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Serko 2020 Annual Report
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Serko annual report
Our Purpose
Our purpose is to transform the way businesses manage travel and expenses. We do this
by helping companies drive down the cost of their travel program, using smart technology
and making the process of booking and managing travel and reconciling expenses a
positive experience for their people.
About Serko
Serko is a market leading travel and expense technology solution in Australasia, used by
over 6,800 corporate entities. Zeno is Serko’s next generation travel management
application, using intelligent technology, predictive workflows, and a global travel
marketplace to transform business travel across the entire journey. Serko is listed on the
New Zealand Stock Exchange Main Board (NZX:SKO) and Australian Securities Exchange
(ASX:SKO). Serko employs more than 240 people worldwide, with its headquarters in New
Zealand, and offices across Australia, China, and the U.S.
Visit www.serko.com for more information.
SERKO 2020
ANNUAL REPORT
This Annual Report is dated 24 June 2020 and is signed on behalf of the Board of Directors (Board) of Serko
Limited by Claudia Batten, Acting Chair, and Darrin Grafton, Chief Executive Officer (CEO).
CLAUDIA BATTEN
ACTING CHAIR
DARRIN GRAFTON
CHIEF EXECUTIVE OFFICER
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Serko annual report
Our Purpose
Our purpose is to transform the way businesses manage travel and expenses. We do this
by helping companies drive down the cost of their travel program, using smart technology
and making the process of booking and managing travel and reconciling expenses a
positive experience for their people.
About Serko
Serko is a market leading travel and expense technology solution in Australasia, used by
over 6,800 corporate entities. Zeno is Serko’s next generation travel management
application, using intelligent technology, predictive workflows, and a global travel
marketplace to transform business travel across the entire journey. Serko is listed on the
New Zealand Stock Exchange Main Board (NZX:SKO) and Australian Securities Exchange
(ASX:SKO). Serko employs more than 240 people worldwide, with its headquarters in New
Zealand, and offices across Australia, China, and the U.S.
Visit www.serko.com for more information.
3
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$26.8m
2%
$42.4m
Cash balances increased
from $15.7m post net capital
raise of $43.2m
($6.1m)
EBITDAF* loss
($9.4m)
Net Loss After Tax
11%Operating Revenue Growth to $25.9m
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11%Operating Revenue Growth to $25.9m
$26.8m
2%
$42.4m
Cash balances increased
from $15.7m post net capital
raise of $43.2m
($6.1m)
EBITDAF* loss
($9.4m)
Net Loss After Tax
* EBITDAF = earnings before interest, taxation, depreciation, amortisation and fair value
5
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Increase in booking transactionsTotal Income
CEO and Chairman’s letter
Dear Fellow Shareholders,
The first three quarters of the financial year ended 31 March
Company’s strong cash position has provided a comfortable
2020 were characterised by monthly revenue growth and
level of liquidity that meant we have had no requirement to
the achievement of a number of key milestones. However,
raise capital in distressed circumstances.
Serko’s performance was impacted in the fourth quarter of the
financial year as the Covid-19 pandemic became widespread,
significantly affecting booking volumes. This resulted in an
adverse impact on the full-year result.
This has allowed us to maintain our operating capacity and
retain our key people to best position Serko when travel
volumes recover.
Government responses to the pandemic worldwide, including
SUMMARY FINANCIAL RESULTS
lockdowns and the suspension of all non-essential travel,
continue to have a material adverse effect on booking
transaction volumes on Serko’s online travel booking platforms,
which generate the majority of Serko’s revenue.
The Serko Board has exercised judgement on a number of
important areas in the Income Statement and Statement
of Financial Position and we draw your attention to the
commentary in this Annual Report, the Financial Statements
Clear evidence of a pattern of declining booking activity
themselves and the Notes to the Financial Statements for
became apparent in mid-February 2020 and this was followed
more detailed explanations.
by a precipitous decline in March 2020 as lockdown measures
were implemented. At its lowest point during the financial year
Revenue
in March 2020, daily booking volumes were down in excess of
90% compared to similar days in March 2019.
Total Operating Revenue for the year to 31 March 2020 rose 11%
to $25.9 million from $23.4 million in the same period a year
In response to the operational and economic impacts of
ago, substantially lower than our initial guidance range of 20%
Covid-19, Serko has reduced cash burn and reprioritised
- 40% for the year. We revised revenue expectations to the
strategic initiatives to position the business for the materially
low end of the range on 25 February 2020 and then abandoned
changed operating environment. The implementation of these
guidance completely on 16 March 2020, in both cases owing to
initiatives was largely undertaken after the balance date.
the effects of Covid-19.
It should, however, be noted that Serko has carefully chosen
Under IFRS 15 (Revenue from Contracts) Serko records
to retain resource and capacity on key growth initiatives to
revenue from its portfolio of contracts with reference to actual
ensure we are well positioned to participate in the recovery of
transactions, forecast transactions and minimum contracted
corporate travel.
Of note during the financial year, Serko entered into an
agreement with Booking.com to supply a ‘white-label’ version
of our Zeno booking tool for Booking.com, targeting its
business customer base internationally. The ‘Booking.com
for Business’ version of Zeno is currently in pilot phase and is
expected to be rolled out to additional Northern Hemisphere
markets following achievement of agreed performance targets.
Booking Holdings (owner of Booking.com) participated in
Serko’s successful oversubscribed capital raising of $45 million
commitments. Serko has agreed to a number of changes to
contracts as a result of the impact of Covid-19 on the entire
industry, this includes changes to schedules of contracted
minimum revenues. This has had the effect of reducing the
revenue that Serko expected to record in the current year. The
Board has also made decisions with respect to Expected Credit
Losses (IFRS 9) that reflect the prevailing level of uncertainty
in the travel industry.
Total income from all sources for the year to 31 March 2020 was
up 9% to $26.8 million from $24.6 million in the prior year.
($43.2 million net of costs), completed in late 2019.
Recurring Product Revenues increased 16% during the year,
This capital raise was intended to provide funding for Serko’s
planned expansion into new markets. Although we did not
anticipate an event as catastrophic as Covid-19, the Serko
Board has always maintained a prudent approach to balance
sheet management. By raising additional capital, the
lifted by a full-year contribution from InterplX and organic
business growth prior to the Covid-19 outbreak. Peak
Annualised Transactional Monthly Revenue (ATMR) at the end
of February 2020, historically a forward-looking indicator
of recurring revenues, stood at $27.5 million, up from $26.0
6
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million in the same period of the prior year. However, by the
AUSTRALASIAN MARKET UPDATE
end of March ATMR had fallen to $15 million, based on the drop
that occurred within the month, ending the year with travel
booking revenues up only 2% to $16.3 million from $15.9 million
in the prior year. Subsequently ATMR has dropped further post
year-end.
Serko Expense platform revenues were up 115% to $5.8 million
for the financial year from $2.7 million reflecting the full-year
contribution of the InterplX acquisition of $3.7 million versus
$0.9 million for a single quarter for FY19. Excluding InterplX,
Serko Expense platform revenues were up 16% at $2.1 million
from $1.8 million the prior year.
Services revenue and grant income were down 33% on the
same period a year ago, reduced to $1.8 million owing to
Serko’s development resources being directed toward product
development for new markets. Supplier commissions revenues
declined marginally by $111,000 (7%) to $1.4 million.
Expenses and Investment Activity
Operating costs increased 59% to $37.1 million reflecting a
full year of InterplX operating costs and the scale up of our
international presence. Costs included $4.7 million non-
The New Zealand and Australian markets together generated a
majority of total bookings on our platform, and travel booking
revenues, during the financial year. The majority of these
transactions were domestic bookings.
During the financial year we achieved year-on-year booking
growth each month through to February 2020. This was
despite softer economic conditions in Australia in the first
half, followed by the Australian bushfires negatively impacting
corporate travel.
Serko continued to grow customer numbers during the
financial year with the number of corporates transacting
through the travel platforms increasing by over 700 (comparing
February 2020 to February 2019).
We also saw a significant transition to the premium Zeno
product from Serko Online during the period. Zeno was carrying
approximately 25% of transactions across our platforms at
the end of the financial year, up from approximately 6% of
transactions at the beginning of the year.
Zeno is now being used by 42% of corporate customers in
Australia and New Zealand, up from 9% at the beginning of
cash costs relating primarily to depreciation, amortisation,
final fair-value adjustment related to the issue of the final
the year.
tranche of Serko shares for the InterplX acquisition and
In February a peak of over 24,000 bookings were processed
share based payments.
Serko has capitalised $11 million of development costs for
FY20, compared to $6.7 million in FY19. Total Research &
Development (R&D) at $13.6 million was 53% of net operating
income compared to 39% in the prior year. Although there
remains considerable uncertainty as to the future operating
environment, the Serko Board remains of the view that this
in a single day (up from a peak of 21,000 in the same month in
the prior year). However, with the gradual decline in bookings
becoming evident in mid-February, and the subsequent rapid
decline in March 2020, total bookings for the entire financial
year were up only 2% over the prior year.
Impacts of Covid-19
investment will produce an acceptable commercial return in
The Covid-19 pandemic and related travel restrictions resulted
the future.
Cash Flow and Cash Balance
in an observable declining trend in February 2020 followed by a
dramatic reduction in March 2020. By the end of March 2020,
daily transaction volumes had declined by ~90% compared to
the equivalent days in March 2019.
Serko remains well funded following the completion of an
oversubscribed capital raise of $45 million in November 2019,
We currently believe that the Australian and New Zealand
with cash balances up from $15.7 million in the prior year. Net
domestic and trans-Tasman travel markets, which presently
funds received after capital raising costs were $43.2 million.
generate most of our revenue, are poised to recover more
Excluding these funds, Serko’s net cash burn for the year,
quickly than international routes outside of Australasia.
including capitalised development, was $16.5 million. Cash
balances at 31 March 2020 were $42.4 million.
Earnings
Travel volumes have gradually started to recover in May 2020
with the easing of domestic travel restrictions in New Zealand.
We are yet to see any material increase in domestic travel
in Australia owing to the significant travel restrictions that
Net loss after tax for the year was ($9.4 million), down from
remain in place. Essential travel in Australia has, however,
a FY19 profit of $1.6 million and EBITDAF fell to a loss of ($6.1
continued and we continue to manage a small number of
million) from a profit of $2.6 million in the same period a
Australian transactions across our platforms.
year ago.
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During the first three weeks of June 2020, over 3,200
for most of FY21. Additional key markets will be developed and
corporate customers have made travel bookings as New
‘localised’ (e.g. for content and language) as we progressively
Zealand moved down to Level 1 restrictions. This has resulted
roll out the solution across Europe.
in daily booking volumes on Serko’s platforms steadily
increasing in June 2020 to about 25% of the daily booking
Impacts of Covid-19
volumes in June 2019 (from a low of 9% in April). Although the
outlook is highly uncertain, we anticipate our core Australasian
markets will be operating at 40% - 70% of their pre-Covid-19
activity levels by March 2021. Beyond that we are taking a
conservative approach to growth as most industry reports
indicate a slow, and largely unpredictable, return to full pre-
Covid-19 activity levels.
We have been working proactively with our travel
management partners to support their recovery. In some
instances this has required amendment of contractual
obligations that has adversely impacted our previously noted
FY20 revenue recognition.
NORTH AMERICAN & EUROPEAN EXPANSION UPDATE
North America
During the financial year we invested heavily in our Zeno
platform for expansion into North America. Transactions
commenced in this market following the transition of several
travel management resellers from pilot phase to onboarding
their first corporate customers. As expected, revenue numbers
from this market were not significant for the financial year.
Travel management reseller onboarding slowed materially in
the last quarter owing to the impact of Covid-19 and we expect
further corporate onboarding to be slow until travel resumes in
that market.
Serko’s business plans in North America and Europe are not
contingent on the revival of long-haul international travel. In
excess of 95% of the revenue opportunities we were pursuing
prior to the pandemic were domestic or intra-regional
bookings and the total addressable market remains significant.
Domestic travel in the United States (US), and domestic and
cross-border intra-regional travel to nearby countries within
Europe, are expected to be the first segments of these travel
markets to recover post-Covid-19.
SERKO EXPENSE PLATFORM INITIATIVES
As noted above the Serko Expense platform has provided solid
revenue growth during the financial year and represents an
important diversification from travel revenues for Serko.
In North America the development work required to bring the
InterplX expense platform in line with the Zeno user experience
continues and we expect to launch the new Zeno Expense
offering in Q3 FY21, bringing greater scalability and a richer set
of features to our combined Travel & Expense offering.
In Australasia a direct marketing campaign and activation of a
reseller incentive programme across our travel management
company partners, along with the introduction of a rapid
implementation programme that materially reduces our set-up
time to onboard new accounts, is resulting in an increased
pipeline of Serko Expense platform opportunities.
Transactions have effectively ceased due to the lockdown
restrictions in this market.
RESPONSE TO COVID-19
Despite the impacts of Covid-19, Serko has signed an additional
three resellers since 31 March 2020. Development work will
continue in the market, expanding local air, rail and hotel
content, as well as completing reseller integrations to support
the migration of additional corporates onto our platforms.
United Kingdom & Europe
In the United Kingdom and Europe we have been undertaking
the development work required for the launch of ‘Booking.
com for Business’, a white-label version of Zeno to be offered
internationally to Booking.com’s small and medium-sized
enterprise (SME) customers.
Our immediate response to the Covid-19 pandemic was to
introduce measures to look after our people. We already had
in place a pandemic plan that informed our planning for a crisis
such as Covid-19. Our crisis management team convened when
our China office was forced to close. This team, with close
Board oversight, focussed on ensuring the ongoing health
and safety of our people and the seamless continuation of our
operations as we transitioned to remote working.
We maximised the use of digital technology to retain our
productivity and interconnectedness. We also worked hard
to ensure we communicated effectively with our people
throughout the crisis and ran a digital resilience programme
to support and engage our people as they worked remotely.
The impacts of Covid-19 delayed the beta-launch of ‘Booking.
Serko’s most recent (May 2020) culture survey results show the
com for Business’ from March 2020 to May 2020. However,
strongest engagement scores in five years of surveying and
initial bookings have been completed in the United Kingdom
our employees voiced their gratitude for the leadership and
and Ireland and the roll out in these two markets will continue
support shown during such a challenging period.
8
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These initiatives were rapidly followed by a cost-reduction
programme designed to preserve our strong cash balance
• We are focusing predominantly on domestic travel within
North America, where we continue to add resellers to
position and target an average cash burn rate of no more than
our platform and continue development work to localise
$2 million per month through to the end of FY21. We balanced
content in that region;
cost savings with investment in core areas to maintain our
capability to deliver on our key growth initiatives.
This cost-reduction programme saw the removal of non-
essential expenditure, scaled down operating expenses (such
as cost of sales and hosting) as well as the rationalisation of
our contractor resources (including the conversion of some
of this resource to full-time employment). Serko has aimed to
keep as many people employed during this period as possible,
as we recognise the personal impact to employees if they were
to lose their jobs and the cost to the business of losing skilled
people, especially as our ambition to grow in new markets
remains undiminished.
We acknowledge and thank the various Government
programmes and subsidy schemes that have assisted in the
retention of our people during this challenging period. We
accessed $1.6 million of Government-backed Covid-19 relief
schemes to date across the countries in which Serko operates,
including receipt of $871,670 in salary subsidies from the New
Zealand Government.
In addition, employees agreed to take a salary reduction for
three months from May 2020, and the non-executive directors
agreed to either take a reduction in their directors’ fees or
receive a portion of their directors’ fees in shares for the first
three months of FY21.
BUSINESS TRAVEL OUTLOOK
The rate of return to business travel will vary by region and type
of trip (i.e. domestic, regional, long-haul international). Volumes
are very difficult to model. Travel Management resellers are
operating with fewer human resources, creating opportunities
for automation and technology solutions. Additionally, we are
seeing greater cost management by corporations and a focus
on traveller wellbeing, duty of care obligations and change
management. We are actively assessing changes in corporate
and traveller needs to ensure that we can support the market,
our customers and our growth as the industry recovers.
FY21 OUTLOOK
We consider the business is well positioned for growth when
trading conditions improve and the travel industry starts to recover:
• We occupy a strong market position in Australasia, with
the majority of our transactions being domestic and
Trans-Tasman in our home markets. There remains a
pipeline of new customers to be onboarded from our
existing reseller partners;
• ‘Booking.com for Business’ white-label is now live in the
United Kingdom and Ireland and our agreement with
Booking.com presents an opportunity to continue to
expand use of the Zeno booking tool internationally;
• We have a strong balance sheet and ongoing
commitment to investment, which will benefit existing
and prospective customers; and
• We have retained resource and capacity on key
growth initiatives.
We believe these factors position us well to continue to prosper
in our home markets and to roll out our products globally as
confidence returns to corporate travel markets.
Timing, however, remains uncertain. As a result, we are unable
to forecast our likely operating revenue for the 2021 financial
year with any certainty.
As at 31 May 2020, Serko had net cash and cash equivalents of
$39.9 million. We believe these cash resources, at the current
rate of cash burn, will be sufficient to see the Company through
to cash flow break even again, should our anticipated recovery
scenario be achieved.
We will continue our rigorous focus on cash flow throughout the
remainder of FY21, targeting an average monthly cash burn of no
more than $2 million per month, to conserve cash reserves.
THANK YOU TO OUR PEOPLE
We want to take this opportunity to thank our people for
their continuing dedication and hard work during the 2020
financial year and also, most importantly, since the Covid-19
pandemic dramatically changed our industry and our way of
working. We acknowledge this been an incredibly difficult
period personally for many of our employees. Our people
have adapted quickly to working remotely during the lock
down period in each of our offices and have continued to
work hard to deliver on Serko’s goals. We thank them for their
continuing commitment to Serko.
Signed
CLAUDIA BATTEN
ACTING CHAIR
DARRIN GRAFTON
CHIEF EXECUTIVE OFFICER
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STRATEGIC
OVERVIEW
Technology
Innovation
Grow ARPB
Grow Customer
Base
Grow average revenue
per booking (ARPB) by
offering increased
content and moving
customers to Zeno
Offer premium,
integrated global
solutions
Expand into new
territories through
strategic alliances and
reach the unserved SME
market
10
Serko annual report
STRATEGIC
OVERVIEW
Technology
Innovation
Grow ARPB
Grow Customer
Base
Grow average revenue
per booking (ARPB) by
offering increased
content and moving
customers to Zeno
Offer premium,
integrated global
solutions
Expand into new
territories through
strategic alliances and
reach the unserved SME
market
TECHNOLOGY INNOVATION
Our vision of building Zeno as a platform for the future of travel supported us into new
markets and strategic partnerships
• Developed Zeno into a white-label platform under the Booking.com for Business brand to target SME customers
• Launched Zeno Labs, an innovation program that plugs our customers directly into our product development research and development
• Continued to expand our integrations with content partners, enriching travel options for users (e.g. Southwest Airlines through New
Distribution Capability (NDC), train bookings)
Our focus for FY21:
• Develop a strategy of architecting our technology to become an extensible platform that can be built on by partners in future
• Accelerate our ability to scale internationally by enabling additional content and service partners to build onto the Zeno platform
• Implement the learnings from our partnership with Booking.com to deliver a more consumer-grade shopping and booking experience
GROW CUSTOMER BASE
Zeno helped our travel management partners win new business and the first Zeno
customers in the US and Canada went live
• 700 new customers were added to Zeno during the year1, bringing total customers to more than 6,800 globally, with a peak of 24,000
bookings per day2
• Developed content and systems integration needed to deploy Zeno through our reseller partners in North America and the first
corporate customers in the US and Canada went live
• Launched a best-in-class sales enablement programme to support reseller partners globally to win and retain more customers with Zeno
Our focus for FY21:
• Support Booking.com to roll out the Zeno powered white-label Booking.com for Business platform to their existing customers and drive
new customer acquisition
• Extend our self on-boarding white-label solution to additional resellers and markets
• Drive adoption and market share of Zeno across the customer base of our North American travel management partners
GROW ARPB
We signed a significant new agreement to launch Booking.com for Business powered by
Zeno on a revenue share model
• Grew the adoption of Zeno across the Serko customer base from approximately 6% of transactions at the beginning of the financial year
to approximately 25%
• Developed a pipeline of partnerships with revenue share business models that are higher than our transactional ARPB to date (e.g.
Booking.com for Business) presenting future opportunities for growth
• Rolled out the Zeno self-onboarding portal to enable partners to cost-effectively add customers to our online booking platform
Our focus for FY21:
• Invest in product development of value-add functionality across cost, risk and change management that can be commercialised on a
transaction or subscription basis
• Launch our new Zeno Expense platform into the North American market
• Support the migration to Zeno of the remaining 50%+ of Serko Online customers, with the associated uplift in transaction fees
1 Comparing February 2019 to February 2020.
2
In February 2020, before the impact of Covid-19 hit. Note transactions have materially declined since February 2020 as a result of Covid-19.
11
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Our Products
Zeno is an integrated travel and expense platform that is designed to revolutionise
the world of corporate travel and expense management globally.
Zeno travel
Zeno Travel is an Online Booking Tool (OBT) that is used by
corporate travellers to book flights, trains, hotels, rental cars and
airport transfers in line with their corporate travel policies.
This provides the oversight and control that travel managers need
to ensure that spend is effectively managed, with the ease of use
and personalised experience that draws corporate travellers to
use the OBT and avoid travel program ‘leakage’ to supplier
websites or leisure travel retailers.
Zeno does this with an intuitive interface that makes booking
business travel super simple, intelligent technology that provides
personalised itinerary recommendations based on traveller
preferences, and a global marketplace that allows travellers to
connect with preferred suppliers at every stage of the journey.
The result is greater traveller adoption, increased compliance
and greater control over the entire travel program compared with
legacy corporate booking tools.
Zeno expense
Zeno Expense automates the process of corporate card and
out-of-pocket expense submission, reconciliation and
reimbursement. Employees capture receipts via the mobile app,
or email receipts directly to Zeno, add a description or cost
centre if needed and submit for approval there and then. To
make it even simpler, Zeno also offers automated integrations
with providers such as Uber for Business.
Zeno’s intelligent technology proactively identifies and manages
out of policy claims, detecting and minimising expense claim fraud
and dramatically streamlining the expense administration function.
Zeno Expense also provides managers and finance teams with a full
suite of analysis tools that help them to run their Travel & Expense
budgets more effectively, identify problem areas and optimize
expense policies.
The result is better spend management and less time wasted
preparing, approving and processing expense reports.
12
Serko annual report
Serko generates revenue through corporate
customers paying a booking fee per transaction and
through supplier commission.
Serko earns revenue through corporate customers
paying a fee per active user and/or per expense
report submitted.
BOOKING.COM FOR BUSINESS
powered by Zeno
In October 2019 Booking Holdings invested in Serko as part of
a capital raising, and extended the Serko partnership to
eventually enable Booking.com to leverage the Zeno platform
as a white-label solution under the Booking.com for Business
brand, with a commercial partnership based on a revenue
share model between Booking.com and Serko.
Teams at both companies have worked together to rapidly
bring to market an initial product which is currently being
tested in a few key markets.
For small to medium sized businesses who don't have the
complex managed travel needs that a travel management
company would support, the new Booking.com for Business
platform will in time provide them with a one-stop-shop for all
their business travel needs, helping them save time and money
and making life easier for their travellers and their
administration teams alike.
About Booking Holdings: Booking Holdings is the world’s
leading provider of online travel & related services, provided to
consumers and local partners in more than 225+ countries and
territories through six primary consumer-facing brands:
Booking.com, KAYAK, Priceline, Agoda, Rentalcars.com and
OpenTable
Our Products
Zeno is an integrated travel and expense platform that is designed to revolutionise
the world of corporate travel and expense management globally.
Zeno travel
Zeno Travel is an Online Booking Tool (OBT) that is used by
corporate travellers to book flights, trains, hotels, rental cars and
airport transfers in line with their corporate travel policies.
This provides the oversight and control that travel managers need
to ensure that spend is effectively managed, with the ease of use
and personalised experience that draws corporate travellers to
use the OBT and avoid travel program ‘leakage’ to supplier
websites or leisure travel retailers.
Zeno does this with an intuitive interface that makes booking
business travel super simple, intelligent technology that provides
personalised itinerary recommendations based on traveller
preferences, and a global marketplace that allows travellers to
connect with preferred suppliers at every stage of the journey.
The result is greater traveller adoption, increased compliance
and greater control over the entire travel program compared with
legacy corporate booking tools.
