Gentrack Annual Report 2018
Gentrack Group Limited
Annual Report 2018
2 / GENTRACK ANNUAL REPORT
GENTRACK ANNUAL REPORT / 3
CONTENTS
4 Gentrack Highlights
6 Chairman and Chief Executive Officer’s Report
10 Customers: Growing our Community of
Leading Utilities and Airports
14 Utilities: Enabling the Energy and Water Revolution
18 Acquisition Update: Evolve Analytics
20 Airports: Go Brilliantly — Go Veovo
24 Gentrack Operational Update
26 Technology Update
30 People Success
33 Industry Recognition
34 Building a Sustainable Future
37 Financial Statements
73 Corporate Governance
77 Disclosures
82 Corporate Directory
4 / GENTRACK HIGHLIGHTS
GENTRACK
HIGHLIGHTS
ADDITIONAL CUSTOMERSGROWTH IN TOTAL
RECURRING REVENUE
ACQUISITIONSAAS REVENUES
RIGHTS ISSUESUCCESSFUL MARKET ENTRY
3
new systems
deployed to
customers
$90m
Zero debt
$50m undrawn facility
15 of 16
new utility customers
signed on subscription basis
Annualised Committed Recurring Revenue
$51.8m – Up 103% year on year
£23.0m (NZ$44.9m)
Revenue and Cost Assurance
Portfolio Data Management
25 utilities3 airports
Full Year Recurring Revenue:
$64m – Up 50% year on year
All figures in NZD.
1
Recurring Revenue includes recurring software revenues and recurring professional services.
GENTRACK HIGHLIGHTS / 5
REVENUE
CAGR EBITDA
c.24% since IPO
$31.0m
Up 30%
$13.9m
Up 17%
85%
Pre-tax as a %
of EBITDA
13.7cps
Full year
4
192%
since IPO
5
EBITDA
2
N PAT
FREE CASHFLOWDIVIDEND
TOTAL
SHAREHOLDER RETURNS
Up 37%
Excluding acquisition
3
Up 26%
Excluding acquisition
3
$104.5m
Up 39%
2
Throughout this report EBITDA refers to profit before depreciation, amortisation, acquisition related costs, revaluation of financial liabilities,
impairment of goodwill, financing and tax.
3
Evolve Analytics acquired in June 2018.
4
Final dividend is 8.7cps.
5
Based on the closing share price on 23 November 2018 of NZ$6.48 and including the FY18 final dividend.
6 / CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REPORT
CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REPORT / 7
DEAR SHAREHOLDERS
The year to 30 September 2018 (FY18) was another exciting period for
Gentrack as we continued to deliver strong organic growth, raise our profile
in the global airport sector with the launch of the Veovo brand and expand
our utility solutions offering with the acquisition of Evolve Analytics and the
introduction of Gentrack Cloud.
We welcomed 25 new utilities and 3 new airports to our growing customer
community, which helped to drive our FY18 subscription and software licence
revenues up 78% on last year. FY18 also saw Gentrack retain its leading market
share of the UK’s independent energy suppliers and advance the delivery of our
strategy with a number of the UK’s large utilities signing up for our solutions.
Our new utilities customers continue to adopt our productised solutions in the
cloud, and over 90% of our new contracts have been signed on a SaaS basis,
driving the Group’s Annualised Committed Recurring Revenue (ACRR) up
by 103% year-on-year to $51.8m. Full year recurring revenue for the Group,
which includes non-contractually recurring services to our customer base now
accounts for 61% of total revenue.
We have been rewarded for our investment in the Veovo brand with revenues
up 66% and new business signed with key airports in the USA, including
Orlando International Airport and the Port Authority of New York and New
Jersey which operates JFK, LaGuardia and Newark International airports. Hot
on the heels of this success, we opened our first sales and support office in the
region and are now seeing a growing pipeline of US opportunities.
In June 2018 we completed the acquisition of Evolve Analytics which offers a
highly complementary SaaS-based portfolio data analytics, and revenue and
cost assurance solution to our existing utility billing and customer information
solutions. Evolve Analytics is performing well, and we are seeing the expected
cross-sell opportunities in our UK customer base.
CHAIRMAN AND
CHIEF EXECUTIVE
OFFICER’S REPORT
8 / CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REPORT
“The transition to SaaS has been a major focus as
we look to deliver more value and extend the life-
time value of our customers.”
Continued expansion in the UK means that over 50% of the Group’s revenues
now come from the UK and Europe and half of our staff are based in the
region. We continue to see growth opportunities in South East Asia following
the opening of our new office in Singapore and our third contract win in that
newly competitive market.
Our new product strategy is also paying dividends with the release of our
first cloud-native integration platform for utilities. We remain positioned as a
key supplier of full meter-to-cash solutions with integrated revenue and data
assurance, and analytics capabilities in the cloud. We will continue to invest
in our highly productised solutions to enable faster solution delivery and a
smooth transition to our SaaS model, which will extend the lifetime value of
our customers.
In July 2018 we undertook a successful Accelerated Renounceable Equity
Offer to raise NZ$90m to de-gear the balance sheet, leaving us with NZ$50m
of undrawn debt facilities to pursue acquisition opportunities that may arise.
The offer was well received by the market with strong demand in both the
institutional and retail book builds.
We have declared a final dividend of 8.7cps, taking the full year dividend to
13.7cps, up 7.9% on last year. This is in line with our dividend policy to pay out
70-80% of NPATA, representing a total payout of NZ$12.8m and 70% of NPATA.
Looking forward, in our key markets in the UK and Australia, there is currently
significant investment uncertainty amongst our utility customers following
Government reviews and intervention in the energy retail markets. In the UK
the introduction of electricity price caps on default tariffs in January 2019 will
significantly impact utility margins and business models, and will compound
CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REPORT / 9
Brexit uncertainty. Gentrack continues to target 15% p.a. organic EBITDA
growth in the long term, but we remain exposed to contract and project timing
risk and are seeing customers adopt a cautious approach to new projects. Our
transition to productised solutions and increased focus on growing committed
recurring revenues and expanding our addressable market will enable us to
build resilience during the uncertain market conditions.
It’s been another strong year of growth and transformation for Gentrack,
and we would like to thank our customers, teams and shareholders for their
ongoing support as we position the business for further global success.
John Clifford
Ian Black
Chairman Chief Executive Officer
UP 103%
Annualised
Committed Recurring
Revenue (ACRR)
UP 68%
Licence Revenue
UP 82%
Annual Fees
UP 107%
UK Revenue
UP 66%
Airport Revenue
UP 34%
Utilities Revenue
10 / CUSTOMERS
CUSTOMERS / 11
For 30 years we have focussed on designing, building, delivering and
supporting software solutions to two core markets — utilities and airports. Over
this time, our IP has continued to evolve at pace along with our customers, the
markets they operate in and the end-customers they serve on a daily basis.
Our software solutions are considered mission critical, and once deployed, they
become deeply embedded within our customers’ organisations and sit at the
heart of operational efficiency and customer service enablement.
CUSTOMERS: GROWING
OUR COMMUNITY OF
LEADING UTILITIES AND
AIRPORTS
ENERGY
Our customer base comprises energy suppliers
in competitive and reforming markets, from new
entrant and specialist suppliers to independent
and large suppliers serving residential, business
and commercial customers in Australia, New
Zealand, the UK and Singapore.
WATER
We serve water suppliers across all states and
territories of Australia and the competitive
non-household water market in the UK.
AIRPORTS
Our customer base is made up of large airports
and aviation authorities in the USA, Europe,
APAC and EMEA regions, typically with over 2
million PAX p.a.
12 / CUSTOMERS
WE REMAIN FOCUSSED ON UTILITIES AND AIRPORTS
Leveraging our IP within utilities and airports markets provides a focus for our
business as we look to take advantage of growth opportunities and to extend
the value we deliver to our customers around the world. These markets
present significant opportunities, not least the potential for delivering highly
valued subscription-based enterprise software that will further transform
Gentrack’s revenue model and be truly reflective of what we enable utilities
and airports to achieve.
Remaining focussed on these markets is a core tenet of our business
strategy. Our expertise and ability to build credibility is essential to winning
new business and delivering larger high-value projects in our core markets.
Our success is predicated on staying focussed on the continued industry,
technology and customer revolution driving energy and water utilities and
airports to find new ways to work, new ways to engage customers and new
ways to manage their investment in technology and partner ecosystems.
GENTRACK EXTENDS ITS UTILITIES FOOTPRINT
This year has seen the addition of 25 new utilities to our customer base,
including a range of new entrant, growing independent and large energy
suppliers in the UK, Australia, New Zealand and Singapore. We have retained
our market position in the UK, working with over half of the independent
energy suppliers in the market and, more recently, delivering our solutions to
four of the largest energy brands in the sector – npower, SSE, EON, and EDF.
In New Zealand, we have welcomed the highly successful Energy Online retail
business as a customer, and in Singapore we successfully deployed three
energy retail solutions to the new open electricity market.
Our success with the Junifer billing and customer information solution,
an acquisition in 2017, has been strong in the UK, and recently we have
celebrated the successful introduction of the product into Australia
NZ
21
AUSTRALIA
22
UK
60
SINGAPORE
3
(Utility customers by region)
CUSTOMERS / 13
“We continue to engage with larger utilities and airports looking to disrupt
themselves. Our cloud-ready solutions and expertise position Gentrack as a
partner of choice where success is predicated on being agile and delivering
rapid results.”
Ian Black, CEO
winning our first Junifer contract in the region with Mojo Power. Further
commercialisation of the solution in Australia will continue through 2019 with
a healthy pipeline of opportunities to deliver against our original strategy to
leverage our acquisitions into existing markets.
The acquisition of Evolve Analytics in June 2018 has contributed nine new
names to our customer community, including EDF Energy, Utility Warehouse
and Ecotricity. Since 2010, the portfolio data management and revenue and
cost assurance solution has saved energy suppliers in the UK in excess of
£300m in market settlement overcharges proving its value to utilities who
need specialist expertise and data intelligence to improve their operational and
revenue performance.
VEOVO LANDS NEW AIRPORTS DEALS
Veovo added three new airports as customers in FY18, signifying the growing
value of our revenue, operations and customer platform for airports. Orlando
International Airport is deploying Veovo’s Resource Management and Airport
Operational Database solutions throughout FY19, and the Port Authority of
New York and New Jersey has extended its investment in our solutions with
the deployment of Veovo’s passenger tracking solution, BlipTrack.
Having been awarded contracts by Belfast International Airport, and Jersey
Airport in the Channel Islands, further development of the Veovo business in
the UK is also a highlight of FY18. New signings and ongoing projects have
resulted in Veovo achieving year-on-year revenue growth of 66%, with licence
revenue and annual fees up 80% and 64% respectively.
Veovo customers include 24 of the World’s Top 100
Airports of 2018 (Skytrax)
14 / ENABLING THE ENERGY AND WATER REVOLUTION
NEW TECHNOLOGIES. NEW CUSTOMERS.
NEW EXPECTATIONS.
Energy and water sectors globally are continuing to evolve at speed with a
combination of competitive reforms, new technologies and changing customer
service innovation driving the next wave of the energy and water revolution.
UTILITIES: ENABLING
THE ENERGY AND
WATER REVOLUTION
MARKET COMPETITION
NEW TECHNOLOGIES
CUSTOMER SERVICE
INNOVATION
ENABLING THE ENERGY AND WATER REVOLUTION / 15
16 / ENABLING THE ENERGY AND WATER REVOLUTION
Energy and water suppliers are now under more pressure than ever to
ensure that they have efficient and market compliant operations, as well as
a differentiated offering to attract and retain customers. Customer choice is
essential, and this can be best achieved through crafting a unique product
and service offering that not only drives down cost to serve but also rewards
digital customer engagement and loyalty, truly setting the supplier apart from
competitors.
New technologies are also playing a significant role in shaping the next
iteration of energy and water sectors. Electric vehicles, solar PV, energy
storage and new customer engagement technologies provide opportunities for
new entrant and established energy suppliers to create unique offerings while
customers themselves are becoming prosumers overnight. The falling costs
and availability of these technologies mean that community-based energy is
quickly becoming a reality, placing more control of energy generation and
usage in the hands of consumers.
And with the age of customer experience innovation upon us, energy and
water suppliers can no longer retain traditional approaches to service delivery
and customer engagement. Customers want more, with their expectations
being shaped by other digital retail experiences. Utilities are finding new ways
to balance cost to serve with customer service experiences that deliver a
longer lifetime value of each customer. While digital experiences are essential,
they also need to be personalised and enable engagement across multiple
platforms and channels to ensure the customer journey is an exceptional one.
LEADING ENTERPRISE SOFTWARE AND SERVICES TO
ENABLE THE ENERGY AND WATER REVOLUTION
Gentrack’s customers live at the heart of this revolution, and therefore, our
software, and services are playing an essential role in enabling the continued
proliferation of the energy and water revolution. We design, build and deliver
our solutions with this revolution front of mind, and it forms the very core
for why we do what we do. Our productised software solutions for energy
and water utilities offer the flexibility needed to bill any number of products
and services, and to manage information for all types of customers, including
household, business and commercial.
ENABLING THE ENERGY AND WATER REVOLUTION / 17
“Our IP has enabled us to build highly productised
solutions for our core markets that can be
delivered faster than ever before. In order to
optimise the value of these solutions and to fulfil
our role as an enabler of innovation, an open
cloud-based platform is essential to our ongoing
success.”
Colin Bowern, Head of Product
WE’VE BUILT OUR FIRST CLOUD-NATIVE SOLUTION
We’ve built our first ever cloud-native product to enable our utilities customers
to leverage their investment in core billing and customer data, predominantly
to enhance the customer service experience. The revolution has seen a
myriad of new technologies brought to market, including apps and tools that
empower customers to use their energy and water more cost-effectively and
responsibly. Our Integration Services platform opens utility businesses to
a new world of possibilities with a growing ecosystem of partners building
solutions around our Gentrack Cloud offering. Pre-built connectors remain in
our R&D pipeline to support ease of connectivity to best-in-class solutions that
enhance a utility’s customer service experience and operational performance.
18 / ACQUISITION UPDATE
UNLEASHING PERFORMANCE THROUGH
ENERGY PORTFOLIO INTELLIGENCE
In June this year, we welcomed Evolve Analytics to Gentrack, extending our
offering for UK energy suppliers in the areas of revenue and cost assurance,
and portfolio data management. The Evolve solution is highly complementary to
the Gentrack product and service offering and presents potential opportunities
for cross-selling our solutions and exploring the introduction of the Evolve
solutions and services into other markets where Gentrack has an ecosystem of
utilities customers.
In an era of smart technologies, when volumes of data across the utilities
sector are set to grow exponentially, data accuracy is critical. And building
intelligent portfolio insights to enable effective segmentation and prioritisation
of revenue optimisation activities is just as important.
With Gentrack’s unique combination of software and expertise, utilities can:
ACQUISITION UPDATE:
EVOLVE ANALYTICS
Optimise
revenues
Boost porfolio
performance
Rapidly identify and
address data errors
Identify and rectify
multiple issues per
meter point
Automate corrective
workflows
Ensure compliance
targets are met
ACQUISITION UPDATE / 19
“Over 10 years, we’ve recovered in excess of £300
million in settlement overcharges for our clients.”
Alan Duggan, MD, Evolve
20 / AIRPORTS
AIRPORTS / 21
VEOVO BRAND LAUNCHED GLOBALLY
In February 2018 Gentrack launched Veovo, its new brand combining its 20/20
operations solution with the BlipTrack guest predictability and CA+ revenue
maximisation solutions. By fusing these powerful solutions into one airport-
wide collaboration platform, we now enable airports and their partners to plan,
predict and perfect their operations and passenger experiences.
AIRPORTS MAKE BETTER DECISIONS WITH VEOVO-
ENABLED PREDICTIVE INSIGHTS
Airports around the world are embracing digital transformation to overcome
capacity challenges, manage soaring passenger numbers and boost their
incomes. However, many lack access to the right data to make the best
decisions as it resides in different, unconnected systems around the airport.
Veovo’s unique value proposition is that it helps airports to harness the most
significant operations, revenue and guest behaviour data from across the
airport business. We then use our expertise and predictive analytics to help
airports plan the best path forward, quickly react to emerging situations and
learn from the actions taken to ensure better outcomes in the future. With
Veovo, airports can now answer questions such as what impact will long
queues have on retail spend, or what changes do we need to make to bus
scheduling and gate allocations to handle flight delays?
INVESTING IN THE VEOVO BRAND
Following the Veovo launch, we have invested significantly in building brand
awareness in key airport growth markets such as Europe and North America.
Exhibitions and industry engagements at major industry trade shows, including
the Passenger Terminal Expo in Europe and the Airport Council International
conference in North America, have enabled further propagation of the Veovo
platform proposition and advancement of opportunities in the sales pipeline.
