2021 Annual Report
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Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 Our Purpose
marketplace.
We have a vision to reinvent business travel retailing with the world’s first business travel
To achieve this we’re on a mission to connect the world’s business travellers with the universe
of travel content, providing travel buyers with the content, information and services they need
at every stage of the journey to create a connected trip.
About Serko
Serko is a leader in online travel booking and expense management for the business travel
market. 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. Listed on the New Zealand Stock Exchange Main Board (NZX:SKO)
and Australian Securities Exchange (ASX:SKO). Serko is headquartered in New Zealand, with
offices across Australia, China and the United States.
Visit www.serko.com for more information.
SERKO 2021
ANNUAL REPORT
This Annual Report is dated 19 May 2021 and is signed on behalf of the Board of Directors (Board) of Serko
Limited by Claudia Batten, Chair, and Darrin Grafton, Chief Executive Officer (CEO).
CLAUDIA BATTEN
CHAIR
DARRIN GRAFTON
CHIEF EXECUTIVE OFFICER
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Serko annual report Our Purpose
We have a vision to reinvent business travel retailing with the world’s first business travel
marketplace.
To achieve this we’re on a mission to connect the world’s business travellers with the universe
of travel content, providing travel buyers with the content, information and services they need
at every stage of the journey to create a connected trip.
About Serko
Serko is a leader in online travel booking and expense management for the business travel
market. 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. Listed on the New Zealand Stock Exchange Main Board (NZX:SKO)
and Australian Securities Exchange (ASX:SKO). Serko is headquartered in New Zealand, with
offices across Australia, China and the United States.
Visit www.serko.com for more information.
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Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 The Covid-19 pandemic has caused enormous disruption to international travel
markets and Serko’s business, with revenue from all regions falling sharply during
the 2021 financial year.
$16.9m
$80m
$12.4m
($29.4m)
-63%
($22.3m)
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Serko annual reportEBITDAF* lossCash and short-term depositsincrease from $42.4m post netcapital raise of $65mDecrease in booking transactionsNet Loss After Tax Total IncomeOperating Revenue The Covid-19 pandemic has caused enormous disruption to international travel
markets and Serko’s business, with revenue from all regions falling sharply during
the 2021 financial year.
$16.9m
$80m
$12.4m
($29.4m)
-63%
($22.3m)
EBITDAF is a Non-GAAP measure representing Earnings Before the deduction of costs relating to Interest, Taxation, Depreciation, Amortisation,
Foreign Currency (Gains)/Losses and Fair value remeasurement of contingent consideration. Serko uses this as a useful indicator of cash profitability.
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Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94EBITDAF* lossCash and short-term depositsincrease from $42.4m post netcapital raise of $65mDecrease in booking transactionsNet Loss After Tax Total IncomeOperating Revenue CEO and Chair’s letter
Dear Fellow Shareholders,
The Covid-19 pandemic has caused enormous disruption to
customers. However, just as we have seen in Australasia, we
international travel markets and Serko’s business, with revenue
believe these domestic and intra-regional markets will lead
from all regions falling sharply during the 2021 financial
a broader recovery in travel activity, particularly as mass
year. However, by the end of the year Serko had experienced
vaccination programmes are completed.
improving travel booking volumes across its core Australasian
business and made good progress positioning the company for
an expected recovery in its Northern Hemisphere markets.
A key project to participate in the recovery and begin to realise
our potential in new markets has been the partnership with
Booking Holdings, which includes the supply of the Zeno
Despite this uncertainty – and thanks to the support of
platform for Booking.com’s small and medium enterprise (SME)
shareholders who took part in an oversubscribed $67.5 million
solution, ‘Booking.com for Business’. As we announced in late
capital raise in October 2020 – Serko has strategically chosen
March, we have begun to transition existing Booking.com for
to retain resources and capacity to invest in key growth
Business customers to the new platform, a process that is due
initiatives. Consequently, the company is well positioned and
to finish by the end of July 2021.
is participating in the recovery of corporate travel markets
around the world.
The new Booking.com for Business platform is now being
rolled out globally as additional languages and regional content
We occupy a strong market position in Australasia, with most
are added. As previously announced, subject to the recovery
of our transactions being domestic. As the pandemic has
in relevant markets, the partnership is expected to make a
been contained, these markets have recovered from the near
material contribution to revenues in the 2022 financial year.
standstill experienced at the beginning of the financial year.
We are delighted with the progress we have made and the
In April 2020 booking volumes reached a trough, representing
potential for the company as we transition to a future when
just 11% of the volumes recorded in the same month of 2019 - a
freedom of movement is less constrained.
year unaffected by Covid-19 and the benchmark Serko is using
to assess the progress of the recovery.
By the last month of the financial year (March 2021) volumes
had recovered to 73% of the March 2019 volumes and by
April 2021 had risen further to represent 84% of the April
2019 volumes. Importantly, the March result was ahead of
market guidance that our core Australasian markets would be
operating at 40-70% of their pre-Covid-19 activity levels by the
end of our 2021 financial year.
We are pleased with the recovery in booking volumes. But we
recognise the unpredictable nature of this recovery and the
potential for public health conditions in our core markets to
reverse the gains.
Serko has been investing to grow in new markets outside of its
Australasian markets to become a significant global business.
Serko’s business plans in these markets 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
SUMMARY FINANCIAL RESULTS
The Serko Board has exercised judgement on a number
of important areas in the Statement of Comprehensive
Income and Statement of Financial Position and we draw
your attention to the commentary in this Annual Report,
the Financial Statements themselves and the Notes to the
Financial Statements for more detailed explanations.
Covid-19 disruptions to international travel markets saw Total
Income from all sources for the year to 31 March 2021 fall 37%
to $16.9 million from $26.8 million in the prior year.
A 52% fall in Total Operating Revenue to $12.4 million from
$25.9 million in the prior year - due largely to a 53% fall in
Recurring Product Revenues - was partially offset by $3.4
million of Covid-19 subsidies from governments across the
territories in which Serko operates and $1.0 million in Research
and Development grants.
pandemic were domestic or intra-regional bookings and the
Peak Annualised Transactional Monthly Revenue (ATMR) for
total addressable market even in recovery remains significant.
March 2021, a forward-looking indicator of recurring revenue,
Recovery in these Northern Hemisphere markets has been
subdued. Persistent travel restrictions have limited bookings,
while ongoing staff furloughs at our Travel Management
Company (TMC) partners has limited the onboarding of new
was $17.2 million. This was down 37% from $27.5 million in
February 2020 (the pre Covid-19 peak) and up 202% from the
low of $5.7 million in April 2020.
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Serko annual report Total Operating Expenses increased by 21% to $44.9 million
continue, although it is reasonable to expect further periodic
from $37.1 million in the prior year. This investment included
short-term lockdowns.
a net increase of 54 people to 287 full-time equivalent staff
(FTE). Research & Development (R&D) expenditure was
$10.6 million, down 22% from the prior year, reflecting the
reprioritisation of development resources with the onset of
Covid-19. However, the figure still represents a significant
investment into platform development for expansion into new
markets and the delivery of white-label platforms.
The net loss after tax for the year was $29.4 million, wider
than the prior year’s net loss after tax of $9.4 million, with the
fall reflecting the Covid-19 travel disruptions and increased
expenditure. Accordingly, EBITDAF losses increased to $22.3
million from a loss of $6.1 million in the prior year.
Serko is well funded. Cash balances and short-term deposits at
31 March 2021 were $79.9 million, up from $42.4 million in the
prior year, thanks to the capital raise and careful management
of our costs and investment programmes. Net funds received
after capital raising costs were $65 million. Over the 2021
financial year we averaged a monthly cash burn of $2.3 million,
a figure well within the $2 million to $4 million guidance given
in October 2020 during the capital raise. This was revised
from a first half target of less than $2 million average cash
burn per month following Board approval to continue to invest
for growth opportunities, assuming an eventual recovery in
corporate travel.
AUSTRALASIAN MARKET UPDATE
The Covid-19 pandemic and related travel restrictions resulted
in booking volumes beginning to soften in February 2020 with
the trend accelerating precipitously through the following
month to reach a floor in April 2020. However, we have been
encouraged by the steady recovery in recent months.
The recovery in volumes through our New Zealand TMC channel
has outperformed Australia’s, with travel volumes in New
Zealand rebounding strongly in the final month of the financial
year to 138% of March 2019 volumes. This increase was due to
the onboarding of new customers by our TMC partners, while
New Zealand also endured less widespread lockdowns than
Australia.
Reflecting these trends, revenue from New Zealand sources for
the 2021 financial year fell less than Australian revenues. New
Zealand revenue fell 13% to $2.2 million from $2.5 million in the
same period a year ago, while Australian sourced revenues fell
by 59% to $7.5 million from $18.2 million.
By the end of the financial year, Australian TMC volumes had
recovered to 56% of March 2019 travel volumes from a low
in April 2020 when travel volumes were just 11% of the same
month in 2019. With the recent formation of the trans-Tasman
bubble from the end of April 2021 we expect this trend to
We made further progress in the transition of customers to the
premium Zeno product from Serko Online during the financial
period. Zeno was carrying approximately 45% of transactions
across our platforms for March 2021, up from approximately
25% of transactions for March 2020. Zeno was being used by
58% of corporate customers in Australia and New Zealand for
March 2021, up from 42% for March 2020.
We have been working proactively with our TMC partners to
support their recovery. In some instances, this has required
the amendment of contractual terms and this has adversely
impacted our ability to recognise revenue from contractual
minimums.
The region has made good progress on travel recovery and
with the planned vaccination programme we expect that
corporate travel in the region will make a progressive recovery
throughout the current financial year. Our best estimate is for a
full recovery in the 2023 financial year, although this outlook is
still subject to considerable uncertainty.
What is clear, however, is that risk and cost management are
the key priorities for organisations as they return to travel.
We have introduced a number of product capabilities in
Zeno to address the challenges of post-pandemic business
travel, including detailed airline and hotel safety information,
Covid-19 testing and vaccination requirements and supporting
government contact tracing requirements for new bookings.
GLOBAL EXPANSION UPDATE
Booking.com For Business Update
During the financial year we have invested to scale our Zeno
platform to accommodate the accelerated migration of
Booking.com business customers onto the upgraded ‘Booking.
com for Business’ platform, following successful pilots
conducted throughout 2020.
We have localised the language and user interface to enable
roll out in more than 90 countries and integrated new flight and
rail providers that support a connected trip offering in select
markets.
We are currently seeing an average of over 1,300 SME business
customers activate on the new platform each weekday. Serko
expects this rate of activation to significantly increase as we
progress through the final phases of the migration, which is
due to complete in July 2021.
The migration provides Serko with the opportunity to access
a much larger addressable market as travel activity recovers
over time.
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Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 North America Update
of travel recovery difficult.
North American-sourced income, primarily Expense platform
Nevertheless, we are seeing trends that favour the adoption of
revenue and US sourced supplier commissions, declined 51% to
Serko’s travel and expense management solutions.
$2.4 million from $4.8 million largely due to Covid-19 impacts.
TMC resellers are operating with fewer people and this
During the 2020 financial year we invested in our Zeno platform
is creating opportunities for automation and technology
to position us for our continued expansion into North America.
solutions. Corporations are increasingly focused on the costs
Booking revenue from this market was not significant in the
and administration of their travel and expense budgets and at
2021 financial year as TMC onboarding of customers onto the
the same time are focused on traveller wellbeing and their ‘duty
platform slowed materially and transactions have effectively
of care’ obligations. We are actively assessing these changes
ceased due to the lockdown restrictions and corporate
to ensure that we can support the market, our customers and
imposed travel restrictions in this market.
our growth as the industry recovers.
We have a clear strategy to grow this market and it rests on the
We are cautiously optimistic that the global vaccination
pillars of building awareness and support among TMC resellers,
programmes will enable widespread travel to resume, and we
lifting our brand profile, reaching out directly to corporates
are continuously looking for new ways to lead the industry in
to use our solutions and the launching of the Zeno expense
this recovery. Indeed, we believe our target of achieving $100
platform to broaden the product offer.
million revenue in the mid-term remains achievable but has
Serko has signed an additional five TMC resellers during the
been delayed during this Covid-19-affected year.
financial year, and post-year end signed an additional reseller
As noted above, the Booking.com for Business customer
Frosch Travel Group in April 2021. We continue to assist our
migration is anticipated to have a materially positive impact
resellers to be ready for the return to travel by supporting the
on our revenue for the FY22 financial year. However, as we are
integrations and the migration of additional corporates onto
only part way through the migration process, and in light of
our platform.
SERKO EXPENSE PLATFORM INITIATIVES
The Serko Expense platform has delivered a more resilient
performance than the travel management platform.
It represents an important diversification from travel
revenues for Serko. Expense revenue, benefitting from fixed
components to pricing, fell 31% to $4 million from $5.8 million,
less sharply than the 52% fall in travel booking revenue.
A key development milestone in the year was the completion
of work to align the user experience of InterplX’s expense
management platform with that of Zeno Expense. We launched
this new Zeno Expense offering in October 2020.
the uncertainty that remains around global travel trends, it is
not possible to guide the market with any certainty as to the
expected revenue uplift at this time.
As at 30 April 2021, Serko had cash and short-term deposits of
$77.7 million. We are still planning to increase the number of
employees as we scale to capture growth opportunities, but we
continue to target an average monthly cash burn of between $2
million and $4 million per month, to conserve cash reserves.
We believe these cash reserves, at the current rate of cash
burn, will be sufficient to see the company through to cash
flow break even, based on our current strategy. However, we
will maintain our rigorous focus on cash flow throughout the
remainder of the year with ongoing investment continuously
assessed alongside developments in international travel
We continue to develop this product to enable integration
within the travel platform offering.
markets.
FY22 OUTLOOK
A year on from the widespread imposition of global travel
restrictions, the timing and extent of the travel recovery
remains uncertain. The rate of return to business travel will
vary by region, the type of traveller (SME versus enterprise)
and the type of trip (i.e. domestic, regional, long-haul
international). These multiple factors make predicting the rate
We will consider acquisitions and/or investments to assist
Serko to accelerate execution of our strategic priorities, where
it makes sense to do so.
