ikeGPS Group FY21 Results announcement

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


1

FOR IMMEDIATE RELEASE
31 May 2021

Solid performance in COVID-impacted FY21.
Record run rates for new contracts closed over the five months from January to May 2021.

ikeGPS (IKE) is pleased to release key metrics from its performance for the FY21 year and to
provide an update on other recent performance metrics (all figures NZD). The financial results
presented are based on figures which are unaudited. The audit is currently in process.
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 assets and networks.

Financial highlights for the FY21 year to March 2021:
＋ Revenue in the year of approximately $9.3m (pcp of $9.8m).
○ This performance is as previously announced, is at analyst expectations, and
reflects a solid outcome in the context of the Q1 and Q3 periods being
disrupted by COVID-19 impacts on customers and associated pole projects
across North America.
＋ Gross margin of approximately $5.9m (pcp of $6.9m) with a gross margin percentage
of approximately 64% (pcp of 71%).
＋ Loss of $7.4m (pcp of $6.1m)
＋ Total cash and receivables 31 March 2021 of approximately $14m, with no debt.




Takeaways
❏ IKE’s revenue mix in this core segment has continued to
trend positively with greater than 75% of revenue generated
from transaction & subscription sources in FY21 (shown by
the blue bar in the chart).
❏ This is an important transition in terms of increasing
revenue quality and predictability.
❏ Total revenue from this segment was approximately flat
against PCP, notwithstanding Covid impacts.



Additional key metrics within total FY21 revenue of $9.3m were:
o Total subscription revenue = $4.6m
o Total enterprise subscription customers = 282
o Total transaction revenue = $2.3m
o Total number of billed pole transactions = 53,000
These metrics will be reported quarterly moving forward.

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


2

Highlights for the Q4 FY21 period to March 2021, and Q1 FY22 update.
Approximately $8.8m of new contracts closed in the five months to 31 May 2021.

＋ IKE has closed approximately $8.8m of new contracts in calendar 2021 as the North
America market has emerged from COVID-19 impacts and network projects are
accelerated.
＋ The final quarter of FY21 to March was strong, with record new contracts closed as
project deferrals through calendar 2020 were eased.
○ Approximately $5.4m of contracts were closed in Q4. A majority of the
associated revenue is expected to be recognized through IKE’s FY22 period to
March 2022.
○ New contracts won are supporting network projects for some important
underlying customers including AT&T Inc. (the world’s largest communications
company), Crown Castle International Inc. (the largest shared communication
infrastructure company operating in the U.S.), Corning Optical
Communications Inc. (the world’s largest fiber optics manufacturer), ALLO
Communications (a communications business operating across the states of
Nebraska and Colorado), and a Fortune 100 electric utility group.
○ Several deferred projects from Q3, as detailed above, came online as specific
constraints of COVID-19 eased.
＋ Sales momentum has continued in the initial eight weeks of Q1 FY22 to June 2021.
○ Approximately $3.4m of contracts have closed in the quarter to date. A
majority of the associated revenue is expected to be recognized through IKE’s
FY22 period to March 2022.

Market and customer development overview
The core revenue engine for IKE is generated from platform subscriptions and additively when
certain processes are used to analyse an asset using the IKE platform (transactions). In the
Q1 period to June 2020 and Q3 period to December 2020, materially less engineering activity
occurred on certain network projects while COVID-19 response measures were put in place.
However, and positively, many deferred contracts are now transitioning to delivery and new
network projects are now being initiated.
IKE targets sales into North America’s approximately 200 communications companies,
approximately 3,000 electric utilities, and their approximately 1,000 engineering service
providers. Once a customer, IKE then aims to embed and expand the use of IKE platform
products inside of these accounts over time. Several recent customer expansion examples
help to explain this model and point to larger future revenue opportunities. Examples:
＋ In May 2021 IKE signed an extension to an important agreement with a Fortune 100
U.S. electric utility group to help assess and design its power distribution
infrastructure. This follow-on contract is expected to generate an additional
approximately $1.2m revenue in IKE’s FY22 (the period ending 31 March 2022). In
total, the value of this customer contract is now approximately $1.9m, increasing
more than four-fold since October 2020.

