1
ASX:STG
ST R AKER TR ANSLATIONS GR OUP
Annual Report
2020
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 2
ASX:STG
S TR AKER TR A NSLATIONS GR OUP
3
Straker is a world-leading
Ai data-driven language
translation platform
powering the global growth
of businesses
Contents
What We Do
Highlights
Chairman’s Report
CEO’s Report
Powering The Global Growth of Business
Advantage Through Proprietary RAY Ai platform
Board of Directors
Management Commentary
Financial Statements
Corporate Governance Statement
Additional Disclosures
Company Directory
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10
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16 - 23
24 - 72
73 - 81
82 - 89
90
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 4
5
5
What we do
Straker helps leading technology
companies streamline and scale
their ability to communicate
across regions
Straker works with major
e-commerce providers to
localise their product websites
into multiple languages
Straker helps major financial
institutions deliver quarterly
market reports in multiple
languages
Straker enables thousands
of companies to cost-
effectively cross-border
trade without language as
a barrier
Straker provides subtitling,
audio translations and
dubbing services to the
online movie industry
Straker provides leading global
manufacturers with the ability to
easily launch new products into
multiple markets
Straker provides speech to text
transcriptions for corporate
conferences and presentations
We enable the translation
of documents, websites,
technical manuals and
e-commerce platforms
for both large and small
businesses across a range of
industries
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 6
7
Highlights
Straker continues to deliver growth
$27.7m
Group revenue
86%
Repeat revenue
55%
Media
revenue growth
13%
YOY Revenue growth
($ 0.58m)
Adjusted EBITDA1
$11.2m
Cash at bank
1. Adjusted EBITDA is a non-IFRS measure.
Refer to pages 16 and 21 for reconciliation and
explanation to IFRS financial information
Powering
the global growth
of businesses
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 8
Chairman’s Report
9
Overview
The financial year ended 31 March 2020 (FY20) was another
successful year for Straker with solid revenue growth, improved
gross profit and stable EBITDA. The Company successfully
concluded two strategic acquisitions, grew its Enterprise and
Media business, and accelerated investment in its technology
platform given the substantial growth opportunities available.
Financial Performance
Revenue in FY20 was up 13% to NZ$27.7 million, and pre-
COVID-19 was tracking to achieve a run-rate of NZ$40 million
(if an acquisition had not been paused). Importantly, repeat
revenues increased 18% during FY20 to NZ$23.9 million and
represented 86% of overall revenue. Reflecting the Company’s
strategy to focus on its Enterprise and Business customers,
average project revenue continued to increase, and as at 31
March 2020 was up 18%.
The number of business customers using our proprietary Ai
powered RAY translation platform was up 23% to 2,650. Not
only does the RAY platform increase the speed at which
customers can translate projects and deliver substantial
savings to them, it also delivers increased gross margin as more
work is moved onto the platform from acquired companies.
Gross margin on the RAY platform currently sits at 56% and
underpinned an overall 55% gross margin of NZ$15.2 million.
On a non-IFRS financial performance basis, the Company
produced an Adjusted EBITDA loss of NZ$(0.58) million, an
increase of NZ$(0.4) million on FY19. The change reflected our
shift in focus to attract Enterprise customers, continued R&D
investment to expand our footprint in the Media industry, and
the costs of being a listed company, offset by the effects of the
new IFRS 16 lease standard.
The loss from trading operations* of NZ$(2.4) million was an
increase on the FY19 comparable loss of NZ$(0.8) million. The
FY20 result included NZ$(0.8) million related to increases in
depreciation and amortisation and re-structuring costs from
right-sizing to respond to COVID-19.
In addition, NZ$0.8 million of goodwill related to the Group’s
subsidiary Elanex was impaired in FY20 as a result of a current
banking customer closing its investment banking arm, which
we provided translation services for, as well as the likely impacts
of COVID-19 on this part of the business.
The loss after income tax was NZ$(2.5) million, which was an
improvement of $1.8 million on FY19.
Stable Cashflows and Strong Balance Sheet
Operating net cash outflow of NZ$(1.6) million was up NZ$(0.5)
million on last year as the Company continued to progress its
strategy to focus on the Enterprise and Media sectors, invest
in R&D and re-structure the business to achieve cost synergies.
While larger in size, Enterprise and Media projects have longer
sales duration times.
The Company continues to have a strong capital position
with NZ$11.2 million cash at bank at 31 March 2020 and no
debt, other than the deferred and contingent consideration in
respect of acquisitions and lease liabilities recognised under
IFRS 16.
Business Strategy
Straker’s goal is to be a world leading Ai data-driven translation
business and we will achieve this ambition through a
combination of organic growth and the acquisition of other
translation companies that add revenue scale and key customer
relationships in strategically important categories, geographic
diversity, operating leverage through the use of Straker’s
proprietary RAY technology platform, and additional human
capital.
Over the last twelve months, the Company has increased its
focus on larger Enterprise customers and grew the number of
such customers by 70% to 56 at year-end. This focus will remain
a key element of the Company’s growth strategy going forward
and as we enter FY21, the pipeline of Enterprise opportunities
is strong.
Our Media business is rapidly gaining momentum, increasing
55% on FY19, and we now have several important customer
relationships with US-based global media organisations that
we service both directly via our Burbank, California office and
with key technology partners such as AppTek. We expect these
Media relationships to be a major area of growth for Straker and
we will continue to invest in our specialised Ai powered RAY
Media platform to support this growth.
COVID-19 Pandemic
Over April and May 2020 (the first two months of FY21) there
has been a small decline in core customer sales orders, but
these remain at the same level as sales orders for the first two
months of FY20. This decline has, however, been offset by
a number of one-off projects undertaken for customers in
response to the pandemic, for example, providing sub-titled
video services as organisations move conferences online.
Our response to COVID-19 was swift, seeing us quickly shift
all staff to a working from home mode without affecting
our excellent customer service levels. We have also taken a
number of steps to reduce costs across the business, including
temporary salary cuts for nearly all staff, Management and
Board members.
We also temporarily paused M&A activity following the onset
of the pandemic. This impacted one European acquisition
opportunity that was at an advanced stage of negotiation,
but our team is maintaining contact with the owners of that
business and expect to re-engage once the impact of COVID-19
is clearer. Our pipeline of M&A prospects remains strong and
we are confident that as the pandemic subsides more attractive
opportunities will emerge.
Based on the Company’s performance over the first two months
of FY21 and what we can see ahead, we believe revenue will be
stable over FY21 relative to FY20.
Management and Governance
We are fortunate to have a talented and committed
Management team, which has remained unchanged during
FY20. Led by Grant Straker, our CEO and Co-founder, this
team has delivered a strong FY20 result, secured another two
acquisitions, reacted quickly and positively to an unexpected
pandemic, and positioned the business for further organic
and acquired growth in FY21 in a what is expected to be a
challenging market environment.
The Board of Directors also remained unchanged during the
year. However, on 14 April 2020, Katrina Johnson, resigned
as a Director and I thank her for the input she has provided
during her tenure and wish her well in her future endeavours.
The Nominations and Remuneration Committee will seek a
replacement for Katrina as soon as the COVID-19 pandemic
subsides.
On behalf of the Board, I would like to thank the Company’s
senior leadership team and all our staff across the globe for their
hard work during FY20. I would also like to express my thanks
to my fellow Directors for their support over a very busy FY20.
Lastly, I would like to thank all our shareholders for their
ongoing support over the last year. We are looking forward
to delivering on the attractive opportunities we see for the
business moving forward and growing shareholder value.
Phil Norman
Chairman
* Loss from trading operations before amortisation of
acquired intangibles, acquisition and integration costs,
impairment of intangible assets and IPO related costs
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 10
CEO Report
FY20 saw Straker Translations continue on the growth trajectory
established in FY19, following our ASX listing in October 2018.
Key Achievements
Delivered continued growth
• Delivered continued growth
• Revenue up 13% to NZ$27.7 million
• Repeat revenue up 18% and now accounting for 86% of all
revenue
• 55% increase in Media revenue
•
Improved gross margin of 55%
• Stable EBITDA result in line with expectations
• Strong balance sheet, with NZ$11.2 million cash and no
debt.
Completed two M&A transactions
• On-Global Language Marketing SL (On-Global), based in
Vitoria-Gazteiz and Barcelona in Spain, further expanding the
Company’s reach into the industrial Enterprise market in
Europe
• New Zealand Translation Centre Limited (NZTC
International), which does the same thing in the APAC
region.
Deepened our penetration into the Media market
• Secured key customer relationships via past acquisition COM
Translations Online SL (COM)
• Entered a strategic partnership with US software company,
Applications Technology (AppTek)
• Developed a specialised Ai powered RAY Media technology
platform specifically for the Media market.
• Grew our Enterprise customer base by 70% to 56 such
customers at 31 March 2020. While the sales cycle to secure
Enterprise customers is longer, these customers generate
more repeat revenue and are relatively “sticky”.
• At the end of the year, we responded quickly and effectively
to the COVID-19 pandemic, in so doing ensuring the safety
and wellbeing of our staff was paramount but also rapidly
adapting our business practices to protect core revenues,
capture new opportunities arising out of the pandemic and
decrease our cost base.
Strategic Priorities
We continue to maintain our ambition to become a NZ$100
million revenue business within three years. This will be driven
by:
• A continuing focus on Enterprise business – large global
businesses that are looking for relationships with vendors
that can deliver translation services rapidly and at scale
across multiple geographies. We will concentrate account
management resources on existing customers and deploy
additional sales capability internationally to win new
customers.
• An increased commitment to the US$97 billion Media
market to ensure that we continue to meet the
specialised needs of this rapidly growing business area.
The leading-edge functionality of our Ai powered RAY Media
platform has already allowed us to secure major projects
with some of the world’s largest media production
houses and as we are now one of the pre-eminent
technology providers for the localisation of media content,
we expect a growing stream of revenue from the Media
market.
• A growing focus on key strategic partnerships that provide
opportunities to collaborate with other technology
providers that have a need to incorporate data-driven
Ai powered translation capability into their offerings.
The relationship with AppTek, which is a world-leader in next
generation Ai and machine learning technologies for
automatic speech recognition, neural machine translations
and natural language solutions is an example of a
partnership where the integration of AppTek’s technology
into Straker’s Ray platform will improve the speed,
automation and accuracy of the platform, delivering
enhanced commercial outcomes for the Company’s Media
customers.
• An accelerating investment in our Ai powered RAY
technology platform. The use of artificial intelligence to
process the massive volumes of data now generated from
the projects we undertake for our customers has become a
major point of differentiation for Straker and allows us to
deliver larger projects to customers faster and at better gross
margins.
• M&A will continue to be a major plank of our growth
strategy. The acquisitions of On-Global and NZTC
International during FY20 were strategically important.
Given prior acquisition and integration experience, we have
been able to integrate these two companies very quickly
and improved margins in both businesses. While we have
paused our M&A efforts in the near-term, we are taking this
time to further evaluate different opportunities in our
pipeline.
11
Outlook for FY21
The effect of COVID-19 will have an impact on FY21, but the scale
of that impact is difficult to assess at this point in time. However,
based on the results from the first two months of trading in FY21,
we are optimistic that the Company’s revenue performance will be
stable relative to FY20.
We also anticipate that when business returns to a more normal
rhythm as the pandemic subsides, that M&A opportunities will once
again surface, potentially in greater numbers and at more attractive
prices.
We are committed to having one of the best translations platforms
available globally and will leverage our strong balance sheet to
develop world-leading capability that allows us to offer innovative,
Ai powered solutions for our customers.
We look forward to progressing all our strategic initiatives as we
take further steps to becoming a NZ$100 million revenue business.
This, of course, will only be possible with the assistance of our great
team of people that are now located in seven different countries
and I thank them all for their commitment and passion, particularly
in the difficult COVID-19 environment in which we are currently
operating.
I would like to thank the Board for their support during the year
and express my appreciation to all shareholders for your continuing
support. I am excited by the opportunities I see for our business
and look forward to sharing further successes with you.
Grant Straker
CEO and Co-founder
STRAKER TRANSLATIONS FY20 ANNUAL REPORT
12
Powering the global growth
of business
Advantage through proprietary
RAY Ai platform
13
Many of the big opportunities for business globally are in
emerging markets. With the growth of e-commerce and the
internet making it easier to launch products into new markets,
the growth in global content continues to accelerate. There are
now over 4 billion internet users in the world and more than
90% are in countries where English is not the native language.
For companies looking to sell more internationally, streamlining,
speeding up and simplifying the translation process are all
critical decision criteria when selecting a vendor. Providers that
can offer advanced technology along with a global service
delivery capability are attractive to these companies and this is
where Straker has strongly differentiated itself in the translation
services eco-system. Existing providers with legacy systems and
a lack of global service capacity will increasingly struggle to
deliver the translation solutions customers are looking for, and
this presents a very large opportunity for Straker.
We have proven our ability to deliver advanced translation
process automation cost-effectively and at scale for some of
the world’s leading global companies. Our data-driven systems,
made possible through our unique approach to solving and
scaling the translation of documents, websites, technical
manuals, videos and much more, has enabled our customers to
grow their international operations faster.
Looking forward, we see a growing need for both SMEs and
large enterprises to use our technology and services to enable
seamless growth without communication as a barrier.
One of the keys to Straker’s success has been its focus on the
way technology would impact the translation industry and
how, ultimately, the mix of machines and humans would speed
up the translation process and still produce the same quality
outcomes as humans alone.
To reach that goal, Straker needed to develop a world-leading
technology platform that would allow humans and machines
to work together in the most effective way to allow big data
assets to be collected so they could be used to further train the
machines.
Straker also needed to build a technology platform that could
automate the process of getting content into and out of the
system and make it extendable so that custom on-ramps for
customers could be built.
The Company’s proprietary Ai RAY technology platform does
all of this and more, making it one of the most comprehensive
translation platforms available. This provides Straker with the
ability to offer its unique data-driven approach to translation.
The proprietary Ai RAY platform allows Straker to operate
a single global team all concurrently working on the same
system. This provides operating efficiency and allows the
Company to acquire new businesses and still retain a “one team,
one platform” approach across all its offices.
There is huge potential in the media localisation market and
demand has, in the past, created production bottlenecks. As a
result, Straker has developed its RAY media platform to enable
more automation of the media localisation process, which will
allow much greater throughput of work without the need to
add more people across the organisation.
Straker has recently partnered with AppTek, a leading provider
of machine learning and automated speech-to-text recognition
software. Integration of AppTek’s software into Straker’s Ai RAY
technology platform is now complete and along with the other
advances being made to the Company’s RAY media platform,
this AppTek integration allows Straker to offer the media
localisation industry a world-leading, fast, simple and scalable
service.
Our Media services now include subtitling, audio translations
and dubbing for the online movie industry as well as speech to
text transcriptions for corporate conferences and presentations.
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 14
Board of Directors
15
Grant Straker
CEO and Co-founder
Prior to founding Straker in 1999,
Grant served in the British Army as
an elite paratrooper.
As a co-founder of Straker, Grant
has extensive experience in the
language translation market.
Grant was appointed to the board
on 21 December 1999.
Grant’s wide-ranging technical,
sales and business skills, combined
with his strong entrepreneurial
drive, have placed him in an ideal
position to help accelerate the
growth of Straker.
Grant is a member of the NZ
Institute of Directors.
Along with Merryn Straker, Grant
was the winner of the 2018 master
category for NZ Entrepreneur of the
Year.
Tim Williams
Independent Non-Executive Director
Tim was appointed a Non-Executive
Director of Straker on 24 June 2015.
He founded ValueCommerce Co.
Ltd in 1996.
Tim is one of the original pioneers
in the Japanese internet and
advertising industry. His vision and
record of achievement are
demonstrated by the success and
growth of ValueCommerce Co. Ltd.
Tim founded ValueCommerce, an
internet affiliate marketing
company, selling a 49% stake to
Yahoo Japan in 2005. Subsequently
in 2007, ValueCommerce was listed
on the Tokyo Stock Exchange.
Tim is also a Director of
The Icehouse, The University of
Auckland’s technology incubator,
and is a General Partner in
The Icehouse linked fund Tuhua
Ventures, which invests in high-
growth start-ups in New Zealand.
Tim holds a Bachelor of Science
(Hons) in molecular genetics from
the University of Canterbury.
Phil Norman
Independent Non-Executive
Chairman
Phil was appointed the Non-
Executive Chairman of Straker on
13 January 2014.
He was the founding Chairman of
Xero Limited, one of New Zealand’s
most successful listed technology
companies, and retired from Xero’s
Board in July 2102 after five years’
service.
Phil’s other current director
roles include the Independent
Chairmanship of Loyalty New
Zealand Limited (New Zealand’s
largest loyalty company and
operator of Fly Buys), Chair of NZX
listed Plexure Group Limited (a
customer engagement software
company), Chair of Touchpoint
Group Limited (a software company
specialising in customer interaction
platforms), and Parallo Limited (an IT
services business).
Phil is a past Chairman of the New
Zealand Private Equity and Venture
Capital Association and was for six
years a member of New Zealand
Trade and Enterprise’s New Zealand
Beachheads Advisory Board.
Phil holds an MBA from the
University of Auckland and is a
Chartered Member of the
New Zealand Institute of Directors.
Katrina Johnson
Independent Non-Executive Director
Steve Donovan
Non-Executive Director
Paul Wilson
Non-Executive Director
Katrina was appointed a Non-
Executive Director of Straker on 3
July 2018.
Katrina has over 15 years of
specialist in-house legal experience
within technology companies,
including executive leadership and
board roles.
Katrina joined Uber in April 2015
after spending 12 years with
the eBay group of companies in
Australia and the United States.
She led the Uber legal team for
Asia pacific and was a member of
Uber’s APAC Regional Leadership
Team until December 2019. In
March 2020, Katrina took up the role
of General Counsel for WiseTech
Global, an ASX listed logistics
software company.
Katrina holds BA and LLB (Hons)
degrees from Macquarie University,
and a Graduate Diploma of Legal
Practice from the College of Law,
NSW. She is also a member of the
Australian Institute of Directors.
Katrina resigned as a Straker Director
on 14 April 2020.
Steve was appointed a Non-
Executive Director of Straker on 1
December 2004.
He is a former partner of Ernst &
Young. He qualified as a Chartered
Accountant in the UK and has
operated within the IT and finance
industry in New Zealand for a
number of years.
Steve has significant experience as
a director and investor in the SME
sector in New Zealand, including a
Finance Director role at accounting
software provider, Greentree
Software Group, which was sold to
MYOB in 2016. Other current
directorships include, Buro Seating
Limited (office chair wholesaler) and
New Zealand Pure Dairy Products
Limited (infant formula
manufacturer).
Steve is Straker’s former Chief
Financial Officer and has been
working with technology
companies across a range of
industries.
Steve holds a Bachelor of
Economics from the University of
Lancaster and is a qualified
Chartered Accountant and a current
member of the Institute of
Chartered Accountants in England
and Wales.
Paul was appointed a Non-
Executive Director of Straker on 22
September 2015.
He is a co-founder of ASX listed
Bailador Technology Investments
(which is a major shareholder of
Straker). He has had extensive
private equity investment
experience as a director of CHAMP
Private Equity in Sydney and New
York, with MetLife in London, and as
executive director at media focussed
investment group, Illyria.
Paul is a director of SiteMinder,
Stackla, the Rajasthan Royals IPL
cricket franchise and ASX
listed Vita Group Limited.
Paul holds a Bachelor of Business
(Banking and Finance), from
Queensland University of
Technology and is a Fellow of
the Financial Services Institute
of Australia, a Member of the
Institute of Chartered Accountants
of Australia and a Member of the
Australian Institute of Company
Directors.
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 16
Management Commentary
17
The following commentary should be read in conjunction
with the consolidated financial statements and the related
notes in this report. Some parts in this commentary
include forward looking statements and information on
strategy and plans for the business that involve risks and
uncertainties. Actuals events and the timing of events may
vary.
All amounts are presented in NZD unless otherwise stated.
Straker is a New Zealand incorporated company and has a
31 March year end balance date. References to FY20 refer to the
year ended 31 March 2020 and FY19 year ended 31 March 2019.
Non-IFRS measures
To ensure that the presentation of results fully reflect the
underlying performance of the business, Straker Translations
Group publishes its key metrics on a non-IFRS basis as well as on
an IFRS basis. For transparency purposes, Straker also publishes
full reconciliations between IFRS and non-IFRS measures. IFRS
refers to NZ IFRS.
Repeat business is revenue from repeat customers (customers
who have previously placed an order with Straker, many of
whom are enterprise in nature).
Non-operating costs include costs of re-structuring activities,
IPO costs and other non-recurring consulting costs.
The non-IFRS measures have not been independently audited
or reviewed.
The obligation to prepare a Directors’ Report in section 298
of the Australian Corporations Act 2001 (CA) does not apply
to Straker as a NZ company. However the ASX Listing Rules
include a separate requirement (ASX LR 4.10.17) requiring all
listed entities to include an operational and financial review
statement in their Annual Reports which is equivalent to the
general information requirements set out in s 299 and 299A of
the CA. This Management Commentary section is intended to
meet this requirement.
Company Background
Based in New Zealand, Straker Translations has established itself
as a world-leading Ai data-driven translation platform powering
the global growth of businesses.
