Serko FY22 Full Year Results Announcement
Serko Limited, Saatchi Building, Unit 14D 125 The Strand, Parnell, Auckland, New Zealand
PO Box 47-638, Ponsonby, T: +64 9 884 5916, F: +64 9 377 0545, investor.relations@serko.com
Incorporated in New Zealand ARBN 611 613 980
Market Release
18 May 2022
FY22 Full Year Results Announcement
AUDITED FINANCIAL RESULTS FOR THE YEAR TO 31 MARCH 2022
Serko Limited (NZX & ASX: SKO), a leader in travel and expense management for business, today announces results
for the year to 31 March 2022, showing the company benefiting from an ongoing recovery in international travel
markets and the advancement of its partnership with global travel giant Booking.com.
Summary Financial Results:
• Total income (revenue and other income) increased 12% to $18.9 million
• Segment revenue
1
was $19.8 million, a 17% increase on the prior year and above the midpoint of our revenue
guidance of $18.5 million and $20.5 million
• Online travel booking volumes rose 67% to 2.15 million, boosted by the easing of COVID travel restrictions and
new Booking.com for Business transactions
• Booking.com for Business added an additional 54,000 new registered companies, taking the total to more than
420,000 net new registered companies, while room booking volumes grew to 39,000 in March 2022
• Average revenue per booking (ARPB) for travel-related revenue increased during the year by 8% to $5.80, driven
primarily by the strong average revenue per completed room booking of over $20 for Booking.com for Business.
• Net losses after tax increased by 22% to $36.0 million reflecting investment to develop the significant opportunities
Serko sees in international markets. EBITDAF
2
losses increased 26% to $28.1 million from $22.3 million
• Average monthly cash burn for the 6 months to 31 March 2022 was $3.0 million, lower than our guidance of close
to $4 million, partly reflecting additional non-recurring payments from customers.
• Cash and cash equivalents at 31 March 2022 were $124.5 million, lifted by the $83.3 million capital raising ($80.1
million net of costs) undertaken towards the end of 2021
• Serko expects revenue to approximately double from the prior year and plans to increase our rate of investment
into our products and markets in line with revenue projections.
All dollar amounts are New Zealand dollars unless otherwise stated
Please find attached the following documents containing additional information:
• Market Release
• Results Announcement (NZX Appendix 2)
• Investor Presentation
• Annual Report
1
Segment revenue is a non-GAAP measure representing Total Income before it is reduced to reflect consideration payable to customers. In the period,
consideration payable to customers comprised Serko’s share of jointly agreed marketing expenses. See note 4 of the Financial Statements for a
reconciliation to Total income.
2
See notes in the accompanying Market Release (dated same date) for definitions of non-GAAP financial measures referenced, including EBITDAF.
• ESG Report (including Corporate Governance Statement)
These documents will also be made available on: www.serko.com/investor-centre/
Earnings Call
The full-year results will be discussed on a conference call at 11.30am (NZT) today:
To participate in the call dial one of the following numbers 5- 10 minutes prior to the call start time. The call
confirmation code is 696244.
Location Phone Type Phone Number
New Zealand Tollfree/Freephone 0800 423 972
New Zealand, Auckland Local +64 (0)9 9133 624
Australia Tollfree/Freephone 1 800 590 693
Australia, Sydney Local
+61 (0)2 7250 5438
Singapore Tollfree/Freephone
800 120 7297
Singapore, Singapore Local
+65 6703 6913
Hong Kong, Hong Kong Local
+852 3008 1533
United States/Canada Tollfree/Freephone 800-289-0459
United Kingdom Tollfree/Freephone 0800 358 6374
United Kingdom Local +44 (0)330 165 3646
For and on behalf of Serko by Shane Sampson.
ENDS
Released for and on behalf of Serko Limited by:
Shane Sampson
Chief Financial Officer
For further information:
Investor relations:
Shane Sampson
Chief Financial Officer, Serko
+64 9 884 5916
Investor.relations@serko.com
---
Serko Limited, Saatchi Building, Unit 14D 125 The Strand, Parnell, Auckland, New Zealand
PO Box 47-638, Ponsonby, T: +64 9 884 5916, F: +64 9 377 0545, investor.relations@serko.com
Incorporated in New Zealand ARBN 611 613 980
AUDITED FINANCIAL RESULTS FOR THE YEAR TO 31 MARCH 2022
SERKO REPORTS GROWTH AS TRAVEL RECOVERY BUILDS
SUMMARY FINANCIAL RESULTS
• Total income (revenue and other income) increased 12% to $18.9 million
• Segment revenue
1
was $19.8 million, a 17% increase on the prior year and above the midpoint of our
revenue guidance of $18.5 million and $20.5 million
• Online travel booking volumes rose 67% to 2.15 million, boosted by the easing of COVID travel
restrictions and new Booking.com for Business transactions
• Booking.com for Business added an additional 54,000 new registered companies, taking the total to
more than 420,000 net new registered companies, while room booking volumes grew to 39,000 in
March 2022
• Average revenue per booking (ARPB) for travel-related revenue increased during the year by 8% to
$5.80, driven primarily by the strong average revenue per completed room booking of over $20 for
Booking.com for Business.
• Net losses after tax increased by 22% to $36.0 million reflecting investment to develop the significant
opportunities Serko sees in international markets. EBITDAF
2
losses increased 26% to $28.1 million from
$22.3 million
• Average monthly cash burn for the 6 months to 31 March 2022 was $3.0 million, lower than our
guidance of close to $4 million, partly reflecting additional non-recurring payments from customers.
• Cash and cash equivalents at 31 March 2022 were $124.5 million, lifted by the $83.3 million capital
raising ($80.1 million net of costs) undertaken towards the end of 2021
• Serko expects revenue to approximately double from the prior year and plans to increase our rate of
investment into our products and markets in line with revenue projections.
All dollar amounts are New Zealand dollars unless otherwise stated
Serko Limited (NZX & ASX: SKO), a leader in travel and expense management for business, today announces
results for the year to 31 March 2022, showing the company benefiting from an ongoing recovery in
international travel markets and the advancement of its partnership with global travel giant Booking.com.
Online travel bookings across all segments for the 2022 financial year increased 67% year on year to 2.15
million from 1.29 million, with 1.95 million travel bookings in our Managed Travel segment (Australasia and
North America). The total also includes 0.21 million bookings from the platform for small and medium-sized
businesses that we have developed with Booking.com (our Unmanaged Travel segment).
By the end of the financial year, Australasian booking volumes had recovered to 78% of March 2019 (pre-
COVID) levels as the market emerged from Omicron. Serko is also seeing the recovery trend continue through
April 2022 with Australasian transactions at 83% of April 2019 numbers.
Booking.com for Business booking volumes have also recovered and for the month of March 2022 reached,
39,000, a 42% increase on the October 2021 figure. This growth has also continued into the first month of the
new financial year.
1
Segment revenue is a non-GAAP measure representing Total Income before it is reduced to reflect consideration payable to customers.
In the period, consideration payable to customers comprised Serko’s share of jointly agreed marketing expenses. See note 4 of the
Financial Statements for a reconciliation to Total income.
2
See notes to this release for definitions of non-GAAP financial measures, including EBITDAF.
The strong growth from Booking.com for Business follows the successful onboarding of more than 420,000
net new Booking.com for Business registered companies during the year.
Finally, in North America we are also seeing a travel recovery and continuing signs that we can realise the
potential we see for Serko in this market. By way of example, the international payments company Visa has
selected Zeno as its corporate booking tool and is now live in North and South America and the Asia Pacific
region. Zeno was also named a ‘Globally Preferred Booking Tool’ by our travel reseller partner CWT, one of
the top three global Travel Management Companies.
Serko Chief Executive and Co-Founder Darrin Grafton said “Our focus over the past year has been to position
the business to catch the wave of the global travel recovery. It is therefore pleasing to report that the recovery
has commenced and that the investments we have made are starting to deliver a return.
“The 2022 financial year has been one of careful cost management while investing for the recovery of the
business travel market. Our priorities across Serko for the 2022 financial year were to support our Australian
and New Zealand business, invest heavily into our travel platform for small and medium-sized businesses in
partnership with Booking.com, and develop the North American market.
“We are pleased with the progress that we have made.”
FINANCIAL PERFORMANCE AND FUNDING
Serko’s financial performance, although showing a significant improvement in revenue relative to the prior
year, continues to reflect the impact of the pandemic and our investments in our products to drive the
Booking.com for Business opportunity and to position ourselves for the recovery of global business travel.
Total income increased by 12% to $18.9 million. Revenue grew by 44% to $17.9 million but this was partially
offset by government grant revenue down 77% to $1.0 million.
Segment revenue
was $19.8 million, a 17% increase on the prior year and above the midpoint of our revenue
guidance of $18.5 million and $20.5 million. Revenue growth was driven by a partial business travel recovery
in Australasia over the previous financial year, a strong contribution from Booking.com for Business and a
modest increase in revenue from North American markets. These gains were diluted by the lockdown and
travel restrictions in New Zealand through the third and fourth quarters of the financial year.
Average revenue per booking (ARPB) for travel-related revenue increased during the year by 8% to $5.80,
driven primarily by the strong average revenue per completed room booking of over $20 for Booking.com
for Business.
EBITDAF losses increased 26% to $28.1 million from $22.3 million in the same period a year ago, with the rise
reflecting an increase in operating expenses as we scaled up and invested for future growth. Net losses after
tax increased 22% to $36.0 million from $29.4 million.
Serko remains well funded as a result of the $83.3 million capital raising ($80.1 million net of costs) undertaken
towards the end of 2021. Cash and cash equivalents at 31 March 2022 were $124.5 million, an increase of 56%
or $44.6 million on the prior year end. Cash burn over the year was $35.5 million, an average of $3.0 million
per month. Average monthly cash burn for the 6 months to 31 March 2022 was $3.0 million, lower than our
guidance of close to $4 million, partly reflecting additional non-recurring payments from customers.
OUTLOOK
Two years on from the onset of the COVID related global travel restrictions, it is gratifying to see the strong
recovery, both in Australasia and the new markets we are pursuing, Mr Grafton said.
“Transaction volumes in April 2022 show the recovery of business travel has been sustained into the new
financial year, reflecting a return to travel. That said, we cannot be complacent about the ongoing risks,
including geo-political uncertainty, the potential resurgence of COVID and additionally the structural changes
to the travel market that have occurred through the pandemic.
“Nevertheless, the proof points of the current market continue to give us confidence about our prospects for
the year to 31 March 2023 and we expect revenue to approximately double from the prior year.
“The disruption of the last two years has sharpened our focus on building upon the strengths of our
technology and carefully targeting new market segments.
“We plan to increase our rate of investment into our products and markets to support future growth in line
with revenue projections over the six months to 30 September 2022. However, we are tightly focused on
execution and the application of capital to directly drive the outcomes related to both our strategy and
shareholder return while maintaining prudent cash management practices.
“We continue to negotiate the potential acquisition of a travel technology business. There is no certainty that
this acquisition will proceed, and we will update the market as appropriate. The potential acquisition would
be earnings accretive and assist Serko to accelerate the execution of its strategic priorities. The total
consideration payable is expected to be primarily payable in scrip with a smaller cash component. It is likely
that a significant portion of the total consideration would be deferred and performance based.
“We thank shareholders for their ongoing support and look forward to providing an update at our annual
shareholders meeting in August,” Mr Grafton concluded.
Released for and on behalf of Serko Limited by:
Shane Sampson
Chief Financial Officer
For further information:
Investor relations: Media:
Shane Sampson Richard Inder
Chief Financial Officer
The Project
+64 9 884 5916 +64 21 645 643
investor.relations@serko.com richard@theproject.co.nz
ABOUT SERKO
Serko is a leader in online travel booking and expense management for the business travel market. Zeno is
Serko’s next generation travel management application, using intelligent technology, predictive workflows,
and a global travel marketplace to transform business travel across the entire journey. Listed on the New
Zealand Stock Exchange Main Board (NZX: SKO) and Australian Securities Exchange (ASX: SKO), Serko is
headquartered in New Zealand, with offices across Australia, China, and the United States. Visit
www.serko.com
for more information.