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


3
○ The customer will utilise the IKE platform to assess approximately of 350,000
power pole assets, a sub-segment of its network of approximately 1.3m poles.
○ This follow-on agreement followed a successful pilot and phase-1 programme
and went live immediately.
○ This Group has five other similar electric utility companies in its portfolio in the
U.S.
＋ In January 2021 IKE signed a contract with an engineering service provider (ESP) that
is delivering network projects for AT&T. AT&T has standardized on IKE for certain
pole-based engineering tasks.
○ This ESP initially contracted to use the IKE platform to deliver analysis on
approximately 100,000 poles over 12-18 months, that will generate
approximately $420k of revenue for IKE through FY22 and FY23.
○ In April 2021, this ESP additionally contracted to the IKE Analyze product to
accelerate some advanced engineering assessment of 3,000 poles, that will
generate approximately an additional $120k revenue for IKE over the coming
approximately six months.
＋ In May 2021, IKE signed a customer contract with another AT&T-focused ESP.
○ This ESP has initially contracted to use the IKE platform to support pole project
delivery in two states for AT&T, in California and Arizona.
○ It is expected that this will initially generate over $300k of transaction and
subscription revenue for IKE over the coming 12 months.
○ This ESP has won multi-year contracts to deliver projects into AT&T across 13
states.
＋ In March 2021, IKE signed a material contract with an ESP linked to Crown Castle
International Inc. (CCI). CCI has standardized on the IKE Platform for specific pole
engineering applications.
○ This ESP’s use of the IKE Platform for CCI and other network projects is
expected to translate to approximately $700k subscription and transaction
revenue per annum.
○ Concurrently, CCI has continued to roll out the IKE Platform internally for its
own engineering teams. To date, CCI have deployed approximately 55 IKE
systems internally for their own engineering operations.

Broader market tailwinds continue to support the growth potential of IKE’s business, with
more than $300b forecast to be invested into fiber and 5G infrastructure over the next five
plus years, with the potential for more the $80b of government funding for rural broadband
initiatives, and with more than 3,000 electric utilities needing to address the challenges of
network assessments, strengthening, engineering, and maintenance. The IKE platform
delivers network assessment, execution and maintenance processes that are faster, safer,
and to a higher quality data standard.

Research coverage
Bell Potter (https://bellpotter.com.au), one of Australia’s largest full-service financial advisory
firms, initiated research coverage on IKE in January 2021. Their associated report outlines the
growth potential of the business.

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


4


Product and market extensions
A focus in 2H FY21 was the acquisition and integration of certain assets of Visual Globe LLC,
a US-based Artificial Intelligence (AI) and low code/no code software company that
specializes in the automated analysis of power poles from very large data sets:
＋ This strategic acquisition complements IKE’s existing offering and aligns with the
Company’s vision to be the Pole OS company and the standard for collecting,
analyzing and managing power pole information.
＋ Visual Globe’s AI platform provides the potential for IKE to grow its addressable
market within the electric utility and communication industries and to significantly
increase the number of transactions that can process efficiently on its platform. New
market applications specific to pole projects include NESC Violation assessment,
Right of Way encroachment assessment, As-builts for future change detection, Joint
Use assessment, and others.
＋ The addition of Visual Globe’s technology and team will enable IKE to process and
analyze large volumes of pole data that can be collected from new additional sources
including drones and smartphones, making the Company’s platform even more
attractive to electric utilities and communications groups in the North American
market.

Team and Talent. Brand and Customer Experience.
＋ In calendar 2021 IKE has made several important appointments, including;
○ Eileen Healy as non-executive director. Based in San Francisco, Eileen is a
communications industry leader and serial entrepreneur who has founded two
high-tech startups addressing the U.S. communications market: Healy & Co, an
innovative company providing outsourced engineering to the U.S. utility market.
Customers include AT&T Mobility, T-Mobile, Vodafone, Verizon Wireless,
Frontier Communications, and FirstNet. She also founded and sold
Telecompetition Inc., a data analytics company.
○ Tom DuBois as VP Product Management. Tom brings product leadership
experience from several silicon-valley based growth companies and has also
held executive roles at Electronic Arts, Google, and most recently Intel – from
where he joined IKE.
○ Jareth Hosskings as Head of Engineering. Jareth has been appointed to lead
all of IKE’s engineering teams across the IKE Office, IKE Structural
(PoleForeman), and IKE Insight (formerly Visual Globe) solutions. Most
recently Jareth was Head of Engineering at AgilityCIS, where he led an
engineering team of 75 developers operating across a number of countries
specializing in software products for the utility sector.
○ In September 2020, Bruce Harker however stood down as non-executive
director. The Board, and all of the IKE team, wish to thank Bruce for his
considerable contribution to the business.

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


5
＋ Meaningful brand and customer experience milestones achieved through the FY21
period included:
○ The launch of a scalable online training, education and deployment platform,
called IKE University.
○ The U.S.-based IKE team shifted to 100% remote working at the onset of the
COVID-19 pandemic. The company has worked consistently on implementing
and improving remote working best practices and performance. Although IKE
intends to return aspects of its operations to in-office – it is believed remote
working excellence can be a source of competitive advantage for attracting
and retaining talent moving forward.

