant accounting policies (cont.)
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business
combination are, with limited exceptions, measured initially at their fair values at the acquisition
date. The Group recognises any non-controlling interest in the acquired entity on an acquisition-
by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of
the acquired entity’s net identifiable assets. Acquisition-related costs are expensed as incurred.)
The excess of the:
+ consideration transferred,
+ amount of any non-controlling interest in the acquired entity, and
+ acquisition-date fair value of any previous equity interest in the acquired entity over the fair
value of the net identifiable assets acquired is recorded as goodwill.
If those amounts are less than the fair value of the net identifiable assets of the business
acquired, the difference is recognised directly in profit or loss as a bargain purchase. Where
settlement of any part of cash consideration is deferred, the amounts payable in the future are
discounted to their present value as at the date of exchange. The discount rate used is the entity’s
incremental borrowing rate, being the rate at which a similar borrowing could be obtained from
an independent financier under comparable terms and conditions. Contingent consideration is
classified either as equity or a financial liability. Amounts classified as a financial liability are
subsequently remeasured to fair value with changes in fair value recognised in profit or loss.
5. Operating segments
The CEO and the Board of Directors are assessed to be the Chief Operating Decision Maker
(CODM) who regularly review financial information by product and gross margin. Reporting of
overheads and balance sheet position is not undertaken at a level lower than the Group as a
whole. Geographically, revenue is substantially generated in the United States.
During FY21 the Group’s selling activities were focused and organised into two customer
segments namely Utility & Communications and Other Business. The Utility & Communications
segment includes electrical utility companies, engineering service providers and sales to
companies involved in the broadband fiber and cellular 5G roll out in the United States.
Within the Utilities & Communications segment the Group derives its revenue from:
+ selling an IKE device and corresponding annual subscription revenue,
+
+
the IKE Platform solution where customers collect pole data on a leased IKE device and
is either analysed by IKE according to an agreed statement of work or our customers
use the software platform directly to process their pole data,
transactional revenue by analysing pole data through an AI and machine learning
platform through its recent acquisition of the Visual Globe assets,
+ pole loading software licenses and ongoing subscriptions for maintenance and support.
p. 68
Notes to the consolidated financial statements
for the year ended 31 March 2021
5. Operating segments (cont.)
These segments differ from those used in prior periods to analyse the business and comparative
information has been presented on a consistent basis to the revised segments.
The segment information provided to the CEO and Board of Directors for the year ended 31
March 2021 are as follows:
2021
2020
Utility &
Communication
Other
Business
Group
Utility &
Communication
Other
Business
Restated*
Restated*
Group
Restated*
$'000's
$'000's
$'000's
$'000's
$'000's
$'000's
Sales of Product
Sale of product & services
Subscription
Contribution
IKE Platform Solution
Subscription and lease
IKE Analyze
Contribution
Poleforman
Pole loading software
licenses, services and
subscriptions
Contribution
Spike
Sale of product
Subscription
Contribution
Gross Profit
Sales and marketing costs
Other corporate income and
expenses
Net loss before tax
2,091
2,654
3,481
939
2,321
1,327
999
999
-
-
-
-
-
-
-
-
286
34
114
2,091
2,654
3,481
939
2,321
1,327
999
999
286
34
114
5,921
(5,556)
(7,858)
(7,492)
2,250
2,730
3,733
571
3,244
2,425
402
402
-
-
-
-
-
-
-
-
591
50
400
2,250
2,730
3,733
571
3,244
2,425
402
402
591
50
400
6,960
(4,697)
(8,284)
(6,021)
p. 69
Notes to the consolidated financial statements
for the year ended 31 March 2021
6. Revenue
Revenue
Sale of product (Point in time)
Platform as a service (Over time and Point in time)
IKE Analyze (Point in time)
IKE Insight (Point in time)
IKE subscription (Over time)
Pole loading licence and subscription (Over time and Point in time)
Services (Point in time)
Total Operating revenue
Government grants
Other income
Total other income
2021
2020
$'000's
$'000's
2,100
940
2,294
26
2,688
999
277
2,653
571
3,243
-
2,780
403
188
9,324
9,838
899
16
915
1
-
1
In the current year, no customer within a particular operating segment represented more than
10% of revenue (FY20: no customers).
Reconciliation of deferred income balances
Opening deferred income balance
Subscription revenue recognised
Platform as a service revenue recognised
PoleForeman maintenance and support
New Zealand wage subsidy
Unsatisfied performance obligations for the current year
Closing deferred income balance
2021
$'000's
2,447
(1,643)
(299)
(378)
(81)
2,431
2,477
2020
$'000's
1,301
(1,230)
-
-
81
2,295
2,447
p. 70
Notes to the consolidated financial statements
for the year ended 31 March 2021
6. Revenue (cont.)
Government grants are payments received in relation to COVID-19 government relief. This
includes the New Zealand COVID-19 wage subsidy and U.S. Federal Government CARES Act
Paycheck Protection Programme (PPP).
The New Zealand COVID-19 wage subsidy are payments received to enable businesses to
continue to pay employee wages. To qualify for the wage subsidy the following criteria needed
to be met:
• A 30% reduction in revenue for any one month due to COVID-19 for the applicable period
(between 20 January 2020 and 9 June 2020)
• Active steps were taken to mitigate the impact of COVID-19
• 80% of usual wages were paid to employees
The Group met the revenue reduction threshold for the month of April 2020 and met all other
eligibility criteria at that time. The payments were recognised as ‘other income’ as the
corresponding wages were paid (in the period April to June 2020). As at balance date all revenue
had been recognised.