Straker has developed a hybrid translation platform that
utilises a combination of Ai, machine-learning and a crowd-
sourced pool of freelance translators. The Company’s cloud-
based platform manages the end-to end translation process,
leveraging Ai, machine-learning (both inhouse and third
party owned engines) to create a first draft translation and
subsequently matching the customer’s content with one or
more of the approximately 13,000 crowd-sourced human
freelance translators for refinement.
This process is managed using Straker’s proprietary RAY Ai
platform, which has been developed over eight years and is an
enterprise grade, end-to-end, cloud-based platform.
By leveraging machine translations and its big data assets, the
RAY Ai platform enables the delivery of faster and more accurate
translations, lowering the time and cost to deliver versus
traditional translation services. The platform can be integrated
directly into customers’ systems and consists of a customer
dashboard, machine translation integration and modules for
assisting and managing translators.
Industry
Straker operates in the language services industry, providing a
platform for the translation of written content in both offline
and online form. Typical content translated includes product
brochures, operating manuals, legal documents and websites.
In a report commissioned by Straker, industry research
company Frost & Sullivan estimated that the global market
size for all language services was US$43 billion in 2017, and
is expected to grow to US$67 billion in 2022, representing an
estimated CAGR of over 9%. The translations segment within
language services is forecast by Frost & Sullivan to represent
69% of the total industry in 2018, representing a market in
excess of US$30 billion in size. Key drivers behind the growth of
the industry include:
•
•
the increasing level of globalisation, accompanied by the
need for localisation of content;
the rapid increase in content produced, both online and
offline, providing an ever-increasing base of content which
may require translation
•
the economic emergence of new markets with specific
language requirements
regulatory authorities mandating translation of content,
particularly in the European Union.
•
Competitive Positioning
The translation services market is highly fragmented with
thousands of small companies across the globe offering
personalised services to customers in local geographies. Such
companies rarely utilise technology-driven translation platforms
and are, therefore, relatively inefficient compared to Straker.
These companies are ideal Straker acquisition targets as we can
secure margin improvements from our sophisticated RAY Ai
platform and synergy benefits from geographic consolidation.
As Straker scales its business, its ability to enhance its offerings
will improve, allowing it to compete more effectively for
enterprise customers with larger competitors in areas such as
video streaming, mobile apps and e-commerce. At this part
of the translation market, there is a relatively small number of
larger players and Straker is now well positioned to compete
with these companies based on its world-class technology
capability, its service strength and its global footprint.
Significant changes in the year
During the FY20 year the Company made two acquisitions,
On-Global Language Marketing SL (On-Global) and The New
Zealand Translation Centre Limited (NZTC), which contributed
12% of the Company’s revenue for the year.
Straker’s Value Proposition
The explosion and speed of content creation today means there
is more content being created than all the human translators in
the world can translate effectively. We could see this happening
nearly a decade ago and knew that machines and humans
together would be the future of the industry. That point has
now arrived and, ultilising our world-class RAY Ai platform and
our global services capability, we are able to deliver solutions to
customers that legacy providers in the industry have no ability
to match. Our value proposition is based around:
• How we can simplify the translation process - from rapid
quoting to advanced customer dashboards and fully integrated
API connectors
• How we are able to deliver better value through our platform
and our ability to offer differentiated delivery and pricing
models
• With offices in twelve countries around the globe offering
24/7 delivery capability and services utilising more than 13,000
translators means we have scale on tap and can deliver large
and urgent projects without issues
• Speed is now a major consideration for customers so our
ability to deliver projects within a short timeframe is of huge
value. This includes our ability to automate and make the
process frictionless as well as the way we can increase the
speed of the actual translation.
The combination of our world-class sales and support teams,
advanced technology and our geographical reach is a
compelling proposition for both large and small customers.
With a growing development team, we are continuing to
invest in R&D and continue to find more ways to increase the
efficiency of the translation process and integration of acquired
companies.
STRAKER TRANSLATIONS FY20 ANNUAL REPORT
18
Management Commentary
continued
19
Operating Revenues
Straker primarily generates revenue from its customers for the provision of translation services. Services are primarily charged on a
rate per word basis with the rate varying depending upon the language pair. The Company also generates revenues from Media and
interpretation services, which are not currently material from a segment disclosure perspective.
The Company operates globally across three main regions, Asia Pacific (APAC), Europe (EMEA), and North America (NAM) and
categorises its revenue into two broad groups, 1. new business revenue and 2. revenue from repeat customers (customers who have
previously placed an order with Straker, many of whom are enterprise in nature).
Revenue by Region
APAC
EMEA
NAM
Translation revenues
FY20
$'000
3,993
14,787
8,956
27,737
FY19
$'000
3,620
12,520
8,454
24,594
Change
10%
18%
6%
13%
Revenue Growth
New
Repeat
Translation revenues
FY20
$'000
3,838
23,899
27,737
FY19
$'000
4,415
20,179
24,594
Change
-13%
18%
13%
Revenues grew by 13% in FY20 and reflect the strategic shift the Company has made towards Enterprise customers which, together
with other business customer revenues, were up 18% for the year.
Repeat revenues grew by 18% and made up 86% of the mix for the year. The growth in repeat revenues means that the Company is
more likely to have consistent revenues moving forward.
New business revenues were affected by the Company’s strategic decision to focus on selling more to Enterprise customers and to not
activity target smaller translation customers. As a result, the new business segment was down on FY19.
APAC grew 10% during FY20, on the back of the recently acquired NZTC entity.
In EMEA, Straker grew from expanding technology enabled translation services offered to a number of existing Enterprise customers.
This was made possible by the use of the RAY Ai platform. The region also experienced some cyclical sales order downturn due to the
nature of the project-based translation industry. Contributions from the previous year’s acquisitions, as well as On-Global, purchased
during the year also contributed to EMEA’s revenue growth.
Growth in North America was up 6% on FY19, driven by an increase in Media services in the region – which were up 55% on a like for
like basis, offset by the impact of a major banking customer closing down its investment banking division and the shift in emphasis
away from small customers.
COVID-19 had a slight adverse impact on the March 2020 results across all major markets.
Gross Margin
Translation margin
Other margin
Gross Margin
FY20
$'000
55.2%
51.2%
54.8%
FY19
$'000
54.6%
51.0%
54.6%
Change
0.5%
0.2%
0.2%
FY20 Revenue Growth
FY20 Revenue Mix
Translation margin
27.7m
3.8
24.6m
4.4
13%
GROWTH
20.2
23.9
14%
86%
FY19
FY20
New
Repeat
New
Repeat
Straker continues to improve gross margin by feeding more
translation volume through the RAY Ai platform.
The reported gross margin, which included the Media business,
improved by 0.2% to 54.8% against the previous reporting
period. The translation related gross margin, excluding Media
work, was up 0.5% year-on-year to 55.2%, driven by the
operating leverage gained through Straker’s world-class RAY Ai
platform.
Straker processed an additional 25% of translation content
through the RAY Ai platform and the Company continued to
produce gross margin levels of 56%. A small proportion of
revenue was not processed through the RAY platform during
the year, and this yielded a lower gross margin. Content
processed through the RAY Ai platform yields higher margins.
60
Basis Points
55.2%
54.6%
FY19
FY20
STRAKER TRANSLATIONS FY20 ANNUAL REPORT Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA)
Operating loss before net finance income/ (expense)
Add:
Depreciation & amortisation
Amortisation of acquired intangibles
Impairment of intangible assets
EBITDA
EBITDA Margin
Acquistion & Integration costs
Other non-operating costs
IPO related costs
Adjusted EBITDA
Adjusted EBITDA Margin
FY20
$’000
(5,104)
1,264
1,155
799
(1,887)
-6.8%
772
534
-
(581)
-2.1%
FY19
$’000
(4,018)
459
682
-
(2,878)
-11.7%
594
172
1,953
(159)
-0.6%
21
Change
-27%
175%
69%
N/A
34%
4.9%
-30%
-211%
N/A
-265%
-1.4%
The Company’s EBITDA loss for FY20 was impacted by one-off costs associated with acquiring and integrating four businesses and
from re-structuring activity to reduce the future cost base.
On an underlying basis, after adjusting for the impact of the items mentioned above, Straker produced an Adjusted EBITDA loss of
($0.58m), an increase of ($0.4m) on FY19. The change reflected the Company’s shift in strategic focus to attract Enterprise customers,
while investing in research and development to expand its footprint in the Media industry as well as bearing the costs of being a listed
company, offset by the effects of the new IFRS 16 lease standard - see note 2b to the financial statements for further explanation.
EBITDA and Adjusted EBITDA are non-IFRS measures. Management believes Adjusted EBITDA reflects the underlying operating perfor-
mance of the business.
Non-operating costs include costs of re-structuring activities, IPO costs and other non-recurring consulting costs. The non-IFRS measures have not been independently audited or reviewed.
20
Management Commentary
continued
Statutory Results
Translations revenue
Gross Margin
Gross Margin %
Other Income
Depreciation & Amortisation
Operating expenses excluding D&A
Operating expenses
Percentage of operating revenue
Loss from trading operations*
Percentage of operating revenue
Amortisation of acquired intangibles
Acquistion & Integration costs
Impairment of intangible assets
IPO related costs
Operating loss before net finance income / (expense)
Net Finance income / (expense)
Loss before income tax
Percentage of operating revenue
Income tax credit
Net loss after tax
FY20
$’000
27,737
15,200
54.8%
62
(1,264)
(16,377)
(17,641)
64%
(2,379)
-9%
(1,155)
(772)
(799)
-
(5,104)
2,392
(2,712)
-10%
190
(2,522)
FY19
$’000
24,594
13,425
54.6%
81
(459)
(13,837)
(14,296)
58%
(790)
-3%
(682)
(594)
-
(1,953)
(4,018)
(466)
(4,484)
-18%
155
(4,329)
Change
13%
13%
0.2%
-
175%
18%
23%
5%
-201%
-5.4%
69%
30%
N/A
N/A
-27%
414%
40%
8.5%
22%
42%
The Company’s financial performance for FY20 reflected the strategic targeting of more translation services to Enterprise customers, as
well as its expansion into the Media market through its previous acquisition of COM Translations Online SL and the launch of the RAY
Media platform.
Revenue was up 13% year-on-year to NZ$27.7m, reflecting growth from both Enterprise customers in EMEA and the Media business,
and from part-year revenues from acquisitions completed in FY20.
On a dollar basis, gross margin was up 13% year-on-year to NZ$15.2m.
Operating costs, excluding depreciation and amortisation, of NZ$16.4m were up 18% on FY19 due to the cost base brought on from
acquired businesses, business re-structuring costs incurred to lower the future cost base, listed Company compliance costs, and
investment in the R&D team.
The higher revenue and margin, combined with an increase in operating costs, produced a loss from trading operations before
amortisation of acquired intangibles, acquisition and integration costs and impairment of intangible assets of ($2.4m); an increase on
the FY19 comparable loss of ($0.8m).
The Company impaired $0.8m of goodwill related to the Group’s subsidiary, Elanex, as a result of a current banking customer closing
its investment banking arm, which Straker provided translation services for, as well as the likely impacts of COVID-19 on this part of the
business.
The loss before income tax was ($2.7m), which was a 40% improvement on the FY19 loss of ($4.5m).
* Loss from trading operations before amortisation of acquired intangibles, acquisition and integration costs, impairment of intangible assets and IPO related costs
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 22
Management Commentary
continued
Cash flow
Receipts from customers
Other operating cash flows
Operating cash flow
Capital Investment
Free cash flow
Investment in Acquistions
Investing cash flow
Net capital raise
Lease Liability
Deferred consideration payments
Net Financing cash flow
Net cash flow
Open bank balance
Foreign exchange
Closing bank balance
FY20
$’000
27,124
(28,727)
(1,603)
(1,441)
(3,044)
(2,197)
(2,197)
(157)
(535)
(1,511)
(2,202)
(7,443)
17,669
1,001
11,227
FY19
$’000
23,900
(24,965)
(1,065)
(839)
(1,904)
(2,748)
(2,748)
16,828
-
(1,559)
15,269
10,617
7,824
(772)
17,669
Change
13%
15%
-51%
-72%
-60%
20%
20%
-101%
NA
3%
-114%
-170%
-36%
Receipts from customers were up 13% to $27.1m which remains closely aligned to revenue growth.
Operating cash outflows of ($1.6m) were up ($0.5m) on FY19, driven by the operating performance and increased re-structuring costs,
offset by the impact of the new IFRS16 lease standard.
Free cash out-flows were up ($1.1m) due to the operating outflow and the Company continuing to invest in the RAY Ai platform, the
new RAY Media platform and in modernising computer hardware in acquired companies to enable staff to work the agile Straker way.
The Company now spends approximately 10% of revenues on R&D. In the FY20 year Straker capitalised $1.2m of software related
assets that will help to drive growth in the business moving forward.
Continued investment in acquisitions, with the purchase of On-Global and NZTC throughout the year.
Straker issued a small amount of share capital during the year which was related to employees and Directors exercising share options.
This amount, included in net capital raise in the summary above, was offset against executive bonuses that were paid out in FY20 in
relation to the capital raising associated with the successful ASX IPO in FY19.
Straker continues to make deferred consideration payments to ex shareholders of acquired companies demonstrating the success of
the acquisition strategy for all parties involved.
The Company is in a strong financial position to weather the effects of the COVID-19 global pandemic and continues to deliver on its
M&A strategy and support organic growth, with NZ$11.2m cash at bank and no debt other than deferred consideration in respect of
acquisitions.
23
Strategy to deliver growth
The translation industry continues to evolve as technology
plays an increasingly important part in the localisation process.
Companies like Straker now “lead the pack” providing innovation
that larger, traditional suppliers cannot match.
Acquisition Rationale
In a highly fragmented translation industry, there are many
companies in the “trouble zone” with strong customer
relationships. These companies present a substantial acquisition
opportunity for Straker.
As a smaller but rapidly growing company, innovation is the
foundation of Straker’s competitive advantage and enables
Straker to capture market opportunities quickly.
There is now a significant “trouble zone” in the translation industry
where many industry participants that are neither large nor
innovative lack the resources to break fee from this “trouble zone”.
These companies typically have long-term relationships with
customers, but such customers are now looking for alternative,
more innovative solutions that embrace the use if Ai and process
automation.
Developing an innovation-led product takes time and Straker
has over many years evolved its market-leading proprietary Ai
RAY technology platform that underpins its offering, allowing
the Company to disrupt the translation market. Netflix is a good
analogy of how an innovative player has disrupted the media
industry with its online content streaming service and Straker is
now well positioned to disrupt the translation industry through
its use of Ai and machine learning. Over time, Straker has also
accumulated a massive quantity of language pairs – intellectual
property that is highly valuable, making the Company more
capable than most of its competitors in the language localisation
area.
Securing new customer relationships via acquisitions is frequently
easier than developing these relationships via organic sales
activity and, once acquired, Straker can offer these customers
more innovative solutions that will provide productivity
improvements and expansion opportunities.
For Straker, acquisitions provide an opportunity to scale its
operations globally and generate operating leverage as acquired
entities are migrated onto the Company’s proprietary Ai RAY
technology platform.
Media Spotlight
The huge explosion in the streaming of media content and
the need for this content to be delivered to global audiences is
driving significant growth in the media translation industry.
As with its translation services model, Straker believes that the
winners in media localisation will be those companies that
can innovate and then build scale, rather than companies that
just build scale using traditional approaches. Straker has made
a significant innovation investment in the media area and in
September 2019 released its Ai RAY media platform, which offers
sophisticated, industry specific services to the media industry.
To give our innovation scale, Straker is working on five strategic areas of focus:
Geographical
Grow geographical footprint while
focusing on key markets
Enterprise
Grow enterprise customer base
to rapidly scale platform and
geographic footprint
Connected
Platforms
Grow by leveraging scalibility of our
proprietary RAY platform
Acquisitions
Grow by building capabilities and
presence in key countries and
market segments.
Media
Grow in the fastest growing
segment of the global translations industry
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 24
Straker Translations and Group
Financial Statements
FO R TH E YEAR ENDED 31 MAR CH 2 02 0
Financial Statements Contents
Directors Responsibility
Audit Report
Financial Statements
Income Statement
Statement of Changes in Equity
Statement of Financial Position
Statement of Cash Flows
Notes to the Financial Statements
General Information
1. Reporting entity and statutory base
2. Basis of Preparation
Performance
Segment Reporting
3.
4. Revenue
5. Operating Expenses
6. Net Finance Income
Income Tax Expense
7.
Earnings per shares
8.
Operating Assets and Liabilities
Intangible Assets
Trade Receivables
9.
10. Other Assets , Prepayments and Contract Assets
11.
12. Plant & Equipment
13. Right-Of-Use Assets
Trade Payables
14.
Sundry Creditors and Accruals
15.
16.
Employee Provisions
17. Lease Liabilities
Share Capital
Funding and risk
18. Consideration liabilities
19.
20. Capital Management
21.
22.
Events After the Reporting Date
Financial Risk Management
Group Structure
23. Group Subsidiaries
24. Business Combinations Completed in Current Period
25. Business Combinations Completed in Prior Period
Other Information
26. Cashflow Reconciliation
27. Related Party Transactions
28.
29. Significant Accounting Policies
Share Options
25
27
28 - 31
32
33
34
35
36
36 - 38
38 - 39
40
40
41
42 - 43
43
44
44
45 - 49
50 - 51
51
51
52
52
52 - 54
55-56
57
58
58
58 - 62
63
63 - 65
66 - 67
67
68
69 - 70
70 - 72
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 26
27
Straker Translations Limited and Group
Directors’ Responsibility Statement
for the year ended 31 March 2020
The Directors are pleased to present the consolidated financial statements of Straker Translations Limited for the year ended 31
March 2020.
The Directors are responsible for the preparation, in accordance with New Zealand law and generally accepted accounting
practice, of financial statements which give a true and fair view of the financial position of the Straker Translations Limited
Group as at 31 March 2020 and the results of their operations and cash flows for the year ended 31 March 2020.
The Directors consider that the consolidated financial statements of the Group have been prepared using accounting policies
appropriate to the Group’s circumstances, consistently applied and supported by reasonable and prudent judgements and
estimates and that all applicable New Zealand equivalents to International Financial Reporting Standards have been followed.
The Directors have responsibility for ensuring that proper accounting records have been kept which enable, with reasonable
accuracy, the determination of the financial position of the Group and enables them to ensure that the financial statements
comply with the Financial Reporting Act 2013.
The Directors have responsibility for the maintenance of a system of internal control designed to provide reasonable assurance
as to the integrity and reliability of financial reporting. The Directors consider that adequate steps have been taken to safeguard
the assets of the Group and to prevent and detect fraud and other irregularities.
Approved for and on behalf of the Board of Directors on 28 May 2020.
D I R E C T O R
D I R E C T O R
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 28
Independent Auditor’s Report
to the shareholders of Straker Translations Limited
Independent Auditor’s Report
to the shareholders of Straker Translations Limited
29
BDO Auckland
BDO Auckland
INDEPENDENT AUDITOR’S REPORT
TO THE SHAREHOLDERS OF STRAKER TRANSLATIONS LIMITED
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of Straker Translations Limited (“the Company”) and
its subsidiaries (together, “the Group”), which comprise the consolidated statement of financial position as at
31 March 2020, and the consolidated statement of profit or loss and other comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to
the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Group as at 31 March 2020, and its consolidated financial performance
and its consolidated cash flows for the year then ended in accordance with New Zealand equivalents to
International Financial Reporting Standards (“NZ IFRS”).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (“ISAs (NZ)”).
Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit
of the Consolidated Financial Statements section of our report. We are independent of the Group in
accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for Assurance Practitioners
issued by the New Zealand Auditing and Assurance Standards Board, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Our firm carries out other assignments for the Group in the areas of taxation advice services. The firm has no
other relationship with, or interests in, the Company or any of its subsidiaries.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in the
context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Goodwill impairment
Key Audit Matter
How The Matter Was Addressed in Our Audit
The Group has recognised goodwill on historical
acquisitions, as well as for OnGlobal and NZTC, which
were acquired in the year.
The goodwill balance of $7.590m at 31 March 2020 is
subject to an annual impairment test in accordance
with NZ IAS 36 Impairment of Assets.
Management performed their impairment test by
considering the recoverable amount of the Group’s
goodwill using a value in use calculation. This
calculation is complex and subject to key inputs and
assumptions, such as discount rates and future cash
flows, which inherently include a degree of
estimation uncertainty and are prone to potential
bias or inconsistent application.
• We have obtained Management’s value in use
calculations prepared for each of the cash
generating units and evaluated the key inputs
and assumptions including those impacted by
COVID-19. The key inputs included revenue,
growth rates, gross margin, and discount rate.
• We assessed the accuracy of previous forecasts
to actual performance in order to form a view
on the reliability of Management's forecasting
ability. We have considered the sensitivity of
key assumptions to the VIU calculations in the
context of COVID-19. We performed this in
order to identify the cash generating units that
required closer scrutiny.
• We have engaged our internal valuation experts
to review the mechanics of the value in use
calculation against the valuation methodology,
and the discount rate used.
Goodwill impairment (continued)
Key Audit Matter
How The Matter Was Addressed in Our Audit
In addition to the above, Management has recognised
an impairment loss of $0.799m in the year in relation
to the Elanex cash-generating unit resulting from a
sustained loss of revenue. This further increased our
effort in this key audit area.
Refer to note 11 (intangible assets) of the
consolidated financial statements.
• We have compared the carrying value of the
CGUs’ assets to the recoverable amount
determined by the impairment test to identify
any impairment losses. We verified the
impairment loss of $0.799m recognised on the
Elanex cash generating unit at 31 March 2020.