IKE CEO, Glenn Milnes, commented, “The far-reaching impacts of COVID-19 across North
America in 2020 created a period of challenge and high uncertainty for our business and our
industry. IKE’s plan throughout this pandemic however has been to seek to get on the ‘front
foot’ wherever possible. This has been in terms of strengthening our people, processes,
products, and financial position so to be able to execute on growth initiatives, such as
acquisitions. These strategic objectives were executed on through the 2020 year. Positively,
our customers and our market have bounced forward strongly since January 2021 and we are
pleased that IKE has emerged in the strongest position it has ever been – in terms talent, an
extended product portfolio that allows more value to be delivered to customers across new
pole applications, balance sheet strength, sales performance run rates and sales pipeline. We
are excited about the growth potential for FY22”.




ENDS

About ikeGPS
IKE - the Pole OS company, 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:
Simon Hinsley, Investor Relations, +61-401-809-653, simon@nwrcommunications.com.au
Glenn Milnes, CEO, +1 720-418-1936, glenn.milnes@ikegps.com

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ikeGPS Group Limited
Results for announcement to the market
Reporting Period12 months to March 2021
Previous Reporting Period12 months to March 2020
Amount (000s)Percentage change
Revenue from ordinary
activities
9,324 NZD-5.0%
Profit (loss) from ordinary
activities after tax attributable to
security holders
-7,417 NZD-21.0%
Net profit (loss) attributable to
security holders
-7,417 NZD-21.0%
No dividends declared
31 Mar 202031 Mar 2021
Net tangible assets per security
0.030 NZD0.060 NZD
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ikeGPS Group Limited
Year End // 31 March 2021
Financial
Results

Contents

Consolidated statement of profit or loss and other comprehensive income...........................................2
Consolidated statement of changes in equity.............................................................................................3
Consolidated balance sheet .................................................................................................................................4
Consolidated statement of cash flows...........................................................................................................5
Notes to the consolidated financial results..............................................................................................6-17

p. 2

Consolidated statement of profit or loss and
other comprehensive income


Year ended 31 March
Group


2021
Unaudited
2020
Restated*
Continuing operations
$'000's $'000's
Operating revenue

9,324 9,838
Cost of sales

(3,403) (2,878)
Gross profit
5,921 6,960
Other income

915 1
Foreign exchange (losses)/gains

(468) 5
Fair value movements

(178) -
Total other income, gains and losses 269 6
Support costs

(428) (541)
Sales and marketing expenses

(5,556) (4,697)
Research and engineering expenses

(2,445) (3,383)
Corporate costs*

(5,124) (4,447)
Expenses
(13,553) (13,068)
Operating loss (7,363) (6,102)
Net finance (expense)/income

(54) (22)
Net loss before income tax (7,417) (6,124)
Income tax (expense)/credit

- (17)
Loss attributable to owners of ikeGPS Group

(7,417) (6,141)
Other comprehensive loss



Exchange differences on translation of foreign operations *

(1,017) 467
Comprehensive loss

(8,434) (5,674)



Basic and diluted loss per share
5
$ (0.06) $ (0.06)
*See note 6 for details of restatement of prior period error.














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

p. 3

Consolidated statement of changes in equity



Share
capital
Accumulated
losses
Restated*
Share based
payment
reserve
Restated*
Foreign
currency
translation
reserve
Restated*

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
Changes in accounting policy - (45) - - (45)
Restatement of prior period error* - (595) 77 (11) (529)
Restated balance at 1 April 2019
55,132 (46,486) 269 (126) 8,789
Loss for the year* - (6,141) - - (6,141)
Currency translation differences* - - - 467 467
Total comprehensive income/(loss) - (6,141) - 467 (5,674)
Issue of ordinary shares 5,940 - - - 5,940
Recognition of vesting of share-based
options*
- - 426 - 426
Issue of shares from exercising share
options
37 - (27) - 10
Share options forfeited during the year* - - (20) - (20)
Share based payment reserve movement 389 - 121 - 510
Total transactions with owners
6,366 - 500 - 6,866
Restated Balance at 31 March 2020 61,498 (52,627) 769 341 9,981



Share
capital
Accumulated
losses
Share based
payment
reserve
Foreign
currency
translation
reserve

Total

$'000's $'000's $'000's $'000's $'000's
Opening balance at 1 April 2020*
61,498 (52,627) 769 341 9,981
Loss for the year - (7,417) - - (7,417)
Currency translation differences - - - (1,017) (1,017)
Total comprehensive loss - (7,417) - (1,017) (8,434)
Issue of ordinary shares 18,465 - - - 18,465
Recognition of vesting of share-based
options
- - 691 - 691
Issue of shares from exercising share
options
446 - (311) - 135
Share options forfeited during the year - - (36) - (36)
Share based payment reserve movement 523 - 116 - 639
Total transactions with owners
19,434 - 460 - 19,894
Balance at 31 March 2021
80,932 (60,044) 1,229 (676) 21,441


*See note 6 for details of restatement of prior period errors.