The PPP is a ‘small business’ loan for businesses to continue to employ and pay their employees
during the COVID-19 crises. The loan is forgivable as long as the proceeds are used to cover payroll
costs, rent and utility costs over the covered period after the loan is made.
To qualify for the PPP loan the following criteria needed to be met:
+ Considered a ‘small business’ being those with less than 500 employees
+ Certify that the current economic uncertainty makes the loan necessary to support the
ongoing operations of the business
+ The loan funds will be used to retain workers and maintain its payroll or make lease payments
and utility payments
On application, due to the market uncertainty, the difficulty to predicting future cashflows and the
impact the pandemic would have on our customers future projects. The Group met the above criteria.
The payment was recognised as ‘other income’ as the corresponding payroll costs and lease
payments were paid (in the period May and June). The Group received confirmation the loan was
forgiven on 15 February 2021.
p. 71
Notes to the consolidated financial statements
for the year ended 31 March 2021
7. Expenses
Operating expenses
Operating expenses consist of operations costs, sales and marketing expenses, engineering and
research expenses and corporate expenses.
Audit of consolidated financial statements
Audit and review of consolidated financial statements
Other services
Other assurance services1.
Total other services
Total fees paid to auditor
Amortisation of development asset
Depreciation
Total amortisation and depreciation2.
Employee benefit expense
Share-based payment
External contractors and consultants
Employee benefit expense capitalised3.
Operating lease expenses4.
Direct selling and marketing5.
Sales tax expense
Impairment of assets6.
Credit loss provision and write off expense7.
Other operating expenses8.
Total operating expenses
*See note 26 for details of prior period error.
Notes
16
2021
$'000's
2020
Restated*
$'000's
295
155
-
-
295
947
504
1,451
8,700
880
582
(1,274)
234
318
275
85
(88)
2,084
6
6
161
936
287
1,223
6,623
512
644
(683)
180
836
201
1,100
317
1,851
13,542
12,965
1. Other assurance services in 2020 comprise the review of Callaghan Innovation research and
development grant claim for the 2019 income year.
2. Total depreciation for the year is $945,000 (2020: $682,000) which is made up of
depreciation on fixed assets of $659,000 (2020: $510,000) as per note 15 and depreciation
on leased assets of $286,000 (2020: $172,000) as per note 22. All of amortisation and
$218,000 (2020: $115,000) of depreciation are included in engineering and research
expenses, $286,000 (2020: $172,000) related to lease assets under NZ IFRS 16 is included
in corporate costs. The balance of depreciation totalling to $441,000 (2020: $395,000) is
included in cost of sales.
3. Relates to employee benefit expense, external contractors and consultants’ expenses that
are directly attributable to the development of intangible assets and have been capitalised.
p. 72
Notes to the consolidated financial statements
for the year ended 31 March 2021
7. Expenses (cont.)
4. Relates to short term and low value leases and common area maintenance costs.
5. Selling and marketing expenses
in relation to
includes expenses
promotional activities which include travel, commissions and other direct marketing
expenses.
incurred mainly
6.
Impairment of intangible assets of Spike and SDK.
7. A revenue contract with a customer was modified during the year. This resulted in a prior
year impairment provision being reversed in the current year of $118,000.
8. Other operating expenses include corporate advisory, travel, engineering expenses, facilities
and IT expenses.
8. Cash and cash equivalents
Cash at bank
Call / term deposits
Total
2021
2020
$'000's
11,342
$'000's
3,827
-
500
11,342
4,327
An overdraft facility of NZ$250,000 is in place with BNZ. BNZ has security interest on all property of
ikeGPS Limited. On the BNZ facility there is an outstanding guarantee to another party of $75,000.
9. Inventory
Finished goods
Components
Total inventory
Current
Non-current
2021
2020
$'000's
681
$'000's
764
469
646
1,150
1,410
798
352
876
534
Included in cost of sales is $1,089,743 (2020: $995,695) relating to the amount of inventory
recognised as an expense in the year. During the year IKE materials have been written down by
$124,882 and Spike finished goods by $161,105 (2020: Spike raw materials valuing $146,545).
Inventory is treated as non-current if it is not expected to be sold within twelve months of balance
date.
p. 73
Notes to the consolidated financial statements
for the year ended 31 March 2021
10. Trade and other receivables
Trade receivables
Impairment provision
GST receivable
Other receivables
2021
$'000's
2,622
(106)
88
26
2020
$'000's
1,828
(329)
72
5
Total trade and other receivables
2,630
1,576
The Group has $690,305 of trade receivables past due but not impaired at 31 March 2021.
(2020: $887,183)
30 – 90 days
$467,638
90 days +
$222,667
Total past due
$690,305
11. Trade and other payables
Trade payables
Other payables
Accrued expenses
Total trade and other payables
12. Subsidiaries
2021
2020
$'000's
591
$'000's
469
-
292
369
170
960
931
Name of entity
Country of
incorporation
Principal activity
2021
$'000's
ikeGPS Limited
New Zealand
Product development and business operations
1,000
ikeGPS Inc.