____________________________________________________________________________________________________________
Important notes:
Non-GAAP (generally accepted accounting practices) financial measures do not have standardised meanings
prescribed by GAAP and therefore may not be comparable to similar financial information presented by other
entities. The Non-GAAP financial information included in this release has not been subject to review by the
auditors.
Non-GAAP measures are used by management to monitor the business and are considered useful to provide
information to investors to assess business performance. Reconciliation of non-GAAP to GAAP measures can
be found in the Management Commentary within the Annual Report dated 18 May 2022.
• Travel related revenue is a non-GAAP measure comprising travel platform booking revenue and supplier
commissions revenue, as set out in note 4 to the Financial Statements.
• Average Revenue Per Booking (ARPB) is a non-GAAP measure. Serko uses this as a useful indicator of the revenue
value per travel booking. ARPB for travel-related revenue is calculated as travel-related revenue divided by the total
number of online bookings.
• Segment revenue is a non-GAAP measure representing Total Income before it is reduced to reflect consideration
payable to customers. In the period, consideration payable to customers comprised Serko’s share of jointly agreed
marketing expenses. See note 4 of the Financial Statements for a reconciliation to Total income.
• Operating expenses is a non-GAAP measure comprising expenses excluding costs relating to taxation, interest,
depreciation, amortisation, finance expenses and foreign exchange gains and losses.
• EBITDAF is a non-GAAP measure representing Earnings Before the deduction of costs relating to Interest, Taxation,
Depreciation, Amortisation, Foreign Currency (Gains)/Losses and Fair value measurement. See the Management
Commentary in the Annual Report for a reconciliation to Net loss after tax.
---
RESULTS ANNOUNCEMENT
18 May 2022
Results for announcement to the market
Name of issuer Serko Limited (“SKO”)
Reporting Period 31 March 2022
Previous Reporting Period 31 March 2021
Currency New Zealand Dollars
Amount (000s) Percentage change
Revenue from continuing
operations
$18,874 Up 12%
Total Revenue $18,874 Up 12%
Net profit/(loss) from
continuing operations
($35,959) Increase of
22%
Total net profit/(loss) ($35,959) Increase of
22%
Interim/Final Dividend
Amount per Quoted Equity
Security
No dividends have been paid during the period and there is no
intention to pay dividends while Serko pursues growth
opportunities
Imputed amount per Quoted
Equity Security
Not applicable
Record Date Not applicable
Dividend Payment Date Not applicable
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
100.14 cents 74.59 cents
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Please refer to the market release and annual report released in
conjunction with this announcement.
Pursuant to ASX listing rule 1.15.3, Serko Limited confirms that it
continues to comply with the rules of its home exchange (NZX
Main Board).
Authority for this announcement
Name of person authorised to
make this announcement
Shane Sampson
Contact person for this
announcement
Shane Sampson, CFO
Contact phone number +64 9 884 5916
Contact email address investor.relations@serko.com
Date of release through MAP 18/05/2022
Audited financial statements for the period ended 31 March 2022 accompany this
announcement.
Serko Limited, Saatchi Building, Unit 14D 125 The Strand, Parnell, Auckland, New Zealand
PO Box 47-638, Ponsonby, T: +64 9 309 4754, F: +64 9 377 0545, investor.relations@serko.com
Incorporated in New Zealand ARBN 611 613 980
---
Financial Results for the year to 31 March 2022
Investor Presentation18 May 2022
DISCLAIMER
2
|
•This presentation has been prepared by Serko Limited. All information is current at the date of this presentation, unless stated otherwise. All currency amounts
are in NZ dollars unless stated otherwise.
•Information in this presentation
•is for general information purposes only, and does not constitute, or contain, an offer or invitation for subscription, purchase, or recommendation of
securities in Serko Limited for the purposes of the Financial Markets Conduct Act 2013 or otherwise, or constitute legal, financial, tax, financial product, or
investment advice;
•should be read in conjunction with, and is subject to Serko’s Financial Statements and Annual Reports, market releases and information published on
Serko’s website (www.serko.com);
•includes forward-looking statements about Serko and the environment in which Serko operates, which are subject to uncertainties and contingencies
outside Serko’s control –Serko’s actual results or performance may differ materially from these statements, particularly as a result of the impacts of
Covid-19;
•includes statements relating to past performance information for illustrative purposes only and should not be relied upon as (and is not) an indication of
future performance;
•may contain information from third-parties believed to be reliable, however, no representations or warranties are made as to theaccuracy or
completeness of such information.
•Non-GAAP financial information does not have a standardised meaning prescribed by GAAP and therefore may not be comparable to similar financial
information presented by other entities. The non-GAAP financial information included in this release has not been subject to review by auditors. Non-GAAP
measures are used by management to monitor the business and are useful to provide investors to access business performance.
FY 22 HighlightsStrategic Priorities
CONTENTS
Financial Update
Outlook
3
|
FY22 Highlights
4
|
Capability and capacity
Successfully retaining and recruiting
talent to build capacity across our
product and technology functions in a
COVID constrained market.
$83 million capital raising allowed us to
look beyond the travel market turmoil.
Cash burn averages $3.0 million per
month.
FY22: EMERGING FROM COVID WITH A GLOBAL PLATFORM
SERKO INVESTMENT AHEAD OF THE RECOVERY POSITIONS US WELL FOR GROWTH
Booking.com
Delivered a travel platform to a global
giant from a standing start, onboarding
420,000+ registered companies.
Monthly room nights booked rose to 39k
for March, up 42% from October.
Collaborating with Booking.com to drive
customer acquisition and conversion.
5
|
Managed travel
Recovery is evident with travel patterns
improving at the end of Q4 FY22.
Demonstrated resilience in Australia and
New Zealand through retention and
market share growth in the face of
recurrent travel shutdowns.
North America is showing validation of
our approach with marquee Travel
Management Company (TMC) partners
and corporate buyers selecting Zeno.
PROFIT (LOSS)REVENUEACTIVITYCOSTS
NET LOSS AFTER
TAX
$(36m)
EBITDAF
1
loss
$(28.1m)
REVENUE
44%
Revenue from
customers
$17.9m
TOTAL INCOME
12%
Total income from all
sources including
grants
$18.9m
SEGMENT
REVENUE
17%
Segment revenue
1
$19.8m
ROOM NIGHTS
COMPLETED
1
320k
Total Booking.com
room nights
completed
320k
ONLINE TRAVEL
BOOKINGS
67%
Online travel platform
bookings for the
period
2.2m
PRODUCT
DESIGN &
DEVELOPMENT
1
33%
143% of Revenue
Capex $15.3m
$25.5m
OPERATING
EXPENSES
23%
Net FTE
1
increase in
the past 12 months of
25toa total of 312
employees
$55.1m
1
Refer to Appendix for definitions anddescriptions of the non-GAAP measures used by management.
FY22: WEATHERING THE PANDEMIC, INVESTING FOR GROWTH
PERFORMANCE COMPARED TO PRIOR COMPARABLE PERIOD
6
|
SERKO’S STRATEGIC PRIORITIES FY23 -> FY25
3 YEAR
STRATEGIC
GOALS
CUSTOMER
SUCCESS
Deliver an
exceptional CX
through
experimentation
driven development.
1
UNMANAGED
REVENUE
Establish significant
market share in the
unmanaged travel
market through our
partnership with
Booking.com.
2
MANAGED
REVENUE
Consistently grow
market share in the
global managed
travel market
through TMC
partnerships and
inorganic growth.
3
MARKETPLACE
& CONTENT
Commercialise the
connected trip
experience through
an open platform.
4
CULTURE
Grow a culture of
engaged Serkodians
who uphold our
corporate values.
5
7
|
CUSTOMER SUCCESS
FRICTIONLESS BUSINESS TRAVEL THROUGH AN EXCEPTIONAL CUSTOMER EXPERIENCE
8
|
•Serko’s product teams are focused on increasing customer satisfaction by
continuing to enhance the performance and usability of our products.
•Booking.com is providing us with access to the learnings and insights of one of
the largest online travel retailers in the world.
•With the support of our Booking.com partnership, Serko’s product organisation
is transitioning to an experiment-led approach built on data-driven decision
making.
•A focus on delivering enhancements to reduce friction based on customer
feedback has included multi-room bookings, express search and enhanced
room imagery, which are delivering improvements in customer outcomes.
1
UNMANAGED REVENUE
BOOKING.COM LAUNCH A SIGNIFICANT ACHIEVEMENT
1
We expect SME business booking behaviors will be different from our enterprise customers. It is uncertain when, and how often, migrated (also referred to as activated) customers and
new sign-ups will transact, particularly during COVID-affected periods and as a result of intermittent travel needs of SME’s.There is no guarantee that migrated/activated customers, or
new sign-ups, will make bookings in the current financial period or at all.
9
|
420K+
Registered
Booking.com for
Business companies
1.
39K
Rooms booked in March
2022 up 42%from
October 2021.
PHASE 3:
SCALING
PHASE 2:
ACTIVATING
+ ENGAGING
PHASE 1:
MIGRATION
COMPLETE
H2 FY22-FY23FY23-FY24
2
Oct-21Nov-21Dec-21Jan-22Feb-22Mar-22
Booking.com for Business Rooms Booked
>$20
Average revenue per
completed booking.
10
|
•Serko’s product and technology teams are collaborating closely with their Booking.com
counterparts, with Booking.com resourcing a dedicated team to support the
partnership.
•Focused investment for growth in FY22 and FY23:
•Expanding the connected trip offering with additional content including rail,
rental cars, airlines and partnership offerings with 3
rd
party business tools.
•Air travel now able to be booked through the Booking.com for Business
platform in 31 countries including Australia.
•Increasing customer conversion through UI functionality enhancements.
•Ta r g e t e d d i g i t a l m a r k e t i n g t o d r i v e c u s t o m e r a c q u i s i t i o n ..
BOOKING.COM
RENTALCARS.COM
AGODA
PRICELINE
OPEN TABLE
LIVE
IN PROGRESS
POTENTIAL FUTURE
INTEGRATIONS
UNMANAGED REVENUE
PRODUCT INVESTMENT FOCUS ON CUSTOMER CONVERSION
2
MANAGED REVENUE
RECOVERY GAINING MOMENTUM ACROSS ALL MARKETS
•Australasia is seeing a steady recovery, ending March 2022 at
78% of pre-COVID volumes after a year of volatility reflecting
virus outbreaks.
•Serko has retained key customers and won new enterprise
customers during the pandemic-affected period, achieving
62% adoption across the ASX 50.
•North American travel market is recovering, and we are
seeing signs of Zeno gaining traction in market.
•Zeno has been selected as a globally preferred online
booking tool by CWT.
•VISA selected Zeno as its corporate booking tool and is now
live via CWT across North and South America and the Asia
Pacific region.**
3
11
|
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
Apr-21May-21Jun-21Jul-21Aug-21Sept-21Oct-21Nov-21Dec-21Jan-22Feb-22Mar-22
Australasia transactions as % of pre-COVID-19*
New Zealand TMCsAustralian TMCsAustralasia
*Percentages are measured against the same month in 2019to reflect pre-Covid-19 volumes.
**Theagreement between Serko and CWT is not expected to have a
material impact on Serko’s current financial year.
4
PLATFORM AND CONTENT
INVESTING IN MARKETPLACE FOUNDATIONS
12
|
•Serko is investing in the marketplace foundations to create an open
platform with a content hub that enables third party supply
partners to connect at scale.
•In FY22 we progressively expanded the content offerings across
multiple markets, including the introduction of flights and DB Rail
in Booking.comfor Business.
•We rolled out product innovations through specialist provider
integrations including: destination health & safety and arrival
requirements information, and e-Visa capabilities.
•In alignment with Serko’s ESG focus we launched integrated
environmental impact and carbon offset for flights and sustainable
property flags.