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

p. 4

Consolidated balance sheet

As at 31 March
Group

2021
Unaudited
2020
Restated*
2019
Restated*
ASSETS $'000's $'000's
$'000's
Current assets


Cash and cash equivalents

11,342 4,327 3,475
Trade and other receivables

2,630 1,576 1,370
Prepayments

254 681 294
Inventory

798 876 1,691
Total current assets

15,024 7,460 6,830
Non-current assets


Property, plant and equipment

1,053 1,165 921
Intangible assets

13,795 6,468 3,571
Inventory

352 534 -
Lease assets

434 727 -
Deferred tax asset

- - 17
Total non-current assets

15,634 8,894 4,509
Total assets

30,658 16,354 11,339
LIABILITIES


Current liabilities


Trade and other payables

861 931 505
Employee entitlements

304 231 226
Provision*

1,012 847 473
Other liabilities

3,902 574 -
Lease liabilities

339 327 -
Deferred income

2,449 2,392 1,246
Total current liabilities

8,867 5,302 2,450
Non-current liabilities


Lease liabilities 174 482 -
Other liabilities

148 534 -
Deferred income

28 55 55
Total non-current liabilities

350 1,071 55
Total liabilities

9,217 6,372 2,505
Total net assets

21,441 9,981 8,834
EQUITY


Share capital

80,932 61,498 55,132
Share based payment reserve*

1,229 769 269
Accumulated losses*

(60,044) (52,627) (46,441)
Foreign currency translation reserve*

(676) 341 (126)
Total equity

21,441 9,981 8,834
*See note 6 for details of restatement of prior period errors.



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

p. 5

Consolidated statement of cash flows


Year ended 31 March
Group

2021
Unaudited
2020

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

Cash receipts from customers

8,562 10,306
Cash paid to suppliers and employees

(12,596) (11,303)
Payment of low value and short term leases

(59) (73)
Payroll protection programme payments

838 -
Interest paid

(63) (34)
Net cash used in operating activities (3,317) (1,104)



Cash flows from investing activities



Purchases of property, plant and equipment

(844) (781)
Additions to intangible assets

(1,192) (683)
Purchase of assets in business combination

(4,600) (2,592)
Interest received

8 12
Net cash used in investing activities (6,628) (4,044)



Cash flows from financing activities



Payment of principal portion of lease liabilities

(271) (161)
Exercising of share options

135 10
Proceeds from issuance of shares

18,495 5,940
Net cash from financing activities 18,360 5,789
Net (decrease)/increase in cash and cash equivalents 8,414 641
Cash and cash equivalents at 1 April

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

(1,399) 211
Cash and cash equivalents 11,342 4,327

















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

Notes to the consolidated financial results for
the year ended 31 March 2021



p. 6

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
consolidated financial results for the year ended 31 March 2021 comprise the Company and
its subsidiaries (together referred to as the “Group”) which comprises of 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 unaudited consolidated financial results were authorised for issue by the Directors on 31
May 2021.
2. Basis of preparation
The principal accounting policies applied in the preparation of these unaudited consolidated
financial results are set out below. These policies have been consistently applied to all the
years presented, unless otherwise stated.
Basis of measurement
These unaudited consolidated financial results do not include all the notes normally included
in the annual consolidated financial statements presented in accordance with New Zealand
Generally Accepted Accounting Practice. Accordingly, this report should be read in conjunction
with the audited financial statements of the Group for the financial year ended 31 March 2020.
All significant 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.
Critical estimates and judgments
The preparation of financial results 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.
The material judgments and estimates used in preparation of the consolidated financial
results are outlined below.