USA
Business operations
1,000
2,000
2020
$'000's
1,000
1,000
2,000
Investment
ikeGPS Limited and ikeGPS Inc. are 100% (2020: 100%) owned by the Company. All subsidiaries have
31 March balance dates.
p. 74
Notes to the consolidated financial statements
for the year ended 31 March 2021
13. Current and deferred tax
The Group’s tax expense/ (benefit) comprises:
Deferred tax
Income tax expense /(credit)
2021
2020
$'000's
$'000's
-
-
17
17
Prima facie income tax expense on pre-tax accounting loss from operations reconciles to the
accounting loss from operations and reconciles to the income tax expense/(credit) in the
consolidated financial statements as follows:
Net loss before income tax
Prima facie income tax credit at 28%
Effect of different foreign income tax rates
Non-deductible expenses
Deferred tax on temporary differences
Unrecorded tax losses
Income tax expense /(credit)
Deferred tax opening balance
Temporary differences
Employee entitlements and provisions
Deferred research and development
IFRS 16 Leases
Property, plant and equipment
Intangible assets
Other
Tax losses
Deferred tax closing balance
2021
$'000's
(7,492)
(2,098)
255
(162)
(13)
2,018
-
2021
$'000's
-
25
38
4
(179)
(114)
22
204
-
2020
$'000's
(6,021)
(1,686)
-
145
(24)
1,565
-
2020
$'000's
17
2
24
1
-
(44)
-
-
Deferred tax assets on deductible temporary differences have been recognised to the extent taxable
temporary differences exist in the same tax jurisdiction. No deferred tax asset is recognised in
excess of the available taxable temporary differences, due to the uncertainty of when the unused tax
losses can be utilised.
Unrecognised deferred tax assets related to deductible temporary differences total $544,231.
p. 75
Notes to the consolidated financial statements
for the year ended 31 March 2021
13. Current and deferred tax (cont.)
The New Zealand Group has unrecognised tax losses of $19,178,691 (2020: $14,793,000), available
for use against future taxable profits, subject to the New Zealand Tax Legislation requirements
being met.
The entity incorporated in the United States has unrecognised tax losses of $32,333,968 (2020:
$34,579,439, of which $7,917,482 is available indefinitely for use against future taxable profits and
$24,416,486 available to be carried forward up to 20 years from the date the tax loss was created.
14. Contributed equity
Share capital
On issue at beginning of year
Issued under share placement
Issued under share purchase plan
Less listing costs offset against issue proceeds
Exercise of share options
Issued as part of business combination
Total share capital
Share capital on issue
Fully paid total shares at beginning of year
New ordinary shares offered
Ordinary shares issued on settlement of options
Ordinary shares issued as part of business combination
2021
$'000's
61,498
9,757
9,938
(1,230)
446
523
2020
$'000's
55,132
5,306
1,194
(560)
37
389
80,932
61,498
2021
2020
102,194,048
90,469,567
28,963,035
10,833,333
1,128,334
855,346
242,134
649,014
Fully paid ordinary shares
133,140,763
102,194,048
p. 76
Notes to the consolidated financial statements
for the year ended 31 March 2021
15. Property, plant and equipment
Plant &
equipment
IKE rental
devices
Office
furniture &
equipment
Total
$'000's
$'000's
$'000's
$'000's
Cost
Balance at 1 April 2019
Additions
Disposals
Exchange differences
Balance at 31 March 2020
Balance at 1 April 2020
Additions
Disposals
Exchange differences
Balance at 31 March 2021
Depreciation
Balance at 1 April 2019
Depreciation for the year
Disposals
Exchange differences
Balance at 31 March 2020
Balance at 1 April 2020
Depreciation for the year
Disposals
Exchange differences
Balance at 31 March 2021
Carrying amounts
At 31 March 2020
At 31 March 2021
1,219
-
-
-
1,219
1,219
92
-
-
1,311
719
241
-
-
960
960
232
-
-
1,192
259
119
183
587
(115)
62
717
717
594
(225)
(100)
986
34
116
(4)
10
156
156
231
753
194
(47)
75
975
975
158
(377)
(106)
650
481
153
(40)
36
630
630
196
(60)
(369)
(61)
396
(21)
306
561
680
2,155
781
(162)
137
2,911
2,911
844
(602)
(206)
2,947
1,234
510
(44)
46
1,746
1,746
659
(429)
(82)
1,894
345
254
1,165
1,053
p. 77
Notes to the consolidated financial statements
for the year ended 31 March 2021
16. Intangible assets
Development
assets
Work in
Progress
Patents
Goodwill
Customer
contracts,
relationships
and
trademarks
Training
materials
Total
$'000's
$'000's
$'000's
$'000's
$'000's
$'000's
$'000's
Cost
Balance at 1 April 2019
Additions
Exchange differences
8,995
3,794
314
Balance at 31 March 2020
13,103
Balance at 1 April 2020
Additions
Disposals
Exchange differences
13,103
4,266
-
(601)
125
284
15
424
424
915
-
-
174
-
-
174
174
-
-
-
-
-
-
-
-
3,199
-
85
Balance at 31 March 2021
16,768
1,339
174
3,284
Amortisation and
impairment losses
Balance at 1 April 2019
Amortisation for the year
Impairment
Exchange differences
Balance at 31 March 2020
Balance at 1 April 2020
Amortisation for the year
Impairment
Exchange differences
Balance at 31 March 2021
Carrying amounts
At 31 March 2020
At 31 March 2021
5,549
887
1,100
14
7,550
7,550
845
85
(220)
8,260
-
-
-
-
-
-
-
-
-
-
5,553
8,508
424
1,339
174
-
-
-
174
174
-
-
-
174
-
-
-
-
-
-
-
-
-
-
-
-
-
3,284
-
303
18
321
321
382
-
(36)
667
-
38
-
-
38
38
82
-
(8)
112
284
555
-
9,294
206
13
219
4,587
360
14,241
219
14,241
-
-
(31)
188
8,762
-
(583)
22,420
-
11
-
-
11
11
19
-
(1)
29
5,723
936
1,100
14
7,773
7,773
946
85
(229)
8,575
207
159
6,468
13,845
Total additions consist of $5,792,000 of cash and $2,970,000 of non-cash additions included in
the investing outflows in the statement of cash flows.