AIRPORTS: GO
BRILLIANTLY—
GO VEOVO
22 / AIRPORTS
North America continues to present attractive opportunities for Veovo
with 130 airports in our target segment and a $3.2b government-funded
infrastructure plan. We are already reaping the rewards of our sales and
marketing investments. Orlando International Airport, one of the largest in the
country, has selected the Veovo platform to optimise the use of its resources,
simplify long-term planning and help it to respond quicker to unplanned events
and passenger needs. And by aligning sales teams across the Veovo offering,
we are benefitting from cross-sell opportunities, including the Port Authority
of New York and New Jersey, which extended its relationship with Veovo
to include our BlipTrack guest predictability solution. In September 2018 we
established a US office to service our customers in the region and support our
growth ambitions.
UNDERPINNING EXCELLENCE FOR THE
WORLD’S TOP AIRPORTS
Today Veovo technology supports brilliant airport operations for 118 airports in
25 countries, including 24 of the Skytrax ‘Top 100 airports’ in the world. Our
CA+ revenue maximisation software also took out the prestigious International
Airport Review award in FY18 for best revenue generation solution.
UK/EUROPE
78
NORTH AMERICA
11
A PAC
16
REST OF WORLD
13
(Airports by region)
When airports must go brilliantly: Go Veovo.
AIRPORTS / 23
Gold Coast Airport raised the bar for customer experience and
operational efficiency during the 2018 Commonwealth Games with
help from Veovo. New Veovo operations and flight information
display systems enabled the airport to smoothly handle a 30%
increase in the number of flights for Commonwealth Games
athletes and visitors, improving both on-time performance and
passenger communications.
VEOVO SUPPORTS PASSENGER INFLUX
FOR THE 2018 COMMONWEALTH GAMES
CUSTOMER STORY
“Gold Coast Airport places a strong emphasis
on providing an exceptional customer
experience for our passengers, and Veovo is
helping us deliver on that.”
Marion Charlton, COO, Gold Coast Airport
24 / GENTRACK OPERATIONAL UPDATE
“Businesses globally are impacted by the growing risks of
cybersecurity threats. Maintaining robust security practices and
awareness across the business is an essential component of our
journey to SaaS. Complacency is not an option.”
Robert Shelwell, GM ICT and Information Security
GENTRACK OPERATIONAL UPDATE / 25
CUSTOMER SUCCESS THROUGH REGIONAL AUTONOMY
Throughout FY18 we continued to invest in the transformation of our customer
support operations, in particular shifting the focus to Customer Success
as the core principle underlying how we deliver projects and engage with
our customers. We’ve moved to empower the regional offices and enable
regional autonomy, which is expected to pay dividends with ongoing customer
engagements and the delivery of more value to our customers. Our journey to
SaaS progressed strongly in FY18 with over 90% of our new contracts signed
on a subscription basis, supporting our strategy for productised solutions that
can be deployed quickly and easily maintained and updated regularly by our
DevOps teams.
WORKING IN NEW WAYS WITH AGILE
Agile practices have continued to proliferate across the global business
with investment in agile training dominating our learning and development
programme. The business now has dedicated agile coaches and team
facilitators as well as over 100 ICAgile Professionals. We continue to apply
agile principles and thinking across our customer success teams to ensure the
delivery of exceptional service and support.
EMBEDDING SECURITY IN OUR BUSINESS
Ongoing cybersecurity threats are impacting individuals and businesses
globally. Over the past year, we have invested in bolstering our infosecurity
team and awareness across the business, reinforcing the importance of
remaining vigilant to potential security threats. As well as training our people
and implementing best practice security processes and policies, we have
attained our ISO/IEC 27001:2013 accreditation and progressed our SOC2
compliance — one of the few tech companies in New Zealand to do so. These
certifications provide support for our sales engagement in core markets giving
customers added confidence in our Cloud solutions and services.
We remain committed to protecting customer data and credentials as well as
the key systems we use to deliver and support our software for airports and
utilities. We will continue to invest in security practices to minimise the risk of
cybersecurity threats to our business and that of our customers.
GENTRACK
OPERATIONAL UPDATE
26 / TECHNOLOGY UPDATE
CHANGING MARKETS REQUIRE NEW THINKING
The markets in which we operate are evolving at pace. Disruptive technologies,
consumer trends, new business models and increasing competition are all
leading to a foundational changes in our markets. We refer to this change as the
‘energy and water revolution’.
Enabling utilities to stay relevant and successful throughout this revolution
requires new approaches and thinking. Utilities want to experiment rapidly
and at an acceptable cost, whilst digitising back-office processes to achieve
operational excellence and lower cost to serve. A feature rich and compliant
solution for critical back-office processes is still required but no longer enough
on its own for success in competitive markets. We have seen a resulting trend
towards productised billing and customer information solutions, and therefore,
we have aligned our corresponding R&D investment in pre-packaged solutions
for our target markets.
In conjunction with our cloud-native platforms for integrating new technologies
and essential market interactions, productisation of our core solutions is the
foundation for shaping our future as a leading provider of SaaS solutions to
enable the energy and water revolution.
TECHNOLOGY
UPDATE
“Gentrack Cloud Integration Services enables
utilities to differentiate at speed, extending their
core meter-to-cash processes into the rest of the
digital enterprise.”
Colin Bowern, Head of Product
PRODUCTISED SOLUTIONS
(SaaS)
Delivered in the cloud
Pre-configured solutions
Market-driven R&D
Regular software upgrades
<
4 month delivery
Pre-built connectors via
cloud platform
TRADITIONAL SOLUTIONS
On-premise delivery
Bespoke solutions
Customer-driven R&D
Irregular software upgrades
12+ month delivery
Custom integration
TECHNOLOGY UPDATE / 27
28 / TECHNOLOGY UPDATE
BUILDING PRODUCTISED SAAS SOLUTIONS
We have accelerated our productisation programme as a key enabler of
our transition to SaaS and transformed our approach to building software
products for energy and water utilities. To meet the evolving requirements of
utilities looking to SaaS to support their IT and business strategies, we are
leveraging the cloud. This ensures that our products can be delivered faster
than ever before and that new capabilities can be deployed effortlessly to
extend the lifetime value of our customers and boost our annual recurring
revenues.
Our R&D programme in FY18 has led to the successful delivery of our
productised energy retail solutions in the UK and Singapore. We also
completed our fastest ever software deployment project for a new entrant
energy supplier, taking just four weeks for delivery in the Singapore electricity
market.
We continue to focus on building out our water retail solution and making
available the essential cloud-native platforms for enabling our customers to
connect new digital technologies and third-party apps designed to enhance the
customer experience and lower cost to serve.
GENTRACK PARTNERS WITH AMAZON WEB SERVICES
To support our move to SaaS, with a full service offering covering support,
maintenance and regular product updates, Gentrack has further cemented its
partnership with Amazon Web Services (AWS) over the past 12 months.
AWS is a leading provider of on-demand cloud computing platforms and
delivers a world-class environment and services ecosystem that underpins
rapid delivery of our Gentrack Cloud solutions, ensuring the security,
scalability and resilience our customers expect from a SaaS provider.
INCREASING THE LIFETIME VALUE OF OUR CUSTOMERS
Gentrack builds its software to support the most business-critical functions
within energy and water utilities, and traditionally, new functionality has been
added to existing products deployed on-premise. Our journey to SaaS signifies
a move towards delivering added value to customers, removing barriers for
taking product updates and making it easier to do business with Gentrack
through a subscription-based pricing model. This presents opportunities to
increase the lifetime value of our customers and to grow contracted recurring
revenues and margins.
TECHNOLOGY UPDATE / 29
“We’re excited by the future presented by a
transition to SaaS. We have an opportunity to
deliver more value to customers through our
subscription model including the ability to adapt at
pace to the energy and water revolution.”
Jan Behrens, CTO
In FY18 90% of our new contracts were on a SaaS basis, driving our full year
recurring revenues up by 50% to $64m and annualised committed recurring
revenues, a key measure of our growth, up 103% year on year to $51.8m.
ENABLING UTILITIES TO DIFFERENTIATE AT PACE
In FY18 we celebrated our first ever cloud-native product for utilities
customers with the official launch of the Gentrack Cloud Integration Services
platform. It was developed in response to growing demand to connect digital
technologies and services that enhance the customer experience and deliver
greater operational performance.
Utilities globally are reimagining their digital enterprise and reshaping their
teams, operating models and systems to gain competitive advantage and
drive down cost to serve. This can only happen with flexibility, speed and the
drive to innovate rapidly. In conjunction with a growing ecosystem of global
and local technology partners, Gentrack Cloud Integration Services enables
utilities to adapt quickly to the energy and water revolution.
30 / PEOPLE SUCCESS
EXPERTISE TO SUPPORT OUR GROWTH AND TRANSITION
Our people and their expertise in changing utilities and airports markets remain
highly sought after in the industry and are essential to our transition to SaaS and
continued growth. Throughout FY18 we have grown our number of people by
26%, adding 26 staff with the acquisition of Evolve Analytics. A further 84 staff
were added globally to support projects and new office openings in the USA and
Singapore. 50% of new hires were in the UK.
A FOCUS ON PEOPLE SUCCESS
FY18 saw the implementation of several new initiatives to elevate Gentrack’s
focus on People Success, including a streamlined onboarding process for
accelerating the knowledge and time-to-value of our people in technical roles.
Learning and development continues to be a focus for the business, with Agile
training across all offices dominating our investment throughout the year.
We recognise the importance of not only recruiting top talent but also continually
investing in our people, empowering them through Agile and enabling them to
deliver more value to our customers, faster. To compliment Agile training, we
have introduced a new mentoring initiative to foster an environment in which
our people at all levels within the business can learn from the experiences of
other Gentrackers and develop stronger expertise in areas of their choice.
We continue to give our people opportunities to build an exciting and successful
life at Gentrack, and in doing so, we ensure that we are able to retain and grow
the unique IP which is key to successfully delivering on our strategy.
INNOVATING THROUGH OUR INTERN PROGRAMME
Now in its third year, our summer internship programme offers tertiary students
in New Zealand, undertaking relevant software or IT programmes of study, the
opportunity to apply their academic learnings in a commercial setting and to
deepen their knowledge as they work alongside our experienced development
teams.
PEOPLE
SUCCESS
PEOPLE SUCCESS / 31
32 / PEOPLE SUCCESS
In FY18, we actively promoted our internship opportunities at The University
of Auckland through a partnership with its Faculty of Engineering. Bringing a
high level of enthusiasm and fresh ideas to the table, our interns were given
the chance to carve out the next stage of their careers while helping us to
shape the Gentrack of tomorrow.
GROWTH THROUGH DIVERSITY AND INCLUSION
Gentrack embraces diversity and fosters an inclusive environment where each
and every Gentracker is valued and respected. We recognise that nurturing
an inclusive and diverse culture within the organisation will ultimately lead to
enhanced People Success, stronger relationships with stakeholders, better
customer service and improved financial performance. At Gentrack, we value
the fresh thinking that diversity brings to our business and enjoy regularly
celebrating our diversity as part of our authenticity and global brand.
“We will win by empowering our people and
creating opportunities for growth and success.”
Melina Lemalie, HR Director
INDUSTRY RECOGNITION / 33
FY18 saw Gentrack receive a number of accolades in recognition of its financial success in New Zealand and offshore
markets. We are delighted with these achievements, which are testament to the expertise and passion of our people
and our innovative solutions which are in demand in markets around the globe.
INDUSTRY
RECOGNITION
AIR NEW ZEALAND CARGO EXPORTNZ AWARDS —
WINNER, BEST LARGE BUSINESS
Gentrack won the regional accolade of Best Large
Business (Services Exports) at 2018’s Air New Zealand
Cargo ExportNZ Awards in recognition of its success
by net return to New Zealand’s economy as a result of
operating in offshore markets. The aim of the ExportNZ
awards programme is to inspire New Zealand firms to
expand their business
horizons, engage in
exporting and grow
internationally.
TIN100 — EY TOP 10 COMPANIES TO WATCH
Gentrack ranked #7 in the EY Ten Companies to Watch
list in the 2018 Technology Investment Network (TIN)
Report. Sponsored by organisations including New
Zealand Trade and Enterprise and EY, the report monitors
the performance of New Zealand’s 200 (TIN100 and
Next100) largest technology exporters in various sectors.
The ranking recognises
Gentrack’s significant
contribution to New
Zealand’s economy
during FY18.
NZ INTERNATIONAL BUSINESS AWARDS — FINALIST
IN BEST LARGE BUSINESS
Gentrack was shortlisted as a finalist in the ANZ Best
Large Business category of the 2018 New Zealand
International Business Awards (NZIBA), run by New
Zealand Trade and
Enterprise. The category
recognises success by net
return to the NZ economy of
businesses with an annual
revenue totalling over $40m.
INTERNATIONAL AIRPORT REVIEW AWARDS —
REVENUE GENERATION AWARD (VEOVO)
Concessionaire Analyzer+ (CA+)
scooped the International Airport
Review Revenue Generation
Award in FY18. The Revenue
Generation category awards
those businesses that think
outside the box when it comes to
generating the income to sustain
modern day airports.
34 / BUILDING A SUSTAINABLE FUTURE AT GENTRACK
Gentrack is committed to doing business in ways that are good for our
communities and the planet. In FY18 we implemented our Gaia Programme to
drive sustainability education, activities and practices across our offices. We
are also building and delivering solutions to our customers that enable them to
implement their own sustainability strategies.
SUPPORTING SUSTAINABILITY IN OUR CUSTOMERS’
BUSINESSES
By developing innovative software solutions that enable the energy and
water revolution, we are making it easier for our customers to offer green
products and services, and we therefore support them in realising their vision
for a sustainable future. Furthermore, we track and aim to minimise the
environmental footprint of our airport customers by developing smart, eco-
friendly solutions that enable them to lower their carbon emissions.
REDUCING OUR ENVIRONMENTAL FOOTPRINT
Gentrack’s purchasing practices take into account both environmental and
ethical considerations to guide our decisions. We seek to minimise our plastic
waste, choose locally produced goods and focus on ethical sourcing.
Smart transport plays a key role in reducing fuel usage, and we remain
committed to encouraging the use of green modes of transport. Our people are
given the opportunity to work from home and encouraged to carpool, use public
transport and utilise online collaboration tools to minimise our carbon footprint.
Gentrack’s waste management strategy aims to achieve a reduction in waste
transferred to landfill through the efficient coordination of waste and recycling
disposal. We have elevated awareness of smart waste management and
participate in national recycling initiatives, providing facilities to dispose of
organic waste, recyclables, soft plastics and batteries. We have also established
a worm farm at our Auckland HQ to encourage composting.
BUILDING A SUSTAINABLE
FUTURE AT GENTRACK
BUILDING A SUSTAINABLE FUTURE AT GENTRACK / 35
“We have established policies to minimise our carbon footprint and
encourage our people to do the same at home. The team is driving
sound sustainable behaviours throughout the business, and we will
continue to focus on doing so in the future.”
Joanne McNish, Head of Sustainability
36 / GENTRACK ANNUAL REPORT
FINANCIAL STATEMENTS / 37
FINANCIAL
STATEMENTS 2018
© 2018 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
Independent Auditor’s Report
To the shareholders of Gentrack Group Limited
Report on the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated
financial statements of Gentrack Group Limited (the
company) and its subsidiaries (the group) o n pages
44 to 72:
i.present fairly in all material respects the Group’s
financial position as at 30 September 2018 and
its financial performance and cash flows for the
year ended on that date; and
ii.comply with New Zealand Equivalents to
International Financial Reporting Standards and
International Financial Reporting Standards.
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated statement of financial position
as at 30 September 2018;
— the consolidated statements of comprehensive
income, changes in equity and cash flows for
the year then ended; and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ ISAs (NZ)’) . We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the group in accordance with Professional and Ethical Standard 1 (Revised) Code of
Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board and the
International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA
Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements and the
IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the
consolidated financial statements section of our report.
Our firm has also provided other services to the group in relation to taxation compliance and taxation advisory
services. Subject to certain restrictions, partners and employees of our firm may also deal with the group on
normal terms within the ordinary course of trading activities of the business of the group. These matters have
not impaired our independence as auditor of the group. The firm has no other relationship with, or interest in, the
group.
Materiality
The scope of our audit was influenced by our application of materiality. Materiality helped us to determine the
nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually
and on the consolidated financial statements as a whole. The materiality for the consolidated financial
statements as a whole was set at $1.2m determined with reference to a benchmark of group profit before tax.
We chose the benchmark because, in our view, this is a key measure of the group’s performance.
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 in the current period. We summarise below those matters and our key
audit procedures to address those matters in order that the shareholders as a body may better understand the
process by which we arrived at our audit opinion. Our procedures were undertaken in the context of and solely
for the purpose of our statutory audit opinion on the consolidated financial statements as a whole and we do not
express discrete opinions on separate elements of the consolidated financial statements.
The key audit matter How the matter was addressed in our audit
1.Revenue from implementation services
Refer to note 3 of the consolidated
financial statements.
The Group has reported revenues of
$104.5m (2017: $75.2 m) which includes
implementation services revenue of
$26.5m. We focussed on the revenue
from implementation services as a key
audit matter due to inherent
complexities of software
implementation projects and the
estimates involved.
Revenue from implementation services
is recognised based on the stage of
completion calculated using either the
proportion of actual hours at the
reporting date compared to
managements estimates for total
forecast hours or with reference to
milestones.