Great
customer
experience
High
conversion
rate
Large
base of
customers
Demand
from
content
suppliers
Breadth
of content
CULTURE
GROWING A CULTURE THAT ATTRACTS AND RETAINS TALENT
•Serko seeks to employ the best people and empower them to do their best work.
•We are focused on offering a holistic employee experience across the key areas of
organisational culture; working environments; personal and career development;
remuneration and benefits; and employee health, safety and wellbeing.
•Key initiatives:
•Diversity policy 40:40:20 (men, women, any gender) target across the business by 2023
•Review of processes for bias including hiring,promotion and annual performance
•New inclusive benefits programme recognising parents,well-being, flexible working
•Annual employee survey and monthly pulse checks
•Rigorous health & safety management through the pandemic
•We continue to enhance our environmental, social and governance program, with a keen
focus on climate change reporting.
•Serko is actively exploring initiatives to make a positive impact in the community, including
working with Booking.com to assist the UNHCR with accommodation support for refugees
displaced by the war.
5
13
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Financial Update and Outlook
AUDITED FINANCIAL RESULTS FOR THE YEAR TO 31 MARCH 2022
14
|
15
|
NET PROFIT SUMMARY/ EBITDAF RECONCILATION
•Revenue of $17.9m is up 44% from FY21 as
travel volumes partially recovered from
COVID effects.
•Total income of $18.9m is up 12% from FY21.
•EBITDAF loss of $28.1m is $5.8m more than
the previous year with the increase in
Operating expenses, partially offset by higher
total income.
•Net loss after tax for the period was $36m.
Net Profit SummaryFY22FY21
changechange
EBITDA Reconciliation
$'000$'000$'000%
Revenue17,85512,4205,43544%
Other income (including Grants)1,0194,476(3,457)-77%
Total income18,87416,8961,97812%
Operating expenses(55,057)(44,854)(10,203)23%
Percentage of revenue-308%-361%
Foreign exchange gains/(losses)(35)(1,337)1,302-97%
Net finance (expense)/income578247331134%
Net (loss) before tax(35,640)(29,048)(6,592)-23%
Percentage of revenue-200%-234%
Income tax benefit/(expense)(319)(341)22-6%
Net (loss) after tax(35,959)(29,389)(6,570)-22%
Deduct: net finance (expense)/income(578)(247)(331)134%
Add back: income tax319341(22)-6%
Add back:depreciation and amortisation8,0385,6332,40543%
Add back: net foreign exchange (gains)/losses351,337(1,302)-97%
EBITDAF (loss)(28,145)(22,325)(5,820)26%
EBITDAF (loss) margin-158%-180%
16
|
REVENUE ANALYSIS
•Segment revenue
1
increased 17% to $19.8m,
above the midpoint of guidance.
•Travel platform revenue increased by 42% to
$9m.
•Supplier commissions before consideration
payable increased 710% to $4.4m reflecting
increased travel volumes and growth in
revenue from Booking.com for Business.
•After deducting consideration payable to
customers, supplier commissions revenue
increased 541% to $3.5m.
•ARPB for recurring revenue decreased by 11%
to $7.83 due to the weighting of Expense
revenue decreasing as travel booking
volumes and revenues grew faster.
•Average Revenue per Booking (ARPB) for
travel-related revenue (travel platform and
supplier commissions) increased by 8% to
$5.80.
Revenue and Other IncomeFY22FY21
changechange
by Type
$'000$'000$'000%
Revenue –transaction and usage fees:
Travel platform booking revenue9,0426,3542,68842%
Expense platform revenue4,0393,997421%
Supplier commissions revenue4,3585383,820710%
Services revenue1,0071,145(138)-12%
Other revenue320386(66)-17%
Other Income1,0194,476(3,457)-77%
Segment revenue19,78516,8962,88917%
Consideration payable to customers(911)-(911)n/a
Total revenue and other income in accordance with
NZ GAAP18,87416,8961,97812%
Operating Revenue by Geography
Australia10,6867,5203,16642%
New Zealand1,5392,154(615)-29%
North America2,5972,36922810%
Europe and Other3,0333772,656705%
Total Revenue17,85512,4205,43544%
Total travel bookings (000)2,5561,56699063%
Online bookings (000)2,1531,28786667%
ARPB (travel related revenue only/online bookings)$5.80$5.36$0.448%
ARPB (recurring revenue/online bookings)$7.83$8.76($0.93)-11%
1
Refer to Appendix for definitions anddescriptions of the non-GAAP measures used by management.
17
|
TRANSACTION ANALYSIS -ANZ
•New Zealand travel booking volumes peaked in
June 2021 at 163% of 2019 volumes reflecting both
travel recovery and increased market share in New
Zealand before further lockdowns and travel
restrictions began to impact from August 2021.
•In Australia, travel booking volumes recovered to
72% of 2019 volume before further lockdowns
caused volumes to fall, hitting a low of 29% of
2019 levels in August 2021.
•With high vaccination levels and significant
reductions in COVID related restrictions, travel
volumes in March 2022 recovered to 78% of 2019
levels in Australia and to 75% of 2019 levels in New
Zealand.
*Percentages are measured against the same month in 2019to reflect pre-Covid-19 volumes.
17
|
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
Apr-21May-21Jun-21Jul-21Aug-21Sept-21Oct-21Nov-21Dec-21Jan-22Feb-22Mar-22
Australasia transactions as % of pre-COVID-19*
New Zealand TMCsAustralian TMCsAustralasia
18
|
OPERATING EXPENSES
•Total operating expenses increased 23% to
$55.1m as Serko invested for future growth.
•Selling and marketing expenses increased
50% to $3.1m driven by increased
transaction volumes and further investment
in marketing initiatives.
•Hosting expenses increased 82% to $4.9m
driven by increase in online booking
volumes of 67% during the year and
additional infrastructure to support the
Booking.com for Business migration.
•Remuneration and benefits increased by 9%
owing to increased average headcount and
increase in compensation per employee.
•Administration expenses increased to $6.9m
of which $1.6m is professional fees relating
to potential acquisition and consultancy
services to support the design and
development of a new mobile app.
Note: A further breakdown of Operating Expenses can be found in Note 5 of the financialstatements.
18
|
Operating ExpensesFY22FY21
changechange
$'000$'000$'000%
Total selling and marketing expenses3,0872,0561,03150%
Hosting expenses4,9322,7102,22282%
Total remuneration and benefits32,07429,5272,5479%
Total administration expenses6,9264,9281,99841%
Total amortisation and depreciation8,0385,6332,40543%
Total Operating Expense55,05744,85410,20323%
Percentage of revenue308%361%
Number of employees at period end
312287259%
19
|
PRODUCT DESIGN AND DEVELOPMENT
•Total PD&D costs increased by 33% to
$25.5m reflecting increased average PD&D
headcount as Serko invested in its products
to support future revenue growth.
•Product design and development (PD&D)
costs is a non-GAAP measure
1
representing
the internal and external costs related to
PD&D that have been included in operating
expenses or capitalised as computer software
development during the period.
•Capitalised PD&D costs increased by 112% to
$15.3m reflecting the increased total PD&D
costs and an increase in the proportion of
PD&D costs capitalised to 60%.
Product Design and DevelopmentFY22FY21
changechange
Expenditure
$'000$'000$'000%
Total Product Design & Development25,54819,2036,34533%
Percentage of revenue143%155%
Less: capitalised product development costs(15,320)(7,231)(8,089)112%
Percentage of Product Design & Development
costs
60%38%
Total Product Design & Development
(excluding amortisation)10,22811,972(1,744)-15%
Percentage of revenue57%96%
Add: Amortisation of capitalised development
costs6,3863,9092,47763%
Total16,61415,8817335%
Percentage of revenue93%128%
1
Refer to Appendix for definitions anddescriptions of the non-GAAP measures used by management.
20
|
BALANCE SHEET
•Cash balances and Short-term deposits
increased 56% to $124.5m as at 31 March 2022.
•Excluding funds from the capital raise, net cash
burn for the year was $35.5m, an average of
$3m per month.
•In the six months to 31 March 2022 average
monthly cash burn was $3m, lower than
planned.
•Part of the lower than planned cash burn was
due to additional payments from customers
which are expected to reverse in the year to 31
March 2023 and are included in current
liabilities.
•Other current assets increased by 15%
reflecting anticipated government grant
income.
•Non current liabilities increased 620% as a
result of new premises leases entered into
during the period and deferred income.
Balance SheetFY22FY21
changechange
$'000$'000$'000%
Cash and Short-Term Deposits124,51379,91944,59456%
Other Current Assets6,2265,40082615%
Intangibles32,05823,3048,75438%
Other Non Current Assets4,3942,6861,70864%
Total Assets167,191111,30955,88250%
Current Liabilities13,3008,3634,93759%
Non Current Liabilities3,0104182,592620%
Equity150,881102,52848,35347%
Total Liabilities and Equity167,191111,30955,88250%
•We are gratified to see the strong recovery both in Australasian markets and the new markets we are pursuing. Australasian transactions
through April show the post-COVID recovery has been sustained into the new financial year with booking volumes in April 2022 at 83% of April
2019 levels.
•We believe our aspiration of reaching $100 million revenue in the mid-term remains achievable. This revenue target has been delayed during
this COVID-affected year, and impacts from the pandemic and other factors continue to make it challenging to determine the timing of
realisation of revenues from these opportunities.
•We continue to negotiate the potential acquisition of a travel technology business. There is no certainty that this acquisition will proceed, and
we will update the market as appropriate. The potential acquisition would be earnings accretive and assist Serko to accelerate the execution of
its strategic priorities. The total consideration is expected to be primarily payable in scrip with a smaller cash component.Itis likely that a
significant portion of the total consideration would be deferred and performance-based.
•The strong recovery from COVID in business travel markets together with our partnership with Booking.com gives us confidence that revenue
for the year to 31 March 2023 will approximately double from the prior year.
•We plan to increase our rate of investment into our products and markets over the six months to 30 September 2022 to support future growth.
•We are tightly focused on execution and the application of capital to directly drive the outcomes related to both our strategy and shareholder
return.
OUTLOOK
21
|
Financial Results for the year to 31 March 2022
Investor Presentation18 May 2022
Q&A
Appendix
Company snapshot, risks and definitions
23
|
ABOUT SERKO
FOUNDED IN 2007
Innovative Solutions
Serko is a technology company focused on
innovative solutions that address the challenges of
corporate travel and expense management.
Serko’s revenue comes from Travel Management
Companies (TMCs), who provide our online travel
booking solution to their corporate customers,
and from direct corporate travel bookings on
Booking.com for Business which is powered by
our technology. Serko also sells Expense
management solutions to corporate customers
directly.
Market Leader
Serko is a leading supplier of travel
technology solutions for TMCs in Australasia
and is now expanding into Northern
Hemisphere markets with multiple reseller
partners in North America and a global
offering for small to medium sized business
through the Booking.com for Business
platform.
NZX/ASX Listed
Serko listed on the New Zealand stock
exchange in June 2014. In June 2018, Serko
listed as a foreign exempt listing on the
Australian Securities Exchange. Serko
trades under the ticker ‘SKO’ on both
exchanges.
Serko employs around 360 people
worldwide with its HQ in New Zealand, and
offices across Australia, the U.S. and China
For further information refer to Serko’s website www.serko.comand its latest Annual Report which can be found under Investor Centre.
24
|
Zeno TravelZeno Expense
Zeno Travel is an
Online
Booking Tool (OBT)
that
corporate travellers use to
book flights, trains, hotels,
rental cars and airport
transfers in line with their
corporate travel policies.
Zeno Expense
automates
the process
of corporate
card and out-of-pocket
expense submission,
reconciliation and
reimbursement.
SERKO PRODUCTS
25
|
Non-GAAP(generallyacceptedaccountingpractices)financialmeasuresdonothavestandardisedmeaningsprescribedbyGAAPandthereforemaynotbe
comparabletosimilarfinancialinformationpresentedbyotherentities.Non-GAAPmeasuresareusedbymanagementtomonitorthebusinessandare
consideredusefultoprovideinformationtoinvestorstoassessbusinessperformance.Reconciliationofnon-GAAPfinancialmeasurestoGAAPmeasurescan
befoundwithintheAnnualReportdated18May2022.