The Goodwill asset has been allocated to CGU 4 and tested for impairment within this CGU.
See note 2 Impairment and Business Combinations for the assumptions utilised at arriving at
the value.
p. 78
Notes to the consolidated financial statements
for the year ended 31 March 2021
16. Intangible assets (cont.)
During the year the group recognised a number of assets from a business combination. See
note 2 – Business combinations for the assumptions utilised to arrive at the initial fair value of
Goodwill, Work in progress, Development assets and Customer Contracts recognised as part of
that combination. The inputs utilised to determine the fair value were level 3, unobservable
inputs. See note 19 for details of the fair value hierarchy.
17. Financial instruments and financial risk management
Financial instruments
The Group’s principal financial instruments comprise cash balances, trade and other receivables,
trade and other payables, employee entitlements and other liabilities.
The following table shows the designation of the Group’s financial instruments:
2021
$'000's
Financial
Assets at
amortised
cost
Financial
liabilities
at
amortised
cost
Financial
liabilities
at fair
value
Total
carrying
value
Financial
Assets at
amortised
cost
Financial
liabilities
at
amortised
cost
2020
$'000's
Total
carrying
value
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
Employee entitlements
Trade payables
Other payables
Accrued expenses
Lease liabilities
Other liabilities
Total financial liabilities
Financial risk factors
11,342
2,542
13,884
-
-
-
-
-
-
-
-
-
-
303
591
-
369
513
816
2,592
-
-
-
-
-
-
-
-
11,342
2,542
4,327
1,504
13,884
5,831
-
-
-
4,327
1,504
5,831
303
591
-
369
513
3,226
3,226
4,042
5,818
-
-
-
-
-
-
-
231
469
292
170
809
231
469
292
170
809
1,108
3,079
1,108
3,079
The main risks arising from the Group’s financial instruments are credit risk, liquidity risk, foreign
currency risk and interest rate risks, which arise in the normal course of the Company and
Group’s business. The Group uses different methods to measure and manage different types of
risks to which it is exposed. Liquidity risk is monitored through the development of future rolling
cash flow forecasts.
p. 79
Notes to the consolidated financial statements
for the year ended 31 March 2021
17. Financial instruments and financial risk management (cont.)
Credit risk
The Group’s exposure to credit risk arises from potential default of the counterparty, with a
maximum exposure equal to the carrying amount of these instruments. Financial instruments
that potentially subject the Group to credit risk principally consist of cash and cash equivalents,
and trade and other receivables. All cash and cash equivalents in New Zealand are held with high
credit quality counterparties, being trading banks with "AA-" grade or better credit ratings, and a
Moody’s A3 rating in the USA. The Group does not require collateral or security from its trade
receivables. The Group performs credit checks and ageing analyses and monitoring of specific
credit allowances. The Group does not anticipate any material non-performance of those
customers. The total impaired trade receivables as at balance date is $105,562 (2020: $328,605).
At balance date 81% (2020: 79%) of the Group’s cash and cash equivalents were with one bank.
The Group will continue to monitor the impact of COVID-19 on customers’ ability to pay
outstanding receivables (refer note 2).
Maximum exposure to credit risk at balance date:
Cash at bank
Trade and other receivables
Total
Liquidity risk
2021
2020
$'000's
$'000's
11,342
4,327
2,630
1,576
13,972
5,903
Liquidity risk is the risk that the Group cannot pay contractual liabilities as they fall due. Finance
monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash
to meet operational needs. Such forecasting takes into consideration the Group’s forward
financing plans, commitments and the close monitoring of any impact COVID-19 has on the
business (refer note 2). Based on this the Group believes that it has sufficient liquidity to meet
its obligations as they fall due for the next 12 months.
The following table sets out the undiscounted cash flows for all financial liabilities of the Group:
Contractual
cash flows
6 months
or less
6 months
to 1 year
1 to 2
years
3 to 4
years
Employee entitlements
303
Trade payables
Accrued expenses
Lease liabilities
Other liabilities
Total financial liabilities
591
369
525
4,277
6,065
-
591
369
185
223
1,368
-
-
-
173
93
266
-
-
-
167
147
314
-
-
-
-
-
-
2021
$'000's
No stated
maturity
303
-
-
-
3,814
4,117
p. 80
Notes to the consolidated financial statements
for the year ended 31 March 2021
17. Financial instruments and financial risk management (cont.)
Contractual
cash flows
6 months
or less
6 months
to 1 year
1 to 2
years
3 to 4
years
Employee entitlements
231
Trade payables
Other payables
Accrued expenses
Lease liabilities
Other liabilities
469
292
170
809
300
-
469
203
170
160
166
Total financial liabilities
2,271
1,168
Foreign currency risk management
-
-
89
-
167
-
256
-
-
-
-
482
81
563
-
-
-
-
-
53
53
2020
$'000's
No stated
maturity
231
-
-
-
-
-
231
The Group is exposed to foreign currency risk on its sales and a significant portion of its
expenses that are denominated in USD which is different to the Group’s presentation currency.
The Group currently does not hedge its exposures arising from its transactions denominated in
a foreign currency.