Accurate recording of revenue is highly
dependent on:
— Detailed knowledge of individual
characteristics of a contract,
including unique terms, knowledge
of software and length of time to
complete contractual milestones;
— Ongoing adjustments to estimated
hours to complete implementation
taking into consideration changes in
scope, estimated timing and project
delays; and
— Changes to total project revenue for
contract variations or additional
billing for changes in scope or
additional hours incurred.
We focused our procedures on the implementation service projects
that were in progress at balance date, based on the significance of
implementation service revenue to the total revenue of the Group.
For the projects selected for testing we checked that revenue
recognised is consistent with contractual terms, including
considering how the initial licence fee, design and implementation,
and maintenance phases of the contract are arranged.
We recalculated the stage of completion based on hours to date as
a proportion of total forecast hours or with reference to milestones.
We assessed the forecast hours through discussion with project
managers and senior management and challenged key
assumptions, including consideration of alternative scenarios and
how management addressed risks in the contract.
We compared significant changes in total forecast hours to
correspondence with customers, legal documentation or contract
variations. We evaluated potential exposure to liquidated damages
by reviewing legal correspondence and correspondence with
customers.
We also inspected a sample of milestone billings and compared
those to invoice and cash receipts. In addition we considered the
historical accuracy of managements’ estimates of forecast hours by
analysing previous forecasts to actual hours.
The key audit matter How the matter was addressed in our audit
2.Business acquisition
During the year the Group acquired
Evolve Parent Limited and Evolve
Analytics Limited (‘Evolve’). The details
of the acquisition are outlined in note
33.
Accounting for the Evolve acquisition
required management to make
judgments in order to:
— Identify and measure the fair value
of intangible assets acquired and
liabilities assumed as part of the
acquisition;
— Determine appropriate valuation
methodology and assumptions
underlying forecast revenues,
margin, growth and discount rates;
and
— Allocate the acquisition price to
identifiable assets and liabilities and
goodwill.
The calculations underlying the fair value
assessments are both subjective and
complex and the fair values are sensitive
to the assumptions adopted. In light of
this, there can be a wide range of
acceptable outcomes with respect to
fair value assessments.
We performed procedures in relation to the business acquisition,
which included the following:
— We inspected the sale and purchase agreement (“SPA”) for the
acquisition, along with the due diligence report, to assess
whether the acquisition price and the identifiable assets and
liabilities acquired were complete and appropriate;
— We compared the underlying accounting treatment to the
accounting standards and considered whether the disclosures
properly reflected the judgements and estimates made;
— With the assistance of our corporate finance specialists, we
challenged management’s assessment of the fair values of the
intangible assets acquired;
— In addition, our corporate finance specialists assessed the
appropriateness of the valuation methodology used by
management, testing the assumptions used against other
external market data. They
also subjected the key assumptions
to sensitivity analyses to assess whether the valuations fell
within an acceptable range.
3. Impairment assessment of CA Plus Limited
The group undertakes an annual
impairment test of goodwill.
In the current year we focused on the
impairment of goodwill arising from the
acquisition of CA Plus Limited (‘CA
Plus’). This is considered a key audit
matter due to a deterioration in the
expected fi nancial performance of CA
Plus and the significant judgements and
estimates the Group uses to determine
the value of the business. This requires
management to make assumptions in
relation to forecast cash flows, the
terminal growth rate and discount rate
used in a discounted cash flow model.
We performed procedures to evaluate management’s assessment
of the value of the CA Plus business. Our procedures included the
following:
— We evaluated the significant future cash flow assumptions by
comparing actual results to forecasts at date of acquisition,
business plans and budgets;
— Our corporate finance specialists assessed whether the
methodology adopted in the discounted cash flow model was
consistent with accepted valuation approaches within the
software industry;
— In addition, our corporate finance specialists checked the
mathematical accuracy of the model, and considered whether
the discount and terminal growth rate assumptions applied to
the estimated future cash flows were within an acceptable
range for the industry and lifecycle of the business;
The key audit matter How the matter was addressed in our audit
— We also challenged the assumptions and judgements used by
management by performing sensitivity analysis, considering a
range of likely outcomes based on various scenarios.
Other information
The Directors, on behalf of the group, are responsible for the other information included in the entity’s Annual
Report. Other information includes the Chairman and Chief Executive’s report and disclosures relating to
corporate governance. Our opinion on the consolidated financial statements does not cover any other
information and we do not express any form of assurance conclusion thereon.
The Annual Report is expected to be made available to us after the date of this Independent Auditor's
Report. Our responsibility is to read the Annual Report when it becomes available and consider whether the
other information it contains is materially inconsistent with the consolidated financial statements, or our
knowledge obtained in the audit, or otherwise appears materially misstated. If so, we are required to report such
matters to the Directors.
Use of this independent auditor’s r eport
This independent auditor’s report is made solely to the shareholders as a body. Our audit work has been
undertaken so that we might state to the shareholders those matters we are required to state to them in the
independent auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the shareholders as a body for our audit work, this independent
auditor’s report, or any of the opinions we have formed.
Responsibilities of the Directors for the consolidated financial
statements
The Directors, on behalf of the company, are responsible for:
— the preparation and fair presentation of the consolidated financial statements in accordance with generally
accepted accounting practice in New Zealand (being New Zealand Equivalents to International Financial
Reporting Standards) and International Financial Reporting Standards;
— implementing necessary internal control to enable the preparation of a consolidated set of financial
statements that is fairly presented and free from material misstatement, whether due to fraud or error; and
— assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless they either intend to liquidate 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 objective is:
— 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 independent auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs NZ will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They 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.
A further description of our responsibilities for the audit of these consolidated financial statements is located at
the External Reporting Board (XRB) website at:
http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/
This description forms part of our independent auditor’s report.
The engagement partner on the audit resulting in this independent auditor's report is Jason Doherty.
For and on behalf of
Jason Doherty
KPMG Auckland
29 November 2018
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors are required to prepare financial statements for each financial year that present fairly the financial position of the Group and its
operations and cash flows for that period.
The Directors consider these financial statements have been prepared using accounting policies suitable to the Group’s circumstances, which
have been consistently applied and supported by reasonable judgements and estimates, and that all relevant financial reporting and accounting
standards have been followed.
The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy, at any time, the financial position of
the Group and to enable them to ensure that the financial statements comply with the Companies Act 1993. They are also responsible for
safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Board of Directors of the Company authorised these financial statements for issue on 29 November 2018.
For and on behalf of the Board of Directors:
John Clifford Graham Shaw
Chairman Director
Date: 29 November 2018 Date: 29 November 2018
DIRECTORS’ RESPONSIBILITY STATEMENT / 43
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2018
($000)NOTES20182017
Revenue3104,47775,181
Expenditure4(73,521)(51,277)
Profit before depreciation, amortisation, acquisition related costs, revaluation of
financial liabilities, impairment of goodwill, financing and tax30,95623,904
Depreciation and amortisation5(6,987)(3,991)
Acquisition related costs6(1,268)(1,325)
Revaluation of acquisition related financial liability73,835-
Impairment of goodwill8(3,984)-
Profit before financing and tax22,55218,588
Finance income2678
Finance expense(1,846)(1,230)
Net finance expense9(1,820)(1,152)
Profit before tax20,73217,436
Income tax expense10(6,863)(5,611)
Profit attributable to the shareholders of the company13,86911,825
OTHER COMPREHENSIVE INCOME
Translation of international subsidiaries5,5193,580
Total comprehensive income for the year19,38815,405
Earnings per share from profit attributable to ordinary equity holders of the parent
(expressed in dollars per share)
Basic and diluted earnings per share12$0.16$0.15
The accompanying notes form part of these financial statements.
44 / STATEMENT OF COMPREHENSIVE INCOME
STATEMENT OF FINANCIAL POSITION / 45
STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2018
($000)NOTES20182017
CURRENT ASSETS
Cash and cash equivalents1611,4009,727
Trade and other receivables1724,05521,713
Inventory376336
Total current assets35,83131,776
NON-CURRENT ASSETS
Property, plant and equipment183,8362,524
Goodwill19146,189122,212
Intangibles2068,18741,958
Deferred tax asset113,6262,888
Total non-current assets221,838169,582
Total assets257,669201,358
CURRENT LIABILITIES
Trade payables and accruals216,9074,979
Deferred revenues7,7499,488
GST payable1,3001,434
Financial liabilities25-527
Employee entitlements233,8514,737
Income tax payable4,0302,583
Total current liabilities23,83723,748
NON-CURRENT LIABILITIES
Bank loans24-.44,989
Lease incentives223,612693
Financial liabilities252,8085,964
Employee entitlements23339361
Deferred tax liabilities1110,6487,076
Total non-current liabilities17,40759,083
Total liabilities41,24482,831
Net assets216,425118,527
EQUITY
Share capital13190,968101,490
Share based payment reserve14570239
Foreign currency translation reserve9,3393,820
Retained earnings15,54812,978
Total shareholders’ equity216,425118,527
The accompanying notes form part of these financial statements.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2018
($000)NOTES
SHARE
CAPITAL
SHARE BASED
PAYMENT
RESERVE
RETAINED
EARNINGS
TRANSLATION
RESERVE
TOTAL
EQUITY
Balance as at 1 October 201660,3966110,26624070,963
Profit attributable to the shareholders
of the company--11,825-11,825
Other comprehensive income-.-.-.3,5803,580
Total comprehensive income for the year,
net of tax-.-.11,8253,58015,405
TRANSACTIONS WITH OWNERS:
Issue of capital1341,094-.-.-.41,094
Share based payments14-.178-.-.178
Dividends paid15-.-.(9,113)-.(9,113)
Balance at 30 September 2017101,49023912,9783,820118,527
Balance as at 1 October 2017101,49023912,9783,820118,527
Profit attributable to the shareholders
of the company-.-.13,869-.13,869
Other comprehensive income-.-.-.5,5195,519
Total comprehensive income for the year,
net of tax-.-.13,8695,51919,388
TRANSACTIONS WITH OWNERS:
Issue of capital1389,478-.-.-.89,478
Share based payments14-.
331-.-.331
Dividends paid15-.-.(11,299)-.(11,299)
Balance at 30 September 2018190,96857015,5489,339216,425
The accompanying notes form part of these financial statements.
46 / STATEMENT OF CHANGES IN EQUITY
STATEMENT OF CASH FLOWS / 47
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
($000)NOTES20182017
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers103,34369,169
Payments to suppliers and employees(73,173)(50,302)
Income tax paid(7,918)(4,808)
Net cash inflow from operating activities
32
22,25214,059
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment(2,287)(1,268)
Purchase of intangibles(3,916)(920)
Acquisition of a business, net of cash33(42,796)(77,636)
Repayment of acquisition related costs(362)-
Proceeds from sale of PPE272-
Net cash outflow from investing activities(49,089)(79,824)
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of ordinary shares90,08435,512
Costs in relation to issue of ordinary shares(2,559)(110)
Drawdown of borrowings-42,481
Repayment of borrowings(46,826)(11,852)
Interest paid(1,095)(493)
Dividends paid15(11,299)(9,113)
Net cash inflow from financing activities28,30556,425
Net increase/(decrease) in cash held1,468(9,340)
Foreign currency translation adjustment205249
Cash at beginning of the financial year9,72718,818
Closing cash and cash equivalents11,4009,727
The accompanying notes form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Gentrack Group Limited is a limited liability company, domiciled and
incorporated in New Zealand and registered under the New Zealand
Companies Act 1993. The registered office of the Company is 17
Hargreaves Street, Auckland 1011, New Zealand.
The financial statements presented are for Gentrack Group Limited
and its subsidiaries (together ‘the Group’) for the year ended
30 September 2018. Last year comparatives are for the year ended
30 September 2017.
The consolidated financial statements of the Group for the year ended
30 September 2018 were authorised for issue in accordance with a
resolution of the directors on 29 November 2018.
The Group’s principal activity is the development, integration, and
support of enterprise billing and customer management software
solutions for the utility (energy and water) and airport industries.
(a) CHANGES IN ACCOUNTING POLICY
The accounting policies adopted are consistent with those of the
previous year.
Certain comparatives have been updated to ensure consistency with
current year presentation.
(b) BASIS OF PREPARATION
The financial statements have been prepared in accordance with New
Zealand Generally Accepted Accounting Practice (‘NZ GAAP’). They
comply with the New Zealand Equivalents to International Financial
Reporting Standards (‘NZ IFRS’) and other applicable Financial
Reporting Standards as appropriate to profit-oriented entities. The
financial statements comply with International Financial Reporting
Standards (‘IFRS’).
The Company is an FMC entity for the purposes of the Financial
Reporting Act 2013 and Financial Markets Conduct Act 2013 and is
listed on the New Zealand Stock Exchange (NZX) and the Australian
Securities Exchange (ASX).
The financial statements have been prepared in accordance with the
requirements of the Financial Reporting Act 2013, Financial Markets
Conduct Act 2013 and the Companies Act 1993.
Presentation currency
The financial statements are presented in New Zealand dollars unless
otherwise stated and all values are rounded to the nearest $1,000
(where rounding is applicable). The functional currency is New
Zealand dollars (‘NZD’).
Use of estimate and judgements
In preparing the financial statements, management has to make
certain judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets,
liabilities, revenue and expenses. The actual outcome may differ from
these judgements, estimates and assumptions. Judgements,
estimates and assumptions are reviewed on an ongoing basis and are
based on historical experience and various other factors, including
expectations about future events, which are believed to be reasonable
under the circumstances. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and in any
future periods affected.
The significant judgements, estimates and assumptions made by
management in the preparation of these financial statements are
outlined below.
(i) Impairment of goodwill and other assets
The Group tests annually whether goodwill has suffered any
impairment, in accordance with the accounting policy stated in note
1(f). The recoverable amounts of cash-generating units have been
determined based on value-in-use calculations. These calculations
require the use of assumptions. Refer to note 19 for details of these
assumptions and the potential impact of changes to the assumptions.
All other assets are reviewed for indicators or object evidence of
impairment. If indicators or objective evidence exists, the recoverable
amount is reviewed.
(ii) Revenue recognition
Revenue recognition involves certain revenue streams being
recognised based on the stage of completion. This is discussed in
more detail in note 3.
(c) BASIS OF CONSOLIDATION
Business combinations
Business combinations are accounted for using the acquisition method
as at the acquisition date, which is the date on which control is
transferred to the Group. Control is the exposure or right to variable
returns from involvement with the entity and the ability to affect those
returns through power over the entity.
The Group recognises the fair value of all identifiable assets, liabilities
and contingent liabilities of the acquired business. Goodwill is
measured as the excess cost of the acquisition over the recognised
assets and liabilities. When the excess is negative (negative goodwill),
the amount is recognised immediately in the Statement of
Comprehensive Income.
The Group applies the anticipated acquisition method where it has the
right and the obligation to purchase any remaining non-controlling
interest (so-called put/call arrangements). Under the anticipated
acquisition method the interests of the non-controlling shareholder are
derecognised when the Group’s liability relating to the purchase of its
shares is recognised. The recognition of the financial liability implies
that the interests subject to the purchase are deemed to have been
acquired already. Therefore, the corresponding interests are presented
as already owned by the Group even though legally they are still
non-controlling interests. The initial measurement of the fair value of
the financial liability recognised by the Group forms part of the
consideration for the acquisition.
This is discussed in more detail in note 33.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls
an entity when the Group is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. In assessing
control, potential voting rights that currently are exercisable are taken
into account. The financial statements of subsidiaries are included in
the consolidated financial statements from the date that control
commences until the date that control ceases. The accounting policies
of subsidiaries have been changed when necessary to align them with
the policies adopted by the Group.
48 / NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS / 49
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
Transactions eliminated on consolidation
Intra-group balances and any unrealised income and expenses arising
from intra-group transactions, are eliminated in preparing the
consolidated financial statements.
(d) SALES TAX
The Statement of Comprehensive Income and the Statement of Cash
Flows have been prepared so that all components are stated exclusive
of sales tax, except where sales tax is not recoverable. All items in the
Statement of Financial Position are stated net of sales tax with the
exception of receivables and payables, which include sales tax invoiced.
Commitments and contingencies are disclosed net of the amount of
sales tax recoverable from, or payable to, the taxation authority.
Sales tax includes Goods and Services Tax (GST) and Value Added Tax
(VAT) where applicable.
(e) FOREIGN CURRENCY TRANSLATIONS
Items included in the financial statements of each of the Group’s
entities are measured using the currency of the primary economic
environment in which the entity operates (‘the functional currency’).
The consolidated financial statements are presented in New Zealand
dollars ($) (the ‘presentation currency’), which is the Company’s
functional currency. Foreign currency transactions are translated into
the functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation at year-end
exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the Statement of Comprehensive
Income. Foreign exchange gains and losses are presented in the
Statement of Comprehensive Income within net finance expense.
The Group translates the results of its foreign operations from their
functional currencies to the presentation currency of the Group using
the closing exchange rate at balance date for assets and liabilities and
the average monthly exchange rates for income and expenses. The
difference arising from the translation of the Statement of Financial
Position at the closing rates and the Statement of Comprehensive
Income at the average rates is recorded within the foreign currency
translation reserve.