Zeno expense
Zeno Expense automates the process of corporate card and
out-of-pocket expense submission, reconciliation and
reimbursement. Employees capture receipts via the mobile app,
or email receipts directly to Zeno, add a description or cost
centre if needed and submit for approval there and then. To
make it even simpler, Zeno also offers automated integrations
with providers such as Uber for Business.
Zeno’s intelligent technology proactively identifies and manages
out of policy claims, detecting and minimising expense claim fraud
and dramatically streamlining the expense administration function.
Zeno Expense also provides managers and finance teams with a full
suite of analysis tools that help them to run their Travel & Expense
budgets more effectively, identify problem areas and optimize
expense policies.
The result is better spend management and less time wasted
preparing, approving and processing expense reports.
Serko generates revenue through corporate
customers paying a booking fee per transaction and
through supplier commission.
Serko earns revenue through corporate customers
paying a fee per active user and/or per expense
report submitted.
BOOKING.COM FOR BUSINESS
powered by Zeno
In October 2019 Booking Holdings invested in Serko as part of
a capital raising, and extended the Serko partnership to
eventually enable Booking.com to leverage the Zeno platform
as a white-label solution under the Booking.com for Business
brand, with a commercial partnership based on a revenue
share model between Booking.com and Serko.
Teams at both companies have worked together to rapidly
bring to market an initial product which is currently being
tested in a few key markets.
For small to medium sized businesses who don't have the
complex managed travel needs that a travel management
company would support, the new Booking.com for Business
platform will in time provide them with a one-stop-shop for all
their business travel needs, helping them save time and money
and making life easier for their travellers and their
administration teams alike.
About Booking Holdings: Booking Holdings is the world’s
leading provider of online travel & related services, provided to
consumers and local partners in more than 225+ countries and
territories through six primary consumer-facing brands:
Booking.com, KAYAK, Priceline, Agoda, Rentalcars.com and
OpenTable
13
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Business travel in a
post-pandemic world
In a post-pandemic world, the rate of return to business travel will vary by region and type of trip
(i.e. domestic, regional, long-haul international) and nobody can say with a great deal of certainty
what volumes will look like.
The future
We’re built for the future
What is more certain, however, is that as business travel
The managed sales channel offers a solution to these
resumes, factors such as cost, risk and change management
requirements. Flights or hotels booked directly with
are likely to be top-of-mind priorities for organisations.
suppliers across multiple airline or hotel websites make it
difficult for the organisation to effectively address cost, risk
Cost management is a key consideration because most
or change management.
organisations will be returning from a near zero dollar spend on
travel, and each trip and each dollar proposed to be spent will
Adoption of the corporate booking tool and the subsequent
be reviewed with a greater level of scrutiny than before.
corporate travel policy compliance has become
Risk management is likely to be of increased importance to
ensure traveller wellbeing is certain and that duty of care
obligations are being met.
Change management is also expected to be a critical priority,
not just to support an organisation’s travellers as they navigate
a much more unpredictable landscape of disruptions but also
to ensure that credits are effectively tracked and utilised.
increasingly important.
This is the future of business travel that Zeno is built for:
A traveller-centric platform that is easy to use, with rich
content presented in a way that is familiar to any traveller to
drive adoption,
compliance, and
Seamless policy application at point of purchase to ensure
Intelligent technology to support changes and cancellations
with dynamic application of ticket credits.
The world of business travel has changed, and Serko is well
positioned to support this change.
The markets we serve
HIGHLY
MANAGED
LIGHTLY
MANAGED
UNMANAGED
TRAVEL SPEND
$$$
$$
CORPORATE PROFILE
Enterprise
Mid-Large Corporate
TRAVEL POLICY
SERVICING NEEDS
CHANNEL TO MARKET
Highly complex
High touch
Direct + TMC
Moderate
Low touch
TMC
OUR SOLUTIONS
Zeno Travel
& Expense
Zeno Travel & Expense
Self on-boarding
$
SME
Simple
Self-service
TMC
Booking.com for Business
Booking.com for Business
powered by Zeno
Zeno Travel & Expense Self
on-boarding
Managed travel
Mid to large sized organisations generally have well
Un-managed travel
Small to medium sized organisations (SMEs) generally have
developed corporate travel policies and significant annual
lower annual spend and less developed corporate travel
travel spend, relying on the services of Travel Management
policies. Travel bookings are generally made directly with
Companies (TMC) to manage their corporate travel
suppliers or through online travel booking sites, meaning
programs. These services generally include travel booking,
they miss out on corporate negotiated rates and often make
risk management, traveller support, supplier negotiation and
multiple bookings for a single trip. This can make it difficult
reporting. TMCs provide Zeno to their corporate customers
to deal with disruption and change management,
as their online booking channel, as a standalone app or as
expenditure reconciliation and traveller support.
part of a suite of digital tools to support business travel.
14
Serko annual report
The markets we serve
HIGHLY
MANAGED
LIGHTLY
MANAGED
UNMANAGED
TRAVEL SPEND
$$$
$$
CORPORATE PROFILE
Enterprise
Mid-Large Corporate
TRAVEL POLICY
SERVICING NEEDS
CHANNEL TO MARKET
Highly complex
High touch
Direct + TMC
Moderate
Low touch
TMC
OUR SOLUTIONS
Zeno Travel
& Expense
Zeno Travel & Expense
Self on-boarding
$
SME
Simple
Self-service
TMC
Booking.com for Business
Booking.com for Business
powered by Zeno
Zeno Travel & Expense Self
on-boarding
Managed travel
Un-managed travel
Mid to large sized organisations generally have well
Small to medium sized organisations (SMEs) generally have
developed corporate travel policies and significant annual
lower annual spend and less developed corporate travel
travel spend, relying on the services of Travel Management
policies. Travel bookings are generally made directly with
Companies (TMC) to manage their corporate travel
suppliers or through online travel booking sites, meaning
programs. These services generally include travel booking,
they miss out on corporate negotiated rates and often make
risk management, traveller support, supplier negotiation and
multiple bookings for a single trip. This can make it difficult
reporting. TMCs provide Zeno to their corporate customers
to deal with disruption and change management,
as their online booking channel, as a standalone app or as
expenditure reconciliation and traveller support.
part of a suite of digital tools to support business travel.
Business travel in a
post-pandemic world
In a post-pandemic world, the rate of return to business travel will vary by region and type of trip
(i.e. domestic, regional, long-haul international) and nobody can say with a great deal of certainty
what volumes will look like.
The future
We’re built for the future
What is more certain, however, is that as business travel
resumes, factors such as cost, risk and change management
are likely to be top-of-mind priorities for organisations.
Cost management is a key consideration because most
organisations will be returning from a near zero dollar spend on
travel, and each trip and each dollar proposed to be spent will
be reviewed with a greater level of scrutiny than before.
Risk management is likely to be of increased importance to
ensure traveller wellbeing is certain and that duty of care
obligations are being met.
Change management is also expected to be a critical priority,
not just to support an organisation’s travellers as they navigate
a much more unpredictable landscape of disruptions but also
to ensure that credits are effectively tracked and utilised.
The managed sales channel offers a solution to these
requirements. Flights or hotels booked directly with
suppliers across multiple airline or hotel websites make it
difficult for the organisation to effectively address cost, risk
or change management.
Adoption of the corporate booking tool and the subsequent
corporate travel policy compliance has become
increasingly important.
This is the future of business travel that Zeno is built for:
A traveller-centric platform that is easy to use, with rich
content presented in a way that is familiar to any traveller to
drive adoption,
Seamless policy application at point of purchase to ensure
compliance, and
Intelligent technology to support changes and cancellations
with dynamic application of ticket credits.
The world of business travel has changed, and Serko is well
positioned to support this change.
15
Serko annual report
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Board of Directors
Simon Botherway CFA
Independent Non-executive Director, Chair, New Zealand
1
Appointed 30 April 2014, re-elected August 2018
Simon is based in New Zealand. He is a Chartered Member of the NZ Institute of Directors. He holds a BCom, as well as the US-based
Chartered Financial Analyst (CFA) designation. Simon has extensive experience in corporate governance, banking and investment
management. In 2002 Simon co-founded Brook Asset Management and was Chairman from 2004 to 2008. He is also a past President of
the CFA Society of New Zealand and was a member of the CFA Asia-Pacific Advocacy Committee.
Simon was appointed as a member of the Securities Commission in 2009 and chaired the Financial Markets Authority Establishment
Board in 2010. Simon is currently a Director of Fidelity Life Assurance and is a Guardian of the New Zealand Superannuation Fund.
Claudia Batten
Independent Non-executive Director, Acting Chair, United States
1
Appointed 30 April 2014, re-elected August 2017
Claudia is based in the United States. She holds an LLB (Hons) and BCA from Victoria University (Wellington). Claudia has been a founding
member of two highly successful entrepreneurial ventures. The first venture was Massive Incorporated, a network for advertising in
video games, she helped pioneer ‘digital’ as a media buy. Massive was sold to Microsoft in 2006. In 2009 she co-founded Victors & Spoils
(‘V&S’), the first advertising agency built on the principles of crowdsourcing. V&S was majority acquired by French holding company
Havas Worldwide in 2011. Claudia is a strong supporter of the New Zealand start-up scene as an active mentor and adviser. She is also
the digital adviser to the Board of Westpac New Zealand.
Clyde McConaghy
Independent Non-executive Director, Australia
Appointed 30 April 2014, re-elected August 2019
Clyde is based in Australia. He holds a BBus, and an MBA from Cranfield University United Kingdom (UK). Clyde is a Fellow of the
Australian Institute of Company Directors and a Fellow of the Institute of Directors UK. He is the founder of Optima Boards, providing
independent director and advisory services to public, private, family office and charitable entities around the world. Clyde has worked
in publishing, media, online and technology sectors, living in the UK, Germany, China and Australia. He is a Director of ASX-listed
technology company, Infomedia Limited and Chairman of the Board of Chapman Eastway Pty Limited.
Darrin Grafton
Executive Director, Chief Executive Officer & Co-Founder
Appointed 5 April 2007, elected August 2019
Darrin has more than 25 years’ experience in travel technology and is a recognised industry innovator. He has been responsible
for leading major changes in the corporate travel industry throughout his career and was named one of the top 25 most influential
executives in the travel industry by the BTN Group in 2014.
Darrin has held directorships and senior management positions across various companies, including the Gullivers Travel Group (listed
on the Australian and New Zealand Stock Exchanges between 2004 and 2006). Darrin has previously been awarded the NZX Hi-Tech
Entrepreneur Award, has been a past finalist for the NZ Hi-Tech Company Leader Award and the EY Entrepreneur of the Year Award.
He is also a member of the Institute of IT Professionals NZ, the Institute of Directors NZ.
Robert (Bob) Shaw
Executive Director, Chief Strategy Officer & Co-Founder
Appointed 5 April 2007, re-elected August 2018
Since 1987, Bob has been involved in transforming the travel industry, collaborating with the World’s leading airlines, travel agencies
and global distribution systems. He has held a number of directorships and senior management positions in various high-profile
ventures, including Gullivers Travel Group (listed on the Australian and New Zealand Stock Exchanges between 2004 and 2006) and
Interactive Technologies.
Bob has been a past finalist for the EY Entrepreneur of the Year Award.
He is also a member of the Institute of IT Professionals NZ and the Institute of Directors NZ.
1.
Mr Botherway continues as a director of Serko (attending all Board and Committee meetings) but took a leave of absence from the Chair role on 12 March 2020 for
medical reasons. Ms Batten assumed the role of Acting Chair from this date.
16
Serko annual report
Management Team
John Challis
Head of Business Development
John has 18 years’ experience in the corporate travel technology sector across operations, implementations and sales. John has been
with Serko for 11 years and was until recently responsible for managing the Australasian sales team, however, as part of Serko’s global
expansion plans John is now responsible for growth in new markets, with a heavy focus on the Northern Hemisphere.
Tony D’Astolfo
Senior Vice President, NORAM
Tony is a 35-year travel industry veteran, with rich expertise in travel and technology and a passion for moving the industry forward. His
career includes senior leadership positions at Deem, Phocuswright, GroundLink, Sabre/GetThere and United Airlines. Tony is a long-time
member of GBTA and ACTE and a former member of the Board of Directors of both ACTE and WINiT for Women.
Charlie Nowaczek
Chief Operating Officer (COO)
Charlie has over 25 years’ experience as an operations executive and management adviser, specialising in business transformation and
operational excellence. Over the last decade he has been COO for a number of technology start-ups in the US and Canada.
Duanne O’Brien
Chief Technology Officer
Duanne is a technology leader with over 25 years’ experience, specialising in building global enterprise SaaS (software as a service)
platforms. Duanne leads the largest of our global teams, designing, building and running Serko’s platforms and products.
Susan Putt
Chief Financial Officer (CFO)
Susan has over 30 years’ experience working in New Zealand and has also worked in Australia and Canada. She is a Chartered Accountant
and Chartered Member of the Institute of Directors. Susan has worked as CFO, Head of Strategy, and director for a number of New
Zealand businesses and specialises in working with high-growth companies.
Murray Warner
Head of Australasian Market
Murray has 20 years’ experience working with cloud software technology building new sales and revenue operations. He has previously
held several senior management positions with Concur Technologies, an SAP company, across Asia-Pacific, Europe and North America.
Nick Whitehead
Chief Marketing Officer
Nick has a 20-year track record of commercialising technology through the development of effective go-to-market strategies and leads
Serko’s global marketing and communications function.
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Corporate Responsibility
Serko aims to be a successful growth company. To
realise this ambition we must do the right thing by our
people, customers, communities and our shareholders.
We aim to achieve this through:
1) Focusing on long-term growth and business
sustainability;
2) Applying best practice governance and risk
management procedures;
3) Cultivating an inclusive workplace of diverse and
engaged staff; and
4) Enabling environmentally sustainable choices
through technology.
Serko is committed to developing long-term value
creation and making positive improvements in social,
economic and environmental outcomes.
Further information and our full Annual Report can be
found on the investor centre of Serko’s website.
Serko’s first Environmental Social and Governance
(ESG) Report was produced in 2018. The United
Nations (UN) Sustainable Development Goals (SDGs)
have been adopted for Serko’s ESG initiatives
to be reported against. Serko’s ESG framework
remains under development and will continue to be
progressed over time.
The SDGs are a set of global initiatives set by the UN
for everyone to contribute to. For Serko, the SDGs
are a way to see which areas of sustainability we are
directly contributing to and how our initiatives relate
to a larger vision for positive change.
The UN SDGs relevant to Serko and our actions are
as follows:
18
Serko annual report
People:
Good health and well-being
Health and Safety Policies
Quality education
Training and intern programmes
Gender equality
Diversity and inclusion policies
Decent work and
economic growth
Remuneration policies
Reduced inequalities
Diversity and inclusion policies
Customers:
Industry, innovation and
infrastructure
Industry recognition for innovation
Responsible consumption
and production
Privacy and security policies
Community:
Sustainable cities and
communities
Sponsorships and donations
Climate action
Environmental practices
People:
Good health and well-being
Health and Safety Policies
Quality education
Training and intern programmes
Gender equality
Diversity and inclusion policies
Decent work and
economic growth
Remuneration policies
Reduced inequalities
Diversity and inclusion policies
Customers:
Industry, innovation and
infrastructure
Industry recognition for innovation
Responsible consumption
and production
Privacy and security policies
Community:
Sustainable cities and
communities
Sponsorships and donations
Climate action
Environmental practices
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20
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32
F
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Serko annual report
MANAGEMENT
COMMENTARY
Please read the following commentary with the financial statements and the related notes in this report. Some parts of this
commentary include information regarding the plans and strategy for the business and include forward-looking statements that
involve risks and uncertainties.
Actual results and the timing of certain events may differ materially from future results expressed or implied by the forward-looking
statements contained in the following commentary. All amounts are presented in New Zealand dollars (NZD), except where indicated. All
references to a year are the financial year ended 31 March, unless otherwise stated.
Non-GAAP (generally accepted accounting practices) measures have been included, as we believe they provide useful information for
readers to assist in understanding Serko’s financial performance. Non-GAAP financial measures do not have standardised meanings and
should not be viewed in isolation or considered as substitutes for measures reported in accordance with New Zealand Equivalents to
International Financial Reporting Standards (NZ IFRS). These measures have not been independently audited or reviewed.
20
Serko annual report
NET LOSS AFTER TAX
BUSINESS RESULTS
Year ended 31 March
Revenue
Other income
Total income
Operating expenses
Percentage of operating revenue
Net finance income
Net (loss)/profit before tax
Percentage of operating revenue
Income tax benefit (expense)
Net (loss)/profit after tax
Percentage of operating revenue
2020
$ (000)
25,869
922
2019
$ (000)
23,361
1,215
Change
$ (000)
%
2,508
11%
(293)
-24%
26,791
24,576
2,215
9%
(37,092)
-143%
975
(9,326)
-36%
(38)
(9,364)
-36%
(23,320)
-100%
290
1,546
7%
87
1,633
7%
(13,772)
-59%
685
236%
(10,872)
-703%
(125)
-144%
(10,997)
-673%
Operating revenue excludes other income, which is primarily grants.
Total income from all sources for the year to 31 March 2020 was up 9% to $26.8 million from
$24.5 million in the prior year. However, as operating costs increased, Serko recorded a
net loss result after tax of ($9.4 million) against prior year net profit of $1.6 million. The
result includes non-cash elements of $4.7 million for depreciation, amortisation, fair value
remeasurement adjustments and share-based payments.
Annual total operating revenue grew by $2.5 million (11%) to $25.9 million from $23.4 million
in the prior year, primarily related to Expense platform revenue, with Travel platform revenue
affected by the Covid-19 pandemic. Refer to further analysis under Income on page 22.
The Company recognised $0.9 million in grants from Callaghan Innovation and New Zealand
Trade and Enterprise (NZTE) within other income, down $0.3 million (24%) from the prior year.
Total operating expenses increased by $13.8 million to $37.1 million from $23.3 million in the
prior year. Refer to further analysis under Operating Expenses on page 27.
Net finance income increased by $0.7 million to $1 million, primarily through increased foreign
exchange gains.
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32
F
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78
D
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EARNINGS BEFORE INTEREST, TAX, DEPRECIATION, AMORTISATION AND FAIR VALUE
(EBITDAF)
Year ended 31 March
EBITDAF LOSS
Net (loss) profit after tax
Add back/(deduct): income tax
Deduct: net finance income
Add back: depreciation and
amortisation
Add back: Fair value remeasurement
of contingent consideration
EBITDAF (Loss)
Percentage of operating revenue
2020
$ (000)
(9,364)
38
(975)
3,156
1,056
(6,089)
-24%
2019
$ (000)
Change
$ (000)
%
1,633
(87)
(290)
(10,997)
-673%
125
-144%
(685)
236%
1,048
2,108
201%
287
2,591
-11%
769
268%
(8,680)
-335%
EBITDAF is a Non-GAAP measure representing Earnings Before the deduction of costs relating to Interest, Taxation,
Depreciation, Amortisation and Fair value remeasurement of contingent consideration. Serko uses this as a useful
indicator of cash profitability.
EBITDAF declined by $8.7 million from a profit of $2.6 million to a loss of ($6.1 million).
Depreciation and amortisation increased by $2.1 million over the prior year, owing to increased
amortisation of capitalised software of $1 million, as well as the inclusion of depreciation of
right-of-use assets (leased premises) under IFRS-16 (Leases) adoption of $1 million.
The second tranche of InterplX acquisition shares were issued in February 2020 resulting in a
fair value remeasurement adjustment of contingent consideration of $1.1 million owing to the
increase in share price since March 2019.
INCOME
Year ended 31 March
2020
$ (000)
2019
$ (000)
Change
$ (000)
%
Travel platform booking revenue
16,307
15,948
359
2%
Expense platform revenue
Supplier commissions revenue
Other revenues
Recurring product revenue
Percentage of operating revenue
Services revenue
Total revenue
Other income
Total income
5,831
1,427
485
24,050
93%
1,819
25,869
922
26,791
2,710
1,538
467
20,663
89%
2,698
23,361
1,215
24,576
3,121
115%
(111)
18
3,387
-7%
4%
16%
(879)
-33%
2,508
11%
(293)
-24%
2,215
9%
Recurring product revenue (a Non-GAAP measure) is the revenue derived from transactions and usage of Serko products by
contracted customers. It excludes services revenue.
Total revenue is operating revenue excluding grants and finance income, while total income includes grants.
22
Serko annual report
11%
INCREASE
TOTAL REVENUE
9%
INCREASE
TOTAL INCOME
Under Serko IFRS-15 (Revenue from Contracts) records revenue from its portfolio of contracts with reference to actual transactions,
forecast transactions and minimum contracted commitments. Owing to Covid-19 impacting the entire travel industry, Serko has agreed
to a number of changes to contracts, including changes to schedules of contracted minimum revenue. This has had the effect of
reducing the revenue that Serko expected to record in the current year.
Travel booking transactions were up year on year each month for the year through to February 2020 despite being adversely affected
by a subdued economic climate in the first half, then the Australian bush fires in November. In the fourth quarter of the financial year
the Covid-19 pandemic became widespread, significantly affecting booking volumes and materially impacting Serko’s performance.
Governmental responses to the pandemic worldwide, including lockdowns and the suspension of all non-essential travel, has had
a material adverse effect on booking transactions made on Serko’s online travel booking platforms, which generate the majority of
Serko’s revenue.
Clear evidence of a pattern of declining booking activity became apparent in mid-February 2020 and this was followed by a precipitous
decline in March 2020 as lockdown measures were implemented. At its lowest point during the financial year in March 2020, daily
booking volumes were down in excess of 90% compared to similar days in March 2019.
Travel booking transactions grew 2% on the previous year, with a February peak of over 24,000 bookings processed in a single day (up
over 14% from a peak of 21,000 in the prior year) before the impacts of Covid-19 were felt. February has historically been the month with
the highest average daily transaction volume.
During the year Serko continued to grow customer numbers, with the number of corporates transacting through the travel platforms
for the year increasing by over 700 when comparing February 2020 with February 2019. This was owing to the continued onboarding of
corporate customers by TMC resellers.
We also had significant transition to Zeno, Serko’s premium travel booking tool launched in 2018. As of 31 March 2020, Zeno was carrying
approximately 25% of transactions across our platforms at the end of the financial year, up from approximately 6% of transactions at the
beginning of the year. Zeno is being used by 42% of the corporate TMC customers, up from 9% at the beginning of the year.
Travel platform revenue grew by 2% for the year to $16.3 million from $15.9 million.
Serko Expense platform revenues were up 115% to $5.8 million, up from $2.7 million in the prior year reflecting the full-year contribution
from the InterplX acquisition of $3.7 million versus $0.9 million for a single quarter for FY19. Excluding InterplX, Serko Expense platform
revenues were up 16% at $2.1 million from $1.8 million the prior year.
Supplier commissions revenue declined marginally by $111,000 (7%) to $1.4 million from $1.5 million. Other revenues remained in line with
the prior year at $0.5 million.
Recurring product revenue was up 16% to $24 million from $20.7 million on the prior year, lifted by a full year of contribution from
InterplX and growth in the underlying business ahead of the Covid-19 outbreak. Recurring revenue as a percentage of total revenue
increased to 93%, up from the prior year 89%. Total income including grants was up 9% to $26.8 million.
Services revenue are non-recurring revenues and primarily reflect revenue associated with customising Serko’s travel platform as white-
label solutions for its TMCs. Total services revenue declined by 33% over the prior period to $1.8 million from $2.7 million. This revenue
was higher in the 2019 financial year owing to work performed on behalf of Flight Centre for its SAVI product. This year development
work has been prioritised for the launch of the Booking.com for Business platform, a white-label version of our Zeno booking tool for
Booking.com. Under the agreement with Booking.com, Serko will receive a revenue share of commission rather than development fees.
The platform is currently being trialled in the UK and Ireland.
HOW SERKO MAKES MONEY
Corporate traveller
makes a booking via
Serko Online/Zeno
Corporate traveller
books a hotel, car or taxi
via Serko Online/Zeno
Corporate traveller
downloads and uses
Serko Mobile
Corporate traveller
submits receipts using
Serko Expense/Zeno
$
Booking &
other fees
$
Supplier
commissions
$
Mobile
subscriptions
$
Monthly
user fee
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HOW SERKO MAKES MONEY CONTINUED
Serko’s main source of revenue is Travel platform revenue from Serko Online and Zeno.
