ikeGPS FY2018 Financial Statements

ikeGPS Group Limited

Appendix 1

Results for announcement to the market
Reporting Period 12 months to 31 March 2018
Previous Reporting Period 12 months to 31 March 2017

Amount NZ$ (000s) Percentage change
Revenue from ordinary activities 7,732 up 37%
Profit (loss) from ordinary activities after
tax attributable to security holder
(6,732) down 37%
Net profit (loss) attributable to security
holders
(6,763) Down 36%

Interim/Final Dividend Amount per security Imputed amount
per security
No dividends or distributions were made
during the period.
No dividend was declared.
N/A N/A

Record Date Not Applicable
Dividend Payment Date Not Applicable

Comments:
Accompanying this announcement are
the Company’s audited consolidated
financial statements for the year ended
31 March 2018.
These financial statements, CEO’s
commentary, and FY2018 results
presentation (see separate release)
provide the balance of information
required in accordance with listing rule
10.3.2 Appendix 1.

Individual and total dividends
No dividends or distributions were made during the period.
Dividend or distribution reinvestment plans
There are currently no dividend or distribution reinvestment plans in
operation.
Net tangible assets per security

31 March 2018
(NZ cents)
31 March 2017
(NZ cents)
Net tangible assets per security
CENTS (NZD)
$0.05
CENTTS (NZD)
$0.10
Control of entities gained or lost during the period
Name of
entity
Date of the
gain or loss
of control of
the entity
Contribution to ikeGPS Group Limited’s
profit from ordinary activities during
the period and the previous
corresponding period
None. N/A N/A
Investment in subsidiaries, associates and joint operations
Subsidiaries, Associate or Joint Venture
Entity
ikeGPS Group
Limited’s percentage
holding in the entity
Subsidiaries
ikeGPS Limited 100%
ikeGPS, Inc. 100%
Associates

None.
N/A
Joint Ventures
None.
N/A

---

1

2
Contents
Consolidated statement of profit or loss and other comprehensive income ..................................... 7
Consolidated statement of changes in equity .................................................................................................. 8
Consolidated balance sheet ..................................................................................................................................... 9
Consolidated statement of cash flows...........................................................................................10
Notes to the consolidated financial statements...........................................................................................11

3

Independent auditor’s report
To the shareholders of ikeGPS Group Limited
The financial statements comprise:
• the consolidated balance sheet as at 31 March 2018;
• the consolidated statement of profit or loss and other comprehensive income for the year then
ended;
• the consolidated statement of changes in equity for the year then ended;
• the consolidated statement of cash flows for the year then ended; and
• the notes to the consolidated financial statements, which include the significant accounting
policies.
Our opinion
In our opinion, the financial statements of ikeGPS Group Limited (the Company), including its
subsidiaries (the Group), present fairly, in all material respects, the financial position of the Group as at 31
March 2018, its financial performance and its cash flows for the year then ended in accordance with New
Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) and International
Financial Reporting Standards (IFRS).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
NZ) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the financial statements section of our
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised) Code
of Ethics for Assurance Practitioners (PES 1) issued by the New Zealand Auditing and Assurance
Standards Board and the International Ethics Standards Board for Accountants’ Code of Ethics for
Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
Our firm carries out other services for the Group in the areas of assurance services relating to the
Company’s research and development grant and tax compliance services in respect to annual income tax
returns. The provision of these other services has not impaired our independence as auditor of the Group.
Material uncertainty related to going concern
We draw attention to note 2a) in the financial statements, which indicates that the Group incurred an
operating cash outflow of $2.8m for the year ended 31 March 2018, and a further investing outflow of
$1.2m relating to capitalised internal development. The Group also incurred a net loss of $6.7m for the
year. The cash balance at 31 March 2018 was $2.6m. If the Group fails to achieve its FY19 business plan
(particularly forecast sales growth), manage costs or obtain alternative sources of financing it may not be
able to meet its obligations as they fall due. As stated in note 2a), these conditions, along with other
matters as set forth in note 2a), indicate that a material uncertainty exists that may cast significant doubt
on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this
matter.

4

Our audit approach
Overview

An audit is designed to obtain reasonable assurance whether the financial
statements are free from material misstatement.
Overall group materiality: $400,000, which represents approximately 5% of the 3-
year average loss before tax.
We chose 3-year average loss before tax as the benchmark because, in our view,
the level of ongoing losses is the benchmark against which the performance of the
Group is most commonly measured by users, and utilisation of a 3-year average
addresses the historical volatility of the benchmark.
Our key audit matter is the valuation of development assets.

Materiality
The scope of our audit was influenced by our application of materiality.
Based on our professional judgment, we determined certain quantitative thresholds for materiality,
including the overall Group materiality for the financial statements as a whole as set out above. These,
together with qualitative considerations, helped us to determine the scope of our audit, the nature, timing
and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in
aggregate on the financial statements as a whole.
Audit scope
We designed our audit by assessing the risks of material misstatement in the financial statements and our
application of materiality. As in all of our audits, we also addressed the risk of management override of
internal controls including among other matters, consideration of whether there was evidence of bias that
represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion
on the financial statements as a whole, taking into account the structure of the Group, the accounting
processes and controls, and the industry in which the Group operates.
The financial statements are a consolidation of the Company and two subsidiaries, one based in New
Zealand and one in the United States of America. The Company and both subsidiaries share one
centralised group finance function. We scoped our audit on a group financial statement line item basis
and completed audit work on group balances at the materiality level for the Group. All audit procedures
were conducted by the Group audit team.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements of the current year. In addition to the matter described in the Material
uncertainty related to going concern section, we have determined the matter described below to be the
key audit matter to be communicated in our report. This matter was addressed in the context of our audit
of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.

