2018 Annual Report
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS
MARCH 2018
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
PAGE
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Contents
Directors’ Report 3 – 6
Statement of Financial Position 7 – 8
Statement of Comprehensive Income 9
Statement of Cash Flows 10
Statement of Changes in Equity 11
Notes to the Financial Statements 12 – 50
Corporate Information 51
Auditor’s Report 52 – 55
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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Directors’ Report
The Directors are pleased to submit to shareholders their report and financial statements for the year ended
31 March 2018.
Principal Activities
Enprise Group Limited (Enprise) currently has one operating division, Enprise Solutions, which is a
solution provider for MYOB Enterprise software in Australia and New Zealand.
Enprise has a joint venture, Datagate Innovation Limited (Datagate), an early stage business that
provides online reporting and billing portals under a Software-as-a-Service (SaaS) model for resellers of
Telco/Utility services and hosted service providers. Enprise invested in another joint venture,
Kilimanjaro Consulting Pty Limited (Kilimanjaro) in September 2017. Kilimanjaro is the largest MYOB
enterprise partner in Australia. Enprise also invested in an associate, iSell Pty Limited (iSell) in December
2017. iSell sells a cloud-based quoting system used by the IT reseller market in Australia, New Zealand
and the UK.
Significant Changes in the State of Affairs
Enprise invested $1 million in cash and issued $2.1 million worth of shares in exchange for a 47.09%
ownership of Kilimanjaro Consulting Pty Limited (Kilimanjaro) on 29 September 2017. The Enprise shares
were issues at $1.39 per share. Kilimanjaro’s principal activities are similar to Enprise in that it is a
solution provider for MYOB Enterprise software in Australia. Enprise also invested $739,210 in cash for a
14.6% holding in iSell on 19 December 2017.
Directors
Mr Lindsay Phillips (appointed 1 December 2013)
Mr George Cooper (appointed 10 April 2012)
Mr Nicholas Paul (appointed 1 December 2015)
Mr Ronald Baskind (appointed 31 January 2018)
Remuneration of Directors
The remuneration of the Directors for the year ended 31 March 2018 is set out below:
Group
2018 2017
$000 $000
Salaries, bonuses and commissions 201 211
Other benefits 33 50
Directors fees 65 65
Total compensation 299 326
George Cooper 201 211
Lindsay Phillips 40 40
Nicholas Paul 58 75
299 326
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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Rounding of Amounts
Amounts in the directors’ report and financial statements have been rounded off to the nearest
thousand dollars.
Review of Operations and Outlook
Enprise is leveraging its position as the only MYOB EXO and MYOB Advanced reseller with offices in both
New Zealand and Australia, to target trans-Tasman businesses. Enprise is well positioned to take
advantage of the trend towards cloud while still having a stable, well supported, secure and continually
developed on-premises offering. The Australian sales increased by 6.4% to $2.0 million, whilst New
Zealand sales increased by 6.0% to $7.0 million. Profit from operations before income tax decreased by
15.9% to $686,000. Net tangible assets per share increased during the year by 36% to 20 cents per
share.
The company paid dividends during the year of 3.5 cents per share in July 2017 and 1 cent per share in
January 2018. The total dividend for the year was $339,284 of which $46,326 was reinvested through
the dividend reinvestment plan.
Datagate had twenty seven paying customers at 31 March 2018 representing annualised recurring
revenue of $329,490, a 45% increase from 31 March 2017. The Datagate rights issue in November 2017
was over-subscribed. The total cash raised by Datagate was $685,959 made up entirely of external
investors. Enprise chose not to subscribe and consequently Enprise’s stake in Datagate reduced to
39.29%. If Enprise’s 1,708,333 shares in Datagate were valued at the rights issue price of $1.50 per
share, the value of Enprise’s Datagate investment would be $2,562,500. The actual carrying value of
Datagate is $1,080,603 after accounting for Enprise’s share of Datagate’s loss for the year of $431,370
using the equity method of accounting. The carrying value also reflects a gain on dilution of $154,410 for
the year ending 31 March 2018.
Enprise obtained a 47.09% share of Kilimanjaro in September 2017. Kilimanjaro is the largest reseller of
MYOB Exo and Advanced in Australia. This was a strategic addition to the portfolio to gain synergies due
to the similarities in the business models and to expand Enprise’s reach in Australia. To date synergies
have already been gained by merging the Finance functions and Kilimanjaro utilising the cloud
infrastructure resources that Enprise already possesses. Future synergies are in progress for the
consulting and sales divisions of the business. The initial value of the investment was $3,168,400. The
carrying value of Kilimanjaro at year end was $2,876,847 after accounting for Enprise’s share of
Kilimanjaro’s loss for the year of $291,553 using the equity method of accounting. At the time of
purchase the Company also granted a put option for the remaining 52.91% for $3,967,964 (2,854,650
ENS shares). The option can be exercised between 1 September 2019 and 30 August 2020.
In December 2017 Enprise obtained a 14.6% holding in iSell, which sells a cloud-based quoting system
used by the IT reseller market in Australia, New Zealand and the UK. iSell shares the same Managed
Service Provider market as Datagate and the two entities could gain synergies in their sales and
marketing functions. The initial value of the investment was $739,210.
In November 2017 Enprise paid $223,737 for a 6.49% holding in Vadacom, a cloud based VOIP phone
and virtual PABX provider. Enprise has a similar target market as Vadacom and both entities have and
will continue to leverage off this.
Enprise is actively exploring other opportunities in the SME software market.
Donations
Enprise made donations during the year of nil (2017: $870).
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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Directors Interests
Number of
Shares
Lindsay Phillips* 1,629,682
George Cooper 414,974
Nicholas Paul 39,600
Ronald Baskind 717,978
Interests’ Register
The following entries are recorded in the year ending 31 March 2018:
Ronald Baskind was appointed as a director of Enprise Group Ltd. He was also appointed as a
director of Kilimanjaro Consulting Pty Ltd, EzyCollect Pty Ltd and Red Cow Pty Ltd prior to the
year ending 2018.
Lindsay Phillips was appointed as a director of Kilimanjaro Consulting Pty Ltd, Leed
Manufacturing Pty Ltd, Vehicle Monitoring Systems Pty Ltd, Mayfield Group Investments Pty Ltd,
Mayfield IP Pty Ltd, Moneyball Australia Ltd, and Walker Control Pty Ltd. Lindsay Phillips ceased
directorships in Control Bionics Pty Ltd, Creditor Watch Pty Ltd, Creditor Watch Holdings Pty Ltd
and Toffee International Pty Ltd.
George Cooper was appointed as a director of iSell Pty Ltd.
Top 20 Shareholdings as at 25 July 2018
Holding %
New Zealand Central Securities Depository
Ltd
1,961,741 20.48
Nightingale Partners Pty Ltd* 1,189,991 12.42
Red Cow Investments Pty Ltd~ 717,978 7.50
Net Power Solutions Limited 611,408 6.38
Awatea Trust 422,591 4.41
Cooper Trust 320,927 3.35
Amely Zaininger 301,189 3.14
Ironwood Investments Pty Ltd* 237,569 2.48
Anjelco Investments Pty 210,865 2.20
Bernard Israel Fridman 181,767 1.90
Dixson Trust Pty Limited 177,902 1.86
Donwood Pty Ltd 171,590 1.79
Audesse Holdings Limited 160,962 1.68
Jason Patrick Fegan 160,682 1.68
Sarah May Loveys 159,493 1.67
Roger John Williams 108,207 1.13
Mr Lindsay John Phillips 96,160 1.00
George Elliot Cooper 94,047 0.98
Carjon Investments Pty Limited 92,943 0.97
Savgas Pty Limited 92,943 0.97
*Related parties to Lindsay Phillips
~Related party to Ronald Baskind
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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Geographic Distribution of Shareholders as at 25 July 2018
Country Holders Holder % Issued Capital Issued Capital %
New Zealand 194 55.11 4,959,304 51.78
Australia 127 36.08 4,568,324 47.70
Germany 17 4.83 9,667 0.10
USA 8 2.28 22,729 0.24
Great Britain 5 1.42 17,346 0.18
Switzerland 1 0.28 200 0.00
Total 352 100.00 9,577,570 100.00
Distribution of Shareholders as at 25 July 2018
Range Holders Holding Quantity Holding %
1-1000 119 56,176 0.59
1001-5000 122 312,675 3.26
5001-10000 40 307,401 3.21
10001-50000 47 1,158,443 12.10
50001-100000 8 648,013 6.77
Greater than 100000 16 7,094,862 74.07
Total 352 9,577,570 100.00
The directors’ report is signed for and on behalf of the Board, and was authorised for issue on the date
below.