We will also keep investors apprised of material developments
in the market and their impact on Serko, including when
we complete the migration of ‘Booking.com for Business’
customers.
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Serko annual report EXECUTIVE UPDATE
As announced at the time of the interim earnings
announcement, Chief Financial Officer, Susan Putt will
transition out of her permanent role at the end of May 2021,
following completion of the full-year earnings announcement
and audit process. We wish to take this opportunity to
sincerely thank Susan for her contribution during her time
with us. Our process for identifying Susan’s replacement is
progressing well. In the meantime, we have appointed an
interim CFO, Susan Nemeth, to oversee the finance function
during the transitional period.
As a company with strong growth ambitions, we have been
continuing to strengthen our executive leadership team
appointing Sarah Miller as General Counsel and appointing
Rachael Satherley as Chief People Officer during the year.
THANK YOU FOR YOUR SUPPORT
We also thank our dedicated employees who supported the
company and agreed to take a small salary reduction for three
months from May 2020. The team has continued to rise to the
challenges we’ve faced this year, while continuing to make a
huge effort for the company. Their efforts have been nothing
short of exemplary.
The dedication of the Serko team this year has been inspiring.
Despite the significant personal and professional challenges
of Covid-19, the team has chosen to look through the
current travel market turmoil and dedicated themselves to
Serko’s vision of transforming business travel and expense
management.
It is this spirit that saw Serko named the PwC Hi-Tech Company
of the Year where we were praised for the company’s ethos,
culture and diversity. It is this same commitment that has
underpinned shareholder support for the company and our
inclusion in the benchmark NZX50 index in June 2020.
Serko is grateful for the support we have received through
Signed
this challenging period. We acknowledge and thank the
governments in the territories we operate for the programmes
and subsidy schemes that have assisted us to retain our people
and continue to invest for the future.
CLAUDIA BATTEN
CHAIR
DARRIN GRAFTON
CHIEF EXECUTIVE OFFICER
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Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 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 TECHNOLOGY INNOVATION
We introduced new capabilities to address the needs of post-pandemic business travel
to make travel programs safer, leaner and smarter
• Integrated airline and hotel safety and cleanliness information at point of sale to support safer choices for travellers in response to
increased customer demand in a Covid 19-affected world
• Developed the capability to compare and book complex multi-stop international trips without requiring agent support
• Committed to and commenced a multi-year program to transform our core technology platform into a highly scalable, global and
open framework
Our focus for FY22:
• Begin the development of a new Zeno mobile experience to support a frictionless in-trip experience incorporating payment, expense
and itinerary management
• Introduce environmental impact insights at point of purchase and the ability to carbon offset to drive more sustainable business travel
• Engage with partners to build the foundations of the program for 3rd party content and service providers to build onto the Zeno
platform
GROW CUSTOMER BASE
The Zeno-powered Booking.com for Business platform began a roll out program in
multiple languages across international markets
• Accelerated our development of Zeno as a white-label platform under the Booking.com for Business brand to launch ahead of the
initial program schedule
• Commenced an upgrade program that will see existing Booking.com for Business customers transitioned to the new Zeno-powered
platform
• Completed the wholesale migration of customers onto Zeno from a competitor platform at Travel Management Company partners in
Australia and New Zealand
Our focus for FY22:
• Extend the roll out of the Zeno-powered white-label Booking.com for Business platform into additional regional markets with
localised content and language and optimise the product offering to drive new customer acquisition
• Develop our pipeline of direct commercial relationships with large, global enterprise customers
• Increase the scale of our partnership network in North America and drive adoption and market share of Zeno as business travel
resumes
GROW ARPB
We integrated new supply channels that enable us to offer a connected trip offering to
the global SME market on a revenue share basis
• Progressed our vision of a connected trip experience, adding the ability for SME customers to book and manage air travel in a self-
service workflow that does not require agent fulfillment
• Accelerated the adoption of Zeno across the Serko customer base to approximately 45% of transactions (up from 25% at the
beginning of the Financial Year)
• Implemented the learnings from our partnership with Booking.com to enhance the customer experience to optimise conversion
Our focus for FY22:
• Bring to market new pre-trip authorisation capability to support the return to travel
• Explore new ways to commercialise payments and expense reconciliation and pilot channels that open up new market segments for
our expense management solutions
• Implement new models that enable us to commercialise our investment in airline supply connectivity
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Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 Our Products
Zeno is an integrated travel and expense platform that is revolutionising the world of
corporate travel and expense management globally.
BOOKING.COM FOR BUSINESS
powered by Zeno
In 2019 Booking Holdings extended its partnership with Serko
to enable Booking.com to resell the Zeno platform
white-labelled under the Booking.com for Business brand,
with a commercial partnership based on a revenue share
model between Booking.com and Serko.
Dedicated teams at both companies worked together to bring
to market an initial product that went live in the UK and
Ireland in May 2020 ahead of a global roll out that began in
early 2021. The platform is now available in local language
versions across more than 90 countries.
The new Booking.com for Business platform powered by Zeno
aims to provide a one-stop-shop for all business travel needs,
helping save time and money and making life easier for
business travellers and their administration teams alike.(cid:31)In
addition to Booking.com accommodation content, we are
continuing to build a global connected trip offer including
flights and rail content in selected countries.
Zeno travel
Zeno expense
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 encourages corporate travellers to
use the OBT and avoid travel program ‘leakage’ to
supplier websites or leisure travel retailers.
Zeno achieves 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.
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, preventing
expense claim fraud and dramatically streamlining
the expense administration function.
Zeno also provides managers and finance teams with
a full suite of analysis tools that help them to run their
T&E budgets more effectively, identify problem
areas, and optimise expense policies.
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Serko annual reportSerko 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 or per expense report submitted. Our Products
Zeno is an integrated travel and expense platform that is revolutionising the world of
corporate travel and expense management globally.
Zeno travel
Zeno expense
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 encourages corporate travellers to
use the OBT and avoid travel program ‘leakage’ to
supplier websites or leisure travel retailers.
Zeno achieves 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.
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, preventing
expense claim fraud and dramatically streamlining
the expense administration function.
Zeno also provides managers and finance teams with
a full suite of analysis tools that help them to run their
T&E budgets more effectively, identify problem
areas, and optimise expense policies.
BOOKING.COM FOR BUSINESS
powered by Zeno
In 2019 Booking Holdings extended its partnership with Serko
to enable Booking.com to resell the Zeno platform
white-labelled under the Booking.com for Business brand,
with a commercial partnership based on a revenue share
model between Booking.com and Serko.
Dedicated teams at both companies worked together to bring
to market an initial product that went live in the UK and
Ireland in May 2020 ahead of a global roll out that began in
early 2021. The platform is now available in local language
versions across more than 90 countries.
The new Booking.com for Business platform powered by Zeno
aims to provide a one-stop-shop for all business travel needs,
helping save time and money and making life easier for
business travellers and their administration teams alike.(cid:31)In
addition to Booking.com accommodation content, we are
continuing to build a global connected trip offer including
flights and rail content in selected countries.
13
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94Serko 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 or per expense report submitted. DON'T JUST
RETURN TO
TRAVEL
Come back Safer. Leaner. Smarter.
Zeno is empowering the business travel world to seize the re-set opportunity
to transform travel programs with an intelligent travel management platform
built around the priorities of the new world of travel.
Zeno is now even safer, leaner and smarter than before.
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Serko annual report Come back Safer
Zeno helps to prioritise travellers’ safety and supports an organisation's duty
-of-care requirements
1
2
3
Book safe flight and hotel options with confidence.
Track travellers at a glance.
Intelligent approval levels.
Come back Leaner
Zeno empowers organisations with an efficient travel program that delivers
heightened cost control without sacrificing travellers’ preferences.
1
2
3
Mitigate lost fares with flexible online booking and smart credit management.
Get enhanced control and visibility of travel spend.
Connect travellers with a greater selection of booking choices.
Come back Smarter
Zeno supports a more effective travel program that drives adoption and
responds to today's rapidly changing environment.
1
2
3
Personalised travel booking that gets to know travellers’ preferences.
Frictionless booking experience.
Stay up to date with regulatory requirements.
15
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94Zeno visually highlights airline and hotel safety measures within the booking flow, making it easy for travellers to select the safest choice while ensuring alignment with their travel policy. The Zeno dashboard visually tracks all current and upcoming trips for a company’s travellers, making it easy to identify and manage potential risks. Zeno supports multi-tier approval workflows that can be dynamically assigned based on trip parameters. While low-risk travel (e.g. domestic) can follow standard authorisation process, high-risk or international travel can be configured to automatically require multiple approvers, such as regional leaders or Human Resource (HR) to minimize risk and ensure the right people are informed. Zeno makes it easy to change individual itinerary elements before or after tickets are issued* and stores qualifying cancelled flight purchases as unused ticket credits** that are surfaced within the booking flow, automatically applying unused tickets and credits for the next booking – reducing the risk of lost fares. Pre-approval of air, hotel and rental car spend gives enhanced visibility and control over total travel spend and allows a more efficient mode of managing expenses by exception. Zeno’s multi-source content engine gives travellers greater choice***, pulling content from suppliers directly, as well as from NDC, GDS and multiple content aggregators. Travellers and bookers can review flights, including ancillary content, accommodation and transport details the same way they appear on supplier websites, to help make more informed travel decisions on the spot. Zeno learns traveller preferences and recommends tailored end-to-end itineraries, with a user-friendly, intuitive interface and conversational booking flow. With Zeno, travellers can easily compare different flight options with rich content that displays options in the same format as airline sites. This eliminates the need to check information across multiple sites, leading to more streamlined bookings. In a rapidly changing environment, Zeno is continually innovating to support regulatory mandates, such as airline passenger contact tracing requirements. *Changes and cancellations to bookings are subject to supplier and fare conditions and are only available where supported by the travel management company.**Flight credit availability is subject to supplier and fare conditions.***By sourcing content from multiple sources, Zeno provides a greater content selection than online booking tools that source content from the GDS only. Board of Directors
Claudia Batten
Independent Non-executive Director, Chair, United States/New Zealand
Appointed 30 April 2014, re-elected August 2020
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, where 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 a director of Vista Group and is also the digital adviser to the Board of Westpac New Zealand.
Simon Botherway CFA
Independent Non-executive Director, New Zealand
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 Guardian of the New Zealand Superannuation Fund.
Clyde McConaghy
Independent Non-executive Director, Australia
Appointed 30 April 2014, re-elected August 2019
Clyde is based in Australia. He holds a BBus (University of South Australia), and an MBA from Cranfield University (UK). Clyde is a
Fellow of the Australian Institute of Company Directors. 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 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 30 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.
16
Serko annual report Management Team
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.
Sarah Miller
General Counsel & Company
Secretary
Sarah has over 20 years’ experience leading
in-house legal functions for dual-listed entities,
consulting to a range of companies on capital
markets and M&A transactions, providing
governance advice, and working for major law
firms in New Zealand and the UK. She has been
Serko’s Company Secretary since 2014.
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.
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. Susan is leaving Serko
on 31 May 2021.
Rachael Satherley
Chief People Officer
Rachael has 20 years of experience in people
leadership roles across Europe, North America
and Asia-Pacific most recently with Expedia
Group. She has a passion for unlocking
individual, team and organisational potential
through transformation.
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.
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.
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.
17
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 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 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
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
Serko annual report 19
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 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 practice) 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 ($29.4m)
NET LOSS AFTER TAX
BUSINESS RESULTS
Year ended 31 March
Revenue
Other income
Total income
Operating expenses (excluding foreign
exchange)
Percentage of operating revenue
Foreign exchange gains/(losses)
Net finance (expense)/income
Net (loss) before tax
Percentage of operating revenue
Income tax benefit (expense)
Net (loss) after tax
Percentage of operating revenue
2021
$ (000)
12,420
4,476
16,896
2020
$ (000)
Change
$ (000)
%
25,869
(13,449)
-52%
922
3,554
385%
26,791
(9,895)
-37%
(44,854)
(37,092)
(7,762)
-21%
-361%
(1,337)
247
-143%
718
257
(2,055)
-286%
(10)
-4%
(29,048)
(9,326)
(19,722)
-211%
-234%
(341)
-36%
(38)
(303)
-797%
(29,389)
(9,364)
(20,025)
-214%
-237%
-36%
Operating revenue excludes other income, which is primarily grants (refer Note 14 on page 61).
Total income from all sources for the year to 31 March 2021 was down 37% to $16.9 million from
$26.8 million in the prior year due to the effects of Covid-19. Also, operating costs increased,
from the Company continuing to scale for future growth opportunities. Serko recorded a net loss
result after tax of ($29.4 million) against prior year net loss of ($9.4 million). The result includes
non-cash elements of $10.0 million including depreciation, amortisation and share-based
payments up from $4.7 million in the previous year.
Annual total operating revenue fell by $13.5 million (52%) to $12.4 million from $25.9 million in the
prior year, primarily related to Travel platform revenue affected by the Covid-19 pandemic. Refer
to further analysis under Income on page 23.
The Company recognised $4.5 million in other income (primarily grants), including $3.4 million in
Covid-19-related subsidies.
Total operating expenses increased by $7.8 million to $44.9 million from $37.1 million in the prior
year. Refer to further analysis under Operating Expenses on page 30.
Foreign exchange gains/(losses) moved from a gain of $0.7 million in the prior year to a loss of
($1.3 million).
21
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 ($22.3m)
EBITDAF LOSS
EBITDAF
Year ended 31 March
2021
$ (000)
2020
$ (000)
Change
$ (000)
%
Net (loss) after tax
(29,389)
(9,364)
(20,025)
-214%
Deduct: net interest and dividend
income
Add back: income tax
Add back: depreciation and
amortisation
Add back: net foreign exchange (gains)/
losses
Add back: Fair value remeasurement
of contingent consideration
(247)
341
5,633
(257)
38
10
-4%
303
797%
3,156
2,477
78%
1,337
(718)
2,055
-286%
-
1,056
(1,056)
-100%
EBITDAF (loss)
Percentage of operating revenue
(22,325)
-180%
(6,089)
-24%
(16,236)
-267%
EBITDAF is a Non-GAAP measure representing Earnings Before the deduction of costs relating to Interest,
Taxation, Depreciation, Amortisation, Foreign Currency (Gains)/Losses and Fair value remeasurement of
contingent consideration. Serko uses this as a useful indicator of cash profitability.