•ARPB (Average Revenue Per Booking) is a non-GAAP measure. Serko uses this as a useful indicator of the revenue value per travel booking. ARPB for
travel-related revenue is calculated as travel-related revenue divided by the total number of online bookings. ARPB for recurring revenue is calculated as
revenue from customers less services revenue divided by the total number of online bookings.
•Tot al t r av el book i ngs i nc l ude bot h onl i ne and offl i ne book i ngs. Offl i ne book i ngs are sy st em aut omat ed book i ngs.
•Segment revenue (a non-GAAP measure) is Total revenue and other income before deducting consideration payable to customers.
•Tot al oper at i ng rev enue (a non-GAAP measure) is revenue excluding income from grants and finance income; total income includes grants.
•Product design and development costs is a non-GAAP measure representing the internal and external costs related to the design, development and
maintenance of Serko’s platforms that are included within operating expenses or capitalised but excludes amortisation.
•Operating expenses is a non-GAAP measure comprising expenses excluding costs relating to taxation, interest, depreciation, amortisation, finance
expenses and foreign exchange gains and losses.
•EBITDAF is a non-GAAP measure representing Earnings Before the deduction of costs relating to Interest, Taxation, Depreciation, Amortisation, Foreign
Currency (Gains)/Losses and Fair value measurement. See slide 15 for a reconciliation to Net loss after tax.
•FTE = Full time equivalent employee.
DEFINITIONS
Serko Limited, 125 The Strand, Parnell, Auckland, New Zealand
T: +64 9 309 4754
investor.relations@serko.com
Incorporated in New Zealand ARBN 611 613 980
26
|
Thank you
---
ESG REPORT 2022
Serko believes in the power of being
face-to-face. Our purpose is to
bring people together. Our vision is a
connected, frictionless travel experience.
To deliver that, we’re building
the world’s leading business travel
marketplace — connecting business
travellers everywhere with the content,
information and services they need
at every stage of the journey.
We are committed to doing what
is right for our business, people,
customers and communities.
This will drive our long-term value.
The United Nations (UN) Sustainable Development Goals (SDGs) are a set
of global initiatives set by the UN for everyone to contribute to.
For Serko, the SDGs provide a way for us to show which areas of sustainability
we are directly contributing to and how our initiatives relate to a larger vision for
positive change. The UN SDGs relevant to Serko and our actions are as follows:
People
Health &
Safety Policies
Training & intern
programmes
Diversity &
inclusion policies
Remuneration
policies
Diversity &
inclusion policies
CustomersCommunity
Industry
recognition for
innovation
Sponsorships
& donations
Environmental
practices
Privacy &
security policies
ESG Report 2022
Sustainable Business Growth 2
ESG Governance 3
Our Strategy 4
Performance Reporting
Environmental 6
Social 12
Governance 22
Risk Management 37
This Environmental, Social and Governance (ESG) Report, which
incorporates Serko’s Corporate Governance Statement, was approved by
the Board of Serko Limited on 18 May 2022 and is accurate as at that date.
The Board does not undertake any obligation to revise this Report to reflect
events or circumstances after 18 May 2022 (other than in accordance with
the continuous disclosure requirements of the applicable Listing Rules).
Building sustainable
long-term business growth
We believe strong ESG practices give Serko its social licence to operate,
as well as creating long-term value. Here’s how:
Continuously innovating —
to adapt to rapid environmental
changes and deliver sustainable
and innovative products to
our customers
Powering our people —
to do amazing work that
drives our business and
sustainability goals
Being a brand you can count
on — trusted by our employees,
customers, investors
and partners
2
ESG Governance
At Serko, our commitment to ESG is company wide. Ownership starts at our Board
and flows through the entire organisation. This framework summarises the roles
and responsibilities for the oversight, planning and delivery of ESG programmes
and practices at Serko.
The Board approves ESG
vision and strategy and
oversees risk management
Board committees oversee
the relevant aspects of the
ESG programme and report
to the Board
The Executive Steering
Committee oversees,
prioritises, resources
and champions the ESG
projects that comprise the
programme and ensures
alignment with Serko’s
strategy and value drivers
Project Delivery Teams
do the planning and
execution of the projects
that contribute to the
ESG programme and help
advance the company
towards its ESG goals
Serko Board
Team Serko
Audit and Risk
Committee
Project Delivery Teams
Project Delivery Teams
Project Delivery Teams
Project Delivery Teams
People, Remuneration
and Culture Committee
CEO /
Executive Steering
Committee
3
FY23
Objectives
Conversion
Grow revenue from
the unmanaged travel
segment by focusing on
customer conversion
Product health
foundations
Increase customer
satisfaction by continuing
to enhance the performance
and usability of our products
Our
Purpose
We bring people together
Our Vision
+ Mission
To create a connected, frictionless
travel experience by building the world’s
leading business travel marketplace
3 yr
Strategic
Goals
21
Unmanaged
revenue
Establish significant
market share in
unmanaged travel market
Customer
success
Deliver exceptional
customer experience (CX)
through experimentation-
driven development
Our Strategy
4
Platform
foundations
Build the marketplace
foundations through
technology enablement of
an open integration platform
Retain
and grow
Scale growth in North
America and extend our
leadership in the Australia
and New Zealand markets
Organisational
alignment
Maximise alignment
across our teams and
minimise friction for our
customers to increase
organisational efficiency
43
Marketplace
and content
Commercialise
connected trip
experience through
an open platform
Managed
revenue
Consistently grow market
share in global managed
travel market through
TMC partnerships and
inorganic growth
Culture
Grow a culture of
engaged Serkodians
aligned to our purpose,
mission and values
5
Our strategy provides our stakeholders — employees,
customers, end users, partners, suppliers, shareholders
and others — with a clear sense of what drives us, where
we are heading and how we will create long-term value.
5
ENVIRONMENTAL
6
As a technology company Serko operates in an online,
office-based environment. With our operational model,
Serko’s direct environmental footprint is relatively
small and made up largely from third-party data
centres, office energy consumption, employee travel
and from the typical consumables of a technology
business. We believe that the biggest environmental
impact we can have is in two core areas:
•Understanding and reducing our
own carbon footprint
•Assisting our customers to make smart
sustainable business decisions.
1. UNDERSTANDING AND REDUCING
OUR OWN CARBON FOOTPRINT
UNDERSTANDING OUR OWN CARBON
FOOTPRINT
Serko’s goal is to become carbon neutral for our
operations by offsetting 100% of our unavoidable
operational emissions, after measuring and reducing
all avoidable consumption. We have initiated
this process by engaging an external consultant
to calculate our carbon emissions from FY22.
This will be a greenhouse gas (GHG) inventory
assurance review in accordance with the International
Standards on Assurance Engagements (NZ) 3000:
Assurance Engagements Other than Audits or
Reviews of Historical Financial Information (‘ISAE
(NZ) 3000’) and the related ISAE 3410: Assurance
Engagements on Greenhouse Gas Statements.
7
1 For more information on the steps Microsoft Azure is undertaking to
continue to improve its environmental impact see https://azure.microsoft.
com/en-au/global-infrastructure/sustainability/#carbon-benefits
REDUCING OUR CARBON FOOTPRINT
Over the past financial year, we have continued to
look at ways to progressively reduce Serko’s carbon
footprint. With most of our operational emissions
generated from energy consumption (through our
office spaces and data centres) and employee travel
(mainly air), we have focused first on these areas as
opportunities to reduce our impact. Initiatives in place
(or in the process of being implemented) include:
Energy consumption
•Wherever possible, we host information technology
(IT) and platform services in the cloud, lowering our
on-premise energy consumption. Our cloud services
platform partner, Microsoft Azure, has been carbon
neutral since 2012. We are working with Microsoft to
optimise how we use our technology infrastructure,
including offsetting our energy usage through
Microsoft’s pathway to carbon negative by 2030
1
. We
use Microsoft’s Emissions Impact Dashboard to view
and measure our emissions from data centre usage.
•We have appointed a new energy provider for our
New Zealand offices that generates 100% renewable
energy sources. Under this arrangement, we will
be issued with Renewable Energy Certificates for
our energy consumption.
Employee travel
•Due to Covid-19 related travel restrictions, there
was limited employee travel during the FY22
financial period. As travel recovers, we will bring
carbon considerations to all travel decisions, and
offset where travel is deemed necessary. At the end
of 2021, we partnered with Tasman Environmental
Markets (TEM) to integrate BlueHalo, a technology
solution that enables travellers and businesses
to offset their travel. Serko will use this solution
to offset internal employee travel emissions.
We are also offering this service to our customers.
•We see the benefit of reduced carbon emissions
associated with a reduction of employees
commuting. As such, we actively manage flexibility
for our employees to work from home for part of the
work week.
Reducing waste
•We are committed to a reduction in waste and
single-use items. Our efforts to reduce, reuse
and recycle include the following initiatives:
–
reusing IT equipment and parts where
possible and donating IT equipment to
charitable organisations (see page 20
about our donation initiative with the
Salvation Army);
–
reinforcing smart environmental choices
within the corporate culture, particularly
in procurement and entertainment
decision-making in the business;
–
recycling and composting; and minimising
the use of disposable coffee cups and
single-use water bottles, where possible.
8
TCFD REPORTING
We are currently assessing our readiness to start
reporting against the upcoming climate-related
disclosure requirements in line with the Taskforce
on Climate-related Financial Disclosures (TCFD)
framework. Those requirements, currently being
developed by the New Zealand External Reporting
Board, will be mandatory for Serko to report against
from the FY23 reporting period.
In next year’s ESG report, we will provide information
about Serko’s climate-related risks and opportunities,
how they affect us, and in turn how our operations
affect climate change. We will also identify and
report the key metrics associated with our material
climate impacts.
Serko recognises that the improved transparency
of our climate-related information will enable us to
better manage our risks, inform our climate change
strategy and help build long-term organisational value.
2. ASSISTING OUR CUSTOMERS TO MAKE
SUSTAINABLE BUSINESS DECISIONS
As a company providing a travel booking platform
that is used by thousands of organisations around the
world to book millions of trips, we play a role in helping
reduce the environmental impact of our customers’
activity. By providing insight into travel-related
emissions and environmental impact at point of sale
and enabling corporate travellers to offset their carbon
emissions, our travel booking platform can shape user
behaviour to prefer lower impact options and develop
more sustainable travel programs. See page 10–11 for
more details on how we assist our customers to make
sustainable business decisions.
9
Mission Zero, launched in our Zeno booking
platform in 2021, allows our customers to
actively reduce the environmental impact
of their travel activity.
Mission Zero empowers business travellers to choose
environmentally friendly booking options by providing
carbon offset data for flights, highlighting lower
emission rental car options and enabling customers
to select a targeted environmental programme to
offset emissions.
We have partnered with Tasman Environmental
Markets (TEM) to integrate BlueHalo®, an end-to-end
technology solution that enables Zeno to calculate and
offset the emissions of a flight. TEM’s ability to provide
granular, dynamic carbon offset data based on choice
of fare gives our customers the ability to build
a robust carbon offset program for their businesses.
Serko’s vision for supporting efficient business travel
with Mission Zero is built around four principles:
1. Real-time data
Serko is collaborating with its partners to enable
Zeno users to measure the impact of their entire
trips in real-time, including flights, accommodation
and rental car options.
2. Informed choice
Travel programs can be designed to minimise
environmental impact, not just financial cost.
The most efficient flight routes, cabin classes
and vehicle types can be identified at the
point of purchase to drive more sustainable
buying behaviour.
3. Impact visibility
By providing complete visibility of a business
travel program’s environmental impacts, Zeno
enables organisations to make policy choices
that get their travellers where they need to go,
while treading as lightly as possible.
4. Net Zero impact
Through our partnership with TEM, Mission Zero
offers organisations a measurable and credible
way to offset their greenhouse emissions
by investing in carefully chosen carbon offset
projects that deliver social and economic benefits
to communities, as well as emissions reduction.