At 31 March 2021, had the local currency strengthened / weakened against the USD by 10% the
pre-tax loss would have been (higher)/lower as follows:
Carrying value of
FX impacted
financial
instruments
+10%
-10%
USD $'000's
$'000's
$'000's
5,881
1,752
252
(764)
(227)
33
934
278
(40)
29,315
(3,807)
4,653
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Intercompany balance foreign
Interest rate risk management
The Group’s interest rate risk arises from its cash balances. The Group currently has no
significant exposure to interest rate risk other than in relation to the amount held at the bank. A
reasonably expected movement in the prevailing interest rate would not materially affect the
Group’s consolidated financial statements.
p. 81
Notes to the consolidated financial statements
for the year ended 31 March 2021
18. Capital management
The capital structure of the Group consists of equity raised by the issue of ordinary shares in the
Company. The Group manages its capital to ensure the entities in the Group are able to continue
as a going concern. The Group is not subject to any externally imposed capital requirements.
In the current financial year, the Group completed an institutional placement, accelerated
entitlement offer and retail entitlement offer raising $19.7m. The Group’s aim is to maintain a
sufficient capital base so as to maintain investor and creditor confidence and to sustain future
development of the business. The Group’s capital requirements are regularly reviewed by the
Board of Directors.
There have been no material changes in the Group’s management of capital from the previous
year.
This note should be read in conjunction with note 2; Going Concern which outlines the material
uncertainty around the Group’s going concern assumption and the FY22 plan that Directors
believe will enable the Group to continue operations.
19. Fair value estimation
The Group measures certain assets and liabilities at fair value either at initial recognition and/or
continually. In order to determine these fair values, valuation techniques are utilised.
To provide an indication about the reliability of the inputs used in determining fair value, the
Group has identified what level of input is utilised in the valuation in the note for each asset or
liability. An explanation of each level is below.
Level 1: The fair value of assets/liabilities traded in active markets (such as publicly traded
derivatives, and equity securities) is based on quoted market prices at the end of the reporting
period.
Level 2: The fair value of assets/liabilities that are not traded in an active market (for example,
over-the-counter derivatives) is determined using valuation techniques which maximise the use
of observable market data and rely as little as possible on entity-specific estimates.
Level 3: If one or more of the significant inputs is not based on observable market data, the
asset/liability is included in level 3.
Assets and liabilities measured utilising fair value are outlined below:
Other liabilities – see note 21
p. 82
Notes to the consolidated financial statements
for the year ended 31 March 2021
20. Commitments and contingencies
Non-cancellable short-term leases and low value or
lease related costs
Less than one year
Between one and five years
Total
2021
$'000's
2020
$'000's
211
66
277
232
308
540
Operating leases are in relation to rented premises (short term under one year) and photocopiers
(low value assets). This does not include leases accounted for under IFRS 16.
Contingent asset
The Group has recorded a sales tax provision for outstanding tax not collected, refer note 28.
The Group has the right to reduce this obligation further by invoicing customers the sales tax
shortfall, however any such recovery has not been recognised due to it not being virtually certain
of receipt. Contacting customers is yet to commence, therefore due to the uncertainty of the
outcome of this process of it is not practical to provide an estimate of any potential recoveries
at the reporting date.
21. Other liabilities
Less than one year
Accrued liability for services
Deferred consideration on business combination
Earn-out consideration on business combination
Between one and three years
Accrued liability for services
Deferred consideration on business combination (share based)
2021
2020
$'000's
$'000's
316
352
3,226
3,894
148
-
148
166
408
-
574
134
400
534
Total other liabilities
4,042
1,108
All other liabilities are in relation to business combination entered into in both the current and
prior year.
p. 83
Notes to the consolidated financial statements
for the year ended 31 March 2021
21. Other liabilities (cont.)
Accrued liabilities for services
The Group has employment agreements, which result in cash payments being made to staff at
the end of a three-year service period. The expenses are accrued as services are delivered and
payment is made at the end of the service period. The liability is initially measured at fair value
and subsequently measured at amortised cost.
Deferred consideration on business combination
The Group acquired PoleForeman assets in the 2020 year. As part of this transaction
consideration was deferred for a period over three-years. Consideration consists of a cash
payment and an unfixed number of shares. The liability is initially measured at fair value and
subsequently measured at amortised cost.
Earn out consideration on business combination (cash and shares)
During the year, the Group acquired certain assets from Visual Globe LLC. As part of this
acquisition contingent consideration was recognised related to revenue milestones. The
consideration consists of both cash payments and share issues. The contingent consideration
liability is initially and subsequently measured at fair value with gains or losses recognised in
profit or loss. A revaluation of contingent consideration of $178,000 has been recognised in the
year from the movement of this instrument.
The fair value of contingent consideration was measured utilising discounted cashflow methods,
using the assumptions outlined in note 2. At year end the assumptions had not materially
changed and the fair value movement represents the unwind of the discount.
The inputs utilised to determine the fair value were level 3, unobservable inputs.
22. Leases
The Group leases different offices spaces in Colorado and Wellington. These leases typically run
for a period ranging from 1 to 3 years with an option to renew the lease. The renewal periods
were not taken into account as management is not reasonably certain that these leases will be
renewed.
During the year the Group entered into a new 3 year lease for office space in Wellington, New
Zealand. The Group’s incremental borrowing rate applied to the new lease liabilities was 5.50%.
The Group has adopted NZ IFRS 16 from 1 April 2019 using the simplified transition approach.
Under this approach the cumulative effect of initially applying NZ IFRS 16 is recognised as an
adjustment to retained earnings as at 1 April 2019.