EBITDAF declined by $16.2 million from a loss of ($6.1 million) to a loss of ($22.3 million).
Depreciation and amortisation increased by $2.5 million over the prior year. Depreciation
includes of right-of-use assets (leased premises) under IFRS-16 (Leases) adoption of $1.1 million
(FY20 $1 million).
Movements from foreign exchange rates resulted in losses of $1.3 million for the year compared
to gains of $0.7 million in the prior year. No fair value adjustments affected profit for the current
year.
22
Serko annual report INCOME
Year ended 31 March
Travel platform booking revenue
Expense platform revenue
Supplier commissions revenue
Other revenues
Recurring product revenue
Percentage of operating revenue
Services revenue
Total revenue
Other income
Total income
2021
$ (000)
6,354
3,997
538
386
11,275
91%
1,145
12,420
4,476
16,896
2020
$ (000)
16,307
5,831
1,427
485
Change
$ (000)
%
(9,953)
(1,834)
-61%
-31%
(889)
-62%
(99)
-20%
24,050
(12,775)
-53%
93%
1,819
(674)
25,869
(13,449)
-37%
-52%
922
3,554
385%
26,791
(9,895)
-37%
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.
52%
DECREASE
TOTAL REVENUE
37%DECREASE
TOTAL INCOME
Total revenue is operating revenue excluding grants and finance income, while total income includes grants.
Other income includes grants of $4.4 million, of which $3.4 million related to Covid-19 subsidies in New
Zealand, Australia and the US.
Travel platform revenue fell by 61% for the year to $6.4 million from $16.3 million.
Serko Expense revenue, benefitting from fixed components to pricing, fell 31% to $4.0 million
from $5.8 million, less sharply than the 61% fall in travel platform revenue.
Supplier commissions revenue declined by $0.9 million (62%) to $0.5 million from $1.4 million.
Services revenue declined to $1.1 million from $1.8 million in the prior year due to the prioritsation
of the launch of the Booking.com for Business platform. Other revenues declined marginally to
$0.4 million, compared to $0.5m for the prior year.
Recurring product revenue was down 53% to $11.3 million from $24 million on the prior year, due
to Covid-19. Recurring revenue as a percentage of total revenue declined to 91%, from the prior
year comparative of 93%. Total income including grants was down 37% to $16.9 million, from
$26.8 million in the prior year.
23
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 In the fourth quarter of the 2020 financial year, the Covid-19 pandemic became widespread, significantly affecting booking volumes
and materially impacting Serko’s performance over the 2021 financial year. 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. Travel volumes have slowly recovered over the year.
From the lowest point during the financial year in April 2020 at 11% of the prior year month, monthly booking volumes have recovered
to 73% in the month of March 2021. The majority of the booking volumes have come from the Australasian region, with different
recovery rates between New Zealand and Australia due to timing and resumption of travel, as well as continued onboarding of new
TMC customers (refer to graph below). As a comparator New Zealand bookings are 149% versus 62% for Australia in March 2021. Total
travel booking transactions for the 2021 financial year fell 63% against the 2020 financial year.*
Australasia Transactions as % of Prior Year*
150%
100%
50%
0%
New Zealand TMCs
Total Australasian Transactions
Australian TMCs
Apr 2020
Mar 2021
*As of March 2021, Serko has begun benchmarking current transaction volumes to 2019 volumes (in addition to 2020 volumes) as we believe this
provides a more meaningful indication of the resumption of travel by business travellers. This is as a result of Covid-19-related travel restrictions
beginning to materially impact Serko’s transaction volumes from mid-March 2020. For completeness, total Australasian transaction volumes
exceeded 131% of March 2020 volumes (NZ: 211%, AUS: 116%), when Covid-19-related border closures started materially impacting Serko’s
transaction bookings.
Under IFRS-15 (Revenue from Contracts) Serko records revenue from its portfolio of contracts with reference to actual transactions,
forecast transactions and minimum contracted commitments. With 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 recorded in the current year.
Serko had 72 Travel Management resellers using the platform during the year, including Booking.com. The number of business
customers using the travel booking platforms fell with Covid-19 from 7,759 in FY20 to a low of 1,725 for the month of April 2020.
Total business customers using the platform during the year has grown to 9,104 for FY21, including SMEs that had commenced the
migration process with the Booking.com platform since this was opened up on 24 March 2021, eight days before year end.
24
Serko annual report While the number of Booking.com businesses that have used the platform is rapidly increasing, the number of business customers
that completed a booking during that period was lower at 6,904 of the 9,104, due to these businesses using the search functionality
without yet completing a booking. Thus revenue will lag the migration phases. The migration process is expected to be completed in
July 2021. Serko anticipates significant volumes of SMEs to migrate during the remaining phases of the migration and for the related
income to be material.
We continue to have customers transition to Zeno, Serko’s premium travel booking tool launched in 2018. As of 31 March 2021, Zeno
was carrying approximately 45% of transactions across our platforms at the end of the financial year, up from approximately 25% of
transactions at the beginning of the year. Zeno is being used by 58% of the corporate TMC customers, up from 42% at the beginning
of the financial year.
REVENUE BY GEOGRAPHY
Year ended 31 March
Australia
New Zealand
North America
Other
Revenue
2021
$ (000)
7,520
2,154
2,369
377
2020
$ (000)
18,218
2,465
4,823
363
Change
$ (000)
%
(10,698)
-59%
(311)
(2,454)
14
-13%
-51%
4%
12,420
25,869
(13,449)
-52%
Serko earned 61% (FY20: 70%) of revenue from Australia and 17% (FY20: 10%) from New Zealand sources, with New Zealand-
sourced income down 13% and Australian-sourced income down 59% over the prior year. The portion of income from New Zealand
has increased primarily with the onboarding of new TMC customers. 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 period, Serko expects the Australasian
domestic and trans-Tasman market to recover progressively to reach pre-Covid levels by the end of FY23 with vaccine programmes
currently rolling out.
The portion of North American income has also declined, and primarily represents Expense platform revenue and North American-
based supplier commissions. 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 with lockdown restrictions in this market.
Serko has signed five new TMCs in FY21 with another large group, Frosch Travel Group signed in April 2021. As this market returns to
travel, with vaccination programmes currently rolling out across North America, Serko expects revenue from this market through
TMCs to increase.
25
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 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
Serko’s main source of revenue is Travel platform revenue from Serko Online and Zeno.
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.
Serko also earns commission income on a portion of bookings direct when corporates opt to book Serko-sourced hotel and other
traveller-related services. Serko is paid directly from the suppliers of these services, therefore income from this source through its
platforms is included in supplier commissions. The Booking.com for Business platform provided in partnership with Booking.com is
a free service with Booking.com receiving commissions from suppliers. 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.
Other revenue 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 historically has been primarily government grants for research and development projects and international growth
grants. However, for FY21, Serko has received government grants related to Covid-19 subsidies amounting to $3.4 million. With the
change of R&D grants to a tax credit regime, Serko will no longer receive R&D grants in future years.
26
Serko annual report Revenue trend
Booking trend1
Travel platform booking trend
over the last 9 years
$25m
$20m
$15m
$10m
$5m
$0m
4m
3m
2m
1m
0m
Services
Suplier commissions and other
Expense platform
Travel platform
FY13
FY14 FY15 FY16 FY17
FY18 FY19 FY20 FY21
Other and custom bookings
Online bookings
FY13 FY14 FY15 FY16 FY17
FY18
FY19
FY20
FY21
Peak ATMR2
Year-on-year movement
$30m
$27.5m
$26m
6%
37%
41%
$18.4m
$15m
2018
2019
2020
$17.2m
2021
1 Booking volumes are total volumes and include Offline 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. Peak ATMR occurred in February 2020 and in March 2021 for
FY21.
27
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 63%DECREASE
TRAVEL PLATFORM
BOOKINGS
ACTIVITY
Travel platform bookings decreased 63% over the prior year and were Covid-19 impacted. Total
travel bookings during FY21 were 1.57 million, down from 4.22million. Total travel bookings
include 0.28 million Offline bookings (system automated bookings) that don’t contribute
significantly to revenue or are bundled into the ‘Online’ booking rate. Online bookings for the year
were 1.29 million with a 65% decline.
Serko is currently expanding into Northern Hemisphere markets. However, these regions did
not make a significant contribution to volumes in FY21 while these markets were in market
development and trial stages and Covid-19 had a major effect on the overall market. 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.
INCREASE36%
ARPB for recurring revenue (total recurring revenue divided by Online bookings) at $8.76
improved by 36% from $6.46 in the prior year as Expense platform revenue was not as adversely
affected as Travel platform revenue. Average Revenue Per Booking (ARPB) for travel-related
revenue (Travel platform and supplier commissions) increased during the year by 12% to $5.36
from $4.76 based on Online bookings and was largely related to increases in pricing for the Zeno
ARPB
platform.
Peak Annualised Transactional Monthly Revenue (ATMR), a useful indicator of recurring revenue
from Serko products, fell from a preCovid-19 peak of $27.5 million in February 2020 to $17.2
million as of March 2021. However, this improved compared to the beginning of the year with
ATMR at the end of March 2020 of $15 million based on the drop in transactions that occurred in
the month following the impact of Covid-19.
37%
DECREASE
PEAK ATMR
28
Serko annual report OPERATING EXPENSES
INCREASE21%
Year ended 31 March
Marketing expenses
OPERATING EXPENSES
Third party connection costs
Other selling costs
Total selling and marketing expenses
2021
$ (000)
1,054
535
467
2,056
2020
$ (000)
Change
$ (000)
1,469
885
635
2,989
(415)
(350)
(168)
(933)
%
-28%
-40%
-26%
-31%
Hosting expenses
2,710
3,362
(652)
-19%
Employee renumeration
25,083
17,161
Contribution to pension plans
Share-based payment expenses
Other remuneration and benefits
880
3,184
380
662
959
637
Total remuneration and benefits
29,527
19,419
Auditor remuneration and other
assurance fees
Directors’ fees
Movement of expected credit loss
allowance on receivables
Bad debts written off
Rental and operating lease expenses
Professional fees
Computer licences
Other administration expenses
Total administration expenses
Amortisation of intangibles
Depreciation
Total amortisation and depreciation
Fair value remeasurement on
contingent consideration
171
402
(19)
63
102
851
1,148
2,210
4,928
3,909
1,724
5,633
153
357
229
8
83
1,571
925
3,784
7,110
1,705
1,451
3,156
7,922
218
2,225
(257)
10,108
18
45
46%
33%
232%
-40%
52%
12%
13%
(248)
-108%
55
19
(720)
223
(1,574)
(2,182)
688%
23%
-46%
24%
-42%
-31%
2,204
129%
273
2,477
19%
78%
-
1,056
(1,056)
-100%
Total operating expenses excluding
foreign exchange gains/(losses)
Percentage of operating revenue
44,854
37,092
7,762
21%
361%
143%
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.
Other administration expenses include insurance, listed market costs, recruitment, training, travel and other
miscellaneous office costs.
29
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 Total operating expenses were up 21%, or $7.8 million, from the prior year to $44.9 million, primarily owing to increases in
remuneration and benefits as Serko expands its operations, as well as increased amortisation and depreciation.
Selling and marketing expenses declined to $2.1 million from $3.0 million in the prior year primarily owing to declining volumes and
cost saving initiatives.
Hosting costs at $2.7 million decreased 19% primarily with the booking volume decreases of 63% during the year. However, there is
a base level of costs to support the business, as well as investment into infrastructure improvements to increase speed and ensure
stability of the product in advance of increased volumes expected with the Booking.com customer transition.
Remuneration and benefits (R&B) increased by $10.1 million to $29.5 million owing to the increased head count of 54 from 233 full-
time equivalent (FTE) to 287 FTE as at 31 March 2021. No short-term incentives were included in the prior year. For FY21 an accrual
has been made for $1.9 million. Share-based payments of $3.2 million related to employee share-based payments and options (long-
term incentives) for 2021, compared to $1 million in the prior year. This increase in non-cash share-based payments was primarily due
to expanding the long-term incentive scheme to more people to retain staff while the organisation undertook cost saving measures,
including temporarily reducing salaries and not paying FY20 short-term incentives. Serko is planning on hiring additional staff as it
expands, however, owing to Covid-19 uncertainty, the rate of additional hiring will be subject to a recovery in travel revenues.
Administration costs at $4.9 million were down from $7.1 million on the prior year due to decreased discretionary spend as part of
cost saving initiatives.
30
Serko annual report 22%DECREASE
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)
2021
$ (000)
2020
$ (000)
Change
$ (000)
%
10,633
13,606
(2,973)
-22%
86%
(7,231)
68%
53%
(11,013)
3,782
-34%
81%
3,402
2,593
809
31%
Less: Government grants for R&D
(930)
(683)
(247)
36%
Add: Amortisation of capitalised
development costs and intellectual
property
Net product development costs
Percentage of operating revenue
3,909
1,705
2,204
129%
6,381
51%
3,615
14%
2,766
77%
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 less development costs for FY21 than in FY20, at $7.2 million compared
to $11.0 million in FY20. Total R&D at $10.6 million was 86% of net operating income compared
to 53% in the prior year. With the onset of Covid-19, development resources were deployed into
managing the platform costs due to reduced booking volumes and then the management of the
platform as transactions continued to scale up. While there remains considerable uncertainty as
to the future operating environment, Serko remains of the view that the capitalised portions for
the current year and the remaining prior year intangibles 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.
31
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 INCREASE23%
FTE
EMPLOYEES AND AVERAGE REVENUE PER FTE
Year ended 31 March
2021
2020
Change
%
Product development and maintenance
Sales and marketing
Customer support
Administration
Total employee numbers at end of the
year (FTE)
Average revenue per FTE (NZD $000)
193
16
48
30
287
67
146
18
52
17
233
47
(2)
(4)
13
54
32%
-11%
-8%
76%
23%
121
(54)
-45%
Serko’s staff numbers increased by a net 54 during the year moving to 287 from 233 full-time
equivalent (FTE) staff at the end of 2020. Head count was 289 with 172 staff based in New
Zealand, 20 in Australia, 54 in China and 43 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 292.