Notes to the consolidated financial results for
the year ended 31 March 2021



p. 7

2. Basis of preparation (cont.)
Going concern
These consolidated financial results 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 the consolidated financial results are approved.
The Group has continued its plan for growth, investing in developing and acquiring technology
to expand the Group’s revenue generating product and service offerings. Throughout FY21,
revenue was impacted by a restricted operating environment due to the COVID-19 pandemic.
This impacted the timing of our customers’ investment in their assets and therefore timing of
IKE revenue.
During the FY21 year the Group had cash outflows of $3,317,000 (2020: $1,104,000) relating
to operations, and $6,628,000 (2020: $4,044,000) relating to capitalised internal and acquired
development for the year ended 31 March 2021.The cash balance on 31 March 2021 was
$11,342,000 (2020: $4,327,000).
The Board of the Group has approved a business plan for FY22 which assumes material
growth from FY21 in the communications and utilities market as Federal, State and company
restrictions related to COVID-19 continue to be lifted with increased vaccinations in North
America. Transactional revenue is expected to grow above prior periods and revenue from
recently acquired technology is expected to materialise in quarter 3 and quarter 4. The FY22
plan has been based on a strong order forecast through the fourth quarter of FY21 with a
number of large contracts closing. However, the Board acknowledges continued uncertainty
related to COVID-19 remains.
The key judgements in assessing the Group’s going concern position are:
+ Achievement of the revenue growth anticipated in the FY22 business plan through the
expected rebound in core market activity as COVID-19 restrictions are lifted
+ Continued development of technology solutions that support future revenue growth
+ The ability to reduce operating expenses if planned revenue growth is delayed
+ The ability to raise capital for future acquisitions and support operating cash flow
The FY22 business plan has been extended out to May 2022 to project cash flows for a period
of twelve months after the approval of these consolidated financial results.
Historically it has been a challenge for the Group to accurately forecast business growth, and
this is exacerbated in the current economic climate caused by COVID-19. The Group has
assessed the degree of market sensitivity, and stress testing has been performed on the FY22
plan to May 2022.The stress testing takes account of historic forecasting volatility, reducing
forecast receipts from customers by 23% in FY22, and reducing planned additional headcount
and discretionary cost in response to reduced revenue in the second half of FY22. The
outcome of this analysis shows that the Group remains in a strong cash on hand position.

Notes to the consolidated financial results for
the year ended 31 March 2021



p. 8

2. Basis of preparation (cont.)
albeit with reduced available funds. Further cost reduction measures are available to the Group
if one or more components of the plan are not realised.
The Group has also considered its ability to raise additional capital in the future. In FY21, the
Group completed an institutional placement and rights entitlement offer raising approximately
$19.7m. This successful capital raise has put IKE in a strong position to invest in increasing
the Group’s sales and delivery capability and it provided funding for the acquisition of an
artificial intelligence and machine learning platform. The Directors believe that additional
capital could be raised through the Australian and New Zealand capital markets to enable the
Group to fund operational cash flows and pursue the growth opportunities available to the
business, including any future strategic acquisition opportunities.
However, the liquidity risk arising from the ability of the Group to meet sales growth forecasts
or reduce expenditure and raise capital should revenue growth not occur as anticipated
creates a material uncertainty that cash inflows and cash on hand may not be sufficient for
the Group to meet its obligations as they fall due. This may cast significant doubt on the ability
of the Group to continue as a going concern and, therefore, may result in the Group’s inability
to realise its assets and settle its liabilities in the normal course of business. These
consolidated financial results do not reflect adjustments in the carrying values of the assets
and liabilities, the reported revenues and expenses, and the balance sheet classifications used,
that would be necessary if the Group were unable to continue as a going concern.
While acknowledging the uncertainty that exists, the Directors believe that projected cash
inflows, combined with cash on hand at 31 March 2021 of $11.3m, 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 consolidated financial results, 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 identified the following cash generating units (CGUs):
+ CGU1 – IKE Core platform: intangible assets, property plant and equipment, capital
work in progress, lease assets and working capital.
+ CGU2 – Spike: intangible assets and working capital.
+ CGU3 – Pole Forman: intangible assets and working capital.
+ CGU4 – Visual Globe: intangible assets, including goodwill acquired in the business
combination, and working capital.
The Directors concluded that operating losses associated with CGU1 are an indicator of
impairment, requiring an estimate of the CGU1 recoverable amount. Additionally, they
determined that due to the lower than expected revenue from CGU2, an indicator of
impairment existed requiring an estimate of the CGU2 recoverable amount.