Revenue trend
Travel platform revenue is made up of transaction fees, ancillary service fees and contracted minimum payments (where applicable) and
is stated net of volume-related rebates and discounts.
The serko.travel platform for small and medium enterprises is a free booking service and Serko earns commission income on those
bookings direct from suppliers, therefore income from this platform is included in supplier commissions. This platform is now being
adapted to become the Booking.com for Business platform in partnership with Booking.com. The commissions earned through this
platform will be split and recognised under supplier commissions.
Serko also earns income from its expense management platform Serko Expense, which allows registered users of corporate customers
to process travel and expense claims for accounting and reimbursement. Revenues are derived from a combination of fees for active
users, registered users and reports processed. In December 2018 Serko acquired US based InterplX. The two expense platforms will
be brought together as Zeno Expense and with further development to link directly to Zeno travel platform to enable automation of the
travel expenses filing.
Supplier commission revenue is earned when corporates opt to book Serko-sourced hotel and other traveller-related services. Serko is
paid directly from the suppliers of these services.
Other income includes income from Serko Mobile licence fees and other miscellaneous revenues.
Services revenue is derived from installation service and customised software development undertaken on behalf of the TMCs.
It also includes the fees charged to develop connections to third party systems wanting to integrate with Serko’s platforms. The basis of
charging can vary depending on the contractual terms with the customer, which may specify time and materials, capped
or fixed pricing.
Other income is primarily government grants for research and development projects and international growth grants.
REVENUE BY GEOGRAPHY
Year ended 31 March
Australia
New Zealand
North America
Other
Revenue
2020
$ (000)
18,218
2,465
4,823
363
2019*
$ (000)
19,335
2,343
1,471
212
25,869
23,361
Change
$ (000)
%
(1,117)
122
-6%
5%
3,352
228%
151
2,508
71%
11%
Peak ATMR2
Year-on-year movement
*Note the prior year figures have been adjusted as a result of a reclass of grant revenue resulting in a movement between Australia and New Zealand-sourced income.
Serko currently earns 70% (FY19: 83%) of revenue from Australia and 10% (FY19: 10%) from New Zealand sources, with New Zealand
sourced income up 5% and Australian sourced income down 6% over the prior year. The decline in Australian revenue is owing to the
Covid-19 impact on travel and declining services revenue. The portion of income from New Zealand has increased primarily with the
onboarding of Orbit customers, which commenced last year (signed July 2018). Both Australia and New Zealand have been adversely
affected by Covid-19 travel restrictions. While the travel market is expected to be impacted for a considerable period, there remains a
pipeline of new customers to be onboarded onto Serko’s platforms by Serko’s travel management resellers.
The portion of North American income has grown year on year, primarily owing to Expense platform revenue from the InterplX
acquisition. Within North America, TMC onboarding and customer trials had commenced prior to Covid-19, with live bookings being
made. However, transactions and further onboarding have been delayed in line with lockdown restrictions in this market. Serko has
signed three new mid-sized TMCs since 31 March 2020.
24
Serko annual report
FY13
FY14 FY15 FY16 FY17
FY18 FY19 FY20
Booking trend1
Travel platform booking trend
over the last 8 years
$25m
$20m
$15m
$10m
$5m
$0m
4m
3m
2m
1m
0m
Services
Suplier commissions and other
Expense platform
Travel platform
Other and custom bookings
Online bookings
FY13 FY14 FY15 FY16 FY17
FY18
FY19
FY20
6%
$27.5m
$26m
$30m
$15m
$26m
41%
$18.4m
2019
2020
Revenue trend
Booking trend1
Travel platform booking trend
over the last 8 years
Peak ATMR2
Year-on-year movement
FY13
FY14 FY15 FY16 FY17
FY18 FY19 FY20
Services
Suplier commissions and other
Expense platform
Travel platform
Other and custom bookings
Online bookings
$25m
$20m
$15m
$10m
$5m
$0m
4m
3m
2m
1m
0m
FY13 FY14 FY15 FY16 FY17
FY18
FY19
FY20
6%
$27.5m
$26m
$30m
$15m
$26m
41%
$18.4m
2019
2020
1 Booking volumes are total volumes and include Offline and and Custom Bookings, which can be either bundled into a price per Online booking or at a reduced rate, as these
are primarily automated bookings but processed through the booking tool.
2 Peak ATMR is a Non-GAAP measure representing Annualised Transactional Monthly Revenue (ATMR). Serko uses this as a useful indicator of future recurring revenues from
Serko products. It is based on the monthly transactions and average revenue per booking (for its Travel platform revenue) and monthly user charges (for its Expense platform
revenue) annualised on a constant currency basis. Peak ATMR was February for both 2019 and 2020. However, ATMR declined at the end of March 2020 to $15 million based on
the drop in transactions that occurred in the month following the impact of Covid-19.
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Serko annual report
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2%
INCREASE
TRAVEL PLATFORM
BOOKINGS
6%
INCREASE
PEAK ATMR
ACTIVITY
Travel platform bookings increased 2% over the prior year, driven mainly by growth in our core
Australasian markets. Total travel bookings during FY20 were 4.22 million, up from 4.14 million,
representing 58% of an estimated addressable market of 7.2 million corporate travel bookings
in Australia and New Zealand. Total travel bookings include 0.5 million Offline bookings (system
automated bookings) which don’t contribute significantly to revenue or are bundled into the
‘Online’ booking rate. Online bookings for the year were 3.72 million and, with 1% decline, were
Covid-19 impacted, with more Offline bookings completed during March 2020. Online volumes
dropped for March 2020 to around 50% of the previous March 2019 volumes.
With border restrictions and in-country lockdowns in place, both domestic and international
travel dropped, and Serko experienced a low of less than 10% of previous year volumes in April
2020. During the first three weeks of June 2020, over 3,200 corporate customers have made
a travel booking as New Zealand moved down to Level 1 restrictions. This has resulted in daily
booking volumes on Serko’s platforms steadily increasing in June 2020 to about 25% of the daily
booking volumes in June 2019. The Australian and New Zealand domestic and trans-Tasman
travel markets, which presently generate the majority of our travel revenue, are poised to recover
more quickly than international routes outside Australasia.
Serko is currently expanding into Northern Hemisphere markets. However, these regions did
not make a significant contribution to volumes in 2020 owing to being in development and trial
stages. Once travel does start to increase in these markets, Serko is expecting to gain volume
both from its TMC resellers, as well as its recently launched Booking.com for Business (powered
by Zeno) platform, which commenced trials in the UK and Ireland in May 2020.
Average Revenue Per Booking (ARPB) for travel-related revenue (Travel platform and supplier
commissions) increased marginally during the year by 2% to $4.76 from $4.67 based on Online
bookings and was largely related to increases in pricing for the Zeno platform. ARPB for recurring
revenue (total recurring revenue divided by Online bookings) at $6.46 improved by 17% from $5.52
in the prior year mainly attributable to the inclusion of InterplX income.
Peak Annualised Transactional Monthly Revenue (ATMR), a useful indicator of recurring revenue
from Serko products, rose to $27.5 million in February 2020 from $26.0 million in the same period
of the prior year. However, ATMR declined at the end of March 2020 to $15 million based on the
drop in transactions that occurred in the month following the impact of Covid-19.
26
Serko annual report
59%
INCREASE
OPERATING EXPENSES
OPERATING EXPENSES
Year ended 31 March
Marketing expenses
Third party connection costs
Other selling costs
Total selling and marketing expenses
2020
$ (000)
1,469
885
635
2,989
2019
$ (000)
Change
$ (000)
1,171
62
458
1,691
298
823
177
1,298
%
25%
1327%
39%
77%
Hosting expenses
3,362
1,931
1,431
74%
44%
53%
66%
215%
48%
40%
26%
44
74
244
-3486%
951
1,157
(721)
514
665
1,062
3,990
126%
394%
-90%
49%
256%
39%
64%
Employee renumeration
17,161
11,924
5,237
Contribution to pension plans
Share-based payment expenses
Other remuneration and benefits
662
959
637
433
576
202
229
383
435
Total remuneration and benefits
19,419
13,135
6,284
Auditor remuneration and other
assurance fees
Directors’ fees
Expected credit loss allowance on
receivables
Amortisation of intangibles
Depreciation
Rental and operating lease expenses
Professional fees
Computer licences
Other administration expenses
Total administration expenses
Fair value remeasurement on
contingent consideration
153
357
237
1,705
1,451
83
1,571
925
3,784
10,266
109
283
(7)
754
294
804
1,057
260
2,722
6,276
1,056
287
769
268%
Total operating expenses
Percentage of operating revenue
37,092
143%
23,320
100%
13,772
59%
Selling and marketing expenses comprise all the direct costs of sales that are not people or salary related.
Remuneration and benefits are the total costs of employees and contractors engaged within the business during the
financial year, including gross salary, additional payroll taxes, superannuation and KiwiSaver, bonuses, commissions and
the value of any share-based remuneration or awards.
Administration expenses are other general overheads and operating costs, including depreciation and
amortisation charges.
Total operating expenses were up 59%, or $13.8 million, from the prior year to $37.1 million, owing
to increases across all categories of expenses as Serko expands its operations.
Selling and marketing expenses increased to $3.0 million from $1.7 million in the prior year.
Selling costs increased owing to increased third party connection costs, primarily related to
Sabre Global Distribution technology fees introduced in May 2019. Marketing costs increased
owing to increased presence at North American travel conferences in advance of launching the
product. This had led to a healthy pipeline of customer interest prior to Covid-19 but onboarding
has been delayed owing to a significant number of TMC staff being furloughed in the region
during the lockdown period.
27
Serko annual report
03
S
E
R
K
O
A
B
O
U
T
04
S
U
M
M
A
R
Y
06
L
E
T
T
E
R
10
O
V
E
R
V
I
E
W
S
T
R
A
T
E
G
C
I
12
P
R
O
D
U
C
T
S
16
L
E
A
D
E
R
S
H
P
I
18
C
O
R
P
O
R
A
T
E
R
E
S
P
O
N
S
I
B
I
L
I
T
Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
78
D
I
S
C
L
O
S
U
R
E
S
G
O
V
E
R
N
A
N
C
E
&
95
I
D
R
E
C
T
O
R
Y
G
L
O
S
S
A
R
Y
&
OPERATING EXPENSES CONTINUED
Hosting costs at $3.4 million increased with the volume increases and set-up costs associated with new data centres for new territories
as well as infrastructure improvements to increase speed and stability of the product.
Remuneration and benefits (R&B) increased by $6.3 million to $19.4 million owing to the increased head count from 173 full-time
equivalent (FTE) to 233 FTE as at 31 March 2020. Share-based payments of $0.9 million related to employee share-based payments
and options (long-term incentives) for 2020, compared to $0.6 million in the prior year. Short term incentives included in the prior year
were $1.4 million. Owing to Covid-19 cost saving measures, no short-term incentives have been accrued for the 2020 financial year.
Serko was planning on hiring additional staff as it expanded, however, owing to Covid-19 additional hiring will be subject to a recovery
in travel revenues.
Administration costs at $10.3 million were up from $6.3 million on the prior year. Administration costs included significant increases
for depreciation and amortisation, up $2.1 million of which $1.0 million related to reclassification of premises costs due to adoption of
IFRS-16 (Leases). An increase in professional fees included $0.4 million related to one-off costs related to partnership owing diligence
activity prior to the share capital raise. An increase in computer licences relates to head count increases, as well as more sophisticated
collaboration tools and software monitoring. Other administration costs also increased with expansion, including increases in travel,
recruitment and insurance. An increase in Expected Credit Loss (ECL) provision was also related to Covid-19 impact owing to the
prevailing level of uncertainty in the travel industry.
The fair value measurement adjustment on contingent consideration, relating to the InterplX acquisition, was $1.0 million, compared
to the prior year value of $0.3 million. The total value of shares issued in February 2020 for the final tranche was $2.9 million for a final
increase in value of $1.3 million owing to the increase in share price since acquisition.
The InterplX acquisition consideration was by way of issuance of Serko shares, half of which was deferred and contingent on InterplX
achieving key milestones. As a result the liability for the deferred component of this acquisition varied with the trading price of the
shares at the date of issue. An increase in the Serko price therefore resulted in an accounting entry that reduced Serko’s profit and
increased the contingent consideration liability, which was then extinguished on share issue.
28
Serko annual report
48%
INCREASE
R&D COSTS
RESEARCH AND DEVELOPMENT (R&D) COSTS
Year ended 31 March
Total R&D costs (including amounts
capitalised)
Percentage of operating revenue
Less: capitalised product development
costs
Percentage R&D costs
Research costs (excluding
amortisation of amounts previously
capitalised)
2020
$ (000)
13,606
53%
2019
$ (000)
Change
$ (000)
%
9,165
39%
4,441
48%
(11,013)
(6,740)
(4,273)
63%
81%
74%
2,593
2,425
168
7%
Less: Government grants for R&D
(683)
(810)
127
-16%
Add: Amortisation of capitalised
development costs and intellectual
property
Net product development costs
Percentage of operating revenue
1,705
3,615
14%
754
951
126%
2,369
10%
1,246
53%
Research & Development (R&D) costs is a Non-GAAP measure representing the internal and external costs related to R&D
that have been included in operating costs and capitalised as computer software development during the period. Research
expenditure includes all reasonable expenditure associated with R&D activities that does not give rise to intangible
assets. R&D expenses include employee and contractor remuneration related to these activities. It also covers research
expenditure defined by NZ IAS 38.
Serko has capitalised more development costs for FY20 than in FY19, at $11.0 million compared
to $6.7 million in FY19. Total R&D at $13.6 million was 53% of net operating income compared to
39% in the prior year. While there remains considerable uncertainty as to the future operating
environment, Serko remains of the view that this investment will produce an acceptable
commercial return in the future.
Continued investment in the Travel platforms for Northern Hemisphere expansion, as well as the
further development of the Serko Expense platform will see Serko continue in a development
phase for the next financial year as the products continue to be localised for each market.
29
Serko annual report
03
S
E
R
K
O
A
B
O
U
T
04
S
U
M
M
A
R
Y
06
L
E
T
T
E
R
10
O
V
E
R
V
I
E
W
S
T
R
A
T
E
G
C
I
12
P
R
O
D
U
C
T
S
16
L
E
A
D
E
R
S
H
P
I
18
C
O
R
P
O
R
A
T
E
R
E
S
P
O
N
S
I
B
I
L
I
T
Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
78
D
I
S
C
L
O
S
U
R
E
S
G
O
V
E
R
N
A
N
C
E
&
95
I
D
R
E
C
T
O
R
Y
G
L
O
S
S
A
R
Y
&
35%
INCREASE
FTE
EMPLOYEES AND AVERAGE REVENUE PER FTE
Year ended 31 March
2020
2019
Change
%
Product development and maintenance
Sales and marketing
Customer support
Administration
Total employee numbers at end of the
year (FTE)
146
18
52
17
233
100
16
40
17
173
46
46%
2
12
0
13%
30%
0%
60
35%
Average revenue per FTE (NZD $000)
121
167
(46)
-28%
Serko’s staff numbers increased during the year moving to 233 from 173 full-time equivalent
(FTE) staff at the end of 2019. Head count was 237 with 120 staff based in New Zealand, 23 in
Australia, 48 in China and 46 in the US. The increase in staff is primarily in product development
and reflects the investment Serko is making in its product to service the Northern Hemisphere
markets. Post year end staff numbers have increased to 240.
Average revenue per FTE decreased by $46,000 to $121,000, reflecting the investment into
additional staff as Serko expands.
30
Serko annual report
169%
INCREASE
CASH FLOWS
Year ended 31 March
Receipts from customers
CASH BALANCES
Grant income receipts
2020
$ (000)
22,318
649
2019
$ (000)
21,855
1,264
Change
$ (000)
%
463
2%
(615)
-49%
Other operating cash flows
(26,756)
(19,472)
(7,284)
37%
Total cash flows from operating
activities
(3,789)
3,647
(7,436)
-204%
Investing cash flows
Financing cash flows
Total net cash flows
Net foreign exchange differences
Closing cash balances
(11,812)
42,273
26,672
(13)
42,391
(7,279)
14,220
10,588
(4,533)
62%
28,053
197%
16,084
152%
(88)
75
-85%
15,732
26,659
169%
Receipts from customers increased by 2% over the year from $21.9 million to $22.3 million. Other
operating cash outflows increased by $7.3 million to $26.8 million mainly owing to increased
payments to employees and suppliers. Net operating cash outflows for the year were $3.8 million.
Cash outflows for property, plant and equipment and intangibles, reflecting capitalised internal
development, were $11.8 million. A capital raise to fund expansion resulted in a net $43.2
million contribution to cash balances. Lease liabilities recorded under finance activities under
new IFRS 16 adoption were $1.1 million. Previously, rental payments were recorded under
operating activities.
Cash balances increased 169% as at 31 March 2020, from $15.7 million to $42.4 million.
31
Serko annual report
03
S
E
R
K
O
A
B
O
U
T
04
S
U
M
M
A
R
Y
06
L
E
T
T
E
R
10
O
V
E
R
V
I
E
W
S
T
R
A
T
E
G
C
I
12
P
R
O
D
U
C
T
S
16
L
E
A
D
E
R
S
H
P
I
18
C
O
R
P
O
R
A
T
E
R
E
S
P
O
N
S
I
B
I
L
I
T
Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
78
D
I
S
C
L
O
S
U
R
E
S
G
O
V
E
R
N
A
N
C
E
&
95
I
D
R
E
C
T
O
R
Y
G
L
O
S
S
A
R
Y
&
FINANCIAL
STATEMENTS
32
Serko annual report
The directors of Serko Limited are pleased to present the
financial statements for Serko Limited and its subsidiaries (the
group) for the year ended 31 March 2020 to shareholders.
The directors are responsible for presenting financial
statements in accordance with New Zealand law and generally
accepted accounting practice, which fairly present the financial
position of the group as at 31 March 2020 and the results of its
operations and cash flows for the year ended on that date.
The directors consider the financial statements of the group
have been prepared using accounting policies that have been
consistently applied and supported by reasonable judgements
and estimates and that all relevant financial reporting and
accounting standards have been followed.
The directors believe that proper accounting records have been
kept that enable, with reasonable accuracy, the determination
of the financial position of the group and facilitate compliance
of the financial statements with the Companies Act 1993, NZX
Listing Rules, Financial Reporting Act 2013 and the Financial
Markets Conduct Act 2013.
The directors consider they have taken adequate steps to
safeguard the assets of the group and to prevent and detect fraud
and other irregularities. Internal control procedures are also
considered to be sufficient to provide a reasonable assurance as
to the integrity and reliability of the financial statements.
The financial statements are signed on behalf of the Board of
Directors 24 June 2020 by:
CLAUDIA BATTEN
ACTING CHAIR
DARRIN GRAFTON
CHIEF EXECUTIVE OFFICER
CONTENTS
Consolidated statement of comprehensive income
Consolidated statement of changes in equity
Consolidated statement of financial position
Consolidated statement of cash flows
Notes to the financial statements
Independent auditor’s report
34
35
36
37
38-73
74-77
33
Serko annual report
03
S
E
R
K
O
A
B
O
U
T
04
S
U
M
M
A
R
Y
06
L
E
T
T
E
R
10
O
V
E
R
V
I
E
W
S
T
R
A
T
E
G
C
I
12
P
R
O
D
U
C
T
S
16
L
E
A
D
E
R
S
H
P
I
18
C
O
R
P
O
R
A
T
E
R
E
S
P
O
N
S
I
B
I
L
I
T
Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
78
D
I
S
C
L
O
S
U
R
E
S
G
O
V
E
R
N
A
N
C
E
&
95
I
D
R
E
C
T
O
R
Y
G
L
O
S
S
A
R
Y
&
Consolidated Statement of
Comprehensive Income
For the year ended 31 March 2020
Revenue
Other income
Total income
Operating Expenses
Selling and marketing expenses
Hosting expenses
Remuneration and benefits
Administration expenses
Fair value remeasurement on contingent consideration
Total operating expenses
Finance income
Finance expenses
(Loss)/profit before income tax
Income tax (expense)/benefit
Net (loss)/profit attributable to the shareholders of the company
Movement in foreign currency reserve
Total comprehensive income/(loss) for the year
Earnings per share
Basic profit per share
Diluted profit per share
Notes
2020
2019
$ (000)
25,869
922
26,791
(2,989)
(3,362)
(19,419)
(10,266)
(1,056)
(37,092)
1,137
(162)
(9,326)
(38)
(9,364)
(11)
(9,375)
($0.10)
($0.11)
$ (000)
23,361
1,215
24,576
(1,691)
(1,931)
(13,135)
(6,276)
(287)
(23,320)
360
(70)
1,546
87
1,633
(126)
1,507
$0.02
$0.02
4
4
5
5
5
6
18
18
The accompanying notes form part of these financial statements.
34
Serko annual report
Consolidated Statement of
Changes in Equity
For the year ended 31 March 2020
Notes
Share
capital
$ (000)
Share-
based
payment
reserve
$ (000)
Foreign
currency
reserve
Accumulated
losses
Total
$ (000)
$ (000)
$ (000)
40,993
1,885
(211)
(16,432)
26,235
Balance as at 1 April 2019
Net loss for the year
Adjustment on adoption of new IFRS16
2(d)
Other comprehensive income/(loss)*
Total comprehensive income/(loss) for the year
Transactions with owners
Issue of share capital
Cost of equity issued
Shares allocated to employees
Shares forfeited from employees
Share-based payments — employee share options
Non-executive directors settlement of non-recourse loan
Shares issued in respect of InterplX acquisition
Balance as at 31 March 2020
Balance as at 1 April 2018
Net profit for the year
Other comprehensive income/(loss)*
Total comprehensive income for the year
Transactions with owners
Issue of share capital
Cost of equity issued
Shares allocated to employees
Shares forfeited from employees
Share-based payments — employee share options
Shares issued in respect of InterplX acquisition
Balance as at 31 March 2019
17
17
17
17
17
17
17
17
17
17
17
17
17
-
-
-
-
45,000
(1,793)
353
-
74
243
2,881
87,751
-
-
-
-
-
-
682
(17)
(133)
(43)
-
-
-
(11)
(11)
-
-
-
-
-
-
-
(9,364)
(9,364)
(323)
(323)
-
(11)
(9,687)
(9,698)
-
-
-
-
-
-
-
45,000
(1,793)
1,035
(17)
(59)
200
2,881
2,374
(222)
(26,119)
63,784
25,185
1,309
-
-
-
-
-
-
(85)
-
(126)
(126)
(18,065)
8,344
1,633
1,633
-
(126)
1,633
1,507
15,048
(778)
-
-
-
1,538
40,993
406
(24)
194
-
-
-
15,048
(778)
406
(24)
194
1,538
-
-
-
1,885
(211)
(16,432)
26,235
*Items in other comprehensive income may be reclassified to the income statement and are shown net of tax.
The accompanying notes form part of these financial statements.
35
Serko annual report
03
S
E
R
K
O
A
B
O
U
T
04
S
U
M
M
A
R
Y
06
L
E
T
T
E
R
10
O
V
E
R
V
I
E
W
S
T
R
A
T
E
G
C
I
12
P
R
O
D
U
C
T
S
16
L
E
A
D
E
R
S
H
P
I
18
C
O
R
P
O
R
A
T
E
R
E
S
P
O
N
S
I
B
I
L
I
T
Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
78
D
I
S
C
L
O
S
U
R
E
S
G
O
V
E
R
N
A
N
C
E
&
95
I
D
R
E
C
T
O
R
Y
G
L
O
S
S
A
R
Y
&
Consolidated Statement of Financial Position
As at 31 March 2020
Current assets
Cash at bank and on hand
Receivables
Income tax receivable
Derivative financial instruments
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax asset
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Contingent consideration
Income tax payable
Interest-bearing loans and borrowings
Lease liabilities
Total current liabilities
Non-current liabilities
Trade and other payables
Interest-bearing loans and borrowings
Lease liabilities
Total non-current liabilities
Total liabilities
Equity
Share capital
Share-based payment reserve
Foreign currency reserve
Accumulated losses
Total equity
Total equity and liabilities
Notes
2020
2019
$ (000)
$ (000)
11
7
8
9
10
6
12
14
16
13
12
16
13
17
17
42,391
6,578
84
557
15,732
5,493
-
421
49,610
21,646
3,382
20,110
250
23,742
1,129
10,553
84
11,766
73,352
33,412
7,073
-
-
58
1,280
8,411
-
92
1,065
1,157
9,568
4,791
1,825
224
54
-
6,894
134
149
-
283
7,177
87,751
2,374
(222)
(26,119)
63,784
40,993
1,885
(211)
(16,432)
26,235
73,352
33,412
For and on behalf of the Board of Directors, who authorise these financial statements for issue on 24 June 2020
CLAUDIA BATTEN
ACTING CHAIR
DARRIN GRAFTON
CHIEF EXECUTIVE OFFICER
The accompanying notes form part of these financial statements.