Mission Zero also recently introduced
‘sustainability badges’, which allow Booking.com
users to search for accommodation that meets
certain sustainability criteria.
Mission Zero
Assisting business travellers to minimise
their environmental impacts
10
Preferencing of lower emission rental cars in the Zeno booking flow
Zeno calculates the carbon emission and offset data for each flight and provides the option
to offset to a portfolio of high impact projects.
11
SOCIAL
12
Team Serko
Serko seeks to attract, motivate and retain talented
and diverse people and empower them to do their best
work. We offer an inclusive environment and culture
that allows people to show up authentically, have their
ideas heard, reach their potential and have fun along
the way.
We provide a connected employee experience
underpinned by a clear company purpose and
vision and our strong values, developed from and
tested against the diversity of perspectives that
make up Serko.
OUR PURPOSE AND VALUES
Our purpose, or ‘why we exist’ is simple, and that
is to bring people together.
Our mission describes ‘what we do’, which is to
create a connected, frictionless travel experience.
Together, these two statements provide our
stakeholders – employees, customers, end users,
partners, suppliers, shareholders and others —
with a very clear sense of what drives us and where
we are heading.
Our values reflect who we are as a company, the way
we work together as a team and the way we interact
with our customers and partners. Our values show up
in the decisions we make, who we hire, how we develop
and reward and how we lead our teams.
Serkodians tell us that they have a strong sense
of belonging, through participation in our surveys.
More than 80% consistently agree that they are proud
to work for Serko and that they would recommend
Serko as a great place to work. Our teams also have
a clear understanding of how their work contributes
to the achievement of Serko’s business objectives
and feel that their leaders role model Serko’s values
to others.
OUR VALUES
MASTERY
Serkodians continuously strive
to become masters of what they do
AUTONOMY
Serkodians are able to work independently
and make decisions for themselves
for the benefits of our customers
PASSION
Serkodians are passionate about
what they do and what Serko does
INTEGRITY
Serkodians are honest, respectful of others,
deliver on their commitments to each
other and our customers and make ethical
business decisions
SUCCESS
Serkodians strive toward their goals
to ensure Serko reaches its goals
FAMILY
Serkodians are valued as part of the Serko
team working together to do the right thing for
each other and our customers, and partners
FUN
We value humour, laughter and enjoying
our time at Serko
13
DIVERSITY & INCLUSION
At Serko, we believe that creating an inclusive work
environment strengthens our ability to serve our
customers, attract top talent and achieve our business
objectives. We are proud to be an equal opportunities
employer and value the benefits that our team of many
individuals with diverse skills, values, backgrounds,
ethnicities and experiences bring to our business.
Our Diversity and Inclusion Policy articulates our
commitment to achieving diversity in the skills,
attributes and experience of Serko’s Board members,
management and staff across a broad range of criteria
(including but not limited to, culture, gender, sexual
orientation and age).
Our key principles are:
•We’re committed to attracting diverse
talent and equitable hiring practices.
•We’re committed to equal pay for equal work.
•We use data to ensure we can identify and mitigate
unconscious bias in our decision-making
•We actively support flexible, hybrid and
remote ways of working.
We set measurable objectives to reinforce our
commitment to diversity, with progress against
these objectives regularly monitored and reported
through to the Board. Here are some ways we are
seeking to create an inclusive work environment
against the objectives:
14
Key objectives to FY23Progress this year (FY22):
Achievement of gender
diversity target 40:40:20
(see page 16)
• We actively seek to attract and hire diverse talent, which in FY22 has led to 50%
of hires being female
• Our progress on gender diversity numbers is provided on page 16
Increase conscious
awareness focus on
behavioural Inclusion:
inclusive mindsets, skillsets
and relationships
• An inclusive benefits programme was launched in FY22 with:
– parental benefits that provide enhanced leave and return-to-work entitlements regardless of
gender identity
– resources to support wellbeing and mental health including Mindfulness Training and an
additional ‘Serko Mission You’ paid wellbeing day
– flexible working arrangements that provide employees with choice
• We provide unconscious bias training for all people leaders to help leaders realise how the
unconscious shapes our everyday decisions and actions. A rollout of unconscious bias training for
all employees is planned for FY23
• Key people processes are reviewed for bias, including hiring, promotions, annual performance
review and total reward decisions. This includes:
– establishing a new Career Level framework for structured comparison
– integrating unconscious bias micro training for all major people processes
– using data and analysis to identify and mitigate unconscious bias (focused on gender in FY22)
in our decision-making
• We celebrate cultural events, such as Māori Language Week, Martin Luther King Day, Chinese New
Year, Diwali, Pride, and International Women’s Day
• We are investing in Business Resource Groups with the first being ‘Women in Technology ’ in FY22.
We plan to expand these in FY23
Define, communicate and
report against Inclusion
and Diversity Objectives
with engagement from
Executive team
• We actively listen to the voice of employees to better understand how well we are doing to create
an inclusive work environment where everyone has equal opportunity and their voices are heard
(see page 17)
15
2 40:40:20 represents the following definitions: 40% female/women (she/
her/hers); 40% male/men (he/him/his); 20% unspecified to allow for
flexibility and to recognise that gender is not binary (they/their/them).
Achievement of the target is defined by female representation of =/> 40%.
GENDER DIVERSITY PROGRESS
In March 2021, the Board introduced a new gender
diversity target of 40:40:20
2
to be achieved by
2023 across a) overall employees; b) non-executive
directors; c) executive roles and d) people leadership
roles. At the end of FY22 we are pleased to report
positive progress across most groups, while noting
there is further work to do in two key areas — executive
and people leader roles. However, it is also
encouraging to note that more than 50% of roles
reporting directly to executives are held by women
or non-binary and more than 50% of new recruits
are also from those groups.
Serko employees represent more than 20 different
nationalities. We embrace this diversity and view
it as critical for encouraging awareness of cultural
experiences and breadth of innovative thinking as
we expand into different markets. Serkodians range
in age from early 20s to mid-60s, with the spread
peaking in the late-30s. In FY22, we continued
measuring employee’s sense of inclusion and
belonging, with positive results showing that
employees generally feel respected, their point
of view is listened to and that they are able to
have a fair balance of work and home life.
Gender diversity of
employees by group
Non-executive
directors
67% Female
33% Male
Officers
20% Female
80% Male
Senior employees
52% Female
48% Male
All workforce
41% Female
59% Male
All directors
40% Female
60% Male
16
Preserving and evolving our culture as we grow is a priority for Serko.
We believe that putting the voice of our employees first through Serko’s
active listening strategy is critical to our success.
This year, in addition to our annual employee engagement survey, we introduced
monthly pulse surveys, which enable us to listen to how our teams are feeling about
a range of areas, with a focus in FY23 on Engagement, Alignment, Leadership,
Learning and Development and Wellbeing in the working environment.
These check-ins provide real-time feedback and allow real-time adjustment.
The strong participation rates (around two-thirds of Serkodians participate in every
check-in) are also an indicator of the high levels of engagement, as well as enabling
us to be confident in our data. Our deep-dive annual engagement survey allows us
to track our progress over a longer period, using a consistent group of indicators.
Listening to the voice of our
employees keeps us on track
17
REMUNERATION AND REWARD
To ensure Serko has the right foundations in place as
we scale, over the past year we have made significant
progress in redesigning our approach to reward and
development. We aim to attract, motivate, retain and
reward highly skilled talent necessary for achievement
of our long-term business objectives. We support a
pay-for-performance culture where employees are
rewarded for individual and overall company success.
We highlight the following initiatives and their
benefits below.
•Career Level Framework: implementation of
this framework has created a strong foundation
for benchmarking and analysis moving forward,
including enabling ‘like-for-like’ comparisons from a
Pay Equity perspective.
•Defined Career Pathways: the creation of clear
career pathways provides more transparency
and facilitates internal mobility by identifying
opportunities for employees in other roles at Serko –
creating an internal market for talent and linking that
back to learning and development opportunities.
•Remuneration review processes:
–
Comprehensive analysis in preparation
for the Remuneration Review, including
Pay Equity review, with targeted allocations
for specific roles, where required
–
Introduction of consistent starting
methodology for remuneration reviews,
taking into consideration performance
and position in remuneration bands
–
Post-review cross-checks to ensure
equitable application.
•Benefits Enhancements: for leave and wellness
entitlements globally, including the implementation
of enhanced Parental Leave Benefits with gender
neutral application.
With the foundations now in place, the focus in the
coming year is on enhancing ways of working and
development opportunities as we grow.
EMPLOYEE HEALTH, SAFETY & WELLBEING
During FY22, the Covid-19 pandemic had a significant
impact on the lives of our employees. Serko’s Board
and management have accordingly sought to establish
leading practices appropriate for an online, office-
based employer, which promotes a safe and healthy
working environment for everyone working in, or
interacting with, our business.
We have continued to ensure rigorous health and
safety practices throughout the pandemic, which
included making swift decisions to close offices,
providing personal protective equipment and
encouraging social distancing and high levels of
hygiene practices when offices did reopen. With
the sustained impacts of Covid-19 in FY22 we have
increased focus on the wellbeing and mental health of
all Serkodians.
In December 2021, we introduced to our New Zealand
team our COVID-19 Pandemic Vaccination Policy,
which aimed to best protect the health, safety and
wellbeing of our people in the workplace. The Policy
was developed taking into consideration employee
feedback, a health and safety risk assessment, as
well as government direction and scientific evidence
demonstrating the effectiveness of the vaccine. The
policy required employees working in our office
18
environment to be vaccinated, with the option to
continue working from home should they choose
either not to be vaccinated or not to disclose their
vaccination status. Employee feedback during this
period was that the Policy made them feel secure in
the knowledge that they were less likely to contract
the illness at work. The Policy was retired in April
2022 in alignment with the timing of the New Zealand
government changes to vaccination passes.
We continue to operate a policy of a ‘symptom free’
workplace, requiring any people demonstrating signs
or symptoms of any transmissible illness to stay at
home. To assist employees who have contracted
Covid-19, we have introduced a special Covid-19 leave
allowance of up to ten days paid leave, which enables
our people to safely rest and recover from their illness
without concern that their income will be affected.
We are continuing to use lessons learned during the
pandemic to further improve our flexible working
practices and to encourage increased levels of
employee wellbeing.
During the FY22 financial year there was no time lost
due to workplace accidents or incidents (LTIFR=0)
meeting our zero-harm target.
MENTAL HEALTH AND WELLBEING
Serko’s commitment to investment in the wellbeing
of our people continues to be reflected in positive
employee feedback and engagement, despite
the ongoing impacts of Covid-19. More than 85%
consistently agree that ‘Serko demonstrates care for
the health and wellbeing of its people’.
In FY22, we have emphasised mental health and
wellbeing initiatives, which encourage our teams to
prioritise their own wellbeing, with the full support
of Serko. The focus for FY22 has been on utilising
the science of mindfulness, building healthy habits
and testing new ways of working, led by the following
initiatives:
•Partnership with BlueSkyMinds to deliver
Mindfulness training for employees, with a FY22
focus on the science of habits and how to build
healthy habits to manage in uncertainty.
•Introduction of Mission You employee wellbeing days
in the second half of FY22, designed to consciously
disconnect from work and take a day dedicated to
restorative activities to reconnect with oneself.
•Continued investment in testing new ways of
working, including options to provide greater
employee flexibility, including different hybrid and
remote working approaches. ‘No meetings days’ are
being tested in FY23 to ensure our teams have time
for focused, uninterrupted working time each week.
•Expansion of Serko’s outsourced Employee
Assistance Programme (EAP), including extending
usage to families of employees impacted by global
events including the war in Ukraine.
Our employee wellbeing is critical to our sustained
success. We are planning to continue investing in this
programme in FY23, as well as additional initiatives
aimed at helping employees to focus the mind from
distraction and improve their ability to manage
demands and to create healthy levels of stress.
19
At Serko, we believe in the power of supporting
the communities in which we live and operate.
As we scale, we are continuing to look at the
ways that we can support for-purpose (non-
profit) groups and our communities to make
a difference to improve community wellbeing
or assist with education. The following
examples highlight some of the great work
being done by our team and our partners.