5




Key audit matter How our audit addressed the key audit matter
Valuation of development assets
As disclosed in note 14, the Group has $3.9m of
development assets related to the internal
development of hardware and software products.
Development assets are initially carried at cost. To
determine whether the carrying value of the
developed assets is reasonable, the Directors
assessed whether any impairment indicators existed
for each major development asset by considering,
among other factors, sales achieved to date for the
asset’s relevant product line(s) and the overall
operating and cash performance of the entity. The
Directors concluded the Group’s overall operating
losses and difficulty in meeting budgeted sales
levels for the Spike Business were indicators of
impairment. Management performed an
impairment assessment of the overall business and
the Spike development assets on a value in use
basis. These assessments require significant
judgment when forecasting future sales and the
related cash flows.
The impairment assessments were a key audit
matter due to the significant judgments involved in
assessing whether forecast future cash flows would
be achieved to support the conclusion on whether it
is probable that future economic benefit will be
generated and whether the carrying value was
impaired.
Based on management’s assessments, no
impairment was recognised.
Refer to notes 2b), 2c) and 14 in the financial
statements for disclosures on development assets.
We obtained an understanding and evaluated the Group’s
processes and controls relating to the assessment of
impairment indicators of development assets, the preparation
and approval process of forecasts and the execution of the
impairment assessment.
We completed the following audit procedures to assess the
reasonableness of the impairment assessment:
• We obtained management’s assessment of impairment
indicators and assessed whether the indicators identified
were consistent with our understanding of the operations
and environment of the business.
• We obtained management’s impairment test and
considered our knowledge of the Group’s operations and
reporting systems to determine whether cash inflows are
largely independent of those from other assets to assess
management’s identification of cash-generating units.
• We assessed the mathematical accuracy of the impairment
model and used our internal valuation expert to challenge
and assess the appropriateness of the assumptions
underlying the impairment model, including the discount
rates adopted by the Group by calculating an independent
rate.
• We assessed the reasonableness of the forecast sales,
expenses and working capital movements within the
Board-approved budget for the year ending 31 March 2019
and the remaining forecast period. Our assessment
included comparing previous forecasts to actual results to
assess the reliability of historical forecasting, assessing
expenses and working capital movements in relation to
operational requirements, and considering factors
influencing forecast revenue growth, such as sales
pipelines, previous growth achievements and the Group’s
strategic objectives.
• To consider forecasting risk we performed our own
sensitivity analysis based on independent assumptions
over the forecast sales volumes, expenses, and discount
rate, among other factors.
Whilst recognising that the impairment assessment is
inherently judgmental, we did not identify any matters from
our procedures.

6



Information other than the financial statements and auditor’s report
The Directors are responsible for the annual report. Our opinion on the financial statements does not
cover the other information included in the annual report and we do not, and will not, express any form of
assurance conclusion on other information. At the time of our audit, there was no other information
available to us.
In connection with our audit of the financial statements, if other information is included in the annual
report, our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the
other information that we obtained prior to the date of our auditor’s report, we conclude that there is a
material misstatement of this other information, we are required to report that fact.
Responsibilities of the Directors for the financial statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of the
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 financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements, as a whole, are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs NZ and ISAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located at the
External Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/
This description forms part of our auditor’s report.
Who we report to
This report is made solely to the Company’s shareholders, as a body. Our audit work has been undertaken
so that we might state those matters which we are required to state to them in an auditor’s report and for
no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s shareholders, as a body, for our audit work, for this
report or for the opinions we have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Chris Ussher.
For and on behalf of:

Chartered Accountants Wellington
30 May 2018

7
Consolidated statement of profit or loss and other
comprehensive income



Year ended 31 March
Group
2018 2017
Continuing operations $'000's $'000's
Operating revenue 5 (a) 7,732 5,655
Cost of sales (3,754) (3,397)
Gross profit 3,978 2,258
Other income 5 (a) 125 185
Operations cost 5 (b) (477) (860)
Sales and marketing expenses 5 (b) (3,231) (3,229)
Research and engineering expenses 5 (b) (3,019) (4,867)
Corporate costs 5 (b) (4,011) (4,139)
Foreign exchange (losses)/gains (71) (135)
Expenses (10,809) (13,230)
Operating loss (6,706) (10,787)
Net finance income (20) 69
Net loss before income tax (6,726) (10,718)
Income tax (expense)/credit 11 (6) (9)
Loss attributable to owners of ikeGPS Group (6,732) (10,727)
Other comprehensive loss
Items that may subsequently be recognised through profit or loss
Exchange differences on translation of foreign operations (31) 98
Comprehensive loss (6,763) (10,629)

Basic loss per share 20 $ (0.09) $ (0.18)

Diluted loss per share 20 $ (0.09) $ (0.18)







The notes on pages 11 to 34 are an integral part of these consolidated financial statements.

8
Consolidated statement of changes in equity





Share
capital
Accumulated
losses
Share
based
payment
reserve
Foreign
currency
translation
reserve Total
$'000's $'000's $'000's $'000's $'000's
Opening balance at 1 April 2016 37,352 (24,036) 275 (350) 13,241
Loss for the year

-
(10,727)

-

-
(10,727)
Currency translation differences

-

-

-
98 98
Total comprehensive income/(loss)

-
(10,727)

-
98 (10,629)
Issue of ordinary shares 7,758 - - - 7,758
Recognition of vesting of share-based options

-

-
266

-
266
Share based payment reserve movement 142

-
(142)

-

Total transactions with owners 7,900

-
124

-
8,024
Balance at 31 March 2017 45,252 (34,763) 399 (252) 10,636


Share
capital
Accumulated
losses
Share
based
payment
reserve
Foreign
currency
translation
reserve Total
$'000's $'000's $'000's $'000's $'000's
Opening balance at 1 April 2017 45,252 (34,763) 399 (252) 10,636
Loss for the year

-
(6,732)

-

-
(6,732)
Currency translation differences

-

-

-
(31) (31)
Total comprehensive income/(loss)

-
(6,732)

-
(31) (6,763)
Issue of ordinary shares 4,011 - - - 4,011
Recognition of vesting of share-based options

-

-
68

-
68
Share based payment reserve movement

-
407 (407)

-

-
Total transactions with owners 4,011 407 (339)

-
4,079
Balance at 31 March 2018 49,263 (41,088) 60 (283) 7,952




The notes on pages 11 to 34 are an integral part of these consolidated financial statements.

