ikeGPS FY21 Half-Year Results

Financial
Statements
For the six month period ended
30 September 2020
ikeGPS Group Limited
Get the measure of your world
FY21 Interim Report

Contents

Consolidated interim statement of profit or loss and other comprehensive income.......1
Consolidated interim statement of changes in equity............................................................2
Consolidated interim balance sheet ................................................................................................3
Consolidated interim statement of cash flows..........................................................................4
Notes to the consolidated interim financial statements ..............................................5 to 15

1
Consolidated interim statement of profit or loss
and other comprehensive income


Unaudited 6
months to
September
2020
Unaudited 6
months to
September
2019
Continuing operations $'000's $'000's
Operating revenue
4
4,405 5,245
Cost of sales

(1,470) (1,459)
Gross profit
2,935 3,786
Other income
7
899 1
Operations cost
4
(215) (283)
Sales and marketing expenses
4
(2,913) (1,894)
Research and engineering expenses
4
(1,104) (1,091)
Corporate costs
4
(2,092) (1,633)
Foreign exchange (losses)/gains

52 (1)
Expenses (6,272) (4,902)
Operating loss
(2,438) (1,115)
Net finance income / (expense)

(42) (7)
Net loss before income tax
(2,480) (1,122)
Income tax (expense)/credit

- -
Loss attributable to owners of ikeGPS Group

(2,480) (1,122)
Other comprehensive loss


Exchange differences on translation of foreign operations

(631) 222
Comprehensive loss

(3,111) (900)



Basic and diluted loss per share

$ (0.02) $ (0.01)






The accompanying notes form part of, and should be read in conjunction with, these financial statements.

2
Consolidated interim statement of changes in
equity


Share capital

Accum-
ulated
losses
Share based
payment
reserve
Foreign
currency
translation
reserve

Total

$'000's $'000's $'000's $'000's $'000's
Opening balance at 1 April 2019
55,132 (45,846) 192 (115) 9,363
Change in accounting policy
- (45) - - (45)
Restated balance at 1 April 2019 55,132 (45,891) 192 (115) 9,318
Loss for the year - (1,122) - - (1,122)
Currency translation differences - - - 222 222
Total comprehensive income/(loss)
- (1,122) - 222 (900)
Issue of ordinary shares - - - - -
Recognition of vesting of share-based options - - 101 - 101
Share based payment reserve movement 6 8 (8) - 6
Total transactions with owners 6 8 93 - 107
Balance at 30 September 2019
55,138 (47,005) 285 107 8,525


Share capital
Accum-
ulated
losses
Share based
payment
reserve
Foreign
currency
translation
reserve

Total

$'000's $'000's $'000's $'000's $'000's
Opening balance at 1 April 2020
61,498 (51,596) 545 437 10,884
Loss for the year - (2,480) - - (2,480)
Currency translation differences - - - (631) (631)
Total comprehensive income/(loss)
- (2,480) - (631) (3,111)
Issue of ordinary shares 18,472 - - - 18,472
Recognition of vesting of share-based options - - 145 - 143
Issue of shares from exercise of share options 11 - (11) -
Share based payment reserve movement 134 - 134
Total transactions with owners
18,483 - 266 - 18,749
Balance at 30 September 2020 79,981 (54,076) 813 (194) 26,524








The accompanying notes form part of, and should be read in conjunction with, these financial statements.

3
Consolidated interim balance sheet


Unaudited
September
2020
Audited
March
2020
ASSETS $'000's $'000's
Current assets