SUPPORTING UNDER-REPRESENTED GROUPS
During the year, Serko’s IT team began a partnership
with the Salvation Army ’s reintegration services
to redistribute laptops the team has upgraded or
replaced. The Reintegration Services team works with
hundreds of people each year across New Zealand
who have limited support and possessions. They
are assisted with one-on-one support to help them
settle back into the community with accommodation,
transport, health support and employment/
training opportunities.
The Salvation Army tells us that for this group, access
to computers makes an enormous difference, giving
access to greater learning opportunities, enabling
connections with a wider support network and
driving self-empowerment for producing their own
documents, such as a CV. The first computers were
shipped in April 2022.
BACKING NEW ZEALAND’S WORLD CHAMPION
ROBOTICS TEAM
In 2021 Serko became a sponsor of End Game, a world
champion robotics team that competes in the global
BattleBots series. The team, who originated from the
Auckland University Robotics Association, comprises
seven members who together contribute around
50,000 hours each year to build and compete at the
highest level in their field. This is a fitting partnership
with fellow tech innovators who are equally passionate
about what they do.
Serko has supported the team with a combination
of funding for the team to travel and defend
their world title in the 2021 competition in Las Vegas,
and ‘hands-on’ support to help the team develop its
brand to become a financially sustainable operation.
See the team at endgamebattlebot.com.
Community
20
VOLUNTEERING IN THE COMMUNITY
In FY22, our Board and Management announced
the Serko ‘Day of Community ’ which will launch in
FY23. This initiative has been developed following
consultation with employees and people leaders about
how we can positively impact our local communities,
and support the wellbeing of our teams.
The ‘Day of Community ’ provides each employee
with a paid day off to undertake an activity they
believe will make a difference in the communities
in which they live and work across New Zealand,
Australia, United States and China. We look forward
to reporting our peoples’ great work in FY23.
SERKO AND BOOKING.COM PARTNERSHIP
ASSISTS UKRAINE HUMANITARIAN EFFORTS
Booking.com has been leading an initiative to
support non-government organisations (NGOs)
that are working tirelessly with those impacted
by the war in Ukraine.
With multiple NGOs assisting with the humanitarian
relief efforts in Eastern Europe, Booking.com has
partnered with accommodation providers to provide
free or significantly discounted rooms. Serko has
worked closely with the Booking.com team to set up
Booking.com for Business to enable the display
and booking of these rooms and supported the
onboarding of NGOs in the region.
In addition, Serko made a donation to the Red Cross
Ukraine appeal on behalf of our people and encouraged
our worldwide team to contribute as well.
21
GOVERNANCE
22
STOCK EXCHANGE LISTINGS
Serko is listed on the New Zealand Stock Exchange
(NZX Main Board) and on the Australian Securities
Exchange (ASX) as an ASX Foreign Exempt Listing. As
an ASX Foreign Exempt Listing, Serko needs to comply
with the NZX Listing Rules (other than as waived
by NZX) but does not need to comply with the vast
majority of the ASX Listing Rule obligations.
Serko is incorporated in New Zealand.
OVERVIEW OF SERKO’S GOVERNANCE
STRUCTURE
The Serko Board has been appointed by shareholders
to protect and enhance the company ’s long-term
value and to act in the best interests of Serko and
its shareholders. The Board is the ultimate decision-
making body of the company and is responsible
for Serko’s corporate governance. The role and
responsibilities of the Board are set out in the Board
Charter, which can be found on the investor centre of
the company ’s website.
The Board currently comprises an independent
non-executive Chair, two independent non-executive
directors and two executive directors, as detailed on
the investor centre of the company ’s website and in
the latest Annual Report.
The Board has established two standing Board
Committees to assist in the execution of the Board’s
responsibilities:
•
Audit and Risk Committee; and
•
People, Remuneration and Culture Committee
(formerly the Remuneration and Nominations
Committee)
The role of the nomination committee is currently
carried out by the full Board. This role was previously
carried out by the Remuneration and Nominations
Committee, which was superseded by the People,
Remuneration and Culture Committee during FY22.
Serko’s Board and management are very committed
to ensuring the company maintains best practice
corporate governance and adheres to the highest
ethical standards.
When establishing its governance framework, the
Board has considered the NZX Listing Rules as well as
a range of corporate governance recommendations,
including the current NZX Corporate Governance
Code dated 10 December 2020 (NZX Code) and the
Fourth Edition of the Australian Securities Exchange
(ASX) Corporate Governance Council Principles and
Recommendations.
The NZX Listing Rules require Serko to formally
report its compliance against the recommendations
contained in the NZX Code. Serko’s implementation of
these recommendations is set out in this Corporate
Governance Statement. The Board considers that
Serko’s corporate governance structures, practices
and processes have followed all recommendations in
the NZX Code during the financial year ended 31 March
2022, with the exception that it chose to undertake a
capital raising via a placement and retail offer (refer to
NZX Code recommendation 8.4) during the financial
period.
Serko’s governance charters and policies can be found
in the Company ’s Corporate Governance Manual on
the investor centre of the company ’s website. Go to:
www.serko.com/investors. Our corporate governance
charters and policies have been approved and regularly
reviewed by the Board and are amended to reflect
developments in corporate governance practices and
updates to the NZX Code.
This statement is current as at 18 May 2022 and
has been approved by the Board. This Report has
undergone a verification process by management,
with the oversight of the Board.
23
policies, including our delegated authority framework,
and to report on any wrongdoing. Serko management
must provide the Board with all necessary information
to fulfil its duties, including any information relating to
material breaches of the Code of Ethics. In addition,
the Code outlines additional director responsibilities.
The Board reviews the Code annually and expects any
incidents arising under it to be brought to directors’
attention immediately.
Serko’s employees are reminded via staff-wide
communications of their obligations to comply with
and report any concerns they have about compliance
with the company ’s Code of Ethics, other policies or
legal obligations.
Whistleblowing
A stand-alone Whistleblowing Policy, which is
overseen and monitored by the Board, exists to
support the application of the Code and define the
process for raising concerns about actual, suspected
or anticipated wrongdoings within the Serko Group.
While employees may choose to raise concerns about
wrongdoing with managers or executives, employees
can raise concerns and report dishonesty or unethical
behaviour via an independent external Whistleblower
hotline. A designated email address, accessible only
by non-executive directors, is also available for staff to
confidentially raise any concerns they may have.
Anti-Bribery and Corruption
Serko’s Anti-Bribery and Corruption Policy reflects the
company ’s commitment to conducting its business
in an honest and ethical manner. We take a zero-
tolerance approach to bribery and corruption and are
committed to acting professionally, fairly and with
integrity in all business dealings and relationships. A
gift register has been established to record the receipt
of gifts above prescribed limits, along with a process
for approving whether gifts can be retained.
The company is not aware of any instances of
corruption or of incidents in which employees were
dismissed or disciplined for corruption during FY22.
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.
ETHICAL DEALINGS
The Board recognises that high ethical standards and
behaviours are central to good corporate governance
and has implemented a Code of Ethics (Code),
Whistleblowing Policy and Anti-Bribery & Corruption
Policy to guide the behaviour of its directors and
employees.
Serko’s Code of Ethics, Whistleblowing Policy and
Anti-Bribery & Corruption Policy are each available on
the investor section of the company ’s website in the
Company ’s Corporate Governance Manual.
Code of Ethics
Serko’s Code of Ethics outlines how Serko people, such
as directors, employees and contractors, are expected
to conduct their professional lives. They are expected
to behave and make decisions that meet Serko’s
business goals that are consistent with our values,
policies and legal obligations.
Serko’s Code of Ethics is available to all employees on
the company ’s intranet and forms part of the induction
process for new employees and directors.
The Code of Ethics covers matters such as acting
in accordance with Serko’s Values (see page 13 of
this Report), ensuring conflicts of interest do not
interfere with Serko’s best interests, not accepting
gifts or personal benefits that may compromise or
influence business decisions, using Serko property
and information for legitimate and authorised
purposes and maintaining appropriate security and
confidentiality of information entrusted to employees
in their roles. It also requires Serko people to be
familiar with, and comply with, all relevant laws and
24
These geographies have a low prevalence of modern
slavery and governments that take strong action
against it.
3
Based on our knowledge of our direct
supply chain, we consider our direct supply chain
modern slavery and human trafficking risk to be low.
Serko does not have any direct supply chain exposure
to the Russian-Ukraine conflict and does not source
any key intellectual property or other items directly
from the conflict zones. We do not have full visibility
over our indirect, extended supply chains. However,
we haven’t been made aware of any human trafficking
or modern slavery allegations against any of our direct
or indirect suppliers. If we are made aware of an
allegation, we will take appropriate action and ensure
that it is reported to the relevant authorities.
SECURITIES TRADING
Serko is committed to complying with legal and
statutory requirements with respect to ensuring that
directors and employees do not trade Serko securities
while in possession of inside information.
Serko’s Securities Trading Policy and Guidelines apply
to all directors, officers, employees and contractors of
Serko and its subsidiaries. This Policy seeks to ensure
that those subject to the Policy do not trade in Serko
securities if they hold undisclosed price-sensitive
information. The Policy sets out additional rules, which
includes the requirement to seek company consent
before trading, and prescribes certain black-out
periods during which trading is prohibited.
Compliance with the Securities Trading Policy is
monitored through the consent process, through
education and via notification by Serko’s share
registrar when any director or senior manager trades
in Serko securities. All trading by directors and
senior managers (as defined by the Financial Markets
Conduct Act 2013) is required to be reported to NZX
and recorded in Serko’s securities trading registers.
Modern slavery
While Serko is not a reporting entity under Australia’s
Modern Slavery Act 2018, we believe we are able to
mitigate the risks of modern slavery in our operations
through our approach to corporate governance. We
strive for a culture where employees are committed to
doing the right thing, using company policies (such as
the Code of Ethics) to help inform and determine what
the right thing is and to feel safe raising the alarm if
they have concerns.
As a listed company, Serko adheres to the best
practice recommendations determined by the NZX
and ASX, and all Serko operations are overseen by
executives based in New Zealand, Australia and the
United States.
The majority of Serko’s employees (including
contractors) are located in New Zealand, Australia
and the United States (84% of employees). These
countries are considered to have a low prevalence
of modern slavery and governments that take strong
action against it.
3
Serko employs a small number of
people in China (16% of employees). Serko’s China
operations are overseen by New Zealand-based
executives. Serko does not have any personnel in
conflict zones.
Each of our offices share centralised, New Zealand-
based financial, legal and company secretarial
functions. The recruitment and remuneration
processes for our directly employed workforce are
subject to Serko’s risk management systems and,
as a software company, our workforce tends to be
skilled labour. We don’t engage in financing or lending
activities that might support modern slavery. Given the
visibility we have over our operations, we consider our
modern slavery and human trafficking risk to be low.
The majority of goods and services we buy relate to
information and communications technology (ICT),
marketing, professional services and facilities-related
goods and services for the Serko Group. The majority
of our direct suppliers are located in New Zealand
(54%), Australia (23%) and the United States (16%).
3 Walk Free 2018 Global Slavery Index, available from
https://www.globalslaveryindex.org/resources/downloads/
25
BOARD DIVERSITY, SIZE AND COMPOSITION
The size of the Board is determined by the Board
from time to time, in accordance with the limitations
prescribed in the NZX Listing Rules and in accordance
with the provisions of Serko’s Constitution and the
Board Charter.
As at 31 March 2022, the Board comprised five
directors – being the two co-founders and executive
directors, Darrin Grafton and Robert Shaw, and three
independent non-executive directors – Jan Dawson,
Claudia Batten and Clyde McConaghy. During FY22,
there was a change of directors with Jan Dawson’s
appointment, following Simon Botherway ’s retirement
from the Board. A biography of each director can be
found on the investor section of the company ’s website
and in the latest Annual Report.
The Board is currently responsible for assessing
the Board’s size and composition, a role that was
previously undertaken by the Remuneration and
Nominations Committee (which was superseded
by the People, Remuneration and Culture Committee
during FY22).