36
Serko annual report
Consolidated Statement of Cash flows
For the year ended 31 March 2020
Notes
2020
2019
$ (000)
$ (000)
22,318
21,855
418
649
(529)
304
1,264
(142)
(26,275)
(19,395)
(126)
(244)
21
(3,789)
10
17
17
13
(794)
(11,018)
(11,812)
45,000
(1,793)
(1,080)
200
(54)
42,273
26,672
(13)
15,732
42,391
(20)
(219)
3,647
(466)
(6,813)
(7,279)
15,048
(778)
-
-
(50)
14,220
10,588
(88)
5,232
15,732
11
42,391
42,391
15,732
15,732
Cash flows from operating activities
Receipts from customers
Interest received
Receipts from grants
Taxation (paid)/received
Payments to suppliers and employees
Interest payments
Net GST refunded (paid)
Net cash flows (used in)/from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Capitalised development costs and other intangible assets
Net cash flows (used in) investing activities
Cash flows from financing activities
Issue of ordinary shares
Cost of new share issue
Payment of lease liabilities
Non-executive directors non-recourse loan
Net repayment of loans
Net cash flows from financing activities
Net increase in total cash
Net foreign exchange difference
Cash and cash equivalents at beginning of period
Cash and cash equivalents at the end of the period
Cash and cash equivalents comprises the following:
Cash at bank and on hand
The accompanying notes form part of these financial statements.
37
Serko annual report
03
S
E
R
K
O
A
B
O
U
T
04
S
U
M
M
A
R
Y
06
L
E
T
T
E
R
10
O
V
E
R
V
I
E
W
S
T
R
A
T
E
G
C
I
12
P
R
O
D
U
C
T
S
16
L
E
A
D
E
R
S
H
P
I
18
C
O
R
P
O
R
A
T
E
R
E
S
P
O
N
S
I
B
I
L
I
T
Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
78
D
I
S
C
L
O
S
U
R
E
S
G
O
V
E
R
N
A
N
C
E
&
95
I
D
R
E
C
T
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Notes to the Financial Statements
For the year ended 31 March 2020
1 CORPORATE INFORMATION
The financial statements of Serko Limited (‘the Company’)
and subsidiaries (‘the Group’) were authorised for issue in
accordance with a Board resolution.
The Company is a limited liability company domiciled and
incorporated in New Zealand under the Companies Act 1993
and is listed on the New Zealand Stock Exchange (NZX) and
the Australian Securities Exchange (ASX) as an ASX Foreign
Exempt Listing. Its registered office is at Unit 14d, 125 The
Strand, Parnell, Auckland.
The Group is involved in the provision of computer software
solutions for corporate travel. The Group is headquartered
in Auckland, New Zealand.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation
of these consolidated financial statements are set out in
the respective notes and in this note. These policies have
been consistently applied to all the years presented, unless
otherwise stated.
a) Basis of preparation
In light of the severe impact of Covid-19 on Serko’s core
business of the provision of online travel booking software,
the Board has given careful consideration to the ability
of the Group to continue to operate as a going concern
for at least the next 12 months from the date the financial
statements are authorised for issue.
Serko completed an oversubscribed capital raising of $45
million ($43.2 million net of costs) in late 2019. This capital
raise was intended to provide funding for Serko’s anticipated
strategic initiative of expansion into new markets. Although
we did not anticipate an event as catastrophic as Covid-19,
the Serko Board has always maintained a prudent and
conservative approach to balance sheet management. By
raising more capital than the Board believed Serko required,
the Company’s a strong cash position that has provided a
comfortable level of liquidity. It also allowed us to;
• Maintain our operating capacity;
• Retain resource and capability to put Serko into a strong
position to reassure our customers of our ongoing viability;
• Retain our key people to quickly recover from the impact
of the pandemic when travel volumes recover.
We have, however, responded to the decline in activity and
the uncertainty of the future environment by reducing cash
The financial statements have been prepared in accordance
costs across all expense categories.
with generally accepted accounting practice in New
Zealand (NZ GAAP) and the requirements of the Financial
Markets Conduct Act 2013. The financial statements have
been prepared on a historical cost basis, modified by the
revaluation of certain assets and liabilities as identified in
specific accounting policies.
The Group has made significant changes to the way we
operate and addressed Serko’s cost base in anticipation
of a subdued operating environment. The Company
has undertaken modelling of future results based on
three alternative scenarios and has then weighted those
scenarios to formulate a plan for the ongoing solvency of the
The financial statements are presented in New Zealand
business. Serko has applied a weighting of 50% to the most
dollars and all values are rounded to the nearest thousand
pessimistic scenario.
dollars unless stated otherwise.
In reaching their conclusion the Board has considered the
The financial statements provide comparative information
following factors:
• Cash reserves at 31 March 2020 of $42.4 million provides
a sufficient level of headroom to help support the
business for at least the next 12 months;
in respect of the previous period.
b) Going concern
The Board has carefully considered the ability of the Group
to continue to operate as a going concern for at least the
next 12 months from the date the financial statements are
authorised for issue. It is the conclusion of the Board that
the Group will continue to operate as a going concern and
the financial statements have been prepared on that basis.
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• Covid–19 cost saving initiatives introduced post year end
to target maximum cash burn of $2 million per month on
NZ IFRS 16 (Leases) is effective for annual periods beginning
on or after 1 January 2019. The standard deals with the
average for FY21 through the following initiatives:
recognition, measurement, presentation and disclosure
of leases and replaces the current guidance in NZ IAS
17 Leases (NZ IAS 17). The new standard introduces a
single model for lessees that recognises all leases on the
balance sheet through an asset representing the rights
to use the leased item during the lease term and a liability
for the obligation to make lease payments. This removes
the distinction between operating and finance leases
and aims to provide users of the financial statements
relevant information to assess the effect that leases
have on the statement of financial position, statement of
comprehensive income and cash flows of the reporting
entity. Lessor accounting remains largely unchanged from
NZ IAS 17 for the Group.
The Group adopted NZ IFRS 16 using the modified
retrospective approach with the right-of-use (ROU) asset
being determined as if NZ IFRS 16 had been applied from
lease commencement but using the incremental borrowing
rate as at 1 April 2019. Leases recognised relate to
building leases at different geographical locations and an
incremental borrowing rate of between 4% and 6% has been
applied. The Group has made use of the practical expedient
available on transition to NZ IFRS 16 not to reassess whether
a contract is or contains a lease. Accordingly, the definition
of a lease in accordance with NZ IAS 17 will continue to be
applied to those leases entered or modified before 1 April
2019. Comparative numbers have not been restated.
– Seeking government Covid-19 wage subsidy schemes,
in New Zealand, Australia and the US
– Implementing hiring and salary freezes and
terminating non-essential contractors and staff
– Scaling-down hosting environment for reduced
transactions
– Negotiating reduced rental on leasehold premises
– Reducing other expenditure (i.e. marketing and travel)
to essential only
– Implementing voluntary staff salary reductions for
three months from May 2020
– Non-executive directors agreeing to take either
a reduction of directors’ fees or receive a portion
of their directors’ fees in shares for the first three
months of FY21
• The Board has made due enquiry into the
appropriateness of the assumptions underlying the
budgetary forecasts.
c) Statement of compliance
The financial statements have been prepared in accordance
with NZ GAAP. They comply with New Zealand equivalents
to International Financial Reporting Standards (NZ IFRS) and
International Financial Reporting Standards, as appropriate
for profit-oriented entities.
d) Application of new and revised standards, amendments
and interpretations
Apart from the changes noted below, the accounting policies
adopted are consistent with those of previous years.
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Lease liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental
borrowing rate at 1 April 2019. Key changes to the financial statements are set out below:
• Recognition of an ROU asset and lease liability for operating leases, adjusted for any incentives on the statement of financial
position; and
• Recognition of interest and depreciation expense (refer to note 5) instead of operating lease rental expense in the statement of
financial performance. The change in accounting standard has impacted retained earnings by $323,000 and resulted in a credit
to profit before tax of $203,000 in the current financial year; and
• Interest-bearing loans and borrowings relating to leasehold improvements have been reclassified.
In accordance with the transition provisions of NZ IFRS 16, comparatives have not been restated, with the cumulative effect being
recognised in opening retained earnings at transition (1 April 2019).
A reconciliation of operating lease commitments at 31 March 2019 to the lease liability recognised at 1 April 2019 is shown below:
Operating lease commitments disclosed at 31 March 2019
The effect of discounting
Adjustments as a result of a different treatment of extension and termination options
Lease liabilities recognised as at 1 April 2019
Classified as:
Less than one year
Later than one year but not more than five years
Lease liabilities recognised as at 1 April 2019
$ (000)
1,688
(196)
987
2,479
768
1,711
2,479
Serko Limited also entered into a lease agreement to sub-lease additional premises through to December 2020, with these premises
being available for use in October 2019.
Practical expedients applied
In applying NZ IFRS 16 for the first time, Serko has used the following practical expedients permitted by the standard:
• Use of a single discount rate to leases with reasonably similar characteristics;
• Accounted for each lease component and any associated non-lease components as a single lease component;
• Excluded lease contracts of insignificant value;
• Excluded lease contracts less than 12 months; and
• Exclusion of initial direct costs for the measurement of the lease asset at the date of initial application.
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e) Basis of consolidation
The consolidated financial statements comprise the
• Reclassifies the parent’s share of components
financial statements of Serko Limited and its subsidiaries as
previously recognised in other comprehensive income
at and for the year ended 31 March each year.
Control is achieved when the Group is exposed, or has
rights, to variable returns from its involvement with the
to profit or loss or retained earnings, as appropriate, as
would be required if the Group had directly disposed of
the related assets or liabilities.
investee and has the ability to affect those returns through
The acquisition of subsidiaries is accounted for using the
its power over the investee. Specifically, the Group controls
acquisition method of accounting. The acquisition method
an investee if and only if the Group has:
• Power over the investee (i.e. existing rights that give
it the current ability to direct the relevant activities of
the investee);
• Exposure, or rights, to variable returns from its
involvement with the investee; and
• The ability to use its power over the investee to affect
its returns.
When the Group has less than a majority of the voting or
similar rights of an investee, the Group considers all relevant
facts and circumstances in assessing whether it has power
over an investee, including:
• The contractual arrangement with the other vote holders
of the investee;
• Rights arising from other contractual arrangements; and
• The Group’s voting rights and potential voting rights.
The Group reassesses whether or not it controls an
investee if facts and circumstances indicate there are
changes to one or more of the three elements of control.
Consolidation of a subsidiary begins when the Group
obtains control over the subsidiary and ceases when the
Group ceases control of the subsidiary. Assets, liabilities,
income and expenses of a subsidiary acquired or disposed
of during the year are included in the financial statements
from the date the Group gains control until the date the
Group ceases to control the subsidiary.
A change in the ownership interest of a subsidiary, without a
cease of control, is accounted for as an equity transaction.
If the Group ceases control over a subsidiary, it:
• Derecognises the assets (including goodwill) and
liabilities of the subsidiary;
• Derecognises the carrying amount of any non-
controlling interests;
• Derecognises the cumulative translation differences
recorded in equity;
• Recognises the fair value of the consideration received;
• Recognises the fair value of any investment retained;
• Recognises any surplus or deficit in profit or loss; and
of accounting involves recognising at acquisition date,
separately from goodwill, the identifiable assets acquired,
liabilities assumed and any non-controlling interest in the
acquiree. The identifiable assets acquired and liabilities
assumed are measured at their acquisition date fair values.
Acquisition-related costs are expensed as incurred and
recognised in profit or loss.
The difference between the above items and the fair value
of the consideration is recorded as either goodwill or gain
on bargain purchase. After initial recognition goodwill is
measured at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired
in a business combination is, from the acquisition date,
allocated to each of the Group’s cash-generating units
expected to benefit from the combination, irrespective
of whether other assets or liabilities of the acquiree are
assigned to those units.
Goodwill is tested annually for impairment, or immediately if
events or changes in circumstances indicate that it might be
impaired, and carried at cost less accumulated impairment
losses. Impairment losses on goodwill are not reversed.
Any gain on bargain purchase is recognised immediately on
acquisition to profit and loss.
Inter-company transactions, balances and unrealised
gains and losses on transactions between Group
companies are eliminated.
Non-controlling interests are allocated their share of
comprehensive income after tax in the statement of
comprehensive income and are presented within equity in
the consolidated statement of financial position, separately
from the equity of the owners of the parent.
f) Foreign currency translation
i) Functional and presentation currency
Items included in these financial statements of each of the
Group’s entities are measured using the currency of the
primary economic environment in which the entity operates
(the ‘functional currency’). These financial statements
are presented in New Zealand dollars, which is the Group’s
presentation currency and the parent’s functional currency.
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ii) Transactions and balances
i) Amortised cost
Transactions in foreign currencies are initially recorded
Financial assets measured at amortised cost are those
in the functional currency by applying the exchange rates
held within a business model whose objective is to hold
ruling at the date of the transaction. Monetary assets
financial assets in order to collect contractual cash
and liabilities denominated in foreign currencies are
flows and the contractual terms of the financial asset
retranslated at the rate of exchange ruling at balance date.
give rise on specified dates to cash flows that are solely
Non-monetary items measured in terms of historical cost
payments of principal and interest on the principal amount
in a foreign currency are translated using the exchange
outstanding. They arise when the Group provides money,
rate as at the date of the initial transaction. Non-monetary
goods or services directly to a debtor with no intention
items measured at fair value in a foreign currency are
of selling the receivable. Such assets are subsequently
translated using the exchange rates at the date when the
carried at amortised cost using the effective interest
fair value was determined.
Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation
at year end of exchange rates for monetary assets and
liabilities denominated in foreign currencies, are recognised
in profit or loss.
iii) Foreign Currency Translation Reserve
For the purposes of presenting these consolidated financial
statements the assets and liabilities of the Group’s foreign
operations are translated into currency units using
exchange rates prevailing at the end of each reporting
method. Expected credit loss movements are recognised
in profit or loss when the contract assets and liabilities
are derecognised or impaired, as well as through the
amortisation process.
ii) Financial liabilities
Financial liabilities are classified as ‘other financial
liabilities’. Other financial liabilities, including
interest-bearing loans and borrowings, are initially
measured at fair value, net of transaction costs. Other
financial liabilities are subsequently measured at amortised
cost using the effective interest method.
period. Income and expense items are translated at the
The effective interest method calculates the amortised cost
average exchange rates for the period, unless exchange
of a financial liability and allocates the interest expense
rates fluctuate significantly during that period, in which
over the relevant period. The effective interest rate is the
case the exchange rates at the dates of the transactions are
rate that exactly discounts estimated future cash payments
used. Exchange differences arising, if any, are recognised
through the expected life of the financial liability or, where
in other comprehensive income and accumulated in the
appropriate, a shorter period to the net carrying amount of
foreign currency translation reserve.
the liability.
g) Financial instruments
Financial liabilities are classified as current liabilities unless
the Group has an unconditional right to defer settlement of
Cash at bank and on hand and receivables are financial
the liability for at least 12 months after balance date.
assets measured at amortised cost. When financial assets
are recognised initially they are measured at fair value
iii) Impairment of financial assets
plus directly attributable transaction costs. The Group
determines the classification of its financial assets on initial
recognition and, when allowed and appropriate, re-evaluates
this designation at each financial year end.
The Group recognises a loss allowance for expected credit
losses (ECL) on investments in debt instruments that
are measured at amortised cost or at fair value through
comprehensive income, lease receivables, trade receivables
Derivative financial instruments are recognised at fair value
and contract assets, as well as on financial guarantee
through profit or loss.
contracts. The amount of expected credit losses is updated
at each reporting date to reflect changes in credit risk since
initial recognition of the respective financial instrument.
42
Serko annual report
The Group always recognises lifetime ECL for trade
h) Borrowing costs
receivables, contract assets and lease receivables. The
expected credit losses on these financial assets are
estimated using a provision matrix based on the Group’s
historical credit loss experience, adjusted for factors that
are specific to the debtors, general economic conditions
and an assessment of both the current as well as the
forecast direction of conditions at the reporting date,
including time value of money where appropriate.
Special consideration has been given to ECL in light of
the economic impact of Covid-19 throughout the travel
industry and the capacity of our customers to meet their
obligations to us.
Borrowing costs directly attributable to the acquisition,
construction or production of a qualifying asset are
capitalised as part of the cost of that asset. A qualifying
asset is one that takes 12 months or longer to prepare for its
intended use or sale. Other borrowing costs are expensed
when incurred.
i) Other taxes
Revenues, expenses and assets are recognised net of the
amount of goods and services tax (GST) except where the
GST incurred on a purchase of goods and services is not
recoverable from the taxation authority, in which case
For all other financial instruments the Group recognises
the GST is recognised as part of the cost of acquisition of
lifetime ECL when there has been a significant increase
the asset or as part of the expense item as applicable. All
in credit risk since initial recognition. However, if the
receivables and payables are stated GST inclusive.
credit risk on the financial instrument has not increased
significantly since initial recognition, the Group measures
the loss allowance for that financial instrument at an
amount equal to 12-month ECL.
Lifetime ECL represents the expected credit losses that will
result from all possible default events over the expected
life of a financial instrument. In contrast, 12-month ECL
represents the portion of lifetime ECL that is expected to
result from default events on a financial instrument that are
possible within 12 months after the reporting date.
The Group writes off a financial asset when there is
information indicating that the debtor is in severe financial
difficulty and there is no realistic prospect of recovery, e.g.
when the debtor has been placed under liquidation or has
entered into bankruptcy proceedings or, in the case of trade
receivables, when the amounts are over two years past due,
whichever occurs sooner.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables or
payables in the statement of financial position.
Commitments and contingencies are disclosed net of
the amount of GST recoverable from, or payable to, the
taxation authority.
j) Comparatives
Certain comparative amounts have been reclassified to
conform to the current year’s presentation.
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3 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES
AND ASSUMPTIONS
The preparation of the Group’s consolidated financial
Development costs (note 10)
statements requires management to make judgements,
estimates and assumptions that affect the reported
amounts of revenues, expenses, assets and liabilities and
the accompanying disclosures.
Development costs of a project are capitalised in
accordance with the accounting policy. Initial capitalisation
of costs is based on management’s judgement that
technological and economic feasibility is confirmed, usually
In the process of applying the Group’s accounting policies,
when a product development project has reached a defined
management has made the following judgements,
milestone according to an established project management
which have an effect on the amounts recognised in the
model. In determining the amounts to be capitalised,
consolidated financial statements.
Covid-19 Pandemic
On 11 March 2020 the World Health Organization (WHO)
declared a global pandemic as a result of the outbreak and
spread of Covid-19. However, as Serko announced on 25
February 2020, the Company had detected an adverse trend
management makes assumptions regarding the expected
future cash generation of the project and the expected
period of benefits. The effects that Covid-19 has had on
travel have been considered in assessing expected future
cash flows.
Functional and presentation currency
in travel bookings prior to the WHO declaration. On 14 March
The Group periodically reviews the functional currency
the New Zealand Government announced it was closing its
for reporting purposes. The Group believes that there
borders to non-New Zealand residents and on 25 March the
is sufficient justification for the continued use of NZD
New Zealand Government raised its Alert Level to 4 (full
as the functional currency. The key factors behind this
lockdown other than ‘essential’ services) for an initial four-
conclusion are:
• Serko is NZX listed and has raised capital in NZD;
• Research and development grant funding is in NZD;
• NZD is the main currency for labour, operating cost and
capital expenditure; and
• The Group also generates certain revenues in NZD as
per note 4.
week period. Covid-19 related travel restrictions were also
enacted within Australia and within Northern Hemisphere
markets where Serko expects to grow. New Zealand
domestic travel resumed when the country moved to Level
2 on 11 May. However, travel is still restricted in Australia
to essential travel only. Northern Hemisphere travel is also
restricted but varies between regions.
Revenue from Serko’s online booking tools is almost
exclusively directly related to booking volumes.
The Governmental policy responses, including lockdowns
and the suspension of all travel other than essential
services, has had a severe adverse effect on bookings on
Serko’s Travel booking platform.
The actions taken by Serko are outlined as per Going
Concern disclosure (note 2b). It should, however, be noted
that Serko has carefully chosen to retain resource and
capacity on key growth initiatives to ensure it is positioned
to participate in the eventual recovery of corporate travel.
The Serko Board has exercised judgement on a number of
important areas in the income statement and statement
of financial position and we draw your attention to the
commentary in the notes to the financial statements for
more detailed explanations.
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3 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES
AND ASSUMPTIONS CONTINUED
Impairment (note 10 – Intangibles and note 7 -
Receivables)
Management reviews the carrying value of intangible and
non-financial assets on an annual basis, in particular,
goodwill, computer software and development work in
progress. Consideration is placed on a number of factors,
depending on the specific asset in question, which may
include discounted cash flow forecasts, the ability to
continue to generate discrete cash flow and returns,
any changes or anticipated changes in the business or
product circumstances and the nature of the events that
originally gave rise to the recognition of any non-financial
assets. Management has considered reduced travel owing
to Covid-19 and estimated the recovery profile of travel
in various geographies and its effect on growth plans. No
impairment to intangibles is considered necessary.
Serko has updated its expected credit loss assumptions and
the provision was increased to $237,000 from the prior year
$7,000 due to Covid-19 impacts.
Revenue recognition (note 4)
Serko has customer agreements that contain annual
minimum transaction volume commitments that span
financial reporting periods. Based on this management
needs to make a judgement about estimated future
transaction volumes to determine related revenue for the
specific financial reporting period. The effects of Covid-19
have been considered and as a result of reduced forecasts
adjustments on contractual revenue have been recognised.
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4 REVENUE & OTHER INCOME
Revenue is recognised and measured at the fair value of
the consideration received or receivable to the extent it
is probable that the entity will collect the consideration
to which it will be entitled in exchange for the goods or
Supplier commission revenue, predominantly from hotel
bookings, is recognised at a point in time, once the
performance obligation is fulfilled.
services that will be transferred to the customer. Revenue
b) Revenue from services
is disclosed net of credit notes, rebates and discounts.
a) Revenue from transaction and usage fees
Revenue from transaction and usage fees is recorded at the
time travel or expense transactions are processed through
Serko’s platforms. Contracts that have fixed minimum
booking volume arrangements are recognised over the
period of volume commitment. For contracts without
fixed consideration we have applied the ‘as invoiced’ basis.
Revenue from a contract to provide installation services is
recognised by reference to the completion of the contract or
services delivered at balance date. If services relate to one-off
chargeable work orders, these can be invoiced as and when the
performance obligation is satisfied. Revenue is recognised at a
point in time by applying the ‘as invoiced’ practical expedient. If
these relate to customised set up or installation, the revenues
are recognised over the contract term.
Serko records revenue from its portfolio of contracts with
c) Contract assets
reference to actual transactions, forecast transactions
and minimum contracted commitments. Owing to Covid-19
impacting the entire travel industry, Serko has agreed to a
number of changes to contracts with customers, including
changes to schedules of contracted minimum revenue.
This has had the effect of reducing the revenue that Serko
expected to record in the current year.
Serko Expense revenue is invoiced monthly on an active
user basis and revenue recognised at a point in time.
Contract assets relate to accrued revenue for contractual
minimum guarantees (refer note 7).
d) Government grants
When the grant relates to an expense item, it is recognised
as income over the periods necessary to match the grant on
a systematic basis to the costs it is intended to compensate.
Revenue is recognised once the criteria of the grant
application is met.
46
Serko annual report
4 REVENUE & OTHER INCOME CONTINUED
Revenue – transaction and usage fees:
Travel platform booking revenue
Expense platform revenue
Supplier commissions revenue
Services revenue
Other revenue
Total revenue
Government grants
Sundry income
Total other income
Total revenue and other income
Geographic information
Australia
New Zealand
US
Other
Total revenue
Notes
2020
$ (000)
2019
$ (000)
16,307
15,948
5,831
1,427
1,819
485
2,710
1,538
2,698
467
25,869
23,361
15
922
-
922
1,208
7
1,215
26,791
24,576
2020
$ (000)
2019
$ (000)
restated*
19,335
2,343
1,471
212
18,218
2,465
4,823
363
25,869
23,361
*Note the prior year figures have been adjusted as a result of a reclass of grant revenue resulting in a movement between Australia and New Zealand sourced income.