Notes to the consolidated financial results for
the year ended 31 March 2021



p. 9

2. Basis of preparation (cont.)
The Directors assessed CGU3 for indicators of impairment and, taking account of its
performance including its historical and forecast positive cashflows, determined that no
impairment indicator existed.
CGU 4 was acquired on 4 January 2021 (refer to the Business combinations section below).
Goodwill was identified as part of the acquisition, and there is a requirement to test this
annually for impairment.
CGU1 was determined to have a carrying value of $4,558,090. Future cash flows are forecast
based on a five year business model for CGU1, which included an average revenue growth rate
of 30% and operating expenses reflecting the FY21 business plan for CGU1. A post-tax
discount rate of 13% was used to establish the recoverable amount on a value in use basis.
The forecast financial information is based on both past experience and future expectations
of operating 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 the CGU1 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. To determine terminal value the Group applied a
2% growth rate.
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 20%.
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 was determined to have a carrying value of $586,843. Future cash flows are forecast
based on a five-year business model for CGU2 and a post-tax discount rate of 13% was used
to establish the recoverable amount on a value in use basis.
Spike sales volumes in FY21 were COVID-19 impacted, and the Directors have assumed these
will recover to FY20 levels by FY23. Zero growth in sales volumes has been assumed
subsequently for FY24 to FY26. An estimate of the cash flows required to market and sell the
Spike products was based on the business plan for FY21. No terminal value is assumed, which
aligns with the remaining expected useful life of the assets.
The Directors have determined that an impairment of $135,000 is required as the carrying
value exceeded the value in use calculation by that amount. The impairment has been
recorded against the Spike applications and SDK software and is included in the Research and
Engineering line in the Consolidated Statement of Profit or Loss and Other Comprehensive
Income.

Notes to the consolidated financial results for
the year ended 31 March 2021



p. 10

2. Basis of preparation (cont.)
The forecast financial information is based on both past experience and future expectations
of operating 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.
The Directors have assessed the performance of CGU4 subsequent to the date of acquisition
and determined it continues to meet the forecasts used to calculate the fair values of the
assets and liabilities acquired as part of the business combination. Consequently, the Directors
have applied the same assumptions in assessing the recoverable amount of CGU4 on a value
in use basis and concluded that no impairment exists. However any change in these
assumptions would result in an impairment being recognised.
Business Combination
On 4 January 2021 ikeGPS Inc acquired the assets, customer contracts and processes of
Visual Globe LLC. Visual Globe LLC is a software company specialising in the automated
analysis of utility poles and related database records. This strategic acquisition complements
the Group’s existing offerings and provides the potential for the Group to grow its addressable
market within the communications and utility segment.
The purchase consideration was allocated to the acquired assets based on their estimated fair
values as at the date of acquisition.
Purchase consideration
$'000's
Cash Paid

4,600
Contingent consideration

2,969
Total purchase consideration 7,569
Valuation experts were utilised to establish the fair value of the assets and liabilities recognised
in the acquisition as follows:
Intangible assets
$'000's
Technology

3,988
Customer relationships

361
Other

21
Net identifiable assets

4,370
Goodwill

3,199
Total net assets acquired 7,569
The goodwill recognised is attributable to the future growth potential of the acquired business.
For tax purposes ikeGPS Inc can claim amortisation on the goodwill balance. As a result no
deferred tax liability has been recognised related to goodwill.

Notes to the consolidated financial results for
the year ended 31 March 2021



p. 11

2. Basis of preparation (cont.)
The methods, assumptions and critical estimates and judgments used to determine the fair
value of the assets acquired and contingent consideration paid in the business combination
are outlined below.
Contingent consideration
In the event that certain pre-determined revenue amounts are achieved in the three years
ended 31 March 2024, additional consideration of up to USD $3.9 million in cash and USD
$1.7 million in Group shares may be payable.
The potential undiscounted amount payable under the agreement and revenue targets are
outlined below:
Revenue target Cash Consideration Share Consideration
$'000's $'000's $'000's
3,300 1,300 560
10,100 2,600 1,120
21,000 3,900 1,680
In addition, if revenue exceeds USD $30 million in the three-year period an additional royalty
of 3% of the revenue in excess of USD $30 million is payable.
The fair value of the contingent consideration of USD$2.13m was estimated by calculating
the present value of the future expected cashflows of the business.
The estimates are based on a discount rate of 28%, with projected revenue in the first full
year (being 1 April 2021 to 31 March 2022) of USD$1.2m, and a projected revenue growth
rate of 145%, 103% and 41.8% respectively in the following years. Based on these revenue
growth rates the model has an assumption that revenue targets one and two will be met in
years three (2023) and four (2024). The model has assumed revenue target three and the
royalty target will not be met and no consideration has been allocated to these targets.
The estimates of the probability and timing of the revenue targets being met are based on
forecast cashflows and subject to both timing and achievement uncertainty, due to the early
stage nature of the business. If the revenue targets that are expected to be achieved (being
revenue target one and two) are achieved a year earlier than forecast the impact on profit or
loss would be a decrease of USD $0.58m. If the targets are achieved a year later than forecast
the impact on profit or loss would be an increase of USD $1.17m. If these revenue targets are
not achieved profit or loss will increase by USD $2.13m.
Contingent consideration is classified as a liability and forms part of the other current liabilities
balance. Contingent consideration is recognised at fair value and remeasured at each
reporting period. At 31 March 2021 there has been no change in the fair value of the contingent
consideration (expect for the unwinding of the discount of $178,000), as there has been no
change in the probability of the revenue targets being met.