The Group elected to apply the exemption for low-value assets on the lease of the photocopier
and the exemption for short term leases on the office space rented in Alabama. The lease
payments associated with those leases will be recognised as an expense on a straight-line basis
over the lease term.
p. 84
Notes to the consolidated financial statements
for the year ended 31 March 2021
22. Leases (cont.)
The Group negotiated rent deferrals with both its Colorado and Wellington office leases as a
result of the impact of the COVID-19 pandemic during the year. The practical expedient for
COVID-19-related rent concessions as detailed in the Amendment to IFRS 16 were applied
consistently to eligible rent deferrals/concessions. The payments deferred had no material
impact on the value of the lease liability.
Lease liabilities are measured at the present value of the remaining lease payments, discounted
using the ‘incremental borrowing rate’. The Group’s incremental borrowing rate applied to the
lease liabilities was 5.50%.
Lease Liabilities
Balance at 1 April
Additions due to first-time adoption of IFRS 16
Additions during the year
Payments made
Interest charges
Derecognition of lease liability
Exchange differences
Balance at 31 March
The maturity of the lease liabilities is as follows:
Less than one year
One to five years
Lease liabilities recognised as at 31 March
Lease Assets
Balance at 1 April
2021
2020
$'000's
809
$'000's
-
-
73
(310)
37
(20)
(76)
513
412
528
(161)
30
-
-
809
2021
$'000's
339
174
513
2020
$'000's
327
482
809
2021
$'000's
727
2020
$'000's
-
Additions due to first-time adoption of IFRS 16
-
Additions during the year
Depreciation charges
Derecognition of lease assets
Exchange differences
Balance at 31 March
73
(283)
(20)
(63)
434
367
532
(172)
-
-
727
p. 85
Notes to the consolidated financial statements
for the year ended 31 March 2021
22. Leases (cont.)
The following leases are exempt from the application of NZ IFRS 16 and have been recognised
as an expense in the consolidated statement of profit and loss:
Photocopier
Office space
23. Cash used in operations
Loss for the year
Less investment interest received
Add non-cash items included in net loss
Depreciation
Amortisation of intangible assets
Asset impairment
Raw materials write-off
Debtor & Creditor write off
Deferred tax expense
Share based payment expense
Write off of obsolete materials, assets and IKE devices transferred to
customers on rental close out
Revaluation of contingent consideration
Foreign exchange (gains)/losses
2021
$'000's
3
56
59
2020
$'000's
4
69
73
2020
2021
Restated
$'000's
(7,492)
(8)
$'000's
(6,038)
(12)
945
947
85
286
(88)
-
880
169
178
553
680
936
1,100
146
258
17
512
118
-
(5)
3,545
3,750
Add/(less) movement in working capital items
Decrease/(Increase) in trade and other receivables
(1,058)
Decrease/(Increase) in inventories
Decrease/(Increase) in prepayments
Increase/(Decrease) in trade and other payables
Increase/(Decrease) in deferred income
Increase/(Decrease) in other liabilities
Increase/(Decrease) in provision
Increase/(Decrease) in employee entitlements
260
427
(29)
(30)
230
275
(72)
3
Net cash used in operating activities
(3,542)
(524)
134
(390)
485
990
282
201
6
1,184
(1,104)
p. 86
Notes to the consolidated financial statements
for the year ended 31 March 2021
24. Basic and diluted earnings per share
2021
$'000's
2020
Restated
$'000's
Total loss for the year attributable to the owners of the parent
(7,492)
(6,038)
Ordinary shares issued
133,140,763
102,194,048
Weighted average number of shares issued
121,474,636
95,950,183
Basic loss per share
$(0.06)
$(0.06)
There has been no change to the 2020 loss per share as a result of the restatement.
The potential shares and options are anti-dilutive in nature due to the Group being in a loss
position. The diluted loss per share is therefore the same as the undiluted EPS at ($0.06) and
($0.06) for the respective periods.
25. Share based payments
Share based payments are in relation to both share options granted and contractual share
payments to be made to employees based on the period of employment.
Share based payment reserve
Share options
Share based payment on earn-out
Total
*See note 26 for details on prior period error.
2021
2020
$'000's
913
265
1,178
Restated*
$'000's
632
121
753
The contractual share based payments are in relation to employees who have service conditions,
which when completed grant the right to shares. These arrangements arose from prior business
combinations. The Company has no legal or constructive obligation to settle the shares in cash
and has no history of choosing to settle these payments in cash. As such, these awards are
treated as equity settled share based payments.
The Company determines the value of shares issued under contractual share-based payments
based on the agreed share price at the time of grant. This price is fixed.
A total of 226,415 shares at a value of $135,849 were issued during the period for services
rendered.
Share options are granted to directors and selected employees to retain, reward and motivate
such individuals to contribute to the growth and profitability of the Group.
p. 87
Notes to the consolidated financial statements
for the year ended 31 March 2021
25. Share based payments (cont.)
Options outstanding at 31 March 2021 have a contractual life from grant date of between 2.5
and 6 years. Options can be exercised at any time after vesting and unexercised options expire
at the end of the contract or if the employee leaves the Group. The Group has no legal or
constructive obligation to repurchase or settle the options in cash. Any share to be issued on the
exercise of the option will be issued on the same terms and will rank equally in all respects with
the ordinary shares in the company on issue.