47
Serko annual report
03
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E
R
K
O
A
B
O
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04
S
U
M
M
A
R
Y
06
L
E
T
T
E
R
10
O
V
E
R
V
I
E
W
S
T
R
A
T
E
G
C
I
12
P
R
O
D
U
C
T
S
16
L
E
A
D
E
R
S
H
P
I
18
C
O
R
P
O
R
A
T
E
R
E
S
P
O
N
S
I
B
I
L
I
T
Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
78
D
I
S
C
L
O
S
U
R
E
S
G
O
V
E
R
N
A
N
C
E
&
95
I
D
R
E
C
T
O
R
Y
G
L
O
S
S
A
R
Y
&
5 EXPENSES
Operating profit before taxation includes the following expenses:
Marketing expenses
Third party connection costs
Other selling costs
Total selling and marketing expenses
Hosting expenses
Employee remuneration
Contributions to pension plans
Share-based payment expenses
Other remuneration and benefits
Total remuneration and benefits
Auditor remuneration and other assurance fees
Directors’ fees*
Expected credit loss allowance on receivables
Amortisation of intangibles
Depreciation
Rental and operating lease expenses
Professional fees
Computer licences
Other administration expenses
Total administration expenses
Fair value remeasurement of contingent consideration
Expenses from ordinary activities
*Directors’ fees include $12,500 earned by a director of subsidiary, Serko India Private Limited.
2020
$ (000)
2019
$ (000)
1,469
885
635
2,989
1,171
62
458
1,691
3,362
1,931
17,161
11,924
662
959
637
433
576
202
19,419
13,135
153
357
237
1,705
1,451
83
1,571
925
3,784
10,266
109
283
(7)
754
294
804
1,057
260
2,722
6,276
1,056
287
37,092
23,320
48
Serko annual report
5 EXPENSES CONTINUED
Finance income and expenses includes:
Finance income
Interest received
Dividends received
Foreign exchange gains – net
Total finance income
Finance expenses
Interest expense
Interest expense on lease liabilities
Other finance expenses
Total finance expenses
Total finance income and expenses
Auditor remuneration
Amounts for services performed by Deloitte Limited:
Audit of financial statements
Other assurance services*
Total audit fees
*Other assurance services relate to review of the Group’s compliance with Callaghan Innovation Grant requirements.
49
Serko annual report
2020
$ (000)
2019
$ (000)
418
1
718
1,137
(14)
(111)
(37)
(162)
305
1
54
360
(20)
-
(50)
(70)
975
290
2020
$ (000)
2019
$ (000)
146
7
153
79
7
86
03
S
E
R
K
O
A
B
O
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T
04
S
U
M
M
A
R
Y
06
L
E
T
T
E
R
10
O
V
E
R
V
I
E
W
S
T
R
A
T
E
G
C
I
12
P
R
O
D
U
C
T
S
16
L
E
A
D
E
R
S
H
P
I
18
C
O
R
P
O
R
A
T
E
R
E
S
P
O
N
S
I
B
I
L
I
T
Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
78
D
I
S
C
L
O
S
U
R
E
S
G
O
V
E
R
N
A
N
C
E
&
95
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C
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O
R
Y
G
L
O
S
S
A
R
Y
&
6
INCOME TAX
Current tax assets and liabilities for the current period are
measured at the amount expected to be recovered from
or paid to the taxation authorities based on the current
period’s taxable income. The tax rates and tax laws used
to compute the amount are those that are enacted or
substantively enacted in the jurisdictions on which the
Group operates at the reporting date.
Current income tax relating to items recognised directly
in equity is recognised in equity and not in the statement
of comprehensive income. Management periodically
evaluates positions taken in the tax returns, with respect to
situations in which applicable tax regulations are subject to
interpretation, and establishes provisions where appropriate.
Deferred income tax is provided on all temporary
differences at the balance sheet date between the tax
bases of assets and liabilities and their carrying amounts for
financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable
temporary differences except:
• For a deferred income tax liability arising from the initial
recognition of goodwill; and
Current income tax
Current income tax charge
Adjustments in respect of income tax
Deferred income tax
• Where the deferred income tax liability arises from the
initial recognition of an asset or liability in a transaction
that is not a business combination and, at the time of
the transaction, affects neither the accounting profit
nor taxable profit or loss.
Deferred income tax assets are recognised for all deductible
temporary differences and unused tax losses, to the extent
that it is probable that taxable profit will be available against
which the deductible temporary differences can be utilised.
The carrying amount of deferred income tax assets is
reviewed at each balance date and reduced to the extent
that it is no longer probable that sufficient taxable profit will
be available to allow all or part of the deferred income tax
asset to be utilised.
Deferred income tax assets and liabilities are measured at
the tax rates that are expected to apply to the year when the
asset is realised or the liability is settled, based on tax rates
(and tax laws) relevant to the appropriate tax jurisdiction,
that have been enacted or substantively enacted at the
balance date.
2020
$ (000)
2019
$ (000)
318
(113)
205
493
(225)
268
Origination and reversal of temporary differences
(167)
(355)
Income tax expense/(benefit) reported in the statement of comprehensive income
38
(87)
50
Serko annual report
6
INCOME TAX CONTINUED
The prima facie tax payable on profit before income tax is reconciled to the income tax expense as follows:
Accounting (loss)/profit before income tax
At the statutory income tax rate of 28% (2019:28%)
Non-deductible items
Adjustments in respect of income tax
Foreign taxes
Share-based payments
Tax losses unrecognised/(recognised)
Effect of tax on overseas subsidiaries at different rate
Income tax expense/(benefit)
At effective income tax rate of:
Deferred income tax at 31 March relates to the following:
Deferred income tax liabilities recognised
Intangibles
Unrealised foreign exchange
Deferred income tax asset recognised
Intangibles and non-current assets*
Provision for ECL
Employee entitlements
Bonus provision
Share-based payments
Net deferred tax asset recognised
Deferred income tax asset not recognised
Employee entitlements
Bonus provision
Leases
*Net of lease liabilities.
2020
$ (000)
2019
$ (000)
(9,326)
1,546
(2,611)
456
(113)
72
182
2,132
(80)
38
433
143
(225)
18
170
(545)
(81)
(87)
-0.4%
-5.6%
2020
2019
Statement
of financial
position
Statement of
comprehensive
income
Statement
of financial
position
Statement of
comprehensive
income
$ (000)
$ (000)
$ (000)
$ (000)
(320)
-
106
65
350
8
41
250
-
-
-
-
86
(13)
51
63
102
(163)
41
167
-
-
-
-
(406)
13
55
2
248
172
-
84
-
-
-
-
20
22
(30)
2
169
172
-
355
(112)
(195)
11
(296)
Tax losses carried forward are attributable to those generated in New Zealand of $20,437,000, subject to shareholder continuity
rules being met.
51
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S
U
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A
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06
L
E
T
T
E
R
10
O
V
E
R
V
I
E
W
S
T
R
A
T
E
G
C
I
12
P
R
O
D
U
C
T
S
16
L
E
A
D
E
R
S
H
P
I
18
C
O
R
P
O
R
A
T
E
R
E
S
P
O
N
S
I
B
I
L
I
T
Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
78
D
I
S
C
L
O
S
U
R
E
S
G
O
V
E
R
N
A
N
C
E
&
95
I
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R
E
C
T
O
R
Y
G
L
O
S
S
A
R
Y
&
7 RECEIVABLES
Receivables are recognised initially at fair value and
matrix, considering history of debtor write off, ageing of
subsequently measured at amortised cost using the effective
invoices, country, market and product risk.
interest method, less provision for impairment.
Collectibility of receivables is reviewed on an ongoing
Serko has also made decisions with respect to Expected
Credit Losses that reflect the prevailing level of uncertainty
basis. Debts that are known to be uncollectible are written
in the travel industry and the impact of Covid-19 on our
off when identified. Trade receivables are assessed for
impairment and an expected credit loss (ECL) provision
made based on lifetime expected credit losses. The ECL
model considers various aspects of credit risk within a risk
customers’ businesses and their capacity to pay.
The impairment, and any subsequent movement,
including recovery, is recognised in the statement of
comprehensive income.
Trade receivables
Expected credit loss provision
Trade receivables (net)
GST receivable
Sundry debtors
Contract assets
Prepayments
Funds held in trust
Total receivables
Foreign currency risk
The carrying amounts of the group’s receivables are denominated in the following
currencies:
New Zealand dollars
Australian dollars
US dollars
British pounds
2020
$ (000)
2019
$ (000)
4,049
(237)
3,812
473
34
1,368
845
46
6,578
3,098
2,748
717
15
3,040
(7)
3,033
229
58
1,593
551
29
5,493
2,981
1,841
666
5
6,578
5,493
At 31 March the ageing analysis of receivables was as
follows:
2020
Trade receivables
2019
Trade receivables
Total
0-30 days
31-60 days
61-90 days
91+ days
$ (000)
$ (000)
$ (000)
$ (000)
$ (000)
4,049
1,996
1,726
173
154
3,040
2,252
630
48
110
52
Serko annual report
7 RECEIVABLES CONTINUED
Allowance for impairment loss – Trade receivables
Group trade receivables over 60 days were $327,000 (2018: $158,000. This balance of $327,000 has been assessed as part of Covid-
19’s impact on the recovery of trade receivables. An ECL provision of $237,000 (2019: $7,000) has been made as required under NZ
IFRS 9. Additionally, the Group recognises an allowance of individual receivables if there is objective evidence of credit impairment.
Trade receivables are non-interest bearing and are generally on 30 - 60-day terms. Serko has historically low levels of impairment on
trade receivables.
8 FINANCIAL INSTRUMENTS
Derivative financial instruments
The Group uses derivatives in the form of forward exchange contracts (FECs) to reduce the risk that movements in the exchange
rate will affect the Group’s New Zealand dollar cash flows. Such derivative financial instruments are initially recognised at fair value
on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as
financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
The following table presents the Group’s foreign currency forward exchange contracts measured at fair value:
Current:
Foreign currency forward exchange contracts
557
421
Contractual amounts of forward exchange contracts outstanding were as follows:
Foreign currency forward exchange contracts
18,819
11,016
2020
$ (000)
2019
$ (000)
Derivative financial instruments have been determined to be within level 2 of the fair value hierarchy. Foreign currency forward
exchange contracts have been fair valued using published market foreign exchange rates and contract forward rates discounted at a
rate that reflects the credit risk of the counterparties.
53
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S
U
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M
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06
L
E
T
T
E
R
10
O
V
E
R
V
I
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W
S
T
R
A
T
E
G
C
I
12
P
R
O
D
U
C
T
S
16
L
E
A
D
E
R
S
H
P
I
18
C
O
R
P
O
R
A
T
E
R
E
S
P
O
N
S
I
B
I
L
I
T
Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
78
D
I
S
C
L
O
S
U
R
E
S
G
O
V
E
R
N
A
N
C
E
&
95
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Y
G
L
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Y
&
9 PROPERTY, PLANT AND EQUIPMENT
a) Impairment
The carrying values of property, plant and equipment
are reviewed for impairment when events or changes
in circumstances indicate the carrying value may not
be recoverable.
If any such indication exists and where the carrying values
exceed the estimated recoverable amount, the assets are
written down to their recoverable amounts.
b) Disposal
An item of property, plant and equipment is derecognised
upon disposal or when no further future economic benefits
are expected from its use or disposal. Any gain or loss
arising on derecognition of the asset (calculated as the
difference between the net disposal proceeds and the
carrying amount of the asset) is included in profit or loss in
the year the asset is derecognised.
All items of property, plant and equipment are recorded
at cost less accumulated depreciation and impairment.
Initial cost includes purchase consideration and those
costs attributable to bringing the asset to the location and
condition necessary for its intended use. Where an item is
self-constructed, its construction cost includes the cost
of materials, direct labour and an appropriate proportion of
production overheads.
Subsequent expenditure relating to an item of property,
plant and equipment is added to its gross carrying amount
when such expenditure either increases the future economic
benefits beyond its existing service potential or is necessarily
incurred to enable future economic benefits to be obtained
and if that expenditure would have been included in the
initial cost of the item had it been incurred at that time. The
carrying amount of any replaced part is derecognised.
All other repairs and maintenance expenditure is recognised
in profit or loss as incurred.
Depreciation is calculated on a straight-line basis over
the estimated useful life of the asset. The residual value
of assets is reviewed and adjusted, if appropriate, at each
balance date.
The following estimates have been used:
• Leasehold improvements - Term of lease (7% - 16.7%)
• Furniture and fittings - 6% - 36%
• Computer equipment - 17.5% - 48%
• Right-of-use asset - Term of lease (16.7% - 100%)
54
Serko annual report
9 PROPERTY, PLANT AND EQUIPMENT CONTINUED
Leasehold
improvement
Furniture &
fittings
Computer
equipment
Right-of-use
asset*
Total
$ (000)
$ (000)
$ (000)
$ (000)
$ (000)
2020
Cost or valuation
Balance at 1 April 2019
Additions
Disposals
Currency translation
Balance at 31 March 2020
Depreciation
Balance at 1 April 2019
Depreciation expense
Disposals
Currency translation
Balance at 31 March 2020
Net carrying amount
2019
Cost or valuation
Balance at 1 April 2018
Additions
Acquisition through business combinations
Currency translation
Balance at 31 March 2019
Depreciation
Balance at 1 April 2018
Depreciation expense
Balance at 31 March 2019
Net carrying amount
*Right-of-use assets relate to premises leases.
812
53
(230)
(25)
610
333
133
(223)
(25)
218
392
770
28
14
-
812
222
111
333
479
556
251
-
7
814
223
70
-
5
298
516
367
166
24
(1)
556
175
48
223
333
873
490
-
27
1,970
946
(60)
45
4,211
1,740
(290)
54
1,390
2,901
5,715
556
264
-
18
838
552
574
270
30
(1)
873
421
135
556
317
-
984
(17)
12
979
1,922
1,112
1,451
(240)
10
2,333
3,382
-
-
-
-
-
-
-
-
-
1,711
464
68
(2)
2,241
818
294
1,112
1,129
55
Serko annual report
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06
L
E
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T
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10
O
V
E
R
V
I
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W
S
T
R
A
T
E
G
C
I
12
P
R
O
D
U
C
T
S
16
L
E
A
D
E
R
S
H
P
I
18
C
O
R
P
O
R
A
T
E
R
E
S
P
O
N
S
I
B
I
L
I
T
Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
78
D
I
S
C
L
O
S
U
R
E
S
G
O
V
E
R
N
A
N
C
E
&
95
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E
C
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O
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Y
G
L
O
S
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A
R
Y
&
10 INTANGIBLES
Intangible assets acquired separately or in a business
Research and development
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, intangible assets are carried at cost less any
accumulated amortisation and any accumulated impairment
losses. Costs related to internally generated intangible
assets, excluding capitalised development costs, are not
capitalised and expenditure is recognised in profit or loss in
the year in which the expenditure is incurred.
Research and maintenance costs are expensed as incurred.
An intangible asset arising from development expenditure
on an internal project is recognised only when the Group
can demonstrate the technical feasibility of completing
the intangible asset so that it will be available for use or
sale, its intention to complete and its ability to use or sell
the asset. Also considered is how the asset will generate
future economic benefits, the availability of resources
to complete the development and the ability to reliably
The useful lives of intangible assets are assessed to be
measure the expenditure attributable to the intangible
either finite or indefinite. Intangible assets with finite
asset during its development. Following initial recognition
lives are amortised over the useful lives and tested for
of the development expenditure, the cost model is
impairment whenever there is an indication that the
applied requiring the asset to be carried at cost less any
intangible asset may be impaired. The amortisation period
accumulated amortisation and impairment losses. Any
and the amortisation method for an intangible asset with a
expenditure capitalised is amortised over the period of
finite useful life is reviewed at least at each financial year
expected benefit from the related project.
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.
Intangible assets with indefinite useful lives are tested for
impairment annually either individually or at the cash-
generating unit level. Such intangibles are not amortised.
An intangible asset with an indefinite useful life is reviewed
each reporting period to determine whether indefinite life
assessment continues to be supportable. If not, the change
in the useful life assessment from indefinite to finite is
accounted for as a change in an accounting estimate and is
thus accounted for on a prospective basis.
Gains or losses arising from derecognition of an intangible
asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are
recognised in profit or loss when the asset is derecognised.
Intangible assets under development at balance date are
recorded as capital work in progress and are not subject
to amortisation.
Impairment of non-financial assets
Intangible assets that have indefinite useful lives or are
not yet completed are not subject to amortisation and are
tested annually for impairment or more frequently if events
or changes in circumstances indicate that they might be
impaired. Other assets are tested for impairment whenever
events or changes in circumstances indicate that the
carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which
the asset’s carrying amount exceeds its recoverable
amount. Recoverable amount is the higher of an asset’s fair
value less costs to sell, and value in use. For the purposes
of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash
inflows that are largely independent of the cash inflows
from other assets or groups of assets (cash-generating
A summary of the policies applied to the Group’s intangible
units (‘CGUs’). Non-financial assets, including development
assets is as follows:
• Goodwill and Other intangible assets (indefinite useful
life, tested annually for impairment)
• Intellectual property (finite, amortised on 5 years
straight-line basis)
• Capitalised software development costs (finite,
amortised on 5 years straight-line basis)
• Computer software (finite, amortised on a straight-line
basis 40% - 60%).
work in progress and computer software are assessed for
impairment at a Group level under one reporting segment.
For the year ended 31 March 2019, InterplX Inc goodwill
was assessed as a separate CGU. In the current year, the
InterplX product has been developed to bundle with travel,
it no longer has separately identifiable cash flows and is
assessed as part of the one Group CGU.
56
Serko annual report
10 INTANGIBLES CONTINUED
Non-financial assets, other than goodwill that suffered
In undertaking an impairment review of the cash-
impairment, are tested for possible reversal of the
generating unit the following assumptions were used in the
impairment whenever events or changes in circumstances
impairment model:
indicate that the impairment may have reversed.
The recoverable amount of the cash-generating unit is
determined from a value-in-use calculation that uses a
discounted cash flow analysis. The key assumptions for the
value-in-use calculation are those regarding the discount
rate, growth rates and forecast financial performance and
cash flows. Management estimates the discount rate using
rates that reflect current market assumptions of the time
value of money and risk specific to the cash-generating
unit. The growth rates are based on management’s best
estimate. Forecast revenues, direct and indirect costs,
are based on historical experience/past practices and
expectations of future changes in the markets the Group
operates in and services.
• Cash flow projections across a five-year forecast period
• Three distinct scenarios were modelled and probability
weighted at 10% to the highest case, 40% to the mid case
and 50% to the lowest case. As a result, the major approved
assumptions for impairment testing are as follows:
– The Australian and New Zealand travel industry
recovers over two years to pre-Covid-19 levels
– Northern Hemisphere travel markets are assumed to
have a lag relative to Australasia and forecasts return
to pre-Covid-19 levels in FY23
– Serko Expense platform revenue growth, supplier
commissions and services and other revenues are
relative to Travel platform recovery and growth in each
Owing to Covid-19 there is uncertainty around forecasts
territory
• Discount rate of 11.7% (FY19: 11.5%)
• Discount factor applied using a mid-year convention
• Terminal growth rate of 2% (FY19: 2.4%).
for domestic and international air travel and consequently
uncertainty relating to Serko’s forecast cash flows, which is
an indicator of possible impairment. Serko has forecast a
significant reduction in travel bookings and Serko Expense
platform system use for the year ending 31 March 2021. These
forecasts are based on the information available to the
Group at the time of preparing these financial statements
and were arrived at with reference to various data sources,
including airlines, the International Air Transport Association
(‘IATA’), external management consultancy reports and Travel
Management Company resellers.
Serko’s estimates of travel recovery and growth rates
remain uncertain and dependent on a number of factors
with respect to Covid-19, including timing of return to
domestic travel, border controls for international travel and
public demand and behaviour with respect to travel and
airline scheduling. Cash flows are sensitive to the ability
of the Group to return to pre-Covid-19 revenue by the end
of FY2022 and to achieve its Northern Hemisphere growth
plans over the five-year period. The longer-term effects
of Covid-19 on Serko’s business remain uncertain and the
potential impacts of the pandemic continue to evolve.
57
Serko annual report
03
S
E
R
K
O
A
B
O
U
T
04
S
U
M
M
A
R
Y
06
L
E
T
T
E
R
10
O
V
E
R
V
I
E
W
S
T
R
A
T
E
G
C
I
12
P
R
O
D
U
C
T
S
16
L
E
A
D
E
R
S
H
P
I
18
C
O
R
P
O
R
A
T
E
R
E
S
P
O
N
S
I
B
I
L
I
T
Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
78
D
I
S
C
L
O
S
U
R
E
S
G
O
V
E
R
N
A
N
C
E
&
95
I
D
R
E
C
T
O
R
Y
G
L
O
S
S
A
R
Y
&
10 INTANGIBLES CONTINUED
In assessing the sensitivity of the forecasts to errors in assumptions, an analysis in key underlying assumptions was performed
and applied to the weighted average scenario. This included reducing the estimated growth rate by 10%, reducing the terminal
growth rate by 1% and increasing the discount rate by 1%. These reasonably possible changes in assumptions did not result in any
impairment to intangible assets.
Goodwill
Intellectual
property
Key
employee
retention
Customer
contracts
Other
intangible
assets
Development
work in
progress
Computer
software
Total
$ (000)
$ (000)
$ (000)
$ (000)
$ (000)
$ (000)
$ (000)
$ (000)
2020
Cost
Balance at 1 April 2019
1,405
1,477
Additions
Assets no longer in use
Transfer of cost
Currency translation
Balance at 31 March 2020
Amortisation and impairment
Balance at 1 April 2019
Amortisation
Currency translation
Balance at 31 March 2020
-
-
-
117
1,522
-
-
-
-
-
-
-
237
1,714
76
332
74
482
Net carrying amount
1,522
1,232
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2019
Cost
Balance at 1 April 2018
Additions
Assets no longer in use
Transfer of cost
Acquisition through business
combinations (refer note 13)
Currency translation
Balance at 31 March 2019
Amortisation and impairment
Balance at 1 April 2018
Amortisation
Assets no longer in use
Balance at 31 March 2019
220
-
(220)
-
1,444
(39)
1,405
220
-
(220)
-
-
-
-
-
1,523
(46)
1,477
-
76
-
76
Net carrying amount
1,405
1,401
78
-
443
-
(78)
(443)
-
-
-
-
-
-
-
-
78
-
443
-
(78)
(443)
-
-
-
-
73
5
-
-
-
78
-
-
-
-
78
-
73
-
-
-
-
4,766
11,013
-
(11,215)
-
4,775
12,496
-
11,018
(36)
11,215
-
(36)
-
354
4,564
15,954 23,832
-
-
-
-
1,867
1,943
1,373
1,705
-
74
3,240
3,722
4,564
12,714
20,110
49
2,915
3,705
6,740
-
6,813
-
(201)
(942)
(2,023)
2,023
-
-
-
39
(1)
3,006
(86)
73
4,766
4,775
12,496
-
-
-
-
-
-
-
-
1390
2,131
678
754
(201)
(942)
1,867
1,943
73
4,766
2,908
10,553
58
Serko annual report
11 CASH AT BANK AND ON HAND
Cash and short-term deposits in the statement of financial position comprise cash at bank, and on hand, short-term highly liquid
investments with an original maturity of three months or less.
Cash at bank – New Zealand dollar balances
Cash at bank – foreign currency balances
The carrying amounts of the group’s cash at bank and on hand are denominated in the
following currencies:
New Zealand dollars
Australian dollars
Chinese Yuan
US dollars
Indian rupees
The Group has an indemnity guarantee over the Australian leased property of $108,000.