Notes to the consolidated financial results for
the year ended 31 March 2021



p. 12

2. Basis of preparation (cont.)
Fair value of asset recognised
Intangible assets - technology
Internally generated software (the Visual Globe Platform) was acquired as part of the business
combination. The value of this software was determined as NZD $3.988m using a relief from
royalty method.
The premise underlying the method is that the user of a developed technology and software
realises an enhanced earnings capacity from ownership of the intangible asset, equal to the
royalty they would otherwise have to pay a third party for use of the developed technology and
software if it were not owned by the company. The method requires assumptions for both
future expected revenues connected to the developed technology and a reasonable estimate
of a royalty rate. The major assumptions used in the method to arrive at a fair value for the
Visual Globe Platform are outlined below:
Projected revenue in the first full year (being 1 April 2021 to 31 March 2022) of USD$1.2m and
a projected revenue growth rate of 145%, 103% and 41.8% respectively in the following three
years.
A revenue growth rate of 1.5% for the remaining life of the asset (assessed at 10 years)
A royalty payment rate of 14% of revenues payable
A 22% discount rate has been applied
Intangible assets – customer relationships
Customer relationships were acquired as part of the business combination. The value of these
relationships was determined to be NZD $361,000 using a multi period excess earnings
method.
This method requires assumptions for future expected revenues, the average life of a
customer contract, the expected margin and operating expenses and contributory asset
charges. The major assumptions used in the method to arrive at a fair value for the customer
relationships are outlined below:
A revenue growth rate of 1.5% for terminal value
An average customer life of 10 years
Margins remaining constant
A 22% discount rate has been applied

Notes to the consolidated financial results for
the year ended 31 March 2021



p. 13

2. Basis of preparation (cont.)
Transactions recognised separately from the business combination
As part of the transaction the Group agreed to pay additional consideration if two key
employees remained employed for a three-year period. The additional consideration is
equivalent to USD $1m in cash, and USD $400,000 in ikeGPS Group shares. Payment (via cash
or issue of shares) is required to be made after each year of service has been completed by
the employee.
The payments have been assessed as not forming part of the business combination and
instead being remuneration for future employment services. This is primarily because the
payments are reliant on the employees remaining employed by the Group, if the employees
cease to be employed by the Group during the period, unpaid consideration will be forfeited.
The payments are required to be paid after each year of employment has been completed and
employee expenses are recognised as services are rendered. Expenses of $165,000 were
recognised as employee expenses in 2021.
3. Operating segments
The CEO and the Board of directors are assessed to be the chief operating decision maker
(CODM) who regularly review financial information by product and gross margin. 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.
During FY21 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 5G roll out in the United States.
Within the Utilities & Communications segment the Group derives its revenue from:
+ selling an IKE device and corresponding annual subscription revenue,
+ the IKE Platform solution where customers collect pole data on a leased IKE device
and is either analysed by IKE according to an agreed statement of work or our
customers use the software platform directly to process their pole data,
+ pole loading software licenses and ongoing subscriptions for maintenance and
support,
+ transactional revenue by analysing pole data through an AI and machine learning
platform through its recent acquisition of Visual Globe LLC.
These segments differ from those used in prior periods to analyse the business and
Comparative information has been presented on a consistent basis to the revised segments.

Notes to the consolidated financial results for
the year ended 31 March 2021



p. 14

3. Operating segments (cont.)
The segment information provided to the CEO and Board of Directors for the year ended 31
March 2021 are as follows:

2021

2020

Utility &
Communication
Other
Business
Group

Utility &
Communication
Restated*
Other
Business
Restated*
Group
Restated*

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

$'000's $'000's $'000's
Sales of Product
Sale of product & services
2,091 2,091

2,250 2,250
Subscription 2,654 2,654 2,730 2,730
Contribution 3,481 3,481 3,733 3,733
IKE Platform Solution
Subscription and lease
939 - 939 571 - 571
IKE Analyze 2,321 - 2,321 3,244 - 3,244
Contribution
1,327 - 1,327

2,425 - 2,425
Poleforman
Pole loading software
licenses, services and
subscriptions (Point in time
& Over time)
999 - 999 402 - 402
Contribution 999 - 999 402 - 402
Spike
Sale of product
- 286 313 - 591 591
Subscription - 34 34 - 50 50
Contribution - 114 114 - 400 402
Gross Profit