Nicholas Paul George Cooper
Director Director
31 July 2018 31 July 2018
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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Statement of Financial Position
As at 31 March 2018
Note
2018 2017
$000
$000
Restated
ASSETS
Current Assets
Cash and cash equivalents
1,265 598
Trade and other receivables 11
1,016 1,226
Related party receivables 11
330 6
Lock Finance
3 57
Term deposit
- 154
Staff receivables 51 8
Total Current Assets
2,665 2,049
Non-Current Assets
Investments in equity accounted
joint venture
12(a),(b),
29
3,958 1,358
Investments in equity accounted
associate
12(c)
738 -
Investments 28
321 -
Property, plant and equipment 13
103 104
Staff receivables
85 9
Deferred tax asset 27
341 325
Intangible assets 14 1,760 1,825
Total Non-Current Assets
7,306 3,621
TOTAL ASSETS 9,971 5,670
LIABILITIES
Current Liabilities
Trade and other payables 15
1,083 1,139
Provisions 16
192 193
Term loan 25
314
Other liabilities 15 15
Total Current Liabilities
1,604 1,347
Non-Current Liabilities
Other liabilities
19 34
Term loan 25
635 -
Deferred tax liability 27 38 56
Total Non-Current Liabilities
692 90
TOTAL LIABILITIES 2,296 1,437
The above statement of financial position should be read in conjunction with the accompanying notes.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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Statement of Financial Position (cont)
As at 31 March 2018
Note
2018 2017
$000
$000
Restated
EQUITY
Equity attributable to equity
holders of the parent
Contributed equity 17
6,566 2,936
Retained earnings 29
1,109 1,297
TOTAL EQUITY 7,675 4,233
TOTAL EQUITY AND LIABILITIES 9,971 5,670
Contributed equity 17
2,936 2,936
For and on behalf of the Board, who authorise the issue of these financial statements on 31 July 2018:
Nicholas Paul George Cooper
Director Director
31 July 2018 31 July 2018
The above statement of financial position should be read in conjunction with the accompanying notes.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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Statement of Comprehensive Income
For the year ended 31 March 2018
Note
2018 2017
$000
$000
Restated
Continuing operations
Revenue
Software and licences
4,296
4,262
Services and support
4,513
3,998
Other revenue 6 43
85
8,852 8,345
Cost of Goods Sold
(3,356)
(3,222)
Advertising and marketing expense
(72)
(90)
Employee benefits expense 7(d)
(3,361)
(3,100)
Professional fees 7(b)
(241)
(183)
Travel expenses
(192)
(165)
Other operating expenses 7(a)
(733)
(631)
Finance expense
(90)
(41)
Net (loss)/gain on foreign exchange
(6)
3
Depreciation & amortisation 7(c)
(115)
(100)
Profit from operations before income tax 686 816
Share of loss from equity accounted joint
ventures, net of tax 12, 29
(569)
(290)
Share of loss from equity accounted
associates, net of tax 12
(1)
-
Profit before tax 116 526
Income (tax)/benefit 8 35 252
Profit for the period attributable to the
shareholders
151 778
Other comprehensive income - -
Total comprehensive income
for the period attributable to the shareholders 151 778
Earnings per share attributable to the ordinary
equity holders of the company: 10
Basic earnings per share
0.019
0.114
Diluted earnings per share
0.019
0.114
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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Statement of Cash Flows
For the year ended 31 March 2018
Note
2018 2017
$000 $000
Cash flows from operating activities
Receipts from customers 9,930 9,249
Payments to suppliers and employees (9,336) (8,293)
Interest paid
(33) (2)
Interest received
11 21
Net cash flows from operating activities 18
572 975
Cash flows from investing activities
Purchase of property, plant and equipment
(65) (15)
Loans repaid by staff
19 15
Investment in equity accounted joint venture 12(b)
(1,000) (250)
Purchase of investment in equity accounted
associate 12(c)
(739) -
Term deposit
154 -
Proceeds for sale of Enprise Software
- 51
Net cash flows used in investing activities
(1,631) (199)
Cash flows from financing activities
Dividends paid
(294) (335)
Proceeds from issue of shares
1,023 168
Share buyback
- (80)
Proceeds from term loan
1,000 -
Repayment of term loan
(51)
Proceeds from Lock Finance
54 1
Repayment of insurance loan
- (35)
Net cash flows from/(used) in financing
activities
1,732 (281)
Net increase/(decrease) in cash and cash
equivalents
673 495
Net foreign exchange differences
(6) (6)
Cash and cash equivalents at beginning of
period
598 109
Cash and cash equivalents at end of period
1,265 598
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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Statement of Changes in Equity
Share
capital
Restated
Retained
earnings
2017
Total
equity
Group $000 $000 $000
Balance at 1 April 2016 2,823 854 3,677
Net profit / (loss) for the period:
- 778 778
Other comprehensive income
- - -
-
Total comprehensive income for the period - 778 778
Transactions with owners, recorded directly in equity 113
(335) (222)
Balance at 31 March 2017 2,936
1,297 4,233
Share
capital
Retained
earnings
2018
Total
equity
Group $000 $000 $000
Balance at 1 April 2017 2,936 1,297 4,233
Net profit / (loss) for the period: - 151 151
Other comprehensive income
- - -
Total comprehensive income for the period - 151 151
Dividends paid - (339) (339)
New shares issued 3,630 - 3,630
Balance at 31 March 2018
6,566 1,109 7,675
The above statement of changes in equity should be read in conjunction with the accompany notes.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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Notes to the Financial Statements
For the year ended 31 March 2018
1 Corporate information
The financial statements represented are those for the Enprise Group Limited.
Enprise Group Limited is a company limited by shares incorporated and domiciled in New Zealand whose shares
are publicly traded on the NZX Alternative Market (NZAX).
The nature of the operations and principal activities of the Group are described in the Directors’ Report section of
this annual report.
2 Summary of significant accounting policies
Table of Contents
(a) Basis of preparation ......................................................................................................... 13
(b) Changes in accounting policies ........................................................................................ 13
(c) Statement of compliance ................................................................................................. 13
(d) New accounting standards and interpretations .............................................................. 13
(e) Basis of consolidation ....................................................................................................... 14
(f) Investment in equity accounted investments – refer note 12 ....................................... 15
(g) Segment reporting – refer note 5 .................................................................................... 15
(h) Foreign currency translation ............................................................................................ 16
(i) Cash and cash equivalents ............................................................................................... 16
(j) Property, plant and equipment – refer note 13 .............................................................. 16
(K) Leases – refer note 21 ...................................................................................................... 17
(l) Intangibles – refer note 14 ............................................................................................... 17
(m) Provisions and employee benefits – refer note 16 .......................................................... 17
(n) Revenue recognition – refer note 6 ................................................................................. 18
(o) Income tax and other taxes – refer note 8 ...................................................................... 19
(p) Earnings per share – refer note 10 ................................................................................... 19
(q) Impairment of non-financial assets ................................................................................. 20
(r) Contributed equity – refer note 17 .................................................................................. 20
(s) Financial Instruments ...................................................................................................... 20
(t) Financial liabilities ............................................................................................................ 23
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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(a) Basis of preparation
The financial statements have been prepared under the historical cost basis, as modified by revaluations to fair value
for certain classes of assets as described in the accounting policies. The financial statements are presented in New
Zealand dollars and all values are rounded to the nearest thousand dollars ($000) unless otherwise stated.
(b) Changes in accounting policies
All policies have been applied on a basis consistent with the previous year.
(c) Statement of compliance
Enprise Group Limited is a FMC Reporting Entity under the Financial Markets Conduct Act 2013 and the Financial
Reporting Act 2013 and its financial statements comply with these acts. The company is listed on the NZX Alternative
Market.
The financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting
Practice (“NZ GAAP”). The financial statements comply with New Zealand equivalents to International Financial
Reporting Standards (“NZ IFRS”), as appropriate for profit-oriented entities. They also comply with International
Financial Reporting Standards (“IFRS”).
(d) New accounting standards and interpretations
Standards and interpretations that have recently been issued or amended but are not yet effective and have not
been adopted by the Group for the annual reporting period ending 31 March 2018. These are outlined in the table
below.
Reference Title Summary of requirements Effective date –
periods
beginning on or
after
Impact on Group financial report Application
date for
Group*
NZ IFRS 9 Financial
Instruments:
Classification
and
Measurement
This standard includes a new
framework for classification and
measurement of financial instruments
and a forward-looking expected-loss
impairment model.
It requires all financial assets to be:
(a) Classified on the basis of the
entity’s business model for
managing the financial assets
and the contractual cash flow
characteristics of the financial
asset.
(b) Initially measured at fair value
plus, in the case of a financial
asset not at fair value through
profit or loss, particular
transaction costs
(c) Subsequently measured at
amortised cost or fair value.
1 January
2018
Due to the nature of the
Group's financial assets and
liabilities the introduction of a
new classification (and
associated measurement)
framework is not expected to
have a material impact on the
financial instruments of the
Group. The forward-looking
impairment requirements are
also unlikely to materially
impact the financial
statements as extended credit
terms are rarely provided and
the Group has not had a
significant history of bad
debts in the past. The Group
also has extensive credit
control policies and
procedures in place that
ensure that credit is only
provided to good quality
customers. The adoption of
IFRS9 will also change the
classification of fair value
available for sale investments
to fair value through
Comprehensive Income.
1 April 2018
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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NZ IFRS 15 Revenue from
Contracts with
Customers
The core principle of the Standard is
to recognise revenue for the amount
of consideration due to an entity in
exchange for goods and services
provided to the customer. This is
done following a 5 step process:
(1) Identify the contract with the
customer
(2) Identify the performance
obligations in the contract
(3) Determine the transaction price
(4) Allocate the transaction price to
the performance obligations in
the contract and
(5) Recognise revenue when (or as)
the entity satisfies a
performance obligation by
transferring control of an asset
to a customer. This may be at a
point in time or over time.
The standard is expected to have a
significant impact on the timing of
revenue recognition for the software
industry.
1 January
2018
The Group has commenced a
NZ IFRS 15 implementation
project by reviewing existing
and planned sales contracts.
Software revenue will change
to becoming recognised net of
cost of goods sold. This will
have a significant impact on
Sales but no impact on Gross
Profit and Total
Comprehensive Income. The
relationship will change from
principal to agent. The effect
on consulting revenue
recognition is immaterial as
revenue recognition occurs in
accordance with the defined
deliverables in the contract
and there are typically few
implementation projects that
are unfinished at year end.
Unfinished implementation
projects at year end will be
reviewed to assess whether
revenue recognition is in
accordance with the defined
deliverables in the contract.
1 April 2018
NZ IFRS 16 Leases NZ IFRS 16 removes the classification
of leases as either operating or
finance leases – for the lessee –
effectively treating all leases as
finance leases. Lessor accounting
remains similar to current practice –
i.e. lessors continue to classify leases
as finance and operating leases.
Measures such as reported EBITDA
will improve because what are
currently accounted for as operating
lease expenses will become
depreciation and interest charges.
1 January
2019
The Group has a number of
lease commitments which will
be required to be capitalised
on the statement of financial
position when the new
standard is introduced. If NZ
IFRS 16 were introduced at
the current reporting date the
leasing asset and associated
liability would be a maximum
of the net present value of the
commitments disclosed in
note 21. The rent expense will
be replaced by interest
expense and depreciation
relating to the lease liability
and asset.
1 April 2019
(e) Basis of consolidation
The consolidated financial statements of Enprise Group Limited (“the Group”) comprise the financial statements of
the parent and its subsidiaries (as outlined in note 19) as at 31 March each year.
Subsidiaries are all entities over which the parent has control. Control is obtained when the parent has power over
the investee, is exposed to or has rights to variable returns from its investment and has the ability to use its power
to affect returns.
Subsidiaries are fully consolidated from the date on which control is obtained by the Group.
The acquisition of subsidiaries is accounted for using the acquisition method. The acquisition method involves
recognising at acquisition date, separately from goodwill, the identifiable assets acquired, the liabilities assumed and
any non-controlling interest in the acquirer. The identifiable assets acquired and the liabilities assumed are
measured at their acquisition date fair values. The difference between the above items and the fair value of the
consideration is goodwill.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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(f) Investment in equity accounted investments – refer note 12
Joint Venture Percentage Held Balance Date
Datagate Innovation Limited 39.29% 31 March
Kilimanjaro Consulting Pty Limited 47.09% 30 June
Associate Percentage Held Balance Date
iSell Pty Limited 14.06% 30 June
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to
the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant activities require unanimous consent of the
parties sharing control.
The results and assets and liabilities of the joint venture are incorporated in these consolidated financial statements
using the equity method of accounting. Under the equity method, an investment in a joint venture is initially
recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the
Group's share of the profit or loss and other comprehensive income of the joint venture.
An investment in a joint venture is accounted for using the equity method from the date on which the investee
becomes a joint venture. On acquisition of the investment in a joint venture, any excess of the cost of the
investment over the Group's share of the net fair value of the identifiable assets and liabilities of the investee is
recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group's
share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after
reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired.
The requirements of NZ IAS 36 are applied to determine whether it is necessary to recognise any impairment loss
with respect to the Group’s investment in a joint venture. When necessary, the entire carrying amount of the
investment (including goodwill) is tested for impairment in accordance with NZ IAS 36 Impairment of Assets as a
single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its
carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal
of that impairment loss is recognised in accordance with NZ IAS 36 to the extent that the recoverable amount of the
investment subsequently increases.