Cash and cash equivalents

20,518 4,327
Trade and other receivables

1,364 1,576
Prepayments

516 681
Inventory

858 876
Total current assets

23,256 7,460
Non-current assets



Property, plant and equipment

937 1,188
Intangible assets

6,114 6,501
Inventory

419 534
Lease assets

516 705
Total non-current assets

7,986 8,928
Total assets

31,242 16,388
LIABILITIES



Current liabilities



Trade and other payables

610 931
Employee entitlements

259 231
Current lease liabilities

345 327
Other liabilities

696 574
Deferred income

1,860 2,392
Total current liabilities

3,770 4,455
Non-current liabilities



Lease Liabilities 284 460
Other liabilities 629 534
Deferred income

35 55
Total non-current liabilities

948 1,049
Total liabilities

4,718 5,504
Total net assets

26,524 10,884
EQUITY



Share capital
5
79,981 61,498
Share based payment reserve

813 545
Accumulated losses

(54,076) (51,596)
Foreign currency translation reserve

(194) 437
Total equity

26,524 10,884

Director Date: 27 November 2020 Director Date: 27 November 2020
NZ (New Zealand Time) NZ (New Zealand Time)
The accompanying notes form part of, and should be read in conjunction with, these financial statements.

4

Consolidated interim statement of cash flows



Unaudited 6
months to
September
2020
Unaudited 6
months to
September
2019

$'000's $'000's
Cash flows from operating activities

Cash receipts from customers

4,152 4,385
Cash paid to suppliers and employees

(6,261) (5,147)
Payment of low value and short term leases

(15) (53)
COVID-19 relief receipts
7
817 -
Interest paid

(43) (3)
Net cash used in operating activities 6 (1,350) (818)



Cash flows from investing activities



Purchases of property, plant and equipment

(180) (337)
Additions to intangible assets

(489) (183)
Interest received

1 8
Net cash used in investing activities
(668) (512)



Cash flows from financing activities



Payments of principal portion of lease liability

(109) (37)
Exercising of share options

- 5
Proceeds from issuance of shares on listing

18,472 -
Net cash from financing activities 18,363 (32)
Net (decrease)/increase in cash and cash equivalents 16,345 (1,362)
Cash and cash equivalents at 1 April

4,327 3,475
Effect of exchange rate fluctuations on cash held

(154) 116
Cash and cash equivalents
20,518 2,229
















The accompanying notes form part of, and should be read in conjunction with, these financial statements.

5
Notes to the consolidated interim financial
statements
1. Reporting Entity
ikeGPS Group Limited (the “Company”) is a limited liability company domiciled and incorporated
in New Zealand, registered under the Companies Act 1993 and listed on the New Zealand Stock
Exchange (“NZX”) and Australian Securities Exchange (“ASX”). The Company is an FMC reporting
entity for the purposes of the Financial Markets Conduct Act 2013. The interim financial
statements for the six months ended 30 September 2020 comprise the Company and its
subsidiaries (together referred to as the “Group”) which include ikeGPS Limited and ikeGPS Inc.
The principal activity of the Group is that of design, sale, and delivery of a solution for the collection,
analysis, and management of distribution assets for electric utilities and communications
companies.
The interim financial statements were authorised for issue by the Directors on 27 November 2020.
2. Basis of preparation
The principal accounting policies applied in the preparation of these interim consolidated financial
statements are set out below. These policies have been consistently applied to all the years
presented, unless otherwise stated.
Basis of measurement
These unaudited interim financial statements for the six months ended 30 September 2020 have
been prepared in accordance with New Zealand Generally Accepted Accounting Practice (“NZ
GAAP”) and NZ IAS 34, Interim Financial Reporting.
The financial statements have been prepared on the historical cost basis with the exception of
certain financial instruments which are measured in accordance with the specific relevant
accounting policy.
These unaudited interim financial statements do not include all the notes of the type normally
included in an annual financial report. Accordingly, this report should be read in conjunction with
the audited financial statements of the Group for the financial year ended 31 March 2020, which
have been prepared in accordance with the New Zealand equivalents to International Financial
Reporting Standards (NZ IFRS). All significant accounting policies have been applied on a basis
consistent with those used in the audited financial statements of the Group for the year ended 31
March 2020.