32
Serko annual report CASH FLOWS
Year ended 31 March
Receipts from customers
Grant income receipts
INCREASE89%
CASH AND SHORT
TERM DEPOSITS
2021
$ (000)
15,542
4,280
2020
$ (000)
Change
$ (000)
%
22,318
(6,776)
-30%
649
3,631
559%
Other operating cash flows
(37,864)
(26,756)
(11,108)
42%
Total cash flows from operating
activities
(18,042)
(3,789)
(14,253)
376%
Investing cash flows
Financing cash flows
Total net cash flows
(52,790)
63,927
(6,905)
(11,812)
42,273
26,672
(40,978)
347%
21,654
51%
(33,577)
-126%
Net foreign exchange differences
(567)
(13)
(554)
4262%
Closing cash and cash equivalents
balances
34,919
42,391
(7,472)
-18%
Short-term deposits
Cash and short-term deposits
45,000
79,919
-
42,391
45,000
37,528
n/a
89%
Receipts from customers decreased by 30% over the year from $22.3 million to $15.5 million.
Other operating cash outflows increased by $11.1 million to $37.9 million mainly owing to
increased payments to employees and suppliers. Net operating cash outflows for the year were
$18.0 million.
Investing cash flows, which include cash outflows for property, plant and equipment and
intangibles, reflecting capitalised internal development, were $7.8 million. Also included in
investing cash flows are the short-term deposits of $45 million as at 31 March 2021.
Financing cash flows. which include a capital raise to fund expansion, resulted in a net $65 million
contribution to cash balances. Lease liabilities recorded under finance activities were $1.3
million.
Cash balances and short-term deposits increased to 89% as at 31 March 2021, from $42.4 million
to $79.9 million. Excluding funds from the capital raise, net cash burn for the year was $27.4
million, an average of $2.3 million per month.
Prior to the capital raise, Serko targeted an average cash burn of $2 million per month. The
first-half cash burn was $1.8 million average per month. Following the capital raise, the Board
determined to continue to invest in scaling the business and the targeted cash burn was
increased to between $2 million and $4 million per month on average. The second-half cash
burn, excluding net funds from the capital raise, was $2.8 million average per month.
33
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 FINANCIAL
STATEMENTS
34
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 2021 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 2021 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 19 May 2021 by:
CLAUDIA BATTEN
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
36
37
38
39
40-73
74-77
35
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 Consolidated Statement of Comprehensive Income
For the year ended 31 March 2021
Revenue
Other income
Total income
Operating Expenses
Selling and marketing expenses
Hosting expenses
Remuneration and benefits
Administration expenses
Amortisation and depreciation
Fair value remeasurement on contingent consideration
Total operating expenses before foreign exchange gains/(losses)
Foreign exchange (losses)/gains – net
Finance income
Finance expenses
Loss before income tax
Income tax expense
Net loss attributable to the shareholders of the company
Movement in foreign currency reserve
Total comprehensive loss for the year
Earnings per share
Basic profit per share
Diluted profit per share
Notes
2021
2020
$ (000)
12,420
4,476
16,896
(2,056)
(2,710)
(29,527)
(4,928)
(5,633)
-
$ (000)
(Restated)
25,869
922
26,791
(2,989)
(3,362)
(19,419)
(7,110)
(3,156)
(1,056)
(44,854)
(37,092)
(1,337)
380
(133)
(29,048)
(341)
(29,389)
43
(29,346)
(0.30)
(0.29)
718
419
(162)
(9,326)
(38)
(9,364)
(11)
(9,375)
(0.11)
(0.11)
4
4
5
5
5
6
17
17
The accompanying notes form part of these financial statements.
36
Serko annual report Consolidated Statement of Changes in Equity
For the year ended 31 March 2021
Balance as at 1 April 2020
Net loss for the year
Other comprehensive income*
Total comprehensive income/(loss) for the year
Transactions with owners
Issue of share capital
Cost of equity issued
Equity-settled share-based payments
Shares vested from employees via Restricted
Share Plan
Shares forfeited from employees via Restricted
Share Plan
Non-executive directors settlement of non-
recourse loan
Issue of shares in respect of director services
Notes
Share
capital
Share-based
payment
reserve
Foreign
currency
reserve
Accumulated
losses
Total
$ (000)
$ (000)
$ (000)
$ (000)
$ (000)
87,751
2,374
(222)
(26,119)
63,784
-
-
-
67,500
(2,541)
684
-
-
303
9
16
16
16
16
16
16
16
-
-
-
-
-
1,807
391
(13)
(50)
-
-
43
43
(29,389)
(29,389)
-
43
(29,389)
(29,346)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
67,500
(2,541)
2,491
391
(13)
253
9
Balance as at 31 March 2021
153,706
4,509
(179)
(55,508)
102,528
Balance as at 1 April 2019
Net loss for the year
Adjustment on adoption of new IFRS16
Other comprehensive loss*
Total comprehensive loss for the year
Transactions with owners
Issue of share capital
Cost of equity issued
Equity-settled share-based payments
Shares allocated to employees via Restricted
Share Plan
Shares forfeited from employees via Restricted
Share Plan
Shares issued in respect of InterplX acquisition
Non-executive directors settlement of non-
recourse loan
40,993
1,885
(211)
(16,432)
26,235
-
-
-
-
45,000
(1,793)
427
-
-
2,881
243
16
16
16
16
16
16
-
-
-
-
-
-
526
23
(17)
-
(43)
-
-
(11)
(11)
-
-
-
-
-
-
-
(9,364)
(9,364)
(323)
-
(323)
(11)
(9,687)
(9,698)
-
-
-
-
-
-
-
45,000
(1,793)
953
23
(17)
2,881
200
Balance as at 31 March 2020
87,751
2,374
(222)
(26,119)
63,784
*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.
37
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 Consolidated Statement of Financial Position
As at 31 March 2021
Current assets
Cash at bank and on hand
Short-term deposits
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
Interest-bearing loans and borrowings
Lease liabilities
Derivative financial instruments
Total current liabilities
Non-current liabilities
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
11
11
7
8
9
10
6
12
15
13
8
15
13
16
16
2021
$ (000)
34,919
45,000
5,393
7
-
2020
$ (000)
42,391
-
6,578
84
557
85,319
49,610
2,569
23,304
117
25,990
3,382
20,110
250
23,742
111,309
73,352
7,142
62
1,017
142
8,363
28
390
418
8,781
153,706
4,509
(179)
(55,508)
102,528
7,073
58
1,280
-
8,411
92
1,065
1,157
9,568
87,751
2,374
(222)
(26,119)
63,784
111,309
73,352
For and on behalf of the Board of Directors, who authorise these financial statements for issue on 19 May 2021
CLAUDIA BATTEN
CHAIR
DARRIN GRAFTON
CHIEF EXECUTIVE OFFICER
The accompanying notes form part of these financial statements.
38
Serko annual report Consolidated Statement of Cash Flows
For the year ended 31 March 2021
Cash flows from operating activities
Receipts from customers
Interest received
Receipts from government grants - Covid-19 subsidies
Receipts from grants
Taxation paid
Payments to suppliers and employees
Interest payments
Net GST refunded /(paid)
Notes
2021
$ (000)
2020
$ (000)
15,542
22,318
349
3,268
1,012
(253)
418
-
649
(529)
(38,406)
(26,275)
(87)
533
(126)
(244)
Net cash flows used in operating activities
20
(18,042)
(3,789)
(559)
(7,231)
(45,000)
(52,790)
67,544
(2,541)
(1,266)
250
(60)
(794)
(11,018)
-
(11,812)
45,000
(1,793)
(1,080)
200
(54)
63,927
42,273
(6,905)
(567)
42,391
34,919
26,672
(13)
15,732
42,391
11
34,919
34,919
42,391
42,391
Cash flows from investing activities
Purchase of property, plant and equipment
Capitalised development costs and other intangible assets
Short-term deposits
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 (decrease)/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.
39
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 Notes to the Financial Statements
For the year ended 31 March 2021
1 CORPORATE INFORMATION
In reaching their conclusion the Board has considered the
The financial statements of Serko Limited (‘the Company’
or ‘Serko’) 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
The financial statements have been prepared in
accordance 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.
following factors:
• Cash reserves (Cash at bank and Term Deposits) at 31
March 2021 of $79.9 million provides a sufficient level of
headroom to help support the business for at least the
next 12 months;
• Serko completed an oversubscribed capital raise in
October 2020 of $67.5 million ($65 million net of costs)
to continue to invest for future growth opportunities
and is targeting an average cash burn between $2
million and $4 million per month for FY22;
• Serko has identified cost saving initiatives to manage
its cash burn should revenue be less than forecast for
FY22;
• Four-year forecasts have been prepared that forecast
a return to profitability within its cash reserves for the
current planned and approved investments; and
• 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
The financial statements are presented in New Zealand
There are no new revised or amended IFRS Standards that
dollars and all values are rounded to the nearest thousand
are applicable to the Group for the year. The accounting
dollars unless stated otherwise.
policies adopted are consistent with the prior year.
The financial statements provide comparative information
in respect of the previous period.
e) Basis of consolidation
b) Going concern
The Board has carefully considered the ability of the Group
The consolidated financial statements comprise the
financial statements of Serko Limited and its subsidiaries
as at and for the year ended 31 March each year.
to continue to operate as a Going Concern for at least the
Control is achieved when the Group is exposed, or has
next 12 months from the date the financial statements are
rights, to variable returns from its involvement with
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.
40
Serko annual report 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Continued
the investee and has the ability to affect those returns
through its power over the investee. Specifically, the Group
controls 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,
• Reclassifies the parent’s share of components
previously recognised in other comprehensive income
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.
The acquisition of subsidiaries is accounted for using the
acquisition method of accounting. The acquisition method
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.
income and expenses of a subsidiary acquired or disposed
Any gain on bargain purchase is recognised immediately on
of during the year are included in the financial statements
acquisition to profit and loss.
from the date the Group gains control until the date the
Group ceases to control the subsidiary.
Inter-company transactions, balances and unrealised gains
and losses on transactions between Group companies are
A change in the ownership interest of a subsidiary,
eliminated.
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
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.
41
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Continued
ii) Transactions and balances
Transactions in foreign currencies are initially recorded
in the functional currency by applying the exchange rates
ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies are
retranslated at the rate of exchange ruling at balance date.
Non-monetary items measured in terms of historical cost
in a foreign currency are translated using the exchange
rate as at the date of the initial transaction. Non-monetary
items measured at fair value in a foreign currency are
translated using the exchange rates at the date when the
fair value was determined.
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 period. Income and expense items are translated
at the average exchange rates for the period, unless
exchange rates fluctuate significantly during that period,
in which case the exchange rates at the dates of the
transactions are used. Exchange differences arising, if
any, are recognised in other comprehensive income and
accumulated in the foreign currency translation reserve.
g) Financial instruments
Cash at bank and on hand and receivables are financial
assets measured at amortised cost. When financial assets
are recognised initially they are measured at fair value
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.
Derivative financial instruments are recognised at fair
value through profit or loss.
i) Amortised cost
Financial assets measured at amortised cost are those
held within a business model whose objective is to hold
financial assets to collect contractual cash flows and
the contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
42
They arise when the Group provides money, goods or
services directly to a debtor with no intention of selling
the receivable. Such assets are subsequently carried
at amortised cost using the effective interest 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.
The effective interest method calculates the amortised
cost of a financial liability and allocates the interest
expense over the relevant period. The effective interest
rate is the rate that exactly discounts estimated future
cash payments through the expected life of the financial
liability or, where appropriate, a shorter period to the net
carrying amount of the liability.
Financial liabilities are classified as current liabilities
unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after
balance date.
iii) Impairment of financial assets
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 and contract assets, as well as on financial
guarantee 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.
The Group always recognises lifetime ECL for trade
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.
Serko annual report 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Continued
i) Other taxes
For all other financial instruments the Group recognises
lifetime ECL when there has been a significant increase
in credit risk since initial recognition. However, if the
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
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
the GST is recognised as part of the cost of acquisition of
the asset or as part of the expense item as applicable. All
receivables and payables are stated GST inclusive.
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
instrument that are possible within 12 months after the
taxation authority.
reporting date.
j) Comparatives
The Group writes off a financial asset when there is
information indicating that the debtor is in severe financial
Certain comparative amounts have been reclassified
difficulty and there is no realistic prospect of recovery,
to conform to the current year’s presentation.
e.g. when the debtor has been placed under liquidation or
Depreciation and Amortisation has been reclassified from
has entered into bankruptcy proceedings or, in the case of
Administration expenses and shown separately in the
trade receivables, when the amounts are over two years
statement of comprehensive income. Foreign exchange
past due, whichever occurs sooner.
h) Borrowing costs
gains/losses are shown separately in the statement of
comprehensive income rather than included in Finance
income/expenses.
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.
43
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 3 SIGNIFICANT ACCOUNTING JUDGEMENTS,
ESTIMATES AND ASSUMPTIONS
Functional and presentation currency
The preparation of the Group’s consolidated financial
statements requires the Group to make judgements,
estimates and assumptions that affect the reported
amounts of revenues, expenses, assets and liabilities and
the accompanying disclosures.
In the process of applying the Group’s accounting policies,
the following judgements have been applied, which have
an effect on the amounts recognised in the consolidated
financial statements.
Covid-19 Pandemic
From early 2020, as a result of the outbreak and global
spread of Covid-19, there has been an adverse effect on
travel bookings.
The Group periodically reviews the functional currency
for reporting purposes. The Group believes that there is
sufficient justification for the continued use of NZD as the
functional currency. The key factors behind this 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, and is expecting growth in other revenues
such as United States dollars (USD) and Euros (EUR) as
a result of expansion plans.
Impairment (note 10 – Intangibles and note 7 -
Revenue from Serko’s online booking tools is almost
exclusively directly related to travel booking volumes.