Movements in the number of share options outstanding and their related average exercise prices
are as follows:
2021
2020 (restated)
Average
Exercise Price
Options (’000’s)
Average Exercise Price
Options (’000’s)
At 1 April
Granted
Exercised
Forfeited
Expired
0.53
0.78
0.52
0.57
nil
$0.64
4,785
1,550
(2,599)
(231)
nil
3,505
0.52
0.51
0.44
0.52
nil
$0.53
3,350
2,275
(567)
(273)
nil
4,785
Out of the 3,504,998 outstanding options 1,820,852 (2020: 2,867,923) had vested and were
exercisable at 31 March 2021.
Options outstanding
Share options outstanding at the end of the year have the following expiry date and exercise
price.
p. 88
Notes to the consolidated financial statements
for the year ended 31 March 2021
25. Share based payments (cont.)
2021
2020 (restated)
Year
Granted
Expiry date
Exercise
price
Number of
options
Term remaining
(years)
Number of
options
2017
2018
2018
2019
2020
2020
2020
2020
2020
2021
2021
31-Dec-21
31-Mar-25
31-Mar-25
31-Mar-25
31-Mar-25
30-Sep-25
31-Dec-24
30-Jun-25
$0.64
$0.51
$0.51
$0.51
$0.51
$0.65
$0.90
250,000
850,000
75,001
379,997
400,000
300,000
$0.75
1,250,000
200,000
1,100,000
1,400,000
250,000
1,150,000
75,001
499,999
400,000
150,000
0.75
4.00
4.00
4.00
4.00
4.50
3.75
4.25
Term
remaining
(years)
0.25
1.00
1.00
1.75
5.00
5.00
5.00
5.00
5.00
Measurement of fair value
The Company determined the fair value of options issued using the Black Scholes valuation
model. The significant inputs to the model are level 3 inputs and were:
Fair value of options issued in the year
$0.47, $0.62, $0.64, $0.67
$0.16, $0.17,
$0.49, $0.41
2021
2020 (restated)
Weighted average share price
Exercise price
Volatility
Dividend yield
$0.78
$0.51
$0.90 & $0.75
$0.51 & $0.65
55%
Nil
30%
Nil
Risk free interest rate
0.10% - 0.37%
0.80% - 1.27%
See note 19 for details of the fair value hierarchy.
26. Restatement of prior period errors
In the preparation of the FY21 financial results, the Group has identified a number of matters
which require the correction of prior period errors in historic financial statements.
p. 89
Notes to the consolidated financial statements
for the year ended 31 March 2021
26. Restatement of prior period errors (cont.)
Consolidated statement of profit or loss and other
comprehensive income
Recognition of vesting of share-based payments
Share options forfeited during the year
Sales tax expense
Corporate costs
Exchange differences on translation of foreign operations
Consolidated balance sheet
31 March
2020
Increase
31 March 2020
Restated
$'000's
$'000's
$'000's
149
(17)
201
333
(52)
4,011
552
4,344
500
31 March
2019
Increase /
(Decrease)
31 March
2019
Restated
31 March
2020
Increase /
(Decrease)
31 March
2020
Restated
$'000's
$'000's
$'000's
$'000's
$'000's
$'000's
944
3,604
-
-
-
192
(115)
(23)
(33)
-
268
-
79
(5)
921
3,571
-
268
-
271
(120)
1,188
6,501
705
-
460
545
437
(23)
(33)
22
521
22
208
(56)
1,165
6,468
727
521
482
753
381
Assets
Property, plant and
equipment
Intangible assets
Lease assets
Liabilities
Provision
Non-current lease
liabilities
Equity
Share based payment
reserve
Foreign currency
translation reserve
Accumulated losses
(45,846)
(398)
(46,244)
(51,596)
(729)
(52,325)
31 March
2019
Increase /
(Decrease)
31 March
2019
Restated
31 March
2020
Increase /
(Decrease)
31 March
2020
Restated
Accumulated losses
consist of:
Rental pool under
depreciated
Amortisation of
intangibles
Share based payment
Sales tax expense
Accumulated losses
(45,846)
Share based payment
reserve consists of:
Share option expense
Options forfeited during
the year
Share based payment
reserve
192
(23)
(33)
(79)
(263)
(398)
103
(24)
79
(46,244)
(51,596)
271
545
(23)
(33)
(208)
(465)
(729)
251
(43)
208
(52,325)
753
p. 90
Notes to the consolidated financial statements
for the year ended 31 March 2021
26. Restatement of prior period errors (cont.)
Sales tax provision
The Group identified that customer sales tax may be payable in multiple States relating to prior
period sales and a best estimate of the liability has been provided for in the respective periods
refer to note 28.
Share based payments.
In FY21 it was discovered that the recognition of share-based payment expense had been
incorrectly recorded. The error resulted in an understatement of the share-based payment
expense and corresponding reserve for FY20 and earlier years. The Group had historically
recognised the share-based payment expense on a straight-line basis as the options vest.
However, a share based payment expense for each option granted should be recognised from
grant date to the date the option vests. This results in a higher share-based payment expense
being recognised in earlier vesting periods and a lower expense being recognised in later
vesting periods rather than an equal expense recognised over the vesting period.
Accumulated identified misstatements
The Group has carried forward a number of prior year uncorrected misstatements backdating
to financial years before 31 March 2020 as they were deemed immaterial. With the reduced
overall materiality applicable for the current year, these carried forward adjustments now have
a material impact on the opening retained earnings in aggregate. The Group is correcting these
carried forward adjustments by way of restatement of a prior period as a prior period error.
These carried forward adjustments relate to:
+ The rental pool assets that were under depreciated by $23,000 in the 2019 financial year
due to the Group not capitalising the assets when they we initially leased to customers.