(f) IMPAIRMENT
At each reporting date, the Group assesses whether there is any
indication that an asset may be impaired. Where an indicator of
impairment exists, the Group makes a formal estimate of the
recoverable amount. Where the carrying value of an asset exceeds its
recoverable amount, the asset is considered impaired and is written
down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell or the
asset’s value in use. For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). Non-financial assets
other than goodwill that suffered an impairment are reviewed for
possible reversal of the impairment at each reporting date.
(g) LOANS AND RECEIVABLES
The Group classifies its financial assets as loans and receivables.
Management determines the classifications of its financial assets at
initial recognition. The Group’s loans and receivables are non-
derivative financial assets with fixed or determinable payments that
are not quoted in an active market. They are included in current
assets, except for those with maturities greater than 12 months after
the reporting date. These are classified as non-current assets. The
Group’s loans and receivables comprise ‘trade and other receivables’
and ‘cash and cash equivalents’ in the Statement of Financial Position.
Loans and receivables are carried at amortised cost using the
effective interest method. The Group assesses at each reporting date
whether there is objective evidence that a financial asset or a group of
financial assets is impaired. Impairment testing of trade receivables is
described in Note 17.
(h) INVENTORY
Inventories are stated at the lower of cost and net realisable value.
Cost is calculated using a weighted average method and includes
expenditure incurred to purchase the inventory and transport it to its
current location. Net realisable value is the estimated selling price of
the inventory in the ordinary course of business less costs necessary
to make the sale. The cost of inventories consumed during the year
are recognised as an expense and included in expenditure in the
Statement of Comprehensive Income.
(i) PROVISIONS
The Group recognises a provision when it has a present legal or
constructive obligation as a result of past events, it is probable that an
outflow of resources will be required to settle the obligation, and the
amount has been reliably estimated. Provisions are not recognised for
future operating losses.
Where there are a number of similar obligations, the likelihood that an
outflow will be required in settlement is determined by considering the
class of obligations as a whole.
Provisions are measured at the present value of the expenditure
expected to be required to settle the obligation using a pre-tax rate
that reflects current market assessments of the time value of money
and the risks specific to the obligation. The increase in the provision
due to the passage of time is recognised as a finance expense in the
Statement of Comprehensive Income.
(j) STANDARDS OR INTERPRETATIONS ISSUED BUT NOT YET
EFFECTIVE AND RELEVANT TO THE GROUP
The International Accounting Standards Board has issued a number of
standards, amendments and interpretations which are not yet effective
and which may have an impact on the Group’s financial statements.
These are detailed below. The Group has not applied these in
preparing these financial statements and will apply each standard in
the period in which it becomes mandatory:
(a) NZ IFRS 9 – Financial Instruments – Classification and
Measurement
This standard addresses the classification, measurement and
de-recognition of financial assets, financial liabilities, impairment
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued...
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
of financial assets and hedge accounting, and will be effective for
the year ended 30 September 2019. The Group does not actively
use hedging instruments and does not apply hedge accounting
which will continue after the transition to NZ IFRS 9.
NZ IFRS 9 also prescribes an ‘expected credit loss’ model instead
of the previous ‘incurred loss’ model for classification and
measurement of financial instruments. This will require the
Group to consider the expected credit losses on forward looking
information in addition to current and historic information. The
Group has not yet completed its assessment of the opening
position but does not anticipate any significant impact.
(b) NZ IFRS 15 – Revenue from Contracts with Customers
The new NZ IFRS 15 revenue reporting standard will be effective
for the year ended 30 September 2019. The Group is required to
assess the implications and transitional considerations for the
year ended 30 September 2018.
NZ IFRS 15 replaces NZ IAS 18 Revenue and defines the
principles for revenue recognition based on the satisfaction of
distinct contractual performance obligations by the vendor which
determine the timing and classification of revenue recognition.
The Group has been undertaking an assessment of the potential
impacts on its reported results and does not expect the
recognition and quantification of revenue to materially change.
The new standard requires a five-part framework to be applied
which guide the allocation of a transaction price to the identified
contractual performance obligations and the determination of the
correct timing of revenue recognition.
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued...
The Group operates a common range of revenue models across
its operating units and subsidiaries. These are generally
classified as either recurring or non-recurring in nature
depending on whether there is a continuing provision and
consumption of defined contractual service obligations over a
defined or open contract term, or time-bound and limited service
obligations defined in specific contracts.
The Group has reviewed IFRS 15 in detail and held workshops for
a range of functions in the business that are involved with
commercial, contracting, pre-sales, operations and finance
activities that support customers. The initial assessments
conclude that the Group’s commercial model and standard forms
of contract, pricing and service description meets the
requirements of IFRS 15. However, as the Group has many
long-standing customer contractual relationships, it has initiated
a project workstream to review existing contracts to identify
whether any aspect of current revenue recognition does not
comply with the new standard. This process is on-going and has
not identified any significant discrepancies to date.
(c) NZ IFRS 16 – Leases
This standard requires a lessee to recognise a lease liability
reflecting the future lease payments and a ‘right-of-use asset’ for
substantively all lease contracts, and will be effective for the year
ended 30 September 2020. The Group is currently assessing the
impact of the implementation of this standard.
50 / NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS / 51
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
2 OPERATING SEGMENTS
An operating segment is a component of an entity that engages in business activities from which it may earn revenue and incur expenses, whose
operating results are regularly reviewed by the entity’s Chief Operating Decision Maker to make decisions about resources to be allocated to the
segment and assess its performance, and for which discrete financial information is available. Operating segments, are aggregated for disclosure
purposes where they have similar products and services, production processes, customers, distribution methods and regulatory environments.
The Group currently operates in two business segments, utility billing software and airport management software, as at 30 September 2018. These
segments have been determined based on the reports reviewed by the Board (Chief Operating Decision Maker) to make strategic decisions.
The assets and liabilities of the Group are reported to and reviewed by the Chief Operating Decision Maker in total and are not allocated by
business segment. Therefore, operating segment assets and liabilities are not disclosed.
($000)UTILITYAIRPORTTOTAL
GROUP – FOR THE YEAR ENDED 30 SEPTEMBER 2018
External revenue85,12119,356104,477
Total expenditure(59,156)(14,365)(73,521)
Segment contribution before depreciation, amortisation, acquisition related
costs, revaluation of financial liabilities, impairment of goodwill, financing
and tax25,9654,99130,956
Depreciation and amortisation(6,987)
Acquisition related costs(1,268)
Revaluation of acquisition related financial liabilities3,835
Impairment of goodwill(3,984)
Finance income26
Finance expense(1,846)
Income tax expense(6,863)
Profit attributable to the shareholders of the company13,869
GROUP – FOR THE YEAR ENDED 30 SEPTEMBER 2017
External revenue63,52311,65875,181
Total expenditure(42,833)(8,444)(51,277)
Segment contribution before depreciation, amortisation, acquisition related
costs, financing and tax20,6903,21423,904
Depreciation and amortisation(3,991)
Acquisition related costs(1,325)
Finance income78
Finance expense(1,230)
Income tax expense(5,611)
Profit attributable to the shareholders of the company11,825
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
2 OPERATING SEGMENTS (CONTINUED)
($000)20182017
REVENUE BY DOMICILE OF ENTITY
Australia29,06230,274
New Zealand18,79118,397
United Kingdom56,19323,126
Rest of World4313,384
104,47775,181
REVENUE BY DOMICILE OF CUSTOMER
Australia31,90333,258
New Zealand11,76212,283
United Kingdom52,93123,092
Rest of World7,8816,548
104,47775,181
In 2018, no single customers and their subsidiaries accounted for 10% or more of the Group’s revenue (2017: $10,361,000). In 2017, these
revenues were attributable to the utility business segment.
3 REVENUE
Revenues are recognised at the fair value of the consideration received or receivable.
The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the
entity and specific criteria have been met for each of the Group’s activities as described below. The Group bases its estimates on the historical
results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
Revenue is recognised for the major business activities as follows:
SOFTWARE LICENCE FEE REVENUE (NON-RECURRING)
Revenue from licence fees due to software sales is recognised on the transferring of significant risks and rewards of control of the licensed software
under agreement between the Company and the customer.
IMPLEMENTATION SERVICES REVENUE FOR LICENSED SOFTWARE (PROFESSIONAL SERVICES)
Revenue from implementation services attributable to licensed software is recognised based on the stage of completion, typically in accordance
with the achievement of contract milestones and/or hours expended, and forecast.
POST SALES CUSTOMER SUPPORT REVENUE FOR LICENSED SOFTWARE (RECURRING)
Post sales customer support (‘PSCS’) revenue for licensed software comprises fees for ongoing upgrades, minor software revisions and helpline
support. PSCS revenue is allocated between annual fees for helpline support and fees for rights of access to ongoing upgrades and minor
software patches. At each reporting date, the unearned portion of the revenue is assessed and deferred to be recognised over the period of
service.
CONSULTING SERVICES REVENUE (PROFESSIONAL SERVICES)
Revenue from project services agreements is based on the stage of completion, typically in accordance with the achievement of contract
milestones and/or hours expended, and forecast.
DEFERRED REVENUES
Consideration received prior to the goods or service being rendered is recognised in the Statement of Financial Position as deferred revenues.
52 / NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS / 53
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
3 REVENUE (CONTINUED)
ACCRUED INCOME
Revenue for which goods or services have been rendered but invoices have not been issued is recognised within the Statement of Financial
Position as accrued income and included within trade and other receivables.
GOVERNMENT GRANTS
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group
will comply with all attached conditions. When a grant relates to an expense item, it is recognised as income over the period necessary to match
the grant on a systematic basis to the costs that it is intended to compensate.
($000)20182017
OPERATING REVENUE:
Recurring38,29421,097
Non-recurring10,5456,292
Professional services54,78347,153
103,62274,542
OTHER INCOME:
Government grants855639
Total revenue104,47775,181
Government grants includes revenue relating to a 3 year agreement for ‘Technology Development Grant Funding’ with Callaghan Innovations. This
3 year agreement is effective from 1 January 2017 to 31 December 2019.
4 EXPENDITURE
($000)20182017
Employee entitlements49,96136,629
Administrative costs9,4515,960
Third party customer related costs5,5003,079
Advertising and marketing1,5431,223
Consulting and subcontracting*5,1473,309
Other operating expenses1,9191,077
Total expenditure73,52151,277
RESEARCH AND DEVELOPMENT EXPENSES
Expenditure on research and development (expensed)7,4834,209
Research and development expenses include payroll overhead, employee benefits and other employee-related costs associated with product
development. Technological feasibility for software products is generally reached shortly before products are released for commercial sale to
customers. Generally costs incurred after technological feasibility is established are not material, and accordingly, these research and
development costs are expensed when incurred. Where costs are material they are capitalised if they meet the criteria in note 20.
Research and development expenses include a portion of employee costs shown above, directly attributable to research and development activities. This
excludes expenses relating to customer paid development.
*Directors’ fees for the year amounted to $423,000 (2017: $371,247). The increase reflects an additional director joining the Board in May 2017.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
4 EXPENDITURE (CONTINUED)
($000)20182017
AUDITOR’S REMUNERATION
KPMG – audit fees325216
KPMG – review fees4131
KPMG – taxation services16880
KPMG - accounting advice-6
KPMG - financial and tax due diligence-181
Total fees paid to auditor534514
5 DEPRECIATION AND AMORTISATION
($000)20182017
Depreciation900581
Amortisation6,0873,410
6,9873,991
6 ACQUISITION RELATED COSTS
($000)20182017
Acquisition costs(1,268)(1,325)
Acquisition related costs of $1,268,000 (2017: $1,325,000) related to legal, due diligence, facility fees, tax and accounting expenses incurred in
relation to the acquisitions made in the year.
7 REVALUATION OF ACQUISITION RELATED FINANCIAL LIABILITY
($000)20182017
Revaluation of acquisition related financial liability3,835-
In May 2017 the Group acquired 75% of the shares of CA PLUS Limited (“CA”) for cash consideration of $6,000. The non-cash consideration
represented the present value of the liability associated with the vendor put option over the remaining 25% of the shares in CA (2017: fair value
$3.8m). The put option valuation is based on the cumulative EBITDA target for the earn out period for the three years ending 31 December 2019
with an exercise date of May 2020. Assuming the target is achieved a minimum payable under the option is $0.9m and the maximum $2.9m.
However, if the cumulative EBITDA target is not achieved a nominal 1 Euro is payable. The Group has accounted for the option using the
anticipated acquisition method. In the year ended 30 September 2017 the value of deferred consideration was recorded as a liability of the group
statement of financial position.
Gentrack Group Limited subscribed to 7,496,400 non-profit participating Redeemable Preference Shares(“RPS”) issued by CA with a nominal value
of ¤1.00 each, fully paid up. The RPS do not entitle the Group to receive notice of and to attend and vote at general meetings of the Company or to
receive dividends. The RPS may be redeemed at any time between April 2020 and April 2055, and shall only be redeemed out of the distributable
profits of CA or out of the proceeds of a fresh issue of shares made for the purpose of redemption. The RPS have been classified in the CA
accounts as a term liability, as the instrument does not have the characteristics of equity, and is eliminated on consolidation having no overall
effect on the Group position. This did not form part of consideration as the RPS are not subscribed for in exchange for control of CA.
On the date of acquisition the Group repaid $11.8 million of CA’s borrowings. The repayment was treated as a separate transaction.
CA is an early stage business which is expected to scale and grow rapidly. Its performance to date has been affected by delays in completing the
core product and delayed sales execution as a result. Actions are in place to address these issues and at 30 September 2018 performance was
estimated to be approximately 12 months behind the acquisition business plan. Management have reviewed the forecasts for the remainder of the
earn-out period to 31 December 2019, which includes the budget approved for the financial year to 30 September 2019 and has assessed that the
minimum cumulative EBITDA target will not be achieved.
The value of the liability for deferred consideration has therefore been revalued to 1 Euro resulting in a credit to the group statement of
comprehensive income of $3.8m recognised at 30 September 2018.
54 / NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS / 55
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
8 IMPAIRMENT OF GOODWILL
($000)20182017
Impairment of Goodwill(3,984)-
This relates to the impairment of goodwill relating to CA PLUS Limited. This is discussed in more detail in Note 19.
9 NET FINANCE EXPENSE
Finance income comprises interest income, changes in the fair value of financial assets at fair value through the Statement of Comprehensive
Income, foreign currency gains, and gains on hedging instruments that are recognised in the Statement of Comprehensive Income. Interest
income is recognised as it accrues, using the effective interest method.
Finance expense comprises interest expense on borrowings, foreign currency losses, changes in the fair value of the financial assets at fair value
through the Statement of Comprehensive Income, impairment losses recognised on the financial assets (except for trade receivables), and losses
on hedging instruments that are recognised in the Statement of Comprehensive Income. All borrowing costs are recognised in the Statement of
Comprehensive Income using the effective interest method.
($000)20182017
FINANCE INCOME
Interest income2678
2678
FINANCE EXPENSES
Interest expense(1,121)(572)
Interest paid - unwinding of discount of financial liability(127)(51)
Foreign exchange losses – realised(370)(521)
Foreign exchange losses – unrealised
1
(228)(86)
(1,846)(1,230)
Net finance expense(1,820)(1,152)
1
Foreign exchange losses included an unrealised loss of $350,000 (2017: $144,000) on intercompany loans.
10 INCOME TAX EXPENSE
In the Statement of Comprehensive Income the income tax expense comprises current and deferred tax.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and
any adjustment to tax payable in respect of previous years. Current tax payable also includes any tax liability arising from the declaration of dividends.
Deferred tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are
expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary differences
can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related
benefits will be realised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except for deferred income tax liabilities where
the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in
the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax
liabilities and when the deferred income tax assets and liabilities relate to income tax levied by the same taxation authority on either the same
taxable entity or different entities where there is an intention to settle the balance on a net basis.
Additional income tax expenses that arise from the distribution of cash dividends are recognised at the same time that the liability to pay the
related dividend is recognised. The Group does not distribute non-cash assets as dividends to its shareholders.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
10 INCOME TAX EXPENSE (CONTINUED)
($000)20182017
(a) RECONCILIATION OF EFFECTIVE TAX RATE
Profit before tax for the year20,73217,436
Income tax using the Company’s domestic tax rate of 28%5,8054,882
Non-deductible expense724343
Difference in tax rates of overseas subsidiaries(372)(187)
Under provided in prior periods706573
Income tax expense6,8635,611
($000)20182017
(b) INCOME TAX CHARGE IS REPRESENTED AS FOLLOWS:
Tax payable in respect of current year8,5775,846
Deferred tax benefit(2,420)(808)
Under provided in prior periods706573
6,8635,611
11 DEFERRED TAX ASSET/(LIABILITY)
($000)20182017
RECOGNISED DEFERRED TAX ASSETS
Deferred tax assets are attributable to the following:
Trade and other receivables-10
Deferred revenue701815
Provisions including employee entitlements and doubtful trade debtors2,3121,421
Trade losses carried forward613640
Fixed assets and foreign exchange-2
Total deferred tax asset3,6262,888
RECOGNISED DEFERRED TAX LIABILITIES
Deferred tax liabilities are attributable to the following:
Intangible assets(10,308)(7,076)
Trade and other receivables(197)-
Other(143)-
Total deferred tax liabilities(10,648)(7,076)
The movement in temporary differences has been recognised in the Statement of Comprehensive Income. Deferred tax has been recognised at a
rate at which they are expected to be realised: 28% for New Zealand entities, 30% for Australian entities, 19% for UK entities, 22% for Denmark
entities and 35% for Malta entities.