Receivables)
The global governmental and corporate policy responses
The Group reviews the carrying value of intangible and
non-financial assets on an annual basis, in particular,
included lockdowns and the suspension of all non-essential
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. The Group has considered reduced travel owing
to Covid-19 and made various assumptions and estimates
relating to the expected recovery profile of travel in various
geographies and its impact on Serko’s activities.
Serko has updated its expected credit loss assumptions
and the provision was decreased to $215,000 (2020:
$237,000) with the provision primarily relating to the
impacts of Covid-19.
Revenue recognition (note 4)
Some of Serko’s customer agreements contain annual
minimum transaction volume commitments. These are
normally for the period of the agreement and span financial
reporting periods. Based on this the Company needs to
make a judgement about estimated future transaction
volumes to determine forecast 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.
travel resulting in a severe adverse effect on booking
volumes for the entire travel industry.
Serko has taken actions to manage its cash flows during
this period by reducing discretionary spending, staff taking
salary reductions for a three-month period, rewarding
staff through share-based payments rather than cash
incentives, as well as costs reducing in line with the
decline in volumes. As previously communicated to the
market, Serko has carefully chosen to increase resource
and capacity to ensure it is positioned to participate in
the eventual recovery of corporate travel and prepare for
growth opportunities.
The Group 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.
Development costs (note 10)
Development costs of a project are capitalised
in accordance with the accounting policy. Initial
capitalisation of costs is based on the Group’s judgement
that technological and economic feasibility is confirmed,
usually when a product development project has reached
a defined milestone according to an established project
management model. In determining the amounts to be
capitalised, management makes assumptions regarding
the expected future cash generation of the project and the
expected period of benefits. The effects of Covid-19 on
travel have been considered in assessing expected future
cash flows.
44
Serko annual report 4 REVENUE & OTHER INCOME
b) Revenue from services
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
services that will be transferred to the customer. Revenue
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 of travel or expense transactions 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. Serko 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 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 is recognised at a point in time.
Supplier commission revenue, predominantly from hotel
bookings, is recognised at a point in time, once the
performance obligation is fulfilled.
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.
c) Contract assets
Contract assets primarily relate to accrued revenue for
contractual minimum guarantees (refer note 7). Contract
modifications arising from changes in pricing minimum
guaranteed volumes are assessed on an individual basis and
are accounted for prospectively, rather than adjusting the
revenue for already satisfied performance obligations.
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.
45
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 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 - Covid-19 subsidies*
Government grants - other
Other
Total other income
Total revenue and other income
Geographic information
Australia
New Zealand
US
Other
Total revenue
Notes
2021
$ (000)
2020
$ (000)
6,354
3,997
538
1,145
386
16,307
5,831
1,427
1,819
485
12,420
25,869
3,437
945
94
14
4,476
-
922
-
922
16,896
26,791
2021
$ (000)
2020
$ (000)
7,520
2,154
2,369
377
18,218
2,465
4,823
363
12,420
25,869
*The Group received government Covid-19 subsidies in New Zealand, Australia and the US totalling NZD $3.4 million.
46
Serko annual report 5 EXPENSES
Operating loss 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*
Movement of expected credit loss allowance on receivables
Bad debts written off
Rental and operating lease expenses
Professional fees
Computer licences
Other administration expenses
Total administration expenses
Amortisation on intangibles
Depreciation
Total amortisation and depreciation
Fair value remeasurement of contingent consideration
Expenses from ordinary activities
2021
$ (000)
2020
$ (000)
1,054
535
467
2,056
1,469
885
635
2,989
2,710
3,362
25,083
17,161
880
3,184
380
662
959
637
29,527
19,419
171
402
(19)
63
102
851
1,148
2,210
4,928
3,909
1,724
5,633
153
357
229
8
83
1,571
925
3,784
7,110
1,705
1,451
3,156
-
1,056
44,854
37,092
*Directors’ fees include $35,000 earned by a director of subsidiary, Serko India Private Limited ($30,000 for the current year and $5,000 related
to the prior year).
47
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 5 EXPENSES Continued
Finance income and expenses includes:
Finance income
Interest received
Dividends received
Total finance income
Finance expenses
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
Tax services
Other assurance services*
Total audit fees
*Other assurance services relate to review of the Group’s compliance with Callaghan Innovation Grant requirements.
2021
$ (000)
2020
$ (000)
379
1
380
(87)
(46)
(133)
247
418
1
419
(111)
(51)
(162)
257
2021
$ (000)
2020
$ (000)
147
17
7
171
146
-
7
153
48
Serko annual report
6
INCOME TAX
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 amounts are
those that are enacted or substantively enacted in the jurisdictions in 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
• 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.
Current income tax
Current income tax charge
Adjustments in respect of income tax
Deferred income tax
Origination and reversal of temporary differences
Income tax expense/(benefit) reported in the statement of comprehensive income
2021
$ (000)
2020
$ (000)
225
(17)
208
133
341
318
(113)
205
(167)
38
49
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 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 before income tax
At the statutory income tax rate of 28% (2020:28%)
Non-deductible items
Adjustments in respect of income tax
Foreign taxes
Share-based payments
Tax losses and temporary differences unrecognised
Effect of tax on overseas subsidiaries at different rate
Income tax expense
At effective income tax rate of:
Deferred income tax at 31 March relates to the following:
2021
$ (000)
2020
$ (000)
(29,048)
(9,326)
(8,133)
3,108
(17)
358
-
5,174
(149)
341
(2,611)
456
(113)
72
182
2,132
(80)
38
-1.2%
-0.4%
2021
2020
Statement
of financial
position
Statement of
comprehensive
income
Statement
of financial
position
Statement of
comprehensive
income
$ (000)
$ (000)
$ (000)
$ (000)
Deferred income tax liabilities recognised
Intangibles
Unrealised foreign exchange
Deferred income tax asset recognised
Intangibles and non-current assets*
Provision for expected credit loss (ECL)
Employee entitlements
Bonus provision
Share-based payments
Net deferred tax asset recognised
(53)
-
-
-
170
-
-
117
Deferred income tax asset not recognised
1,688
*Net of lease liabilities.
267
-
(106)
-
(180)
(8)
(41)
(68)
483
(320)
-
106
65
350
8
41
250
-
86
(13)
51
63
102
(163)
41
167
-
Unrecognised tax losses carried forward are attributable to those generated in New Zealand of $44 million, subject to the
business continuity and shareholder requirements being met. Tax losses carried forward that are attributable to foreign
jurisdictions and are not recognised amount to $3.6 million.
The New Zealand group has a history of tax losses. Given the current uncertainty that exists relating to Covid-19, no recognition
of New Zealand temporary or tax loss assets has occurred.
50
Serko annual report 7 RECEIVABLES
Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method, less provision for impairment.
Collectibility of receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are written 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 matrix, considering history of debtor
write off, ageing of invoices, country, market and product risk.
Serko has also made decisions with respect to ECL that reflect the prevailing level of uncertainty in the travel industry and the
impact of Covid-19 on our 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
Other
2021
$ (000)
2020
$ (000)
2,852
(215)
2,637
130
777
1,037
800
12
5,393
2,082
2,091
402
18
4,049
(237)
3,812
473
34
1,368
845
46
6,578
2,338
2,727
657
11
4,593
5,733
At 31 March the ageing analysis of receivables was as
follows:
2021
Trade receivables
2020
Trade receivables
Total
0-30 days
31-60 days
61-90 days
91+ days
$ (000)
$ (000)
$ (000)
$ (000)
$ (000)
2,852
1,641
803
68
340
4,049
1,996
1,726
173
154
51
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 7 RECEIVABLES Continued
Allowance for impairment loss – Trade receivables
Group trade receivables over 60 days were $408,000 (2020: $327,000). This balance of $408,000 has been assessed as part of
Covid-19’s impact on the recovery of trade receivables. An ECL provision of $215,000 (2020: $237,000) 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
(142)
557
Contractual amounts of forward exchange contracts outstanding were as follows:
Foreign currency forward exchange contracts
5,031
18,819
2021
$ (000)
2020
$ (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 rates that reflect the credit risk of the counterparties.
52
Serko annual report 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 - 10% - 13.5%
• Computer equipment - 17.5% - 48%
• Right-of-use asset - Term of lease (16.7% - 50%)
53
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 9 PROPERTY, PLANT AND EQUIPMENT Continued
Leasehold
improvement
Furniture &
fittings
Computer
equipment
Right-of-use
asset*
Total
$ (000)
$ (000)
$ (000)
$ (000)
$ (000)
2021
Cost or valuation
Balance at 1 April 2020
Additions
Disposals
Currency translation
Balance at 31 March 2021
Depreciation
Balance at 1 April 2020
Depreciation expense
Disposals
Currency translation
Balance at 31 March 2021
Net carrying amount
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
*Right-of-use assets relate to premises leases.
814
31
-
(18)
827
298
76
-
(37)
337
490
556
251
-
7
814
223
70
-
5
298
516
1,390
528
(13)
(59)
1,846
838
388
(13)
(50)
1,163
683
873
490
-
27
2,901
362
(117)
(55)
5,715
921
(130)
(134)
3,091
6,372
979
1,138
(117)
(42)
1,958
1,133
2,333
1,724
(130)
(124)
3,803
2,569
1,970
946
(60)
45
4,211
1,740
(290)
54
1,390
2,901
5,715
556
264
-
18
838
552
-
984
(17)
12
979
1,922
1,112
1,451
(240)
10
2,333
3,382
610
-
-
(2)
608
218
122
-
5
345
263
812
53
(230)
(25)
610
333
133
(223)
(25)
218
392
54
Serko annual report 10 INTANGIBLES
Research and development
Intangible assets acquired separately or in a business
combination are initially measured at cost. The cost of
an intangible asset acquired in a business combination
is its fair value as at the date of acquisition. Following
initial recognition, 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.
The useful lives of intangible assets are assessed to be
either finite or indefinite. Intangible assets with finite
lives are amortised over useful lives and tested for their
impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation period
and the amortisation method for an intangible asset with a
finite useful life is reviewed at least at each financial year
end. Changes in the expected useful life or the expected
pattern of consumption of future economic benefits
embodied in the asset, are accounted for prospectively
by changing the amortisation period or method, as
appropriate, which is a change in accounting estimate. The
amortisation expense on intangible assets with finite lives
is recognised in profit or loss.
Intangible assets with indefinite useful lives are tested for
impairment annually either individually or at the cash-
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 measure the expenditure attributable to the
intangible asset during its development. Following initial
recognition of the development expenditure, the cost
model is applied requiring the asset to be carried at cost
less any accumulated amortisation and impairment losses.
Any expenditure capitalised is amortised over the period of
expected benefit from the related project.
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
generating unit level. Such intangibles are not amortised.
carrying amount may not be recoverable.
An intangible asset with an indefinite useful life is reviewed
at 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.
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
units (‘CGUs’). Non-financial assets, including development
work in progress and computer software, are assessed for
impairment at a Group level under one reporting segment.
A summary of the policies applied to the Group’s intangible
Non-financial assets, other than goodwill that suffered
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); and
• Computer software (finite, amortised on 5 years
straight-line basis).
impairment, are tested for possible reversal of the
impairment whenever events or changes in circumstances
indicate that the impairment may have reversed.
55
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 10 INTANGIBLES Continued
The recoverable amount of the cash-generating unit is
In undertaking an impairment review of the cash-
determined from a value-in-use calculation that uses a
generating unit the following assumptions were used in the
discounted cash flow analysis. The key assumptions for the
impairment model:
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
• Cash flow projections across a four-year forecast
period;
• The approved assumptions with the greatest impact on
value of money and risk specific to the cash-generating
impairment testing are as follows:
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.
Domestic and international air travel is susceptible to
travel restrictions owing to Covid-19. Consequently, there
is uncertainty relating to Serko’s forecast cash flows, which
is an indicator of possible impairment. Serko experienced a
significant reduction in travel bookings and Serko Expense
platform system use for the year ending 31 March 2021.
The ongoing impacts will continue to affect travel. Serko’s
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
– The Australian and New Zealand travel industry
maintains a recovery of at least 60% to pre-Covid-19
levels and recovers fully in FY23
– Migration of the Booking.com business customer
base to the new Booking for Business platform,
powered by Zeno is completed during FY22
– Northern Hemisphere travel markets are assumed to
return to pre-Covid-19 levels in FY23
– Serko Expense platform revenue, supplier
commissions and other revenues are assumed to
recover consistent relative to Travel activity recovery
and growth in each territory
• A Discount rate of 13.8% (FY20: 11.7%);
• The Discount factor applied using a mid-year
Association (‘IATA’), external management consultancy
convention; and
reports and TMC 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 FY23 and to achieve its Northern Hemisphere
growth plans over the four-year period. The longer-term
effects of Covid-19 on Serko’s business remain uncertain as
the potential impacts of the pandemic continue to evolve.
• Terminal growth rate of 2% (FY20: 2%).
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.
56
Serko annual report 10 INTANGIBLES Continued
Goodwill
Intellectual
property
Other
intangible
assets
Development
work in
progress
Computer
software
Total
$ (000)
$ (000)
$ (000)
$ (000)
$ (000)
$ (000)
2021
Cost
Balance at 1 April 2020
1,522
1,714
Additions
Transfer of cost
Currency translation
Balance at 31 March 2021
Amortisation and impairment
Balance at 1 April 2020
Amortisation
Currency translation
Balance at 31 March 2021
-
-
(77)
1,445
-
-
-
-
Net carrying amount
1,445
-
-
(190)
1,524
482
301
(115)
668
856
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
Assets no longer in use
Balance at 31 March 2020
-
-
-
117
1,522
-
-
-
-
-
-
-
237
1,714
76
332
74
482
Net carrying amount
1,522
1,232
78
-
-
-
78
-
-
-
-
78
73
5
-
-
-
78
-
-
-
-
78
4,564
7,231
15,954
23,832
-
7,231
(10,408)
10,408
-
(42)
1,345
6
(303)
26,368
30,760
-
-
-
-
3,240
3,722
3,608
3,909
(60)
(175)
6,788
7,456
1,345
19,580 23,304
4,766
11,013
-
(11,215)
-
4,564
-
-
-
-
4,775
12,496
-
11,018
(36)
11,215
-
(36)
-
354
15,954
23,832
1,867
1,373
-
1,943
1,705
74
3,240
3,722
4,564
12,714
20,110
57
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 11 CASH AT BANK AND ON HAND AND SHORT-TERM DEPOSITS
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*
Cash at bank and on hand
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
Short term deposits
2021
$ (000)
28,842
6,077
34,919
28,842
3,224
523
2,330
-
2020
$ (000)
34,776
7,615
42,391
34,776
6,751
429
412
23
34,919
42,391
45,000
-
*Includes USD$1.5 million of restricted cash owing to minimum bank balances required in the US to provide same-day clearance for expense
reimbursement services.