9
Consolidated balance sheet


Year ended 31 March
Group
2018 2017
ASSETS $'000's $'000's
Current assets
Cash and cash equivalents 6 2,586 2,730
Trade and other receivables 8 1,358 986
Prepayments 273 598
Inventory 7 1,220 2,513
Total current assets 5,437 6,827
Non-current assets
Property, plant and equipment 13 842 1,370
Intangible assets 14 3,928 4,048
Deferred tax asset 11 13 19
Total non-current assets 4,783 5,437
Total assets 10,220 12,264
LIABILITIES
Current liabilities
Trade and other payables 9 699 1,250
Employee entitlements 364 228
Deferred revenue 1,205 150
Total current liabilities 2,268 1,628
Total liabilities 2,268 1,628
Total net assets 7,952 10,636
EQUITY



Share capital 12 49,263 45,252
Share based payment reserve

60 399
Accumulated losses (41,088) (34,763)
Foreign currency translation reserve (283) (252)
Total equity 7,952 10,636





Director Date:30
th
May 2018 Director Date: 30
th
May 2018
The notes on pages 11 to 34 are an integral part of these consolidated financial statements.

10
Consolidated statement of cash flows


Year ended 31 March
Group

2018 2017

$'000's $'000's
Cash flows from operating activities
Cash receipts from customers 8,458 6,846
Cash paid to suppliers and employees (11,241) (15,851)
Interest paid (26) (16)
Net cash used in operating activities 19 (2,809) (9,021)

Cash flows from investing activities
Purchases of property, plant and equipment (26) (271)
Additions to intangible assets (1,224) (1,035)
Interest received 6 85
Net cash used in investing activities (1,244) (1,221)

Cash flows from financing activities
Proceeds from issuance of shares on listing 4,011 7,758
Net cash from financing activities 4,011 7,758
Net (decrease)/increase in cash and cash equivalents (42) (2,484)
Cash and cash equivalents at 1 April 2,730 5,292
Effect of exchange rate fluctuations on cash held (102) (78)
Cash and cash equivalents 2,586 2,730










The notes on pages 11 to 34 are an integral part of these consolidated financial statements.

11
Notes to the consolidated financial statements
1. Reporting Entity
ikeGPS Group Limited (the “Company”) is a limited liability company domiciled and incorporated in
New Zealand, registered under the Companies Act 1993 and listed on the New Zealand Stock
Exchange (“NZX”) and Australian Stock Exchange (“ASX”). The Company is an FMC reporting entity
for the purposes of the Financial Markets Conduct Act 2013. The financial statements for the year
ended 31 March 2018 comprise the Company and its subsidiaries (together referred to as the
“Group”) which include ikeGPS Limited and ikeGPS Inc.
The principal activity of the Group is that of design, marketing and sale of integrated GPS data capture
devices and related software.
The financial statements were authorised for issue by the Directors on 30 May 2018.
2. Basis of preparation
The principal accounting policies applied in the preparation of these consolidated financial
statements are set out below. These policies have been consistently applied to all the years
presented, unless otherwise stated.
Statement of compliance
The consolidated financial statements have been prepared in accordance with the requirements of
the Companies Act 1993 and Financial Reporting Act 2013.
The consolidated financial statements of the Group have been prepared in accordance with New
Zealand Generally Accepted Accounting Practice (“NZ GAAP”). The Group is a for-profit entity for the
purposes of complying with NZ GAAP. The consolidated financial statements comply with New
Zealand equivalents to International Financial Reporting Standards (“NZ IFRS”), other New Zealand
accounting standards and authoritative notices that are applicable to entities that apply NZ IFRS. The
consolidated financial statements comply with International Financial Reporting Standards (IFRS).
Basis of measurement
The financial statements have been prepared on the historical cost basis with the exception of certain
financial instruments which are measured in accordance with the specific relevant accounting policy.
Critical estimates and judgments
The preparation of financial statements requires management to make judgments, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised and in any future periods
affected.
a) Going concern
These financial statements have been prepared based on the Group being a going concern, which
assumes the Group has the ability and intention to continue operations for a period of at least 12
months from the date of the financial statements.
During the Group’s current growth phase, investment continues into increasing revenue by
developing and expanding the Group’s product and service offerings. The Group has continued to
reduce, but still incur, net cash outflows from operating and investing activities during this phase.
During FY18, the Group had cash outflows of $2,809,000 (2017: $9,021,000) relating to operations,
and $1,224,000 (2017: $1,035,000) relating to capitalised internal development for the twelve
months ended 31 March 2018. The cash balance at 31 March 2018 was $2,586,000 (2017:
$2,730,000). While making material improvement on prior years cash outflows, if the current level
of cash outflows continued the Group would not be able to fund its operations without the need to
raise additional capital or alternative funding.

12
Notes to the consolidated financial statements
2. Basis of preparation (continued)
The Directors have approved a base business plan for FY19 that includes the continued prudent
management of costs while focusing effort on realizing the significant sales opportunities for the
entity’s products.
The plan takes into consideration:
- forecast sales increases of its ike4, focused on sales into telecommunications companies
within the United States that are deploying fibre
- increased subscription revenue associated with ike4
- forecast sales increases of its Spike product
- continued prudent operational cost management
- continued focus on optimizing working capital, focusing on inventory
- the ability of the Group to manage its growth activities and associated costs.

Further cost-cutting measures are available to the Group if one or more components of the plan are
not realized. To assess the degree of sensitivity, stress testing has been performed on the FY19 plan,
reducing forecast receipts from customers by 15% and making additional operating expense
reductions of $428,000. The cumulative impact being that the Group remains a going concern, albeit
with reduced available cash funds.
In FY18 the Group completed a Private Placement and Share Purchase Plan raising $4,011,000. The
Directors believe that additional capital could potentially be raised should circumstances necessitate,
such as in the situation where sales are significantly less than budget or should higher levels of
growth require higher levels of working capital.
In FY18 ike4 sales overperformed relative to guidance while Spike sales underperformed. The
Directors acknowledge the difficulty of predicting certainty of sales due to long sales cycles
associated with Enterprise level customer, however the Directors believe that the group now has a
closer understanding of the process requirements of Enterprise level sales cycles and the timing of
forecasted revenue.