When the Group reduces its ownership interest in a joint venture but the Group continues to use the equity method,
the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognised in other
comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to
profit or loss on the disposal of the related assets or liabilities.
When a group entity transacts with a joint venture of the Group, profits and losses resulting from the transactions
with the joint venture are recognised in the Group's consolidated financial statements only to the extent of interests
in the joint venture that are not related to the Group.
The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive
income of equity accounted associate, after adjustments to align the accounting policies with those of the Group,
from the date that significant influence commences until the date that significant influence ceases.
(g) Segment reporting – refer note 5
A business segment is a distinguishable component of the entity that is engaged in providing products or services
that are subject to risks and returns that are different to those of other operating business segments. Operating
segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-
maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of
the operating segments, has been identified as the Board of Directors that makes strategic decisions.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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(h) Foreign currency translation
(i) Functional and presentation currency
Both the functional and presentation currency of Enprise Group Limited is New Zealand dollars ($). The subsidiaries’,
associate’s and joint ventures’ functional currency is the local currency which is translated to presentation currency
(see below).
(ii) Transactions & balances
Subsidiary/Joint Venture/Associate Functional Currency Presentation Currency
Enprise Australia Pty Limited Australian dollars ($) New Zealand dollars ($)
Enprise Solutions Limited New Zealand dollars ($) New Zealand dollars ($)
Enprise Limited New Zealand dollars ($) New Zealand dollars ($)
GlobalBizpro Limited New Zealand dollars ($) New Zealand dollars ($)
Datagate Innovation Limited New Zealand dollars ($) New Zealand dollars ($)
Kilimanjaro Consulting Pty Limited Australian dollars ($) New Zealand dollars ($)
iSell Pty Limited Australian dollars ($) New Zealand dollars ($)
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates
ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
retranslated at the rate of exchange ruling at the reporting date.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate as at the date of the initial transaction.
(iii) Translation of Group Companies functional currency to presentation currency
The results of the subsidiaries are translated into New Zealand dollars as at the date of each transaction. Assets and
liabilities are translated at exchange rates prevailing at reporting date. Exchange variations resulting from the
translation are recognised in the foreign currency translation reserve in equity.
(i) Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise of cash at bank and in hand and
short-term deposits with an original maturity of three months or less that are readily convertible to known amounts
of cash and which are subject to an insignificant risk of changes in value.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as
defined above.
(j) Property, plant and equipment – refer note 13
Property, plant and equipment are stated at historical cost less accumulated depreciation and any accumulated
impairment losses. Such costs include the cost of replacing parts that are eligible for capitalisation when the cost
of replacing the parts is incurred. The cost is recognised in the carrying amount of the plant and equipment as a
replacement only if it is eligible for capitalisation. All other repairs and maintenance are recognised in the
statement of comprehensive income as incurred.
Depreciation is calculated on a diminishing value basis over the estimated useful life of the specific assets:
Computer equipment – 20% to 50%
Office furniture and equipment – 10% to 50%
The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at
each financial year end.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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17
Derecognition
An item of property, plant and equipment is derecognised upon disposal or when no further future economic
benefits are expected from its use.
(k) Leases – refer note 21
Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the
lease term.
(l) Intangibles – refer note 14
Goodwill
Goodwill that arises on the acquisition of subsidiaries are initially measured at cost of the business combination,
being the excess of the consideration transferred over the fair value of the Subsidiaries’ net identifiable assets
acquired and liabilities assumed. After initial recognition, goodwill is measured at the amount recognised at
acquisition date less any accumulated impairment losses.
Other intangible assets
Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less
accumulated amortisation and accumulated impairment losses.
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure, including expenditure on internally generated intangible
assets, is recognised in the statement of comprehensive income as incurred.
Except for goodwill, intangible assets are amortised on a straight-line basis in the statement of comprehensive
income over their estimated useful lives, from the date that they are available for use.
The estimated useful lives for the current and comparative periods are as follows:
Software licenses
3-5 years
Customer relationships
5 years
Amortisation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if
appropriate.
Research and development costs
Research costs are expensed as incurred.
Development activities involve a plan or design for the production of new or substantially improved products and
processes. Development expenditure is capitalised only if development costs can be measured reliably, the
product or process is technically and commercially feasible, future economic benefits are probable and the Group
intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure
capitalised includes the cost of materials, direct labour, overhead costs that are directly attributable to preparing
the asset for its intended use. Capitalised development expenditure is measured at cost less accumulated
depreciation and accumulated impairment losses.
(m) Provisions and employee benefits – refer note 16
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle
the present obligation at the reporting date.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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18
Employee leave benefits
Wages, salaries, annual leave, long service leave
Liabilities for wages and salaries, including non-monetary benefits, and annual leave 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 recognised in respect of other long-term employee benefits are measured at the
present value of the estimated future cash outflows expected to be made by the Group in respect of services
provided by employees up to the reporting date.
(n) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue
are net of returns, trade allowances, rebates and amounts collected on behalf of third parties. Revenue is
recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can
be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:
(i) Rendering of services
Revenue includes software implementation and support services.
When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue
associated with the transaction is recognised by reference to the stage of completion of the transaction at the
balance date. The outcome of a transaction can be estimated reliably when all the following conditions are
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 balance date can be measured reliably; and
The cost incurred for the transaction and the costs to complete the transaction can be measured reliably
Contract revenue is also recognised under the percentage of completion method. A percentage of the revenue is
recognised in the accounting period in which the services are rendered. The stage of completion is assessed by
reference to surveys of work performed and delivered. When the outcome of an implementation and provisioning
contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred
that are likely to be recoverable. An expected loss on a contract is recognised immediately in profit or loss.
When the contract outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses
recognised that are recoverable.
Contract income, which includes license fees, hosting fees and transaction fees, is recognised in the statement of
comprehensive income in the accounting period in which the service is rendered, by reference to completion of
the specific transaction assessed on the basis of the actual service provided.
(ii) Sale of goods
Revenue includes sales of software licenses.
The revenue from the sale of third party software is recognised at the time of sale. Revenue from in-house
developed software is recognised on acceptance by the client.
The revenue from the maintenance on software developed by the Group is recognised over the period that the
maintenance applies.
(iii) Interest revenue
Interest income is accrued on a time basis, by reference to the principal outstanding and at the interest rate
applicable.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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19
(iv) Rental income
Rental income is recognised in the income statement on a straight-line basis over the term of the lease. Lease
incentives granted are recognised as an integral part of the rental income, over the term of the lease.
(o) Income tax and other taxes – refer note 8
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be
recovered from or paid to the taxation authorities based on the current period’s taxable income. The tax rates and
tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the
consolidated financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for
all deductible temporary differences and unutilised tax losses to the extent that it is probable that taxable profits
will be available against which those deductible temporary differences and unutilised tax losses can be utilised.
Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial
recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the
taxable profit nor the accounting profit.
Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Temporary differences that can reasonably be foreseen in the next accounting period have been recognised as a
deferred tax asset.
Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
i. when 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; and
ii. receivables and payables, which are stated with the amount of GST included.
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.
Cash flows are included in the Statement of Cash Flows on a gross basis and including the GST component of cash
flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation
authority is classified as part of operating cash flows.
(p) Earnings per share – refer note 10
Basic earnings per share is calculated as net profit attributable to members of the parent, divided by the weighted
average number of ordinary shares.
Diluted earnings per share is calculated as net profit attributable to members of the parent, divided by the
weighted number of ordinary shares and dilutive potential ordinary shares.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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20
(q) Impairment of non-financial assets
The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine
whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is
estimated.
Goodwill is tested annually for impairment. An impairment loss is recognised if the carrying amount of an asset or
its related cash-generating unit (“CGU”) exceeds its estimated recoverable amount. The recoverable amount of an
asset or CGU is the greater of its value in use and its fair value less costs to sell. For the purposes of impairment
testing, goodwill is allocated to each of the Group’s cash-generating units that are expected to benefit from the
synergies of the combination, irrespective of whether other assets or liabilities are assigned to those units.
Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill
relates. The Group performs its impairment testing as at 31 March each year using the value in use method based
on expected future revenue. When the recoverable amount of the cash-generating unit is less than the carrying
amount, an impairment loss is recognised.
Key assumptions used in determining the future cash flows from each CGU over the next 5 years are as follows.
31 March 2018 Growth Rate Discount Rate
Enprise Services – New Zealand 2.5% 20.0%
Enprise Services – Australia 5.0% 20.0%
31 March 2017 Growth Rate Discount Rate
Enprise Services – New Zealand 5.0% 20.0%
Enprise Services – Australia 10.0% 20.0%
The terminal value is based on a 2% perpetual growth rate after 5 years. These assumptions are based on
continued growth in new products and services being delivered by Enprise to both new and existing customers.
The Australian growth rate is higher than New Zealand as Enprise has assumed increased customer acquisition off
a smaller base, therefore a higher rate as a percentage.
The discount rate was estimated based on the weighted average cost of capital of similar public listed companies
adjusted for differences in risk profiles.
Management has performed sensitivity analysis on the key assumptions and believes that no reasonably possible
changes in any of the above key assumptions would cause the carrying value of goodwill to be materially lower
than its recoverable amount
(r) Contributed equity – refer note 17
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
PAGE
21
(s) Financial Instruments
Financial assets
Financial assets are classified into the following specified categories: ‘held-to-maturity' investments, ‘available-
for-sale' (AFS) financial assets and ‘loans and receivables'. The classification depends on the nature and purpose
of the financial assets and is determined at the time of initial recognition. All regular way purchases or sales of
financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are
purchases or sales of financial assets that require delivery of assets within the time frame established by
regulation or convention in the marketplace.
Financial instruments
Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual
provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value.
Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or
deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value
through profit or loss are recognised immediately in profit or loss.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of
allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash receipts (including all fees and points paid or received that form an integral part of the
effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt
instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments.
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed
maturity dates that the Group has the positive intent and ability to hold to maturity. Subsequent to initial
recognition, held-to-maturity investments are measured at amortised cost using the effective interest method
less any impairment.
Available-for-sale financial assets (AFS financial assets)
AFS financial assets (comprising of investments) are non-derivatives that are either designated as AFS or are not
classified as (a) loans and receivables, (b) held-to-maturity investments or (c) financial assets at fair value
through profit or loss.
The Group also has investments in unlisted shares that are not traded in an active market but that are also
classified as AFS financial assets and stated at fair value at the end of each reporting period (because the
directors consider that fair value can be reliably measured). Fair value is determined in the manner described in
note 28. Changes in the carrying amount of available-for-sale financial assets are recognised in other
comprehensive income and accumulated under the heading of available-for-sale revaluation reserve. When the
investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in
the available-for-sale revaluation reserve is reclassified to profit or loss.
Dividends on AFS equity instruments are recognised in profit or loss when the Group's right to receive the
dividends is established.