6
Notes to the consolidated interim financial
statements
2. Basis of preparation (continued)
Critical estimates and judgments
The preparation of financial statements requires management to make judgments, estimates and
assumptions that affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised and in any future periods
affected.
In preparing these condensed interim financial statements, the significant judgements made by
management in applying the Group’s accounting policies and the key sources of estimation
uncertainty were the same as those that applied to the consolidated financial statements for the
year ended 31 March 2020.
Impact of COVID-19
The majority of the Group’s customers operate in North America, where the economic
environment has experienced a substantial slow-down over the period due to the impact of COVID-
19.
Our target customers being communications companies, electric utilities and their associated
engineering service providers are considered ‘critical businesses’. However, while these
customers may not have been as impacted by restrictions as other industries, trading has been
significantly more restrictive than normal as discretionary work has been reduced. This reduction
in discretionary work is most noticeable in the electric utilities sector.
The Group acknowledges the uncertainty that COVID-19 continues to have across the US. The
Group is continuing to focus on the health and safety of staff and the resilience of its supply chain
and operational capacity. During the period, the technology and operational procedures for
working remotely were successfully rolled out, and the group has not felt any material decrease in
the ability to perform. The US operation will continue to work remotely for the foreseeable future
and will continue to monitor the NZ restrictions recommended by the government.
In preparing these interim financial statements, the Directors of the company have considered the
impact of COVID-19 on the Group. This includes impacts on the FY21 and FY22 business plans.
The Group retains the ability to reduce operating expenditure or limit further investment in
response, should weaker expected demand or further restrictions eventuate. As the potential
impact of COVID-19 could affect the Group’s liquidity, it has been incorporated into our impairment
and going concern assessments as outlined below.

7
Notes to the consolidated interim financial
statements
2. Basis of preparation (continued)
Going concern
These financial statements have been prepared based on the Group being a going concern, which
assumes the Group has the ability and intention to continue operations for a period of at least 12
months from the date of the financial statements.
The Group has continued its plan for growth, investing in developing and expanding the Group’s
product and service offerings to generate increased revenue. In the 31 March Annual Report, the
Group identified liquidity risk as a material uncertainty in that cash inflows and cash on hand may
not be sufficient to meet obligations as they fall due.
However, in FY21, the Group completed an institutional placement and entitlement offer raising
approximately $19.7m. This successful capital raise has put The Group in a strong position to
invest in increasing the Group’s sales pipeline, supporting customer wins, increasing operational
capacity, and provide funding capacity for potential growth opportunities. The cash balance on
30 September 2020 was $20,518,000 (2020: $4,327,000).
During the first half of the fiscal year 2021 (FY21), the Group has felt the impact of the uncertainty
and restrictions around Covid-19, resulting in a net loss of $2,480,000.The Group had cash
outflows of $1,350,000 (2019: $818,000) relating to operations, and $668,000 (2019: $512,000)
relating to capitalised internal development for the six months ended 30 September 2020.
The Group’s business plan for FY21 considers the uncertainty of Covid-19 on the market and
acknowledges the uncertainty through the remainder of the year and FY22. The remaining 6
months of the FY21 plan has been reviewed and assumes revenue growth in the communications
and utilities market based on a strong sales pipeline through the second half of the year. The
Group will focus on continuing investment in realizing the significant sales opportunities for the
entity’s products and services in accordance with the capital raise.
In a high growth business, accuracy of forecasting is challenging, and this is exacerbated in the
current economic climate caused by COVID-19. In response to this, the FY21 business plan has
been extended out to December 2021 to project cashflows for a period of twelve months after
the approval of these financial statements. To assess the degree of sensitivity, stress testing has
been performed on the FY21 plan to December 2021, reducing forecasted receipts from
customers by 25-30%. The outcome of this analysis shows that the group remains in a strong
cash on hand position, albeit with reduced available funds. Further cost-cutting measures are
available to the Group if one or more components of the plan are not realized.