On this basis, the Directors believe that the Group has sufficient funding to continue operations for
at least the next 12 months from the date of authorizing the financial statements, and hence consider
the use of the going concern basis appropriate.
The Group’s ability to improve its financial capacity and cash flow generated from its operations
cannot be assured. Should the Group fail to achieve its FY19 business plan (particularly forecast sales
growth), manage costs or obtain alternative sources of financing, then this represents a material
uncertainty that may cast significant doubt on the validity of the going concern assumption.
The existence of this material uncertainty may result in the Group’s inability to realize its assets and
settle its liabilities in the normal course of operations. These consolidated financial statements do
not reflect adjustments in the carrying values of the assets and liabilities, the reported revenues and
expenses, and the balance sheet classifications used, that would be necessary if the Group were
unable to continue as a going concern.
b) Impairment
The carrying amounts of the Group’s assets were reviewed to determine whether there is any
indication of impairment. The Directors concluded the Group’s operating losses as an indicator of
impairment for the overall business, requiring an estimate of the Cash Generating Unit’s (CGU1 –
Group’s total intangible assets plus total property, plant & equipment) recoverable amount.
Additionally, it determined that due to the underperformance of the Spike Business, an indicator of

13
Notes to the consolidated financial statements
2. Basis of preparation (continued)

impairment existed requiring an estimate of the Cash Generating Unit’s (CGU2) recoverable amount
of the intangibles assets directly associated with the Spike Business. The CGU1 was determined to be
the Group’s total intangible assets plus total property, plant & equipment. The useful life of the CGU
was determined to be 6 years, reflecting the view on the remaining life of the current software and
core technology platform. For impairment purposes, it is assumed that base revenue for FY19 will
increase 28% over FY18 and then conservatively no further growth over the ensuring years. An
estimate of the cashflows required to market and sell the Group’s products was based on the business
plan for FY19. Costs associated with corporate activities which did not directly or indirectly support
the assets, such as the costs associated with managing the Company’s listed status were excluded
from the cashflows. A pre-tax discount rate of 12% was used to establish the net present value.

Sensitivity analysis for CGU1 was performed on all key assumptions. The value in use assessment is
sensitive to changes in each of these assumptions. For there to be an impairment, FY19 growth in
base revenue would have to fall below 23% and stay at this level over the remaining useful life.
Growth in FY18 for ike branded products was 86%, albeit from a lower base.

The Directors have determined that no impairment is required as CGU1 continues to have a useful
life and that the current carrying value of the CGU1 does not exceed its value in use.

The CGU2 was determined to be the intangible assets associated with the Spike Business. The useful
life of the CGU2 was determined to be 3 years, reflecting the view on the remaining life of the current
Spike hardware platform (the core technology platform having an assessed longer life). For
impairment purposes, FY19 unit volume sales were forecasted to increase 10% per annum on FY18
as the Group fully develops opportunities focussed on Signage and Geospatial markets. An estimate
of the cashflows required to market and sell the Group’s products was based on the business plan for
FY19. A pre-tax discount rate of 12% was used to establish the net present value.

Sensitivity analysis for CGU2 was performed on all key assumptions. The value in use assessment is
sensitive to changes in each of these assumptions. The most sensitive assumption is that of changes
to the FY19 unit volume sales since any changes compound over the remaining forecast period. For
there to be an impairment budgeted revenue growth would have to fall below the FY18 growth rate
of 6%.

The Directors have determined that no impairment is required as CGU2 continues to have a useful
life and that the current carrying value of the CGU2 does not exceed its value in use.

c) Intangible assets
Information about significant areas of estimation uncertainty and critical judgments in applying
accounting policies that have the most significant effect on the amount recognised in the financial
statements are the measurement and impairment of intangible assets.
The development costs for all products were initially amortised over periods up to 10 years (core
platform 10 years and subsequent development between 2-5 years) which reflected the expected
useful life of the assets at the time.
Annually the Directors are required to assess the appropriateness of the assets amortisation period.
For the current year the Directors have assessed the amortisation period and have concluded that:
• the core technology platform underpinning ike & Spike devices extends beyond the
life of the current hardware product offering and supports multiple future product releases.
Management has reviewed and reassessed the useful life of the core platform to be valid for 6
years.
• the period over which the economic benefits to accrue from ike & Spike applications and features
result from emerging business opportunities with large enterprise customers where

14
Notes to the consolidated financial statements
2. Basis of preparation (continued)
management expects full commercialization to occur. On that basis the useful life is reassessed to
be valid for 3 years for hardware and 5-6 years for software.
• investment in SDK (software development kit) technology enabling third parties to develop
mobile applications which underpin multiple product releases across both ike & Spike products.
The economic benefits of this technology are expected to accrue in line with ike & Spike
applications. On that basis the useful life reassessed to be valid for 3 years for hardware and 6
years for software.

The amortisation rates reflecting the change in useful lives of asset were reset effective from 01
October 2017. The table below summarises the impact of this change.

Reduction in amortisation expense
due to rate change

FY18
Annualised
impact

$'000's $'000's
ikeGPS platform (8) (16)
ike application & features (136) (312)
Spike application & features (119) (231)
Total
(263) (559)


The pattern of benefits received from the capitalised development may ultimately differ from the
Directors' initial judgment due to risk of obsolescence or other future factors affecting the assets
useful life. The table below summarises the impact that a reduction in the amortisation period of the
core technology platform would have.


In addition to the above, the Group makes judgments about the amount of costs to capitalise as part
of the development asset. The Group’s intangible asset capitalization policy is used to assist in
making these judgements. The Group capitalises direct labour costs into its development asset. The
costs applied are based on judgment as to the nature of work employees performed, and the amount
of time spent on the task. This is assessed each month jointly by engineering management and the
CFO.