5,921

6,960
Sales and marketing costs (5,556)

(4,697)
Other corporate income and
expenses
(7,782)

(8,387)
Net loss before tax (7,417) (6,124)

Notes to the consolidated financial results for
the year ended 31 March 2021



p. 15

4. Basic and diluted earnings per share

2021 2020
$'000's $'000's
Total loss for the year attributable to the owners of the parent (7,417) (6,124)
Ordinary shares issued 133,140,763 102,194,048
Weighted average number of shares issued 121,474,636 95,950,183
Basic loss per share $(0.06) $(0.06)
The potential shares and options are anti-dilutive in nature due to the Group being in a loss
position. The diluted loss per share is therefore the same as the undiluted EPS at ($0.06) and
($0.06) for the respective periods.
5. Contributed equity
Share capital

2021 2020
$'000's $'000's
On issue at beginning of year 61,498 55,132
Issued under share placement 9,757 5,306
Issued under share purchase plan 9,938 1,194
Less listing costs offset against issue proceeds (1,230) (560)
Exercise of share options 446 37
Issued as part of business combination 523 389
Total share capital
80,932 61,498
Share capital on issue

2021 2020
Fully paid total shares at beginning of year 102,194,048 90,469,567
New ordinary shares offered 28,963,035 10,833,333
Ordinary shares issued on settlement of options 1,128,334 242,134
Ordinary shares issued as part of business combination 855,346 649,014
Fully paid ordinary shares
133,140,763 102,194,048

Notes to the consolidated financial results for
the year ended 31 March 2021



p. 16

6. Restatement of prior period errors
In the preparation of the FY21 financial results, the Group has identified a number of matters
which require the correction of prior period errors in historic financial statements.
Statement of profit or loss
31 March
2020
Increase
31 March 2020
Restated

$'000's $'000's $'000's
Recognition of vesting of share-based payments
168
Share options forfeited during the year
(20)
Sales tax expense
288
Corporate costs
4,011 436 4,447
Exchange differences on translation of foreign operations
552 (85) 467

Balance sheet


31 March
2019
Increase /
(Decrease)
31 March
2019
Restated
31 March
2020
Increase /
(Decrease)
31 March
2020
Restated

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

Property, plant and
equipment
944 (23) 921 1,188 (23) 1,165
Intangible assets 3,604 (33) 3,571 6,501 (33) 6,468
Lease assets 705 22 727
Liabilities
Provision - 473 473 - 846 846
Non-current lease
liabilities
460 22 482
Equity
Share based payment
reserve
192 77 269 545 224 769
Foreign currency
translation reserve
(115) (11) (126) 437 (96) 341
Accumulated losses (45,891) (595) (46,486) (51,596) (1,031) (52,627)


Accumulated losses
consist of:

Rental pool under
depreciated
(23) (23)
Amortisation of
intangibles
(33) (33)
Share based payment (77) (225)
Sales tax expense (462) (750)
Accumulated losses (45,891) (595) (46,486) (51,596) (1,031) (52,627)

Notes to the consolidated financial results for
the year ended 31 March 2021



p. 17

7. Restatement of prior period errors (cont.)
Sales tax provision
The primary market for sales of the Group’s products or services is the United States of
America. Sales tax obligations can arise in individual States where IKE is deemed to have sales
tax nexus. The Group identified that customer sales tax may be payable in multiple States
relating to prior period sales and a best estimate of the liability has been provided for in the
respective periods. The error resulted in an understatement of the corporate expense and
corresponding sales tax provision for FY20 and earlier years. IKE will look to reduce this
obligation with offsetting customer exemptions certificates or invoicing the customer the
sales tax shortfall, however any recovery has not been recognised due to it not being virtually
certain of receipt.
Share based payments.
In FY21 it was discovered that the recognition of share-based payment expense had been
incorrectly recorded. The error resulted in an understatement of the share-based payment
expense and corresponding reserve for FY20 and earlier years
Accumulated identified misstatements.
In the preparation of prior period financial statements, certain errors were identified but not
corrected as they were deemed individually immaterial. These included:
+ Rental pool under depreciated
+ Intangible asset work in progress under depreciated
+ Volatility adjustment to the calculation of the share based payment expense.
In FY21 it has been determined that the accumulated effect of these misstatement is material
to the opening retained earnings balance of the Group.

p. 18

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 September 2020)
Alex Knowles
Glenn Milnes
Frederick Lax
William Morrow (retired 30 April 2021)
Mark Ratcliffe
Eileen Healy (appointed 1 April 2021)

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