When considering candidates to act as a director,
the Board will consider factors it deems appropriate,
including the diversity of background, experience
and qualifications of the candidate. When appointing
directors, the Board undertakes appropriate
background checks.
The Board’s broader commitment to diversity includes
building diversity of thought within the Board.
The current Board has a broad range of experience
and skills, both locally and internationally, that are
appropriate to meet its objectives. Serko is proud to
have a part-Māori cofounder who sits on the Board,
along with two female directors, including the Chair.
To assist in maintaining an appropriate mix of
experience, the Board has developed a comprehensive
skills matrix. Areas of expertise and experience
that have been identified as particularly relevant to
governing Serko’s business include, among other skills:
Board Composition & Performance
To ensure an effective Board, there should
be a balance of independence, skills,
knowledge, experience and perspectives.
ROLE OF THE BOARD
The Board is elected by shareholders to govern
Serko in the interests of its shareholders and to
protect and enhance the value of Serko’s assets.
The Board is responsible for corporate governance
and Serko’s overall strategic direction and is the
overall and final body responsible for all decision-
making within Serko. The Board Charter describes
the Board’s roles and responsibilities and regulates
internal Board procedure.
The Board has delegated a number of its
responsibilities to Board committees. The role
of each committee is described below.
To enhance efficiency, remain agile and ensure
decision-making occurs at the right level, the Board
has also delegated to the Chief Executive Officer the
day-to-day leadership and management of Serko.
The Chief Executive Officer has formally delegated
certain authorities to his direct reports within set
limits. The Board regularly monitors and reviews
management’s performance in the execution of its
delegated responsibilities and the appropriateness
of its Delegation of Authority Policy.
During the financial year, the Board met for 12 regularly
scheduled meetings. Directors also met regularly, and
often at short notice, for additional special meetings
and to undertake strategic planning for the business,
manage Covid-19-related risks and oversee the capital
raising and mergers and acquisitions (M&A) activity
undertaken.
Board and committee meeting attendance during
the year ended 31 March 2022 is set out in the latest
Annual Report.
26
At the time of appointment, each new director signs a
comprehensive letter of appointment setting out the
terms of their appointment, including their duties and
expectations in the role. Each director also receives
a copy of Serko’s Corporate Governance Manual
(comprising all of Serko’s core governance documents)
and is introduced to the business through a tailored
induction programme. All directors are regularly updated
on relevant industry and company issues and are
expected to undertake training to remain current on how
to best perform their duties as directors of Serko. During
the Board’s annual evaluation process, training needs are
considered to assist directors to remain upskilled on the
business, industry and legislative developments.
All directors have access to senior management to
discuss issues or obtain information on specific areas
or items to be considered at Board meetings and each
director actively utilises this access to support the
company and its executives.
The Board, Board committees and each director
have the right to seek independent professional
advice at Serko’s expense to assist them in carrying
out their responsibilities.
The Board undertakes a regular review of its own and its
committees’ performance. This is to ensure it has the
right composition and appropriate skills, qualifications,
experience and background to effectively govern Serko
and to monitor Serko’s performance in the interests
of shareholders. During the financial period ended
31 March 2022, performance reviews took place in
accordance with that process and it was agreed the role
of the nominations committee would be assumed by
the full Board and the Remuneration and Nominations
Committee would be reconstituted as the People,
Remuneration and Culture Committee.
INDEPENDENCE OF DIRECTORS
The majority of Serko’s directors are independent.
The criteria for assessing the independence of directors
are set out in the company ’s NZX Code and the Board
Charter. Generally, a director is considered to be
independent if that director is not an employee of
Serko and if the director has no direct or indirect
interest or relationship that could reasonably influence
or be perceived to influence, in a material way,
the director’s decisions in relation to Serko.
•
Innovation, entrepreneurship and partnership;
•
Digital business and high-growth technology;
•
International travel industry knowledge;
•
Scaling companies internationally;
•
Marketing, sales and channel management in
core markets;
•
Governance, legal and compliance;
•
Strategy and operations;
•
Finance, accounting and risk management;
•
Capital markets; and
•
Public company director experience.
The Board regularly reviews its skills matrix as part of
its succession planning and considers the appropriate
mix of skills required to govern Serko as its strategy
evolves and Serko expands internationally. The Board
plans to appoint a new, fourth, non-executive director
to the Board in 2022 to add additional skills to support
Serko’s international scaling efforts.
The average tenure of non-executive directors
is currently five years. A refresh of the Board has
started with Simon Botherway ’s retirement and the
appointment of Jan Dawson (appointed 18 August 2021)
during FY22. The other two non-executive directors,
Claudia Batten and Clyde McConaghy, have each
been in office for 8 years. During their tenure, Clyde
and Claudia have held various roles leading different
committees and with Claudia taking over as Board
Chair in 2020.
BOARD APPOINTMENT, TRAINING AND
EVALUATION
The procedure for the appointment and removal of
directors is ultimately governed by the company ’s
Constitution and relevant NZX Listing Rules. A director
is appointed by ordinary resolution of the shareholders
although the Board may fill a casual vacancy. Every
director appointed by the Board must submit himself
or herself for reappointment by shareholders at the
next annual meeting following his or her appointment.
Directors are subject to the rotation requirements set
out in the NZX Listing Rules.
27
(including but not limited to, culture, gender and age).
The Board as a whole is responsible for overseeing
and implementing the Diversity and Inclusion Policy
but has delegated to the People, Remuneration and
Culture Committee the responsibility to develop and
to recommend measurable objectives to the Board
that are designed to adhere to the Policy. See pages
14-15 of this Report for further information regarding
Serko’s Diversity and Inclusion Policy and practices and
the Board’s assessment of Serko’s progress towards
achieving its diversity objectives.
Board Committees
The Board should use committees where this
will enhance its effectiveness in key areas,
while still retaining Board responsibility.
The Board uses committees to deal with issues
requiring detailed consideration, thereby enhancing
the efficiency and effectiveness of the Board.
However, the Board retains ultimate responsibility for
the functions of its committees and determines each
committee’s roles and responsibilities.
The current standing committees of the Board are:
•
Audit and Risk Committee; and
•
People, Remuneration and Culture Committee
(formerly the Remuneration and Nomination
Committee).
Details of the roles and responsibilities of these
committees are described in their respective charters
and summarised below. From time to time the Board
may constitute an ad hoc committee to deal with a
particular issue that requires specialised knowledge
and experience.
•
The role of the Nomination Committee is
currently carried out by the full Board. This role
was previously carried out by the Remuneration
and Nominations Committee, which was
superseded by the People, Remuneration and
Culture Committee during FY22.
The Board has determined that each of the non-
executive directors are independent directors for the
purposes of the NZX Listing Rules and in accordance
with the Board Charter criteria.
The Board will review any determination it makes on
a director’s independence, on becoming aware of
any new information that may affect that director’s
independence. For this purpose, directors are required
to ensure they immediately advise Serko of any
new or changed relationship that may affect their
independence or result in a conflict of interest.
The Board supports the separation of the role of
Chair and Chief Executive Officer. The current Chair
has been elected by the Board from the independent
directors, in accordance with the terms of the Board
Charter. The Chair’s role is to manage and provide
leadership to the Board and to facilitate the Board’s
interface with the Chief Executive Officer.
CONFLICTS OF INTEREST
The Board is conscious of its obligations to ensure
that directors avoid conflicts of interest (both real
and perceived) between their duty to Serko and their
own interests. The Board Charter outlines the Board’s
policy on conflicts of interest. Serko maintains an
interests’ register in which relevant disclosures of
interest and securities dealings by the directors are
recorded.
COMPANY SECRETARY
The Company Secretary, who is also the General
Counsel, is responsible for supporting the
effectiveness of the Board by ensuring that its policies
and procedures are followed and for coordinating
the completion and dispatch of the Board agendas
and papers. The Company Secretary is directly
accountable to the Board, via the Chair, on all
governance matters.
DIVERSITY & INCLUSION
Serko has a Diversity and Inclusion Policy that reflects
its commitment to achieving diversity in the skills,
attributes and experience of its directors, executives
and employees across a broad range of criteria
28
Under the People, Remuneration and Culture
Committee Charter, the Committee must be
comprised of a minimum of three members, all of
whom are independent directors. The Chair of the
Committee is required to be independent and may not
also be the Chair of the Board.
The current members of the Committee are Clyde
McConaghy (Chair), Jan Dawson and Claudia Batten. All
members are independent, non-executive directors.
Their qualifications and experience are set out in the
latest Annual Report.
TAKEOVER RESPONSE GUIDELINES
Serko’s independent directors have received
comprehensive legal advice on their directors’ duties,
and the process to be followed, in the event of a
takeover offer. The Board has formally adopted this
advice as the guidelines to be applied in the event of a
takeover offer.
Reporting & Disclosure
The Board should demand integrity in
financial and non-financial reporting and
in the timeliness and balance of corporate
disclosures.
Serko is committed to the promotion of investor
confidence by ensuring that the trading of company
shares takes place in an efficient, competitive and
informed market. The Board is tasked with ensuring
the integrity of financial and non-financial reporting to
shareholders.
MARKET DISCLOSURE POLICY
Serko has adopted a Market Disclosure Policy that
guides the Company ’s compliance with the continuous
disclosure requirements of the NZX Main Board. In
addition, directors and management consider at each
Board meeting whether there are any issues that have
arisen that require disclosure to the market.
AUDIT AND RISK COMMITTEE
The primary function of the Audit and Risk Committee
is to assist the Board in fulfilling its oversight
responsibilities relating to Serko’s risk management
and internal control framework, the integrity of its
financial reporting and its auditing processes.
Under the Audit and Risk Committee Charter, the
Committee must be comprised of a minimum of three
members who are each non-executive directors, the
majority of whom are also independent directors and
at least one director with an accounting or financial
background. Further, the Chair of the Committee
is required to be independent and not also be the
Chair of the Board. The Chair of the Committee is
not permitted to have been an audit partner or senior
manager at Serko’s external audit firm within the past
three years.
The current members of the Committee are Jan
Dawson (Chair), Clyde McConaghy and Claudia
Batten. All members are independent, non-executive
directors. Their qualifications and experience are set
out in the latest Annual Report. Jan Dawson, who is a
financial expert, replaced Simon Botherway following
his retirement from the Board.
PEOPLE, REMUNERATION AND CULTURE
COMMITTEE
During FY22, it was agreed the role of the Nomination
Committee would be assumed by the full Board and
the Remuneration and Nominations Committee would
be reconstituted as the People, Remuneration and
Culture Committee.
The primary function of the People, Remuneration
and Culture Committee is to oversee remuneration
and people-related policies and practices at Serko,
oversee executive succession planning and make
recommendations to the Board on Serko’s culture and
employee wellbeing. The Committee is also tasked
with annually monitoring and evaluating the company ’s
performance with respect to its Diversity and Inclusion
Policy.
29
NON-FINANCIAL REPORTING
To assist shareholders to make meaningful investment
decisions, in addition to reporting historical statutory
financial information, Serko is committed to providing
shareholders with a balanced and understandable
assessment of its performance, business model,
strategic objectives and progress against meeting
those objectives at each earnings announcement and
in its full-year reports.
Serko is committed to developing long-term value
creation. As part of this commitment, Serko’s
Board is focused on delivering a sustainable future
for its business, people, customers, partners and
communities by doing what is right.
To demonstrate this, Serko has chosen to report
against the UN Sustainable Development Goals (SDGs),
which are a set of global initiatives set by the United
Nations for everyone to contribute to. For Serko, the
SDGs are a way to see which areas of sustainability it is
directly contributing to and how they relate to a larger
vision for positive change. Information about Serko’s
ESG initiatives are set out in this Report.
Remuneration
The remuneration of directors and
executives should be transparent, fair and
reasonable.
Serko is committed to remunerating its non-executive
directors, executive directors and employees fairly,
transparently and reasonably.