8
Notes to the consolidated interim financial
statements
2. Basis of preparation (continued)
The Groups listing on the NZX and ASX, provides the Group the option to pursue capital raise
opportunities from a wider market. As reflected in the capital raise discussed above, the Directors
believe that additional capital could be raised should growth opportunities arise in the future.
While acknowledging the uncertainty that exists, the Directors believe that projected cash inflows,
combined with cash on hand at 30 September 2020 of $20,518,000, means that the Group has
sufficient funding to continue a growth trajectory for at least the next 12 months from the date of
approval of the financial statements, and hence consider the use of the going concern basis
appropriate.
Impairment
The carrying amounts of the Group’s assets were reviewed to determine whether there is any
indication of impairment. The Directors concluded the Utilities and Communications operating
losses as an indicator of impairment of the intangibles assets, total property plant & equipment,
leased assets and working capital associated with the Utilities and Communications Business,
requiring an estimate of the Cash Generating Unit’s (CGU1) recoverable amount. Additionally, it
determined that due to the low relative revenue from the Spike Business unit, an indicator of
impairment existed requiring an estimate of the Cash Generating Unit’s (CGU2) recoverable
amount of the assets directly associated with the Spike Business.
CGU1 was determined to be the IKE & Core platform intangible assets, total property plant &
equipment, leased assets and working capital totalling $4,741,497. Future cash flows are
forecast based on a five-year business model for CGU1, which included Utilities &
Communications average revenue growth rate of 23% and operating expenses reflect the FY21
business plan. A pre-tax discount rate of 15.5% was used to establish the net present value on a
value in use basis.
The forecast financial information is based on both past experience and future expectations of
operating segment performance and requires judgements to be made as to revenue growth,
operating cost projections and the market environment. Despite the impact of COVID-19, in the
medium term, the Group remains optimistic that its core infrastructure market will continue due
to the significant multiyear investment programmes our customers have in place. The value in
use assessment is sensitive to changes in each of these assumptions, actual results may be
substantially different. The terminal growth rate assumed is 1 x year 5 net operating profit.
Sensitivity analysis was performed on key assumptions. A likely material impairment would need
to be considered if the forecast sales volume growth was lower than the forecast by greater than
10%.

9
Notes to the consolidated interim financial
statements
2. Basis of preparation (continued)
The Directors have determined that no impairment is required as CGU1 continues to have a useful
life and that the current carrying value of the CGU1 does not exceed its value in use.
CGU2 is the total intangible assets of Spike applications, SDK and working capital totalling
$660,112. Future cash flows are forecast based on a five-year business model for CGU2 and a
pre-tax discount rate of 14.1% was used to establish the net present value on a value in use basis.
Spike revenue reflects the FY21 and FY22 business plan, with a revenue growth rate assumed to
be 2% from year 2. An estimate of the cash flows required to market and sell the Spike products
was based on the business plan for FY21 and forecast sales volume profile. The terminal value
assumed is 1x year-5 net operating profit, which aligns with the remaining expected useful life of
the assets.
The Directors have determined that no impairment is required as the carrying value does not
exceed the value in use.
The forecast financial information is based on both past experience and future expectations of
operating segment performance and requires judgements to be made as to revenue growth,
operating cost projections and the market environment. It is sensitive to changes in each of the
assumptions outlined above and actual results may be substantially different. Any change in the
assumptions would likely cause a material change in the impairment recognised by the Group.
3. Operating segments
The CEO and senior management team are the Group’s operating decision-makers. During the
six months ended 30 September 2020, the Group’s selling activities were focused and organised
into two customer segments namely Utility & Communications and Other Business. The Utility &
Communications segment includes sales to companies involved in the broadband fiber and
cellular roll out in the United States. Other Business includes sales of Spike into the Signage,
Architecture Engineering and Construction (AEC) and Geospatial markets.
Within the Utilities & Communications segment, the Group sold the IKE device, corresponding
annual subscription revenue, pole loading software licences, pole loading maintenance and
support subscriptions and IKE analyze transactions being an end to end technical solution to
customers performing make ready engineering (MRE) projects.
The segment reporting format reflects the Group’s management and internal reporting structure.
Contribution is after allocating cost of goods sold. Reporting of overheads and balance sheet
position is not undertaken at a level lower than the Group as a whole. Geographically, revenue is
substantially generated in the United States.