Short-term deposits of $45 million (2020:nil) represent term deposits with a maturity period of more than 90 days that, however,
are less than one year. Short-term deposits are all New Zealand dollars denominated.
The Group has an indemnity guarantee over the Australian leased property of $108,000.
58
Serko annual report
12 TR ADE 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
Annual leave accrual
Total trade and other payables
Disclosed as:
Current
Non-current
The average credit period on trade payables is approximately 30 days.
2021
$ (000)
1,772
3,549
1,821
7,142
7,142
-
7,142
2020
$ (000)
3,032
2,743
1,298
7,073
7,073
-
7,073
59
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 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.
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. 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:
Balance at 1 April 2020
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 5 years
Total undiscounted lease liabilities at 31 March
2021
$ (000)
2,345
362
(1,266)
(34)
1,407
1,017
390
1,407
1,061
410
-
1,471
2020
$ (000)
2,479
900
(1,080)
46
2,345
1,280
1,065
2,345
1,423
848
347
2,618
60
Serko annual report 14 GOVERNMENT GRANTS
Income relating to grants and Covid-19-related relief is presented in the table below:
Covid-19 government subsidies*
Covid-19 relief on leases
Callaghan R&D grant
Callaghan student experience grant
NZTE international growth grant
Total compensation
*The Group received government Covid-19 subsidies in New Zealand, Australia and the US totalling NZD $3.4 million.
15 INTEREST-BEARING LOANS AND BORROWINGS
Current
Leasehold fitout loan
Non-current
Leasehold fitout loan
Total Interest-bearing loans and borrowings
2021
$ (000)
3,437
94
930
15
-
4,476
2020
$ (000)
-
-
683
34
205
922
2021
$ (000)
2020
$ (000)
62
62
28
28
90
58
58
92
92
150
61
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 16 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 18):
• In respect of the Restricted Share Plan (RSP), the Group allocated nil shares (2020: 25,000). Unallocated shares are
1,262,784 (2020: 1,256,846); and
• In respect of Restricted Share Units (RSU), the Group allocated 1,220,061 (2020: 671,117).
2021
2020
2021
2020
Number of
shares
Number of
shares
$ (000)
$ (000)
(000)
(000)
92,739
10,439
4,396
-
-
16
229
3
-
80,923
9,900
1,238
-
-
25
79
-
574
107,822
92,739
Ordinary shares
Balance at 1 April
Issue of shares pursuant to institutional capital placement
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 (RSUs) scheme
Issue of shares in respect of director services
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 vested from employees via Restricted Unit Scheme
Shares forfeited from 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
87,751
47,500
20,000
(2,541)
303
57
627
9
-
153,706
2,374
2,397
(596)
(46)
391
(13)
(50)
52
40,993
40,000
5,000
(1,793)
243
74
353
-
2,881
87,751
1,885
659
-
-
23
(17)
(43)
(133)
Share-based payment reserve at 31 March
4,509
2,374
62
Serko annual report 17 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 attributable to ordinary equity holders of the parent
Continuing operations
Basic earnings per share
Issued ordinary shares
Weighted average of issued ordinary shares
Adjusted for employee restricted share plan 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)
Net tangible assets per security*
2021
$ (000)
2020
$ (000)
(29,389)
(29,389)
(9,365)
(9,365)
Notes
2021
2020
Number
Number
(000)
(000)
Restated
16
107,822
99,659
98,053
(0.30)
98,053
99,735
(0.29)
92,739
85,599
83,680
(0.11)
83,680
84,399
(0.11)
2021
Cents
2020
Cents
74.59
47.09
*Net tangible assets per security is a non-GAAP measure and is provided for NZX reporting purposes. Net tangible assets per security is
calculated as Total assets less Total liabilities less Intangible assets divided by the issued ordinary shares (excluding treasury shares) as at 31
March.
63
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 18 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 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 Group but
has been superseded by the Restricted Share Units scheme (RSUs). There were no new shares granted under the RSP during the
year. 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.
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 Group has no
legal or constructive obligation to repurchase the shares or settle the RSP for cash.
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.
Unvested shares at 1 April
Granted to employees during the year
Forfeited during the year
Vested during the year
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
2021
2020
Number of shares
Number of shares
662,292
-
(5,937)
(312,475)
343,880
343,880
-
343,880
1,499,943
25,000
(13,218)
(849,433)
662,292
312,475
349,817
662,292
Unallocated shares - held by trustee
1,262,784
1,256,846
64
Serko annual report 18 SHARE-BASED PAYMENTS Continued
Employee Restricted Share Units scheme (RSUs)
The Serko Limited Employee Restricted Share Units scheme (RSUs) was introduced to replace the RSP. Under the RSUs, 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.
2021
2021
2020
2020
Weighted average
price NZ$
Number of RSUs
Weighted average
price NZ$
Number of RSUs
Outstanding at 1 April
Allocated to employees during the year
Cancelled during the year
Vested during the year
Outstanding at 31 March
3.99
3.08
2.74
590,617
1,220,061
(67,764)
(228,623)
1,514,291
4.31
3.95
4.49
-
671,117
(1,979)
(78,521)
590,617
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 41 holders of options at 31 March 2021 (2020: 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:
2021
2021
2020
2020
Outstanding at 1 April
Granted to employees during the year
Cancelled during the year
Exercised during the year
Outstanding at 31 March
Weighted average
exercise price ($)
Options
Weighted average
exercise price ($)
128,287
59,619
(3,109)
(16,130)
168,667
2.90
4.45
2.90
2.97
-
4.80
4.80
2.68
65
Options
286,901
44,169
(177,783)
(25,000)
128,287
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 18 SHARE-BASED PAYMENTS Continued
Options outstanding at 31 March fall within the following ranges:
2018-19
2019-20
2020-21
Granted
Expiry date
Grant price
(NZ$)
Options
Options
2021
2020
2020-21
2.68-3.32
2021-22
3.95-4.49
2022-23
4.80
67,988
43,707
56,973
84,118
44,169
-
168,667
128,287
The weighted average fair value of options granted during the year, determined using the Black-Scholes valuation model, was
$2.60 per option (2020: $1.84).
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 65% (2020: between 50% and 56%), a dividend yield of 0%, an expected option life of between
two and five years (2020: two and five) and an annual risk-free interest rate of 0.01% (2020: between 0.7% and 1.2%).
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. Ms
Batten settled her loan in full in the prior year. During the current year, Mr Botherway’s loan was settled following an extension
to 31 January 2021. Mr McConaghy’s loan was extended to 30 June 2021 and remains outstanding. The loan extensions have been
valued using the Black-Scholes model, with the incremental fair value recognised in the profit and loss.
66
Serko annual report 19 REL ATED 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
31 March
31 March
31 March
31 March
31 March
31 March
31 March
2021
100%
100%
99%
100%
100%
100%
100%
2020
100%
100%
99%
100%
100%
100%
100%
2021
2020
1
-
-
-
-
-
1
-
2
-
-
-
3,076
3,077
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 while the investment has now been written off and is in the process of being
deregistered.
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.
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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:
Directors’ fees
Claudia Batten - Chair *
Simon Botherway - non-executive director
Clyde McConaghy - non-executive director
Total
2021
$ (000)
2020
$ (000)
159
92
116
367
113
121
110
344
*Ms Batten was appointed as Chair on the 15 September 2020, having been in the acting role since 12 March 2020.
All directors agreed to reduced their fees by 15% for the 3-month period April 2020 to 30 June 2020. Ms Batten received 1,636 shares at a value
of $5,381.63 and Mr McConaghy received 1,091 shares at a value of $3,587.75 in lieu of these directors’ fees.
c) Key management remuneration*
Short-term benefits to employees
Share-based payments
Post-employment benefits
Total compensation
2021
$ (000)
6,758
2,474
314
9,546
2020
$ (000)
5,779
733
201
6,713
* 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 and short-term incentives. Share-based payments
represent the value movement in the unvested share-based payments granted that will vest in future years. Post-employment benefits includes
pension payments made during the year.
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 2021 the Group has not made any allowance for impairment loss relating to amounts owed by related
parties (2020: $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.
68
Serko annual report 20 RECONCILIATION OF OPERATING PROFIT TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES
Net loss after tax
Add non-cash items
Amortisation
Depreciation
Loss on property, plant and equipment disposal
Fair value remeasurement of contingent consideration
Deferred tax loss/(benefit)
Loss/(gain) on foreign exchange transactions
Share-based compensation - directors’ fees
Share-based compensation
Add/(less) movements in working capital items
Decrease/(increase) in receivables
Decrease/(increase) in income tax receivable
Increase in trade and other payables
2021
$ (000)
2020
$ (000)
(29,389)
(9,364)
3,909
1,724
-
-
133
1,372
9
2,869
1,705
1,451
50
1,056
(167)
(370)
-
959
(19,373)
(4,680)
1,185
(1,084)
77
69
1,331
(308)
2,283
891
Net cash flow used in operating activities
(18,042)
(3,789)
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The Group’s principal financial instruments comprise cash at bank and on hand, short-term deposits, 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.
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.
Excess funds over the forecasted requirements for the 12-month period following year end are invested in short-term deposits
with a mixture of maturity dates to manage interest rate risk and liquidity risks.
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.
70
Serko annual report
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%
7%
0%
8%
11%
7,142
90
1,471
8,703
7,074
165
2,345
9,584
7,142
31
531
7,704
7,074
34
676
7,784
-
31
531
562
-
34
592
626
-
28
409
437
-
68
760
828
-
-
-
-
29
317
346
-
-
-
-
-
-
Group - 2021
Trade and other payables
Leasehold fitout loan
Lease liability
Group - 2020
Trade and other payables
Leasehold fitout loan
Lease liability
b) Currency risk
The Group has exposure to foreign exchange risk as a result of transactions denominated in foreign currencies. 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 either United States and Australian dollars.
Refer to notes 7 (receivables), 11 (cash at bank and on hand and short-term deposits) and 12 (trade and other payables) for further
details on the Group’s foreign currency denominated accounts receivable, accounts payable and cash and short-term deposit
balances.
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The following table summarises the sensitivity to foreign currency exchange rate movements. A sensitivity of +/- 15% (2020: +/-
15%) has been selected owing to exchange rate volatility observed:
The sensitivity table below is excluding the impact of foreign exchange contracts:
Foreign currency risk
+15%
Carrying
amount
Post-tax
profit
Equity
-15%
Post-tax
profit
Equity
$ (000)
$ (000)
$ (000)
$ (000)
$ (000)
6,077
2,511
(1,467)
7,121
7,615
3,480
(1,178)
9,917
571
252
(138)
685
968
430
(150)
1,248
571
252
(138)
685
968
430
(150)
1,248
(772)
(341)
186
(927)
(715)
(337)
111
(941)
(772)
(341)
186
(927)
(715)
(337)
111
(941)
2021
Foreign exchange balances
Cash at bank
Trade receivables
Trade payables
Net exposure
2020
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 at bank and on hand, short-term deposits,
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 96% (2020: 99%) of the Group’s cash at bank and short-term deposits 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
22 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 $5,076,192 of the revenue for the year ended 31 March 2021 (2020: $10,814,032).
23 EVENTS AFTER BALANCE SHEET DATE
There were no significant events between the balance sheet date and the date these financial statements were authorised for
issue.
24 CONTINGENT LIABILITIES
There were no contingent liabilities at balance date (2020: $nil).
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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.
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
2021, 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 36 to 73, present fairly, in all material
respects, the consolidated financial position of the Group as
at 31 March 2021, 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 International Code of
Ethics for Assurance Practitioners (including International
Independence Standards) (New Zealand) issued by the
New Zealand Auditing and Assurance Standards Board and
the International Ethics Standards Board for Accountants’
International Code of Ethics for Professional Accountants
(including International Independence Standards), 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 and taxation services, we have no relationship with
or interests in the Company or any of its subsidiaries, except
74
Serko annual report Key audit matter
How our audit addressed the key audit matter
REVENUE RECOGNITION
The Group has reported total revenue of $12.4 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 ongoing impact of NZ IFRS 15: Revenue
from Contracts with Customers for new and material
contracts or significant variations entered into during 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 interfaces
with the general ledger.
We recalculated revenue recognised for a sample of material
customers by reconciling transactions recorded in the
relevant IT systems to the general 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.
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How our audit addressed the key audit matter
CAPITALISATION OF SOFTWARE DEVELOPMENT
INCLUDING IMPAIRMENT CONSIDERATIONS
Capitalisation of software development
The Group capitalised $7.2 million in relation to software
development, as set out in note 10 ‘Intangibles’, of which $1.3
million relates to development work in progress at balance
date.
Capitalisation of software development
We evaluated the nature of expenditure, the stage of product
development, and how the Group distinguishes expenditure
between research, development and maintenance costs.
We assessed the Group’s processes and controls for recording
time spent on products and the allocation between research or
software development to be capitalised under NZ IAS 38.
As a Software as a Service (“SaaS”) provider, the Group incurs
We tested a sample of additions to evaluate whether the
significant expenditure in developing and enhancing software
recognition criteria under NZ IAS 38 have been met.
products.
Judgement is required to determine whether the recognition
Impairment assessment
criteria under NZ IAS 38 Intangible Assets have been met
We considered existing software for technical obsolescence,
in order to capitalise the applicable costs of development.
by ensuring appropriate revenues exist for those products and
This includes considering whether the costs are directly
corroborating with management whether features or product
attributable to the development of an asset, and whether the
enhancements previously capitalised are still in use.