2020
$ (000)
34,776
7,615
42,391
34,776
6,751
429
412
23
2019
$ (000)
8,945
6,787
15,732
8,945
6,356
290
119
22
42,391
15,732
59
Serko annual report
03
S
E
R
K
O
A
B
O
U
T
04
S
U
M
M
A
R
Y
06
L
E
T
T
E
R
10
O
V
E
R
V
I
E
W
S
T
R
A
T
E
G
C
I
12
P
R
O
D
U
C
T
S
16
L
E
A
D
E
R
S
H
P
I
18
C
O
R
P
O
R
A
T
E
R
E
S
P
O
N
S
I
B
I
L
I
T
Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
78
D
I
S
C
L
O
S
U
R
E
S
G
O
V
E
R
N
A
N
C
E
&
95
I
D
R
E
C
T
O
R
Y
G
L
O
S
S
A
R
Y
&
12 TRADE AND OTHER PAYABLES
Employee benefits
Liabilities for wages and salaries, including non-monetary benefits, long-service leave and annual leave expected to be settled
within 12 months of the reporting date, are recognised in respect of employees’ services up to the reporting date. They are
measured at the amounts expected to be paid when the liabilities are settled.
Liabilities for wages and salaries that are not expected to be settled within 12 months are measured at the present value of the
estimated future cash outflows to be made by the Group in respect of services provided by employees up to the reporting date.
Post-employment benefits
Contributions made on behalf of eligible employees to defined contribution funds are recognised in the period they are incurred.
The defined contribution funds receive fixed contributions from the Group whose legal or constructive obligation is limited to these
contributions only.
Trade and other payables
Trade and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior
to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the
purchase of these goods and services.
Trade payables
Accrued expenses
Lease incentive*
Annual leave accrual
Total trade and other payables
Disclosed as:
Current
Non-current
* The lease incentive has been reclassified upon transition to NZ IFRS 16.
The average credit period on trade payables is approximately 30 days.
2020
$ (000)
2019
$ (000)
3,032
2,743
-
1,298
7,073
7,073
-
7,073
1,144
2,701
193
887
4,925
4,791
134
4,925
60
Serko annual report
13 LEASE LIABILITIES
Recognition and measurement of Serko leasing activities
Serko leases property for fixed periods of between one and six years and some include extension options. These extension options
are usually at the discretion of Serko and are included in the measurement of the lease asset if management intends to exercise the
extension.
Prior to 31 March 2019 leases of property, plant and equipment were classified as operating leases. Payments made under operating
leases (net of any incentives received from the lessor) were charged to profit or loss on a straight-line basis over the period of the lease.
Now assets and liabilities arising from a lease are initially measured on a present value basis. Lease incentives are recognised as
part of the measurement of the right-of-use asset and lease liabilities, whereas under NZ IAS 17 they resulted in the recognition of a
lease incentive liability, amortised as a reduction of rental expense on a straight-line basis. Lease liabilities include the net present
value of fixed payments less any lease incentives receivable. The lease payments are discounted using the lessee’s incremental
borrowing rate, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a
similar economic environment with similar terms and conditions.
The amortisation of the discount applied on recognition of the lease liability is recognised as interest expense in the income statement.
Key movements relating to lease balances are presented below.
2020
$ (000)
2,479
900
(1,080)
46
2,345
1,280
1,065
2,345
1,423
848
347
2,618
Balance at 1 April 2019 due to first-time adoption of NZ IFRS 16
Leases entered into during the period
Principal repayments
Foreign exchange adjustment
Closing balance
Classified as:
Current
Non-current
Closing balance
Maturity analysis - contractual undiscounted cash flows:
Less than 1 year
Later than 1 year and not later than 2 years
Later than 2 years and not later than 3 years
Total undiscounted lease liabilities at 31 March
61
Serko annual report
03
S
E
R
K
O
A
B
O
U
T
04
S
U
M
M
A
R
Y
06
L
E
T
T
E
R
10
O
V
E
R
V
I
E
W
S
T
R
A
T
E
G
C
I
12
P
R
O
D
U
C
T
S
16
L
E
A
D
E
R
S
H
P
I
18
C
O
R
P
O
R
A
T
E
R
E
S
P
O
N
S
I
B
I
L
I
T
Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
78
D
I
S
C
L
O
S
U
R
E
S
G
O
V
E
R
N
A
N
C
E
&
95
I
D
R
E
C
T
O
R
Y
G
L
O
S
S
A
R
Y
&
14 CONTINGENT CONSIDERATION — INTERPLX
Consideration for the InterplX Inc. acquisition was part settled in shares at the market price on 20 December 2018, with the purchase
agreement including contingent consideration that was settled on 12 February 2020 in the form of further Serko shares (tranche
2). Contingent consideration was calculated based on the achievement of InterplX revenue performance over the period 1 January
2019 to 31 December 2019. The fair value remeasurement of shares issued in respect of tranche 2 was $1,342,977 with $1,056,016
recognised as an expense in 2020 (2019: $286,961).
15 GOVERNMENT GRANTS
Income relating to grants is presented in the table below
Callaghan R&D grant
Callaghan student experience grant
NZTE international growth grant
Total compensation
16 INTEREST-BEARING LOANS AND BORROWINGS
Current
Leasehold fitout loan
Non-current
Leasehold fitout loan
2020
$ (000)
2019
$ (000)
683
34
205
922
810
66
332
1,208
2020
$ (000)
2019
$ (000)
58
58
92
92
54
54
149
149
62
Serko annual report
17 EQUITY
Ordinary share capital is recognised at the fair value of the consideration received. Transaction costs relating to the listing of new
ordinary shares and the simultaneous sale and listing of existing shares are allocated to those transactions on a proportional basis.
Transaction costs relating to the sale and listing of existing shares are not considered costs of an equity instrument as no equity
instrument is issued and, consequently, costs are recognised as an expense in the statement of comprehensive income when
incurred. Transaction costs relating to the issue of new share capital are recognised directly in equity as a reduction of the share
proceeds received.
During the year the Group allocated the following restricted shares to Serko employees (refer to note 19):
• In respect of the Restricted Share Plan (RSP), the Group allocated 25,000 shares (2019: 346,157). Unallocated shares are
1,256,846 (2019: 1,268,628); and
• In respect of Restricted Share Units (RSU), the Group allocated 671,117 (2019: nil).
2020
2019
2020
2019
Number of
shares
Number of
shares
$ (000)
$ (000)
(000)
(000)
Ordinary shares
Share capital at the beginning of the year
40,993
25,185
80,923
74,894
Issue of shares pursuant to institutional capital placement
40,000
15,048
9,900
5,455
Issue of shares pursuant to Share Purchase Plan (SPP) placement
Transaction costs for issue of new shares
Non-executive directors settlement of non-recourse loan
Issue of shares pursuant to US Options plan
Issue of shares pursuant to Restricted Share Units (RSU) scheme
Shares issued in respect of InterplX acquisition
Share capital at 31 March
Share-based payment reserve
Balance at 1 April
Shares allocated to employees via Restricted Unit Scheme
Shares allocated to employees via Restricted Share Plan
Shares forfeited from employees via Restricted Share Plan
Non-executive directors settlement of non-recourse loan
Share-based payments - employee share options
Share-based payment reserve at 31 March
5,000
(1,793)
243
74
353
2,881
87,751
-
(778)
-
-
-
1,538
1,238
-
-
25
79
574
-
-
-
-
-
574
40,993
92,739
80,923
1,885
1,309
659
23
(17)
(43)
(133)
2,374
-
406
(24)
-
194
1,885
-
-
-
-
-
-
-
-
-
-
-
-
-
-
63
Serko annual report
03
S
E
R
K
O
A
B
O
U
T
04
S
U
M
M
A
R
Y
06
L
E
T
T
E
R
10
O
V
E
R
V
I
E
W
S
T
R
A
T
E
G
C
I
12
P
R
O
D
U
C
T
S
16
L
E
A
D
E
R
S
H
P
I
18
C
O
R
P
O
R
A
T
E
R
E
S
P
O
N
S
I
B
I
L
I
T
Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
78
D
I
S
C
L
O
S
U
R
E
S
G
O
V
E
R
N
A
N
C
E
&
95
I
D
R
E
C
T
O
R
Y
G
L
O
S
S
A
R
Y
&
18 EARNINGS PER SHARE (EPS)
Basic EPS amounts are calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the profit attributable to ordinary equity holders of the parent by the weighted
average number of ordinary shares outstanding during the year, plus the weighted average number of shares that would be issued on
conversion of all of the dilutive potential ordinary shares into ordinary shares.
The following reflects the income and share data used in the basic and diluted EPS computations:
(Loss)/profit attributable to ordinary equity holders of the parent
Continuing operations
Basic earnings per share
Issued ordinary shares
Adjusted for employee restricted share plan shares
Weighted average of issued ordinary shares
Basic earnings per share (dollars)
Diluted earnings per share
Weighted average of issued ordinary shares
Weighted average of issued ordinary shares for diluted earnings per share
Diluted earnings per share (dollars)
2020
$ (000)
2019
$ (000)
(9,365)
(9,365)
1,633
1,633
Notes
2020
2019
Number
Number
(000)
(000)
17
92,739
(1,919)
90,820
(0.10)
86,893
86,893
(0.11)
80,923
(2,769)
78,154
(0.02)
77,584
77,584
0.02
Subsequent to the reporting date but prior to the date of authorisation of these financial statements, Serko issued a total of 472,243 RSUs.
Net tangible assets per security
2020
Cents
2019
Cents
47.09
19.38
64
Serko annual report
19 SHARE-BASED PAYMENTS
Employees of the Group receive remuneration at the Board’s
discretion in the form of share-based payment transactions,
where services are provided as consideration for the receipt
of equity instruments.
the Group. Under the RSP ordinary shares in Serko Limited
are issued to a trustee, Serko Trustee Limited, a wholly-
owned subsidiary, and allocated to participants, on grant
date, using funds lent to them by the Company.
The cost of share-based payment transactions are
recognised, together with a corresponding increase in
equity, over the period in which the service conditions are
fulfilled. The cumulative expense recognised for share-based
transactions at each reporting date, until the vesting date,
reflects the extent to which the vesting period has expired
and the Group’s best estimate of the number of equity
instruments that will ultimately vest. The expense or credit
for a period represents the movement in cumulative expenses
recognised at the beginning and end of that period.
No cumulative expense is recognised for awards that do not
ultimately vest except where vesting is conditional upon a
market condition.
Employee Restricted Share Plan
The Serko Limited Employee Restricted Share Plan (RSP)
was introduced for selected executives and employees of
The price for each share vested during the year under the
RSP is the higher of the market price of the share on the
date on which the shares are allocated or the grant price.
Under the RSP shares are beneficially owned by the
participants. The length of retention period before the
shares vest is between one and three years. If the individual
is still employed by the Group at the end of this specific
period, the employee is awarded a cash bonus that must be
used to repay the loan and shares are then transferred to
the employee. The number of shares awarded is determined
by the Remuneration Committee of the Board. The weighted
average grant date fair value of restricted shares issued
during the year was $3.17 (2019: $2.96) and was determined
by the volume weighted average price (VWAP) of shares
traded in the previous 20 trading days preceding the date of
grant. The Group has no legal or constructive obligation to
repurchase the shares or settle the RSP for cash.
Unvested shares at 1 April
Granted
Forfeited
Vested
Unvested shares at 31 March - allocated to employees
Ageing of unvested shares
Vest within one year
Vest within two to five years
Ageing of unvested shares at 31 March - allocated to employees
2020
2019
Number of shares
Number of shares
1,499,943
25,000
(13,218)
(849,433)
662,292
312,475
349,817
662,292
1,398,707
345,890
(22,219)
(222,435)
1,499,943
842,911
657,032
1,499,943
Unallocated shares - held by trustee
1,256,846
1,268,628
The number of shares awarded pursuant to the RSP does not equal the number of shares created for the scheme, as the scheme had
an allocated pool of shares upon set up and forfeited shares are held in the trust and reissued.
65
Serko annual report
03
S
E
R
K
O
A
B
O
U
T
04
S
U
M
M
A
R
Y
06
L
E
T
T
E
R
10
O
V
E
R
V
I
E
W
S
T
R
A
T
E
G
C
I
12
P
R
O
D
U
C
T
S
16
L
E
A
D
E
R
S
H
P
I
18
C
O
R
P
O
R
A
T
E
R
E
S
P
O
N
S
I
B
I
L
I
T
Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
78
D
I
S
C
L
O
S
U
R
E
S
G
O
V
E
R
N
A
N
C
E
&
95
I
D
R
E
C
T
O
R
Y
G
L
O
S
S
A
R
Y
&
19 SHARE-BASED PAYMENTS CONTINUED
Employee Restricted Share Units scheme (RSUs)
The Serko Limited Employee Restricted Share Units scheme (RSU) was introduced during the year to replace the RSP. Under the RSU
scheme, ordinary shares in Serko Limited are allocated to employees at grant date with a zero-exercise price and will be taxable to
the employee in the income year when the awards vest.
Vesting conditions are based on:
• Period of continuous employment (usually three years, however, it can be up to five years) and/or;
• Performance hurdles, such as performance against revenue targets.
The weighted average grant date fair value of RSUs issued during the year was determined by either the volume weighted average
price (VWAP) of shares traded in the previous 20 trading days preceding the date of grant or closing price the day before issue.
Weighted
average price
NZ$
4.31
3.95
4.49
2020
2019
Number of RSUs
Number of RSUs
671,117
(1,979)
(78,521)
590,617
-
-
-
-
Allocated to employees during the year
Cancelled during the year
Vested during the year
Total RSUs granted
Employee incentive share options scheme
Options are granted to selected employees. The exercise price of the granted options is set at the closing price the day before issue.
Options are conditional on the completion of the necessary years of service (the vesting period) as appropriate to that tranche. The
options are considered graded equity instruments that vest in tranches over two to five years from the grant date. No options can be
exercised later than five years from grant date. There were 14 holders of options at 31 March 2020 (2019: 14).
The Group has no legal or constructive obligation to repurchase or settle the options in cash.
Movements in the number of options outstanding and their related weighted average exercise prices are as follows:
2020
2020
2019
2019
Weighted average
exercise price ($)
Options
Weighted average
exercise price ($)
2.90
4.45
2.90
2.97
286,901
44,169
(177,783)
(25,000)
128,287
-
2.90
-
-
Options
-
286,901
-
-
286,901
Outstanding at 1 April
Granted
Cancelled
Exercised
Outstanding at 31 March
66
Serko annual report
19 SHARE-BASED PAYMENTS CONTINUED
During the year a further 32,394 options were granted, however, these were subsequently cancelled or forfeited prior to 31 March 2020.
Options outstanding at 31 March fall within the following ranges:
2018-19
2019-20
Granted
Expiry date
Grant price
(NZ$)
Options
Options
2020
2019
2020-21
2.68 - 3.32
84,118
286,901
2021-22
3.95 - 4.49
44,169
-
128,287
286,901
The weighted average fair value of options granted during the year, determined using the Black-Scholes valuation model, was $1.84
per option (2019: $1.64).
The significant inputs into the valuation model were the market share price at grant date, the grant price as shown above, expected
annualised volatility of between 50% and 56% (FY19: 55% and 66%), a dividend yield of 0%, an expected option life of between two
and five years (FY19: two and five) and an annual risk-free interest rate of between 0.7% and 1.2% (FY19: 3%).
The volatility input measured is the standard deviation of continuously compounded share returns and is based on a statistical
analysis of daily share prices in the past one to five years.
Non-executive director shares
The Group’s non-executive directors were granted shares in 2014 that are to be settled by way of a non-recourse loan. The non-
recourse loans were due for repayment on 30 June 2020, following an extension to the previous loan due 30 June 2017. These were
valued using Black-Scholes model at the time of loan extension. During the year Ms Batten settled her loan in full. Subsequent to
year end Mr Botherway’s and Mr McConaghy’s loans were extended to 30 January 2021 and 30 June 2021 respectively. Post balance
date these have been valued using the Black-Scholes model, with the incremental fair value recognised in the profit and loss.
67
Serko annual report
03
S
E
R
K
O
A
B
O
U
T
04
S
U
M
M
A
R
Y
06
L
E
T
T
E
R
10
O
V
E
R
V
I
E
W
S
T
R
A
T
E
G
C
I
12
P
R
O
D
U
C
T
S
16
L
E
A
D
E
R
S
H
P
I
18
C
O
R
P
O
R
A
T
E
R
E
S
P
O
N
S
I
B
I
L
I
T
Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
78
D
I
S
C
L
O
S
U
R
E
S
G
O
V
E
R
N
A
N
C
E
&
95
I
D
R
E
C
T
O
R
Y
G
L
O
S
S
A
R
Y
&
20 RELATED PARTIES
a) Subsidiaries
The consolidated financial statements include the financial statements of Serko Limited and subsidiaries as listed in the following table:
Serko Australia Pty Limited
Serko Trustee Limited
Serko India Private Limited
Serko Investments Limited
Foshan Sige Information Technology Limited
Serko Inc
InterplX Inc
% Equity interest
Investment $(000)
Balance date
2020
2019
2020
2019
31 March
31 March
31 March
31 March
31 March
31 March
31 March
100%
100%
99%
100%
100%
100%
100%
100%
100%
99%
100%
100%
100%
100%
1
-
2
-
-
-
1
-
2
-
-
-
3,076
3,079
3,076
3,079
Serko Australia Pty Limited’s principal business is the marketing and support of travel booking software solutions supplied
by Serko Limited.
Serko Trustee Limited was incorporated on 4 June 2014 to hold the shares issued to key management and staff in the Restricted
Share Scheme in trust until vesting.
Serko India Private Limited was incorporated on 18 February 2015 as a subsidiary for the India-based operations. As of 1 January
2020 Serko India Private Limited was non-trading.
Serko Investments Limited was incorporated on 5 November 2014 as a holding company. It holds 1% of the shares in Serko India
Private Limited.
Foshan Sige Information Technology Limited was incorporated on 7 August 2017 as a subsidiary for the China-based operations.
Serko Inc was incorporated on 30 October 2017 as a subsidiary for the US-based operations.
InterplX Inc was acquired on 20 December 2018 and its principal business is the sale of expense management solutions.
68
Serko annual report
20 RELATED PARTIES CONTINUED
b) Transactions with related parties
The following table provides the total amount of transactions that have been entered into with related parties, excluding key
management and executive director remuneration.
Purchases from related parties
Simon Botherway - Chair (to 12 March*)
Clyde McConaghy - Non-executive Director
Claudia Batten - Acting Chair (from 12 March*)
Total
2020
$ (000)
2019
$ (000)
121
110
113
344
108
83
83
274
*Mr Botherway continues as a director of Serko (attending all Board & Committee meetings) but took a leave of absence from the Chair role on 12 March 2020 for medical
reasons. Ms Batten assumed the role of Acting Chair from this date.
c) Key management remuneration
Short-term benefits employees (*)
Share-based payments
Post-employment benefits
Total compensation
2020
$ (000)
2019
$ (000)
5,779
3,800
733
201
427
121
6,713
4,348
*Key management personnel includes the executive directors in their capacity as Chief Executive Officer and Chief Strategy Officer, the executive management team and
their direct reports. Short-term benefits include salaries, short-term incentives related to FY19 paid in FY20 and the bonus payments related to Restricted Share Plan
(RSP) long-term incentives granted in previous years and vested during the financial year to 31 March 2020.
d) Terms and conditions of transactions with related parties
Outstanding balances at year end are unsecured and settlement occurs in cash.
For the year ended 31 March 2020 the Group has not made any allowance for impairment loss relating to amounts owed by related
parties (2019: $nil). An impairment assessment is undertaken each financial year by examining the financial position of the related
party and the market in which the related party operates, to determine whether there is objective evidence that a related party
receivable is impaired. When such objective evidence exists, the Group recognises an allowance for the impairment loss.
69
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03
S
E
R
K
O
A
B
O
U
T
04
S
U
M
M
A
R
Y
06
L
E
T
T
E
R
10
O
V
E
R
V
I
E
W
S
T
R
A
T
E
G
C
I
12
P
R
O
D
U
C
T
S
16
L
E
A
D
E
R
S
H
P
I
18
C
O
R
P
O
R
A
T
E
R
E
S
P
O
N
S
I
B
I
L
I
T
Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
78
D
I
S
C
L
O
S
U
R
E
S
G
O
V
E
R
N
A
N
C
E
&
95
I
D
R
E
C
T
O
R
Y
G
L
O
S
S
A
R
Y
&
21 RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES
Net (loss)/profit after tax
Add non-cash items
Amortisation
Depreciation
Loss on property, plant and equipment disposal
Fair value remeasurement of contingent consideration
Deferred tax benefit
Gain on foreign exchange transactions
Share-based compensation
Add/(less) movements in working capital items
(Increase) in receivables
Increase in trade and other payables
(Decrease)/increase in income tax
2020
$ (000)
2019
$ (000)
(9,364)
1,633
1,705
1,451
50
1,056
(167)
(370)
959
(4,680)
(1,084)
2,283
(308)
891
754
294
-
287
(72)
(153)
576
3,319
(1,795)
1,998
125
328
Net cash flow from operating activities
(3,789)
3,647
22 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments comprise cash at bank, derivatives, receivables, payables and loans.
The Group manages its exposure to key financial risks, including currency risk, in accordance with the Group’s financial risk
management policy. The objective of the policy is to support the delivery of the Group’s financial targets whilst protecting future
financial security.
Group capital consists of share capital and retained earnings. To maintain or adjust the capital structure, the Group may adjust
amounts of dividends paid to shareholders, return capital to shareholders, issue new shares or amend capital spending plans.
The main risks arising from the Group’s financial instruments are foreign currency, interest, credit and liquidity risk. The Group uses
different methods to measure and manage the different types of risks to which it is exposed. These include monitoring levels of
exposure to foreign exchange risk and assessments of market forecasts for foreign exchange. Ageing analyses and monitoring of
specific credit allowances are undertaken to manage credit risk. Liquidity risk is monitored through the development of future rolling
cash flow forecasts.
70
Serko annual report
21 RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES CONTINUED
The Board reviews and agrees policies for managing each of these risks as summarised below.
a) Risk exposures and responses
i)
Interest rate risk
The Group has exposure to interest rate risk to the extent it borrows funds at fixed and floating interest rates. The risk
specifically relates to the variability of interest rates and the impact this will have on the Group’s financial results. The Group
manages its cost of borrowing by placing limits on the proportion of borrowings at floating rate and the proportion of fixed rate
borrowing repriced in any year.
At balance date this year and prior year, the Group did not have any financial liabilities exposed to variable interest rate risk.
ii) Liquidity and interest rate risk
Liquidity risk represents the Group’s ability to meet its financial obligations on time. In terms of managing its liquidity risk, the Group
generates sufficient cash flows from its operating activities and holds sufficient cash reserves to meet its obligations arising from
its financial liabilities and has credit lines in place to cover potential shortfalls.
The following table sets out the contractual cash flows for all non-derivative financial liabilities settled on a gross cash flow basis.
Weighted
average
effective
interest rate %
Contractual
cash flows
6 months
or less
6-12
months
1-2 years
2-5 years
More than 5
years
$ (000)
$ (000)
$ (000)
$ (000)
$ (000)
$ (000)
0%
8%
0%
8%
7,074
7,074
165
7,239
34
7,108
4,732
4,732
233
27
4,965
4,759
-
34
34
-
27
27
-
68
68
-
82
82
-
29
29
-
97
97
-
-
-
-
-
-
Group - 2020
Trade and other payables
Leasehold fitout loan
Group - 2019
Trade and other payables
Leasehold fitout loan
71
Serko annual report
03
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E
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O
A
B
O
U
T
04
S
U
M
M
A
R
Y
06
L
E
T
T
E
R
10
O
V
E
R
V
I
E
W
S
T
R
A
T
E
G
C
I
12
P
R
O
D
U
C
T
S
16
L
E
A
D
E
R
S
H
P
I
18
C
O
R
P
O
R
A
T
E
R
E
S
P
O
N
S
I
B
I
L
I
T
Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
78
D
I
S
C
L
O
S
U
R
E
S
G
O
V
E
R
N
A
N
C
E
&
95
I
D
R
E
C
T
O
R
Y
G
L
O
S
S
A
R
Y
&
21 RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES CONTINUED
b) Currency risk
The Group has exposure to foreign exchange risk as a result of transactions denominated in foreign companies. The risk specifically
relates to the variability of foreign exchange rates for the currencies the Group trades in and the impact this has on the Group’s
financial results. The majority of the Group’s trading activities occur in New Zealand dollars, however, sales to overseas customers
are transacted in United States and Australian dollars.
Refer to notes 7 (receivables), 11 (cash at bank and on hand) and 12 (trade and other payables) for further details on the Group’s foreign
currency denominated accounts receivable and cash balances.