56 / NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS / 57
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
11 DEFERRED TAX ASSET/(LIABILITY) (CONTINUED)
Movement in temporary timing differences during the year:
BALANCEBUSINESS
TEMPORARY
MOVEMENTSCURRENCYBALANCE
($000)1 OCT 2017COMBINATIONSRECOGNISEDTRANSLATION30 SEP 2018
Trade and other receivables10-(207)-(197)
Intangible assets(7,076)(4,924)2,091(399)(10,308)
Deferred revenue815-(118)4701
Provisions including employee entitlements and doubtful
trade debtors1,421-856352,312
Trade losses carried forward640-(76)49613
Other2-(126)(19)(143)
Total(4,188)(4,924)2,420(330)(7,022)
BALANCEBUSINESS
TEMPORARY
MOVEMENTSCURRENCYBALANCE
($000)1 OCT 2016COMBINATIONSRECOGNISEDTRANSLATION30 SEP 2017
Trade and other receivables(99)9114(14)10
Intangible assets(2,071)(5,525)741(221)(7,076)
Deferred revenue988-.(173)-.815
Provisions including employee entitlements and doubtful
trade debtors1,024165167651,421
Trade losses carried forward-620(24)44640
Other-31(19)(10)2
Total(158)(4,700)806(136)(4,188)
IMPUTATION CREDITS
($000)20182017
NZ Imputation credits available for use in subsequent reporting periods4,9502,099
12 EARNINGS PER SHARE
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares.
Basic EPS is calculated by dividing the net profit attributable to ordinary shareholders of the Company by the weighted average number of
ordinary shares on issue during the year, excluding shares purchased and held as treasury shares.
Diluted EPS is determined by adjusting the net profit attributable to ordinary shareholders and the weighted average number of ordinary shares
on issue for the effects of the dilutive impact of potential ordinary shares, which comprise performance share rights granted to employees.
Potential ordinary shares are treated as dilutive when, and only when, their conversion to ordinary shares would decrease EPS or increase the
profit per share.
($000)20182017
Profit attributable to the shareholders of the company($000)13,86911,825
Basic weighted average number of ordinary shares issued(000)86,62278,258
Basic and diluted earnings per share (dollars) ($)0.160.15
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
13 CAPITAL
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised
as a deduction from equity, net of any tax effects. Where any Group company purchases the Company’s equity share capital (treasury shares),
the consideration paid is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or transferred outside
the Group.
SHARES ISSUEDSHARE CAPITAL
(000)2018201720182017
Ordinary Shares98,52583,697190,968101,490
Ordinary shares are fully paid and have no par value. The holders of ordinary shares are entitled to receive dividends as declared from time to
time and are entitled to one vote per share at meetings of the Company, and rank equally with regard to the Company’s residual assets.
On 2 July 2018, Gentrack Group Limited received gross proceeds of $1.9m from the issue and allotment of 274,754 new ordinary shares at an
issue price of $6.93 per share, as discussed in note 33.
In July 2018, Gentrack Group Limited launched an accelerated entitlement offer under which Eligible Shareholders were entitled to acquire 1 New
Share for every 5.77 Existing Shares held on Friday 6 July at an Application Price of $6.19 per New Share. This was successfully completed by
early August 2018. As a result of this Offer, Gentrack Group Limited received gross proceeds of $90.1m from the allotment of 14,553,208 New
Ordinary Shares.
On 30 March 2017, Gentrack Group Limited received gross proceeds of $35,511k from the allotment of 9,538,373 new ordinary shares at an issue
price of $3.72 per share.
On 3 April 2017, Gentrack Group Limited received gross proceeds of $5,326k from the allotment of 1,459,371 new ordinary shares at an issue
price of $3.65 per share, fair valued at $3.90 per share resulting in an increase in capital of $367k, as discussed in note 33.
Transaction costs directly related to the issue of new shares of $2,558,903 (2017: $109,725), being stock exchange fees, legal fees and
underwriting fees, were incurred in these transactions and reduce the share proceeds received.
14 EMPLOYEE SHARE PLAN
The Group operates an equity based share rights scheme for selected senior employees. If the unlisted performance share rights vest, ordinary
shares will be issued to the employees at or around the vesting date. The issue price of the shares was determined by reference to the 10 trading
day volume weighted average price of shares traded on the NZX immediately following the announcement of the annual financial results to which
the commencement date of the share rights performance period relates.
Vesting is conditional on the completion of the necessary years’ service to the vesting date and performance goals over the vesting period.
The share rights scheme is an equity settled scheme and is measured at fair value at the date of the grant. The fair value determined at the grant
date of the equity-settled share based payments is expensed over the vesting period, based on the Group’s estimate that the shares will vest.
These options were valued using the Black Scholes valuation model and the option cost for the year ending 30 September 2018 of $331,000 has
been recognised in the Group’s Statement of Comprehensive Income for that period (2017: $178,000).
Details of the unlisted performance share rights scheme are:
Commencement date1 October 20171 October 20162 May 2016
Issue price5.763.252.24
Vesting date30 November 202030 November 201931 January 2019
Granted78,04075,859152,400
% of shares vested0%0%0%
15 DIVIDENDS PAID
DIVIDEND PER SHAREDIVIDEND PAID
($000)2018201720182017
Final dividend paid0.0850.0777,1145,598
Interim dividend paid0.0500.0424,1853,515
0.1350.11911,2999,113
58 / NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS / 59
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
16 CASH AND CASH EQUIVALENTS
Comprise cash in hand, deposits held at call with banks, other short-term and highly liquid investments with original maturities of three
months or less.
($000)20182017
Bank balances11,3989,723
Cash on hand24
11,4009,727
17 TRADE AND OTHER RECEIVABLES
The Group recognises trade and other receivables initially at fair value and subsequently measured at amortised cost using the effective interest
method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the
Group will not be able to collect all amounts due according to the original terms of the receivables. The carrying amount of an asset is reduced
through the use of a provision account, and the amount of the loss is recognised in the Statement of Comprehensive Income. When a receivable is
uncollectible, it is written off against the provision account for receivables. Subsequent recoveries of amounts previously written off are credited
against the Statement of Comprehensive Income.
($000)20182017
Trade debtors17,58315,909
Provision for doubtful debts(504)(167)
Provision for warranty claims(15)(15)
Work in progress/accrued debtors4,0934,182
Sundry receivables and prepayments2,8981,804
24,05521,713
(a) CREDIT RISK
The aging of the Group’s trade debtors at the reporting date was as follows:
($000)GROSSALLOWANCE FOR DOUBTFUL DEBTS
2018201720182017
Not past due8,90411,773-.-.
Past due 1-30 days2,9962,116-.-.
Past due 31-60 days1,3891,008-.-.
Past due 61-90 days1,316368-.-.
Past due over 90 days2,978644504167
17,58315,909504167
The movement in the provision for doubtful debts during the year was as follows:
($000)20182017
Opening balance167115
Acquired through business combinations-.83
Increase in provision419-.
Write back of provision(75)(36)
Effect of movement in foreign exchange(7)5
Bad debt written off-.-.
Balance at 30 September504167
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
18 PROPERTY, PLANT AND EQUIPMENT
In the Statement of Financial Position property, plant and equipment is stated at historical cost less depreciation. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Depreciation on assets is calculated using the straight-line method to allocate the difference between their original costs and their residual
values over their estimated useful lives, as follows:
• Office equipment, fixtures and fittings 7 years
• Computer equipment 3 to 7 years
• Leasehold improvements Terms of leases
The assets’ residual values and useful lives are reviewed and adjusted if appropriate at each balance date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated
recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are recognised in the Statement of
Comprehensive Income.
($000)NOTEFURNITURE &
EQUIPMENT
COMPUTER
EQUIPMENT
LEASEHOLD
IMPROVEMENTS
2018
TOTAL
YEAR ENDED 30 SEPTEMBER 2018
Opening balance5367731,2152,524
Acquired through business combinations331654-70
Additions7867198592,364
Disposals(74)(57)(173)(304)
Depreciation charge(176)(576)(148)(900)
Effect of movement in foreign exchange34173182
Closing net book amount1,1229301,7843,836
Cost2,0843,2722,0507,406
Accumulated depreciation(962)(2,342)(266)(3,570)
Net book amount1,1229301,7843,836
($000)NOTEFURNITURE &
EQUIPMENT
COMPUTER
EQUIPMENT
LEASEHOLD
IMPROVEMENTS
2017
TOTAL
YEAR ENDED 30 SEPTEMBER 2017
Opening balance2604892751,024
Acquired through business combinations33257188350795
Additions964677051,268
Disposals-.-.(33)(33)
Depreciation charge(93)(385)(103)(581)
Effect of movement in foreign exchange16142151
Closing net book amount5367731,2152,524
Cost1,2322,2901,6655,187
Accumulated depreciation(696)(1,517)(450)(2,663)
Net book amount5367731,2152,524
60 / NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS / 61
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
19 GOODWILL
Goodwill represents the difference between the cost of acquisition and the fair value of the net identifiable assets acquired. Goodwill is stated at cost
less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but is tested annually for impairment.
($000)NOTE20182017
Opening balance122,21240,277
Goodwill arising on acquisition3322,40878,643
Goodwill impairment(3,984)-
Exchange rate differences5,5533,292
Closing net book amount146,189122,212
Goodwill allocated to Gentrack Velocity43,89537,377
Goodwill allocated to Airport 20/202,9002,900
Goodwill allocated to Junifer63,77560,144
Goodwill allocated to Blip8,3767,833
Goodwill allocated to CA Plus11,00513,958
Goodwill allocated to Evolve Analytics16,238-
Net book amount146,189122,212
Goodwill has been allocated to the cash generating units (CGUs) as summarised in the previous table. The balances against Gentrack Velocity and
Airport 20/20 operating units relate to acquisitions in 2012. The balances against Junifer, Blip and CA Plus arise from the acquisitions completed
in the year ended 30 September 2017.
In June 2018 the acquisition of Evolve Analytics was completed which gave rise to goodwill of $22.408m being recognised. Of this $16.238m was
allocated to the Evolve Analytics CGU, and the balance of $6.518m was allocated to the Gentrack Velocity CGU based on Gentrack’s assessment of
the strategic synergistic value component within the enterprise valuation for the purchase consideration. Evolve Analytics is included in the
Utility segment of the Group.
Except for Evolve Analytics, tests have been conducted for impairment on the CGUs based on value in use calculations as described in the
following paragraphs. Evolve Analytics was acquired three months before the balance date and the acquisition price approximated fair value less
cost to sell.
GENTRACK VELOCITY, JUNIFER AND AIRPORT 20/20
The impairment analysis was based on the Group’s five-year forecast that was included in the Group 2023 Strategy dated May 2018. The forecast
reflected management’s consideration of past performance and its assessment of future expectations. Growth assumptions applied up to the
terminal year were aligned with the Group’s long term 15% CAGR (compound average growth rate) EBITDA growth objectives.
A post tax weighted average cost of capital (WACC) of 10.8% (2017: 10.4%) was applied. The WACC reflects specific risks associated with the
CGU operations and markets in which it operates. The growth rate used to extrapolate cash flows beyond the 5-year forecast is 2.5% (2017:
2.5%) which is consistent with forecasts conducted in similar industry reports.
No impairment to the carrying value of goodwill was identified for these CGUs.
Changes in key assumptions were considered as sensitivities. These are summarised in the table below.
BLIP
The impairment analysis was based on the Group’s five-year forecast that was used to support the valuation and acquisition of BLIP in 2017,
adjusting for actual performance in the FY17 and FY18 financial years and the approved budget for FY19. Growth assumptions applied up to the
terminal year represented an EBITDA growth CAGR of 21%. BLIP is included in the Airports segment of the Group.
A post tax weighted average cost of capital (WACC) of 11.1% was applied. The WACC reflects specific risks associated with the CGU operations,
stage of growth and markets in which it operates. The growth rate used to extrapolate cash flows beyond the 5-year forecast is 2.5% which is
consistent with forecasts conducted in similar industry reports.
No impairment to the carrying value of goodwill was identified for the BLIP CGU.
Changes in key assumptions were considered as sensitivities. Management considers that no reasonably possible changes to any of the key
assumptions would result in the carrying value exceeding the recoverable value in use.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
19 GOODWILL (CONTINUED)
CA PLUS
The impairment analysis was based on the CGU’s five-year forecast that was refreshed in August 2018 which reflected actual performance in the
FY17 and FY18 financial years and the approved budget for FY19.
A post tax weighted average cost of capital (WACC) of 12.0% was applied. The WACC reflects specific risks associated with the CGU operations,
stage of growth and markets in which it operates. The growth rate used to extrapolate cash flows beyond the 5-year forecast is 2.5% which is
consistent with forecasts conducted in similar industry reports. CA PLUS is included in the Airports segment of the Group.
CA Plus is an early stage business which is expected to scale and grow rapidly. Its performance to date has been affected by delays in
completing the core product offering and delayed sales execution as a result. Actions are in place to address these issues, however at 30
September 2018 performance was estimated to be approximately 12 months behind the acquisition business plan. As described in note 7
Gentrack has assessed that the earn out targets associated with the valuation of the deferred portion of consideration for the remaining 25% of
the business not held by Gentrack which is based on a cumulative EBITDA target for the three years to 31 December 2019 will not be achieved.
As a result, the deferred consideration liability in respect of Gentrack’s put option has been revalued to 1 Euro. Similarly, the impact of the delayed
growth profile of the business in the forecast period for the impairment testing gives rise to an impairment to goodwill amounting to $3.984m.
The carrying value after the impairment of $13.1m (value in use) remains sensitive to the future growth and performance of the CA Plus business.
Management considers that based on the sales opportunity pipeline and quality of prospects including opportunities to cross sell to customers in
the Gentrack Airports portfolio it is not appropriate to recognise any further impairment at this stage. However, if the expected growth and
performance does not eventuate, there may be need for further impairment. Sensitivities are summarised below.
30 SEPTEMBER 2018SENSITIVITIES
($000)RECOVERABLE
AMOUNT
EBITDA
+5%
EBITDA
5%
WACC
+1%
WACC
-1%
Gentrack Velocity300,56615,028(15,028)(33,232)42,394
Airport 20/2066,5473,327(3,327)(7,686)9,819
Junifer183,5809,179(9,179)(21,063)26,900
BLIP21,0051,086(1,086)(2,097)2,648
CA PLUS13,054780(780)(1,366)1,693
20 INTANGIBLE ASSETS
CAPITALISED DEVELOPMENT
Costs that are directly associated with the development of software are recognised as intangible assets where the following criteria are met:
• it is technically feasible to complete the software product so that it will be available for use;
• management intends to complete the software product and use or sell it;
• there is an ability to use or sell the software product;
• it can be demonstrated how the software product will generate probable future economic benefits;
• adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and
• the expenditure attributable to the software product during its development can be reliably measured.
Software development costs that meet the above criteria are capitalised. Other development expenditure that does not meet the above criteria
is recognised as an expense as incurred. Development costs previously recognised as expenses are not recognised as assets in a subsequent
period. Software development costs recognised as assets are amortised over their estimated useful lives.
BRANDS
Brands are considered to have an indefinite useful life and are held at cost and are not amortised, but are subject to an annual impairment test
consistent with the methodology outlined for goodwill above.
OTHER INTANGIBLE ASSETS
Other intangible assets consist of internal use software, acquired source code, trade-marks and customer relationships. They have finite useful
lives and are measured at cost less accumulated amortisation and accumulated impairment losses.
AMORTISATION
Except for goodwill and brands, 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.
62 / NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS / 63
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
20 INTANGIBLE ASSETS (CONTINUED)
The estimated useful lives for the current and comparative periods are as follows:
• Acquired source code 10 years
• Customer relationships 10 years
• Trademarks 4 years
• Internal use software 3 years
• Capitalised development 5-10 years
Amortisation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.
($000)NOTESOFTWARECUSTOMER
RELATIONSHIPS
BRAND NAMESTRADE-
MARKS
CAPITALISED
DEVELOPMENT
2018
TOTAL
YEAR ENDED 30 SEPTEMBER 2018
Opening balance24,78311,2505,0241189041,958
Additions186---3,7303,916
Acquisition through business
combinations3316,5598,994-812-26,365
Amortisation charge(3,792)(1,855)-(43)(397)(6,087)
Effect of movement in foreign
exchange1,390613-13192,035
Closing net book amount39,12619,0025,0247934,24268,187
Cost50,65025,6205,0248474,65486,795
Accumulated amortisation(11,524)(6,618)-(54)(412)(18,608)
Net book amount39,12619,0025,0247934,24268,187
($000)NOTESOFTWARECUSTOMER
RELATIONSHIPS
BRAND NAMESTRADE-
MARKS
CAPITALISED
DEVELOPMENT
2017
TOTAL
YEAR ENDED 30 SEPTEMBER 2017
Opening balance6,8704,4585,02414-.16,366
Additions28-.-.-.892920
Acquisition through business
combinations3319,2967,686-.-.-.26,982
Amortisation charge(2,219)(1,177)-.(3)(11)(3,410)
Effect of movement in foreign
exchange808283-.-.91,100
Closing net book amount24,78311,2505,0241189041,958
Cost32,40015,9645,0242290154,311
Accumulated amortisation(7,617)(4,714)-(11)(11)(12,353)
Net book amount24,78311,2505,0241189041,958
21 TRADE PAYABLES AND ACCRUALS
The Group recognises trade and other payables initially at fair value and subsequently measured at amortised cost using the effective interest
method. They represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid. The amounts
are unsecured, non-interest bearing and are usually paid within 45 days of recognition.