No other cash generating units have been
impaired.
• We have reviewed disclosures in the
consolidated financial statements, including
impairment and sensitivity analysis, to the
requirements of the accounting standard.
Intangibles acquired as part of a business combination
Key Audit Matter
How The Matter Was Addressed in Our Audit
The Group is required to recognise at fair value any
separately identifiable intangible assets acquired
through a business combination.
As a result of the acquisitions of COM, On-Global and
NZTC, the Group has recognised customer
relationship intangible assets in the year of $1.659m,
and $0.427m restated in the previous year. At the
reporting date the business combination accounting
for NZTC remained provisional.
There is a significant level of judgement required to
determine the fair value of such intangible assets.
Refer to note 11 (intangible assets), note 24 (business
combinations completed in the current period) and
note 25 (business combinations completed in the
prior period) of the consolidated financial
statements.
• We obtained Management’s assessment of
identifiable intangible assets acquired in the
acquisitions.
• We reviewed their assessment against our
expectations of likely intangible assets, based
on our review of the sale and purchase
agreements and our understanding of similar
acquisitions.
• We obtained Management’s fair value
calculation for intangibles acquired in the
business combinations, prepared in conjunction
with an external valuation expert for the COM
and On-Global acquisitions, and prepared
internally for the NZTC acquisition.
• We assessed the competence and independence
of Management’s external valuation expert, and
challenged the expert as to the scope,
methodology, findings and conclusions of their
work.
• We reviewed the key financial inputs to the fair
value calculations to supporting documentation,
including the existence of any contractual
arrangements, historical financial data, cash
flow forecasts and our understanding of the
businesses.
For the COM and On-Global acquisitions, which
required the finalisation of the business
combination accounting in the year, we
engaged our internal valuation experts to
review the valuation methodology used and the
discount rate used.
•
• We reviewed the consolidated financial
statement disclosures against the accounting
standards.
4
5
STRAKER TRANSLATIONS FY20 ANNUAL REPORT
30
Independent Auditor’s Report
to the shareholders of Straker Translations Limited
Independent Auditor’s Report
to the shareholders of Straker Translations Limited
31
BDO Auckland
BDO Auckland
Contingent acquisition consideration
Key Audit Matter
How The Matter Was Addressed in Our Audit
As part of the consideration for the acquisitions,
Management has recognised $1.371m of contingent
consideration liabilities on the On-Global and NZTC
acquisitions completed in the year.
The liabilities are contingent on the future revenue
performance of the acquired entities over a period of
two years.
The Group has recognised a gain on fair value of
contingent consideration liability of $0.535m to profit
or loss in the year as a result of earn out targets not
being achieved and no longer being forecast to be
met in relation to the Eule cash generating unit, an
acquisition that occurred in the previous year.
As recognition is dependent on forecast revenue
levels when compared to the prescribed revenue
targets, the liabilities are subject to significant
judgement and estimation uncertainty around the
assumptions and inputs to Management’s forecast
calculations and are prone to bias.
Refer to note 18.2 (contingent consideration liabil-
ity), note 22 (financial risk management), and note
24 (business combinations completed in the current
period) of the consolidated financial statements.
• We reviewed sale and purchase agreements to
•
identify the contingent consideration clauses
and relevant earn out targets.
For those earn out clauses based on achieving
revenue targets for future periods from the
date of acquisition, we have performed the
following procedures:
o
o
o
Compared actual revenue performance
since acquisition to the earn out target.
Compared future forecast revenue to
Management-prepared budgets particularly
in the context of the COVID-19 pandemic.
Challenged Management’s assumptions and
inputs to the budgets, focussing on
revenue by customer, historical financial
information (including prior to acquisition)
and the impact of COVID-19.
• We re-performed Management’s contingent
consideration liability calculation based on
actual and forecast revenue to the prescribed
earn out target.
• We re-calculated the gain on fair value of
contingent consideration liability of $0.535m in
relation to the Eule cash generating unit
acquired in the previous financial year. We
confirmed that the earn out target for the first
12 months from date of acquisition was not
achieved. We reviewed Management’s assertion
that the earn out target for the second year
from date of acquisition will not be achieved
based on actual and forecast revenue
performance.
• We reviewed the consolidated financial
statement disclosures
Other Information
The directors are responsible for the other information. The other information comprises the Appendix 4E
Report (which we obtained prior to the date of this auditor’s report), but does not include the consolidated
financial statements and our auditor’s report thereon, and the Annual Report, which is expected to be made
available to us after that date.
Our opinion on the consolidated financial statements does not cover the other information and we do not and
will not express any form of audit opinion or assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information identified above 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.
When we read the Annual Report, if we conclude that there is a material misstatement therein, we are
required to communicate the matter to the directors.
Directors’ Responsibilities for the Consolidated Financial Statements
The directors are responsible on behalf of the Group for the preparation and fair presentation of the
consolidated financial statements in accordance with NZ IFRS, and for such internal control as the directors
determine is necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors are responsible on behalf of the Group for
assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate the
Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (NZ) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the decisions of users taken on the basis of these consolidated
financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements is located on
the External Reporting Board’s website at: https://www.xrb.govt.nz/standards-for-assurance-
practitioners/auditors-responsibilities/audit-report-1.
This description forms part of our auditor’s report.
Who we Report to
This report is made solely to the Company’s shareholders, as a body. Our audit work has been undertaken so
that we might state those matters which we are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company and the Company’s shareholders, as a body, for our audit work, for this report or for
the opinions we have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Chris Neves.
BDO Auckland
Auckland
New Zealand
28 May 2020
6
7
STRAKER TRANSLATIONS FY20 ANNUAL REPORT
32
33
Consolidated Statement of Profit or Loss and other
Comprehensive Income
For the year ended 31 March 2020
Consolidated Statement of Changes in Equity
For the year ended 31 March 2020
Revenue
Cost of sales (translator contractor costs)
Gross margin
Other income
Selling and distribution expenses
Administration expenses
Loss from trading operations before amortisation of acquired
intangibles, acquisition and integration costs, impairment of
intangible assets and IPO related costs
Amortisation of acquired intangibles
Acquisition and integration costs
Impairment of intangible assets
IPO related costs
Operating loss before net finance income/(expense)
Finance income
Finance expense
Net finance income/(expense)
Loss before income tax
Income tax credit
Loss for the year after tax
Other Comprehensive Income
Items that may be reclassified to profit or loss, net of tax
Foreign currency translation differences
Total Comprehensive Income for the year
Earnings per share for the period attributable to the
owners of the parent
Basic earnings per share (cents)
Diluted earnings per share (cents)
Notes
4
11
24
11
5
6
7
8
8
2020
$’000
27,736
(12,536)
15,200
62
15,262
(9,396)
(8,244)
(2,378)
(1,155)
(772)
(799)
-
(5,104)
2,569
(177)
2,392
(2,712)
190
(2,522)
2019
$’000
24,594
(11,169)
13,425
81
13,506
(8,309)
(5,987)
(790)
(682)
(593)
-
(1,953)
(4,018)
716
(1,182)
(466)
(4,484)
155
(4,329)
(1,178)
(3,700)
(147)
(4,476)
(4.77)
(4.73)
(10.95)
(7.87)
Group – 31 March 2020
Balance 1 April 2019
Loss for the year
Currency translation differences
Total comprehensive income for the year
Transactions with owners in their capacity as owners
Issue of share capital
Cost of issue of share capital
Share option cost expensed
Balance 31 March 2020
Group – 31 March 2019
Balance 1 April 2018
Loss for the year
Currency translation differences
Total comprehensive income for the year
Transactions with owners in their capacity as owners
Issue of share capital
Redemption of share capital
Share option cost expensed
Balance 31 March 2019
Notes
Share
Capital
Accumulated
Losses
Share
Option
Reserve
Foreign
Currency
Translation
Reserve
Total
Equity
$’000
$’000
$’000
$’000
$’000
40,123
(13,767)
232
(177)
26,411
-
-
-
676
(13)
-
(2,522)
-
(2,522)
-
-
-
40,786
(16,289)
21,402
-
-
-
20,263
(1,542)
-
(9,438)
(4,329)
-
(4,329)
-
-
-
40,123
(13,767)
19
19
19
-
-
-
-
-
91
323
-
(1,178)
(2,522)
(1,178)
(1,178)
(3,700)
-
-
-
676
(13)
91
(1,355)
23,465
121
(30)
12,055
-
-
-
-
-
111
232
-
(4,329)
(147)
(147)
(147)
(4,476)
-
-
-
20,263
(1,542)
111
(177)
26,411
The above statement should be read in conjunction with the notes to and forming part of the financial statements
The above statement should be read in conjunction with the notes to and forming part of the financial statements
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 34
Consolidated Statement of Financial Position
as at 31 March 2020
Consolidated Statement of Cash Flows
For the year ended 31 March 2020
Current Assets
Cash and cash equivalents
Trade receivables
Other assets and prepayments
Total Current Assets
Non–current Assets
Intangible assets
Plant and equipment
Right-of-use assets
Total Non–current Assets
Total Assets
Current Liabilities
Trade payables
Sundry creditors and accruals
Employee provisions
Deferred consideration
Contingent consideration
Lease liabilities
Total Current Liabilities
Non-current Liabilities
Contingent consideration
Lease liabilities
Deferred tax liability
Total Non-current Liabilities
Total Liabilities
NET ASSETS
Equity
Share capital
Foreign currency translation reserve
Share option reserve
Accumulated losses
TOTAL EQUITY
Approved for and on behalf of the Board of Directors on 28 May 2020
Notes
9
10
11
12
13
14
15
16
18
18
17
18
17
7
19
28
Restated
(Notes 11 & 18)
2019
$’000
17,669
3,908
1,360
22,937
10,615
214
-
10,829
33,766
718
2,847
363
230
1,039
-
5,197
1,357
-
801
2,158
7,355
2020
$’000
11,228
5,854
1,518
18,600
13,391
289
1,049
14,729
33,329
682
3,718
529
561
1,419
402
7,311
872
738
943
2,553
9,864
23,465
26,411
40,786
(1,355)
323
(16,289)
23,465
40,123
(177)
232
(13,767)
26,411
Notes
26
17
Cash flows from operating activities
Receipts from customers
Interest received
Payments to suppliers and employees
Net cash used in operating activities
Cash flows from investing activities
Proceeds from sale of plant and equipment
Payments for capitalised software development
Payments for plant & equipment and purchased software
Payments for acquisition and integration costs
Payments for acquisition of subsidiaries, net of cash acquired
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Cost of share issue
IPO related costs
Lease liability payments
Payment of deferred consideration
Payment of contingent consideration
Payment of acquired entity’s loans and borrowings
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents
Effect of exchange rate on foreign currency balances
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
2020
$’000
27,125
76
(28,803)
(1,602)
10
(1,191)
(250)
(737)
(1,470)
(3,638)
72
(14)
(215)
(535)
(230)
(697)
(583)
(2,202)
(7,442)
1,001
17,669
11,228
35
2019
$’000
23,900
104
(25,069)
(1,065)
-
(740)
(99)
(557)
(2,191)
(3,587)
20,074
(1,402)
(1,844)
-
(287)
(864)
(408)
15,269
10,617
(772)
7,824
17,669
D I R E C T O R
D I R E C T O R
The above statement should be read in conjunction with the notes to and forming part of the financial statements
The above statement should be read in conjunction with the notes to and forming part of the financial statements
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 36
37
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
1. REPORTING ENTITY AND STATUTORY BASE
Straker Translations Limited (“the Company” or “parent”) is a
company domiciled in New Zealand and registered under
the New Zealand Companies Act 1993 and is listed on the
Australian Securities Exchange (ASX). The audited consolidated
financial statements of Straker Translations Limited and its
subsidiaries (together, “the Group” or “Straker”) have been
prepared in accordance with the requirements of Part 7 of the
Financial Markets Conduct Act 2013.
For the purposes of complying with generally accepted
accounting practice in New Zealand ("NZ GAAP"), the Group is a
for-profit entity.
The principal activity of the Group is the provision of translation
services.
2. BASIS OF PREPARATION
The financial statements comply with NZ GAAP, New Zealand
equivalents to International Financial Reporting Standards ("NZ
IFRS") and International Financial Reporting Standards.
The financial statements are presented in New Zealand dollars
(NZD), which is also the functional currency of the parent
company. Amounts are rounded to the nearest thousand
dollars ($’000) in the financial statements.
The preparation of financial statements in compliance with NZ
IFRS requires the use of certain critical accounting estimates.
It also requires Group management to exercise judgement in
applying the Group's accounting policies.
The areas where significant judgements and estimates have
been made in preparing the financial statements and their
effect are disclosed in note 2(c).
a) Basis of measurement
The consolidated financial statements have been prepared on a
historical cost basis, except as noted in the accounting policies.
b) Change of accounting policies
New standards, interpretations and amendments effective from
1 April 2019
One new financial reporting standard is applied for the first time
in these financial statements.
• NZ IFRS 16 Leases (“NZ IFRS 16”) is the new standard for the
recognition, measurement, presentation and disclosure of
leases.
NZ IFRS 16 provides a comprehensive model for the
identification of lease arrangements and their treatment in
the financial statements for both lessors and lessees. NZ IFRS
16 superseded NZ IAS 17 Leases when it became effective for
accounting periods beginning on or after 1 January 2019. The
date of initial application of NZ IFRS 16 for the Group was
1 April 2019.
The Group has chosen the modified retrospective approach
of NZ IFRS 16. Consequently, the Group has not restated the
comparative information. As a result there has been a change
in the financial position between 31 March 2019 and 1 April
2019. As at 1 April 2019 the total assets and total liabilities
have respectively increased (in thousands), by $1,132 for the
recognition of a Right of Use Asset and $201 (current liabilities)
plus $931 (non-current liabilities) due to the recognition of a
Lease Liability.
c) Use of estimates and judgements
The preparation of the financial statements in conformity with
NZ IFRS requires management to make judgements, estimates
and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income
and expenses. Actual results may differ from those estimates.
Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and
in any future periods affected.
Management has identified the following balances and
transactions for which significant judgements, estimates and
assumptions are made:
i) COVID-19 pandemic
In December 2019, a new virus, COVID-19 was detected in the
Wuhan province of China. The virus was soon common in other
countries and on 11 March 2020 the World Health Organization
declared that the outbreak should be considered a pandemic.
The result of this pandemic has been a substantial reduction in
economic activity throughout the world, as governments have
introduced measures (such as the closure of national borders,
the closure of non-essential businesses, the cancellation of
public events and the imposition of restrictions on individuals)
in an attempt to reduce transmission of the virus.
In late March 2020, the New Zealand Government ordered a
four-week lockdown, during which non-essential businesses
and organisations were not allowed to operate and individuals
(other than essential workers or those undertaking essential
business) were required to stay at home. In late April 2020,
the New Zealand Government gradually started easing those
restrictions.
The other jurisdictions where the Group operates remain
subject to varying degrees of lockdown conditions in May 2020
(subsidiaries listed in note 23).
During the various COVID-19 lockdown periods the Group
was able to operate, however sales orders were impacted to
a degree as the Group has experienced reduced demand in
some markets due to the overall reduction in economic activity
caused by the COVID-19 pandemic. This has resulted in lower
revenue in some markets. An assessment of the impact of
COVID-19 on the Group’s financial statements has been set out
on the following page.
This assessment is based on information available at the time of
preparing these financial statements.
Financial statement area
Summary of COVID-19 impacts
Accounts receivable
The impairment provision has increased $0.077m in the current year.
Of this, $0.040m is due to changed expectations regarding counterparties
because of COVID-19.
Goodwill
The goodwill balance of $7.590m at 31 March 2020 was subject to an annual
impairment test in accordance with NZ IAS 36 Impairment of Assets which was
performed by using a value in use calculation.
The cash flow projections used in the value in use calculations are based on
management’s forecasts for the year ending 31 March 2021, adjusted for the
expected impact of COVID-19, which provides for a material decline on forecast
revenue for most of the cash generating units.
The Group has recognised an impairment loss of $0.8m in the year in relation
to the Elanex cash-generating unit as a result of reduced levels of spend from a
banking customer, who closed down their investment banking division, as well
as management’s expectations of reduced future profitability.
No other cash generating units have been impaired.
Note where more
information is provided
Note 9
Note 11
Contingent
consideration liabilities
The Group’s contingent consideration liabilities of $2.291m at 31 March 2020
were subject to re-measurement at the reporting date. The COVID-19 pandemic
has impacted revenue and customer demand, and the consideration payable
in the future is contingent on future revenue performance over two 1-year earn
out periods.
Note 18
Management has not recognised certain contingent consideration amounts at
31 March 2020, as revised revenue forecasts do not achieve the earn out targets.
The revisions to the revenue forecasts have been adjusted for management’s
best estimation of the impact of COVID-19 on revenue and customer demand.
The fair value gain of $0.535m on contingent consideration liability on the Eule
cash generating unit was not impacted by COVID-19, as the probability of the
earn out target not being achieved was assessed prior to the pandemic being
declared.
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 38
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
2. BASIS OF PREPARATION (Continued)
c) Use of estimates and judgements
i) COVID-19 pandemic (Continued)
To date the Group has undertaken the following steps to reduce
the impact of COVID-19 on its operations:
• Reduced expenditure in non-critical business areas
• Taken advantage of wage subsidies made available in
New Zealand and Ireland
• Deferred its merger and acquisition strategy while remaining
vigilant for opportunities
• Management and staff have agreed to reduced working
hours and or salaries during the first quarter of FY21
• Management have reviewed staffing levels and are making
cost saving adjustments where necessary
• Travel has been curtailed for the first quarter
Although the Group has been impacted by COVID-19, the
directors have concluded that the Company will be able to
continue operating for at least 12 months from the date of
signing these financial statements. That conclusion has been
reached because:
• The Group has substantial cash reserves to meet its payment
obligations
• The Group can further reduce expenditure if it becomes
necessary to do so
• Demand for translation services has held up reasonably well
in most markets despite some decline
ii) Business combinations completed in the current period
(note 24) and contingent consideration liabilities (note 18)
The Directors have made significant judgements in respect
of the accounting of business combinations by considering
the fair value of the assets and liabilities acquired, in particular
customer relationship intangible assets and considering the
likelihood of the subsidiaries achieving their earn out targets
in determining the contingent consideration liabilities.
iii) Goodwill (note 11)
The Directors have used judgement in considering
impairment associated with goodwill by using a value-in-use
calculations.
iv) Capitalised software development (note 11)
The Group has considered costs associated with software
development and capitalised those that meet the criteria of
their accounting policy. Judgement is required particularly in
respect of meeting those criteria.
v) Revenue (note 4) and Contract asset (note 10) and Contract
liability (note 15) recognition
Translation income invoices for services not yet performed
are deferred as contract liability on the Statement of Financial
Position until the percentage of completion of services is
sufficient to ensure it is probable that economic benefits will
flow to the Group.
Translation income determined to be earned but not yet
invoiced is accrued as contract asset and recorded under
current assets on the Statement of Financial Position when it
is probable that economic benefits will flow to the Group.
Contract liability consists of unpaid translator costs for which
invoices have not been received, accrued as a current liability.
3. SEGMENT REPORTING
The Group provides translation services to its customers.
The Group's operating segments are each of the Company
and its subsidiaries, and these are grouped as territories
by geographical region as reportable segments as there
are regional managers responsible for the performance of
the Group entities within their territories. The geographical
regions are Asia Pacific (APAC), Europe, Middle East and Africa
(EMEA) and North America (NAM).
Reportable segments are reported in a manner consistent
with the internal reporting provided to the chief operating
decision-maker. The chief operating decision maker has been
identified as the management team including the Board of
Directors, Chief Executive Officer, Chief Operating Officer and
the Chief Financial Officer.
Segment financial performance is evaluated based on profit
or loss and is measured consistently with profit or loss in the
consolidated financial statements.
Inter-segment sales are minimal.
Reports provided to the chief operating decision maker do
not identify assets and liabilities per segment. Assets and
liabilities are instead presented on a consolidated basis as
they are throughout the consolidated financial statements.
Also, the Group’s financing (including finance costs and
finance income), amortisation of intangible assets, acquisition
and integration costs and income taxes are managed on
a Group basis and are not provided to the chief operating
decision makers at the reportable segment level.
APAC
$’000
3,993
27
4,020
(4,457)
(437)
-
(437)
APAC
$’000
3,620
(3,939)
(319)
Year ended 31 March 2020
Revenue
Total revenue from external customers
Other income
Total income
Cost of sales, Selling and distribution and Administration expenses
Loss from segment trading operations before impairment of
intangible assets
Impairment of intangible assets
Segment contribution
Year ended 31 March 2019
Revenue
Total revenue from external customers
Other income, Cost of sales, Selling and distribution and
Administration expenses
Segment contribution
Reconciliation from segment contribution to loss before tax
Segment contribution
Amortisation of acquired intangibles
Acquisition of subsidiaries costs
IPO related costs
Net finance income/expense
Loss before income tax
39
TOTAL
$’000
27,736
62
27,798
(30,176)
(2,378)
(799)
(3,177)
TOTAL
$’000
24,594
(25,384)
EMEA
$’000
14,787
35
14,822
(16,420)
(1,598)
-
(1,598)
EMEA
$’000
12,520
(12,527)
NAM
$’000
8,956
-
8,956
(9,299)
(343)
(799)
(1,142)
NAM
$’000
8,454
(8,918)
(7)
(464)
(790)
2020
$’000
(3,177)
(1,155)
(772)
-
2,392
(2,712)
2019
$’000
(790)
(682)
(593)
(1,953)
(466)
(4,484)
STRAKER TRANSLATIONS FY20 ANNUAL REPORT
40
41
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
4. REVENUE
Set out below is the disaggregation of the Group’s revenue from contracts with customers:
Types of goods and services:
Translation services
2020
$’000
27,736
2019
$’000
24,594
The Group’s revenue is derived from translation services. The timing of the Group’s recognition of translation services revenue is over
time on a percentage of completion basis. The Group is able to recognise revenue on a percentage of completion basis due to the
product being created having no alternative use for the Group and the Group has an enforceable right to remuneration for the work
completed up to that stage.