We challenged the key assumptions within the cash
flow forecasts by considering historical cashflows, our
understanding of the business strategy and other relevant
external information.
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 2021.
We performed sensitivity analysis over key drivers in the
Group’s impairment model, particularly forecast travel
bookings.
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, the Group’s intention to complete the asset, how the
asset will generate future economic benefits, the viability of
resources to complete the asset development and the ability of
the Group to reliably measure the expenditure attributable to
the intangible asset.
Impairment assessment
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.
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.
Cashflows are sensitive to the ability of the Group to return
to pre-Covid 19 revenue by the end of FY23 and to achieve its
Northern Hemisphere growth plans over the four-year period.
We have included capitalisation and impairment considerations
of software development as a key audit matter due to the level
of judgements required.
76
Serko annual report OTHER INFORMATION
The directors are responsible on behalf of the Group for
the other information. The other information comprises
the information in the Annual Report that accompanies the
consolidated financial statements and the audit report.
Our opinion on the consolidated financial statements does not
cover the other information and we do not express any form of
assurance conclusion thereon.
Our responsibility is to read the other information and 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.
A further description of our responsibilities for the audit of the
consolidated financial statements is located on the External
Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-
practitioners/auditors-responsibilities/audit-report-1
This description forms part of our auditor’s report.
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
DIRECTORS’ RESPONSIBILITIES FOR THE CONSOLIDATED
FINANCIAL STATEMENTS
for the opinions we have formed.
Bryce Henderson, Partner
for Deloitte Limited
Auckland, New Zealand
19 May 2021
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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For the year ended 31 March 2021
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 with
in the best interests of Serko and its shareholders. The Board
best practice and that Serko adheres to the highest ethical
is the ultimate decision-making body of the Company and is
standards.
The Board has considered the NZX Listing Rules and a
number of corporate governance recommendations when
establishing its governance framework, including the current
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.
NZX Corporate Governance Code dated 10 December 2020
The Board currently comprises an independent non-executive
(NZX Code) and the Fourth Edition 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 2021.
compliance against the recommendations contained in the
The Board has established two standing Board Committees to
NZX Code. Serko’s implementation of 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. It is intended that
Simon Botherway will temporarily assume the role of
Committee Chair following completion of the full-year
audit process (in June 2021) until such time as a new
non-executive director is appointed. 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. It
is intended that Clyde McConaghy will assume the
role of Committee Chair in June 2021. 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/
investors.
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 2021, except that it chose to undertake a
capital raising via a placement and share purchase plan (refer
to NZX Code recommendation 8.4) during the financial year
ended 31 March 2021 (refer to the ESG Report located on the
investor centre of the Company’s website for more information
on the capital raising structure utilised during the financial
year).
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 and/or changes to relevant
recommendations.
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 NZD$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 2022.
The fees payable have been increased to reflect the ongoing time commitment required by non-executive directors to oversee the
rapid scaling and internationalisation of the business and to attract new directors to the Board:
Postion
Fees per annum (AUD)
Board of Directors
Audit & Risk Committee
Remuneration & Nominations Committee
Chair
Non-executive directors
Committee Chair
Committee Member
Committee Chair
Committee Member
140,000
95,000
20,000
9,000
20,000
9,000
Non-executive directors received the following directors’ fees, remuneration and other benefits from the Company in the year ended
31 March 2021:
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
Claudia Batten
*
$100,629
Simon Botherway
$54,690
-
-
Clyde McConaghy
4
$96,671
*
$15,708
*
$15,708
$42,913
$159,251
-
-
$37,500
$92,190
$3,636
$116,016
TOTAL
$251,990
$15,708
$15,708
$84,050
$367,456
* Indicates Chair of the Board/Committee. Claudia Batten assumed the role of Board Chair from 15 September 2020 (and prior to this was Acting
Chair from 12 March 2020).
1 The figures shown are gross amounts, which have been converted into NZD from AUD and exclude GST (where applicable).
2 Fees include special fees of NZ$15,000 paid to each non-executive director for ad hoc committee meetings held during the year in respect of the
capital raising undertaken and to manage Covid-19-related risks.
3 Shares and other payments or benefits includes the amount of base fees payable to Simon Botherway and Claudia Batten, which were used to
acquire shares in the Company under the Non-executive Director Fixed Trading Plan from 1 April 2020 to 1 January 2021 (refer to the ESG Report
on the investor centre of Serko’s website for more information on the Plan). Additionally, in light of the challenging operating environment
caused by Covid-19, the non-executive directors agreed to take a reduction in their directors’ fees (Simon Botherway) or receive a portion of
their directors’ fees in shares (Claudia Batten and Clyde McConaghy) for the first three months of FY21. The values of the shares received by
Claudia Batten and Clyde McConaghy are reflected in this column.
4 Includes Australian superannuation payable by Serko in accordance with Australian law.
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.
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
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 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.
Darrin Grafton and Bob Shaw’s remuneration comprises a fixed base salary, a short-term incentive up to a maximum target value of
50% 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 FY22.
During the period ended 31 March 2021, both Darrin Grafton’s and Bob Shaw’s variable remuneration components were based on a
scorecard of measures, taking into consideration both financial and strategic OKR (Objective and Key Result) measures relating to:
• Delivery of operational value drivers linked to Serko’s strategy;
• Delivering shareholder value;
• Development of an extensible technology platform;
• Meeting performance targets in respect of customer satisfaction and retention; and
• Maintaining a positive culture and safe working environment.
Delivery of these objectives 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 any short-term incentive payable for the current financial year.
A scorecard based on similar criteria will be applied for assessing the performance of the executive directors in FY22.
80
Serko annual report EXECUTIVE DIRECTOR REMUNERATION Continued
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 2021:
Base salary
1
Taxable
2
benefits
Subtotal
Pay for performance
Total
remuneration
STI
LTI
Subtotal
Darrin
Grafton
$358,648
$30,000
$388,648
3
$90,125
$198,277.20 in the form
of 45,063 restricted share
units
5
$13,518.12 in the form of
5,082 restricted share units
6
$301,920
$690,568
Bob Shaw
$247,844
$30,000
$277,844
4
$35,406
$128,748.40 in the form of
29,261 restricted share units
5
$173,810
$451,654
$9,655.80 in the form of
3,630 restricted share units
6
1 Base salary includes employer contributions towards KiwiSaver at 3% (if applicable).
2 Taxable benefit includes a car allowance. The executive directors also receive carparks and life insurance, which do not have individually
allocated values. It is intended this car allowance will be moved into base salary moving forward.
3 The short-term incentive stated was earned in FY21 and will be paid in FY22. Darrin Grafton’s potential short-term incentive payment for FY21
was $180,250. Maximum target STI was increased from 40% to 50%. No short-term incentive was earned in FY20 (which would typically be paid
in FY21) owing to Covid-19 cost saving initiatives.
4 The short-term incentive stated was earned in FY21 and will be paid in FY22. Bob Shaw’s potential short-term incentive payment for FY21 was
$128,750. Maximum target STI was increased from 40% to 50%. No short-term incentive was earned in FY20 (which would typically be paid in
FY21) owing to Covid-19 cost saving initiatives.
5 The FY21 long-term incentive was granted in September 2020 for non-cash consideration, following partial achievement of pre-grant
performance targets based on FY20 performance. The restricted share units will vest three years after the allocation date. The value stated
is the gross amount earned and is calculated based on the 20-day volume weighted average price of Serko (SKO) shares on NZX at the time of
grant.
6 During the period, Darrin Grafton and Bob Shaw opted to voluntarily accept a small salary reduction for 3 months to reduce Serko’s cash burn
rate at a time when Covid-19 was materially impacting revenues. At this time, they opted in to acquire restricted share units under the Serko
Long Term Incentive Plan to mitigate some of the financial impact. These restricted share units were allotted for non-cash consideration on 22
May 2020 and converted into ordinary shares on 3 December 2020. The value stated is calculated as at the closing price of Serko (SKO) ordinary
shares on NZX on the date preceding the vesting date.
The following long-term incentives previously granted to the executive directors vested during the financial period ended 31 March
2021:
Director
Grant year
Securities
Performance period
Shares vested
Value on vesting
1
Darrin Grafton
Financial Year 2018
Restricted shares
July 2017 - July 2020
54,460
$188,431.60
Financial Year 2021
2
Restricted share units May 2020 - Dec 2020
Bob Shaw
Financial Year 2018
Restricted shares
July 2017 - July 2020
Financial Year 2021
2
Restricted share units May 2020 - Dec 2020
5,082
25,103
3,630
$27,595.26
$86,856.38
$19,710.90
1 Represents the NZX closing price of SKO (Serko) ordinary shares on the day prior to the vesting date multiplied by the number of securities
vested.
2 During the period, Darrin Grafton and Bob Shaw opted to voluntarily accept a small salary reduction for 3 months to reduce Serko’s cash burn
rate at a time when Covid-19 was materially impacting revenues. At this time, they opted in to acquire restricted share units under the Serko
Long Term Incentive Plan to mitigate some of the financial impact. These restricted share units converted into ordinary shares on 3 December
2020.
81
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 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 2021 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, contributions to pension plans and vested or exercised share-based
payments. The table does not include long-term incentives that have been granted and have not yet vested.
Remuneration range (NZD)
Number of employees whose
remuneration includes vested
share-based payments
1,2
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
$320,001 - $330,000
$330,001 - $340,000
$350,001 - $360,000
$360,001 - $370,000
$400,001 - $410,000
14
9
14
15
18
8
4
4
5
1
3
5
1
2
4
2
1
1
1
1
18
11
16
17
19
8
6
5
7
1
3
5
1
2
5
2
1
1
1
1
Total number of employees and former employees
113
130
1 Specifies total number of employees within the range whose remuneration includes share-based payments that have vested during the period.
2 During the period, certain employees voluntarily accepted a small salary reduction for 3 months to reduce Serko’s cash burn rate at a time when
Covid-19 was materially impacting revenues. At this time, these employees had the option to opt-in to acquire restricted share units under the
Serko Long Term Incentive Plan to mitigate some of the financial impact of the salary reduction. These restricted share units converted into
ordinary shares on 3 December 2020 and are included as share-based payments in the table.
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 2020 and 31
March 2021 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
2021
2020
no.
1
1
3
4
99
no.
4
2
7
17
159
%
20%
33%
30%
19%
38%
%
80%
67%
70%
81%
62%
2021
no.
1
1
1
3
86
no.
4
2
7
10
128
%
20%
33%
13%
20%
40%
%
80%
66%
87%
80%
60%
2020
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.
83
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 BOARD AND COMMITTEE ATTENDANCE
The table below shows the Board and Committee meeting attendance during the year ended 31 March 2021:
Director attendance
Board
Audit & Risk
Committee
Remuneration
& Nominations
Committee
Bob Shaw
Claudia Batten
Clyde McConaghy
Simon Botherway
Darrin Grafton
11/12
12/12
12/12
12/12
12/12
*
7/7
7/7
7/7
*
*
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 10 additional Special Board Meetings and Board Sub-Committee meetings
primarily associated with the 2020 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 2021 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 2021 are set out
below:
Date of disclosure
Director
Entity
19 May 2020
Simon Botherway
Clyde McConaghy
Gave notice that they were interested in a Deed of Amendment to be entered into
between each interested director and the Company extending the term of the
Director Share Loan between the director and the Company.
25 May 2020
Darrin Grafton
Bob Shaw
Gave notice to the Board that they had entered into a Deed whereby they agreed to
restrict their voting rights in any shares acquired pursuant to the Restricted Share
Unit Scheme (Relevant Shares) so that the Relevant Share is not a voting security
under the Takeovers Code.
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 2021 and
subsequently, are set out below:
Director
Entity
Relationship
Claudia Batten
Simon Botherway
Darrin Grafton
Clyde McConaghy
Bob Shaw
AIDER International Limited
Broadli Inc
1
Serko Inc
Westpac New Zealand Limited
Vista Group Limited
Arrow Trust
Fidelity Life Assurance Company Limited
Guardians of NZ Super Fund
MSH Trustee (Arrow Limited)
Origin Capital Partners Management Limited
Financial Equities Limited
Grafton-Howe No.2 Trust
1
InterplX Inc.