15
Notes to the consolidated financial statements
3. Significant accounting policies
Basis of consolidation
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The
Group controls an entity when the Group is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the
entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.
They are deconsolidated from the date that control ceases.
Transactions eliminated on consolidation
Intra-Group transactions, balances, and any unrealised gains arising from intra-Group transactions,
are eliminated in preparing the consolidated financial statements. Unrealised losses are eliminated
in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
Foreign currency translation
a) Functional and presentation currency
Items included in the financial statements of each the Group’s subsidiaries are measured using
the currency of the primary economic environment in which the entity operates ("the
functional currency"). The functional currency of the Company is NZ dollars. The functional
currency of the Group's USA subsidiary is US dollars. These financial statements are presented
in NZ dollars, which is the Group's presentation currency.
b) Transactions and balances
Foreign currency transactions are initially translated to functional currencies at the rates of
exchange prevailing at the dates of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the revaluation at year-end
exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss.
c) Group companies
The results and financial position of the US subsidiary are translated into the presentation
currency as follows:
i) assets and liabilities are translated at the closing rate at the date of the balance sheet;
ii) income and expenses are translated at average exchange rates (unless this average is not
a reasonable approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the dates of the
transactions); and
iii) all resulting exchange differences are recognised in other comprehensive income.
When a foreign operation is sold, such exchange differences are reclassified to profit or loss in the
consolidated statement of profit or loss and other comprehensive income.
Goods and Services Tax
All amounts are shown exclusive of Goods and Services Tax (GST) and other indirect taxes except for
trade receivables and trade payables that are stated inclusive of GST.
Financial instruments
A financial instrument is recognised if the Group becomes a party to the contractual provisions of
the instrument. Regular purchases and sales of financial assets are accounted for at trade date, i.e.
the date that the Group commits itself to purchase or sell the asset. Financial assets are derecognised

16
Notes to the consolidated financial statements
3. Significant accounting policies (continued)
if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group
transfers the financial asset to another party without retaining control or substantially all risks and
rewards of the asset. Financial liabilities are derecognised if the Group’s obligations specified in the
contract expire or are discharged or cancelled.
Non-derivative financial instruments
Non-derivative financial instruments comprise loans and receivables, including trade and other
receivables, cash and cash equivalents trade and other payables, and employee entitlements.
Non-derivative financial instruments are recognised initially at fair value plus any directly
attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments
are measured at amortised cost using the effective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits.
Trade and other receivables
Trade and other receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. They arise when the Group provides money, goods and
services directly to a debtor with no intention of selling the receivable. They are included in current
assets, except for those with maturities greater than twelve months after the end of the reporting
period which are classified as non-current assets.
Trade and other payables
Trade and other payables are obligations to pay for goods and services that have been acquired in
the ordinary course of business from suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less (or in the normal operating cycle of the business if longer).
If not, they are presented as non-current liabilities.
Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and
impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset.
Depreciation
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of
each part of an item of property, plant and equipment.
Depreciation methods, useful lives and residual values are reviewed and adjusted, if appropriate, at
each reporting date.
Office furniture and equipment
20% - 33%
Plant and equipment
20% - 50%
IT equipment
33% - 50%
Gain and losses on disposals are determined by comparing proceeds with the carrying amount. These
are included in profit or loss.

17
Notes to the consolidated financial statements
3. Significant accounting policies (continued)
Intangible assets
Research and development
All research costs are recognised as an expense when they are incurred.
Capitalised development costs
The Group capitalises employee and consultants costs directly related to development. The Group
regularly reviews (at least annually) the carrying value of capitalised development costs to ensure
they are not impaired. Management has reviewed the expected remaining useful life of assets and
concluded that the development costs for all products are amortised over periods of up to 6 years
(core platform 6 years; Ike and Spike applications and features between 3-6 years), to reflect the
expected useful life of the assets.
Development costs that are directly attributable to the design and testing of identifiable and unique
software products controlled by the Group are recognised as intangible assets when the following
criteria are met:
• it is technically feasible to complete the software product so that it will be available for use;
• management intends to complete the software product and use or sell it;
• there is an ability to use or sell the software product;
• it can be demonstrated how the software product will generate probable future economic
benefits;
• adequate technical, financial and other resources to complete the development and to use or
sell the software product are available; and
• the expenditure attributable to the software product during its development can be reliably
measured.
Other development expenditures that do not meet these criteria are recognised as an expense as
incurred. Development costs previously recognised as an expense are not recognised as an asset in
a subsequent period.
Impairment of non-financial assets
The carrying amounts of the Group’s assets are reviewed at each balance date to determine whether
there is any indication of impairment or objective evidence of impairment. If any such indication
exists, the assets recoverable amount is estimated. Recoverable amount is the higher of fair value
less costs to sell and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market
assessments for the time value of money and the risks specific to the asset for which estimates of
future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (cash generating unit) is reduced to its recoverable amount.
An impairment loss is recognised in profit or loss immediately. Where an impairment loss
subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to the
revised estimate of its recoverable amount, but only to the extent that the increased carrying amount
does not exceed the carrying amount that would have been determined had no impairment loss been
recognised for the asset (cash generating unit) in prior years. A reversal of an impairment loss is
recognised in profit or loss immediately.
Impairment of financial assets
Evidence of impairment may include indications that the debtors or a group of debtors is
experiencing significant financial difficulty, default or delinquency in interest or principal payments,

18
Notes to the consolidated financial statements
3. Significant accounting policies (continued)
the probability that they will enter bankruptcy or other financial reorganisation, and where
observable data indicates that there is a measurable decrease in the estimated future cash flows,
such as changes in arrears or economic conditions that correlate with defaults.
Leased assets
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor
are classified as operating leases. Payments made under operating leases (net of any incentives
received from the lessor) are charged to profit or loss on a straight-line basis over the term of the
lease.
Inventory
Inventories are measured at the lower of cost and net realizable value. The cost of inventories is
based on a weighted average cost, and includes expenditure incurred in acquiring the inventories
and bringing them to their existing location and condition. Cost comprises direct materials, direct
labour and production overhead. Net realizable value is the estimated selling price in the ordinary
course of business less the estimated costs of completion and the estimated costs necessary to make
the sale.
Government grants