10
Notes to the consolidated interim financial
statements
3. Operating segments (Cont.)
4. Revenue and expenses
Revenue
Unaudited 6
months to
September 2020
Unaudited 6
months to
September 2019

$'000's $'000's
Sale of product 1,006 1,687
IKE rental 309 167
IKE Solution 1,122 1,950
IKE subscription 1,305 1,326
Pole loading licence and subscription 534 -
Services 129 115
Total operating revenue 4,405 5,245

Unaudited 6 months to
September 2020

Unaudited 6 months to
September 2019

Utility &
Communication
Other
Business
Group

Utility &
Communication
Other
Business
Group

$'000's $'000's $'000's

$'000's $'000's $'000's
Sale of product and services
(Point in Time)
1,011 124 1,135

1,436 366 1,802
IKE rental 309 - 309 167 - 167
Subscription (Over time) 1,287 18 1,305 1,299 26 1,325
Contribution 2,038 122 2,160 2,183 332 2,515
IKE Analyze solution (Point
in Time)
1,122 - 1,122

1,951 - 1,951
Contribution 256 - 256

1,271 - 1,271
Pole loading software
licenses, services and
subscriptions (Point in time &
Over time)
534 - 534 - - -
Contribution 519 - 519 - - -
Gross Profit

2,935

3,786
Sales and marketing costs (2,913)

(1,894)
Other corporate income and
expenses
(2,503)

(3,014)
Net loss before tax
(2,480) (1,122)

11
Notes to the consolidated interim financial
statements
4. Revenue and expenses (Cont.)
Operating expenses
Operating expenses consist of operations costs, sales and marketing expenses, engineering and
research expenses and corporate expenses.

Unaudited 6
months to
September 2020
Unaudited 6
months to
September
2019


$'000's $'000's
Amortisation of development asset

513 433
Depreciation
4.


238 174
Total amortisation and depreciation

751 607
Employee benefit expense

4,393 2,954
Employee benefit, contractors and consultants expense
capitalised
1.


(489) (184)
Share-based payment

278 101
Credit loss provision movements & write off expense

(107) -
Operating lease expenses

88 53
Direct selling and marketing
2.


157 541
Other operating expenses
3.


1,254 830
Total operating expenses

6,325 4,902
Notes
1. Relates to employee benefit expense, external contractors and consultants’ expenses that
are directly attributable to the development of intangible assets and have been capitalised.
2. Direct selling and marketing expenses includes expenses incurred mainly in relation to
promotional activities such as commissions, travel and other direct marketing expenses.
3. Other operating expenses include corporate advisory, contractor and consultants, travel,
engineering expenses, facilities and IT expenses.
4. Total depreciation is $465,000, with $238,000 included in operating expenses with the
remaining balance of $227,000 included in cost of sales.

12
Notes to the consolidated interim financial
statements
5. Contributed equity
Share capital

Unaudited 6
months to
September
2020
Audited
year ended
March
2020

$'000's $'000's
On issue at 01 April 2020 61,498 55,132
Shares issued under share-based option scheme 11 37
Issue as part of business combination - 389
Issued under share placement and institutional entitlement offer 9,757 5,306
Issued under retail entitlement offer 9,938 -
Issued under share purchase plan - 1,194
Less listing costs offset against issue proceeds (1,223) (560)
Total share capital
79,981 61,498
Share capital on issue
Fully paid total shares at beginning of year 102,194,048 90,469,567
Ordinary shares issued on settlement of options 115,094 242,134
Ordinary shares issued as part of business combination - 649,014
New shares offered 28,963,035 10,833,333
Fully paid ordinary shares 131,272,177 102,194,048
The Group completed an institutional placement and entitlement offer during the period. The
capital raise is for the business to continue to invest in increasing the Group’s sales pipeline,
supporting customer wins, increasing operational capacity, and provide funding capacity for
potential growth opportunities.