The fair value of AFS monetary financial assets denominated in a foreign currency is determined in that foreign
currency and translated at the spot rate prevailing at the end of the reporting period. The foreign exchange
gains and losses that are recognised in profit or loss are determined based on the amortised cost of the
monetary asset. Other foreign exchange gains and losses are recognised in other comprehensive income.
AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot
be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity
investments are measured at cost less any identified impairment losses at the end of each reporting period.
Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. Loans and receivables (including trade and other receivables, cash and cash
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
PAGE
22
equivalents, related party receivables and staff loans) are measured at amortised cost using the effective
interest method, less any impairment.
Interest income is recognised by applying the effective interest rate, except for short-term receivables when the
effect of discounting is immaterial.
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each
reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a
result of one or more events that occurred after the initial recognition of the financial asset, the estimated
future cash flows of the investment have been affected.
For AFS equity investments, a significant or prolonged decline in the fair value of the security below its cost is
considered to be objective evidence of impairment.
For all other financial assets, objective evidence of impairment could include:
significant financial difficulty of the issuer or counterparty; or
breach of contract, such as a default or delinquency in interest or principal payments; or
it becoming probable that the borrower will enter bankruptcy or financial re-organisation; or
the disappearance of an active market for that financial asset because of financial difficulties.
For certain categories of financial assets, such as trade receivables, assets are assessed for impairment on a
collective basis even if they were assessed not to be impaired individually. Objective evidence of impairment
for a portfolio of receivables could include the Group's past experience of collecting payments, an increase in
the number of delayed payments in the portfolio past the average credit period of 90 days, as well as
observable changes in national or local economic conditions that correlate with default on receivables.
For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference
between the asset's carrying amount and the present value of estimated future cash flows, discounted at the
financial asset's original effective interest rate.
For financial assets that are carried at cost, the amount of the impairment loss is measured as the difference
between the asset's carrying amount and the present value of the estimated future cash flows discounted at the
current market rate of return for a similar financial asset. Such impairment loss will not be reversed in
subsequent periods.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with
the exception of trade receivables, where the carrying amount is reduced through the use of an allowance
account. When a trade receivable is considered uncollectible, it is written off against the allowance account.
Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in
the carrying amount of the allowance account are recognised in profit or loss.
When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in
other comprehensive income are reclassified to profit or loss in the period.
For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event occurring after the impairment was
recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the
carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised
cost would have been had the impairment not been recognised.
In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed
through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other
comprehensive income and accumulated under the heading of available-for-sale revaluation reserve. In respect
of AFS debt securities, impairment losses are subsequently reversed through profit or loss if an increase in the
fair value of the investment can be objectively related to an event occurring after the recognition of the
impairment loss.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
PAGE
23
Derecognition of financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or
when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to
another party. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and
continues to control the transferred asset, the Group recognises its retained interest in the asset and an
associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of
ownership of a transferred financial asset, the Group continues to recognise the financial asset and also
recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset, the difference between the asset's carrying amount and the sum of the
consideration received and receivable and the cumulative gain or loss that had been recognised in other
comprehensive income and accumulated in equity is recognised in profit or loss.
(t) Financial liabilities
Financial liabilities (including borrowings and trade and other payables) are subsequently measured at
amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments (including all fees and points paid or received that form an integral
part of the effective interest rate, transaction costs and other premiums or discounts) through the expected
life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial
recognition.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged,
cancelled or have expired. The difference between the carrying amount of the financial liability derecognised
and the consideration paid and payable is recognised in profit or loss.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
PAGE
24
3 Financial risk management objectives and policies
The Group manages its exposure to key financial risks, including interest rate, liquidity risk and 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.
The Board reviews and agrees policies for managing each of the risks identified below, foreign currency and
interest rate risk, credit allowances, and future cash flow forecast projections.
Risk exposures and responses
Interest rate risk
The Group’s exposure to market interest rates relates primarily to the Group’s cash deposited in interest-bearing
call accounts and term loans. Interest rates are monitored although there is generally no significant variation in
interest rates offered by the different major banks.
The local operational bank accounts do not earn interest.
At 31 March 2018, if interest rates had moved, as illustrated in the table below, with all other variables held
constant, post-tax profit and equity would have been affected as follows:
Judgements of reasonably possible
movements:
Post Tax Profit
Higher/(Lower)
Equity
Higher/(Lower)
2018 2017 2018 2017
$000 $000 $000 $000
Group
+1% (100 basis points) (8) 8 (8) 8
- 1% (100 basis points) 8 (8) 8 (8)
Credit risk
The Group’s exposure to credit risk arises from potential default of the counter party, with a maximum exposure
equal to the carrying amount of these instruments. Exposure at balance date is addressed in each applicable note.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to
credit risk at the reporting date was as follows:
2018
2017
$000 $000
Staff receivables 136 17
Lock Finance 3 57
Trade and other receivables 1,346 1,232
Cash and cash equivalents 1,265 598
Term deposits - 154
Total 2,750 2,058
The Group does not hold any credit derivatives to offset its credit exposure.
The Group trades only with recognised, creditworthy third parties and as such collateral is not requested nor is it
the Group’s policy to securitize its trade and other receivables.
It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification
procedures including an assessment of their independent credit rating, financial position, past experience and
industry reputation. Risk limits are set for each individual customer in accordance with parameters set by the
board. These risk limits are regularly monitored.
In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to
bad debts is not significant.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
PAGE
25
3 Financial risk management objectives and policies (cont)
The only significant concentration of credit risk within the Group exists in relation to cash and cash equivalents,
the majority being held with two major trading banks.
Foreign currency risk
Each entity in the Group conducts the majority of its transactions in its functional currency.
The currency exposure of the Group arises from the effect of any substantial movements in currency rates on the
transfer of funds (the large proportion being in Australian dollars) to the local currency of the subsidiary to fund
operations.
The net exposure is not significant due to the size of the foreign operations and is mitigated by the regular transfer
of small advances to spread the currency risk over time. Although each subsidiary or geographic segment is subject
to variations in foreign currency rates, each segment is not material. Refer to note 5 on segment reporting.
The Group’s exposure to foreign currency risk was as follows based on foreign currency denominated monetary
assets and monetary liabilities:
2018 2017
In thousands translated from Australian
Dollars
NZD $000 NZD $000
Cash and cash equivalents 108 63
Trade and other receivables 252 225
Trade and other payables (397) (379)
Net statement of financial position exposure (37) (91)
The following significant exchange rates applied during the year:
Average rate Reporting date spot rate
2018 2017 2018 2017
Australian Dollars 0.9231 0.9383 0.9423 0.9174
At 31 March 2018, if exchange rates had moved with all other variables held constant, the impact to the post tax
profit and equity would not be material.
Liquidity risk
Liquidity risk represents the Group’s ability to meet its financial obligations on time. The Group’s cash flow enables
it to make timely payments. The Management evaluates the Group’s liquidity requirements on an ongoing basis.
The following tables set out the contractual cash flows for all financial liabilities:
Group – 2018
In thousands on New
Zealand Dollars
Carrying
amount
Contractual
cash flow
6 months
or less
6 – 12
months
1 – 2
years
2 – 5
years
Trade and other payables 1,083 1,083 1,083 - - -
Term loan 949 949 154 160 635 -
Other liabilities 34 34 8 8 18 -
Total 2,066 2,066 1,245 168 653 -
Group – 2017
In thousands on New
Zealand Dollars
Carrying
amount
Contractual
cash flow
6 months
or less
6 – 12
months
1 – 2
years
2 – 5
years
Trade and other payables 1,139 1,139 1,139 - - -
Other liabilities 49 49 8 7 15 19
Total 1,188 1,188 1,147 7 15 19
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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26
3 Financial risk management objectives and policies (cont)
Financial instruments classification
Group
Other
financial
liabilities
Loans and
receivable
Held-to-
maturity
Available for
sale 2018
Total
31 March 2018 $000 $000 $000 $000 $000
Financial Assets:
Cash and cash equivalents - 1,265 - - 1,265
Trade and other receivables - 1,016 - - 1,016
Related party receivables - 330 - - 330
Lock Finance - 3 - - 3
Staff receivables - 136 - - 136
Investments - - - 321 321
Term deposit - - - - -
Total - 2,750 - 321 3,071
Financial Liabilities:
Trade and other payables 1,083 - - - 1,083
Term loan 949 - - - 949
Other liabilities 34 - - - 34
Total 2,066 - - - 2,066
Group
Other
financial
liabilities
Loans and
receivable
Held-to-
maturity
Available for
sale 2017
Total
31 March 2017 $000 $000 $000 $000 $000
Financial Assets:
Cash and cash equivalents - 598 - - 598
Trade and other receivables - 1,226 - - 1,226
Related party receivables - 6 - - 6
Lock finance - 57 - - 57
Staff receivables - 17 - - 17
Term deposit - - 154 - 154
Total - 1,904 154 - 2,058
Financial Liabilities:
Trade and other payables 1,139 - - - 1,139
Other liabilities 49 - - - 49
Total 1,188 - - - 1,188
The Lock Finance facility was secured over Trade Receivables of Enprise Solutions Limited and Enprise Australia Pty
Limited. This facility was relinquished in December 2017 when Enprise Solutions Limited took out the ASB term
loan.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
PAGE
27
4 Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions
that affect the reported amounts in the financial statements. Management continually evaluates its judgements and
estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its
judgements and estimates on historical experience and on other various factors it believes to be reasonable under
the circumstances, the results of which form the basis of the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these estimates under different assumptions and
conditions.
Impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy
stated in note 2(q). The recoverable amounts of cash-generating units have been determined based on value-in-
use calculations. These calculations require the use of estimates (note 2(q))
Impairment of non-financial assets other than goodwill
The Group assesses impairment of all assets at each reporting date by evaluating conditions specific to the Group
and to the particular asset that may lead to impairment. The Group follows the guidance of NZ IAS 36 to determine
if a non-financial asset is impaired. This determination requires significant judgement. In making this judgement,
the Group evaluates, among other factors, external sources of information, such as significant changes with
adverse effect and market rates, as well as internal sources of information, such as evidence of obsolescence or
physical damage.
Recognition of the deferred tax asset
The Group has recognised a deferred tax asset on its statement of financial position as at reporting date. Significant
judgement is required in determining if the utilisation of deferred tax assets is probable. The recognition of
deferred tax assets is based upon whether it is more likely than not that sufficient and suitable taxable profits will
be available in the future against which the reversal of temporary differences can be deducted. To determine the
future taxable profits, reference is made to the latest forecasts of future earnings of the Group. Where the
temporary differences are related to losses, relevant tax law is considered to determine the availability of the
losses to offset against the future taxable profits.
The Group has recognised the benefit of a deferred tax asset for unutilised tax losses for one years’ forecast
taxable profit in New Zealand. The Directors have not recognised the benefit of unutilised tax losses beyond one
year due to uncertainty with regards to future shareholder continuity. Tax losses have not been recognised in
Australia as it is not sufficiently probable that taxable profit will be available to utilise the tax losses against.