Government Grants relate to assistance by Callaghan Innovation who manage the Business
Research and Development (R&D) Grants scheme on behalf of the New Zealand Government.
When the grant relates to an expense item, it is recognised as income on a systematic basis over the
periods necessary to match the grant to the costs that it is intended to compensate.
Government grants are recognised at their fair value where there is reasonable assurance that the
grants will be received, and all attaching conditions will be complied with.
Employee benefits
Liabilities for wages and salaries, including non-monetary benefits and accumulating sick leave that
are expected to be settled wholly within 12 months after the end of the period in which the
employees render the related service are recognised in respect of employees’ services up to the end
of the reporting period and are measured at the amounts expected to be paid when the liabilities are
settled. The liabilities are presented as current employee benefit obligations in the consolidated
balance sheet.
The Group recognises a liability and an expense for bonuses where contractually obliged or where
there is a past practice that has created a constructive obligation.
Share-based payment
The Group operates an employee option scheme (equity-settled) under which employees receive the
option to acquire shares at a predetermined exercise price. The options are measured at fair value
at grant date using the Black Scholes model with the fair value recognised as an employee benefit
expense in profit or loss with a corresponding increase in equity. The total expense is recognised
over the vesting period, which is the period over which all of the specified vesting conditions are to
be satisfied. At the end of each period, the Group revises its estimate of the number of options that
are expected to vest based on the service conditions. It recognises the impact of the revision to
original estimates, if any, in share based payment reserve with a corresponding adjustment to
retained earnings.
Revenue
The Group derives its revenue from the sale of product and related services, and subscription
revenue. Revenue is measured at the fair value of the consideration received or receivable, and

19
Notes to the consolidated financial statements

3. Significant accounting policies (continued)
represents amounts receivable for goods or services supplied, stated net of discounts, returns and
goods and services tax.
a) Sale of product
Revenue from the sale of product is derived from the sale of the Group’s photogrammic laser
measurement devices, associated software, accessories and warranty support. Revenue is
recognised when the products are shipped and significant risks and rewards of ownership have
been transferred to the buyer, and recovery of the consideration is probable. Warranty support
revenue is recognised in the period the warranty service is provided i.e. evenly over the
warranty period. The sale of product often includes other deliverables such as the provision of
warranty support and associated software maintenance and upgrade. Warranty support in
excess of the standard sales warranty provided under various consumer legislation is
recognised as a separate component of revenue as detailed below.
b) Subscription revenue
Subscription revenue comprises fees from customers who subscribe to the Group’s software
services. Revenue is recognised as the services are provided to the customers. Consideration
received in advance (of the service being provided), is recognised in the balance sheet as
deferred revenue.
c) Other operating revenue
Other operating revenue includes consulting and training revenue.
Consideration received prior to the service being provided is recognised in the balance sheet as
deferred revenue.
Revenue associated with the rendering of services is recognised when all the following
conditions have been satisfied:
• the amount of revenue can be measured reliably;
• it is probable that the economic benefits associated with the transaction will flow to the
Group;
• the stage of completion of the transaction at the end of the reporting period can be
measured reliably; and
• the costs incurred for the transaction and the costs to complete the transaction can be
measured reliably.

Finance income and expenses
Interest income is recognised as it accrues, using the effective interest method. Finance expenses
comprise interest expense on borrowings, recognized using the effective interest method.
Current and deferred income tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively
enacted at the balance sheet date in the countries where the Company and its subsidiaries operate
and generate taxable income. Management periodically evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated financial statements. Deferred income
tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the
balance sheet date and are expected to apply when the related deferred income tax asset is realised
or the deferred income tax liability is settled.

20
Notes to the consolidated financial statements

3. Significant accounting policies (continued)
Deferred income tax assets are recognised only to the extent that it is probable that future taxable
profit will be available against which the temporary differences can be utilised.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity. In this case, the tax is also
recognised in other comprehensive income or directly in equity, respectively.
Earnings per share
The Group presents earnings per share (“EPS”) data for its ordinary shares.
Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the
Company by the weighted average number of ordinary shares outstanding during the year.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and
the weighted average number of shares that would be issued on conversion of all of the dilutive
potential ordinary shares into ordinary shares.
Other reserves
Share-based payments reserve
The share-based payments reserve is used to recognise the grant date fair value of options issued
to employees but not exercised.
Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entity are recognised in other
comprehensive income as described in the foreign currency translation accounting policy and
accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or
loss when the net investment is disposed of.

Changes in accounting policy and disclosures
New and amended standards adopted by the Group
There are no new standards, amendments and interpretations which are effective for the financial
year beginning on 1 April 2017 that are material to the Group.
New standards and interpretations not yet adopted
A number of new standards and amendments to standards and interpretations have been issued but
are not yet effective. These standards have not been applied in preparing these consolidated financial
statements. None of these are expected to have a significant effect on the consolidated financial
statements of the Group, except the following:
NZ IFRS 15, 'Revenue from contracts with customers' deals with revenue recognition and
establishes principles for reporting useful information to users of financial statements about
the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s
contracts with customers. Revenue is recognised when a customer obtains control of a good or
service and thus has the ability to direct the use and obtain the benefits from the good or
service. The standard replaces NZ IAS 18 'Revenue' and NZ IAS 11 'Construction contracts' and
related interpretations. The standard is effective for annual periods beginning on or after 1
January 2018 and earlier application is permitted.

21
Notes to the consolidated financial statements

3. Significant accounting policies (continued)
The Group intends to adopt NZ IFRS 15 effective from 1 April 2018 and is taking a structured
approach in assessing the impact of the change. Particularly reviewing type of contracts,
contract duration, timing of transfer of goods and services and recognition of cloud-based
revenue. The Group does not expect it will require significant changes to existing systems and
processes to comply with NZ IFRS 15. However the detailed impacts are still being assessed.

NZ IFRS 16, ‘Leases’, replaces the current guidance in NZ IAS 17. Under NZ IFRS 16, a contract
is, or contains, a lease if the contract conveys the right to control the use of an identified asset
for a period of time in exchange for consideration. Under NZ IAS 17, a lessee was required to
make a distinction between a finance lease (on balance sheet) and an operating lease (off
balance sheet). NZ IFRS 16 now requires a lessee to recognise a lease liability reflecting future
lease payments and a ‘right-of-use asset’ for virtually all lease contracts. Included is an optional
exemption for certain short-term leases and leases of low-value assets; however, this
exemption can only be applied by lessees. The standard is effective for accounting periods
beginning on or after 1 January 2019. Early adoption is permitted but only in conjunction with
NZ IFRS 15, ‘Revenue from Contracts with Customers. The Group intends to adopt NZ IFRS 16
from 1 April 2019. The Group’s lease commitments are substantially real estate / property
related and hence expect the adoption to NZ IFRS 16 to be straight forward with minimum
changes to existing systems and processes. However, detailed assessment of the impact of the
standard has yet to occur.