+ Capitalised intangible assets being under amortised by $33,000. In 2019 financial year
the Group failed to amortise development costs capitalised for a project, thereby
overstating intangible assets.
+
+
In FY20 the Group valued options issued using a volatility rate of 30%, a higher volatility
rate was deemed more appropriate for the year resulting in an adjustment of $18,000 in
FY20.
In FY20 the Group, as part of the adoption of NZ IFRS 16 leases, calculated the lease
liability and leased asset using an incremental borrowing rate of 5.5%, this was deemed
too high resulting in an understatement of both the leased asset and leased liability of
$22,000 in FY20.
p. 91
Notes to the consolidated financial statements
for the year ended 31 March 2021
26. Restatement of prior period errors (cont.)
The following table supplements restated
amounts:
Note
31 March
2020
Increase
$'000's
$'000's
31 March
2020
Restated
$'000's
Lease assets and lease liabilities
Lease liability additions during the year
Lease asset additions during the year
Share based payment reserve
Share options
Sales tax provision
Sales tax provision
Operating expenses
Sales tax provision
Share based payment
Related parties
Share option expense directors and senior management
27. Related parties
Short term benefits to directors and senior management
22
25
28
7
27
506
510
22
22
528
532
424
208
632
-
-
380
160
521
521
201
132
201
512
69
229
2021
2020 Restated
$'000's
1,581
$'000's
1,535
Share option expense for directors and senior management
367
229
*This note has been restated to reflect a prior period error see note 26.
Key management are identified as the Chief Executive Officer, Chief Financial and Operating
Officer and Directors.
The Group issued 850,000 of unlisted share options at NZD$0.75 and NZD$0.90 to Directors and
key management during the period in accordance with the ikeGPS Group Limited Employee Share
Scheme.
In addition to the unlisted options issued, key management and directors exercised 1,825,001
unlisted options (1,600,000 exercisable at NZD$0.54, 25,001 exercisable at NZD$0.51 and
200,000 exercisable at NZD$0.29) resulting in 991,407 new ordinary shares being issued to key
management and directors.
p. 92
Notes to the consolidated financial statements
for the year ended 31 March 2021
28. Sales tax provision
Opening balance
Sales tax expense
Foreign exchange movement
Closing balance
2021
$'000's
521
275
(85)
711
2020
2019
Restated*
Restated*
$'000's
268
201
52
521
$'000's
74
189
6
268
The primary market for sales of the Group’s products or services is the United States of America.
Sales tax obligations can arise in individual States where IKE is deemed to have sales tax nexus.
The Group identified that customer sales tax may be payable in multiple States relating to prior
and current period sales and a best estimate of the liability has been provided for in the respective
periods.
In determining the liability, the Group has reviewed all states where sales have been made over
the last 5 years to determine if a sales tax nexus was triggered (obligation to register and collect
sales tax in the state). A sales tax nexus is achieved through either having a physical presence
or reaching an economic threshold. The Group reviewed physical nexus triggers over the period,
with regards to rental units the group has made the judgement that more than 3 units sold
annually within an individual state triggers a physical nexus.
The Group also reviewed the value of sales made in each state to determine if an economic
threshold was met in any individual state.
If a state was deemed to have a nexus, the Group has applied an average state sales tax rate of
7.3% on the taxable transactions and applied an average interest rate of 10% to the outstanding
amounts. The Group believes that due to the nature of the companies it transacts with, being
utilities and communications companies or engineering service providers, a portion of the tax
outstanding may either not be payable or has already been paid directly by the customer.
However, due to the uncertainty of estimating this impact, the Group made the judgement not to
reduce the sales tax provision calculated. In assessing the sales tax provision, the Group
performed a sensitivity analysis which included an assessment of the probability of customers
holding any exempt certificates or having self-paid the amounts owing and the physical nexus
judgement discussed above.
The Group is in the process of registering in the states identified and remitting the sales tax owed,
the timing of this is likely to occur over the first half of FY22. The Group will contact customers
to request any exemption certificates or confirm that the customers have self-paid. The Group
also retains the right to reduce this obligation further by invoicing the customer the sales tax
shortfall, however any recovery has not been recognised due to it not being virtually certain of
receipt. The error resulted in an understatement of the corporate expense and corresponding
sales tax provision for FY20 and earlier years.
29. Subsequent events
There are no subsequent events.
p. 93
ikeGPS Group Limited
Level 7, Willis Street
Te Aro
Wellington 6011
Telephone: +64 4 382 8064
Directors of ikeGPS Group Limited
Richard Gordon Maxwell Christie
Bruce Harker (resigned September 2020)
Alex Knowles
Glenn Milnes
Frederick Lax
William Morrow (resigned April 2021)
Mark Ratcliffe
Eileen Healy (appointed April 2021)
Legal Advisers
Chapman Tripp
10 Customhouse Quay
PO Box 993
Wellington 6140
Telephone: +64 4 499 5999
Auditor
PricewaterhouseCoopers
PwC Centre 10 Waterloo Quay Pipitea,
Wellington 6011
Telephone: +64 4 462 7000
Share Registrar
Link Market Services Limited
PO Box 91976, Auckland 1142
Level 30 PWC Tower
15 Customs Street West, Auckland 1010
Telephone: +64 9 375 5998
Bankers
Bank of New Zealand
20-54 Mount Wellington Highway
Mount Wellington, Auckland 1060
Private Bag 39806,
Wellington Mail Centre,
Lower Hutt 5045
www.ikegps.com
p. 94