Classification of Datagate as a joint venture
Datagate is a limited liability company whose legal form confers separation between the parties to the joint
arrangement and the company itself. Furthermore, the parties are bound by a shareholder agreement that governs
each party’s rights and obligations. There are no other facts and circumstances that indicate that the parties to the
joint arrangement have rights to the assets and obligations for the liabilities of the joint arrangement. Accordingly,
Datagate is classified as a joint venture of the Group. Refer to note 26 for details.
Classification of Kilimanjaro as a joint venture
Kilimanjaro is a limited liability company whose legal form confers separation between the parties to the joint
arrangement and the company itself. This is because currently decisions regarding Kilimanjaro’s relevant activities
requires unanimous consent of both directors, each who have been appointed by separate investors under the
company’s constitution. Accordingly, Kilimanjaro is classified as a joint venture of the Group as each party receives
its share of the net assets on wind up. Refer to note 26 for details.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
PAGE
28
4 Significant accounting judgements, estimates and assumptions (cont.)
Classification of iSell as an associate
iSell is a limited liability company which Enprise neither controls nor has joint control of. However Enprise’s interest
represents significant influence due to Enprise’s ability to participate in the decision making regarding iSell’s
operations. Therefore the investment in iSell has been equity accounted for and has been presented as an equity
accounted associate in the balance sheet. Refer to note 12 for details.
Fair value measurements and valuation processes
Some of the Group’s assets and liabilities are measured at fair value for financial reporting purposes. Information
about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are
disclosed in note 28.
5 Segment information
In presenting information on the basis of geographical segments, segment revenue is based on the geographical
location of customers. Segment assets are based on the geographical location of the assets.
The Board of Directors is the Group’s chief operating decision-maker. Management has determined the operating
segments based on the information reviewed by the Board of Directors and the Chief Executive Officer for the
purposes of allocating resources and assessing performance.
The geographic segments are described in the table below:
Legal Entity Location Geographic region
Enprise Group Limited (Parent) New Zealand New Zealand
Enprise Solutions Limited New Zealand New Zealand and Worldwide
Enprise Australia Pty Limited Australia Australia
Enprise Limited (Non-Trading) New Zealand New Zealand
Global Bizpro Limited (Non-Trading) New Zealand New Zealand
Datagate Innovation Limited * New Zealand Worldwide
Kilimanjaro Consulting Pty Limited ** Australia Australia
iSell Pty Limited *** Australia Worldwide
* Datagate has been recognised as a subsidiary until 11 December 2015 when the company lost control. From 11 December 2015, Datagate has
been recognised as a joint venture as the Company has joint control.
** Kilimanjaro has been recognised as a joint venture from 30 September 2017 as the Company has joint control.
*** iSell has been recognised as an associate from 19 December 2017 as the Company has significant influence but not joint control.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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29
5 Segment information (cont)
Geographic segments
The following table presents revenue, profit, and certain asset information regarding the geographic segments
performance for the year.
Year ended
31 March 2018
New Zealand
$000
Australia
$000
Asia
$000
TOTAL
$000
Continued operations
Revenue 6,869 1,911 29 8,809
Other income 32 - - 32
Interest Received 10 1 - 11
Total segment revenue 6,911 1,912 29 8,852
Inter-segment elimination - - - -
Total group revenue 6,911 1,912 29 8,852
Share of loss from equity accounted joint
ventures
(277) (292) - (569)
Share of loss in equity accounted associate - (1)
(1)
Inter-segment elimination - - - -
Net profit 277 (126) - 151
Depreciation & amortisation 115 - - 115
Capital expenditure 37 - - 37
Segment assets – current 3,061 348 - 3,409
Equity accounted investments 1,080 3,615 - 4,695
Segment assets – other non-current 2,591 20 - 2,611
Inter-segment elimination (744) - - (744)
Total group assets 5,988 3,983 - 9,971
Liabilities 1,891 1,149 - 3,040
Inter-segment elimination - (744) - (744)
Total group liabilities 1,891 405 - 2,296
Year ended
31 March 2017
New Zealand
$000
Australia
$000
Asia
$000
TOTAL
$000
Revenue 6,382 1,797 81 8,260
Other income 64 - - 64
Interest received 21 - - 21
Total segment revenue 6,467 1,797 81 8,345
Inter-segment elimination - - - -
Total group revenue 6,467 1,797 81 8,345
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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30
5 Segment information (cont)
Year ended
31 March 2017
New Zealand
$000
Australia
$000
Asia
$000
TOTAL
$000
Share of loss from equity accounted joint venture (290) - - (290)
Inter-segment elimination - - - -
Net profit 647 131 - 778
Depreciation & amortisation 100 - - 100
Capital expenditure 31 - - 31
Segment assets – current 2,610 290 - 2,900
Investments in equity accounted joint venture 1,237 - - 1,237
Segment assets – other non-current 1,780 158 - 1,938
Inter-segment elimination (526) - - (526)
Total group assets 5,101 448 - 5,549
Liabilities 1,057 906 - 1,963
Inter-segment elimination - (526) - (526)
Total group liabilities 1,057 380 - 1,437
Enprise Services Corporate Total
31 March 2018
Revenue 8,481 328 8,809
Other income 32 - 32
Total segment revenue 8,513 328 8,841
Interest received 1 10 11
Total group revenue 8,514 338 8,852
Interest expense (19) (14) (33)
Depreciation and amortisation (115) - (115)
Total group expense (134) (14) (148)
Share of loss from equity accounted joint venture - (723) (723)
Gain on dilution from equity accounted joint venture - 154 154
Share of loss from equity accounted associate (1) (1)
Net profit / (loss) 386 (235) 151
Enprise Services Corporate Total
31 March 2017
Revenue 8,260 - 8,260
Other income 64 - 64
Total segment revenue 8,324 - 8,324
Interest received 15 6 21
Total group revenue 8,339 6 8,345
Interest expense - (2) (2)
Depreciation and amortisation (100) - (100)
Total group expense (100) - (100)
Share of loss from equity accounted joint venture - (411) (411)
Gain on dilution from equity accounted joint venture - 121 121
Net profit / (Loss) 1,185 (407) 778
Assets and liabilities are not reported by segment to the Board of Directors. They are reported on a consolidated
group basis.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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31
7 Expenses
2018 2017
$000 $000
(a) Other operating expenses
Communications 66 60
Premises (operating lease) 197 194
Other 470 377
733 631
(b) Professional fees
Directors fees 65 65
Accountancy 11 23
Auditor’s remuneration (See note 24) 68 88
Legal 97 7
241 183
(c) Depreciation and amortisation
Depreciation 50 35
Amortisation – Customer Relationship 65 65
115 100
(d) Employee benefits expense
Wages and salaries 3,267 3,028
Superannuation 94 72
3,361 3,100
6 Other revenue
2018 2017
$000 $000
Interest income 11 21
Rent income 32 64
43 85
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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32
8 Income tax
2018 2017
$000 $000
(a) Income tax expense
Statement of comprehensive income
Current income tax benefit (35) (252)
(b) Reconciliation between tax at
statutory rate and tax expense in the
statement of comprehensive income
Profit before tax from continuing operations 116 526
116 526
Parent and Subsidiaries Profit taxed at 28% 243 407
Australian Subsidiary Profit (Loss) taxed at
30%
(127) 119
116 526
Statutory tax at 28% to 30% thereon 68 150
Temporary Differences 39 (252)
Non-deductible items 256 103
Non-assessable items (55) (34)
Tax losses utilised (343) (219)
Income tax expense reported in the
statement of comprehensive income
(35) (252)
(c) Unrecognised temporary differences
and tax losses
Unrecognised temporary differences are not
material
Accumulated tax losses (8,433) (8,819)
(d) Aggregate temporary differences from
investments in subsidiaries for which no
deferred tax asset has been recognized:
- -
(e) Imputation credits available in
subsequent period
- 15
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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33
9 Dividends paid
A final dividend of 3.5 cents (2017: 3 cents) per share was declared on 2 June 2017, the record date is 3 July 2017.
The dividend amount was $243,833 and paid on 17 July 2017.
An interim dividend of 1.0 cent per share was paid on 31 January 2018. The dividend amount was $95,451. The
dividend reinvestment plan applied resulting in 32,508 new shares being issued. The value of the shares issued at
$1.425 per share, totalling $46,326.
10 Earnings per share
The following reflects the income used in the basic and diluted earnings per share computations:
2018 2017
$000 $000
(a) Earnings used in calculating earnings per share
For basic earnings per share:
Net profit attributable to ordinary equity holders of the parent 151 778
For diluted earnings per share:
Net profit attributable to ordinary equity holders of the parent (from basic
EPS)
151 778
Net profit attributable to ordinary equity holders of the parent 151 778
(b) Weighted average number of shares 2018 2017
Thousands Thousands
Balance as at 1 April 6,966 6,791
Issue of ordinary shares – Staff 249 50
Rights issue 770 -
Purchase of Kilimanjaro in exchange for shares 1,560 -
Cancellation of ordinary shares – Global Bizpro - (200)
Issue of ordinary shares – Dividend Reinvestment Plan 33 325
Balance at end of year 9,578 6,966
Effect of dilution:
Share options - -
Weighted average number of ordinary shares 7,950 6,837
2018 2017
Cents per share
Cents per share
Basic earnings per share 1.9 11.4
Diluted earnings per share 1.9 11.4
There are no instruments (e.g. share options) excluded from the calculation of diluted earnings per share that
could potentially dilute basic earnings per share in the future because they are antidilutive for either of the periods
presented.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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34
11 Current assets - trade and other receivables
2018 2017
$000 $000
Trade receivables 1,073 1,227
Allowance for impairment loss (a) (133) (88)
Other receivables 76 87
Carrying amount of trade and other
receivables
1,016 1,226
Related party receivables (b)
Subsidiaries - -
Joint venture/associate 322 6
Other related parties 8 -
330 6
(a) Allowance for impairment loss
Trade receivables are non-interest bearing and are generally on 30-90 day terms. A provision for bad debts is
recognised when there is objective evidence that an individual trade receivable is impaired.
Bad debts of $46,646 (2017: $18,767) have been recognised by the Group and bad debts recovery of $59,575
(2017: $42,007) by the Group in the current year. These amounts have been included in the other operating
expenses item.
Movements in the provision for impairment loss were as follows:
2018 2017
At 1 April (88) (87)
Charge for the year (105) (43)
Amounts Recovered 60 42
At 31 March (133) (88)
At 31 March 2018, the aging analysis of trade receivables is as follows:
Total 0 – 30 days 31 – 60
days
61- 90 days
PDNI*
+91 days
PDNI*
+91 days
CI*
2018 Group 1,016 739 46 20 78 133
2017 Group 1,226 737 250 48 124 66
Past due not impaired (PDNI) Considered impaired (CI)
(b) Related Party Receivables
For terms and conditions of related party receivables refer to note 19.
(c) Fair value and credit risk
Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value.
The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security, nor is it the
Group's policy to transfer (on-sell) receivables to special purpose entities.