NZ IFRS 9, ‘Financial Instruments’, replaces the current guidance in NZ IAS 39. The Standard
includes requirements for recognition and measurement, impairment, derecognition and
general hedge accounting for financial instruments. The Group intends to adopt IFRS 9 from 1
April 2018. The Group has reviewed the instruments that fall within the scope of IFRS 9 that
are applicable to the business and expects the adoption to NZ IFRS 9 to be straight forward with
minimum changes to existing systems and processes. However the detailed impacts are still
being assessed.

4. Operating segments
The CEO and Senior management team are the Group’s operating decision makers. During FY18 the
Group’s selling activities were focused and organized into two segments namely Utility &
Communications and New Business. The Utility and Communications segment includes sales to
companies involved in the broadband fiber roll out in the United States. New Business includes
Signage, Architecture Engineering and Construction (AEC) and Geospatial.
The segment reporting format reflects the Group’s management and internal reporting structure.
Contribution is after allocating cost of goods sold and selling expenses. Reporting of overheads and
balance sheet position is not undertaken at a level lower than the Group as a whole. Geographically,
revenue is substantially generated in the United States.

22
Notes to the consolidated financial statements
5. Revenue and expenses
(a) Revenue


Revenue from sale of products to two customers totaling to $1,838,000 ($1,045,000 in Utility &
Communication segment, and $793,000 in New Business segment) represented more than 10% of
revenue each (2017: $1,923,000 in New Business segment).
Government grants are in relation to cost subsidies from Callaghan Innovation for research and
development. Under the conditions of the Callaghan Innovation grant the Group is required to submit
an independent review report on the eligibility of the costs claimed. This report is outstanding at
balance date but does not represent a significant unfulfilled condition.

(b) Operating expenses
Operating expenses consist of operations costs, sales and marketing expenses, engineering and
research expenses and corporate expenses.

23
Notes to the consolidated financial statements
5. Revenue and expenses (continued)

Notes
1. The audit fee includes the fees for the annual audit of the financial statements (2017: $112,000).
2. Other assurance services comprise the review of government grant claims.
3. Tax compliance services relates to assistance to review and file the Group’s tax return.
4. All of amortisation and $171,000 of depreciation are included in engineering and research expenses.
The balance of depreciation totaling to $216,000 is included in Cost of sales.
5. Relates to employee benefit expense, external contractors and consultants expenses that are
directly attributable to the development of intangible assets and have been capitalised.
6. Selling and marketing expenses includes expenses incurred mainly in relation to
promotional activities which include travel, commissions and other direct marketing expenses
7. Impairment of assets include ike3 intangible assets of $83,000, Smart Measure Pro intangible assets
of $42,000 and other fixed assets of $41,000. The remaining asset impairment of $125,000 is included
in Cost of sales.
8. Other operating expenses include corporate advisory, travel, engineering expenses, facilities, IT
expenses and employee share option expense.

6. Cash and cash equivalents


An overdraft facility of NZ$250,000 with BNZ and a factoring facility of US$250,000 with Bluevine is
in place. BNZ has perfected security interest in all present and after acquired property of ikeGPS
Limited.

7. Inventory


Included in cost of sales is $2,956,000 (2017: $3,315,000) relating to the amount of inventory
recognised as an expense in the year.

24
Notes to the consolidated financial statements
8. Trade and other receivables

The Group has $299,580 of trade receivables past due but not impaired at balance date.
(2017: $246,858)
30 – 90 days 90 days + Total past due


239,471 60,109 299,580
Trade receivables is net of provision for doubtful debts of $87,605
Other receivables include;
a) Government grant claim with Callaghan Innovation $85,267 (2017: $42,380);
b) GST tax refund of $73,993 (2017: $16,767);
c) Claims receivable from W&Y Taiwan Co Ltd $48,098 (2017: Nil)

9. Trade and other payables

10. Subsidiaries

ikeGPS Limited and ikeGPS Inc. are 100% (2017: 100%) owned by the Company.
All subsidiaries have 31 March balance dates.

25
Notes to the consolidated financial statements
11. Current and deferred tax
The Group’s tax expense/ (benefit) comprises:


Prima facie income tax expense on pre-tax accounting loss from operations reconciles to the
accounting loss from operations and reconciles to the income tax expense/(benefit) in the financial
statements as follows:


The Group has unrecognised tax losses of $16,046,000 (2017: $11,880,000), arising from New
Zealand operations available for use against future taxable profits subject to meeting the
requirements of continuous ownership provision stated in the Income Tax Act 2007.
A tax asset in respect of these losses has not been recognised due to the uncertainty of when the
unused tax losses can be utilised.


Deferred tax asset relates to employee entitlements.

26
Notes to the consolidated financial statements
12. Contributed equity
Share Capital

2018 2017
$'000's $'000's
On issue at beginning of year 45,252 37,352
Issued under ESOP - 142
Issued under share placement 3,725 5,245
Issued under share purchase plan 387 3,000
Less listing costs offset against issue proceeds (101) (487)
Total share capital 49,263 45,252


Share Capital on issue

2018 2017
Fully paid total shares at beginning of year

64,270,910

50,378,506
Ordinary shares issued on settlement of options -

150,000
New shares offered

14,179,345

13,742,404
Fully paid ordinary shares

78,450,255

64,270,910

27
Notes to the consolidated financial statements
13. Property, plant and equipment

28
Notes to the consolidated financial statements
14. Intangible assets


Intangible assets are all recognised within and owned by ikeGPS Group Limited, incorporated in New
Zealand.
Development assets
Additions to internally generated development assets for the year relates to the continued
development of the platform, features to enhance Spike and ike products including web and mobile
applications and the development of SDK (software development kit) technology.