Translation income invoices for services not yet performed are deferred as a contract liability on the Statement of Financial Position
until the percentage of completion of services is sufficient to ensure it is probable that economic benefits will flow to the Group.
Translation income determined to be earned but not yet invoiced is accrued as a contract asset and recorded under current assets
on the Statement of Financial Position when it is probable that economic benefits will flow to the Group. The Group’s performance
obligations towards customers, in the majority of the Group’s contracts, are for the provision of translations and edit services as a single
item.
5. OPERATING LOSS BEFORE NET FINANCE INCOME/(EXPENSE)
During the year, a fee of $1,882 was paid to BDO East Coast Partnership (Australia) in relation to hosting services (2019: $382,000 for
their role as a professional advisor in relation to the IPO process. This includes $88,000 debited to equity as a cost of share issue).
In addition, a fee of $515 was paid to BDO AG Wirtschaftsprüfungsgesellschaft (Hamburg) in relation to contract advisory services
(2019: $160,000 in relation to corporate finance services).
6. NET FINANCE INCOME AND EXPENSE
Notes
Finance income
Interest received on bank balances
Foreign exchange gain
Gain on fair value adjustment to contingent consideration liability
18
Total finance income
Finance expense
Interest expense on liabilities stated at amortised cost
Foreign exchange loss
Impairment
Imputed interest on contingent consideration liability
18
2020
$’000
76
1,958
535
2,569
(66)
-
-
(111)
(177)
2,392
2019
$’000
104
189
423
716
(3)
(1,063)
(9)
(107)
(1,182)
(466)
The following items of expenditure are included in operating loss before net finance income/(expense):
Net finance income/(expense)
Selling and Distribution expenses
Advertising and marketing
Salaries and wages
Administrative expenses
Remuneration to parent auditor:
- fee relating to audit of the financial statements
- fee relating to other assurance engagement (interim review)
- fee relating to audit of subsidiary financial statements paid to parent auditor network
- taxation services – compliance
- professional advisor in relation to the IPO process
Other non-Group auditor’s remuneration for audit of subsidiary entities
Amortisation of capitalised software development (note 11)
Amortisation of computer software (note 11)
Depreciation of property, plant and equipment (note 12)
Depreciation of right of use assets (note 13)
Bad debts written off
Impairment provision recognised on receivables at amortised cost (note 9)
Rent
Salaries and wages
Kiwisaver contributions
Share option expenses
2020
$’000
2,227
7,169
68
35
23
36
-
-
517
68
175
503
33
77
53
2,529
100
91
2019
$’000
2,758
5,551
64
35
-
19
295
17
333
48
77
-
-
50
517
2,323
105
111
Interest income and expense
Finance income includes interest income, which is recognised
as it accrues in profit or loss, using the effective interest method,
and fair value gain on adjustment to contingent consideration
liability, which is measured at fair value through profit or loss.
Finance expense includes interest expense on liabilities, and
imputed interest on deferred consideration liability.
Foreign currency translation gains and losses
Transactions in foreign currencies are initially recorded in the
functional currency by applying the exchange rates ruling
at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the rate
of exchange ruling at the reporting date, with any gain or loss
being recognised in the profit or loss.
Non-monetary items that are measured in terms of historical
cost in a foreign currency are translated using the exchange
rate as at the date of the initial transaction. Non-monetary
items measured at fair value in a foreign currency are translated
using the exchange rates at the date when the fair value was
determined.
STRAKER TRANSLATIONS FY20 ANNUAL REPORT
42
43
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
7. INCOME TAX EXPENSE
a) Income tax recognised in profit or loss
Current tax expense
Deferred tax credit
Total tax credit
2020
$’000
(163)
353
190
2019
$’000
(37)
192
155
The income tax expense comprises current and deferred tax.
The income tax expense is recognised in profit and loss, except
to the extent that it relates to items recognised directly in other
comprehensive income, in which case it is recognised in other
comprehensive income.
Deferred income tax is provided on temporary differences
arising on investments in subsidiaries except where the timing
of the reversal of the temporary difference is controlled by the
Group and it is probable that the temporary difference will not
reverse in the foreseeable future.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted
at the reporting date, and any adjustment to tax payable in
respect of previous years.
Deferred tax is measured at the tax rates that are expected to be
applied to the temporary differences when they reverse, based
on laws that have been enacted or substantively enacted by the
reporting date.
Deferred tax is provided on temporary differences between
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts for taxation purposes.
Deferred tax is not recognised for the following temporary
differences: the initial recognition of assets or liabilities in a
transaction that is not a business combination that affects
neither accounting nor taxable profit or loss.
The total charge for the period can be reconciled to the
accounting profit as follows:
Loss before tax
Income tax expense calculated at 28% (2019: 28%)
Different tax rates applied in overseas jurisdictions
Tax losses not recognised
Income tax credit/(expense) recognised in profit or loss
2020
$’000
(2,712)
(759)
7
562
190
2019
$’000
(4,484)
(1,256)
37
1,374
155
b) Deferred tax liability
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 28% (2019: 28%).
Deferred tax
Deferred tax liabilities arising on business combinations
Reversal of temporary differences
At 31 March
Recognised deferred tax liabilities
Intangible assets – arising on business combinations
At 31 March
2020
$’000
1,296
(353)
943
(943)
(943)
Restated (Note 25)
2019
$’000
993
(192)
801
(801)
(801)
7. INCOME TAX EXPENSE (continued)
Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset current tax liabilities and assets, and
they relate to income taxes levied by the same tax authority on
the same taxable entity, or on different entities, but they intend
to settle current tax assets and liabilities on a net basis.
extent that it is no longer probable that the related tax benefit
will be realised.
A deferred tax asset has not been recognised by the Group
because the Directors consider that it is not probable that the
related tax benefit will be recognised, due to a recent history of
losses.
The deferred tax liability in the prior year has been restated as
a result of the finalisation of the recording of the acquisition of
Straker Media SL (previously ComTranslations Online SL) (note
25).
The value of deferred tax asset not recognised as at 31 March
2020 was $1,149,619 (2019: $1,046,215). The deferred tax asset
not recognised is comprised of the effect of the tax benefit of
operating losses.
A deferred tax asset is recognised to the extent that it is
probable that future taxable profits will be available against
which temporary differences can be utilised. Deferred tax assets
are reviewed at each reporting date and are reduced to the
c) Losses brought forward
At 31 March 2020 the Group had accumulated tax losses to
carry forward for tax purposes of $4,105,783
(2019: $3,736,483).
8. EARNINGS PER SHARE
Earnings per share has been calculated based on shares and
share options issued at the respective measurement dates.
Numerator
Loss for the year after tax (“N”)
Denominator
Weighted average number of ordinary shares used in basic EPS (“D1”)
Period end number of ordinary shares
Effects of: Employee share options
Period end number of shares used in diluted EPS (“D2”)
Basic earnings per share (N/D1 x 100)
Diluted earnings per share (N/D2 x 100)
2020
$’000
(2,522)
’000
52,908
53,101
235
53,336
Cents
(4.77)
(4.73)
2019
$’000
(4,329)
’000
39,535
52,598
2,436
55,034
Cents
(10.95)
(7.87)
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 44
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
9 TRADE RECEIVABLES
Gross trade receivables
Impairment allowance
Trade receivables
Opening balance of impairment provision
Additional expense identified
2020
$’000
6,009
(155)
5,854
78
77
155
2019
$’000
3,986
(78)
3,908
28
50
78
The Group applies the NZ IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss
provision for trade receivables and contract assets. To measure expected credit losses, trade receivables and contract assets are
grouped based on similar credit risk and aging. The contract assets have similar risk characteristics to the trade receivables for similar
types of contracts.
The expected loss rates are based on the Group’s historical credit losses experienced over the three year period prior to the period end.
The historical loss rates are then adjusted for current and forward-looking information on macroeconomic factors affecting the Group’s
customers. The Group has identified the impact of the Covid-19 pandemic, gross domestic product (GDP), unemployment rate and
inflation rate as the key macroeconomic factors in the countries where the Group operates.
10. OTHER ASSETS AND PREPAYMENTS
Contract asset
Deposit
Prepayments
Tax receivables
10.1 CONTRACT ASSET
Opening balance
Invoiced in the year
Un-invoiced revenue at 31 March
Notes
10.1
Notes
2.c.v
2020
$’000
1,074
17
321
106
1,518
2020
$’000
866
(866)
1,074
1,074
2019
$’000
866
131
309
54
1,360
2019
$’000
588
(588)
866
866
45
2019
$’000
1,521
740
(9)
2,252
(290)
(333)
(623)
1,629
11. INTANGIBLE ASSETS
CAPITALISED SOFTWARE DEVELOPMENT
Cost
Opening Balance
Additions in the year
Impairment
Closing Balance
Amortisation
Opening Balance
Charge recognised in statement of comprehensive income
Closing Balance
Net book value
2020
$’000
2,252
1,192
-
3,444
(623)
(517)
(1,140)
2,304
Research costs are expensed as incurred. Costs associated with maintaining computer software programs are recognised as an
expense as incurred. Costs that are directly associated with the production of identifiable and unique software products controlled by
the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets
where the following criteria are met:
it is technically feasible to complete the software so that it will be available for use;
•
• management intends to complete the software and use or sell it;
•
•
• adequate technical, financial and other resources to complete the development and to use or sell the software are available; and
•
there is an ability to use or sell the software;
it can be demonstrated how the software will generate probable future economic benefits;
the expenditure attributable to the software during its development can be reliably measured.
Other development expenditures that do not meet these criteria are expensed when incurred. Development costs previously
recognised as expenses are not recognised as assets in a subsequent period. Development costs that have a finite useful life that have
been capitalised are amortised from the commencement of the time at which they are available for use on a straight-line basis over
the period of its expected benefit, not exceeding five years.
Capitalised development costs are carried at cost less accumulated amortisation and impairment losses.
Capitalised development costs are amortised over the periods the Group expects to benefit from utilising the software to manage
translation service projects (currently five years).
The amortisation expense is included within the administration expenses in profit or loss.
Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised
in profit or loss as incurred.
Additions in the year include salaries and wages of $844,371 (2019: $652,735).
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 46
47
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
11. INTANGIBLE ASSETS (continued)
CAPITALISED SOFTWARE DEVELOPMENT (continued)
COMPUTER SOFTWARE
Cost
Opening Balance
Acquired as part of a business combination (Refer to note 24)
Additions in the year
Closing Balance
Amortisation
Opening Balance
Charge recognised in statement of comprehensive income
Closing Balance
Net book value
Computer software is amortised over 2-4 years on a straight line basis
.
Assets arising as a result of acquisitions
During the year, goodwill and customer relationship assets
(CRA) were recognised as a result of the acquisition of two
subsidiaries (refer note 24) as follows:
CUSTOMER RELATIONSHIP INTANGIBLE ASSETS
Cost
Opening Balance
Acquired as part of a business combination (Refer to note 24)
Closing Balance
Amortisation
Opening Balance
Charge recognised in statement of comprehensive income
Closing Balance
Net book value
2020
$’000
281
31
8
320
(124)
(68)
(192)
128
2020
$’000
4,014
1,659
5,673
(1,149)
(1,155)
(2,304)
3,369
2019
$’000
162
108
11
281
(76)
(48)
(124)
157
Restated (Note 25)
2019
$’000
2,052
1,962
4,014
(467)
(682)
(1,149)
2,865
11. INTANGIBLE ASSETS (continued)
GOODWILL
Cost
Opening Balance
Acquired as part of a business combination (Refer to note 27)
Closing Balance
Impairment
Closing Balance
Net book value
Net book value
Restated (Note 25)
2019
$’000
2,218
3,746
5,964
-
5,964
2020
$’000
5,964
2,425
8,389
(799)
(799)
7,590
Capitalised
Development
Software
Computer
Software
Customer
Relationship
Asset
Goodwill
Total
At 31 March 2020
At 31 March 2019 (restated)
2,304
1,629
128
157
3,369
2,865
7,590
5,964
13,391
10,615
Intangibles acquired in a business combination
Intangibles are recognised on business combinations, if they
are separately identifiable from the acquired entity or arise from
other contractual/legal rights. Intangibles acquired through a
business combination are recognised at fair value as at the date
of acquisition. Following initial recognition, the cost model is
applied.
The significant intangibles recognised by the Group, their useful
economic lives and the methods used to determine the cost of
intangibles acquired in a business combination are as follows:
Customer relationships
Customer relationships acquired separately or in a business
combination are initially measured at cost. The cost of an
intangible asset acquired in a business combination is its fair
value as at the date of acquisition.
Following initial recognition, customer relationship intangible
assets are carried at cost less any accumulated amortisation and
any accumulated impairment losses. The useful economic lives
of customer relationships are between 3 and 7 years dependent
on the underlying contracts, historical information and forecast
revenues.
In the current year, management commissioned an
independent valuation of an acquired company’s customer
relationships in relation to the business combinations where the
business combination accounting has been finalised.
The acquired company is On-Global Language Marketing
Services SL (“on-Global”). Management has also determined a
provisional estimated valuation of the customer relationships
associated with the acquisition of The New Zealand Translation
Centre Limited (“NZTC”) of $390,000.
The fair value at the date of acquisition is determined by
estimated discounted cash flow valuation using the Multi-
Period Excess Earnings Method which is a financial valuation
model used in valuing customer-related intangible assets that
estimates revenues and cash flows derived from the intangible
asset and then deducts portions of the cash flow that can be
attributed to supporting assets, such as a brand name or fixed
assets, that contributed to the generation of the cash flows.
The resulting cash flow, which is attributable solely to the
subject intangible asset, is then discounted at a rate of return
commensurate with the risk of the asset to calculate a present
value.
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 48
49
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
11. INTANGIBLE ASSETS (continued)
Key assumptions and inputs are as follows:
Revenue was based on pre-acquisition historical financial
information adjusted for known losses and customers at the
end of contracts.
Annual customer growth rates
Gross margin
Earnings before interest, tax, depreciation and
amortisation rate
Discount rate %
Customer relationship useful economic life
On-Global
0.7%
53% - 55%
18%
7.9%
4 years
Goodwill
Goodwill represents the excess of the cost of a business
combination over the total fair value of the identifiable assets
(including intangibles), liabilities and contingent liabilities
acquired at acquisition date.
Cost comprises the fair value of assets given, liabilities assumed,
and equity instruments issued, plus the amount of any non-
controlling interests in the acquiree. Contingent consideration
is included in cost at its fair value at acquisition date and, in the
case of contingent consideration classified as a financial liability,
remeasured subsequently through profit or loss.
Direct costs of acquisition are recognised immediately as an
expense.
Goodwill is capitalised as an intangible asset with any
impairment in carrying value being charged to the profit or
loss. Where the fair value of identifiable assets, liabilities and
contingent liabilities exceed the fair value of consideration paid,
the excess is credited in full to profit or loss on acquisition date.
Intangible asset impairment
The useful lives of intangible assets are assessed to be either
finite or indefinite. Intangible assets with finite lives are
amortised over the useful life and tested for impairment
whenever there is an indication that the intangible asset may be
impaired. The amortisation period and the amortisation method
for an intangible asset with a finite useful life are reviewed at
least at each financial year-end. Changes in the expected useful
life or the expected pattern of consumption of future economic
benefits embodied in the asset are accounted for prospectively
by changing the amortisation period or method, as appropriate,
which is a change in accounting estimate. The amortisation
expense on intangible assets with finite lives is recognised in
profit or loss.
Customer relationship intangible assets are amortised over 3-7
years on a straight line basis.
11. INTANGIBLE ASSETS (continued)
GOODWILL IMPAIRMENT
The carrying amount of goodwill has been allocated to the cash generating units (CGUs) as follows:
31March 2020
31March 2019
Eurotext
$’000
449
449
Elanex
$’000
970
1,769
MSS
$’000
1,797
1,797
Eule
$’000
930
930
Com
$’000
1,020
1,085
On-Global
$’000
1,520
-
NZTC
904
-
Total
$’000
7,590
6,030
The Group has allocated goodwill to the above acquired subsidiaries, as the smallest identifiable asset or group of assets that each
generate cash inflows that are largely independent of the cash inflows from other assets and subsidiaries in the Group. The CGUs have
been defined in note 22.
The Group is required to test, on an annual basis, whether goodwill has suffered any impairment, by comparing the carrying amount
of each CGU to its recoverable amount.
The recoverable amount of all CGUs have been determined based on value-in-use calculations. The cash flow projections used in the
value in use calculations are based on management’s forecasts for the year ending 31 March 2021, adjusted for the expected impact
of COVID-19, which provides for a material decline on forecast revenue for most of the cash generating units.
Cash flows beyond the five-year period are extrapolated using the terminal growth rates stated below.
The key assumptions and inputs to the value in use calculations are as follows.
Eurotext
Elanex
MSS
Eule
Com On-Global
NZTC
Annual revenue growth rates
-20% - 10% -27% - 2%
-13% - 5%
-11% -3%
-8% - 69%
-2% - 26% -23% - 16%
Gross margin rate
Discount rate %
Terminal Value
48%
9.50%
0.08%
46%
11.00%
2.1%
57%
49% - 50%
51% 55% - 56% 40% - 43%
9.63%
0.58%
9.50%
0.04%
9.63%
0.58%
9.63%
1.05%
12.90%
0.59%
Based on the value in use calculations, there is no impairment of goodwill other than in respect of the acquisition of subsidiary
company, Elanex Inc. As a result of the dissolution of a major customer in the financial sector and the impact of the Covid-19 pandemic
on economic activity globally, goodwill has been impaired by $0.8m (see note 2.c.i). The recoverable value of the Elanex CGU at 31
March 2020 has been determined as $1.73m.
Management has determined that there are other reasonably possible changes in the key assumptions on which management
has based its determination of the other CGUs’ recoverable amounts that would cause the CGU’s carrying amount to exceeds its’
recoverable value.
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 50
51
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
12. PLANT AND EQUIPMENT
2020
Cost
Balance at 1 April 2019
From acquisitions (note 24)
Additions
Disposals
Balance at 31 March 2020
Accumulated Depreciation
Balance at 1 April 2019
Depreciation charge for the year
Disposals
Balance at 31 March 2020
2019
Cost
Balance at 1 April 2018
From acquisitions (note 25)
Additions
Disposals
Balance at 31 March 2019
Accumulated Depreciation
Balance at 1 April 2018
Depreciation charge for the year
Disposals
Balance at 31 March 2019
Net book value
At 31 March 2020
At 31 March 2019
At 31 March 2018
Motor
Vehicles
$’000
Furniture and
Fittings
$’000
Leasehold
Equipment
$’000
Computer
Equipment
$’000
Total
$’000
48
-
-
(41)
7
7
2
(7)
2
78
21
22
(4)
117
44
16
(4)
56
23
3
42
-
68
6
6
-
12
405
19
177
(25)
576
283
151
(25)
409
554
43
241
(70)
768
340
175
(36)
479
Motor
Vehicles
$’000
Furniture and
Fittings
$’000
Leasehold
Equipment
$’000
Computer
Equipment
$’000
Total
$’000
-
48
-
-
48
-
7
-
7
5
41
-
60
6
12
-
78
32
12
-
44
61
34
28
19
-
4
-
23
4
2
-
6
56
17
15
297
44
68
(4)
405
230
56
(3)
283
167
122
67
376
98
84
(4)
554
266
77
(3)
340
289
214
110
12. PLANT AND EQUIPMENT (continued)
Owned assets
All plant and equipment are stated at historical cost less
accumulated depreciation and impairment losses. Historical
cost includes expenditure that is directly attributable to the
acquisition of the items bringing them to the condition and
location intended by management.
Where material parts of an item of plant and equipment have
different useful lives, they are accounted for as separate items of
plant and equipment.
Subsequent costs
Subsequent costs are included in the asset’s carrying amount
or recognised as a separate asset, as appropriate, only when it
is probable that future economic benefits associated with the
item will flow to the Group and the cost of the item can be
measured reliably. All other costs are charged to profit or loss
during the financial period in which they are incurred.
Depreciation
Depreciation is recognised in profit or loss over the estimated
useful lives of each part of an item of plant and equipment.
The gain or loss arising on the disposal or retirement of an
item of plant and equipment is determined as the difference
between the sales proceeds and the carrying amount of the
asset and is recognised in profit or loss.
The following depreciation rates are used in both years:
•
•
•
•
Computer equipment
Furniture and fittings
Leasehold equipment
Vehicles
25% -50% Straight Line
25% -50% Straight Line
8% -10% Straight Line
20% -25% Straight Line
The residual value, depreciation method and estimated useful
life of plant and equipment are reassessed at each reporting
date.