(d) Foreign exchange and interest risk
For further information on the management of foreign exchange and interest risk refer to note 3.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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35
12 Non-current assets – investments in equity accounted joint ventures and associate
(a) Datagate Innovation Limited
2018 2017
$000 $000
Restated
Opening balance 1,358 1,398
Investments in joint venture for the year - 250
Share of loss for the year (432) (411)
Gain on dilution 155 121
1,081 1,358
Please refer to note 26 – Joint Venture.
The Company reduced its equity stake in Datagate in November 2017 to 39.29% by not investing in this capital
raising. This rights issue took place at $1.50 per share, valuing the Company’s equity interest in Datagate at
$2,562,000.
Datagate is an early stage software company that is incurring losses however it is actively marketing its product.
The recoverability of the investment in the joint venture is dependent on the joint venture meeting its profit
forecast. If the joint venture were unable to meet its profit forecast, adjustments may need to be made to the
carrying value of the investment in joint venture. Further details on the joint venture is provided in note 26.
Reconciliation of the net assets of the joint venture
Net assets of the joint venture 1,866
Proportion of the Group’s ownership interest in the joint venture 39.29% 733
Goodwill 348
Carrying amount of the Group’s interest in the joint venture 1,081
(b) Kilimanjaro Consulting Pty Limited
2018 2017
$000 $000
Opening balance - -
Investments in joint venture for the year 3,168 -
Share of loss for the year (291) -
2,877 -
Please refer to note 26 – Joint Venture.
The Company obtained a 47.09% share of Kilimanjaro in September 2017. The carrying value of Kilimanjaro at year
end was $2,876,847 after Enprise’s share of loss for the year of $291,553. The purchase was made up of $1 million
paid in cash and $2,168,400 through the issuance of Enprise shares. At the time of purchase the Company also
granted a put option for the remaining 52.71% for $3,967,964 (2,854,650 ENS shares). The option can be exercised
between 1 September 2019 and 30 August 2020, subject to approval by MYOB.
Kilimanjaro is the largest reseller of MYOB Exo and Advanced in Australia. This was a strategic addition to the
portfolio to gain synergies due to the similarities in the business models and to expand Enprise’s reach in Australia.
Further details on the joint venture is provided in note 26.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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36
Reconciliation of the net assets of the joint venture
Net assets of the joint venture (411)
Proportion of the Group’s ownership interest in the joint venture 47.09% (194)
Goodwill 3,071
Carrying amount of the Group’s interest in the joint venture 2,877
The recoverability of the investment in the joint venture is dependent on the joint venture meeting its profit
forecast. If the joint venture were unable to meet its profit forecast, adjustments may need to be made to the
carrying value of the investment in joint venture. Further details on the joint venture is provided in note 26.
(c) iSell Pty Limited
2018 2017
$000 $000
Opening balance - -
Investments in associate for the year 739 -
Share of loss for the year (1) -
738 -
The Company obtained a 14.6% holding in iSell in December 2017. The carrying value of iSell at year end was
$738,471 after Enprise’s share of the loss for the year of $739.
iSell is a software company that sells a cloud-based quoting system used by the IT reseller market in Australia, New
Zealand and the UK.
Reconciliation of the net assets of the associate
Net assets of the associate 594
Proportion of the Group’s ownership interest in the associate 14.16% 84
Goodwill 654
Carrying amount of the Group’s interest in the associate 738
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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37
13 Non-current assets – property, plant and equipment
Computer
equipment
Furniture
and fittings
Office
equipment Total
$000 $000 $000 $000
Year ended 31 March 2018
Cost 150 171 84 405
Accumulated depreciation and impairment (117) (111) (73) (301)
Carrying value at beginning of the year 33 60 11 104
Additions 46 1 3 50
Disposals (1) - - (1)
Depreciation charge for the year (31) (17) (2) (50)
Carrying value at the end of the year 47 44 12 103
At 31 March 2018
Cost 195 172 87 454
Accumulated depreciation and impairment (148) (128) (75) (351)
Net carrying amount 47 44 12 103
Computer
equipment
Furniture
and fittings
Office
equipment Total
$000 $000 $000 $000
Year ended 31 March 2017
Cost 165 171 84 420
Accumulated depreciation and impairment (149) (94) (69) (312)
Carrying value at beginning of the year 16 77 15 108
Additions 31 - - 31
Disposals (1) - - (1)
Depreciation charge for the year (13) (17) (4) (34)
Carrying value at end of year 33 60 11 104
At 31 March 2017
Cost 150 171 84 405
Accumulated depreciation and impairment (117) (111) (73) (301)
Net carrying amount 33 60 11 104
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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38
14 Non-current assets – intangible assets
Customer
relationship
Goodwill Total
$000 $000 $000
Year ended 31 March 2018
Cost 329 1,626 1,955
Accumulated amortisation and impairment (130) - (130)
Carrying value at the beginning of the year 199 1,626 1,825
Amortisation charge for the year (65) - (65)
Carrying value at end of year 134 1,626 1,760
At 31 March 2018
Cost 329 1,626 1,955
Accumulated amortisation and impairment (195) - (195)
Net carrying amount 134 1,626 1,760
Customer
Relationship Goodwill Total
$000 $000 $000
Year ended 31 March 2017
Cost 329 1,626 1,955
Accumulated amortisation and impairment (65) - (65)
Carrying value at the beginning of the year 264 1,626 1,890
Additions - - -
Disposal of business - - -
Impairment - - -
Amortisation charge for the year (65) - (65)
Effect of foreign exchange differences - - -
Carrying value at end of year 199 1,626 1,825
At 31 March 2017
Cost 329 1,626 1,955
Accumulated amortisation and impairment (130) - (130)
Net carrying amount 199 1,626 1,825
The carrying amount of goodwill allocated to Australia’s CGU is $417,244 and the carrying amount of goodwill for
New Zealand’s is $1,209,080.
Description of the Group's intangible assets
Customer Relationships
Customer relationship costs are carried at cost less accumulated amortisation and accumulated impairment losses.
This intangible asset has been assessed as having a finite life and is amortised using the straight line value method
over a period of 5 years. The amortisation has been recognised in the statement of comprehensive income in the
line item depreciation and amortisation. If an impairment indication arises, the recoverable amount is estimated
and an impairment loss is recognised to the extent that the recoverable amount is lower than the carrying amount.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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39
15 Current liabilities - trade and other payables
2018 2017
$000 $000
Trade payables 491 520
Payroll liabilities 81 72
Other payables 511 547
Carrying amount of trade and other
payables
1,083 1,139
(a) Fair value
Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value.
(b) Foreign exchange and liquidity risk
For further information on the management of foreign exchange and liquidity risk refer to note 3.
16 Current liabilities – provisions
2018 2017
$000 $000
Employee entitlements 192 193
At 31 March 192 193
The staff leave entitlements which consist of holiday pay are due and payable, it is expected that they will be paid
within the following 12 month period.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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40
17 Contributed equity
2018 2017
$000 $000
Ordinary shares
(a) Ordinary shares
Issued and fully paid 6,566 2,936
Ordinary shares have no par value. Each share entitles the holder to one vote and the right to dividends. On wind
up each share has equal share of residual assets.
2018
$000
2017
$000
Movement in ordinary shares on issue
At 1 April 2017
2,936 2,823
Cancellation of ordinary shares
- (80)
Issue of ordinary shares
2,169 113
Issue of ordinary shares
1,185 25
Issue of ordinary shares
230 55
Issue of ordinary shares 46 -
At 31 March 2018 6,566 2,936
On 29 September 2017, 1,560,000 shares were issued to existing Kilimanjaro shareholders to acquire a 47.09%
stake. The shares were issued at a price of $1.39 per share.
On 30 November 2017, 852,664 shares were issued to eligible shareholders as part of a rights issue. The shares
were issued at a price of $1.39 per share.
On 8 December 2017, 165,753 shares were issued in a private placement to staff. The shares were issued at a price
of $1.39 per share.
On 31 January 2018, 32,508 shares were issued pursuant to a dividend reinvestment plan offered to eligible
shareholders. The shares were issued at a price of $1.425 per share.
The Group's objectives when managing capital, that is share capital and retained earnings, are to safeguard the
Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is
calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including current and
non-current borrowings as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is
calculated as equity as shown in the consolidated balance sheet plus net debt.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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41
18 Statement of cash flows reconciliation
2018 2017
$000 $000
Reconciliation of net profit to net cash flows from operations
Net profit
151
778
Adjustments for non-cash items:
Depreciation and amortisation 115 100
Net loss / (gain) on foreign exchange 6 (3)
Income tax benefit (35) (252)
Release of fit out loan (15) -
Impairment loss on trade receivables 45 -
Share of loss from equity accounted joint venture 569 290
Share of loss from equity accounted associate 1 -
Share based payment 30 -
Share issue in exchange for services (97) -
Changes in assets and liabilities
(Increase)/decrease in trade and other receivables (159) (153)
(Decrease)/increase in trade and other payables (38) 230
Decrease in other liabilities (1) (15)
Net cash from operating activities 572 975
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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42
19 Related party disclosure
(a) Subsidiaries, joint ventures and associates
The consolidated financial statements include the financial statements of Enprise Group Limited and its
subsidiaries, joint ventures, and associate as listed in the following tables:
Subsidiary name Country of
incorporation
Principal
Activity
% of equity interest Investment ($000)
2018 2017 2018 2017
Enprise Solutions
Limited
New Zealand Software sales 100 100 2,075 2,075
Enprise Australia Pty
Limited
Australia Software sales 100 100 - -
Enprise Limited New Zealand Software sales 100 100 - -
Global Bizpro Limited New Zealand Software sales 100 100 - -
Joint Venture/Associate
name
Country of
incorporation
Principal
Activity
% of equity interest Investment ($000)
2018 2017 2018 2017
Datagate Innovation
Limited
New Zealand Software Sales 39.29 44.19 1,352 1,352
Kilimanjaro Consulting
Pty Limited
Australia Software Sales 47.09 - 3,168 -
iSell Pty Limited Australia Software Sales 14.60 - 739 -
(b) Ultimate parent
Enprise Group Limited is the ultimate New Zealand parent entity and the ultimate parent of the Group.
(c) Key management personnel
Details relating to key management personnel, including remuneration paid, are included in note 20.
(d) Transactions with related parties
The following table provides the total amount of transactions that were entered into with related parties for the
relevant financial year (for information regarding outstanding balances on related party trade receivables and
payables at year-end, refer to notes 11 and 15 respectively):
Related Party
Sales to related
parties
Purchases from
related parties
Amounts owed by
related parties
Amounts owed to
related parties
$000 $000 $000 $000
Group
Kilimanjaro Consulting Pty
Limited
2018 293 3 318 -
2017 - - - -
Zhik Pty Limited 2018 81 - 6 -
2017 - - - -
Vadacom Limited 2018 11 - 2 -
2017 - - - -
Datagate Innovation Limited 2018 45 - 4 -
2017 58 - 6 -
Nicholas Paul (Director) ̽ 2018 - 33 - -
2017 - 50 - -
̽The outstanding balance from The Sales Factory within creditors is related by Nicholas Paul, who is a common
director for both companies.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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43
19 Related party disclosure (cont)
Terms and conditions of transactions with related parties:
(i) Shareholders and other related parties
During the year, the group provided and received services on standard commercial terms with related parties.