29
Notes to the consolidated financial statements
15. Financial instruments and financial risk management
Financial instruments
The Group’s principal financial instruments comprise cash balances, trade and other receivables,
trade and other payables and employee entitlements.
The following table shows the designation of the Group’s financial instruments:



Financial risk factors
The main risks arising from the Group’s financial instruments are credit risk, liquidity risk, foreign
currency risk and interest rate risks which arise in the normal course of the Company and
Group’s business. The group uses different methods to measure and manage different types of risks
to which it is exposed. Liquidity risk is monitored through the development of future rolling cash
flow forecasts.
Credit risk
The Group’s exposure to credit risk arises from potential default of the counterparty, with a
maximum exposure equal to the carrying amount of these instruments. Financial instruments which
potentially subject the Group to credit risk principally consist of cash and cash equivalents, and trade
and other receivables. All cash and cash equivalents in New Zealand are held with high credit quality
counterparties, being trading banks with "AA-" grade or better credit ratings, and a Moody’s A3
rating in the USA. The Group does not require collateral or security from its trade receivables. The
Group performs credit checks and ageing analyses and monitoring of specific credit allowances. The
Group does not anticipate any material non-performance of those customers. The total impaired
trade receivables as at balance date is US$63,760.

At balance date date 85% (2017:90%) of the Group’s cash and cash equivalents were with one
bank. The Group has no other concentrations of credit risk.

30
Notes to the consolidated financial statements
15. Financial instruments and financial risk management (continued)
Maximum exposure to credit risk at balance date:

Liquidity risk
Liquidity risk is the risk that the Group cannot pay contractual liabilities as they fall due. Group
finance monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient
cash to meet operational needs. Such forecasting takes into consideration the Group’s forward
financing plans and commitments. Based on this the Group believes that it has sufficient liquidity to
meet its obligations as they fall due for the next 12 months. The Group has an overdraft facility of
NZ$250,000 and access to a US$250,000 factoring facility in place to cover potential shortfalls.

The following table sets out the undiscounted cash flows for all financial liabilities of the Group:


Foreign currency risk management
The Group is exposed to foreign currency risk on its sales and a significant portion of its expenses
that are denominated in USD which is different to the Group’s presentation currency. The Group
currently does not hedge its exposures arising from its transactions denominated in a foreign
currency.
At 31 March 2018, had the local currency strengthened / weakened against the USD by 10% the
pretax loss would have been (higher)/lower as follows:

31
Notes to the consolidated financial statements
15. Financial instruments and financial risk management (continued)
Interest rate risk management
The Group’s interest rate risk arises from its cash balances. The Group currently has no significant
exposure to interest rate risk other than in relation to the amount held at the bank. A reasonably
expected movement in the prevailing interest rate would not materially affect the Group’s financial
statements.
16. Capital management
The capital structure of the Group consists of equity raised by the issue of ordinary shares in the
Company. The Group manages its capital to ensure the entities in the Group are able to continue as a
going concern. The Group is not subject to any externally imposed capital requirements.
In FY18 the Group completed a Private Placement and Share Purchase Plan raising $4,011,000. The
Group’s aim is to maintain a sufficient capital base so as to maintain investor and creditor confidence
and to sustain future development of the business. The Group’s capital requirements are regularly
reviewed by the Board of Directors. There have been no material changes in the Group’s management
of capital from the previous year.
This note should be read in conjunction with note 2; Going Concern which outlines the material
uncertainty around the Group’s Going Concern assumption and the FY19 Plan that Directors believe
will enable the Group to continue operations.
17. Fair value estimation
The fair value of the Group’s financial assets and liabilities does not materially differ from their
carrying value due to their short maturities.
The Group has no financial instruments measured at fair value.
18. Commitments


Operating leases are in relation to rented premises and photocopiers.
The Group advises there are no contingencies.








20182017
$'000's$'000's
Non-cancellable operating leases
Less than one year340407
Between one and five years95263
Total435670
Group

32
Notes to the consolidated financial statements
19. Cash used in operations


Year ended 31 March
Group
2018 2017
$'000's $'000's
Loss for the year

(6,732) (10,727)
Less Investment interest received

(6) (85)



Non-cash items included in net loss


Depreciation

387 440
Amortisation of intangible assets

1,220 1,532
Asset impairment

291 -
Materials write off

296 -
Debtors write off

91 -
Deferred tax expense

6 9
Share option expense

68 307
Foreign exchange (gains)/losses

71 135


2,424 2,338
Add/(less) movement in working capital items


Decrease/(Increase) trade and other receivables

(463) 945
Decrease/(Increase) in inventories

997 (1,564)
Decrease/(Increase) in prepayments

325 (295)
Increase/(Decrease) in trade and other payables

(551) 202
Increase/(Decrease) in deferred revenue

1,055 60
Increase/(Decrease) in employee entitlements

136 20


1,499 (632)
Net cash used in operating activities

(2,809) (9,021)

20. Basic and diluted earnings per share

The potential shares are anti-dilutive in nature. The diluted loss per share is therefore the same as
the undiluted EPS at ($0.09) and ($0.18) for the respective periods.

33
Notes to the consolidated financial statements
21. Share based payments
Share options are granted to directors and selected employees. Options outstanding at 31 March
2018 have a contractual life from grant date of between 2.5 and 3 years. Options can be exercised at
any time after vesting and unexercised options expire at the end of the contract or if the employee
leaves the Group. The Group has no legal or constructive obligation to repurchase or settle the
options in cash.
Movements in the number of share options outstanding and their related average exercise prices are
as follows:

Out of the 1,155,000 outstanding options (2017: 2,515,000), 574,993 (2017: 1,971,663) had vested
and were exercisable at 31 March 2018.
Options vested
Share options outstanding at the end of the year have the following expiry date and exercise price.

34
Notes to the consolidated financial statements
21. Share based payments (continued)

Measurement of fair value
The Company determined the fair value of options issued using the Black Scholes valuation model.
The significant inputs to the model were:

2018 2017
Fair value of options issued in the year $0.01, $0.05 $0.12, $0.13, $0.15
Weighted average share price $0.40 $0.64
Exercise price $0.29 - $0.40 $0.63 - $0.72
Volatility 30% 30%
Dividend yield Nil Nil
Risk free interest rate 2.54% 2.27%

22. Related parties
Key management compensation


Key management are identified as the Chief Executive Officer, Chief Technology Officer, Chief
Financial Officer, Chief Operating Officer, SVP Utilities & Communication, and Directors. In the prior
year 13 individuals comprised the key management. This has reduced to 10 (including one Director
for part of the year) explaining the reduction in compensation.

23. Subsequent events
There were no events subsequent to balance date.