($000)20182017
CURRENT
Trade creditors5,1023,188
Sundry accruals1,8051,791
6,9074,979
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
22 LEASE INCENTIVES
($000)20182017
Lease incentives3,612693
Lease incentives relate to new premises in London and Auckland, which were for terms of 5 years and 12 years respectively.
23 EMPLOYEE ENTITLEMENTS
Liabilities for wages and salaries, including non-monetary benefits, long service leave and annual leave are recognised in employee benefits 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.
Cost for non-accumulating sick leave is recognised when the leave is taken and measured at the rates paid or payable.
($000)20182017
CURRENT
Liability for long service leave492433
Short term employee benefits3,3594,304
3,8514,737
NON-CURRENT
Liability for long service leave339361
339361
24 INTEREST BEARING LOANS AND BORROWINGS
FUNDING ACTIVITIES
The Group currently maintains a revolving five year credit facility and a working capital facility with ASB on the terms outlined below.
The revolving credit facility aggregated is NZD$42.5 million, and the working capital facility is NZD$8 million, totalling NZD$50.5 million. The purpose
of the revolving credit facility is to part fund acquisitions and other capital projects. The purpose of the working capital facility is to assist with funding
the working capital requirements of the Group. During the year all drawn down debt was repaid, following the rights issue (see note 13) and as a
result, at 30 September 2018, NZD$nil (2017: NZD$44,989k) was drawn down. Interest on both is payable at a rate calculated as a base rate plus a
pre-determined margin. During the year, the average rates for the borrowings were GBP1.8249%, NZD3.2800% and EUR1.200%. There are covenants
in place relating to gearing and interest cover and the Group was in compliance with them during the year. The maturity date for each drawdown is the
end of the next interest reset date. Gentrack has the right to roll over the drawdowns up to the maturity of the facility, 28 March 2022.
The Group has provided a General Security Deed over all the present and after acquired property of all entities in the consolidated Group.
25 FINANCIAL LIABILITIES
The potential cash payments related to put options issued by the Group over the equity of subsidiary companies are accounted for as financial
liabilities.
The amount that may become payable under the option on exercise is initially recognised at fair value within borrowings. Options are
subsequently reassessed to fair value, using the effective interest rate method, and any change arising is reflected as an adjustment to the
financial liability and a corresponding entry is recognised in the Statement of Comprehensive Income.
See note 7 Revaluation of acquisition related to deferred consideration liability for more details.
($000)20182017
Earn-out (current)-527
Put/call options (non-current)2,8085,964
Balance at 30 September 20182,8086,491
The reduction for the put/call options relates to the revaluation of the vendor put option for CA PLUS Limited of $3,835k which is described in
note 7, with additional movement from net present value adjustment of $121k and the remainder foreign exchange.
64 / NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS / 65
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
26 FINANCIAL RISK MANAGEMENT
The Group’s principal financial instruments include trade receivables and payables, cash and short term deposits, borrowings and loans.
As a result of the Group’s operations and sources of finance, it is exposed to credit risk, liquidity risk and market risks which include foreign
currency risk, commodity price risk and interest risk. These risks are described below.
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Group’s
risk management policies are established to identify and analyse the financial risks faced by the Group, to set appropriate risk limits and controls,
and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market
conditions and the Group’s activities.
26 FINANCIAL RISK MANAGEMENT (CONTINUED)
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis for measurement and the basis
upon which income and expenses are recognised, in respect of each class of financial asset and financial liability are disclosed in the Statement
of Accounting Policies and notes to the financial statements.
The Group holds the following financial instruments:
($000)20182017
FAIR VALUE
THROUGH
PROFIT & LOSS
LOANS AND
RECEIVABLES
OTHER
AMORTISED
COST
FAIR VALUE
THROUGH
PROFIT & LOSS
LOANS AND
RECEIVABLES
OTHER
AMORTISED
COST
FINANCIAL ASSETS
Cash and cash equivalents11,400--9,727--
Trade debtors-17,079--15,742-
11,40017,079-9,72715,742-
FINANCIAL LIABILITIES
Bank loans-----44,989
Trade creditors--5,102--3,188
Financial liabilities2,808--6,491--
2,808-5,1026,491-48,177
(a) CREDIT RISK
Credit risk is the risk of financial loss to the Group if a customer or counter party to a financial instrument fails to meet its contractual
obligations, and it arises principally from the Group’s trade receivables from customers in the normal course of business.
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The credit worthiness of a customer
or counter party is determined by a number of qualitative and quantitative factors. Qualitative factors include external credit ratings (where
available), payment history and strategic importance of customer or counter party. Quantitative factors include transaction size, net assets of
customer or counter party, and ratio analysis on liquidity, cash flow and profitability.
In relation to trade receivables, it is the Group’s policy that all customers who wish to trade on terms are subject to credit verification on an
ongoing basis with the intention of minimising bad debts. The nature of the Group’s trade receivables is represented by regular turnover of
product and billing of customers based on the Group’s contractual payment terms.
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables.
The carrying amount of the Group’s financial assets represents the maximum credit exposure as summarised above.
Refer to Note 17 for an aging profile for the Group’s trade receivables at reporting date.
(b) LIQUIDITY RISK
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they become due and payable. The Group’s
approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when they become
due and payable, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
The Group has sufficient cash to meet its requirements in the foreseeable future.
Maturities of financial liabilities
The following table details the Group’s contractual maturities of financial liabilities, including estimated interest payments and excluding the
impact of netting agreements, as at the reporting date:
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
26 FINANCIAL RISK MANAGEMENT (CONTINUED)
2018 ($000)1 YEAR OR
LESS
OVER 1 TO 5
YEARS
OVER 5
YEARS
TOTAL
CONTRACTUAL
CASH FLOWS
CARRYING
AMOUNT
LIABILITIES
NON-DERIVATIVE FINANCIAL LIABILITIES
Financial liabilities-2,808-2,8082,808
Trade and other payables5,102--5,1025,102
5,1022,808-7,9107,910
2017 ($000)1 YEAR OR
LESS
OVER 1 TO 5
YEARS
OVER 5
YEARS
TOTAL
CONTRACTUAL
CASH FLOWS
CARRYING
AMOUNT
LIABILITIES
NON-DERIVATIVE FINANCIAL LIABILITIES
Bank loans2,83645,441-.48,27744,989
Financial liabilities5275,964-.6,4916,491
Trade and other payables3,188-.-.3,1883,188
6,55151,405-.57,95654,668
(c) MARKET RISK
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group’s income or the value of
its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimising the return on risk.
Foreign currency risk
The Group is exposed to currency risk on sales transactions that are denominated in a currency other than the respective functional currencies
of Group entities, primarily the Australian Dollar (AUD), Hong Kong Dollar (HKD), Pound Sterling (GBP), EURO (EUR) and US Dollar (USD), and
Singapore Dollar (SGD).
The Group’s exposure to foreign currency risk at the reporting date was as follows (all amounts are denominated in New Zealand Dollars):
2018 ($000)AUDGBPEURUSDHKDSGDDKK
Cash and cash equivalents3,0071,02318366-145-
Trade and other receivables426-1,0301,519180276-
Trade and other payables(168)-(4)(261)(9)--
Financial liabilities------(2,808)
3,2651,0231,0441,624171421(2,808)
2017 ($000)AUDGBPEURUSDHKDSGDDKK
Cash and cash equivalents9143-762---
Trade and other receivables528661,282398-364-
Bank loans-(2,228)(9,021)----
Trade and other payables(14)(598)(8)(3)(4)(74)-
Financial liabilities------(3,101)
1,428(2,757)(7,747)1,157(4)290(3,101)
66 / NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS / 67
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
26 FINANCIAL RISK MANAGEMENT (CONTINUED)
Summarised sensitivity analysis
The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to foreign currency risk.
2018 ($000)FOREIGN CURRENCY RISK
1
PROFIT IMPACT
-10%+10%
Cash and cash equivalents507(415)
Trade and other receivables383(314)
Trade and other payables(51)55
Financial liabilities(312)255
Total increase/(decrease)527(419)
2017 ($000)FOREIGN CURRENCY RISK
1
PROFIT IMPACT
-10%+10%
Cash and cash equivalents186(153)
Trade and other receivables293(240)
Bank loans(1,250)1,023
Trade and other payables(78)64
Financial liabilities(345)282
Total (decrease)/increase(1,194)976
1
The foreign currency sensitivity above represents a 10% decrease and increase in spot foreign exchange rates.
Interest rate risk
The Group’s interest rate risk arises from its bank loans. The repricing of these exposes the Group to cash flow interest rate risk. The Group
does not enter into interest rate hedges.
The interest rate repricing profiles of the Group’s financial assets and liabilities subject to interest rate risk are:
If interest rates had been 1.0% higher/lower during the period with all other variables held constant, the impact on the interest expense of the
Group would have been $402,000 higher/$402,000 lower (2017: $217,000 higher/$99,000 lower) respectively.
(d) CAPITAL MANAGEMENT
The capital structure of the Group consists of equity raised by the issue of ordinary shares in the parent company.
The Group manages its capital to ensure that companies in the Group are able to continue as going concerns. The Group is not subject to any
externally imposed capital requirements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
(e) FAIR VALUE MEASUREMENT
The carrying amounts of the Group’s financial assets and liabilities approximate their fair value due to their short interest maturity periods.
27 RELATED PARTIES
IDENTITY OF RELATED PARTIES
The Group has related party relationships with its subsidiaries. The related party transactions primarily consist of the purchase and sale of
software products, provision of technical support, loan advances and repayments, consultancy services and management charges on commercial
terms. Related parties to the Group are as follows:
EntityPrincipal Activity
Gentrack Group Australia Pty LimitedAustralian holding company
Gentrack Pty LimitedAustralian operating company – software development, sales and support
Veovo Holdings (Denmark) ApSDanish holding company
Blip Systems A/SDanish operating company – software development, sales and support
CA Plus LimitedMaltese operating company – software development, sales and support
Veovo Limited (formerly Total Terminal
Technologies Limited)
New Zealand holding company
Gentrack LimitedNew Zealand operating company – software development, sales and support
Gentrack Holdings (UK) LimitedUnited Kingdom holding company
Gentrack UK LimitedUnited Kingdom operating company – software development, sales and support
Junifer Systems LimitedUnited Kingdom dormant company
Evolve Analytics LimitedUnited Kingdom operating company – software development sales and support
Evolve Parent LimitedUnited Kingdom holding company
Gentrack (Singapore) Pte LimitedSingapore operating company – software sales and support
Veovo IncUSA operating company – software sales and support
Management fees of $3,382,836 (2017: $2,010,200) were charged by Gentrack Limited, the New Zealand operating company, to related parties
during the year to cover management type activities.
A number of the Company’s directors are also directors of other companies. No transactions have occurred between Gentrack and any of these
companies during the year. There have been no transactions between Gentrack and the directors during the year.
28 OPERATING LEASE COMMITMENTS
($000)20182017
NON-CANCELLABLE OPERATING LEASE
COMMITMENTS DUE:
Not later than one year2,6372,264
Later than one year, not later than five years8,0318,171
Later than five years6,7248,497
17,39218,932
The Group leases premises, plant and equipment. Operating leases held over properties give the Group the right to renew the lease subject to
redetermination of the lease rental by the lessor. There are no renewal options or options to purchase in respect of plant and equipment held
68 / NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS / 69
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
under operating leases.
29 KEY MANAGEMENT PERSONNEL
Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities
of the Group, directly or indirectly, and include the Directors, the Chief Executive, their direct reports. The following table summarises
remuneration paid to key management personnel.
($000)20182017
Salaries, bonuses and other benefits3,7603,316
Share based payments331178
Post employment benefits--.
Directors’ fees423371
Total salaries and benefits4,5143,865
OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
There were no other transactions with key management personnel during the year.
30 CAPITAL COMMITMENTS
The capital expenditure commitments as at 30 September 2018 are $nil (2017: $843k).
31 CONTINGENCIES
ASB New Zealand has provided the following guarantees on behalf of the Gentrack Group:
NZD$134,013 (AUD$122,850) to ASB Bank. This guarantee is open ended.
NZD$191,990 (HKD$994,528) to ASB Bank. This guarantee expires on 8 September 2019.
NZD$75,000 to NZX Limited. This guarantee has no expiry date.
NZD$114,574 (AUD$105,030) to ASB Bank. This guarantee is open ended.
NZD$608,747 (AUD$558,038) to ASB Bank. This guarantee expires on 30 April 2020.
NZD$70,018 (SGD$63,441) to ASB Bank. This guarantee expires on 31 December 2018.
Gentrack Group Limited had utilised $986,751 of their $3,750,000 bond from ASB Bank at 30 September 2018.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
32 CASH FLOW INFORMATION
($000)20182017
(a) RECONCILIATION OF OPERATING CASH FLOWS WITH REPORTING PROFIT AFTER TAX:
Profit after tax13,86911,825
Adjustments
Deferred tax(2,420)(808)
Doubtful debts337(36)
Loss on foreign exchange transactions59886
Share based payments331178
Net interest expense1,095494
Revaluation and interest of financial liability(3,888)-
Other non-cash items(79)33
Depreciation and amortisation6,9873,991
Impairment of goodwill3,984-
20,81415,763
Add/(less) movements in other working capital items:
Decrease/(increase) in trade and other receivables278(6,656)
Increase in tax payable1,4181,611
(Decrease)/increase in GST payable(197)933
(Decrease)/increase in deferred revenue(1,906)1,009
(Decrease)/increase in employee entitlements(908)1,465
Increase/(decrease) in trade payables and accruals2,753(66)
Net cash inflow from operating activities22,25214,059
(b) BANK FACILITIES:
Bank facility50,50050,500
Unused bank facility50,5005,511
33 BUSINESS COMBINATIONS
The Group made the following acquisitions during the year:
On 29 June 2018 the Group acquired 100% of the shares in Evolve Parent Limited and Evolve Analytics Limited (“Evolve”) for cash consideration
of $43 million. The non-cash consideration in Evolve is the issue of 274,754 shares (fair value of $1.9 million) in Gentrack Group Limited,
subscribed for by the sellers of Evolve Analytics Limited.
Evolve is a market leading provider of software and services to the UK energy retail sector, specialising in the identification and correction of
settlement and billing errors as well as the accuracy of standing data managing data for over 10 million meter points. Customers include three of
the big 6 UK energy suppliers. The combined Gentrack and Evolve businesses enhance the range of product functionality and will help position
the Group as the market leader in the UK providing a strong base to expand into new markets.
Evolve’s SaaS based solutions and services improve customers’ revenue collection and cost control, and are highly complementary to Gentrack’s
core billing and customer engagement solutions. The acquisition extends Gentrack’s product offering for UK utilities with valuable cross selling
potential within the combined customer base. Evolve brings additional organic growth potential to Gentrack.
For the three months ended 30 September 2018, Evolve contributed revenue of $1.4 million and net profit after tax of $0.8 million to the Group’s
result. If the acquisition had occurred on 1 October 2017, the contribution to revenue and net profit after tax for the Group would have been $4.6
million and $1.5 million.
70 / NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS / 71
33 BUSINESS COMBINATIONS (CONTINUED)
($000)EVOLVE ANALYTICS
LIMITED
FAIR VALUE OF NET ASSETS ACQUIRED AT ACQUISITION DATE
Cash239
Trade and other receivables1,635
Property, plant and equipment70
Intangible assets26,365
Payables and accruals(804)
Deferred tax(4,924)
Net assets22,581
Cash consideration43,035
Non-cash consideration1,954
Total consideration44,989
GOODWILL RECOGNISED AS A RESULT OF THE ACQUISITION
Total consideration44,989
Net assets(22,581)
Goodwill22,408
The difference between fair value of assets and liabilities acquired and the purchase price has been recognised as goodwill. The goodwill
recognised as a result of the acquisitions reflects the technology and technical expertise of the acquired companies and the synergies expected
to be achieved from integrating the companies into the Group’s existing business. Intangible assets consists of fair values assessed for software
and customer relationships (refer note 20).
BUSINESS COMBINATIONS – PRIOR YEAR
In the year ended 30 September 2017, the Group completed three acquisitions:
a) On 3 April 2017 the Group acquired 100% of the shares in Junifer Systems Limited (“Junifer”) for cash consideration $73.2 million. The
non-cash consideration in Junifer is the issue of 1,459,371 shares (fair value of $5.7 million) in Gentrack Group Limited, subscribed for by the
sellers of Junifer Systems Limited.