13
Notes to the consolidated interim financial
statements
6. Cash used in operations


Unaudited 6
months to
September
2020

Unaudited 6
months to
September
2019

$'000's $'000's
Loss for the year

(2,480) (1,122)
Less investment interest received

(1) (8)



Non-cash items included in net loss


Depreciation

465 295
Amortisation of intangible assets

513 433
Debtor and creditor write off

(107) 18
Share based payment expense

278 101
Write off of assets, materials and IKE devices

55 33
Foreign exchange (gains)/losses

(52) 1
1,151 881
Add/(less) movement in working capital items



Decrease/(Increase) in trade and other receivables

219 (1,238)
Decrease/(Increase) in inventories

110 114
Decrease/(Increase) in prepayments

168 50
Increase/(Decrease) in trade and other payables

(320) 64
Increase/(Decrease) in deferred revenue

(552) 375
Increase/(Decrease) in other liabilities

327 -
Increase/(Decrease) in employee entitlements

27 66
(21) (569)
Net cash used in operating activities (1,350) (818)

14
Notes to the consolidated interim financial
statements
7. Other income
On 1 May 2020 IKE received USD$511,594 ($825,000 NZD) under the U.S. Federal Government
CARES Act Paycheck Protection Program (PPP) via its bank, Silicon Valley Bank.
Under the PPP structure, the loan principal amount is forgivable if the proceeds are used to cover
payroll costs, rent, and utility costs over the 8 week or 24 week period after the loan is made. Loan
forgiveness is contingent upon recipients requesting forgiveness, providing supporting
documentation, and certifying compliance to the forgiveness conditions as per the PPP
legislation. IKE will request forgiveness for the maximum loan principal amount available under
the conditions.
After assessing the conditions of the PPP loan, the Group has made a judgement that this amount
is a forgivable loan and the Group has reasonable assurance that they will meet the terms of
forgiveness. As such, the loan has been recognised as a government grant in accordance with NZ
IAS 20. This is based on the structure of the PPP loan and management’s expectation that the full
loan amount will be forgiven. Therefore, the Group has recognised the loan received as other
income over the period in which the related expenses were incurred and not netted off against the
expenses consistent with prior periods. If the loan for some reason is not forgiven the amount
would be treated as a liability and required to be repaid.
In addition to the PPP loan, the group received the New Zealand wage subsidy in relation to the
Groups New Zealand based employees. The Group applied for the loan based on the condition
that the Group would experience a minimum 30% decline in actual or predicted revenue over a
month between January 2020 and 9 June 2020, when compared with the same month in the
previous year, and that decline is related to COVID-19. The Group has met the conditions as
outlined and has recorded the amount received as a grant not a loan. As above, the subsidy
received was recognised as income over the period in which the related expenses were incurred.


Unaudited 6
months to
September 2020

$'000's
PPP forgivable Loan 817
NZ Wages subsidy 82
Other income
899

15
Notes to the consolidated interim financial
statements
8. Related parties
We note that during the annual shareholders meeting held on 29 September 2020, independent
director Bruce Harker notified the Group and shareholders that he was retiring as a director.
The group issued 300,000 unlisted share options at NZD$0.90 to Mark Ratcliffe during the period.
The options were issued in accordance with the resolution passed during the Group’s annual
shareholders meeting and the ikeGPS Group Limited Employee Share Scheme.
In addition to the unlisted options issued, Glenn Milnes was issued 111,141 new ordinary shares
on the net settled of 200,000 unlisted options (exercisable at NZD$0.29 per share, market price of
NZD$0.65).