The following table summarises the sensitivity to foreign currency exchange rate movements. A sensitivity of +/- 15% (2019: +/- 15%)
has been selected owing to exchange rate volatility observed.
Foreign currency risk
Carrying
amount
-15%
Post-tax
profit
Equity
+15%
Post-tax
profit
Equity
$ (000)
$ (000)
$ (000)
$ (000)
$ (000)
7,615
3,480
(1,178)
9,917
6,787
2,507
(173)
9,121
968
430
(150)
968
430
(150)
1,248
1,248
862
315
(22)
1,155
862
315
(22)
1,155
(715)
(337)
111
(941)
(637)
(239)
16
(860)
(715)
(337)
111
(941)
(637)
(239)
16
(860)
2020
Foreign exchange balances
Cash at bank
Trade receivables
Trade payables
Net exposure
2019
Foreign exchange balances
Cash at bank
Trade receivables
Trade payables
Net exposure
c) Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, receivables and contract assets.
The Group’s exposure to credit risk arises from potential default of the counterparty, with a maximum exposure equal to the carrying
amount of these instruments. Exposure at balance date is addressed in each applicable note.
The Group does not hold any credit derivatives to offset its credit exposure.
The Group monitors and manages the exposure to credit risk by ensuring customers have an appropriate credit history. The credit
risk associated with Expense customers is small owing to the inherently low transaction value and the distribution over a large
number of customers.
At reporting date 99% (2019: 99%) of the Group’s cash and cash equivalents were with one bank. The Group has no other
concentrations of credit risk.
d) Fair value
The Board considers that the carrying amounts of financial assets and financial liabilities recognised in the consolidated financial
statements approximate their fair value.
72
Serko annual report
23 SEGMENT INFORMATION
The Board and senior management team monitors the results of the Group’s operations as a whole for the purpose of making
decisions about resource allocation and performance assessment and therefore the Board has determined the Group is a single
reportable operating segment.
This reporting segment is predominantly made up of revenue generated from Travel platform bookings and Expense revenue.
Revenues have been disaggregated at note 4.
As required under NZ IFRS 8 Serko is required to report on major customers making up more than 10% of the revenue for the year.
Under this disclosure Serko advises that two customers had revenue more than 10% of the revenue for the Group.
These customers accounted for $10,814,032 of the revenue for the year ended 31 March 2020 (2019: $10,721,614).
24 EVENTS AFTER BALANCE SHEET DATE
The non-recourse loans for directors have been extended in May 2020. These have been valued using the Black-Scholes model with
the incremental fair value recognised in the profit and loss for the FY21 (refer to note 19).
In May 2020 Serko issued a total of 472,243 RSUs (refer to note 18).
The Group has applied for Government Covid-19 wage subsidy schemes in New Zealand, Australia and the US (refer to note 2b)) and
received $1.6 million post year end of which $871,670 was received from the New Zealand government.
There have been no other events subsequent to 31 March 2020 that materially impact the results reported (2019: nil).
25 CONTINGENT LIABILITIES
There were no contingent liabilities at balance date (2019: $nil).
73
Serko annual report
03
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E
R
K
O
A
B
O
U
T
04
S
U
M
M
A
R
Y
06
L
E
T
T
E
R
10
O
V
E
R
V
I
E
W
S
T
R
A
T
E
G
C
I
12
P
R
O
D
U
C
T
S
16
L
E
A
D
E
R
S
H
P
I
18
C
O
R
P
O
R
A
T
E
R
E
S
P
O
N
S
I
B
I
L
I
T
Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
78
D
I
S
C
L
O
S
U
R
E
S
G
O
V
E
R
N
A
N
C
E
&
95
I
D
R
E
C
T
O
R
Y
G
L
O
S
S
A
R
Y
&
Independent Auditor’s Report
To the Shareholders of Serko Limited
OPINION
We have audited the consolidated financial statements of Serko
Limited and its subsidiaries (the ‘Group’), which comprise the
consolidated statement of financial position as at 31 March
2020, and the consolidated statement of comprehensive
income, statement of changes in equity and 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, on pages 34 to 73, present fairly, in all material
respects, the consolidated financial position of the Group as
at 31 March 2020, and its consolidated financial performance
and cash flows for the year then ended in accordance with
New Zealand Equivalents to International Financial Reporting
Standards (‘NZ IFRS’) and International Financial Reporting
Standards (‘IFRS’).
BASIS FOR OPINION
We conducted our audit in accordance with International
Standards on Auditing (‘ISAs’) and 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 believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with
Professional and Ethical Standard 1 (Revised) Code of Ethics
for Assurance Practitioners issued by the New Zealand
Auditing and Assurance Standards Board and the International
Ethics Standards Board for Accountants’ Code of Ethics for
Professional Accountants, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
Other than in our capacity as auditor and the provision of
assurance services, we have no relationship with or interests in
the Company or any of its subsidiaries, except that partners and
employees of our firm deal with the Company and its subsidiaries
on normal terms within the ordinary course of trading activities of
the business of the Company and its subsidiaries.
AUDIT MATERIALITY
We consider materiality primarily in terms of the magnitude
of misstatement in the financial statements of the Group that
in our judgement would make it probable that the economic
decisions of a reasonably knowledgeable person would be
changed or influenced (the ‘quantitative’ materiality). In
addition, we also assess whether other matters that come to
our attention during the audit would in our judgement change
or influence the decisions of such a person (the ‘qualitative’
materiality). We use materiality both in planning the scope of our
audit work and in evaluating the results of our work.
We determined materiality for the Group financial statements as
a whole to be $450,000.
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.
74
Serko annual report
Key audit matter
How our audit addressed the key audit matter
REVENUE RECOGNITION
The Group has reported revenue of $25.9 million, as set out in
note 4 ‘Revenue and other income’.
Revenue is based on multiple customer contracts that contain
different pricing schedules and varying revenue recognition
triggers. Complexity exists because of the specific nature of
each customer contract, which can include transactional and
usage fees, establishment and installation fees, and chargeable
work orders.
Management judgement is required to estimate revenue
recognition where cash flows do not align to contract
performance obligations, in particular when minimum
transaction volume commitments have period end dates that do
not align to the financial year end.
The recognition of revenue is a key audit matter due to the
significance of revenue to the financial statements and the
specific nature of individual customer contracts.
We considered the application of NZ IFRS 15: Revenue from
Contracts with Customers for new contracts entered into in
the year.
We evaluated the systems, processes and controls in place over
the major operating revenue streams.
We engaged our Information Technology specialists to test the
IT environment in which bookings occur and interface with the
general ledger.
We recalculated revenue recognised for a sample of customers
by reconciling transactions recorded in the relevant IT systems
to the financial ledger, and validating pricing inputs to invoices
and signed customer contracts.
We tested samples of manual journal entries recorded outside
of normal business processes by profiling for unusual revenue
impacting journals.
We assessed key judgements adopted by the Group in
recognising revenue including the timing and disclosure of
revenue net of credit notes, rebates and discounts and the
extent that forecast volumes are impacted by Covid-19.
75
Serko annual report
03
S
E
R
K
O
A
B
O
U
T
04
S
U
M
M
A
R
Y
06
L
E
T
T
E
R
10
O
V
E
R
V
I
E
W
S
T
R
A
T
E
G
C
I
12
P
R
O
D
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Key audit matter
How our audit addressed the key audit matter
CAPITALISATION OF SOFTWARE DEVELOPMENT
INCLUDING IMPAIRMENT CONSIDERATIONS
The Group capitalised $11.0 million in relation to software
Capitalisation of software development costs
development, as set out in note 10 ‘Intangibles’, of which $4.6
million relates to development work in progress at balance date.
Capitalisation of software development costs
We evaluated the nature of expenditure, the stage of product
development, and how the group distinguishes expenditure
between research, development and maintenance costs.
As a Software as a Service (‘SaaS’) provider, the Group
incurs significant expenditure in developing and enhancing
software products.
We assessed the Group processes and controls for recording
time spent on products and the allocation between research or
software development to be capitalised under NZ IAS 38.
Judgement is required to determine if the recognition criteria
under NZ IAS 38: Intangible Assets have been met in order to
capitalise the applicable costs of development. This includes
considering whether the costs are directly attributable to
the development of an asset, and whether the Group can
demonstrate that the asset is in the development stage. This
includes demonstrating the technical feasibility of completing
the intangible asset so that it will be available for use or sale,
the Group’s intention to complete the asset, how the asset will
We tested a sample of additions to evaluate if the recognition
criteria under NZ IAS 38 have been met.
Impairment assessment due to Covid-19
We considered existing software for technical obsolescence,
by ensuring appropriate revenues exist for those products and
corroborating with management whether features or product
enhancements previously capitalised are still in use.
generate future economic benefits, the availability of resources
We challenged the key assumptions within the cash
to complete the asset development and the ability of the
Group to reliably measure the expenditure attributable to the
intangible asset.
Impairment assessment due to Covid-19
The Group must also assess each period whether there are any
indications that the software development assets are impaired
and must perform impairment testing on any capitalised
development costs for which there are indicators of impairment
or which relate to software that is not yet available for use.
flow forecasts by considering historical cash flows, our
understanding of the business strategy and other relevant
external information. This included considering the three
scenarios used due to Covid-19 uncertainties.
We used our internal valuation specialists to assist in evaluating
the assumptions used in the Group’s discounted cash flow model,
specifically the discount rate and terminal growth rates used, to
support the carrying value of assets as at 31 March 2020.
We performed sensitivity analysis over key drivers in the Group’s
Serko has done an impairment test because there is uncertainty
impairment model, particularly forecast travel bookings and
Serko Expense platform use.
around forecasts for travel bookings and Serko Expense
platform use, as a result of Covid-19, particularly around
domestic and international air travel assumptions.
The Group has performed an impairment assessment using
a discounted cash flow analysis for its cash-generating unit.
Expected cash flows were adjusted with reference to Covid-19,
with three distinct scenarios used to factor in the uncertainty
involved in determining the timing of return to domestic travel,
border controls for international travel and public demand and
behaviour with respect to travel and airline scheduling.
Other key assumptions include the discount rates and
growth rates.
We have included capitalisation and impairment considerations
of software development as a key audit matter due to the level
of judgement required.
76
Serko annual report
OTHER INFORMATION
The directors are responsible on behalf of the Group for
A further description of our responsibilities for the audit of the
the other information. The other information comprises
consolidated financial statements is located on the External
the information in the Annual Report that accompanies the
Reporting Board’s website at:
consolidated financial statements and the audit report.
Our opinion on the consolidated financial statements does not
practitioners/auditors-responsibilities/audit-report-1
cover the other information and we do not express any form of
assurance conclusion thereon.
This description forms part of our auditor’s report.
https://www.xrb.govt.nz/standards-for-assurance-
Our responsibility is to read the other information and
RESTRICTION ON USE
This report is made solely to the Company’s shareholders, as a
body. Our audit has been undertaken so that we might state to
the Company’s shareholders those matters 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’s shareholders
as a body, for our audit work, for this report, or for the opinions
we have formed.
Bryce Henderson, Partner for Deloitte Limited
Auckland, New Zealand
24 June 2020
consider whether it is materially inconsistent with the
consolidated financial statements or our knowledge obtained
in the audit or otherwise appears to be materially misstated.
If so, we are required to report that fact. We have nothing to
report in this regard.
DIRECTORS’ RESPONSIBILITIES FOR THE CONSOLIDATED
FINANCIAL STATEMENTS
The directors are responsible on behalf of the Group for the
preparation and fair presentation of the consolidated financial
statements in accordance with NZ IFRS and 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
and 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 economic
decisions of users taken on the basis of these consolidated
financial statements.
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Corporate Governance & Disclosures
For the year ended 31 March 2020
INTRODUCTION
OVERVIEW OF SERKO’S GOVERNANCE STRUCTURE
The Board and management of Serko Limited (Serko or
The Serko Board has been appointed by shareholders to
the Company) are very committed to ensuring that Serko
protect and enhance the long-term value of Serko and to act
maintains corporate governance practices that are in line
in the best interests of Serko and its shareholders. The Board
with best practice and that Serko adheres to the highest
is the ultimate decision-making body of the Company and is
ethical standards.
The Board has considered the NZX Listing Rules and a number
of corporate governance recommendations when establishing
its governance framework, including the revised NZX Corporate
responsible for the corporate governance of the Company.
The role and responsibilities of the Board are set out in the
Board Charter, which can be found on the investor centre of the
Company’s website.
Governance Code dated 1 January 2020 (NZX Code) and
The Board currently comprises an independent non-executive
the Third and Fourth Editions of the Australian Securities
Chair, two independent non-executive directors and two
Exchange (ASX) Corporate Governance Council Principles and
executive directors, as detailed on page 16 of this Annual
Recommendations.
Report. These directors held office throughout the financial
The NZX Listing Rules require Serko to formally report its
year ended 31 March 2020.
compliance against the recommendations contained in the NZX
The Board has established two standing Board Committees to
Code. How Serko has implemented these recommendations
assist in the execution of the Board’s responsibilities:
• Audit and Risk Committee – The current members
of the Committee are Clyde McConaghy (Chair),
Simon Botherway and Claudia Batten. All members
are independent, non-executive directors. Their
qualifications and experience are set out under Board of
Directors in this Annual Report; and
• Remuneration and Nominations Committee – The
current members of the Committee are Claudia Batten
(Chair), Simon Botherway and Clyde McConaghy. All
members are independent, non-executive directors.
Their qualifications and experience are set out under
Board of Directors in this Annual Report.
is set out in Serko’s Corporate Governance Statement, which
is included in its ESG Report and can be found on the investor
centre of the Company’s website. Go to: www.serko.com/
investor-centre/. The Board considers that Serko’s corporate
governance structures, practices and processes have followed
all of the recommendations in the NZX Code during the financial
year ended 31 March 2020.
Serko’s governance charters and policies can also be found
on the investor centre of the Company’s website. Serko’s
corporate governance charters and policies have been
approved by the Board and are regularly reviewed by the Board
and amended (as appropriate) to reflect developments in
corporate governance practices.
STOCK EXCHANGE LISTINGS
Serko is listed on the New Zealand Stock Exchange (NZX Main
Board) and on the Australian Securities Exchange (ASX) as an
ASX Foreign Exempt Listing. As an ASX Foreign Exempt Listing,
Serko needs to comply with the NZX Listing Rules (other than
as waived by NZX) but does not need to comply with the vast
majority of the ASX Listing Rule obligations.
Serko is incorporated in New Zealand.
78
Serko annual report
NON-EXECUTIVE DIRECTOR REMUNERATION
In 2019 Serko’s shareholders approved a total cap of $450,000 per annum for non-executive directors’ fees for the purposes of the NZX
Listing Rules.
The Board has agreed that the following fixed annual fees will apply to all non-executive directors for the year ending 31 March 2021:
Postion
Fees per annum
Board of Directors
Audit & Risk Committee
Remuneration & Nominations Committee
Chair
Non-executive directors
Committee Chair
Committee Member
Committee Chair
Committee Member
AUD$120,000
AUD$75,000
AUD$15,000
-
AUD$15,000
-
In light of the challenging operating environment caused by Covid-19 and related travel restrictions (which have materially impacted
Serko’s revenues), the non-executive directors have either agreed to take a reduction in their directors’ fees or receive a portion of their
directors’ fees in shares for the first three months of FY21. This is to assist Serko to manage expenditure during this challenging period.
Non-executive directors received the following directors’ fees, remuneration and other benefits from the Company in the year ended 31
March 2020:
Name of director
Non-executive
directors’ Board
fees
2
Audit & Risk
Committee fees
Remuneration
& Nominations
Committee fees
Shares and other
payments or
benefits
3
Total remuneration
Remuneration and value of other benefits received
1
Simon Botherway
$71,533*
-
Clyde McConaghy
$94,465
4, 5
$15,625*
-
-
$50,000
$121,533
-
$110,090
Claudia Batten
$47,493*
5
-
$15,625*
$50,000
$113,118
TOTAL
$213,491
$15,625
$15,625
$100,000
$344,741
* Indicates Chair of the Board/Committee. Mr Botherway continues as a director of Serko (attending all Board and Committee meetings) but took a leave of absence from the
Board Chair role on 12 March 2020 for medical reasons. Ms Batten assumed the role of Acting Chair from this date.
1 The figures shown are gross amounts, which have been converted into NZD and exclude GST (where applicable).
2 Board fees includes the amount of base fees payable to Mr Botherway and Ms Batten, which are used to acquire shares in the Company under the Non-executive Director
Fixed Trading Plan (refer to the ESG Report on the investor centre of Serko’s website for more information on the Plan).
3
In addition to directors’ fees, Serko meets costs incurred by non-executive directors that are incidental to the performance of their duties. This includes paying the costs of
directors’ travel. As these costs are incurred by Serko to enable directors to perform their duties, no value is attributable to them as benefits to directors for the purposes of
the above table.
4
Includes Australian superannuation payable.
5 Fees include special fees of NZ$15,000 paid to Mr McConaghy and Ms Batten respectively for ad hoc committee meetings held during the year in respect of a capital raising
and merger & acquisition (M&A) transaction.
More information about remuneration payable to directors is set out in Serko’s Corporate Governance Statement, which is included in the
ESG Report located on the investor centre of the Company’s website.
79
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EXECUTIVE DIRECTOR REMUNERATION
The executive directors, Darrin Grafton and Bob Shaw, receive remuneration and other benefits in their respective executive roles as
Chief Executive Officer and Chief Strategy Officer and, accordingly, do not receive directors’ fees. Their remuneration packages are set
by the Board to reflect the scope and complexity of each role, with reference to comparative market data.
Mr Grafton and Mr Shaw’s remuneration comprises a fixed base salary, a short-term incentive up to a maximum target value of 40% of
their base salary; and a long-term incentive up to a maximum target value of 100% of their base salary. This remuneration composition
will carry forward into FY21.
During the period ended 31 March 2020, both Darrin Grafton’s and Bob Shaw’s variable remuneration components were based on key
performance indicators (KPIs) relating to:
• Delivery of operational value drivers linked to Serko’s strategy;
• Delivering shareholder value;
• Meeting performance targets in respect of customer satisfaction and retention; and
• Maintaining a positive culture and safe working environment.
Delivery of these KPIs is used to assess whether pre-performance hurdles are met in relation to the granting of long-term incentives
for the upcoming financial year and determining the individual component of any short-term incentive payable for the current financial
year. In addition, pay out of any short-term incentive is dependent on meeting pre-determined revenue and EBITDA targets during
the financial period. Owing to Covid-19 related cost savings initiatives that were implemented at the beginning of FY21, no short-term
incentive was paid out in respect of FY20.
Similar criteria will be applied for assessing the performance of the executive directors in FY21.
80
Serko annual report
The tables below (and accompanying notes) set out the total remuneration and value of other benefits earned by, or paid to, each
executive director of Serko during, and in respect of, the financial period ended 31 March 2020:
Base salary
1
Taxable
2
benefits
Subtotal
Pay for performance
Total
remuneration
Darrin Grafton
$370,564
$30,000
$400,564
Bob Shaw
$256,652
$30,000
$286,652
1 Base salary includes employer contributions towards KiwiSaver at 3%.
2 Taxable benefits include a car allowance, carpark and medical insurance.
STI
3
-
4
-
5
LTI
Subtotal
$126,000 in the form of
31,899 restricted share units
$54,000 in the form of 13,671
restricted share units
$126,000
$526,564
$54,000
$340,652
3 For FY20 no short-term incentive was allocated owing to Covid-19 cost saving initiatives. Darrin Grafton’s potential short-term incentive payment for FY20 was $140,000.
During the financial period Darrin Grafton received a short-term incentive of $50,400, which was earned in FY19 and paid in FY20.
4 For FY20 no short-term incentive was allocated owing to Covid-19 cost saving initiatives. During the financial period Bob Shaw received a short-term incentive of $21,600,
which was earned in FY19 and paid in FY20.
5 The FY20 long-term incentive was granted in July 2019, following partial achievement of pre-grant performance targets based on FY19 performance. The restricted share
units will vest three years after the allocation date. The value stated is the gross amount earned.
The following long-term incentives previously granted to the executive directors vested during the financial period ended 31 March 2020:
Director
Grant year
Securities
Performance period
Shares vested
1
Value on vesting
Darrin Grafton
Financial Year 2017
Restricted shares
July 2016 - July 2019
39,512
$167,926.00
Bob Shaw
Financial Year 2017
Restricted shares
July 2016 - July 2019
9,106
$38,700.50
1 Represents the NZX closing price of SKO ordinary shares on the vesting date multiplied by the number of securities vested.
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20
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32
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78
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EMPLOYEE REMUNERATION
The table below shows the number of employees and former employees of Serko and its subsidiaries, not being directors (including
executive directors) of Serko, who, in their capacity as employees, received remuneration and other benefits during the period ended 31
March 2020 totalling at least NZ$100,000.
The remuneration of those employees paid outside of New Zealand has been converted into New Zealand dollars. No employee appointed
as a director of a subsidiary company of Serko receives any remuneration or other benefits for acting in that capacity.
The table below includes base salaries, short-term incentives and vested or exercised long-term incentives. The table does not include
long-term incentives that have been granted and have not yet vested. Where the individual is a KiwiSaver member, contributions of 3%
of gross earnings towards that individual’s KiwiSaver scheme are included in the below table. Where the individual works in Australia,
contributions of 9.5% of gross earnings towards Australian Superannuation are included in the below table.
Remuneration range (NZD)
Number of employees
whose remuneration
1
includes vested LTI
Total number of
employees in range
$100,000 - $110,000
$110,001 - $120,000
$120,001 - $130,000
$130,001 - $140,000
$140,001 - $150,000
$150,001 - $160,000
$160,001 - $170,000
$170,001 - $180,000
$180,001 - $190,000
$190,001 - $200,000
$200,001 - $210,000
$210,001 - $220,000
$220,001 - $230,000
$230,001 - $240,000
$240,001 - $250,000
$250,001 - $260,000
$260,001 - $270,000
$290,001 - $300,000
$410,001 - $420,000
$420,001 - $430,000
$580,001 - $590,000
2
1
1
5
3
-
2
2
1
1
-
3
-
1
-
1
-
1
-
1
1
12
14
15
8
8
9
6
2
1
5
1
3
2
2
1
2
1
1
1
1
1
Total number of employees and former employees
26
96
1 Specifies total number of employees within the range whose remuneration includes long-term incentives that have vested during the period.
82
Serko annual report
DIVERSITY
The respective numbers and proportions of men and women at various levels within the Serko workforce as at 31 March 2019 and 31
March 2020 are set out in the table below:
Female
Male
All directors
Non-executive directors
Officers
1
Senior employees
2
Remaining workforce
All directors
Non-executive directors
Officers
1
Senior employees
2
Remaining workforce
2020
2019
no.
1
1
1
3
86
no.
4
2
7
10
128
%
20%
33%
13%
20%
40%
%
80%
66%
87%
80%
60%
2020
no.
1
1
1
4
61
no.
4
2
6
10
94
%
20%
33%
14%
29%
39%
%
80%
66%
86%
71%
61%
2019
1 Officers are considered to be the Chief Executive Officer and his direct reports (the Executive Team). Note that Chief Executive Officer, Darrin Grafton and Chief of Strategy,
Bob Shaw, are included in both the number of directors and officers reported.
2 Direct reports to the Executive Team with managerial responsibilities.
The Board’s assessment of Serko’s performance against its Diversity and Inclusion Policy is set out in the latest ESG report, which can be
found on the investor centre of the Company’s website.
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32
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BOARD AND COMMITTEE ATTENDANCE
The table below shows the Board and Committee meeting attendance during the year ended 31 March 2020:
Director attendance
Darrin Grafton
Bob Shaw
Simon Botherway
Clyde McConaghy
Claudia Batten
Board
12/12
12/12
11/12
12/12
12/12
Audit & Risk
Committee
Remuneration
& Nominations
Committee
*
*
6/6
6/6
6/6
*
*
4/4
4/4
4/4
*Indicates the director is not a member of the Committee (although they may have been in attendance for these meetings).
In addition, during the year directors participated in 22 additional Special Board Meetings and Board Sub-Committee meetings primarily
associated with M&A activity, the 2019 capital raising and managing risks associated with the Covid-19 pandemic.
DIRECTOR INDEPENDENCE
The Board currently comprises five directors – being the two co-founders and executive directors, Darrin Grafton and Bob Shaw, and
three non-executive directors – Claudia Batten, Simon Botherway and Clyde McConaghy.