13. RIGHT-OF-USE ASSETS
At 1 April 2019
Additions
Amortisation
At 31 March 2020
Equipment
$’000
Property
$’000
Motor vehicles
$’000
-
12
(1)
11
1,132
376
(486)
1,022
-
32
(16)
16
Total
$’000
1,132
420
(503)
1,049
Details of the right-of-use asset policy are contained in notes 2.b and 17.
14. TRADE PAYABLES
Trade payables
2020
$’000
682
2019
$’000
718
No interest is incurred on the trade payables. The Group has financial risk management policies in place to ensure that all payables
are paid within the credit timeframe.
STRAKER TRANSLATIONS FY20 ANNUAL REPORT
52
53
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
15. SUNDRY CREDITORS AND ACCRUALS
Accruals
Translator costs accrual
Goods and services tax
Contract liability
16. EMPLOYEE PROVISIONS
Provision for holiday pay
2020
$’000
593
2,120
405
600
3,718
2020
$’000
529
17. LEASE LIABILITIES
At 1 April 2019
Additions
Interest expense
Lease payments
Effect of change in foreign exchange rates
At 31 March 2020
Equipment
$’000
Property
$’000
Motor vehicles
$’000
-
12
-
(1)
-
11
1,132
382
62
(518)
51
1,109
-
32
1
(16)
3
20
2019
$’000
809
1,686
207
145
2,847
2019
$’000
363
Total
$’000
1,132
426
63
(535)
54
1,140
NZ IFRS 16 distinguishes between leases and service contracts
on the basis of whether the use of an identified asset is
controlled by the customer. Control is considered to exist if
the customer has the right to obtain substantially all of the
economic benefits from the use of an identified asset and the
right to direct the use of that asset.
All leases are accounted for by recognising a right-of-use asset
and a lease liability except for:
• Leases of low value assets; and
• Leases with a term of 12 months or less.
Lease liabilities are measured at the present value of the
contractual payments due to the lessor over the lease term,
with the discount rate determined by reference to the rate
inherent in the lease unless (as is typically the case) this is not
readily determinable, in which case the Group’s incremental
borrowing rate on commencement of the lease is used.
Variable lease payments are only included in the measurement
of the lease liability if they are dependent on an index or rate. In
such cases, the initial measurement of the lease liability assumes
the variable element will remain unchanged throughout the
lease term. Other variable lease payments are expensed in the
period to which they relate.
recognised in profit or loss. The lease liability is then further
adjusted to ensure its carrying amount reflects the amount of
the renegotiated payments over the renegotiated term, with
the modified lease payments discounted at the rate applicable
on the modification date. The right-of-use asset is adjusted by
the same amount.
For contracts that both convey a right to the Group to use
an identified asset and require services to be provided to the
Group by the lessor, the Group has elected to account for the
entire contract as a lease, i.e. it does not allocate any amount
of the contractual payments to, and account separately for, any
services provided by the supplier as part of the contract.
Nature of leasing activities (in the capacity as lessee)
The Group leases a number of properties in the jurisdictions
in which it operates. In some jurisdictions it is customary for
lease contracts to provide for payments to increase each year by
inflation and in others to be reset periodically to market rental
rates.
The Group also leases certain items of plant and equipment,
being vehicles. Leases of vehicles comprise only fixed payments
over the lease terms.
The percentages in the table below reflect the current
proportions of lease payments that are either fixed or variable.
The sensitivity reflects the impact on the carrying amount of
lease liabilities and right-of-use assets if there was an uplift of
2% on the reporting date to lease payments that are variable.
17. LEASE LIABILITIES (continued)
On initial recognition, the carrying value of the lease liability
may also include:
• amounts expected to be payable under any residual value
guarantee;
• the exercise price of any purchase option granted in favour of
the Group if it is reasonably certain to exercise that option;
• any penalties payable for terminating the lease, if the term
of the lease has been estimated on the basis of termination
option being exercised.
Right of use assets are initially measured at the amount of the
lease liability, reduced for any lease incentives received, and
increased for:
• lease payments made at or before commencement of the
lease;
initial direct costs incurred; and
•
• the amount of any provision recognised where the Group
is contractually required to dismantle, remove or restore the
leased asset.
Subsequent to initial measurement, lease liabilities increase as
a result of interest charged at a constant rate on the balance
outstanding and are reduced for lease payments made. Right-
of-use assets are amortised on a straight-line basis over the
remaining term of the lease or over the remaining economic life
of the asset if, rarely, this is judged to be shorter than the lease
term.
When the Group renegotiates the contractual terms of a lease
with the lessor, the accounting depends on the nature of the
modification:
• if the renegotiation results in one or more additional assets
being leased for an amount commensurate with the standalone
price for the additional rights-of-use obtained, the modification
is accounted for as a separate lease in accordance with the
above policy
• in all other cases where the renegotiation increases the
scope of the lease (whether that is an extension to the lease
term, or one or more additional assets being leased), the lease
liability is remeasured using the discount rate applicable on the
modification date, with the right-of-use asset being adjusted by
the same amount
• if the renegotiation results in a decrease in the scope of the
lease, both the carrying amount of the lease liability and right-
of-use asset are reduced by the same proportion to reflect
the partial of full termination of the lease with any difference
STRAKER TRANSLATIONS FY20 ANNUAL REPORT
54
55
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
17. LEASE LIABILITIES (continued)
Year Ended 31 March 2020
Equipment leases with fixed payments
Property leases with payments linked to inflation
Property leases with periodic uplifts to market rentals
Property leases with fixed payments
Vehicle leases
Lease
Contracts
Number
Fixed
payments
%
Variable
payments
%
Sensitivity
$’000
18. CONSIDERATION LIABILITIES
18.1 DEFERRED CONSIDERATION LIABILITIES
1
7
3
2
2
15
0%
-
-
4%
3%
7%
52%
41%
-
-
±5
±3
-
-
Due within one year
Due after more than one year
Total
93%
±8
Movement during the year
The Group has adopted NZ IFRS 16 from 1 April 2019 but
has not restated comparatives for the 2019 reporting period
as permitted under the specific transition provisions in the
standard.
On adoption of NZ IFRS 16, the Group recognised lease liabilities
in relation to leases which had previously been classified as
operating leases under the principles of NZ IAS 17 Leases.
These liabilities were measured at the present value of the
remaining lease payments, discounted using the incremental
borrowing rate as of 1 April 2019. Adjustment for different
treatment of property lease renewal option between NZ
IFRS 16 and NZ IAS 17. NZ IFRS 16 requires management to
consider and to adjust for lease renewal options included
in lease agreements it is likely to exercise. NZ IAS 17, which
is superseded by IFRS 16, only calculates lease operating
commitments up to the first right of renewal.
The weighted average incremental borrowing rate applied to
the lease liabilities on 1 April 2019 was 5.26%.
The aggregate lease liability recognised in the Statement of
financial position at 1 April 2019 and the Group’s operating
lease commitment at 31 March 2019 can be reconciled as
follows:
Operating lease commitment at 1 April 2019
Effect of discounting those lease commitments
Adjustment for different treatment of property lease renewal option
Effect of leases not recognised at 31 March 2019
Lease liability recognised at 1 April 2019
$’000
546
(28)
558
56
1,132
The associated right-of-use assets were increased by $1.13m on 1 April 2019 (see note 13). In applying the modified retrospective
approach, the Group has taken advantage of the following practical expedients:
• Initial direct costs have not been included in the measurement of the right-of-use asset as at the date of initial application.
• Hindsight has been used for the purposes of measuring the right-of-use asset. Therefore, it has been measured based on prevailing
estimates at the date of the initial application and not retrospectively by making estimates and judgements (such as the term of
leases) based on circumstances on or after the lease commencement date.
Opening balance
Paid in year
Reclassified from contingent consideration liabilities at year end
Closing balance
18.2 CONTINGENT CONSIDERATION LIABILITIES
Due within one year
Due after more than one year
Total
Movement during the year
Opening balance
On acquisition 1
Paid in year
Reclassified to deferred consideration liabilities at year end
Gain on fair value to profit or loss (finance income)
Unwinding of imputed interest on contingent consideration
Foreign exchange revaluation
Closing balance
2020
$’000
561
-
561
230
(230)
561
561
2020
$’000
1,419
872
2,291
2,396
1,371
(697)
(561)
(535)
111
206
2,291
2019
$’000
230
-
230
287
(287)
230
230
Restated
2019
$’000
1,039
1,357
2,396
944
2,862
(864)
(230)
(423)
107
-
2,396
1 Note 24 details the business combinations completed in the current period for On-Global and NZTC.
STRAKER TRANSLATIONS FY20 ANNUAL REPORT
56
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
18. CONSIDERATION LIABILITIES
NZTC
In relation to the acquisition, a contingent consideration
liability of NZD $0.25m is payable upon the finalisation of these
financial statements as a result of the successful achievement of
revenue and adjusted profit targets on 31 March 2020.
A contingent consideration liability of NZD $0.3m is payable
upon the successful achievement of revenue and margin
targets on 31 March 2021. This contingent liability has not been
recognised as the Group considers it unlikely that the revenue
required will be achieved due to the forecast impact of the
Covid-19 pandemic on the company’s revenues.
A further contingent earn out liability of NZD $0.3m is payable
upon the successful achievement of revenue and margin
targets on 31 March 2022. The maximum earn out liability of
NZD $0.3m has been recognised, is payable in NZD ($) and has
been discounted based on the Group's incremental borrowing
rate and the number of years remaining under the earn out
period. The Group considers that revenues will have recovered
sufficiently from the effects of the Covid-19 pandemic to meet
the required threshold.
On-Global
In relation to the acquisition, a contingent earn out liability of
Euro €0.25m is payable upon the successful achievement of
revenue targets on 13 June 2020. A further earn out liability of
Euro €0.25m is payable upon the successful achievement of
revenue targets on 13 June 2021.
The maximum contingent earn out liability of €0.5m has been
accrued, is payable in EUR (€) and has been discounted based
on the Group’s incremental borrowing rate and the number
of years remaining under the earn out period. The forecast
impact of the Covid-19 pandemic has been considered in the
assessment of expected revenues.
Straker Media SL (Spain)
(previously ComTranslations Online SL – “COM”)
In relation to the acquisition of COM in the financial year ended
31 March 2019, an earn out liability of €0.130m is payable as a
result of the successful achievement of revenue targets on 29
February 2020. A deferred consideration liability of this amount
has been reclassified from contingent consideration liabilities.
The deferred consideration liability is payable in April 2020.
A previously contingent loan repayment of €0.182m also
became payable as a result of the successful achievement of
revenue targets on 29 February 2020. Payment of this amount
to be made with the earn out payment.
A further earn out liability of €0.125m is payable upon the
successful achievement of revenue targets on 28 February
2021. A contingent consideration liability of €0.1m has been
recognised based on forecast revenues. The liability is payable
in EUR and has been discounted based on the Group’s
incremental borrowing rate and the number of years remaining
under the earn out period. The forecast impact of the Covid-19
pandemic has been considered in the assessment of expected
revenues.
Straker Germany GmbH
(previously Eule Lokalisierung GmbH – “Eule”)
In relation to the acquisition of Eule in the financial year ended
31 March 2019, a maximum contingent earn out liability
of €0.257m is payable upon the successful achievement of
revenue targets on 30 June 2020. No contingent earn out
liability has been recognised at 31 March 2020 as the Group
considers it unlikely that the revenue required for the earn out
will be achieved. In the period an amount of $0.535m has been
taken to profit or loss as a gain on fair value.
The Group has an unrecognised contingent liability of an
additional €0.257m should Eule achieve its full revenue targets
and the earn out becomes payable.
Management System Solutions SL (“MSS”)
In relation to the acquisition of MSS in the financial year ended
31 March 2019, a contingent earn out liability of €0.348m is
payable upon the forecast achievement of revenue targets on
1 June 2020. This liability has been recognised in full.
The calculation is based on the potential revenue forecast
for the year to 31 May 2020, is payable in EUR and has been
discounted based on the Group’s incremental borrowing rate
and the number of years remaining under the earn out period.
The forecast impact of the Covid-19 pandemic has been
considered in the assessment of expected revenues.
All contingent consideration liabilities have been discounted to
fair value based on the Group’s incremental borrowing rate and
translated to NZD at the year-end exchange rate.
57
2019
$’000
10,895
20,091
172
10,507
(1,542)
40,123
10,507
(10,507)
-
19. SHARE CAPITAL
Ordinary capital
Balance at beginning of the year
Proceeds from issue of ordinary shares during the year
Ordinary shares issued during the year – consideration as part of business combination
Converted redeemable preference capital
Costs of share issue
Balance at end of the year
Redeemable preference capital
Balance at beginning of the year
Converted to ordinary shares during the year
Balance at end of the year
2020
$’000
40,123
72
604
-
(13)
40,786
-
-
-
Total Share Capital
40,786
40,123
Ordinary shares
Share capital at the beginning of the year
Converted redeemable preference capital
Share split of 10:1
Ordinary shares issued during the year
Ordinary shares issued during the year – consideration as part of business combination
Balance at end of the year
Preference shares
Numbers of Shares at the beginning of the year
Converted to ordinary shares during the year
Balance at end of the year
No. of Shares
No. of Shares
52,598,610
-
52,598,610
-
103,920
398,830
53,101,360
2,905,399
1,123,995
4,029,394
36,264,546
12,191,170
113,500
52,598,610
-
-
-
1,123,995
(1,123,995)
-
The company has issued 53,101,360 ordinary shares (2019: 52,598,610) at year end. These shares have no par value. Ordinary shares
have equal voting rights and share equally in dividends and surplus on winding up.
The Company has on issue nil convertible preference shares (2019: 0). The convertible preference shares had equal voting rights
and shared equally in dividends as ordinary shares but ranked ahead of ordinary shares on wind up. During the prior year, 1,123,995
convertible preference shares were converted to ordinary shares prior to the IPO.
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 58
59
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
20. CAPITAL MANAGEMENT
The Group’s capital includes share capital and retained earnings.
The Group’s policy is to maintain a strong share capital base
to maintain investor, creditor and market confidence and to
sustain future development of the business.
The Group’s policies in respect of capital management and
allocation are reviewed regularly by the Board of Directors.
There have been no material changes in the Group’s
management of capital during the period.
21. EVENTS AFTER THE REPORTING PERIOD
The Group received COVID-19 Wage Subsidies from New
Zealand government department Work and Income of $0.4m
on 6 April 2020. There were no reported significant events after
balance sheet date as at 31 March 2020.
22. FINANCIAL RISK MANAGEMENT
The Group has exposure to the following risks from its use of
financial instruments:
• Credit risk
•
•
Liquidity risk; and
Foreign exchange risk
In common with all other businesses, the Group is exposed to
risks that arise from its use of financial instruments. This note
describes the Group's objectives, policies and processes for
managing those risks and the methods used to measure them.
There have been no substantive changes in the Group's
exposure to financial instrument risks, its objectives, policies
and processes for managing those risks or the methods used to
measure them from previous periods unless otherwise stated in
this note.
Principal financial instruments
The principal financial instruments used by the Group, from
which financial instrument risk arises, are as follows:
Trade receivables
Trade payables, accruals and translator costs accrual
• Cash and cash equivalents
•
•
• Deferred consideration liability
• Contingent consideration liability
Financial risk management objectives, policies and
processes
The Group manages their exposure to key financial risks,
including credit risk, liquidity risk and foreign exchange risk in
accordance with the Group’s financial risk management policies.
The objective of these policies is to support the delivery of
the Group’s financial targets whilst protecting future financial
security.
22. FINANCIAL RISK MANAGEMENT (continued)
The Board reviews and agrees policies for managing each of these risks as summarised below.
i) Financial instruments by category
31 March 2020
Financial assets
Cash and cash equivalents
Trade receivables
Total
Financial liabilities
Trade payables
Accruals
Translator costs accrual
Deferred consideration
Contingent consideration
Lease liabilities
Total
Assets at
Amortised
Cost
$’000
Liabilities at
Amortised
Cost
$’000
Fair value
through Profit
or Loss
$’000
Total
Carrying
Amount
$’000
11,228
5,854
17,082
-
-
-
-
-
-
-
-
-
-
(682)
(593)
(2,120)
(523)
-
(1,140)
(5,058)
-
-
-
-
-
-
-
(2,329)
-
(2,329)
Maturity analysis – Contractual liabilities
Trade payables
Accruals
Translator costs accrual
Deferred consideration
Contingent consideration
Lease liabilities
Current
Due 1-12m
Due 13-24 m Due 25-36m
682
593
2,120
-
-
-
3,395
-
-
-
523
1,457
402
2,382
-
-
-
-
872
489
1,361
-
-
-
-
-
249
249
11,228
5,854
17,082
(682)
(593)
(2,120)
(523)
(2,329)
(1,140)
(7,387)
Total
682
593
2,120
523
2,329
1,140
7,387
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 60
61
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
22. FINANCIAL RISK MANAGEMENT (continued)
i) Financial instruments by category (Continued)
31 March 2019
Financial assets
Cash and cash equivalents
Trade receivables
Total
Financial liabilities
Trade payables
Accruals
Translator costs accrual
Deferred consideration
Contingent consideration
Total
Maturity analysis
Trade payables
Accruals
Translator costs accrual
Deferred consideration
Contingent consideration
Assets at
Amortised
Cost
$’000
Liabilities at
Amortised
Cost
$’000
Fair value
through Profit
or Loss
$’000
Total
Carrying
Amount
$’000
17,669
3,908
21,577
-
-
-
-
-
-
-
-
-
(718)
(809)
(1,686)
(230)
-
(3,443)
-
-
-
-
-
-
-
(2,153)
(2,153)
Current
Due 1-12m
Due 13-24 m Due 25-36m
718
809
1,686
-
-
3,213
-
-
-
230
956
1,186
-
-
-
-
1,197
1,197
-
-
-
-
-
-
17,669
3,908
21,577
(718)
(809)
(1,686)
(230)
(2,153)
(5,596)
Total
718
809
1,686
230
2,153
5,596
Financial instruments not measured at fair value
Financial instruments not measured at fair value include cash and cash equivalents, trade receivables, trade payables, accruals and
deferred consideration. Due to their short term nature, the carrying value of each approximates their fair value.
Financial instruments measured at fair value
The fair value hierarchy of financial instruments measured at fair value is provided below.
Level 3
Financial liabilities
Contingent consideration liabilities
2020
$’000
2,329
2019
$’000
2,153
There are no Level 1 or Level 2 financial instruments. There were no transfers between levels during the year.
22. FINANCIAL RISK MANAGEMENT (continued)
Quantitative information on significant unobservable
inputs – Level 3
The Group manages its exposure to credit risk by:
The fair value of the Level 3 contingent consideration liabil-
ity has been determined by discounted cash flow valuation
technique. The fair value has been determined with reference
to unobservable inputs, including forecast revenue growth as
explained in note 16, and cost of debt of 6.4%. A 5% decrease in
the forecast revenue input has a $0.4m effect on the contingent
consideration liabilities recognised at fair value through profit
or loss. This is in relation to the On-Global and NZTC contingent
consideration liabilities at year end.
There was no change to the valuation technique used during
the year.
ii) Credit Risk
Credit risk is the risk of financial loss to the Group if a custom-
er or counterparty to a financial instrument fails to meet its
contractual obligations. Financial instruments which potentially
subject the Group to credit risk principally consist of cash and
cash equivalents and trade receivables.
In the normal course of business, the Group incurs credit risk
from debtors and transactions with banking institutions.
• holding bank balances with banking institutions with good
credit ratings; and
• maintaining credit control procedures over debtors.
The Group performs credit evaluations on all customers
requiring credit.
The maximum exposure at reporting date is equal to the total
carrying amount of cash and cash equivalents, and trade
receivables as disclosed in the Statement of Financial Position.
At each reporting date, trade receivables are reviewed for future
expected credit losses in accordance with note 30 (e).
The Group does not require any collateral or security to support
these financial instruments and other debts it holds due to the
low risk associated with the counterparties to these instru-
ments.
Trade receivables net of the provision as stated in note 9,
include balances more than 30 days past due of $1.091m. The
Group has received $0.44m in the post balance date period and
has determined that no further impairment of the remaining
balance is required.
A significant amount of cash and cash equivalents is held with
the following institutions:
AIB
ANZ New Zealand
Bankinter
Barclays
BBVA US
Citibank N.A.
Commerzbank
La Caixa
NAB
Ulster
Rating
BAA3
A1
BAA1
BAA2
A3
AA3
BAA2
BAA1
AA3
BAA3
2020
$000
953
4,709
898
484
270
369
349
1,056
860
777
2019
$000
680
13,998
-
106
146
572
357
576
109
431
STRAKER TRANSLATIONS FY20 ANNUAL REPORT
62
63
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
22. FINANCIAL RISK MANAGEMENT (continued)
iii) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty
in meeting its financial obligations associated with financial
liabilities as they fall due. The Group closely monitors its cash
inflows and cash requirements to manage the net position
in order to maintain an appropriate liquidity position. The
Directors consider that with the monies raised from the issue of
share capital in the prior year (note 19) that liquidity is sufficient
The following significant exchange rates applied during the year:
for the foreseeable future. Refer to financial instrument maturity
analysis in note 22 (i).
iv) Foreign currency risk
The Group has exposure to foreign exchange risk as a result of
transactions denominated in foreign currencies arising from
normal trading activities. The foreign currencies in which the
Group primarily transacts are Euros and US Dollars.