(ii) Subsidiaries
The transactions between the parent, Enprise Group Limited, and its subsidiaries, are comprised of cash advances
from the parent to the subsidiaries ($539k), and purchases made on behalf of the parent by the subsidiaries
($133k).
20 Key management personnel
Compensation for key management personnel
2018 2017
$000 $000
Salaries, bonuses and commissions 201 211
Other benefits 33 -
Directors fees 65 65
Total compensation 299 276
During the year, the number of employees or former employees, not being non-executive directors of Enprise
Group Limited received remuneration and the value of other benefits that exceeded $100,000 as follows:
2018 2017
Number of employees
100,001 – 110,000 5 3
110,001 – 120,000 3 1
120,001 – 130,000 - 4
130,001 – 140,000 1 -
140,001 – 150,000 1 -
150,001 – 160,000 - -
160,001 – 170,000 - 1
170,001 – 180,000 - 1
180,001 – 190,000 - -
190,001 – 200,000 1 -
200,001 – 210,000 1 -
210,001 – 220,000 - 1
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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44
21 Commitments
(i) Leasing commitments
Lease commitments
The Group has commercial lease commitments.
Enprise Solutions Limited – Auckland Office
The lease of Enprise Solutions Limited, Auckland Office, is for an initial term of 8 years, commencing 21 June
2012 with a renewal of a further six years. The renewal date is 21 June 2020. The final expiry date of the lease
is 20 June 2026.
Enprise Solutions Limited – Wellington Office
The lease of Enprise Solutions Limited, Wellington office, is for a term of 12 months, commencing on the 1st
February 2018. The lease expires on 31
st
January 2019 with a renewal of a further one year.
Enprise Solutions Limited – Hamilton Office
The lease of Enprise Solution Limited, Hamilton office, commenced on the 5th November 2007. The lease
agreement continues to operate until terminated by either party by way of 3 months’ notice in writing.
The total expense recognised for the year ended 31 March 2018 in relation to operating commitments is $197,022
(2017: $194,339).
Future minimum rentals payable under non-cancellable operating leases as at 31 March are as follows:
2018 2017
$000 $000
Within one year 137 139
After one year but not more than five years 160 288
After more than five years - -
Total minimum lease payments 297 427
(ii) Property, plant and equipment commitments
The Group had no contractual obligations to purchase plant and equipment at balance date. (2017: $nil).
22 Contingencies
There were no known material contingent liabilities at 31 March 2018 (2017: $nil).
23 Events after the reporting date
There were no known material events after the reporting date (2017: $nil).
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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45
24 Auditor’s remuneration
2018 2017
$000 $000
Amounts received or due and receivable by
Staples Rodway Auckland
Audit of financial statements – Staples
Rodway Auckland
Current year 68 57
Prior year - 31
68 88
25 Borrowings
2018 2017
$000 $000
Secured - at amortised cost
Bank loan 949 -
949 -
Current 314 -
Non-current 635 -
949 -
Borrowing arrangements
On 15 December 2017 the Company took out a $1 million loan with ASB Bank. The bank loan is secured by
unlimited cross guarantee and indemnity from and between Enprise Group Limited, Enprise Solutions Limited,
Globalbizpro Limited, and Enprise Limited.
The weighted average interest rate is 6.830% per annum as at 31 March 2018. The term of the loan is 36 months.
Borrowing covenants
The Group has complied with all borrowing covenants in the current financial year (2017: N/A).
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
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46
26 Joint Ventures and associate
(a) Datagate Innovation Limited
The Company invested $250,000 in Datagate at $1.20 per share on 1 December 2016. The capital raising total of
$1,042,794 reduced the Company’s share of Datagate to 44.19% and valued the company’s investment at
$2,050,000. The Company later reduced its equity stake in Datagate in November 2017 to 39.29% by not investing
in a second capital raising. This rights issue took place at $1.50 per share, valuing the Company’s equity interest in
Datagate at $2,562,000.
The following is summarised financial information for Datagate Innovation, based on its financial statements
prepared in accordance with IFRS.
In thousands of New Zealand
Dollars
2018
$000
2017
$000
Revenue 329 227
Profit / (Loss) from continuing operation’s
(1,038)
(862)
Other comprehensive income - -
Total comprehensive income / (loss) for the period
(1,038)
(862)
Current assets 838 1035
Non-current assets 1,206 1,341
Current liabilities (178) (163)
Non-current liabilities - -
Net assets 1,866 2,213
Financial Information as at 31 March 2018
2018 2017
000’s 000’s
Trade and Other Debtors 74 48
Cash 764 999
Trade Creditors (127) (168)
Fixed Assets 16 14
Intangible Assets 1,191 1,250
Charges to the Statement of Comprehensive Income of Datagate
2018 2017
000’s 000’s
Depreciation and Amortisation (362) (297)
Interest Income 16 14
Interest expense - -
Income Tax - -
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
PAGE
47
26 Joint Ventures and associate (cont)
(b) Kilimanjaro Consulting Pty Limited
Kilimanjaro is the largest reseller of MYOB Exo and Advanced in Australia. This was a strategic addition to the
portfolio to gain synergies due to the similarities in the business models and to expand Enprise’s reach in Australia.
The Company obtained a 47.09% share of Kilimanjaro in September 2017. The carrying value of Kilimanjaro at year
end was $2,876,847 after Enprise’s share of the loss for the year of $291,553.
At the time of purchase the Company also granted a put option for the remaining 52.71% for $3,967,964
(2,854,650 ENS shares). The option can be exercised between 1 September 2019 and 30 August 2020.
The following is summarised financial information for Kilimanjaro Consulting, based on its financial statements
prepared in accordance with IFRS from 1 October 2017 to 31 March 2018.
In thousands of New Zealand
Dollars
2018
$000
2017
$000
Revenue 4,949 -
Profit / (Loss) (619) -
Other comprehensive income - -
Total comprehensive income / (loss) for the period (619) -
Current assets 1,509 -
Non-current assets 1,041 -
Current liabilities (2,241) -
Non-current liabilities (720) -
Net assets (411) -
Financial Information as at 31 March 2018
2018 2017
000’s 000’s
Trade and Other Debtors 849 -
Cash 329 -
Trade Creditors (559) -
Current Financial Liabilities 377 -
Non-current Financial Liabilities 202 -
Fixed Assets 238 -
Intangible Assets 803 -
Charges to the Statement of Comprehensive Income of Kilimanjaro
2018 2017
000’s 000’s
Depreciation and Amortisation (35) -
Interest Income 3 -
Interest Expense (28) -
Income Tax 2 -
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
PAGE
48
26 Joint Ventures and associate (cont)
(c) iSell Pty Limited
iSell is a software company that sells a cloud-based quoting system used by the IT reseller market in Australia, New
Zealand and the UK.
The Company obtained a 14.6% holding in iSell in December 2017. The carrying value of iSell at year end was
$738,471 after Enprise’s share of the loss for the year of $739.
The following is summarised financial information for iSell, based on its financial statements from 19 December
2017 to 31 March 2018.
In thousands of New Zealand 2018 2017
Dollars $0 $0
Revenue 132 -
Profit / (Loss) from continuing operation’s (5) -
Other comprehensive income - -
Total comprehensive income / (loss) for the period (5) -
Current assets 128 -
Non-current assets 794 -
Current liabilities (316) -
Non-current liabilities (12) -
Net assets 594 -
Financial Information as at 31 March 2018
2018 2017
000’s 000’s
Trade and Other Debtors 102 -
Cash 27 -
Trade Creditors (29) -
Fixed Assets 2 -
Intangible Assets 792 -
Charges to the Statement of Comprehensive Income of iSell
2018 2017
000’s 000’s
Depreciation and Amortisation (114) -
Interest Income - -
Interest Expense (90) -
Income Tax - -
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
PAGE
49
27 Deferred Tax Balances
2017 Recognised
in profit
2018
Deferred tax assets in relation to
Doubtful debts 25 14 39
Employee benefits and entitlements 51 19 70
Tax losses carried forward 222 - 222
Audit fee accrual 15 (5) 10
Depreciation of Impaired Assets 12 (12) -
Total deferred tax assets recognised 269 34 303
Deferred tax (liabilities) in relation to
Customer relationships (56) 18 (38)
Total deferred tax liabilities recognised (56) 18 (38)
28 Non-Equity Accounted Investments
2018 2017
$000 $000
Zhik 97 -
Vadacom 224 -
321 -
(a) Zhik Pty Limited
In June 2017 Enprise paid $97,101 for a 0.6% holding in Zhik, a manufacturer of performance sports apparel.
The asset has been treated as an available-for-sale investment carried at fair value. This is because the Company
does not have significant influence over the entity.
(b) Vadacom Limited
In November 2017 Enprise paid $223,737 for a 6.49% holding in Vadacom, a cloud based VOIP phone and virtual
PABX provider. Enprise has a similar target market as Vadacom and both entities have and will continue to
leverage off this.
The asset has been treated as an available-for-sale investment carried at fair value. This is because the Company
does not have significant influence over the entity.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
PAGE
50
The following table gives information about how the fair values of the Group’s available for sale financial assets are
determined (in particular, the valuation technique(s) and inputs used).
Financial
assets
31 March 2018 31 March
2017
Fair value
hierarchy
Valuation technique(s)
and key input(s)
Significant
unobservable
input(s)
Relationship of
unobservable
inputs to fair
value
Zhik 0.6% equity
holding in Zhik
totalling
$97,101.
- Level 2 Market approach using
prices determined by
market transactions
involving the
investment's equity
instruments.
N/A N/A
Vadacom 6.49% equity
holding in
Vadacom
$223,737
- Level 2 Market approach using
prices determined by
market transactions
involving the
investment’s equity
instruments.
N/A N/A
29 Prior Period Adjustment
The Company made an adjustment in the prior period (2017) to account for the gain on dilution on its investment
in Datagate.