The Board has determined, based on information provided by directors regarding their interests, which has been evaluated against the
criteria in the Board Charter, that as at 31 March 2020 and the date of this Annual Report, Claudia Batten, Simon Botherway and Clyde
McConaghy are independent directors. The Board has also determined that Darrin Grafton and Bob Shaw are not independent directors
owing to also being executives and major shareholders in Serko.
84
Serko annual report
DIRECTOR INTEREST DISCLOSURES
Directors have given notices disclosing interests pursuant to section 140(1) of the Companies Act 1993. Those interests (and any changes
to interests) notified and recorded in Serko’s Interests Register during the financial year ended 31 March 2020 are set out below:
Date of disclosure
Director
Entity
22 October 2019
Darrin Grafton
Simon Botherway
Gave notice that they intend to participate in an offer of existing shares by certain
shareholders and, accordingly, were to be considered as interested in the transaction
and entry into the associated Underwriting Agreement.
Directors have given general notices disclosing interests pursuant to section 140(2) of the Companies Act 1993. All of those interests,
and any changes to interests notified and recorded in Serko’s Interests Register during the financial year ended 31 March 2020 and
subsequently, are set out below:
Director
Entity
Relationship
Claudia Batten
Simon Botherway
Darrin Grafton
AIDER International Limited
Broadli Inc
Serko Inc
1
Westpac New Zealand Limited
Arrow Trust
Fidelity Life Assurance Company Limited
Guardians of NZ Super Fund
MSH Trustee (Arrow Limited)
Financial Equities Limited
Grafton-Howe No.2 Trust
1
InterplX Inc.
Serko Australia Pty Limited
1
Serko Inc
1
Serko India Private Limited
1
Serko Investments Limited
1
Travelog World for Windows Pty. Limited
Adviser
Director
Director
Board Adviser
Trustee
Director
Guardian
Trustee
Director
Trustee
Director
Director
Director
Director
Director
Director
Clyde McConaghy
Chapman Eastway Pty Limited
Infomedia Limited
Optima Boards
Chairman (Advisory Board)
Director
Director
Financial Equities Limited
Ripon Trust
Serko Australia Pty Limited
1
Serko India Private Limited
1
Serko Investments Limited
1
Travelog World for Windows Pty. Limited
Director
Trustee
Director
Director
Director
Director
Bob Shaw
1 Serko subsidiary as detailed on page 92.
85
Serko annual report
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P
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S
16
L
E
A
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E
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S
H
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18
C
O
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P
O
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A
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R
E
S
P
O
N
S
I
B
I
L
I
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Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
78
D
I
S
C
L
O
S
U
R
E
S
G
O
V
E
R
N
A
N
C
E
&
95
I
D
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E
C
T
O
R
Y
G
L
O
S
S
A
R
Y
&
DIRECTOR INTEREST DISCLOSURES CONTINUED
In accordance with Section 148(2) of the Companies Act 1993, directors disclosed the following acquisitions or disposals of relevant
interests in Serko ordinary shares during the financial year ended 31 March 2020:
Name
Nature of relevant interest
Number of securities
acquired/(disposed)
Consideration
5
paid/received
Date of
acquisition/
disposal
2-Apr-19
2-May-19
6-Jun-19
2-Jul-19
6-Aug-19
3-Sep-19
19-Sep-19
3-Oct-19
5-Nov-19
3-Dec-19
7-Jan-20
4-Feb-20
4-Mar-20
17-Mar-20
1,283.10
1,108.61
993.63
909.44
1,088.69
862.67
77.06
1,001.03
821.05
801.34
799.22
783.28
995.82
108.57
$4,041.77
$3,990.79
$3,984.44
$3,976.07
$4,093.46
$3,916.54
$323.65
$4,014.13
$3,965.65
$3,995.70
$3,994.98
$3,994.71
$4,082.85
$184.57
(100,000)
$523,755.50
31-Jan-20
1,283.00
1,108.55
993.56
909.37
1,088.63
862.62
77.06
1,001.00
821.01
801.74
798.78
783.23
995.78
110.88
$4,041.45
$3,990.79
$3,984.16
$3,975.76
$4,093.24
$3,916.31
$323.64
$4,014.02
$3,965.49
$3,997.66
$3,992.79
$3,994.47
$4,082.69
$188.50
2-Apr-19
2-May-19
6-Jun-19
2-Jul-19
6-Aug-19
3-Sep-19
19-Sep-19
3-Oct-19
5-Nov-19
3-Dec-19
7-Jan-20
4-Feb-20
4-Mar-20
17-Mar-20
(1,150,000)
$4,646,000.00
30-Oct-19
Claudia Batten
On-market acquisition of beneficial
interest in ordinary shares (held in
custody for Claudia Batten pursuant
to Non-executive Director Fixed
Trading Plan)
1
Simon Botherway
On-market disposal of registered and
beneficial interest in ordinary shares held
pursuant to the Serko Non-executive
Director Loan Facility
On-market acquisition of beneficial
interest in ordinary shares (held in
custody for Simon Botherway pursuant
to Non-executive Director Fixed
Trading Plan)
1
Off-market disposal of beneficial
interest in ordinary shares pursuant to
an underwritten primary placement by
Serko Limited and secondary sell down
by various existing shareholders of
Serko Limited
86
Serko annual report
DIRECTOR INTEREST DISCLOSURES CONTINUED
Darrin Grafton
Bob Shaw
Registered holder and beneficial interest
in ordinary shares issued upon vesting of
restricted shares pursuant to the Serko
Limited Employee Restricted Share Plan
Indirect interest in ordinary shares issued
upon vesting of restricted shares pursuant
to the Serko Limited Employee Restricted
Share Plan, by virtue of a personal
relationship with the registered holder
Beneficial interest in unlisted restricted
share units granted under the Serko
Limited Employee Long Term Incentive
Scheme (ANZ)
Indirect interest in unlisted restricted
share units granted under the Serko
Limited Employee Long Term Incentive
Scheme (ANZ), by virtue of a personal
relationship with the registered holder
Off-market disposal of beneficial interest
in ordinary shares pursuant to an
underwritten primary placement by Serko
Limited and secondary sell down by various
existing shareholders of Serko Limited
Registered holder and beneficial interest
in ordinary shares issued upon vesting of
restricted shares pursuant to the Serko
Limited Employee Restricted Share Plan
Beneficial interest in unlisted restricted
share units granted pursuant to the Serko
Limited Employee Long Term Incentive
Scheme (ANZ)
39,512
2
4
$167,926.00
29-Jul-19
2,017
2,3
4
$8,572.25
29-Jul-19
31,899
2
Nil / Services
30-Jul-19
2,3
762
Nil / Services
30-Jul-19
(1,800,000)
$7,272,000.00
30-Oct-19
9,106
2
$38,700.50
4
29-Jul-19
13,671
2
Nil / Services
30-Jul-19
1 Shares are acquired automatically, on a monthly basis, by an independent broker pursuant to the Non-executive Director Fixed Trading Plan. For more details refer to Serko’s
Corporate Governance Statement on the investor centre of Serko’s website. These shares may not be disposed of while the holder remains a director of Serko and, in any
event, for three years from the commencement of the Plan.
2 These shares are subject to a deed restricting exercise of any voting rights attached to the shares/any shares issued upon vesting.
3 By virtue of Darrin Grafton’s personal relationship, he is implied to have the power to exercise, or to control the exercise of, any right to vote attached to these shares by
virtue of a personal relationship with the beneficial holder of these shares. These shares are subject to a deed restricting exercise of voting rights attached to the shares.
4 Paid in the form of services to Serko. Represents the NZX closing price of SKO ordinary shares on the vesting date multiplied by the number of securities vested.
5 The consideration for on-market trades is stated as the market price paid, excluding fees and taxes.
87
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16
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18
C
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P
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A
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P
O
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I
B
I
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I
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20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
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S
78
D
I
S
C
L
O
S
U
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S
G
O
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E
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N
A
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C
E
&
95
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G
L
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A
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Y
&
DIRECTOR INTEREST DISCLOSURES CONTINUED
In accordance with the NZX Listing Rules, as at 31 March 2020, directors had a relevant interest (as defined in the Financial Markets
Conduct Act 2013) in Serko shares as follows:
Name
Bob Shaw
1
2
Darrin Grafton
Simon Botherway
3
Clyde McConaghy
4
5
Claudia Batten
Relevant interest
Percentage
12,943,426
12,232,868
1,200,986.06
181,818
113,802.76
13.957%
13.191%
1.295%
0.196%
0.123%
1 The relevant interest includes: 12,884,296 shares are held via a trust in which the director is a trustee and beneficiary; 9,106 ordinary shares held directly; and a beneficial
interest in 50,024 restricted shares allocated pursuant to the Serko Employee Restricted Share Plan and held on trust until vesting.
Mr Shaw is also the registered holder and beneficial owner of 13,671 unlisted restricted share units allocated pursuant to the Serko Employee Long Term Incentive Scheme.
2 The relevant interest includes: 10,867,629 ordinary shares are held via a trust in which the director is a trustee and beneficiary; 39,512 ordinary shares held directly; 97,712
restricted shares allocated pursuant to the Serko Employee Restricted Share Plan and held on trust until vesting; and an indirect interest in 1,223,421 ordinary shares and
4,594 restricted shares by virtue of a personal relationship with the beneficial holder of these shares. The 12,232,868 shares are subject to a 12-month contractual lock up on
sale or disposition expiring in October 2020.
Mr Grafton is also the registered holder and beneficial owner of 31,899 unlisted restricted share units allocated pursuant to the Serko Employee Long Term Incentive Scheme
and has an indirect interest in 762 unlisted restricted share units by virtue of a personal relationship with the beneficial owner.
3 884,091 ordinary shares are held via a trust in which the director is a trustee and beneficiary. 284,909 ordinary shares are held directly. 31,986.06 ordinary shares are held
in custody pursuant to the Serko Non-executive Director Fixed Trading Plan. These shares are subject to a 12-month contractual lock up on sale or disposition expiring in
October 2020.
4 Held via a trust in which the director is a trustee and beneficiary.
5 31,876.19 ordinary shares are held in custody pursuant to the Serko Non-executive Director Fixed Trading Plan.
88
Serko annual report
DIRECTOR INTEREST DISCLOSURES CONTINUED
For the purposes of section 161 of the Companies Act 1993, the following entries were made in the Interests Register in relation to the
payment of remuneration and other benefits to directors:
Date of disclosure
Director
Particulars of Board authorisation
21-May-19
Bob Shaw
Darrin Grafton
The payment of remuneration and the provision of other benefits (annual remuneration
review) by the Company to the executive directors on the terms detailed in the Board
minutes dated 21 May 2019 and on the grounds set out in the corresponding directors’
certificate.
23-Jul-19
Bob Shaw
Darrin Grafton
The payment of remuneration and the provision of other benefits (the granting of long-
term incentives) by the Company to the executive directors on the terms detailed in
the Board minutes dated 23 July 2019 and on the grounds set out in the corresponding
directors’ certificate.
22-Oct-19
11-Nov-19
Darrin Grafton
Simon Botherway
The provision of benefits to the directors who were participating in the sell down in the
form of entry into the Underwriting Agreement pursuant to the capital raising being
undertaken on or about the date of the certificate.
Claudia Batten
Clyde McConaghy
The payment of remuneration (in the form of Special Fees) by the Company to the non-
executive directors on the terms detailed in the resolution dated the same date as this
certificate and on the grounds set out in the corresponding directors’ certificate.
For the purposes of section 162 of the Companies Act 1993, an entry was made in the Interests Register in relation to insurance effected
for directors and officers of Serko in relation to any act or omission in their capacity as directors.
There were no entries made in the subsidiary company Interests Register during the financial reporting period.
SHAREHOLDING INFORMATION
As at 30 April 2020 there were 92,738,865 Serko ordinary shares on issue, each conferring on the registered holder the right to vote on
any resolution at a meeting of shareholders, held as follows:
Size of shareholding
Number of holders
1
%
Number of ordinary shares
%
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 50,000
50,001 - 100,000
100,001 and over
TOTAL
2,141
1,612
334
269
37
56
4,449
48.12
36.23
7.51
6.05
0.83
1.26
100
1,080,725
3,826,164
2,436,609
5,439,768
2,451,010
1.17
4.13
2.63
5.87
2.64
77,504,589
83.57
92,738,865
100
1
Includes 1,919,138 ordinary shares with restrictive conditions held by Serko Trustee Limited on behalf of 40 individual beneficial holders (with 662,292 of those ordinary
shares allocated) pursuant to the Serko Restricted Share Plan. Restricted shares have voting rights attached, which are exercised on behalf of a beneficial holder by the
Trustee at the direction of the beneficial holder.
89
Serko annual report
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16
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18
C
O
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P
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A
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P
O
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I
B
I
L
I
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Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
78
D
I
S
C
L
O
S
U
R
E
S
G
O
V
E
R
N
A
N
C
E
&
95
I
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E
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O
R
Y
G
L
O
S
S
A
R
Y
&
SHAREHOLDING INFORMATION CONTINUED
As at 30 April 2020, 1,919,138 ordinary shares with restrictive conditions held by Serko Trustee Limited on behalf of 40 individual
beneficial holders (with 662,292 of those ordinary shares allocated) pursuant to the Serko Restricted Share Plan; 14 participants holding
a total of 128,287 options pursuant to the Serko (US) Share Incentive Plan and 53 participants holding a total of 590,617 restricted share
units pursuant to the Serko Employee Long Term Incentive Scheme (ANZ) and Serko Employee Share Incentive Plan (US). Further
information on these incentive plans is contained in note 19 to the financial statements and in Serko’s ESG Report, which can be found on
the investor centre of the Company’s website. Go to: www.serko.com/investor-centre.
Set out below are details of the 20 largest shareholders of Serko as at 30 April 2020:
Shareholder
1
Number of ordinary shares held
%
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Robert James Shaw & Geoffrey Robertson Ashley Hosking
Darrin Grafton & Geoffrey Robertson Ashley Hosking
TEA Custodians Limited
National Nominees New Zealand Limited
Coronado Pte Limited
Citibank Nominees (NZ) Ltd
HSBC Nominees (New Zealand) Limited
HSBC Custody Nominees (Australia) Limited
Serko Trustee Limited
PT Booster Investments Nominees Limited
Donna Bailey
Philip Rodger Ball
Chuck Buckner
Investment Custodial Services Limited
Skip Enterprises Pty Limited
Accident Compensation Corporation
Simon John Botherway & MSH Trustee (Arrow) Limited
JPMORGAN Chase Bank
Robert Alan Hawker & Elizabeth Anne Hawker
20
Cogent Nominees (NZ) Limited
12,884,296
10,867,629
8,490,874
5,128,273
4,331,683
3,276,738
3,007,745
2,268,826
1,919,138
1,218,334
1,217,594
1,162,517
1,035,014
1,007,360
1,000,000
954,931
884,091
830,198
822,812
784,819
13.89
11.72
9.16
5.53
4.67
3.53
3.24
2.45
2.07
1.31
1.31
1.25
1.12
1.09
1.08
1.03
0.95
0.9
0.89
0.85
1 The shareholding of New Zealand Central Securities Depository Limited (custodian for members trading through NZClear) has been reallocated to the applicable members.
90
Serko annual report
SHAREHOLDING INFORMATION CONTINUED
According to notices given to Serko under the Financial Markets Conduct Act 2013, the following persons were substantial product
holders as at 31 March 2020. As at the balance date (31 March 2020) there were 92,738,865 Serko ordinary shares on issue:
Substantial product holder
Number of ordinary shares in which relevant
2
interest is held
3
% of class held at balance date
Geoffrey Hosking
Robert Shaw
Darrin Grafton
Harbour Asset Management Limited
1
Milford Asset Management Limited
Jarden Securities Limited
1
23,751,925
12,943,426
12,232,868
8,223,424
5,773,273
40,015
25.612
13.957
13.191
8.867
6.225
0.043
1 Jarden Securities Limited (formerly First NZ Capital Group Limited) and Harbour Asset Management Limited file joint substantial product holder notices.
2 Based on last substantial product holder notice filed prior to 31 March 2020.
3 Based on issued share capital of 92,738,865 as at 31 March 2020.
91
Serko annual report
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10
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A
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I
12
P
R
O
D
U
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S
16
L
E
A
D
E
R
S
H
P
I
18
C
O
R
P
O
R
A
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R
E
S
P
O
N
S
I
B
I
L
I
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Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
78
D
I
S
C
L
O
S
U
R
E
S
G
O
V
E
R
N
A
N
C
E
&
95
I
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E
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O
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Y
G
L
O
S
S
A
R
Y
&
SUBSIDIARY COMPANY DIRECTORS
With the following exception, directors of Serko’s subsidiaries do not receive any remuneration or other benefits in respect of their
appointments. The remuneration and other benefits of any such directors who are employees of the group totalling $100,000 or more
during the year ended 31 March 2020 are included in the relevant bandings for remuneration disclosed on page 82 of this Annual Report.
Serko has agreed to pay Ms Chadha NZ$30,000 per year in relation to acting as a director of Serko India Private Limited. During the
financial year ended 31 March 2020, she earned NZ$12,500 (of which $7,500 was paid during FY20) in her capacity as a director of this
entity, representing a pro rating of director fees for five months of the financial year. Prior to that time, she was an employee and did not
receive any directors’ fees for this role.
The following persons held office as directors of subsidiary companies as at 31 March 2020:
Subsidiary
Foshan Sige Information Technology Limited (China)
InterplX Inc. (US)
Serko Australia Pty Limited (Australia)
Serko Inc (US)
Serko India Private Limited (India)
Serko Investments Limited (New Zealand)
Serko Trustee Limited (New Zealand)
1 No subsidiary directors retired during the financial year.
Directors
1
Gerard Neilsen
Darrin Grafton
Tony D’Astolfo
Darrin Grafton
Bob Shaw
John Challis
Darrin Grafton
Claudia Batten
Darrin Grafton
Bob Shaw
Yogita Chadha
Darrin Grafton
Bob Shaw
Susan Putt
Fiona Rockel
92
Serko annual report
REGULATORY MATTERS
On 22 July 2015, NZX regulation granted Serko a waiver from NZX Listing Rule 7.6.4(b)(iii) to the extent required to allow Serko to provide
financial assistance to executive directors, and an associated person of one of the executive directors, to enable them to participate in
Serko’s Restricted Share Plan. The full waiver is available on Serko’s website. Go to: www.serko.com/investors/. The Restricted Share
Plan has now been grandfathered and there is no intention to grant the executive directors (and their associates) any further restricted
shares in reliance on this waiver.
For completeness it is noted that post-year end, Serko has relied on the NZX class waiver dated 3 April 2020, which provides listed
companies with an additional 30 days to prepare and release their full-year FY20 results in acknowledgement of the challenges caused
by Covid-19.
DONATIONS
Serko did not make any donations during the financial year.
CREDIT RATING
Serko does not presently have an external credit rating status.
DISTRIBUTIONS / DIVIDENDS
There were no dividends or distributions paid to shareholders during the financial period.
Dividends and other distributions with respect to the Shares are only made at the discretion of the Serko Board. Serko is a growth
technology company and is not intending to pay a dividend for FY21.
93
Serko annual report
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S
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06
L
E
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10
O
V
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I
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W
S
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A
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I
12
P
R
O
D
U
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S
16
L
E
A
D
E
R
S
H
P
I
18
C
O
R
P
O
R
A
T
E
R
E
S
P
O
N
S
I
B
I
L
I
T
Y
20
C
O
M
M
E
N
T
A
R
Y
M
A
N
A
G
E
M
E
N
T
32
F
I
N
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Glossary
ARPB
Average Revenue Per Booking
Listing
Asia Pacific
ASX
ATMR
Vietnam, Thailand, Taiwan, Sri Lanka,
South Korea, South Africa, Singapore,
Philippines, Pakistan, New Zealand,
Malaysia, Japan, Indonesia, India, Hong
Kong, China, Bangladesh and Australia for
the purposes of this Annual Report
ASX Limited, also known as the Australian
Securities Exchange
ATMR (Annualised Transactional Monthly
Revenue) is a Non-GAAP measure. It is
based on the monthly transactions and
average revenue per booking (for its
Travel platform revenue) and monthly
user charges (for its Expense platform
revenue) annualised on a constant
currency basis.
AUD or A$
Australian dollars
Australasia
New Zealand and Australia for the
purposes of this Annual Report
Board or Board of
Directors
Cloud or cloud-
based
The board of directors of Serko
Cloud computing is when the software
and associated data is hosted outside
the customer’s premises and delivered
over a network or the Internet as a
service, which allows immediate access
to the software
Company or Serko Serko Limited, a New Zealand
incorporated company
EBITDAF (refer
page 22)
ESG
FTE
FX
FY
GST
IFRS
EBITDAF is a Non-GAAP measure
representing Earnings Before the
deduction of costs relating to Interest,
Taxation, Depreciation, Amortisation and
Fair value remeasurement
Environmental Social Governance
Full-time equivalent
Foreign exchange
Financial year ended, or ending, on
31 March (unless otherwise stated)
Goods and Services Tax
The date Serko shares started trading on
the NZX Main Board, 24 June 2014
NZ
New Zealand
NZD or NZ$
New Zealand dollars
NZ GAAP or GAAP New Zealand Generally Accepted
Accounting Practice
NZ IFRS or IFRS
New Zealand equivalents to International
Financial Reporting Standards
NZX
NZX Limited, also known as the New
Zealand Stock Exchange
NZX Listing Rules
or Listing Rules
The Listing Rules applying to the NZX
Main Board as amended from time to time
NZX Main Board
The New Zealand main board equity
security market operated by NZX
R&D
SAAS
Serko Expense
Management
business
Serko Mobile
Serko Online
serko.travel
Research and Development expenditure
Software-as-a-service
Serko’s online expense management
solutions that enables the capture and
processing of corporate credit cards and
out-of-pocket claims
Serko’s mobile app for iPhones and
Android devices that gives users access
to information and travel booking
functionality on their mobile devices
Serko’s cloud-based online travel booking
solution for large organisations
Serko’s cloud-based online travel booking
solution for small to medium enterprises
(SMEs)
SME
Small and medium enterprise
TMC, Travel
Agency or Travel
Management
Company
A travel management company that
provides specialised travel-related
services to corporate customers
USD or US$
United States dollars
Zeno
Serko’s premium cloud-based online
travel booking solution
Zeno Expense
Serko’s Expense management solutions
International Financial Reporting
Standards
$
All figures are in New Zealand dollars,
unless otherwise stated
Independent
Directors
Simon Botherway, Claudia Batten and
Clyde McConaghy
IPO
Initial Public Offering
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Serko annual report
Company Directory
Serko is a company incorporated with limited liability under the New Zealand Companies Act 1993
New Zealand Companies Office registration number 1927488
Australian Registered Body Number (ARBN) 611 613 980
For investor relations queries contact: investor.relations@serko.com
REGISTERED OFFICE
PRINCIPAL
ADMINISTRATION
OFFICE
SHARE
REGISTRAR
New Zealand
Saatchi Building
Unit 14D
125 The Strand
Parnell, 1010
+64 9 309 4754
Australia
c/- Sly & Russell Legal
Nominees Pty Ltd
Level 18
225 George Street
Sydney 2000
NSW, Australia
New Zealand
Saatchi Building
Unit 14D
125 The Strand
Parnell, 1010
+64 9 309 4754
Australia
Level 8
75 Elizabeth Street
Sydney 2000
NSW, Australia
+61 2 9435 0380
DIRECTORS
Simon Botherway (Chairman)
Claudia Batten (Acting Chair from 12 March 2020)
Robert (Clyde) McConaghy
Darrin Grafton
Robert (Bob) Shaw
Key Dates
New Zealand
Link Market Services Limited
Level 11, Deloitte House
80 Queen Street
Auckland 1140, New Zealand
+64 9 375 5998
serko@linkmarketservices.co.nz
Australia
Link Market Services Limited
Level 12
680 George Street
Sydney 2000
NSW, Australia
+61 1300 554 474
AUDITOR
Deloitte Limited
Deloitte Centre
80 Queen Street
Auckland 1040, New Zealand
+64 9 303 0700
19 AUGUST 2020
30 SEPTEMBER 2020
18 NOVEMBER 2020
31 MARCH 2021
Annual Shareholders’ Meeting
Half-Year End
Half-year Results Announced
Financial-Year End
Serko’s ESG Report, which includes its Corporate Governance Statement, can be found at www.serko.com/investor-centre.
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www.serko.com
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