EUR
USD
Monthly average rate
Reporting date spot rate
2020
0.5800
0.6442
2019
0.5881
0.6797
2020
0.5437
0.5965
2019
0.6065
0.6804
The table below summarises the material foreign exchange exposure on the net monetary assets and liabilities of entity against the
significant foreign currencies in which the Group primarily transacts, expressed in NZD:
EUR
USD
Sensitivity analysis
2020
NZD’000
5,389
3,555
2019
NZD’000
7,325
7,600
Based on the net exposure above, the table below outlines the sensitivity of profit and equity to reasonably likely movements of that
currency to the NZD.
10% weakening in NZD/EUR
10% strengthening in NZD/EUR
10% weakening in NZD/USD
10% strengthening in NZD/USD
2020
NZD’000
318
(541)
187
(-323)
2019
NZD’000
403
(364)
410
(371)
23. GROUP SUBSIDIARIES
Subsidiary
Straker Europe Limited
STS Translations Inc.
Straker Translations Pty Limited
Straker Spain SL
Straker UK Limited
Eurotext Translations Limited (“Eurotext”)
Elanex Translations Inc. (“Elanex”)
Hong Kong Translations Limited
Management System Solutions SL (“MSS”)
Straker Germany GmbH (previously Eule Lokalisierung GmbH) (“Eule”)
Straker Media Sl (previously ComTranslations Online SL) (“Com”)
On-Global Language Marketing Services SL (“On-Global”)
New Zealand Translations Services Centre Limited (“NZTC”)
Country of
Incorporation
Ownership
Interest 2020
Ownership
Interest 2019
Ireland
United States of America
Australia
Spain
United Kingdom
Ireland
United States of America
Hong Kong
Spain
Germany
Spain
Spain
New Zealand
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
Management System Solutions SL, Straker Media SL and On-Global Language Marketing Services SL are 100% subsidiaries of Straker
Spain SL. Straker Spain SL, Straker UK Limited and Eurotext Translations Limited are 100% subsidiaries of Straker Europe Limited. Elanex
Translations Inc. is a 100% subsidiary of STS Translations Inc. (USA). All subsidiary companies are providers of translation services and
have 31 March balance dates other than On-Global which has a 31 December financial year end.
24. BUSINESS COMBINATIONS COMPLETED IN CURRENT PERIOD
During the year, the Group acquired two subsidiary companies,
On-Global Language Marketing Services SL effective from 1
June 2019 and The New Zealand Translation Centre Limited
effective from 1 February 2020.
These entities are providers of translation services and the
acquisitions were made as part of the growth strategy of the
Group. The goodwill for the acquisitions reflect intangibles
assets which do not qualify for separate recognition and include
synergies expected.
An element of the considerations is contingent on the
achievement of revenue targets and are detailed in note 18.
On-Global Language Marketing Services SL (“On-Global”)
On 14 June 2019 the Group obtained control of On-Global by
acquisition of 100% of the share capital of the company. On-
Global is a company incorporated in Spain on 13th March 2007.
As disclosed in the Condensed Interim Financial Report for
the half-year ended 30 September 2019, the value of the
identifiable net assets of the subsidiary companies was
determined on a provisional basis as the Group were still
obtaining historical information in respect of customers
acquired in the acquisitions. Other than adjustments required to
account for the fair value of customer list intangible assets and
associated deferred tax liabilities, and the subsequent change
to goodwill, changes to assets and liabilities acquired consist of
allowable offsets and applying appropriate accrual accounting
adjustments to the opening balances.
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 64
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
24. BUSINESS COMBINATIONS COMPLETED IN CURRENT PERIOD (continued)
24. BUSINESS COMBINATIONS COMPLETED IN CURRENT PERIOD (continued)
Details of the fair value of identifiable assets and liabilities, purchase consideration and goodwill are as follows.
All amounts are NZD’000.
The table below summarises the major classes of consideration transferred, and the recognised amounts of assets acquired, and
liabilities assumed at the acquisition dates. All amounts are in NZD’000.
Provisional fair value
$’000
Adjustment
$’000
Final fair value
$’000
On-Global
Cash
Debtors and other receivables
Fixed assets
Intangible assets
Creditors and accruals
Deferred tax liability
Total net assets
903
655
19
31
(573)
-
1,035
-
-
-
1,268
-
(355)
913
Cash paid (NZD)
Shares in Straker Translations Limited (note 19)
Fair value of contingent consideration liability on acquisition (note 18)
Total consideration
Goodwill (note 11)
903
655
19
1,299
(573)
(355)
1,948
2,139
503
826
3,468
1,520
Book value of assets and liabilities acquired
Cash
Debtors and other receivables
Property, plant & equipment
Intangible assets – customer relationship
Creditors and accruals
Deferred tax liability
Term debt
Total net assets
Cash paid
Shares in Straker Translations Limited (note 19)
Fair value of contingent consideration liability on acquisition (note 18)
Total consideration
Provisional goodwill (note 11)
65
NZTC
$’000
(33)
732
24
390
(513)
(109)
(591)
(100)
171
89
545
805
905
The New Zealand Translation Centre Limited (“NZTC”)
On 1 February 2020 the Group obtained control of NZTC by acquisition of 100% of the share capital of the company.
A fair value assessment of the acquiree’s assets and liabilities has not been undertaken at the date of signing and the identifiable assets
and liabilities are shown at book value. The Group has made a provisional estimate of the customer relationship asset in relation to
the business combination. Final valuation of any separately identifiable intangible assets, including customer relationships, will be
determined by an independent valuer.
The excess of purchase price over the identifiable assets and liabilities will be recorded as goodwill. The goodwill is attributable to
the assembled workforce and other synergies expected to arise, which do not qualify for separate recognition. As noted above, the
purchase price surplus shown is a provisional value, which is subject to change.
Goodwill is not expected to be tax deductible.
The revenue and profit included in profit and loss since acquisition for each subsidiary is shown below:
Revenue since date of acquisition
Profit before tax since date of acquisition
If the acquisition date for these business combinations had been 1 April 2019,
the pro forma revenue and profit for each would have been:
On-Global
$’000
2,394
151
NZTC
$’000
1,017
222
Total
$’000
$’000
373
Pro forma revenue for the year
Profit before tax since date of acquisition
2,978
387
4,831
412
7,809
799
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 66
67
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
25. BUSINESS COMBINATIONS COMPLETED IN PRIOR PERIOD
25. BUSINESS COMBINATIONS COMPLETED IN PRIOR PERIOD (continued)
Straker Media SL “COM” (Spain)
During the prior year, the Group acquired subsidiary company,
Straker Media SL (previously COM Translations Online SL –
“COM”). On 1 March 2019 the Group obtained control of COM
by acquisition of 100% of the share capital of the company.
COM is a provider of translation services and the acquisition was
made as part of the growth strategy of the Group. The goodwill
for the acquisition reflects intangible assets which do not
qualify for separate recognition and include synergies expected.
As disclosed in the 2019 Annual Report, the value of the
identifiable net assets of the subsidiary company had only
been determined on a provisional basis as the Group were
still obtaining historical information in respect of customers
acquired. There have been no changes to the fair value of the
identifiable net assets, other than the fair value of customer
relationship intangible assets and associated deferred tax
liabilities, and the subsequent change to goodwill.
Details of the restated fair value of identifiable assets and
liabilities, purchase consideration and goodwill are as follows.
All amounts are in NZD’000.
The Group measures goodwill at the acquisition date as:
• The fair value of consideration transferred; plus
• The recognised amount of any non-controlling interests in
•
the acquiree; plus
If the business combination is achieved in stages, the fair
value of the pre-existing equity interest in the acquiree; less
• The net recognised amount (fair value) of the identifiable
assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is rec-
ognised immediately in profit or loss.
Consideration transferred does not include amounts related
to the settlement of pre-existing relationships. Such amounts
generally are recognised in profit or loss.
Transactions costs, other than those associated with the issue
of debt or equity securities, that the Group incurs in connection
with a business combination are expensed as incurred.
Any contingent consideration payable is measured at fair
value at the acquisition date. If the contingent consideration is
classified as equity, then it is not remeasured and settlement is
accounted for within equity. Otherwise, subsequent changes
in the fair value of contingent considerations are recognised in
profit or loss.
26. RECONCILIATION OF NET PROFIT FOR THE YEAR WITH NET CASH FLOWS FROM OPERATING ACTIVITIES
Book value
Restated adjustment
Restated fair value
COM
Cash
Debtors and other receivables
Property, plant & equipment
Intangible assets
Creditors and accruals
Term debt
Customer relationship asset
Deferred tax liability
Total net assets
Cash paid (NZD)
-
227
33
12
(483)
(408)
-
-
(619)
-
-
-
-
-
-
427
(120)
307
-
227
33
12
(483)
(408)
427
(120)
(312)
33
675
708
1,020
Fair value of contingent consideration liability on acquisition (restated)
Total consideration transferred
Goodwill (restated)
The 2019 comparatives have been restated in these financial statements to include the effect of the adjustments noted.
Under paragraph 10(f ) of NZ IAS 1 Presentation of financial statements, this restatement would ordinarily require the presentation of
a third consolidated statement of financial position as at 1 April 2018. However, as the restatement of the provisional fair values would
have no effect on the statement of financial position as at that date, the Directors do not consider that this would provide useful
additional information and, in consequence, have not presented a third consolidated statement of financial position due to prior
period business combination
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control
is transferred to the Group. The Group controls an entity when it 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. In assessing control, the Group takes into
consideration potential voting rights that currently are exercisable.
Net loss after tax for the year
Adjusted for:
Non-cash items
Amortisation of capitalised software development
Amortisation of computer software
Amortisation of acquired intangibles
Impairment loss on trade receivables
Impairment of Intangibles
Depreciation
Asset written off
Imputed interest on deferred consideration liability
Fair value of contingent consideration liability on acquisition
Share options
Taxation
Unrealised foreign currency (gain)/loss
Non-operating expenses
IPO related costs
Acquisition & integration costs
IFRS 16 Rent Adjustment
Impact of changes in working capital items
Movement in debtors, prepayments and other debtors
Movement in creditors, accruals and other payables
Movement in tax provisions
Net cash flow from operating activities
2020
$’000
(2,522)
517
68
1,155
110
799
678
40
110
(553)
91
(289)
(1,285)
-
772
(535)
(826)
(129)
197
2019
$’000
(4,329)
333
48
682
50
-
77
10
108
(423)
111
(155)
627
1,953
593
-
(920)
44
126
(1,602)
(1,065)
Non-cash investing and financing activities
Significant non-cash transactions included in investing and financing activities include gain on fair value adjustment and unwinding of
imputed interest on deferred consideration liabilities, as detailed in note 18.
STRAKER TRANSLATIONS FY20 ANNUAL REPORT
68
69
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
27. RELATED PARTY TRANSACTIONS
28. SHARE OPTIONS
The Group’s related parties include its subsidiary companies as disclosed in note 23. All related party transactions within the Group
are eliminated on consolidation.
a) Transactions with other related parties during the normal course of business
No other related party transactions were noted during the year.
b) Transactions with directors and key management personnel
Directors
2020
Grant Straker
Stephen Donovan
Philip Norman
Tim Williams
Paul Wilson
Katrina Johnson
2019
Grant Straker
Stephen Donovan
Philip Norman
Tim Williams
Paul Wilson
Katrina Johnson
James Johnstone
Director Fees
(including
disbursements)
Consulting
Fees
Employee
Benefits –Defined
Contribution Plan
Salary & Bonus
-
65
116
65
66
58
370
-
85
-
-
-
-
85
12
-
-
-
-
-
12
353
-
-
-
-
-
353
Director Fees
(including
disbursements)
Consulting
Fees
Employee
Benefits –Defined
Contribution Plan
Salary & Bonus
-
46
65
47
45
36
20
259
-
77
-
-
-
-
77
11
-
-
-
-
-
11
290
-
-
-
-
-
290
Total
$’000
365
150
116
65
66
58
820
Total
$’000
301
123
65
47
45
36
20
637
As required by s(211)(f ) of the Companies Act 1993, the following key management personnel remuneration was paid out during the
year. All amounts are NZD’000.
Key management personnel including the Chief Executive Officer
Employee benefits
2020
$’000
1,590
2019
$’000
1,325
Options to subscribe for shares have been issued to certain Directors and employees of the Group. The purpose of this plan is to
incentivise, attract, retain and reward certain staff for their service to the Group and to motivate them to contribute to the growth and
profitability of the Group.
The options vest at each financial year end. All options are fully exercisable by 31 May 2022.
Number of Options
Average Exercise Price
Reconciliation of outstanding options
Balance at 31 March 2018
Issued during the year pre share split
Balance pre share split
Balance after share split at 10:1
Issued during the year post share split
Lapsed/Exercised during the year
Balance at 31 March 2019
Issued during the year
Lapsed/Exercised during the year
Balance at 31 March 2020
124,069
2,633
126,702
1,267,020
1,122,790
(95,266)
2,294,544
30,000
(188,953)
2,135,591
2020
$
$1.58
$1.58
30%
3 years
3%
25%
$10.90
$15.19
$10.99
$1.10
$1.64
$1.09
$1.36
$1.58
$0.99
$1.39
2019
$
$1.64
$1.64
30%
3 years
3%
25%
The fair value of options granted was measured based upon the Black Scholes pricing model.
Expected volatility is estimated by considering historic average share price and volatility.
Fair Value on grant date
Share Price at grant date (after share split 10:1)
Exercise Price
Expected Volatility
Expected Life
Risk Free rate
Black out factor (until 30 September 2020)
Directors
The following directors hold the following number of options as at balance date expressed at a blended average exercise price:
Name
Stephen Donovan
Katrina Johnson
Philip Norman
Grant Straker
Tim Williams
Paul Wilson
2020
Exercise Price
2020
Number of Options
2019
Exercise Price
2019
Number of Options
$1.41
$1.41
$1.41
$1.41
$1.41
$1.41
25,000
25,000
91,960
341,960
25,000
50,000
$1.32
$1.32
$1.32
$1.32
$1.32
$1.32
66,960
25,000
91,960
341,960
25,000
50,000
Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling
the activities of the Group, directly or indirectly. Key management personnel includes the Executive Team.
Stephen Donovan exercised 41,960 share options at $0.596 per share during the current year.
STRAKER TRANSLATIONS FY20 ANNUAL REPORT
70
71
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
28. SHARE OPTIONS (continued)
Key management personnel including the Chief Executive Officer
The key management personnel hold the following number of options as at balance date:
Key management personnel
$1.40
1,375
2020
Exercise Price
2020
Number of Options
‘000
2019
Exercise
Price
$1.40
2019
Number of Options
‘000
1,417
29. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Basis of Consolidation
The financial statements incorporate the financial statements
of the Parent and entities controlled by the Company (its
subsidiaries). Control exists when the Parent is exposed, or
has rights, to variable returns from its involvement with the
subsidiary and has the ability to affect those returns through its
power over the subsidiary.
The results of subsidiaries acquired or disposed of during the
period are included in the profit or loss from the effective
date of acquisition or up to the effective date of disposal, as
appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies
into line with those used by other members of the Group. All
intra-group transactions, balances, income and expenses are
eliminated in full on consolidation.
b) Foreign currency translation
Transactions entered into by Group entities in a currency other
than the currency of the primary economic environment in
which they operate (their "functional currency") are recorded at
the rates ruling when the transactions occur. Foreign currency
monetary assets and liabilities are translated at the rates ruling
at the reporting date. Exchange differences arising on the
retranslation of unsettled monetary assets and liabilities are
recognised immediately in profit or loss. Exchange differences
realised on settlement of monetary assets and liabilities are also
recognised in profit or loss.
On consolidation, the results of overseas operations are
translated into New Zealand dollars at rates approximating to
those ruling when the transactions took place. All assets and
liabilities of overseas operations, including goodwill arising
on the acquisition of those operations, are translated at the
rate ruling at the date of the statement of financial position.
Exchange differences arising on translating the opening net
assets at opening rate and the results of overseas operations at
actual rate are recognised in other comprehensive income and
accumulated in the foreign exchange reserve.
Exchange differences recognised to profit or loss in Group
entities’ separate financial statements on the translation of
long-term monetary items forming part of the Group’s net
investment in the overseas operation concerned are reclassified
to other comprehensive income and accumulated in the
foreign exchange reserve on consolidation.
c) Goods and Services Tax
Revenue, expenses and assets are recognised net of the amount
of goods and services tax (GST), except:
• where the amount of GST incurred is not recovered from the
taxation authority, it is recognised as part of the cost of
acquisition of an asset or as part of an item of expense; or
• for receivables and payables which are recognised inclusive
of GST (the net amount of the GST recoverable from or pay
able to the taxation authority is included as part of receiv
ables or payables).
Cash flows are included in the statement of cash flows on a net
basis. The GST component of cash flows arising from investing
and financing which is recovered from or paid to, the taxation
authority is classified as operating cash flow.
d) Financial instruments
Non-derivative financial assets
The Group classifies its financial assets as financial assets at
amortised cost.
Amortised cost
These assets arise principally from the provision of services
to customers (eg trade receivables), but also incorporate
other types of financial assets where the objective is to hold
these assets in order to collect contractual cash flows and
the contractual cash flows are solely payments of principal
and interest. They are initially recognised at fair value plus
transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised
cost using the effective interest rate method, less provision for
impairment.
Impairment provisions for receivables from related parties and
loans to related parties are recognised based on a forward
looking expected credit loss model. The methodology used
to determine the amount of the provision is based on whether
there has been a significant increase in credit risk since initial
recognition of the financial asset. For those where the credit
risk has not increased significantly since initial recognition of
the financial asset, twelve month expected credit losses along
with gross interest income are recognised. For those for which
credit risk has increased significantly, lifetime expected credit
losses along with the gross interest income are recognised.
For those that are determined to be credit impaired, lifetime
expected credit losses along with interest income on a net basis
are recognised.
From time to time, the Group elects to renegotiate the terms
of trade receivables due from customers with which it has
previously had a good trading history. Such renegotiations will
lead to changes in the timing of payments rather than changes
to the amounts owed and, in consequence, the new expected
cash flows are discounted at the original effective interest rate
and any resulting difference to the carrying value is recognised
in the consolidated statement of comprehensive income
(operating profit).
The Group’s financial assets measured at amortised cost
comprise trade and other receivables and cash and cash
equivalents in the consolidated statement of financial position.
Cash and cash equivalents includes cash in hand, deposits
held at call with banks, and other short term highly liquid
investments with original maturities of three months or less.
Non-derivative financial liabilities
Non-derivative financial liabilities comprise trade payables,
accruals, translator costs accrual, lease liabilities, deferred
consideration liabilities and contingent consideration liabilities.
Financial liabilities (including liabilities designated at fair
value through profit or loss) are recognised initially on the
trade date, which is the date that the Group becomes a
party to the contractual provisions of the instrument. The
Group derecognises a financial liability when its contractual
obligations are discharged, cancelled or expire.
The Group classifies non-derivative financial liabilities into the
following:
• Other financial liabilities
Such financial liabilities are recognised initially at fair value less
any directly attributable transaction costs. Subsequent to initial
recognition, these financial liabilities are measured at amortised
cost using the effective interest method.
The Group’s other financial liabilities comprise: trade payables,
accruals, translator costs accrual, and deferred consideration.
• Financial liabilities at fair value through profit or loss
After initial measurement, the Group measures its financial
instruments which are classified as at FVPL, at fair value.
Subsequent changes in the fair value of those financial
instruments are recorded in net gain or loss on financial assets
and liabilities at FVPL in profit or loss. Interest and dividends
earned or paid on these instruments are recorded separately in
interest revenue or expense and dividend revenue or expense
in profit or loss.
e) Impairment of assets
Financial assets – trade receivables
Impairment provisions for current and non-current trade
receivables are recognised based on the simplified approach
within NZ IFRS 9 using a provision matrix in the determination
of the lifetime expected credit losses. During this process
the probability of the non-payment of the trade receivables
is assessed. This probability is then multiplied by the amount
of the expected loss arising from default to determine the
lifetime expected credit loss for the trade receivables. For
trade receivables, which are reported net, such provisions are
recorded in a separate provision account with the loss being
recognised within cost of sales in the consolidated statement
of comprehensive income. On confirmation that the trade
receivable will not be collectable, the gross carrying value of the
asset is written off against the associated provision.
STRAKER TRANSLATIONS FY20 ANNUAL REPORT
72
73
Straker Translations and Group
Corporate Governance Statement
FO R THE YEA R E N DE D 31 MAR C H 2 0 2 0
Notes to and forming part of the Financial Statements
For the year ended 31 March 2020
continued
Defined contribution schemes
Contributions to defined contribution schemes are charged to
the profit or loss in the year to which they relate.
Equity settled share option plan
The Employee Share Option Plan allows Group employees to
acquire shares in the Company. The fair value of options granted
is recognised as an employee expense in profit and loss with
a corresponding increase in the share option reserve. The fair
value is measured at the grant date and spread over the vesting
periods. The fair value of the options granted is measured using
the Black-Scholes pricing model, taking into account terms and
conditions upon which the options are granted. When options
are exercised the amount in the share option reserve relating to
those options, together with the exercise price paid by the em-
ployee, is transferred to share capital. The amounts that relate
to vested options which lapse or pass maturity is transferred to
retained earnings.
e) Impairment of assets (Continued)
Non-financial assets
The carrying amounts of the Group’s non-financial assets other
than deferred tax assets are reviewed at each reporting date
to determine whether there is any indication of impairment.
If any such indication exists, the assets recoverable amount is
estimated.