2017 2017
(Restated) (As Reported)
Share of loss from equity accounted investment, net of tax (290) (411)
Retained earnings 1,297 1,176
Investments in equity accounted joint venture 1,358 1,237
The effect was to restate the financial position and the statement of comprehensive income of the Company as at
31 March 2017.
ENPRISE GROUP LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS 31 MARCH 2018
PAGE
51
Corporate Information
New Zealand company number 1562383
ARBN (Australian Registered Body Number) 125 825 792
ABN (Australian Business Number) 41 125 825 792
Contact details
New Zealand Principal place of business
Level 2, 16 Hugo Johnston Drive Level 2, 16 Hugo Johnston Drive
Penrose, Auckland 1061 Penrose, Auckland 1061
PO Box 62262 Phone: +64 9 829 5500
Sylvia Park
Auckland 1644 Registered office
Phone: +64 9 829 5500 Level 2, 16 Hugo Johnston Drive
Fax: +64 9 829 5501 Penrose, Auckland 1061
Australia Principal place of business – Australia
P O Box R348 2/52 O’Connell Street, Parramatta
Royal Exchange NSW 2150
Sydney
NSW 1225 Suite 422-433, 838 Collins Street, Docklands
Phone: +61 2 8355 7055 VIC 3008
Fax: +61 2 8355 7045
Registered office – Enprise Australia
Internet address Level 3, 22 Market Street
www.enprisegroup.com Sydney, NSW 2000
Email
info@enprisegroup.com
Directors George Cooper Chief Executive Officer
Lindsay Phillips Chairman
Nicholas Paul Non-executive Director
Ronald Baskind Executive Director
Share Register Link Market Services Limited
Level 7, Zurich House
21 Queen Street
Auckland, New Zealand
Phone: +64 9 375 5990
Enprise Group Limited shares are listed on the NZX Alternative Market
Auditor Staples Rodway Auckland, New Zealand
Lawyer Hudson Gavin Martin, Auckland, New Zealand
Sean Joyce, Auckland, New Zealand
Principal Bankers ASB Bank Limited, Auckland, New Zealand
Level 9
45 Queen Street
Auckland 1010
New Zealand
PO Box 3899
Auckland 1140
New Zealand
T +64 9 309 0463
F +64 9 309 4544
E enquiries@staplesrodway.com
52
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Enprise Group Limited
Report on the Audit of the Consolidated Financial Statements
Qualified Opinion
We have audited the consolidated financial statements of Enprise Group Limited and its subsidiaries ('the
Group') on pages 7 to 50, which comprise the consolidated statement of financial position as at 31 March 2018,
and the consolidated statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, and notes to the consolidated financial
statements, including significant accounting policies.
In our opinion, except for the effects of the matter described in the
Basis for Qualified Opinion section of our
report, the accompanying consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Group as at 31 March 2018, and its consolidated financial performance
and its consolidated cash flows for the year then ended in accordance with New Zealand Equivalents to
International Financial Reporting Standards ('NZ IFRS') and International Financial Reporting Standards ('IFRS').
Our report is made solely to the Shareholders of Enprise Group Limited, in accordance with the Companies Act
1993. 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 Enprise Group Limited and the Shareholders of Enprise Group
Limited, for our audit work, for our report or for the opinions we have formed.
Basis for Qualified Opinion
The Group’s investment in iSell Pty Ltd, a foreign associate acquired during the year and accounted for by the
equity method, is carried at $738,000 on the consolidated statement of financial position as at 31 March 2018,
and the Group’s share of iSell Pty Ltd’s net loss of $1,000 is included in the Group’s income for the year then
ended. We were unable to obtain sufficient appropriate audit evidence about the carrying amount of the
Group’s investment in iSell Pty Ltd as at 31 March 2018 and the Group’s share of iSell Pty Ltd’s net loss for the
year because Management was unable to provide us access to the financial information and management of
iSell Pty Ltd. Consequently, we were unable to determine whether any adjustments to these amounts were
necessary.
We conducted our audit in accordance with International Standards on Auditing (New Zealand) ('ISAs (NZ)'). Our
responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements
section of our report. We are independent of the Group in accordance with
Professional and Ethical Standard 1 (Revised)
Code of Ethics for Assurance Practitioners issued by the New
53
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 and the IESBA Code. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Other than in our capacity as auditor we have no relationship with, or interests in, Enprise Group Limited or any
of its subsidiaries.
Emphasis of Matter
We draw attention to Note 12 (a) and (b) of the consolidated financial statements, which describes the
uncertainty regarding the recoverability of the investments in joint ventures. Our opinion is not modified in
respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the consolidated financial statements of the current year. These matters were addressed in the context of
our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Key audit matters are selected from the matters
communicated with the Directors, but are not intended to represent all matters that were discussed with them.
Key Audit Matter How our audit addressed the key audit matter
Impairment testing of Goodwill
As disclosed in Note 14 of the Group’s consolidated
financial statements, the Group has goodwill of $1.6m
allocated across two of the Group’s cash-generating
units (‘CGUs’). Goodwill was significant to our audit due
to the size of the asset and the subjectivity, complexity
and uncertainty inherent in the measurement of the
recoverable amount of these CGUs’ for the purpose of
the required annual impairment test. The measurement
of a CGUs recoverable amount includes the assessment
and calculation of its ‘value-in-use’.
Management has completed the annual impairment test
for each of these CGU as at 31 March 2018.
This annual impairment test involves complex and
subjective estimation and judgement by Management
on the future performance of the CGUs, discount rates
applied to future cash flow forecasts, and future market
or economic conditions.
Our audit procedures among others included:
Evaluating Management’s determination of the Group’s CGUs
based on our understanding of the nature of the Group’s
business and the economic environment in which the
segments operate. We also analysed the internal reporting of
the Group to assess how CGUs are monitored and reported.
Challenging Management’s assumptions and estimates used
to determine the recoverable value of its goodwill, including
those relating to forecasted revenue, cost, capital
expenditure, discount rates, by adjusting for future events
and corroborating the key market related assumptions to
external data. Procedures included:
o Evaluating the logic of the value-in-use calculations
supporting their annual impairment test and testing the
mathematical accuracy of these calculations;
o Evaluating Management’s process regarding the
preparation and review of forecasts;
o Comparing forecasts to Board approved forecasts;
o Evaluating the historical accuracy of the Group’s
forecasting to actual historical performance;
o Evaluating the forecast growth assumptions;
o Evaluating the inputs to the calculation of the discount
rates applied;
54
Key Audit Matter How our audit addressed the key audit matter
o Engaging our own internal valuation experts to evaluate
the discount rates applied;
o Evaluating Management’s sensitivity analysis’ for
reasonably possible changes in key assumptions; and
o Performing our own sensitivity analyses for reasonably
possible changes in key assumptions, the two main
assumptions being: the discount rate and forecast growth
assumptions.
Evaluating the related disclosures about indefinite life
intangible assets which are included in Note 2(q) and Note 14
in the Group’s consolidated financial statements.
Accounting for joint ventures
As disclosed in Note 12 of the Group’s consolidated
financial statements, the Group’s interest in Datagate
Innovation Limited is accounted for as a joint venture
using the equity method of accounting. The Group’s
share of the net loss after tax of Datagate Innovation
Limited for the year ended 31 March 2018 was $432,000.
The carrying value of the Group’s investment in
Datagate Innovation Limited at 31 March 2018 was
$1,081,000.
As disclosed in Note 12 of the Group’s consolidated
financial statements, the Group’s interest in Kilimanjaro
Consulting Pty Ltd is accounted for as a joint venture
using the equity method of accounting. The Group’s
share of the net loss after tax of Kilimanjaro Consulting
Pty Ltd for the year ended 31 March 2018 was $291,000.
The carrying value of the Group’s investment in
Kilimanjaro Consulting Pty Ltd at 31 March 2018 was
$2,877,000.
The joint ventures were significant to our audit due to
the size of the joint venture related balances and
complexity inherent in accounting for joint ventures
using the equity method.
Management has completed the equity accounting for
the joint ventures for the year ended and as at 31 March
2018.
Management has completed an impairment test of the
investments in the joint ventures as at 31 March 2018.
The determination of the classification of the Group’s
interests in Datagate Innovation Limited and Kilimanjaro
Consulting Pty Ltd requires subjective judgement by
Management. The assessment of indicators of
impairment and where such indicators exist, the
determination of the recoverable amounts of the CGUs
require subjective estimation and judgement by
Management.
Our audit procedures among others included:
Performing audit procedures on key balances of Datagate
Innovation Limited and Kilimanjaro Consulting Pty Ltd
(including intangible assets and revenue).
Evaluating Management’s accounting treatment of Datagate
Innovation Limited and Kilimanjaro Consulting Pty Ltd to
ensure compliance with NZ IAS 28
Investments in Associates
and Joint Ventures
.
Evaluating Management’s assessment of the indicators of
impairment based on our understanding of the joint ventures,
as its auditors, and current economic data.
Where indicators of impairment have been identified, our
audit procedures included challenging Management’s
assumptions and estimates used to determine the
recoverable value of the joint venture, including those
relating to forecasted revenue, cost, capital expenditure,
discount rates, by adjusting for future events and
corroborating the key market related assumptions to external
data. Procedures included:
o Evaluating the logic of the value-in-use calculations and
testing the mathematical accuracy of these calculations;
o Evaluating the joint venture’s process regarding the
preparation and review of forecasts;
o Comparing forecasts to Board approved forecasts;
o Evaluating the historical accuracy of the joint venture’s
forecasting to actual historical performance;
o Evaluating the forecast growth assumptions;
o Evaluating the inputs to the calculation of the discount
rates applied;
o Engaging our own internal valuation experts to evaluate
the discount rates applied;
o Evaluating the joint venture’s sensitivity analysis’ for
reasonably possible changes in key assumptions; and
o Performing our own sensitivity analyses for reasonably
possible changes in key assumptions, the two main
assumptions being: the discount rate and forecast growth
assumptions.
Evaluating the related disclosures about investments in
equity accounted joint ventures which are included in Note 12
and Note 26 in the Group’s consolidated financial statements.
55
Key Audit Matter How our audit addressed the key audit matter
Revenue Recognition
The Group has two distinct categories of revenue, being
revenue from software and licences and revenue from
services and support.
Revenue recognition in relation to services and support
is based on Management’s estimate of the stage of
completion with reference to the underlying contract.
Revenue recognition was significant to our audit
because of its significance to profit, the high volume of
transactions and the level of estimates and judgements
required by Management in recognising revenue from
service and support.
Our audit procedures among others included:
Evaluating Management’s systems, processes and controls in
place to calculate the amount of software and licence
revenue and services and support revenue recognised by the
Group.
Evaluating the application of the Group’s revenue recognition
policy for a sample of software and licence revenue and
services and support revenue transactions.
Evaluating the related disclosures about revenue recognition
which are included in Note 2(n) in the consolidated financial
statements.
Other Information
The Directors are responsible for the other information. The other information comprises the information
included in the Company’s annual report for the year ended 31 March 2018 (but does not include the financial
statements and our auditor’s report thereon).
Our opinion on the financial statements does not cover the other information and we do not express any form
of audit opinion or assurance conclusion thereon.
In connection with our audit of the financial statements, 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, we conclude that there is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Consolidated Financial Statements
The Directors are responsible on behalf of the 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 the 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
56
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (NZ) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
As part of an audit in accordance with ISAs (NZ), we exercise professional judgement and maintain professional
scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management.
Conclude on the appropriateness of the use of the going concern basis of accounting by the Directors and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including
the disclosures, and whether the consolidated financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are
responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
57
We also provide the Directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Directors, we determine those matters that were of most significance
in the audit of the consolidated financial statements of the current year and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated
in our report because the adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is D I Searle.
STAPLES RODWAY AUCKLAND
Auckland, New Zealand
31 July 2018
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.