16
ikeGPS Group Limited
Level 7, Willis Street
Te Aro
Wellington 6011
Telephone: +64 4 382 8064

Directors of ikeGPS Group Limited
Richard Gordon Maxwell Christie
Bruce Harker (retired 29 September 2020)
Alex Knowles
Glenn Milnes
Frederick Lax
William Morrow
Mark Ratcliffe

Legal Advisers
Chapman Tripp
10 Customhouse Quay
PO Box 993
Wellington 6140
Telephone: +64 4 499 5999

Auditor
PricewaterhouseCoopers
PwC Centre 10 Waterloo Quay Pipitea,
Wellington 6011
Telephone: +64 4 462 7000

Share Registrar
Link Market Services Limited
PO Box 91976, Auckland 1142
Level 7 Zurich House
21 Queen Street, Auckland 1010
Telephone: +64 9 375 5998

Bankers
Bank of New Zealand
Harbour Quays, Ground Floor,
60, Waterloo Quay, Wellington 6011
Private Bag 39806,
Wellington Mail Centre,
Lower Hutt 5045

www.ikegps.com

---

ikeGPS Group Limited
Results for announcement to the market
Reporting Period12 months to September 2020
Previous Reporting Period12 months to September 2019
Amount (000s)Percentage change
Revenue from ordinary
activities
4,405 NZD-16.0%
Profit (loss) from ordinary
activities after tax attributable to
security holders
-2,480 NZD-121.0%
Net profit (loss) attributable to
security holders
-2,480 NZD-121.0%
No dividends declared
31 Mar 202030 Sep 2020
Net tangible assets per security
0.043 NZD0.160 NZD
Comments
This results announcement should be read in conjunction with the unaudited consolidated
financial statements for the six months ended 30 September 2020 ("Interim Financial
Statements").
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ikeGPS Group Limited
350 Interlocken Blvd, Suite 390, Broomfield CO 80021, USA
Office: +1 303 222 3218
www.ikegps.com



FOR IMMEDIATE RELEASE
27 November 2020

COVID-19 impacted Q1. Momentum returned Q2.
1H FY21 financial performance

ikeGPS (IKE) today released its financial statements relating to performance for the six-month
period to 30 September 2020 (all figures NZD).
The IKE platform allows electric utilities, communications companies, and their engineering
service providers to increase speed, quality, and safety for the construction and maintenance
of distribution power pole assets.
Commentary;
＋ IKE performed solidly amongst the backdrop of COVID-19 through 1H FY21 and
pleasingly resumed growth momentum into 2H FY21.
＋ As previously advised, IKE and its customers in North America were impacted by
COVID-19 through Q1 to June 2020. As context, and despite the ‘essential’ status of
IKE and its electric utility and communications customers, the initial approximately 90-
days of COVID-19 saw new sales and pipeline volumes decrease 50-70% versus
subsequent levels through Q2 FY21
＋ The outlook for 2H FY21 is positive and IKE expects to return to its trended growth
profile of the prior three years. This is based on new contracts that closed in the Q2
period to 30 September 2020 of approximately $3M and continued positive operating
& sales momentum since October.
＋ IKE successfully raised $19.7m capital in the period through an oversubscribed
institutional placement, accelerated entitlement offer and oversubscribed retail offer.
The additional funds enable IKE to:
○ Increase sales and implementation teams to support the growing sales
pipeline. IKE has successfully begun to increase capability across these areas.
○ Provide funding capacity for potential inorganic growth opportunities. IKE has
continued to progress specific opportunities since the capital raise.

Key metrics 1H FY21:
＋ Revenue of approximately $4.4m (15% below pcp of $5.2m) reflects a solid result in
the context of the disrupted Q1 period.
＋ Gross margin of approximately $2.9m (pcp of $3.8M), with a gross margin percentage
of approximately 67% (pcp of 72%)
＋ Operating loss for the period was approximately $2.5m (pcp of ($1.1m))
＋ Operating cash flow for the period was approximately ($1.35m) (pcp of ($0.8m))
＋ Total cash and receivables 30 September 2020 of $21.9m, with no debt

ikeGPS Group Limited
350 Interlocken Blvd, Suite 390, Broomfield CO 80021, USA
Office: +1 303 222 3218
www.ikegps.com


The chart below sets out the broader momentum in the business;


Takeaways;
❏ IKE’s revenue mix has shifted materially over the past
24 months.
❏ Greater than 75% of revenue is expected from
transaction & recurring sources in FY21 (shown by the
blue bar in the chart).
❏ This is an important transition in terms of increasing
revenue quality and predictability to underpin growth.