If the estimated recoverable amount of an asset is less than
its carrying amount, the asset is written down to its estimated
recoverable amount and an impairment loss is recognised in
profit or loss.
Estimated recoverable amount of other assets is the greater of
their fair value less costs to sell and value in use. Value in use is
determined by estimating future cash flows from the use and
ultimate disposal of the asset and discounting these to present
value using a pre-tax discount rate that reflects current market
rates and the risks specific to the asset. For an asset that does
not generate largely independent cash inflows, the recoverable
amount is determined for the cash-generating unit to which
the asset belongs.
A cash-generating unit is the smallest group of assets that inde-
pendently generates cash flow and whose cash flow is largely
independent of the cash flows generated by other assets.
Goodwill is tested for impairment annually.
f) Employee benefits
Short Term Employee Benefits
Liabilities for wages and salaries, including non-monetary
benefits and annual leave settled within twelve months of the
reporting date are recognised in other payables in respect of
employees’ services up to the reporting date and are measured
at the amounts expected to be paid when the liabilities are set-
tled on an undiscounted basis. Liabilities for non-accumulating
sick leave are recognised when the leave is taken and measured
at the rates paid or payable.
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 74
Corporate Governance Statement
for the year ended 31 March 2020
The Board of directors of Straker Translations Limited
(Straker) is committed to upholding a high standard of
corporate governance. Straker complies as far as possible with
the ASX Corporate Governance Council’s Corporate Governance
Principles and Recommendations (3rd Edition) which came into
effect on 1 July 2014 (ASX Corporate Governance Principles
and Recommendations) having regard to the nature and size
of Straker’s operations.
This Corporate Governance Statement outlines Straker’s
commitment to achieving compliance with the central
principles of the recommendations set by the ASX Corporate
Governance Council based on:
• an overview of Straker’s implementation of the ASX
Corporate Governance Principles and Recommendations
during the year ended 31 March 2020;
• an explanation of the ASX Corporate Governance Principles
and Recommendations with which Straker does not
currently comply and the reasons for any non-compliance;
and
• a statement of Straker’s intention to take certain actions
and adopt certain policies and processes in order to achieve
compliance with the ASX Corporate Governance Principles
and Recommendations.
Straker’s Board Charter, Corporate Governance Statements
and Policies are available on Straker’s website at
www.strakertranslations.com
This Corporate Governance Statement was approved by the
Board of Directors on 22 April 2020.
Principle 1:
Lay solid foundations for management and oversight
A listed entity should establish and disclose the respective roles
and responsibilities of its board and management and how their
performance is monitored and evaluated.
The respective roles and responsibilities of Straker’s Board
and Management
Straker’s Board of Directors is the body responsible for the
overall corporate governance and decision making within the
Company. While Straker’s senior executive management team
(being employees of Straker who report directly to Straker’s
Chief Executive Officer) deal with and supervise the day-to-day
operational issues and processes experienced by Straker in
carrying out its business, the role of the Board is to direct and
supervise the management of Straker’s business by its senior
executive team, and to ensure that the longer term strategic
objectives of the Company continue to be met.
In order to promote efficiency, Straker’s Board of directors
may from time to time delegate certain functions to its senior
executive management team. Actions delegated to the senior
executive management team typically involve management
of Straker’s resources to deal with day-to-day operations of the
business in a way that contributes to Straker’s overall strategic
direction as set by the Board of Directors. Straker’s Board
has delegated to the Managing Director all the powers and
authorities required to manage the day-to-day operations of
Straker’s business, except those expressly reserved to the Board
or one of its committees.
Straker’s Board Charter sets out the role and responsibilities
of Straker’s Board of Directors and regulates internal Board
procedures. Details about Straker’s Board is available on Straker’s
website.
Selection and recommendation of director candidates
Before appointing or putting forward to shareholders any
candidate for election or re-election as a Director of Straker, a
formal process is undertaken to complete appropriate checks
on that candidate, including checks as to that candidate’s
character, experience, education, criminal record and
bankruptcy history. If Straker is satisfied with the results of such
checks and determines that the candidate be put forward to
shareholders for election, Straker will provide shareholders with
all material information in its possession relevant to a decision
on whether or not to elect or re-elect that Director candidate.
Terms of appointment of Directors and senior executives
All newly appointed Directors of Straker are provided with a
letter of appointment setting out the term of appointment,
remuneration, the Director’s roles and responsibilities and the
entity’s expectations of that director (including with regard
to time commitments, the requirement to disclose Directors’
interests and matters affecting the Director’s independence,
the requirement to comply with key corporate policies, and
ongoing confidentiality obligations). Existing Non-Executive
Directors of Straker also have their terms of appointment
formalised in a written letter of appointment setting out the
above items.
All senior executive employees of Straker have their terms of
employment (including a description of their position, duties
and responsibilities, remuneration arrangements, the role to
which they report, termination obligations and entitlements,
and ongoing confidentiality obligations) contained in a written
agreement with Straker.
The Company Secretary role
Straker’s Board has appointed a Sydney-based Company
Secretary following completion of the Company’s listing on the
ASX. The Company Secretary performs the following functions
for which she’s accountable directly to Straker’s Board:
Corporate Governance Statement
for the year ended 31 March 2020
continued
• advising the Board and its committees on governance
matters;
• ensuring compliance with the Company’s continuous
disclosure obligations;
• monitoring that the Board and committee policy and
procedures are followed;
• co-ordinating the timely completion and despatch of Board
and committee papers;
• ensuring that the matters discussed at Board and committee
meetings are accurately captured in the minutes of those
meetings; and
• helping to organise and facilitate the induction and
professional development of Directors.
Diversity
The Company is committed to creating and ensuring a diverse
work environment in which everyone is treated fairly, with
respect and where everyone feels responsible for the reputation
and performance of the Company. Straker understands that
diversity and inclusivity in the workforce is a strategic asset,
and that a workplace with a genuine balance of employees by
gender, age and background will strengthen Straker’s business
performance and create opportunities to access the best
people for Straker’s business.
Straker has developed a formal Diversity and Inclusion Policy,
which was adopted upon the Company’s listing to the ASX
in October 2018. A copy of the policy can be found on the
Company’s website.
As at the date of this statement, measurable objectives
have not yet been formally established and it is the Board’s
intention to consider the establishment of measurable
objectives in the forthcoming year. In order to demonstrate
Straker’s commitment to compliance with the ASX Corporate
Governance Principles and Recommendations, Straker’s
Board of Directors intends that the Board will set appropriate
and meaningful benchmarks that are able to be measured
and monitored for effectiveness in addressing any gender
imbalance issues that may be present in Straker’s business.
After measurable objectives have been adopted for at least
a 12-month period, Straker’s Board of Directors will conduct
a review of Straker’s progress against the stated measurable
objectives over the preceding 12 months and will disclose
an overview of such progress in the Corporate Governance
Statement for that year.
75
As at the year ended 31 March 2020, the respective proportions
of men and women within Straker were as follows:
Board of directors
Senior executive team
All other employees (not includ-
ing senior executive staff )
Female
Male
1
2
91
5
4
78
* Katrina Johnson resigned from the Board on 14 April 2020
Performance Management
Straker undertakes formal evaluation processes on an annual
basis to review the performance of Straker’s Board, various
Board committees, individual Directors and senior executive
employees. These evaluation processes will be conducted as
follows:
• Board performance and Board committee performance:
Straker’s Board conduct an annual self-review and evaluation
of its own performance (with
Nominations and Remuneration Committee and the
Company Secretary), including the Board’s performance
against the requirements of the Board Charter.
•
Individual Director performance: Straker’s Board Chair will
conduct performance reviews with individual Directors on
assistance from the
an annual basis.
• Senior executive employee performance:
The Nominations and Remuneration Committee will
periodically evaluate the performance of Straker’s
senior executives in accordance with the provisions
of Straker’s Nominations and Remuneration Committee
Charter, which is available on Straker’s website.
Straker’s Board of Directors conducted formal performance
review in accordance with the abovementioned processes
prior to the date of Straker’s Annual Report for the year ended
31 March 2020 and will conduct a similar review at or around
the end of each following year. The evaluation process noted
strengths, recommended improvements and identified areas for
increased focus.
Principle 2:
Structure the Board to add value
A listed entity should have a board of an appropriate size,
composition, skills and commitment to enable it to discharge its
duties effectively.
Straker understands the importance of a high performing and
effective Board of Directors in ensuring proper governance
of a listed entity. Straker has structured its Board of Directors
in accordance with the recommendations set out in the ASX
STRAKER TRANSLATIONS FY20 ANNUAL REPORT
76
Corporate Governance Statement
for the year ended 31 March 2020
continued
Corporate Governance Principles and Recommendations to
ensure that the Board is of a sufficient size, independence
level, and skill set composition to enable it to manage the
requirements of Straker’s business and the industry and market
in which it operates.
Nominations and Remuneration Committee
Straker’s Nominations and Remuneration Committee is
tasked with overseeing and making recommendations to
Straker’s Board of Directors on the nomination, selection and
appointment of Directors to Straker’s Board, the re-election
of incumbent Directors, and the remuneration strategies and
policies of the Company, including recommendations on the
fees to be paid to Directors.
The Nominations and Remuneration Committee has three
members, with current members being Tim Williams, Paul
Wilson and Phil Norman (a majority of whom are Independent
Non-Executive Directors). Katrina Johnson was a member
of the Committee during the year until the date of her
resignation on 14 April 2020. Phil Norman was appointed to
the Committee following Katrina’s resignation. The Committee
is chaired by Tim Williams who is an Independent Director
of Straker, in accordance with the requirements of the ASX
Corporate Governance Principles and Recommendations. The
Nominations and Remuneration Committee Charter sets out
the Board’s policies and practices regarding the nomination,
selection and appointment of new Directors and the re-election
of incumbent Directors, as well as the Board’s policies regarding
the remuneration of Non-Executive Directors and other senior
executives and is available on the Company’s website.
Board composition and independence
As at the year ended 31 March 2020, Straker’s Board comprised
the following five Non-Executive Directors:
Name
Position
Phil Norman
Chair and Independent Non-
Executive Director
Date appointed to
Straker’s board
13 January 2014
Grant Straker
Executive Director
21 December 1999
Steve Donovan
Non-Executive Director
1 December 2004
Paul Wilson
Non-Executive Director
22 September 2015
Katrina Johnson
Tim Williams
Independent Non-Executive
Director
Independent Non-Executive
Director
3 July 2018*
24 June 2015
* Katrina Johnson resigned from the Board on 14 April 2020
The Board only considers a Director to be independent where
they are independent of management and free of any business
or other relationship that could materially interfere with, or
could reasonably be perceived to interfere with, the exercise of
their unfettered and independent judgement.
On this basis, the following Directors have been determined
as being independent as at 31 March 2020 and for the full
financial year ending on that date (or since appointment
date as applicable) – (Mr Phil Norman, Ms Katrina Johnson*
and Mr Tim Williams). This is despite the foregoing interests/
relationships which the Board considers are not material and do
not compromise the independence of the relevant Director:
Name
Plan Scheme Number
Exercise Price Expiry Date
Phil Norman
Legacy ESOP
LTI ESOP
Katrina Johnson* LTI ESOP
Tim Williams
LTI ESOP
41,960
50,000
25,000
25,000
NZ$0.596 3 Apr 2020
$1.51 26 Sep 2024
$1.51 26 Sep 2024
$1.51 26 Sep 2024
* Katrina Johnson resigned from the Board on 14 April 2020
Mr Grant Straker, Mr Steve Donovan and Mr Paul Wilson are
regarded as non-independent based on the ASX criteria in
Principle 2 of the ASX Recommendations.
The Board considers the composition of the Board to be
appropriate and does not believe that it is detrimental to the
Company or its Shareholders that the majority of the Board is
not independent.
The Nominations and Remuneration Committee will re-assess
the independence of each Non-Executive Director on an annual
basis and in cases where a specific need for an independence
assessment is identified due to a change in the interests,
positions, associations or relationships of one or more Non-
Executive Directors. If Straker’s Board of Directors determines
that a Director’s status as an Independent Director has changed,
the Board will disclose and explain that determination to the
market in a timely manner.
Skills and experience of Straker’s Board of Directors
Straker recognises that its Board of Directors should represent
a diverse range of skills, experience and attributes in order
to ensure effective decision-making and governance of the
Company. Straker’s Board of Directors is currently comprised of
members with skills and experience in the following areas:
information technology;
•
•
investment banking;
• mergers and acquisitions;
• corporate governance;
•
• product development;
• sales and marketing; and
• finance.
technology commercialisation;
There are also a range of qualifications currently represented
across Straker’s Board of Directors, including in the fields of
finance and accounting, business management, sales and
marketing, and software development.
Corporate Governance Statement
for the year ended 31 March 2020
continued
Straker’s Board of Directors’ review on an annual basis the skills,
experience and attributes held by the Directors and whether
the Board group as a whole possess the skills and experience
required to fulfil their role on the Board and relevant Board
committees. Where any gaps are identified, the Board will
consider what training or development could be undertaken
to fill those gaps or provide resources or access to resources
to help develop and maintain the skills and knowledge of its
Directors.
Induction of new Directors and ongoing professional
development
Where a new Director is appointed to Straker’s Board, Straker’s
Chair will arrange induction sessions with the new Director in
order to brief them on the background and growth story of
the Company and advise the new Director on Straker’s Board
procedures, constitutional documents, corporate governance
policies and procedures.
Due to the current size and growth stage of Straker’s business,
the Director induction and professional development processes
of the Company are largely informal. However, as Straker grows
in size and market significance, Straker will consider providing
Directors with appropriate formalised professional training and
development opportunities to allow new and existing Directors
to develop and maintain the skills and knowledge needed to
perform their roles effectively.
Board and Committee Meeting Attendance
The number of scheduled Board and Committee meetings
held during the year ended 31 March 2020 and the number
of meetings attended by each of the Directors is set out in the
table below:
Board
Meeting
Audit & Risk
Management
Committee*
Nominations &
Remuneration
Committee*
A
13
13
11
13
12
10
B
13
13
13
13
13
13
A
5
0
5
5
0
0
B
5
0
5
5
0
0
A
0
0
0
5
5
4
B
0
0
0
5
5
5
Phil Norman
Grant Straker
Steve Donovan
Katrina Johnson*
Paul Wilson
Tim Williams
* Resigned as a director on 14 April 2020
A = Number of meetings attended
B = Number of meetings held during the time the director held
office or was a member of a committee during the year
77
Principle 3:
Act ethically and responsibly
A listed entity should act ethically and responsibly.
Straker is committed to complying with its legal obligations and
to acting with honesty, integrity and in a manner consistent
with the reasonable expectations of its investors and the wider
community.
Code of Conduct
Straker expects that all of its Directors, senior executives
and employees will also act ethically and responsibly, in
strict compliance with all applicable laws, regulations, and
in accordance with accepted principles of good corporate
citizenship. In order to demonstrate Straker’s commitment to
acting ethically and responsibly, Straker’s Board of Directors has
developed a Code of Conduct that clearly defines Straker’s core
values, articulates what Straker regards as acceptable business
practices, and sets out the standards and expectations required
of Straker’s Board of Directors, senior executives and employees
in performing their duties. Straker’s Code of Conduct is available
on Straker’s website.
Principle 4:
Safeguard integrity in corporate reporting
A listed entity should have formal and rigorous processes that
independently verify and safeguard the integrity of its corporate
reporting.
Audit and Risk Management Committee
Straker’s Audit and Risk Management Committee is tasked
with reporting to Straker’s Board of Directors on the integrity
of Straker’s financial reporting process, its internal and external
audit functions, and its internal control and risk management
process. In accordance with the requirements of the ASX
Corporate Governance Principles and Recommendations, the
Audit and Risk Management Committee comprises of at least
three Non-Executive Director members, being Steve Donovan,
Tim Williams and Phil Norman (a majority of whom are
Independent Directors). Katrina Johnson was a member of the
Committee during the year until the date of her resignation on
14 April 2020. Tim Williams was appointed to the Committee
following Katrina’s resignation.
The ASX Corporate Governance Principles recommend that
the Audit and Risk Management Committee will be chaired
by an Independent Director. Straker’s Board of Directors have
had regard to the skills and experience of the Board and have
determined that despite not being considered an Independent
Director, Steve Donovan is the most appropriate member of
the Board to act as Chair of the Audit and Risk Management
Committee given his knowledge of Straker and its history of
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 78
Corporate Governance Statement
for the year ended 31 March 2020
continued
Corporate Governance Statement
for the year ended 31 March 2020
continued
79
audit and risk issues, as well as his expertise and qualifications in
the area of finance.
The relevant qualifications and experience of the members of
the Audit and Risk Management Committee are available in the
Annual Report.
The Audit and Risk Management Committee Charter sets
out the policies and practices of Straker’s Board of Directors
regarding the financial audit and risk management processes of
Straker and is available on the Straker’s website.
Declaration of Managing Director and CFO on financial
statements
As a New Zealand incorporated company, Straker is not subject
to section 295A(4) of the Corporations Act 2001 (Cth) (which
requires that the CEO/Managing Director and CFO of a listed
entity to provide certain declarations regarding the financial
statements for that entity in each financial year). However, in
accordance with the ASX Corporate Governance Principles
and Recommendations, Straker’s Managing Director and CFO
provided to Straker’s Board of Directors (prior to the approval by
the Board of Straker’s financial statements for a financial period)
a written opinion to the Board of Directors that, in their opinion:
• Straker’s financial reports comply with the appropriate
accounting standards;
• Straker’s financial reports give a true and fair view of Straker’s
financial position and performance; and
•
the opinion of the Managing Director and CFO has been
formed on the basis of a sound system of risk management
and internal control, which is operating effectively.
Attendance of external auditor at Annual Meeting
In order to safeguard the integrity of Straker’s corporate
reporting process and to maintain free and open
communication between the Board of Directors, shareholders
and auditors, Straker requests that its external auditor attend
Straker’s Annual Meeting so as to be available to answer any
shareholder questions raised at or prior to the Annual Meeting
about the conduct of the audit and the preparation and
content of the audit report.
Principle 5:
Make timely and balanced disclosure
A listed entity should make timely and balanced disclosure of all
matters concerning it that a reasonable person would expect to
have a material effect on the price or value of its securities.
Complying with Continuous Disclosure Obligations
Straker complies with the continuous disclosure obligations
contained in the ASX Listing Rules. As part of these continuous
disclosure obligations, where Straker becomes aware of any
information concerning the Company that a reasonable person
would expect to have a material effect on the price or value
of the Straker’s securities, Straker must immediately disclose
that information to the market (subject to limited exceptions
available under the ASX Listing Rules).
To encourage and assist compliance by Straker’s Board of
Directors and its employees with these continuous disclosure
obligations, Straker’s Board of Directors have developed a
Continuous Disclosure Policy which is available on Straker’s
website. The Continuous Disclosure Policy has been developed
with regard to ASX Listing Rules 3.1-3.1B and relevant ASIC
regulatory guidance with respect to disclosure for investors.
The Company Secretary will have primary responsibility for all
relevant regulatory filings to ensure Straker’s compliance with
its continuous disclosure obligations.
Principle 6:
Respect the rights of security holders
A listed entity should respect the rights of its security holders by
providing them with appropriate information and facilities to
allow them to exercise those rights effectively.
Access to information about Straker and its governance
In accordance with the ASX Corporate Governance Principles
and Recommendations, Straker has a “Investors” section on
its website, from which all relevant corporate governance
information about Straker can be accessed by the general
public. Such information includes:
•
• Straker’s constitution, board charter and board committee
this Corporate Governance Statement;
charters;
the Straker Code of Conduct;
•
• various corporate governance policies; and
• names, photographs and summarised biographical
information for each of Straker’s Directors and senior
executives.
Other relevant information and documents about Straker,
including but not limited to copies of Straker’s annual reports
and financial statements, copies of Straker’s announcements to
the ASX, and copies of notices of meetings of shareholders (and
any accompanying documents) can be accessed on relevant
areas of Straker’s website.
Shareholder relations
Straker has implemented a formal Shareholder Communications
Policy to ensure that shareholders are provided with sufficient
information to assess the performance of Straker at regular
intervals and are informed of all major developments affecting
the state of affairs of Straker, in accordance with applicable laws.
A copy of Straker’s Shareholder Communications Policy has
been adopted and is available on Straker’s website.
Pursuant to Straker’s Shareholder Communications Policy,
Straker regularly provides information to shareholders:
• market releases to the ASX in accordance with Straker’s
continuous disclosure obligations;
the investor relations section of Straker’s website;
•
• Straker’s annual and half-yearly reports; and
• Straker’s Annual Meeting.
In addition to providing shareholders with information about
the Company, Straker also provides opportunities for two-
way communication between shareholders and Straker by
requesting that its external auditor and the relevant Chairs of
the various Board committees attend Straker’s Annual Meeting
to be available to answer any shareholder questions about
the conduct of the audit and the preparation and content of
the audit report, or about the activities of the various Board
committees. Shareholders are encouraged to express to the
relevant Straker representatives present at the Annual Meeting
any matters of concern or interest to shareholders, with the
understanding that these views will be communicated to
Straker’s Board of Directors for consideration.
Shareholders who are not able to attend the Annual Meeting
and exercise their right to ask questions about or make
comments on the management of Straker will be given the
opportunity to provide questions or comments ahead of the
Annual Meeting. Where appropriate, these questions will be
considered and answered at the Annual Meeting.