(b) On 23 April 2017 the Group acquired 79.81% of the shares in BLIP Systems A/S (“Blip”) for cash consideration of $8.4 million. The Blip
non-cash consideration is made up of two elements; the value of an earn-out provision based on total revenue achieved for the year ending
December 2017 (fair value $0.5 million) and the present value of the liability associated with a vendor put option over 20.19% of the shares in
Blip (fair value $2.4 million). The put option is based on the probability of achieving an average EBITDA target over financial years ending
31 December 2017, 2018 and 2019 and an exercise date of March 2020. The minimum payable under the option is $2.1 million and there is no
upper limit. The undiscounted estimated payment is $2.5m. The Group have accounted for this element of the consideration using the
anticipated acquisition method, and accordingly no non-controlling interest has been recognised.
(c) On 8 May 2017 the Group acquired 75% of the shares in CA PLUS Limited (“CA”) for cash consideration of $6,000. The CA non-cash
consideration is the present value of the liability associated with a vendor put option over 25% of the shares in CA (fair value $3.4 million).
The put option is valued based on a cumulative EBITDA target for the financial years ending 31 December 2017, 2018 and 2019 and an
exercise date of May 2020. The minimum payable under the option is $0.8 million and the maximum $11.9 million. The undiscounted estimated
payment is $3.6m. The Group have accounted for this element of the consideration using the anticipated acquisition method, and accordingly
no non-controlling interest has been recognised.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
33 BUSINESS COMBINATIONS (CONTINUED)
Gentrack Group Limited subscribed to 7,496,400 non-profit participating Redeemable Preference Shares(“RPS”) issued by CA with a nominal
value of ¤1.00 each, fully paid up. The RPS do not entitle the Group to receive notice of and to attend and vote at general meetings of the
Company or to receive dividends. The RPS may be redeemed at any time between April 2020 and April 2055, and shall only be redeemed out
of the distributable profits of CA or out of the proceeds of a fresh issue of shares made for the purpose of redemption. The RPS have been
classified in the CA accounts as a term liability, as the instrument does not have the characteristics of equity, and is eliminated on
consolidation having no overall effect on the Group position. This did not form part of consideration as the RPS are not subscribed for in
exchange for control of CA.
On the date of acquisition the Group repaid $11.8 million of CA’s borrowings. The repayment was treated as a separate transaction.
($000)JUNIFER
SYSTEMS LIMITED
BLIP SYSTEMS
A/S
CA PLUS
LIMITED
FAIR VALUE OF NET ASSETS ACQUIRED AT ACQUISITION DATE
Cash consideration73,1938,3826
Non-cash consideration5,6922,8763,361
Total consideration78,88511,2583,367
GOODWILL RECOGNISED AS A RESULT OF THE ACQUISITION
Total consideration78,88511,2583,367
Net assets(21,044)(3,945)10,121
Goodwill57,8417,31313,488
The values above are stated in New Zealand dollars at the applicable exchange rates at the dates of acquisition.
34 EVENTS SUBSEQUENT TO BALANCE DATE
A final dividend of $8,571,694 ($0.087 per share) was declared on 29 November 2018 for the year ended 30 September 2018, and will be paid on
21 December 2018. During the year an interim dividend of $4,184,863 ($0.05 per share) was paid on 25 June 2018.
72 / NOTES TO THE FINANCIAL STATEMENTS
The Board recognises the importance of good corporate governance,
particularly its role in delivering improved corporate performance and
protecting the interests of all stakeholders.
The Board is responsible for establishing and implementing the
Company’s corporate governance frameworks, and is committed to
fulfilling this role in accordance with best practice while observing
applicable laws, and NZX Corporate Governance guidance.
This section sets out the Company’s commitment to good corporate
governance and addresses the Company’s compliance with the eight
fundamental principles of the NZX Corporate Governance Code (NZX
Code) published in May 2017.
The Company’s Constitution, the Charters and most of the policies
referred to in this Corporate Governance Statement are available on
the Company’s website www.gentrack.com (“Company Website”) in
the Leadership and Governance section of the Investor Centre.
This corporate governance statement is current as at 28 November
2018 and has been approved by the Board.
PRINCIPLE 1 – CODE OF ETHICAL BEHAVIOUR
Directors should set high standards of ethical behaviour, model this
behaviour and hold management accountable for these standards being
followed throughout the organisation.
The Board maintains high standards of ethical conduct and the Chief
Executive Officer is responsible for ensuring that high standards of
conduct are maintained by all staff. The Board has adopted a “Code of
Ethics”, a copy of which is available in the Investor Centre section of
the Company’s website.
The Board is the overall and final body responsible for all decision
making within the Company, with the core objective of representing
and promoting the interests of shareholders by adding long-term value
to the Company.
The Company has a Share Trading Policy for the approval of all share
purchases and sales by staff, including directors. A copy of this policy
is available in the Investor Centre section of the Company’s website.
The Company undertakes appropriate checks of prospective Directors
prior to putting forward a candidate for election and provides material
information in its possession relevant to such a decision to security
holders.
PRINCIPLE 2 – BOARD COMPOSITION AND PERFORMANCE
To ensure an effective Board, there should be a balance of independence,
skills, knowledge, experience and perspectives.
BOARD CHARTER
This describes the Board’s role and responsibilities and regulates
internal Board procedures; a copy of this document is available in the
Investor Centre section on the Company’s website.
The Board directs, and supervises the management of, the business
affairs of the Company including, in particular:
• ensuring that the Company’s goals are clearly established, and
that strategies and resources are in place for achieving them;
• ensuring that there is an ongoing review of performance against
the Company’s strategic objectives;
• approving transactions relating to acquisitions and divestments
and capital expenditure above delegated authority limits;
• ensuring that there is an ongoing assessment of business risks
and that there are appropriate control and accountability systems
in place to manage them;
• monitoring the performance of management and overseeing
company-wide remuneration, employment and health and safety
practices;
• appointing the Chief Executive Officer, setting the terms of their
employment and, where necessary, terminating their employment;
• approving and monitoring the Company’s financial and other
reporting and ensuring the Company’s financial statements
represent a true and fair view; and
• setting the dividend policy.
NOMINATION AND APPOINTMENT
The procedures for the appointment and removal of Directors are
ultimately governed by the Company’s Constitution. The Board has
established a Nominations and Remuneration Committee whose role is
to identify and recommend to the Board individuals for nomination as
members of the Board and its Committees, taking into account such
factors as it deems appropriate, including experience, qualifications,
judgement and the ability to work with other Directors.
COMPOSITION OF BOARD
As at 30 September 2018 the Board comprised six Directors, as
follows:
• John Clifford (Non-executive Chair) – appointed May 2012
• James Docking (Non-executive Director) – appointed May 2012
• Andy Coupe (Non-executive Director) – appointed April 2014
• Graham Shaw (Non-executive Director) – appointed March 2014
• Leigh Warren (Non-executive Director) – appointed May 2012
• Nick Luckock (Non-executive Director) – appointed February 2018
Profiles of each Director are available in the Investor Centre section
on the Company’s website.
The Company has written agreements with each board member
establishing the terms of their appointment.
DELEGATION
To enhance efficiency, the Board has delegated some of its powers to
Board Committees and other powers to the Chief Executive Officer.
The terms of the delegation by the Board to the Chief Executive Officer
are documented in the Board Charter and more clearly set out in the
Company’s Delegated Authority Framework. This framework also
establishes the authority levels for decision-making within the
Company’s management team.
DIRECTOR INDEPENDENCE
The Board Charter requires that at least 50% of Directors be
“independent”.
The Board takes into account the guidance provided under the NZX
Listing Rules in determining the independence of Directors.
The Board will review any determination it makes as to a Director’s
independence on becoming aware of any information that may have an
impact on the independence of the Director. For this purpose,
Directors are required to ensure that they immediately advise the
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE / 73
74 / CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
Board of any relevant new or changed relationships to enable the
Board to consider and determine the materiality of the relationships.
The Board considers that Leigh Warren, Graham Shaw and Andy
Coupe are Independent Directors. The Board has determined that
James Docking and John Clifford are not Independent Directors
because they are both substantial shareholders of the Company. Nick
Luckock is not classed as an independent director because HgCapital
(of which he is a Partner) controls Baincor Nominees Pty Limited,
which is a substantial shareholder of the Company.
SELECTION AND ROLE OF CHAIRMAN
The Chairman of the Board is elected by the non-executive Directors.
The Board supports the separation of the role of Chairman and Chief
Executive Officer. The Chairman’s role is to manage the Board
effectively, to provide leadership to the Board, and to facilitate the
Board’s interface with the Chief Executive Officer.
John Clifford has held the role of Chairman throughout the financial
year. The Board has determined that John Clifford is not an Independent
Director because he is a substantial shareholder in the Company (as
noted above). However, given the nature of the Company, John Clifford
is considered the most appropriate Director to act as Chairman given
his wealth of experience in the utilities sector, having served as
Chairman of several other businesses involved in utility technology.
DIVERSITY AND INCLUSION POLICY
The Company recognises the importance of diversity and inclusion and
is committed to promoting these values within its workplace and
culture. The Board supports this initiative and has approved a Diversity
and Inclusion Policy, a copy of which is available in the Investor
Centre on the Company’s website.
In June 2018 the Company became a member of Diversity Works New
Zealand and has rolled out a number of key initiatives to progress its
diversity and inclusion philosophy. Carer’s leave, in addition to sick
leave, has been introduced to cover days where an employee provides
care or support to a member of his or her immediate family. Flexible
working has also been introduced.
One of the Company’s key priorities over the next financial year will be
to establish a Diversity and Inclusion Committee, the committee will
work to review the Diversity and Inclusion Strategy to progress the
objectives of the Diversity and Inclusion Policy.
At 30 September 2018, the gender breakdown for the Company (and its
wholly owned subsidiaries) was as follows:
BOARDSENIOR
EXECUTIVES
ALL
EMPLOYEES
FY18
Female01134
Male610400
% Female0%9%25%
FY17
Female0291
Male68297
% Female0%20%23%
These figures include permanent full-time, permanent part-time and
fixed-term employees, but not independent contractors or consultants.
A Senior Executive is defined as an employee who reports directly to
the Chief Executive Officer. The Company recruits for predominantly
technology roles.
DIRECTOR EDUCATION
All Directors are responsible for ensuring they remain current in
understanding their duties as Directors. Directors are provided access
to the Company’s on-line knowledge hub.
RETIREMENT AND RE-ELECTION
The Board acknowledges and observes the relevant Director rotation/
retirement rules under the NZX Listing Rules.
DIRECTORS’ SHARE OWNERSHIP
The table of Directors’ shareholdings is included in the Disclosures
section of this Annual Report.
INDEMNITIES AND INSURANCE
Deeds of Indemnity have been granted by the Company in favour of the
Directors in relation to potential liabilities and costs they may incur for
acts or omissions in their capacity as Directors.
The Directors’ and Officers’ Liability insurance covers risks normally
covered by such policies arising out of acts or omissions of Directors
and employees in their capacity as such.
BOARD MEETINGS
The Board has a standard schedule which includes meeting ten times
per annum, in addition other board meetings are held as needed to
deal with specific matters such as acquisition related activity. There
were also separate meetings of the Board Committees. Directors
receive detailed information in Board papers to facilitate decision
making. At each meeting the Board considers key financial and
operational information as well as matters of strategic importance.
Executives regularly attend Board meetings and are also available to
be contacted by Directors between meetings.
Directors who are not members of the Committees may attend the
Committee meetings where invited to do so by the Chairman of the
relevant Committee.
The Board has a broad range of IT, financial, sales, business, risk
management and other skills and expertise necessary to meet its
objectives.
BOARD ACCESS TO INFORMATION AND ADVICE
The Company Secretary is responsible for supporting the
effectiveness of the Board by ensuring that policies and procedures
are followed and co-ordinating the completion and dispatch of the
Board agendas and papers.
All Directors have access to the senior management team to discuss
issues or obtain information on specific areas in relation to items to be
considered at Board meetings or other areas as they consider
appropriate. Further, Directors have unrestricted access to Group
records and information.
The Board, the Board Committees and each Director have the right,
subject to the approval of the Chairman, to seek independent
professional advice at the Company’s expense to assist them to carry
CORPORATE GOVERNANCE
out their responsibilities. Further, the Board and Board Committees
have the authority to secure the attendance at meetings of outsiders
with relevant experience and expertise.
CONFLICTS OF INTEREST
The Board Charter outlines the Board’s policy on conflicts of interest.
Where conflicts of interest do exist, Directors excuse themselves
from discussions and do not exercise their right to vote in respect of
such matters.
PERFORMANCE REVIEW
The Board has a formal review of its performance on an annual basis.
A review was undertaken in August 2018.
PRINCIPLE 3 – BOARD COMMITTEES
The Board should use committees where this will enhance its
effectiveness in key areas, while still retaining board responsibility.
BOARD COMMITTEES
The Board has established two Committees: the Audit and Risk
Committee, and the Nominations and Remuneration Committee. The
Charters of each Committee are in the Investor Centre section of the
Company’s website.
The membership of each Committee at 30 September 2018 was:
1. Audit and Risk Committee – Graham Shaw (Chair), Andy Coupe,
John Clifford
2. Nominations and Remuneration Committee – John Clifford
(Chair), Leigh Warren and Graham Shaw.
For further details on the functions of the Audit and Risk Committee
please refer to “Principle 7”. For further details on the functions of the
Nominations and Remuneration Committee please refer to “Principle
2” and “Principle 5”.
During the year the Board finalised a Takeover Response Protocol. The
Protocol outlines the procedures in the event the Company is subject
to a takeover offer.
PRINCIPLE 4 – REPORTING AND DISCLOSURE
The Board should demand integrity in financial and non-financial
reporting, and in the timeliness and balance of corporate disclosures.
The Company is committed to maintaining a fully informed market
through effective communication with the NZX and ASX, the
Company’s shareholders, analysts, media and other interested
parties. The Company provides all stakeholders with equal and timely
access to material information that is accurate, balanced, meaningful
and consistent.
The Board has adopted a Market Disclosure Policy and a Shareholder
Communications Policy, copies of which are available in the Investor
Centre section on the Company’s website. The Policies have been
communicated internally to ensure that they are strictly adhered to by
the Board and the Company’s employees. The Company has been
listed on the NZX Main Board and the ASX since 25 June 2014 and
has at all times complied with its continuous disclosure obligations.
Directors consider at each Board meeting whether there is any
material information which should be disclosed to the market.
The “Code of Ethics”, Board Committee Charters and other key
governance documents are available in the Investor Centre section of
the Company’s website.
The Company does not currently provide non-financial reporting on
environmental, social and governance factors other than as set out in
this statement.
PRINCIPLE 5 – REMUNERATION
The remuneration of Directors and executives should be transparent, fair
and reasonable.
The Board has a Nominations and Remuneration Committee. One of that
Committee’s principal functions is to oversee the remuneration strategies
and policies of the Company. The Nominations and Remuneration
Committee is governed by a formal charter, a copy of which is available
in the Investor Centre section on the Company’s website.
DIRECTOR REMUNERATION
The Company distinguishes the structure of non-executive Directors’
remuneration from that of executive Directors. Total Directors’ fees
are currently set at a maximum of $450,000 per annum for the
non-executive Directors. The actual amount of fees paid in the past
year was $423,000.
CEO REMUNERATION
This is structured as follows:
Fixed base salary of $500,000 per annum. This amount is reviewable
at the Board’s discretion each year.
Annual short term incentive payments of up to 50% of the fixed base
salary. The actual short term incentive awarded (if any) is determined
at the discretion of the Board after assessing the performance of the
Company and the performance of the CEO against performance
targets and priorities agreed annually.
The CEO participates in the Company’s Long Term Incentive Scheme
(LTI Scheme). In March 2018, the Company issued a total of 30,506
performance rights under the LTI Scheme to the CEO. These rights
vest over three years and are subject to Gentrack Group achieving
certain performance hurdles contained within the LTI Scheme that are
aligned to sustained earnings per share growth.
The Remuneration Policy Statement is available in the Investor Centre
section of the Company’s website.
PRINCIPLE 6 – RISK MANAGEMENT
Directors should have a sound understanding of the material risks faced by
the issuer and how to manage them. The Board should regularly verify that
the issuer has appropriate processes that identify and manage potential and
material risks.
The Board has an Audit and Risk Committee that reports to the Board
– please see “Principle 7” below for further detail in relation to the
Audit and Risk Committee.
CORPORATE GOVERNANCE / 75
76 / CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
The Company’s senior management maintain a Risk Register, which is
reviewed by the Audit and Risk Committee and forms a key part of the
risk management framework. During the year the Company
participated in a risk profiling workshop that was run by a third party.
The output from the workshop has been taken account of in the risk
management process.
To support its commitment to Information Security Management, the
Company is an ISO/EC 27001:2013 certified organisation for Cloud
services it provides via Amazon Web Services. ISO/IEC 27001:2013
specifies the requirements for establishing, implementing, maintaining
and continually improving an information security management
system. It also includes requirements for the assessment and
treatment of information security risks tailored to the needs of the
organisation. The purpose of this international standard is to help
organisations establish and maintain an information security
management system to manage and control information, security risks
as well as maintaining the integrity, protection, preservation and
confidentiality of information.