1
Serko Australia Pty Limited
1
Serko Inc
1
Serko India Private Limited
1
Serko Investments Limited
Travelog World for Windows Pty. Limited
Chapman Eastway Pty Limited
Infomedia Limited
Optima Boards
Financial Equities Limited
Ripon Trust
1
Serko Australia Pty Limited
1
Serko India Private Limited
1
Serko Investments Limited
Travelog World for Windows Pty. Limited
Ceased to be Adviser
Director
Director
Board Adviser
Appointed Director
Trustee
Ceased to be Director
Guardian
Trustee
Appointed Chair
Director / Shareholder
Trustee / Beneficiary
Director
Director
Director
Director
Director
Director
Chair (Advisory Board)
Ceased to be Director
Director
Director / Shareholder
Trustee / Beneficiary
Director
Director
Director
Director
1 Serko subsidiary as detailed on page 92.
85
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 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 2021:
Name
Nature of relevant interest
Number of securities
acquired/(disposed)
Consideration paid/
received
4
Date of
acquisition/
disposal
2-Apr-20
2-Apr-20
2-Apr-20
5-May-20
5-May-20
4-Jun-20
4-Jun-20
2-Jul-20
4-Aug-20
3-Sep-20
3-Sep-20
6-Oct-20
3-Nov-20
3-Dec-20
1,829.33
274.12
16.01
12.53
1,726.32
569.08
654.42
1,178
1,194.42
770.55
258.44
799.12
804.30
703.45
$3,475.72
$507.12
$29.94
$28.82
$3,970.54
1,838.11
2,107.23
$4,003.58
$4,001.32
$2,982.03
$987.24
$3,883.74
$3,956.39
$3,903.93
1,636
Nil / Services
1-Jul-20
1,827.50
273.84
15.99
12.53
1,726.32
569.08
654.42
1,177.25
1,194.70
770.55
258.44
799.12
804.30
703.45
$3,472.25
$506.60
$29.90
$28.82
$3,970.54
$1,838.12
$2,107.22
$4,002.66
$4,002.23
$2,982.04
$987.24
$3,883.74
$3,956.39
$3,903.93
2-Apr-20
2-Apr-20
2-Apr-20
5-May-20
5-May-20
4-Jun-20
4-Jun-20
2-Jul-20
4-Aug-20
3-Sep-20
3-Sep-20
6-Oct-20
3-Nov-20
3-Dec-20
(50,000)
(884,091)
$264,000.00
$4,644,660.48
20-Nov-20
20-Nov-20
22
54,460
Nil / Services
7-Jul-20
3,469
2,3
Nil / Services
7-Jul-20
2,5
5,082
45,063
Nil / Services
Nil / Services
15-May-20
18-Sep-20
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
Issuance of ordinary shares in part
consideration for services provided in
the role as non-executive director for the
period 1 April 2020 to 30 June 2020
6
On-market acquisition of beneficial
interest in ordinary shares (held in
custody for Simon Botherway pursuant
to Non-executive Director Fixed Trading
Plan)
1
Darrin Grafton
On-market sale of ordinary shares
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 Long
Term Incentive Plan
86
Serko annual report DIRECTOR INTEREST DISCLOSURES Continued
Bob Shaw
Indirect interest in unlisted restricted
share units granted under the Serko
Long Term Incentive Plan, by virtue of a
personal relationship with the registered
holder
Registered holder and beneficial interest
in ordinary shares issued upon vesting
of restricted share units pursuant to the
Serko Long Term Incentive Plan
Indirect interest in ordinary shares
issued upon vesting of restricted share
units pursuant to the Serko Long Term
Incentive Plan, by virtue of a personal
relationship with the registered holder
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
Long Term Incentive Plan
Off-market disposal of ordinary shares
pursuant to an Order of the High Court of
New Zealand
Registered holder and beneficial interest
in ordinary shares issued upon vesting
of restricted share units pursuant to the
Serko Long Term Incentive Plan
2,3
795
2
962
Nil / Services
Nil / Services
15-May-20
18-Sep-20
5,082
2
Nil / Services
3-Dec-20
2,3
795
Nil / Services
3-Dec-20
2
25,103
Nil / Services
7-Jul-20
2,5
3,630
2
29,261
Nil / Services
Nil / Services
15-May-20
18-Sep-20
(2,884,296)
Nil
18-Nov-20
3,630
2.5
Nil / Services
3-Dec-20
On-market sale of ordinary shares
(870,000)
$4,872,000.00
20-Jan-21
Clyde McConaghy
Issuance of ordinary shares in part
consideration for services provided in
the role as non-executive director for the
6
period 1 April 2020 to 30 June 2020
1,091
Nil / Services
1-Jul-20
1 During the term of the Non-executive Director Fixed Trading Plan, (which ended on 1 January 2020, three years after it was established) shares
were 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 in the ESG Report on the investor centre of Serko’s website. These shares may not be
disposed of while the holder remains a director of Serko.
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 (Donna Bailey). These shares are subject
to a deed restricting exercise of voting rights attached to the shares.
4 The consideration for on-market trades is stated as the market price paid, excluding fees and taxes.
5 During the period, Darrin Grafton, Donna Bailey and Bob Shaw opted to voluntarily accept a small salary reduction for 3 months to reduce Serko’s
cash burn rate at a time when Covid-19 was materially impacting revenues. At this time, they opted in to acquire restricted share units under
the Serko Long Term Incentive Plan to mitigate some of the financial impact. These restricted share units converted into ordinary shares on 3
December 2020.
6 During the period, in light of the challenging operating environment caused by Covid-19, Claudia Batten and Clyde McConaghy agreed to receive
a portion of their directors’ fees in shares for the first 3 months of FY21.
87
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 DIRECTOR INTEREST DISCLOSURES Continued
In accordance with the NZX Listing Rules, as at 31 March 2021, directors had a relevant interest (as defined in the Financial Markets
Conduct Act 2013) in Serko shares as follows:
Name
Darrin Grafton
1
Bob Shaw
2
Simon Botherway
3
Clyde McConaghy
4
5
Claudia Batten
Relevant interest
Percentage
12,238,745
9,192,760
277,682.56
182,909
126,228.36
11.35%
8.53%
0.26%
0.17%
0.12%
1 The relevant interest includes: 10,867,629 ordinary shares held via a trust in which the director is a trustee and beneficiary; 99,054 ordinary
shares held directly; 43,252 restricted shares allocated pursuant to the Serko Employee Restricted Share Plan and held on trust until vesting;
and an indirect interest in 1,227,685 ordinary shares and 1,125 restricted shares by virtue of a personal relationship with the beneficial holder of
these shares.
Darrin Grafton is also the registered holder and beneficial owner of 76,962 unlisted restricted share units allocated pursuant to the Serko Long
Term Incentive Plan and has an indirect interest in 1,724 unlisted restricted share units by virtue of a personal relationship with the beneficial
owner.
2 The relevant interest includes: 9,130,000 shares held via a trust in which the director is a trustee and beneficiary; 37,839 ordinary shares held
directly; and a beneficial interest in 24,921 restricted shares allocated pursuant to the Serko Employee Restricted Share Plan and held on trust
until vesting.
Bob Shaw is also the registered holder and beneficial owner of 42,932 unlisted restricted share units allocated pursuant to the Serko Employee
Long Term Incentive Scheme.
3 42,773.56 ordinary shares are held in custody pursuant to the Serko Non-executive Director Fixed Trading Plan.
4 182,909 ordinary shares are held via a trust in which the director is a trustee and beneficiary.
5 42,774.36 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
15-May-20
Bob Shaw
Darrin Grafton
The payment of remuneration and the provision of other benefits by the Company to
the executive directors on the terms detailed in the Board minutes dated 15 May 2020
and on the grounds set out in the corresponding directors’ certificate.
19-May-20
Simon Botherway
Clyde McConaghy
The extension of loans authorised originally on 30 April 2014 by the Company on the
terms set out in the relevant Deeds of Amendment and Original Loan Agreement, for
the value of:
• Simon Botherway - $250,000
• Clyde McConaghy - $200,000
18-Sep-20
Bob Shaw
Darrin Grafton
The payment of remuneration and the provision of other benefits by the Company
to the executive directors on the terms detailed in the Board minutes dated 14
September 2020 and on the grounds set out in the corresponding directors’
certificate.
20-Oct-20
Simon Botherway
Claudia Batten,
Clyde McConaghy
The payment of remuneration and the provision of other benefits by the Company
to the non-executive directors on the terms detailed in the Board minutes dated 20
October 2020 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 Registers during the financial reporting period.
SHAREHOLDING INFORMATION
As at 30 April 2021 there were 107,822,497 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
%
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
1
TOTAL
1,592
1,147
264
202
29
55
3,289
48.40
34.87
8.03
6.14
0.88
1.67
100
732,166
2,741,409
1,935,518
4,037,749
2,032,202
96,343,453
107,822,497
%
0.68
2.54
1.8
3.75
1.89
89.35
100
1
Includes 1,506,664 ordinary shares with restrictive conditions held by Serko Trustee Limited on behalf of 35 individual beneficial holders (with
243,880 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 reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 SHAREHOLDING INFORMATION Continued
As at 30 April 2021, the following securities were on issue:
• 1,506,664 ordinary shares with restrictive conditions held by Serko Trustee Limited on behalf of 35 individual beneficial
holders (with 243,880 of those ordinary shares allocated) pursuant to the Serko Restricted Share Plan;
• 41 participants holding a total of 167,674 options pursuant to the Serko (US) Share Incentive Plan; and
• 132 participants holding a total of 1,514,291 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/investors.
Set out below are details of the 20 largest shareholders of Serko as at 30 April 2021:
Shareholder
1
Number of ordinary shares held
%
Darrin Grafton & Geoffrey Robertson Ashley Hosking
10,867,629
10.08
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
TEA Custodians Limited
Robert James Shaw & Michael John Moore
HSBC Custody Nominees (Australia) Limited
Citibank Nominees (NZ) Ltd
Coronado PTE Limited
Hobson Wealth Custodian Limited
National Nominees New Zealand Limited
HSBC Nominees (New Zealand) Limited
Citicorp Nominees Pty Limited
Accident Compensation Corporation
Investment Custodial Services Limited
J P Morgan Nominees Australia Pty Limited
New Zealand Depository Nominee
Serko Trustee Limited
PT Booster Investments Nominees Limited
FNZ Custodians Limited
Donna Bailey
Custodial Services Limited
20
BNP Paribas Nominees NZ Limited Bpss40
9,288,845
9,130,000
6,659,771
5,606,126
4,921,789
3,815,251
3,319,641
3,281,710
2,776,379
2,772,408
2,752,693
2,004,392
1,612,802
1,506,664
1,288,014
1,234,838
1,217,594
1,196,932
1,167,772
8.61
8.47
6.18
5.2
4.56
3.54
3.08
3.04
2.57
2.57
2.55
1.86
1.5
1.4
1.19
1.15
1.13
1.11
1.08
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
According to Serko records and notices given to Serko under the Financial Markets Conduct Act 2013, the following persons were
substantial product holders as at 31 March 2021. As at the balance date (31 March 2021) there were 107,821,504 Serko ordinary shares
on issue:
Substantial product holder
Number of ordinary shares in which relevant
interest is held
4
% of class held at balance date
Darrin Grafton
Geoffrey Hosking
Robert Shaw
Michael Moore
Harbour Asset Management Limited
1
Fisher Funds Management Limited
Jarden Securities Limited
1
2
12,238,745
10,867,629
9,192,760
2
2
2
9,130,000
8,482,898
5,256,333
608,470
3
3
3
11.35%
10.08%
8.53%
8.47%
7.87%
4.88%
0.56%
1 Harbour Asset Management Limited and Jarden Securities Limited (formerly First NZ Capital Group Limited) file joint substantial product holder
notices.
2 Based on Serko’s records and on the last substantial product holder notice filed prior to 31 March 2021.
3 Based on last substantial product holder notice filed prior to 31 March 2021.
4 Based on issued share capital of 107,821,504 as at 31 March 2021.
91
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 SUBSIDIARY COMPANY DIRECTORS
With the below 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 2021 are included in the relevant bandings for remuneration disclosed on page 82 of this Annual
Report.
Serko has agreed to pay Yogita 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 2021, she earned NZ$30,000 and was paid NZ$35,000 during the year ($5,000 related to the prior
year).
The following persons held office as directors of subsidiary companies as at 31 March 2021:
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
NZX waivers
In October 2020, Serko undertook a placement to raise approximately $47.5 million by the issue of new shares in Serko (the
Placement). On 30 September 2020, NZX Regulation issued a class waiver and ruling in relation to Rule 4 of the NZX Listing Rules
(the Class Waiver). Under the Class Waiver, the placement capacity under NZX Listing Rule 4.5.1 was increased to 25%. Serko relied
on that increased placement capacity to undertake the Placement.
The Placement was followed by a non-underwritten Share Purchase Plan (SPP) of up to approximately $10 million of new shares to
existing shareholders (although Serko subsequently elected to accept $10 million of oversubscriptions, bringing the total amount
of capital raised under the SPP to $20 million). On 30 September 2020, NZX Regulation also issued a waiver in favour of Serko
(the Serko Waiver). The combined effect of the Class Waiver and the Serko Waiver in the context of the offer of the SPP in New
Zealand was to amend, on a temporary basis, the definition of Share Purchase Plan under the NZX Listing Rules to permit eligible
shareholders to subscribe for up to NZ$50,000 worth of Shares under the SPP despite having participated in Serko’s share purchase
plan conducted in October 2019. Serko relied on similar relief granted by ASIC in the context of the offer of the SPP in Australia.
A copy of the Serko Waiver can be found on the investor centre of the Company’s website at www.serko.com/investors.
DONATIONS
Serko did not make any donations during the financial year.
CREDIT RATING
Serko does not presently have an external credit rating status.
DISTRIBUTIONS / DIVIDENDS
There were no dividends or distributions paid to shareholders during the financial period.
Dividends and other distributions with respect to the shares are only made at the discretion of the Serko Board. Serko is a growth
technology company and is not intending to pay a dividend for FY22.
93
Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 The date Serko shares started trading on
the NZX Main Board, 24 June 2014
NZ
New Zealand
NZD or NZ$
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
Research and Development expenditure
Software-as-a-service
Serko’s online expense management
solution 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.travel
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
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
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
incorporated company
EBITDAF is a non-GAAP measure
representing Earnings Before the
deduction of costs relating to Interest,
Taxation, Depreciation, Amortisation,
Impairment, Foreign Exchange gains/
losses and Fair value remeasurements
Environmental Social Governance
Full-time equivalent
Foreign exchange
EBITDAF (refer
page 22)
ESG
FTE
FX
FY
GST
IFRS
Independent
Directors
Simon Botherway, Claudia Batten and
Clyde McConaghy
IPO
Initial Public Offering
94
Company or Serko Serko Limited, a New Zealand
Serko Online
Financial year ended, or ending, on
31 March (unless otherwise stated)
Zeno
Serko’s premium cloud-based online
travel booking solution
Goods and Services Tax
Zeno Expense
Serko’s Expense management solutions
International Financial Reporting
Standards
$
All figures are in New Zealand dollars,
unless otherwise stated
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
PRINCIPAL
ADMINISTRATION
OFFICE
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
SHARE
REGISTRAR
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
REGISTERED OFFICE
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
DIRECTORS
Claudia Batten (Chair)
Simon Botherway
Robert (Clyde) McConaghy
Darrin Grafton
Robert (Bob) Shaw
Key Dates
18 AUGUST 2021
30 SEPTEMBER 2021
17 NOVEMBER 2021
31 MARCH 2022
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/investors.
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Serko annual reportABOUTSERKO03SUMMARY05LETTER06STRATEGICOVERVIEW10OURPRODUCTS12LEADERSHIP16MANAGEMENTCOMMENTARY20FINANCIAL STATEMENTS34GOVERNANCE &DISCLOSURES78CORPORATERESPONSIBILITY18GLOSSARY & DIRECTORY94 2021 Annual Report - Serko Limited
serko.com
96
Serko annual report