Electronic communications
Straker encourages its shareholders to receive information and
communications from, and send communications to, Straker
and its share registry electronically. Shareholders may elect to
send and receive communications electronically by registering
their email address online with Straker’s share registry.
Principle 7:
Recognise and manage risk
A listed entity should establish a sound risk management
framework and periodically review the effectiveness of that
framework.
Straker is committed to the establishment and maintenance of
a sound risk management framework encompassing oversight,
management and internal control of risks within and facing
Straker’s business.
Audit and Risk Management Committee
As outlined above (see Principle 4), Straker’s Audit and Risk
Management Committee, oversees and reports to the Board of
Directors on the integrity of Straker’s financial reporting process
and risk management process. Please see Principle 4 for further
information on the membership structure and committee
charter of Straker’s Audit and Risk Management Committee.
Annual review of Straker’s risk management framework
The Audit and Risk Committee, regularly reviews and discusses
the major risks affecting Straker’s business and develops
strategies to mitigate these risks throughout the year, and
reviews Straker’s overall risk management framework at least
annually to ensure that the framework continues to be effective
and suitable to the risks involved in Straker’s business.
Evaluating and improving risk management and internal
control processes
While Straker does not have an internal audit function, Straker’s
Board of Directors ensures that the risk management and
internal control processes of Straker are regularly evaluated
and the effectiveness of these processes will be continually
improved through review by the Audit and Risk Management
Committee, and by the Board of Directors of Straker.
Where it considers necessary, Straker’s Board of Directors will
consider the recommendations of the external auditors and
other external advisers in relation to Straker’s financial reporting
process and risk management framework, and appropriate
action will be taken by the Board of Directors to ensure that key
risks, as identified, are managed effectively.
Material exposure to risk
Straker’s Board of Directors ensures that any material exposure
of Straker to economic, environmental and social sustainability
risks will be disclosed in accordance with the requirements of
ASX Listing Rule 3.1.
The Board of Directors has considered the Company’s exposure
specifically to economic, environmental and social sustainability
risks and has determined the following:
• Economic Risk – The business is exposed to general
economic conditions. Specifically, material risk exists in
relation to: competition and new technologies; reliance on
key personnel; data loss, theft or corruption; technology
platform failure; the impact of privacy laws and regulations;
country specific risks in new unfamiliar markets;
• Environmental risks – The COVID-19 pandemic represents
a material environmental and economic risk for Straker. The
Company has developed and implemented a
comprehensive response focused on the safety of its
workforce and an anticipated decline in revenues for
a period of time; and
• Social sustainability – There is a material risk associated
with crowd and remote workers, however, the Company has
practices and processes in place to mitigate these risks.
STRAKER TRANSLATIONS FY20 ANNUAL REPORT
81
Corporate Governance Statement
for the year ended 31 March 2020
continued
and Directors of Straker, under which options over
the ordinary shares of Straker may be issued to such
qualifying employees, senior executives and Directors of
Straker. The new ESOP scheme (which operates on
substantially similar terms to the current ESOP scheme), was
approved by Straker’s Board and shareholders and adopted
shortly prior to Straker’s listing on the ASX.
Under Straker’s Securities Trading Policy, participants in either
or both of Straker’s ESOP schemes are not permitted to enter
into transactions (whether through the use of derivatives or
otherwise) which limit the economic risks of participating in the
relevant scheme (or schemes, as the case may be).
Any options offered to Directors and/or senior executives after
Straker is listed on the ASX will be subject to board and/or
shareholder approval as required by applicable law, the ASX
listing rules and Straker’s Constitution.
80
Corporate Governance Statement
for the year ended 31 March 2020
continued
Principle 8:
Remunerate fairly and responsibly
A listed entity should pay director remuneration sufficient to
attract and retain high quality directors and design its executive
remuneration to attract, retain and motivate high quality senior
executives and to align their interests with the creation of value
for security holders.
On 26 September 2018, additional options were issued to
directors in Straker’s new, LTI ESOP scheme:
• Grant Straker: 300,000 options issued at $A1.51
• Phil Norman: 50,000 options issued at $A1.51
• Paul Wilson: 50,000 options issued at $A1.51
• Steve Donovan: 25,000 options issued at $A1.51
• Tim Williams: 25,000 options issued at $A1.51
• Katrina Johnson: 25,000 options issued at $A1.51
Nominations and Remuneration Committee
As outlined above (see Principle 2), Straker’s Nominations
and Remuneration Committee’s principal function is the
oversight of the remuneration strategies and policies of the
Company. Please see Principle 2 for further information on
the membership structure and committee charter of Straker’s
Nominations and Remuneration Committee.
Straker’s Executive Director and other senior executives are paid
by way of cash salaries and in relation to the year ending 31
March 2020 were, in addition, entitled to be paid a cash bonus
linked to the achievement of annually agreed corporate and
individual KPI’s. No performance-based cash bonuses were
paid to Straker’s executive director or other senior executives in
relation to the year ended 31 March 2020.
Board review and determination of remuneration
structures
Straker’s Board of Directors reviews the overall remuneration
structure and policies and will consider recommendations from
the Nominations and Remuneration Committee. No individual
Director or senior executive is or will be involved in deciding his
or her own remuneration.
The Board of Directors of Straker may seek the advice of external
advisers from time to time in order to develop remuneration
packages to retain and attract high quality Non-Executive
Directors and senior executives and encourage these Directors
and executives to pursue the growth and success of the entity
without taking undue risks.
Straker’s Non-Executive Directors are paid by way of fees
for services up to a maximum aggregate sum of $A600,000
per annum as approved by shareholders at the Company’s
Annual Meeting held on 25 September 2018. Only with prior
shareholder approval in general meeting may fees be paid to
Non- Executive Directors in excess of this $A600,000 fee cap.
As at 31 March 2020, Non-Executive Directors were paid
$A60,000 per annum with the Chair receiving
$A96,000 per annum. Grant Straker, who is an Executive
Director, is not paid director’s fees.
In addition, Straker’s Directors are entitled to participate in the
Company’s Employee Share Options Schemes, which require
approval by shareholders before further option issuances can
be made to Directors.
As at 31 March 2020, the following directors held options in
Straker’s legacy ESOP scheme:
• Grant Straker: 41,960 options issued at $NZ0.596
• Phil Norman: 41,960 options issued at $NZ0.596
The Company’s CEO and Managing Director is paid $NZ290,000
per annum as at 31 March 2020.
Straker sets corporate and individual KPI’s annually at the
beginning of each financial year. Bonus targets for the
Executive Director and senior executives are expressed as
a percentage of base salary and achievement against the
corporate and individual KPI’s is assessed by the Nominations
and Remuneration Committee. If achieved, payment of cash
bonuses is made following completion of the audited annual
financial statements.
In addition, Straker’s senior executives are entitled to participate
in the Company’s Employee Share Option Schemes. No option
grants were made to the Company’s senior executives during
the year ended 31 March 2020.
Aligning remuneration and performance to the creation of
value for shareholders
As at the year ended 31 March 2020, Straker had in place an
employee share option plan (ESOP) entitling certain Directors,
senior executive staff and other employees to the issue of
options over ordinary shares in Straker, according to the terms
of the plan.
To ensure that Straker’s incentive strategies are appropriate
for an ASX listed entity and continue to align the interests
of Directors and senior executives with the creation of value
for shareholders, Straker’s Board of Directors has taken the
following steps:
•
retained the existing ESOP scheme that was in place prior
to the IPO with some minor amendments to ensure
compliance with the relevant ASX listing rule
requirements (this old ESOP scheme is being grandfathered);
and
• established a new ESOP scheme to provide long-term
incentives for qualifying employees, senior executives
STRAKER TRANSLATIONS FY20 ANNUAL REPORT
82
Straker Translations and Group
Additional Disclosures
Additional Disclosures
83
F OR T HE YEAR ENDED 31 MAR CH 2 02 0
As required under s(211) of the Companies Act 1993, the Company and Group disclose the following statutory information.
Entries Made into the Companies Interests Register
Director
Relevant Interest
% of Ordinary Shares
Owned 31 March 2020
% of Ordinary Shares
Owned 31 March 2019
Stephen Donovan
Katrina Johnson
Philip Norman
Grant Straker
Timothy Williams
Paul Wilson
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
4.41%
0.02%
0.09%
13.82%
0.22%
0.47%
4.37%
0.02%
0.10%
13.90%
0.22%
0.47%
Number of Employees or Ex-Employees, excluding Directors, who received benefits exceeding $100,000 during the year:
$100,000 to $120,000
$120,001 to $140,000
$140,001 to $160,000
$160,001 to $200,000
$200,001 to $240,000
Donations made
The Group made donations during the year of $nil (2019: nil).
No. of Employees
10
3
7
2
10
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 84
Additional Disclosures
continued
Equity holdings of all Directors
At 31 March 2020
Non-executive Directors
Stephen Donovan
Katrina Johnson
Philip Norman
Timothy Williams
Paul Wilson
Executive Directors
Grant Straker
Notes
Number of shares
Number of options
2,339,930
10,000
50,000
114,760
250,000
25,000
25,000
91,960
25,000
50,000
1
7,329,380
341,960
Entries recorded in the interests register
Straker maintains an interests register in accordance with the Companies Act 1993 (New Zealand). The following are particulars of
entries made in the interests register during FY20
1 - included in Grant Straker’s shareholding are 3,664,690 shares which are in escrow until the publication of Straker’s half-year results dated 30 September 2020.
Bailador Technology Investments Limited
Blue Frog Breakfast Limited
Shareholder
Shareholder
Viranda Holdings Limited
Director and shareholder
The Icehouse Limited
Technomancy Group Limited
Director and shareholder
85
Relationship
Shareholder
Shareholder
Shareholder
Director and shareholder
Director and shareholder
Director
Director
Director
Director
Director
Shareholder
Director
Shareholder
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Additional Disclosures
continued
Directors’ Interests
Directors disclosed the following relevant interests, or cessations of interest, in the following entities.
Director / Entity
Stephen Donovan
Buro Seating Limited
Relationship
Director / Entity
Grant Straker
Director and shareholder
Serko Limited
Dopast Holdings Limited
Director and shareholder
Bailador Technology Investments Limited
New Zealand Pure Dairy Products Limited
Director and shareholder
Ubco Limited
Director and shareholder
Director and shareholder
Timothy Williams
Director and shareholder
90 Seconds TV Pte Limited
Canaveral Corner Limited
Purelac Dairy Limited
Purelac Brands Limited
Sherwood Country Limited
Aritech Innovations Limited
Aritech Investments Limited
Radius Group Limited
Allright Group Limited
Advanced Customs Service Limited
Trustee
Trustee
Trustee
Trustee
Trustee
Trustee
Donovan Group NZ Limited
Donovan Group International Limited
Donovan Group Properties Limited
Donovan Group Modular Limited
Donovan Group Holdings Limited
Shuttlerock Limited
Horizon Management Limited
Remington Properties Limited
Photowonder New Zealand Limited
Katrina Johnson
Uber Technologies, Inc
eBay Inc
Share options holder
Design Station Limited
Shareholder
Firstwood Limited
The Allens Hub for Technology, Law and Innovation
Advisory board member
Spoke Network Limited
Paypal Holdings, Inc
Obiotics Group Limited
Phil Norman
Shareholder
Shareholder
Managwhai Village Development Limited
Modern Building Product (2018) Limited
T Williams Trustees Limited
Kiwispan 2017 Limited
Plexure Group New Zealand Limited
Director and shareholder
Coresteel New Zealand Limited
Plexure Limited
VMob IP Limited
VMob Singapore Pte Ltd
Xero Limited
Loyalty New Zealand Limited
UBNZ World Markets (NZ) Limited
iSport Federation Holdings Limited
Director
Director
Director
Shareholder
Director
Shareholder
Shareholder
President’s Bush Limited
Director and shareholder
Global Crop Traders Co Limited
Director
TWG General Partner Limited
Director and shareholder
Circular Plastics General Partner Limited
Director and shareholder
Home Research Limited
Picsos Limited
Our Home Direct General Partner Limited
Nortek Management Services Limited
Director and shareholder
MBP Company Limited
TruScreen Limited
MyWave Holdings Limited
Touchpoint Group Limited
Shareholder
Shareholder
Director & Shareholder
Home Research Limited
Picsos Limited
Atrax Group New Zealand Limited
Advisory board member
Paul Wilson
Bright Spark Innovations GP Limited
Director
Vita Group Limited
Director and shareholder
Parallo Limited
Director and chairman
Royals Multisport Private Limited
Stackla Pty Limited
Online Ventures Pty Limited
Director
Director
Director
Bailador Technology Investments Limited
Director and shareholder
Bailador Investment Management Pty Limited
Director and shareholder
Peandel Pty Limited
Director and shareholder
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 86
Additional Disclosures
continued
Additional Disclosures
continued
87
Share dealings of Directors
Distribution of shareholding
Directors disclosed the following acquisitions or disposals of relevant interests in Straker shares during the year. All dollar figures in
this table are in Australian dollars.
Registered holder
Date of acquisition/ disposal
Consideration per share
Number of shares acquired/(disposed)
Stephen Donovan
9 December 2019
AUD 0.57
41960
Insurance
In accordance with the Companies Act 1993 (New Zealand), Straker has continued to insure its directors and officers (through renewal
of its D&O insurance policy) against potential liability or costs incurred in any proceeding, except to the extent prohibited by law.
Deeds of Indemnity
Straker has provided Deeds of Indemnity to all directors and officers of Straker and its subsidiaries for potential liabilities and costs they
may incur for acts or omissions in their capacity as directors or officers of Straker or its subsidiaries.
Remuneration disclosures
Information about non-executive and executive directors remuneration is provided on page 68 of this report. The total remuneration
available to non-executive directors is fixed by shareholders. Currently, the annual total aggregate non-executive directors’ remunera-
tion is capped at AUD 600,000 as approved by shareholders at the Annual General Meeting in September 2018.
Information regarding employee remuneration exceeding $100,000 per annum is presented on page 83 of this report.
Shareholder information
The shareholder information set out below is current at 1 Jun 2020.
Issued capital
The total number of issued ordinary shares in Straker Translations Limited as at 1 June 2020 was 53,101,360, of which 3,664,690 were
held in escrow at that date.
Range
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total
Number of holders
394
563
170
235
41
%
28.08
40.13
12.12
16.75
2.92
1,403
100.00
Ordinary shares
232,651
1,518,718
1,294,954
6,551,314
43,503,723
53,101,360
%
0.44
2.86
2.44
12.34
81.93
100.00
Un-marketable share parcels
Range
< AUD$500
Number of holders
187
%
13.33
Ordinary shares
65,212
%
0.12
Distribution of Share Options
Range
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total
Number of holders
4
22
6
32
%
12.50
68.75
19
100.00
Ordinary shares
32,032
686,846
1,416,713
2,135,591
%
1.50
32.16
66.34
100.00
Options
There were 32 individuals holding a total of 2,135,591 unlisted options.
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 88
Additional Disclosures
continued
Additional Disclosures
continued
89
Substantial holdings and limitations on the acquisition of securities
Voting rights
Straker is a New Zealand incorporated and domiciled company listed on the Australian Securities Exchange (ASX). From a regulatory
perspective, this means that while the ASX Listing Rules apply to Straker, certain provisions of the Australian Corporations Act 2001
(Cth) do not. Straker is not subject to chapters 6, 6A, 6B, and 6C of the Australian Corporations Act 2001 (Cth) dealing with the acqui-
sition of its shares (including substantial holdings and takeovers). The Companies Act 1993 (New Zealand) applies to Straker, while
certain provisions of the Financial Markets Conduct Act 2013 (New Zealand) do not.
Straker has a single class of ordinary shares on issue. Where voting at a meeting of shareholders is by voice or a show of hands, every
shareholder present in person, or by representative, has one vote. On a poll, every shareholder present in person, or by representative,
has one vote for each fully paid ordinary share. In practice, Straker ensures that all resolutions at shareholder meetings are decided by
poll rather on a show of hands. Share options carry no voting rights until they are fully exercised and converted into actual shares. On
market buy-back There is no on-market buy-back for Straker shares.
There is no requirement on Straker’s substantial shareholders to provide substantial holder notices to Straker. Straker is aware of the
following substantial shareholders with a holding of 5% or greater:
On market buy-back
There is no on-market buy-back for Straker shares.
Name
1. Grant & Merryn Straker
2. Bailador Technology Investments Limited
3. Scobie Ward
4. Skyone Capital Pty Ltd
Total substantial Shareholders
Number of ordinary shares held
% of total issued capital
7,329,380
6,404,201
6,013,060
5,535,977
25,282,618
13.80
12.06
11.32
10.43
47.61
Key limitations on the acquisition of shares in Straker are imposed by the following legislation: Commerce Act 1986, Overseas Invest-
ment Act 2005 and Takeovers Act 1993, together with various regulations and codes promulgated under such legislation.
Top 20 holders
The names of the 20 largest holders of Straker’s ordinary shares are set out below.
Name
Number of ordinary shares held
% of total issued capital
1. Bailador Technology Investments Limited
2. Angelina I Hunter & Merryn J Straker & Grant O Straker
3. Skyone Capital Pty Ltd
4. Citicorp Nominees Pty Limited
5. Angelina I Hunter & Merryn J Goble & Grant O Straker
6. Forsyth Barr Custodians Limited
7. National Nominees Limited
8. Msg Holdings Pty Limited
9. Sandra Donovan & Stephen P Donovan & Julie C Ullness
10. Soul Pattinson
11. Skyone Fund Management Pty Ltd
12. Glenda Lauraine Bailey & Ian Harold Bailey
13. Skyone Capital Pty Ltd
14. David Sowerby
15. Mr Michael John Gregg & Mrs Suzanne Jane Gregg
16. Dopast Holdings Limited
17. J P Morgan Nominees Australia Pty Limited
18. Leonard Douglas Light
19. Custodial Services Limited
20. Washington H Soul Pattinson And Company Limited
Top 20 holders of ordinary fully paid shares (total)
Other shareholders (balance on register)
Grand total
6,404,201
4,163,470
3,270,900
3,225,274
3,165,910
3,013,060
2,017,074
1,900,000
1,533,870
1,375,088
1,324,504
1,306,540
940,573
918,810
860,000
764,100
715,829
700,000
579,694
529,802
38,708,699
14,392,661
53,101,360
12.06
7.84
6.16
6.07
5.96
5.67
3.80
3.58
2.89
2.59
2.49
2.46
1.77
1.73
1.62
1.44
1.35
1.32
1.09
1.00
72.90
27.10
100.00
Restricted ordinary shares
The following fully paid ordinary shares were in escrow as at 1 June 2020:
Number of ordinary shares
3,664,690
318,830
80,000
Release date
On release of HY2021 results to ASX
On release 18 June 2020
On release 10 June 2020
Use of cash assets
During the period since admission to the ASX on 22 October 2018 to 31 March 2020, the Company has used its cash and assets
readily convertible to cash that it had at the time of ASX admission in a way consistent with its buisiness objectives as set out in the
propospectus, dated 26 September 2018.
Payments of proceeds to Selling Shareholders
Investment in sales & marketing, investment in product development,
general corporate purposes and customer acquisitions including
potential additional acquisitions
Working Capital
Costs of the Offer
Total Use of Funds
Prospectus Use of Funds
Funds Used to 31 March 2020
$NZD’000
3,043
14,674
1,957
3,370
23,043
$NZD’000
3,072
5,768
1,893
3,461
14,194
Matters of circumstance arisen since year end
There have been no material matters of circumstance that have arisen since year end.
Environment issues
The Group is not affected by any significant environmental regulation in respect of its operations.
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 90
Company Directory
for the year ended 31 March 2020
91
Company Numbers
Registered office
Head Office Address
and Principal Place
of Business
1008867
NZBN: 942 903 739 6718
ARBN: 628 707 399
New Zealand
Level 2, Building 3
61 Constellation Drive
Auckland
Australia
C/o Boardroom Pty Limited
Level 12
225 George Street
Sydney
NSW 2000
Level 2, Building 3
61 Constellation Drive
Rosedale
Auckland 0632
New Zealand
Directors
Phil Norman (Chair)
Company Secretary
Grant Straker (Managing Director
and Chief Executive Officer)
Steve Donovan
Katrina Johnson
(Resigned 14 April 2020)
Tim Williams
Paul Wilson
Laura Newell
Boardroom Pty Limited
Level 12
Grosvenor Place
225 George Street
Sydney, NSW 2000
Australia
Phone: +61 2 9290 9600
www.boardroomlimited.com.au
Auditor
Lawyers
Bankers
Share Registrar
Stock Exchange
BDO Auckland
Level 4
4 Graham Street
Auckland 1010
New Zealand
Phone: +64 9 379 2950
www.bdo.nz
Bell Gully
Level 21
ANZ Centre
171 Featherston Street
Wellington 6140
New Zealand
Phone: +64 4 915 6800
www.bellgully.com
Talbot Sayer
Level 27
Riverside Centre
123 Eagle Street
Brisbane
Queensland 4001
Australia
Phone: +61 7 3160 2900
www.talbotsayer.com.au
ANZ Bank
Bank of New Zealand
National Australia Bank
Link Market Services Limited
Level 12
680 George Street
Sydney, NSW 2000
Australia
Phone: +61 2 8280 7100
www.linkmarketservices.com.au
Straker’s shares are listed on the
Australian Securities Exchange
(ASX code: STG)
Company website
www.strakertranslations.com
STRAKER TRANSLATIONS FY20 ANNUAL REPORT 92