Financial commentary
Lower revenue in 1H 2021 ($4.4m compared with pcp of $5.2m) was caused primarily by the
short but sharp impact from COVID-19 on IKE’s market from approximately early-March to
mid-June 2020. IKE did not lose any material customers nor material pipeline contracts
through this period. However, the revenue engine for IKE is the number of assets being
processed through the IKE platform and less engineering activity occurred while initial COVID-
19 response measures were put in place by customers. Generally, network projects were
deferred rather than cancelled.
Subscription revenue tracked to plan with subscription renewal rates high at 87%, indicating
that IKE’s customers are committed to the long-term use of the platform.
Gross margin in the period was 67%. Fixed costs specific to the IKE Analyze segment were
retained over the period, where spare capacity was leveraged to prepare for greater operating
efficiency through 2H FY21 and FY22 with additional quality control procedures and increased
offshore efficiencies implemented.
Operating expenses for the period of $6.3m compared with pcp of $$4.9m. This reflects
investment into IKE’s growth strategy. Sales and marketing expenses were $2.9m for the
period with this investment growing capability across sales, solutions engineering, delivery,
and marketing teams to support the sales pipeline, customer onboarding and the broader
customer experience requirements of the very large infrastructure customers that IKE serves.

Customer and market commentary
IKE targets sales and deployments into North Americas largest communications companies,
investor-owned electric utilities, and their engineering service providers.
Recent customer wins include;

ikeGPS Group Limited
350 Interlocken Blvd, Suite 390, Broomfield CO 80021, USA
Office: +1 303 222 3218
www.ikegps.com


Major U.S. infrastructure group standardizes on the IKE Platform;
In the period IKE announced that the largest shared communications infrastructure company
in the U.S. has standardized on the IKE platform for all pole-related 5G and fiber deployment
processes. The expected revenue impact is not yet defined however IKE believes this will have
a positive impact on financial performance 2H FY21 and beyond, and on IKE’s broader
position in the North American market.
This customer has now commenced internal deployment and standardization of the IKE
platform in nine operating regions across the U.S. The subsequent roll out step is to introduce
the IKE platform to more than 100 initial engineering services companies that perform
network development on its behalf. This introduction will take place from Q4 FY21 and into
FY22.
Large contract with US electric utility (signed October 2020);
IKE signed an important agreement with a large U.S. electric utility to help assess its power
distribution infrastructure in a fast, safe, and reliable way. Under this contract IKE will initially
analyze 250,000 assets, a small subset of the Group’s asset base. The initial phase is
expected generate approximately $750,000 revenue in IKE’s 2H FY21 (the period ending 31
March 2021). This customer’s parent company is an American Fortune 100 energy business
with similar companies in its portfolio. This agreement follows a successful pilot program,
and the onboarding and implementation process went live immediately in October 2020.
Significantly, this is the first major cross-sell from IKE’s acquisition of the assets of Powerline
Technology that was completed October 2019

Outlook
IKE’s primary focus for 2H FY21 is on delivery of contracts and the extension of revenue
opportunities from customers under contract. The Company is at the early stages of
penetrating these large existing customer groups, where it is currently active in analyzing a
small percentage of their respective assets.
Several significant market tailwinds support the high growth potential of the IKE business,
with more than $350B forecast to be invested into fiber and 5G infrastructure over the coming
five plus years and with more than 3,000 electric utilities needing to address the challenges of
network build, strengthening, and maintenance, The IKE platform delivers network
construction and maintenance processes that are faster, safer, and to a higher quality data
standard.




ENDS

IKE seeks to be the standard for collecting, analysing and managing pole and overhead asset
information for electric utilities, communications companies, and their engineering service
providers.

Contact: Glenn Milnes, CEO, +1 720-418-1936, glenn.milnes@ikegps.com