The Company does not have an internal audit function, but through the
steps outlined above the Board ensures the company is reviewing,
evaluating and continually improving the effectiveness of its risk
management and internal control processes.
The Company considers that it does not have any material exposure to
economic, environmental and social sustainability risks. The Board
receives a health and safety report and an information security report
each month and considers these matters at each Board meeting.
PRINCIPLE 7 – AUDITORS
The Board should ensure the quality and independence of the external
audit process.
The Board is committed to a transparent system for auditing and
reporting of the Company’s financial performance. The Board
established an Audit and Risk Committee, which performs a central
role in achieving this goal. The members of the Committee provide a
balance of independence, sector experience and relevant professional
experience and qualifications.
The Audit and Risk Committee’s principal functions are:
• to assist the Board in fulfilling its responsibilities for the
Company’s financial statements and external financial reporting;
• to assist the Board in ensuring that the ability and independence
of the external auditors to carry out their statutory audit role is
not impaired, or could reasonably be perceived to be impaired;
• to assist the Board in ensuring appropriate accounting policies
and internal controls are established and maintained; and
• to assist the Board in ensuring the efficient and effective
management of all business risks.
One of the main purposes of the Audit and Risk Committee is to
ensure the quality and independence of the audit process. The
Chairman of the Audit and Risk Committee and Chief Financial Officer
work with the external auditors to plan the audit approach. All aspects
of the audit are reported back to the Audit and Risk Committee and the
auditors are given the opportunity at Audit and Risk Committee
meetings to meet with the Board.
The Audit and Risk Committee has adopted a formal Charter, a copy of
which is available in the Investor Centre section on the Company’s
website.
As a New Zealand company, section 295A of the Australian
Corporations Act is not applicable to the Company. This section
requires the Company’s Chief Executive Officer and Chief Financial
Officer to make a declaration in relation to the financial records and
financial statements and notes. However, the Company’s Chief
Executive Officer and Chief Financial Officer provide equivalent
assurances to the Board as part of the annual external audit process.
The Company’s external auditors will attend the annual meeting, and
are available to answer questions relating to the conduct of the
external audit and the preparation and content of the auditor’s report.
PRINCIPLE 8 – SHAREHOLDER RIGHTS AND RELATIONS
The Board should respect the rights of shareholders and foster
constructive relationships with shareholders that encourage them to
engage with the issuer.
The company currently keeps shareholders informed through:
• the annual report;
• the interim report;
• the annual meeting of shareholders;
• disclosure to the NZX and ASX in accordance with the
Company’s Shareholder Communications Policy and Market
Disclosure Policy; and
• the Investor Centre section on the Company’s website.
The company’s Shareholder Communications Policy and Market
Disclosure Policy are designed to ensure that communications with
shareholders and all other stakeholders are managed efficiently. The
Chairman, Chief Executive Officer and Chief Financial Officer are the
points of contact for shareholders and analysts.
The Board considers the annual report to be an essential opportunity for
communicating with shareholders. The company publishes its results
and reports electronically on the Company Website. Investors may also
request a hard copy of the annual report by contacting the company’s
share registrar, Link Market Services Limited. Contact details for the
registrar appear at the end of this report.
The Company considers the annual meeting to be a valuable element
of its communications programme. The Chairman will provide an
opportunity for shareholders to raise questions for their Board. The
Chairman may ask the Chief Executive Officer and any relevant
manager of the Company to assist in answering questions if required.
As noted earlier, the Company’s external auditors will also attend the
annual meeting, and are available to answer questions relating to the
conduct of the external audit and the preparation and content of the
auditor’s report.
DISCLOSURES / 77
DISCLOSURES
ENTRIES RECORDED IN THE INTERESTS REGISTER
The Company maintains an Interest Register in accordance with the Companies Act 1993 and the Securities Markets Act 1988. There were no
entries made in the Interests Register for the period 1 October 2017 to 30 September 2018 that require disclosure.
SHARE DEALINGS OF DIRECTORS
Directors disclosed the following acquisitions and disposals of relevant interests in Gentrack shares during the year ended 30 September 2018.
SHARES
DATE OF
ACQUISITION/DISPOSAL
CONSIDERATION
PER SHARE
NUMBER OF
SHARES ACQUIRED/
(DISPOSED)
Andy Coupe3 August 2018$6.193,611
Graham Shaw3 August 2018$6.198,666
Leigh Warren3 August 2018$6.1919,669
Paul Fitzgerald3 August 2018$6.1975,804
Kenton Judson3 August 2018$6.1975,804
Saul Nurtman3 August 2018$6.1978,610
Nick Luckock3 August 2018$6.191,653,098
John de Giorgio3 August 2018$6.1967,145
John Clifford13 July 2018$6.19403,877
Tim Bluett13 July 2018$6.6911,495
John de Giorgio12 January 2018$6.714,750
Please refer to the notes on directorships at the foot of the following table.
SHAREHOLDINGS OF DIRECTORS AT 30 SEPTEMBER 2018
20182017
TYPE OF HOLDINGNUMBER OF SHARESNUMBER OF SHARES
John CliffordBeneficial Interest9,555,2519,151,374
Andy CoupeHeld Personally24,44420,833
James DockingBeneficial Interest5,358,1965,358,196
Tim Bluett
1
Held Personally11,495-.
Graham ShawHeld Personally58,66650,000
Leigh WarrenBeneficial Interest298,853279,184
Paul Fitzgerald
2
Held Personally513,191437,387
Kenton Judson
2
Held Personally513,191437,387
Saul Nurtman
2
Held Personally532,188453,578
Nick Luckock
3
Beneficial Interest11,191,4719,538,373
John de Giorgio
4
Held Personally454,566382,671
Alan Duggan
5
Held Personally241,779-.
1
Tim Bluett is a Director of the following subsidiaries: Gentrack UK Limited, Gentrack Holdings (UK) Limited, Evolve Parent Limited, Evolve Analytics Limited.
2
Paul Fitzgerald, Kenton Judson and Saul Nurtman are Directors of the following subsidiary company: Junifer Systems Limited.
3
Nick Luckock is the Partner of HgCapital. HgCapital controls Baincor Nominees Pty Limited which holds shares in Gentrack Group Limited.
4
John de Giorgio is a Director of the following subsidiary company: CA Plus Limited.
5
Alan Duggan is a Director of the following subsidiary company: Evolve Analytics Limited.
DISCLOSURES
REMUNERATION OF DIRECTORS
Details of the total remuneration of, and the value of other benefits received by, each Director of Gentrack Group Limited during the financial year
ended 30 September 2018 are as follows:
20182017
FEESFEES
John Clifford103,000100,000
Andy Coupe62,00060,000
James Docking62,00060,000
Nick Luckock
1
36,167-.
Nic Humphries
2
25,83321,247
Graham Shaw
3
72,00070,000
Leigh Warren62,00060,000
423,000371,247
1
Nick Luckock was elected as a non-executive director on 28 February 2018. His fees cover the period from 28 February 2018 to 30 September 2018.
2
Nic Humphries resigned as a non-executive director on 28 February 2018.
3
Graham Shaw was paid $62,000 for his role as Director and $10,000 for his role as the chair of the Audit and Risk Committee.
No directors received salaried remuneration in either 2018 or 2017.
EMPLOYEE REMUNERATION
The number of current employees of the parent and subsidiaries receiving remuneration and benefits above $100,000 in the year ended
30 September 2018 are set out in the table below:
REMUNERATIONNUMBER OF EMPLOYEES
$100,001 – $110,00033
$110,001 – $120,00026
$120,001 – $130,0007
$130,001 – $140,00012
$140,001 – $150,0004
$150,001 – $160,0007
$160,001 – $170,0008
$170,001 – $180,00010
$180,001 – $190,00012
$190,001 – $200,0005
$200,001 – $210,0003
$210,001 – $220,0006
$220,001 – $230,0005
$230,001 – $240,0003
$250,001 – $260,0002
$270,001 – $280,0002
$290,001 – $300,0001
$300,001 – $310,0001
$340,001 – $350,0002
$350,001 – $360,0001
$370,001 – $380,0002
$400,001 – $410,0001
$590,001 – $600,0001
Total154
78 / DISCLOSURES
DISCLOSURES / 79
DISCLOSURES
The analysis above includes the remuneration and benefits paid to employees, in the relevant bandings, where their annual remuneration and
benefits exceed $100,000.
ANALYSIS OF SHAREHOLDING AT 30 SEPTEMBER 2018
SIZE OF HOLDINGNUMBER OF
HOLDERS
FULLY PAID ORDINARY SHARES
NUMBER OF SHARES
1
% OF ISSUED
CAPITAL
1 – 1,0001,593748,3961
1,001 – 5,0001,7344,243,3584
5,001 – 10,0004223,022,3453
10,001 – 100,0003157,603,2868
100,001 and over5082,907,83184
TOTAL4,11498,525,216100
1
The total number of shares on issue as at 30 September 2018 was 98,525,216.
TWENTY LARGEST SHAREHOLDERS AT 30 SEPTEMBER 2018
The twenty largest shareholders of fully paid ordinary shares as at 30 September 2018 were:
NAMENUMBER OF ORDINARY
SHARES HELD
% OF ISSUED
SHARE CAPITAL
Baincor Nominees Pty Ltd11,191,47111.36
Uplands Group Pty Limited8,424,2568.55
National Nominees New Zealand Limited
1
5,474,2885.56
Jametti Limited5,358,1965.44
HSBC Nominees (New Zealand) Limited
1
4,993,4265.07
J P Morgan Nominees Australia Limited3,984,8814.04
Citibank Nominees (NZ) Ltd
1
3,592,8833.65
HSBC Nominees (New Zealand) Limited
1
3,347,7763.40
Nigel Peter Farley and Richard John Burrell3,312,6613.36
Custodial Services Limited2,965,7663.01
Custodial Services Limited2,601,5742.64
Tea Custodians Limited
1
2,510,6452.55
HSBC Custody Nominees (Australia) Limited1,788,3171.82
Roy Desmond Grant and Nina Cathering Maria Grant and
Adrienne Alexandra Wigmore
1,466,6381.49
Terence De Montalt Maude and Wendy Fay Wood1,400,0001.42
Custodial Services Limited1,223,9121.24
Cogent Nominees Limited
1
1,140,7561.16
JCVC Pty Ltd1,130,9951.15
Custodial Services Limited955,6430.97
New Zealand Superannuation Fund Nominees Limited
1
885,0010.90
1
These shareholdings are held through New Zealand Central Securities Depository Limited (NZCSD) which allows electronic trading of securities
to members.
The percentage shareholding of the 20 largest shareholders of Gentrack Group Limited fully paid ordinary shares was 77%.
DISCLOSURES
SUBSTANTIAL SHAREHOLDERS AS AT 30 SEPTEMBER 2018
According to notices given under the Securities Markets Act 1988, the following persons were Substantial Shareholders in Gentrack Group
Limited at 30 September 2018 in respect of the number of voting securities set opposite their names.
NAMENUMBER OF ORDINARY
SHARES HELD
% OF ISSUED
SHARE CAPITAL
Baincor Nominees Pty Limited
1
11,191,47111.4
Uplands Group Pty Limited as trustees of Uplands Group Trust, JCVC Pty Limited as
trustees of JCVC Superannuation Fund, John Clifford and Valerie Clifford9,555,2519.7
First NZ Capital Group Limited6,278,9116.4
Mawer Investment Management Limited5,825,9585.9
Jametti Limited as trustees of the Fraxinus Aurea Trust5,358,1965.4
1
On 9 July 2018, Devaron (NZ) Limited transferred its holding of 9,538,373 fully paid ordinary shares to Baincor Nominees Pty Limited. The
consideration paid was nil and there was no change in beneficial ownership. Accordingly, HG Pooled Management Limited now has the power to
control the exercise of the right to vote, as well as the power to control the acquisition or disposal of the shares, held by Baincor Nominees Pty
Limited. Devaron (NZ) Limited is no longer the registered shareholder of any Gentrack Group Limited shares.
The total number of issued voting shares of Gentrack Group Limited at 30 September 2018 was 98,525,216. Where voting at a meeting of the
shareholders is by voice or show of hands, every shareholder present in person or by representative has one vote, and on a poll, every
shareholder present in person, or by representative has one vote for each fully paid ordinary share in the Company.
At 30 September 2018, there were 76 shareholders holding marketable parcels of less than $500.
SUBSIDIARY COMPANY DIRECTORS
The following people held office as Directors of subsidiary companies at 30 September 2018:
Gentrack Limited
John Clifford, Ian Black
Gentrack Pty Limited
John Clifford, Ian Black
Gentrack Group Australia Pty Limited
John Clifford, Ian Black
Gentrack UK Limited
John Clifford, Ian Black, Tim Bluett*
Junifer Systems Limited
Paul Fitzgerald, Kenton Judson, Saul Nurtman
Blip Systems
John Clifford, Ian Black, Peter Knudsen, Lars Tørholm
CA Plus Limited
John Clifford, Ian Black, John de Giorgio
Veovo Limited
John Clifford, Ian Black
Veovo (Denmark) Limited
John Clifford
Gentrack Holdings (UK) Limited
John Clifford, Ian Black, Tim Bluett*
Gentrack (Singapore) Pte Limited
John Clifford, Ian Black, K Kalaai Pillai
Evolve Parent Limited**
John Clifford, Ian Black, Tim Bluett
Evolve Analytics Limited**
John Clifford, Ian Black, Tim Bluett, Alan Duggan
Veovo Inc***
John Clifford, Ian Black
Directors of the company’s subsidiaries do not receive any remuneration or other benefits in respect of their appointments.
* Tim Bluett was appointed as director on 10 May 2018.
** Tim Bluett, John Clifford and Ian Black were appointed as directors on 29 June 2018.
*** Both directors were appointed on incorporation on 22 March 2018.
80 / DISCLOSURES
DISCLOSURES / 81
DISCLOSURES
DONATIONS
The Company made donations of $2,300 during the year ended 30 September 2018.
CREDIT RATING
The Company has no credit rating.
FOREIGN EXEMPT LISTING
ASX approved a change in the Company’s ASX admission category from an ASX Listing to an ASX Foreign Exempt Listing, effective from the
commencement of trading on 30 March 2016.
The Company continues to have a full listing on the NZX Main Board, and the Company’s shares are still listed on the ASX. The Company is
primarily regulated by the NZX, complies with the NZX Listing Rules, and is exempt from complying with most of the ASX Listing Rules (based on
the principle of substituted compliance).
WAIVERS
Gentrack Group Limited had no NZX waivers granted or published by NZX within or relied upon in the 12 months ending 30 September 2018. On
listing in 2014, Gentrack Group Ltd was granted waivers from the ASX which are standard for a New Zealand company listed on the ASX. This
includes confirmation that ASX will accept financial statements denominated in New Zealand dollars and prepared and audited in accordance
with New Zealand Generally Accepted Accounting Principles and Auditing Standards. The waivers granted by the ASX have been extended to
reflect the Company’s ASX Foreign Exempt listing status from 30 March 2016.
ANNUAL MEETING
Gentrack Group Limited’s Annual Meeting of Shareholders will be held in Auckland on 26 February 2019 at 4:00pm. A notice of Annual Meeting
and Proxy Form will be circulated to shareholders in January 2019.
CORPORATE DIRECTORY
REGISTERED OFFICE
Gentrack Group Limited
17 Hargreaves Street, St Marys Bay, Auckland 1011,
New Zealand
Phone: +64 9 966 6090
Facsimile: +64 9 376 7223
Level 9, 390 St Kilda Road, Melbourne, VIC 3004
Australia
Phone: +61 3 9867 9100
Facsimile: +61 9867 9140
POSTAL ADDRESS
PO Box 3288, Shortland Street, Auckland 1140
New Zealand
NEW ZEALAND INCORPORATION NUMBER
3768390
AUSTRALIAN REGISTERED BODY NUMBER (ARBN)
169 195 751
DIRECTORS
John Clifford, Chairman
Andy Coupe
James Docking
Nick Luckock*
Graham Shaw
Leigh Warren
*Nick Luckock was elected by shareholders at the Annual Meeting on
28 February 2018 as a non-executive director.
COMPANY SECRETARY
Jon Kershaw
AUDITOR
KPMG
18 Viaduct Harbour Avenue, Auckland, 1140
Phone: +64 9 367 5800
Facsimile: +64 9 367 5875
LEGAL ADVISERS
BELL GULLY
BANKERS
ASB BANK LIMITED
ANZ LIMITED
HSBC PLC
SHARE REGISTRAR
NEW ZEALAND
LINK MARKET SERVICES LIMITED
Level 11, Deloitte Centre, 80 Queen Street, Auckland 1010
PO Box 91 976, Auckland 1142
Phone: +64 9 375 5998
Facsimile: +64 9 375 5990
Email: enquiries@linkmarketservices.com
AUSTRALIA
LINK MARKET SERVICES LIMITED
Level 12, 680 George Street, Sydney, NSW 2000
Locked Bag A14, Sydney South, NSW 1235
Phone: +61 1300 554 474
Facsimile: +2 9287 0303
Email: enquiries@linkmarketservices.com
82 / CORPORATE DIRECTORY
www.gentrack.com
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.