NON-EXECUTIVE DIRECTOR REMUNERATION
In August 2021, Serko’s shareholders approved a total
cap of NZ$600,000 per annum for non-executive
directors’ fees for the purposes of the NZX Listing
Rules, providing flexibility for Serko to appoint an
additional (fourth) non-executive director in the future
as part of the Board’s succession plans and to provide
headroom to pay ad hoc special fees to directors for
services outside of their usual duties for Serko.
Serko has established a Disclosure Committee whose
role it is to determine whether information is ‘material
information’ and whether the material information
is required to be released to the NZX and ASX. The
Disclosure Committee comprises the Board Chair, the
Audit and Risk Committee Chair, the Chief Executive
Officer, the Chief Financial Officer and the General
Counsel.
The Disclosure Committee is governed by the Market
Disclosure Policy and is responsible for implementing
that Policy.
GOVERNANCE POLICIES & PROCEDURES
Serko’s governance charters and policies can be found
on the investor centre of the company ’s website in the
Corporate Governance Manual.
FINANCIAL REPORTING
The Board is responsible for ensuring the integrity of
its financial reporting. The Audit and Risk Committee
closely monitors financial reporting risks in relation
to the preparation of the financial statements. The
Audit and Risk Committee, with the assistance of
management, also works to ensure that the financial
statements are founded on a sound system of risk
management and internal control and that the system
is operating effectively in all material respects in
relation to financial reporting risks.
As part of this process, the Chief Executive Officer and
Chief Financial Officer are required to state in writing
to the Board that, to the best of their knowledge, the
company ’s financial reports:
•
Present a true and fair view of the company ’s
financial condition and operational results;
•
Are prepared in accordance with the relevant
accounting standards; and
•
Are founded on a sound system of risk
management and internal control that is
operating effectively.
30
In addition to the remuneration detailed above, at the
time of the initial public offering (IPO) in June 2014, the
Board introduced (with the approval of Serko’s existing
shareholders) a loan facility for the independent
directors, which enabled them to acquire a specified
number of Serko shares at the time of the IPO (Director
Loan Shares). Mr McConaghy repaid his loan during
the FY22 financial year. There are no remaining loan
facilities in place for any Serko director.
REMUNERATION POLICY
The purpose of Serko’s Remuneration Policy is to
outline the remuneration principles that apply to all
directors and employees to ensure remuneration
practices within Serko are fair and appropriate
and there is a clear link between remuneration and
employee performance.
As a global technology organisation, Serko’s long-
term success is dependent on the ability to attract
and retain high-calibre talent. Serko’s remuneration
approach is designed to support the company to
attract and retain this talent to achieve our strategic
objectives and create shareholder value.
Serko’s Remuneration Policy is guided by the following
principles for remuneration practice:
•
Clear alignment with Serko’s values, culture and
corporate strategy;
•
Support the attraction, retention and
engagement of employees;
•
Clearly understood by employees;
•
Equitable and flexible;
•
Appropriately competitive with the market and
within an organisational context;
•
Recognise individual performance, rewarding
individuals for achieving high performance; and
•
Recognise company performance and the
creation of shareholder value.
The Remuneration Policy is available on the investor
section of the company ’s website in the Corporate
Governance Manual.
The fixed annual fees to apply to all non-executive
directors during FY23, and actual fees paid to non-
executive directors during FY22, are set out in Serko’s
latest Annual Report.
The non-executive directors do not receive any
performance-based remuneration to ensure incentives
do not conflict with their obligations to bring
independent judgement to matters before the Board.
However, it is Serko’s policy to encourage directors to
hold shares in the company, and their shareholdings
are disclosed in the Annual Report.
The non-executive directors are entitled to be
reimbursed for all reasonable travel, accommodation
and other expenses incurred by them in connection
with their attendance at Board or shareholder
meetings or otherwise in connection with Serko’s
business. These expenses were minimal during the
financial year because of the inability of overseas
directors to travel as a result of Covid-19-related travel
restrictions.
No retirement benefits will be paid to other non-
executive directors on their retirement unless required
under legislation.
In 2017, a fixed trading plan (Plan) was established in
accordance with section 260 of the Financial Markets
Conduct Act 2013 to enable non-executive directors
to invest a portion of their annual directors’ fees in
Serko shares on a monthly basis and over a fixed
term of three years (Term). The Term expired on 1
January 2021. Under the Plan, an independent broker
automatically applied the designated fees to the
monthly acquisition of shares on-market during the
Term. Once a non-executive director has entered the
Plan, they have no ability to influence share trading
decisions and no ability to withdraw from the Plan
before the end of the Term. Further, the directors are
not permitted to trade any shares acquired under the
Plan for the duration of their tenure as directors of
Serko (except in the event of a takeover). Ms Batten
was a participant in the Plan until it expired and
continues to hold shares under the Plan.
31
Serko’s remuneration framework includes a mix of the
following fixed and variable components:
•
Fixed remuneration, which includes base salary
and employer KiwiSaver (or overseas equivalent)
contributions (where relevant);
•
A discretionary short-term incentive (STI) may
be offered for executive, senior leadership and
selected other roles, at the discretion of the
Chief Executive Officer (or the Board in the Chief
Executive Officer’s and Chief Strategy Officer’s
case). Serko’s STI is based on achievement
against company and individual performance
objectives;
•
A discretionary sales/business development
incentive plan (SIP) may be offered to sales and
business development staff, at the discretion
of the Chief Executive Officer. The structure of
such incentives is approved by the Board. The
SIP is designed to incentivise sales and business
development staff to meet or exceed sales/
business development targets;
•
An Employee Incentive Share Scheme (EISS) may
be offered, as approved by the Board. Serko’s
EISS schemes are designed to:
–
Attract and retain key people within the
business;
–
Align remuneration with long-term
shareholder value; and
–
Reward the achievement of company and
individual performance based on a company
scorecard and individual OKRs (Objectives
and Key Results).
Company-wide performance measures and targets
that relate to incentives are reviewed annually by the
People, Remuneration and Culture Committee and
approved by the Board.
Serko’s Employee Incentive Share Schemes offer
participants a future right to acquire Serko shares in
the form of restricted share units. Restricted share
units vest within three years after the allocation date.
No director or employee is permitted to enter into
financial products or arrangements that operate to
limit the economic risk of their vested or unvested
entitlements.
In addition, Serko may offer benefits that have a
monetary benefit to employees but are not considered
part of remuneration.
Each year a review is carried out to benchmark salaries
against the market, and remuneration is reviewed
accordingly.
The People, Remuneration and Culture Committee
is responsible for overseeing the remuneration of
the company ’s executives in consultation with the
Chief Executive Officer. Executives are subject to
regular performance reviews by the Chief Executive
Officer who meets with each executive to discuss
their performance, as measured against agreed key
performance targets (both financial and non-financial).
During the year ended 31 March 2022, performance
reviews took place in accordance with that process.
EXECUTIVE DIRECTOR REMUNERATION
The executive directors, Darrin Grafton and Bob
Shaw, receive remuneration and other benefits in
their respective executive roles as Chief Executive
Officer and Chief Strategy Officer and, accordingly,
do not receive directors’ fees. Their remuneration
packages are set by the Board to reflect the scope and
complexity of each role, with reference to comparative
market data.
Darrin Grafton and Bob Shaw ’s remuneration
comprises a fixed base salary, a short-term incentive
up to a maximum target value of 50% of their base
salary and participation in the Employee Incentive
Share Scheme (EISS) up to a maximum target value
of 100% of their base salary. The total remuneration
and value of other benefits earned by, or paid to,
each executive director during, and in respect of, the
financial period ended 31 March 2022 is included in the
latest Annual Report. This remuneration composition
will carry forward into FY23.
32
Darrin Grafton’s and Bob Shaw ’s fixed and variable
remuneration components are assessed annually
based on company and individual performance against
a performance scorecard financial and strategic OKR
(Objective and Key Result) measures. An overview of
this performance criteria is set out in the latest Annual
Report.
The executive directors’ performance is reviewed
by the Board annually. Following the financial period
ended 31 March 2022, performance reviews took place
in accordance with that process.
No termination payments are payable to the executive
directors in the event of serious misconduct.
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.
Serko is committed to proactively and consistently
managing risk to:
•
Enhance and protect Serko’s value by delivering
on its commitments and meeting stakeholders’
expectations;
•
Allow Serko to pursue opportunities in an
informed way and aligned with the Board’s risk
appetite; and
•
Ensure a safe and secure environment for Serko’s
people (employees and contractors), partners
and customers.
Serko’s Risk Management Policy is included in the
Corporate Governance Manual published on its
website. Serko has designed and implemented a
comprehensive risk management framework for
oversight and management of financial and non-
financial business risks, as well as related internal
compliance systems.
The Board has ultimate responsibility for Serko’s risk
management and internal control system, setting the
‘tone at the top’ with regards to risk culture. The Audit
and Risk Committee, under delegation from the Board
and in conjunction with management, regularly reports
to the Board on the effectiveness of the company ’s
management of its material business risks and
whether the risk management framework and systems
of internal compliance and control are operating
effectively and efficiently in all material respects.
The Audit and Risk Committee conducts at least
quarterly reviews of Serko’s risk management
framework, risk appetite and principal risks, to satisfy
itself that the company ’s approach to risk continues
to be sound. A comprehensive review of Serko’s
risk management framework and capabilities was
conducted in early 2022 by an external consultant,
and the Audit and Risk Committee will oversee the
implementation of the recommendations resulting
from the review.
Further details on Serko’s risks and risk management
processes are detailed on pages 37-41 of this Report.
Auditors
The Board should ensure the quality and
independence of the external audit process.
EXTERNAL AUDITOR INDEPENDENCE
Serko has an External Audit Independence Policy that
requires, and sets out the criteria for, the external
auditor to be independent. The Policy recognises the
importance of the Board’s role in facilitating frank
dialogue among the Audit and Risk Committee, the
auditor and management.
The Policy prescribes the services that can and cannot
be undertaken by the external auditor, which are
designed to ensure that services provided by Serko’s
external auditor are not perceived as conflicting with
its independent role.
The Policy requires that the key audit partner is
changed at least every five years so that no such
persons shall be engaged in an audit of Serko for more
33
than five consecutive years. In addition, three years
must expire between the rotation of an audit partner
and that partner’s next engagement by Serko. The
key audit partner is due for rotation in respect of the
FY23 audit, in accordance with this Policy and the NZX
Listing Rules.
The Audit and Risk Committee Charter requires the
Committee to facilitate the continuing independence
of the external auditor by assessing the external
auditor’s independence and qualifications and
overseeing and monitoring its performance. This
involves monitoring all aspects of the external
audit, including the appointment of the auditor,
the nature and scope of its audit and reviewing the
auditor’s service delivery plan. In carrying out these
responsibilities the Audit and Risk Committee meets
regularly with the auditor without executive directors
or management present, and the key audit partner
has direct contact with the Chair of the Audit and Risk
Committee.
The auditor is restricted in the non-audit work it
may perform, as detailed in Serko’s External Audit
Independence Policy. For further details on the audit
fees paid and work undertaken during the period,
refer to the latest Annual Report. The Audit and Risk
Committee regularly monitors the ratio of fees for
audit to non-audit work.
INTERNAL AUDIT FUNCTION
While Serko has an internal auditor to oversee
Serko’s data security processes, Serko does not
have a dedicated internal audit function. Instead,
internal controls are managed on a day-to-day basis
predominantly by the finance, legal and security
teams. Compliance with certain internal controls
is reviewed annually by Serko’s auditor. The Board,
finance, legal and security teams regularly consider
how Serko can improve its internal audit and risk
management practices during Serko’s annual
governance review, quarterly risk reviews, preparation
of interim and full-year financial statements and
following Serko’s annual audit. The Audit and Risk
Committee oversee these reviews and the controls
Serko has in place to manage risk.
Shareholder Rights & Relations
The Board should respect the rights of
shareholders and foster constructive
relationships with shareholders that
encourage them to engage with the issuer.
INFORMATION FOR SHAREHOLDERS
Serko is committed to maintaining a full and open
dialogue with its shareholders (and other interested
stakeholders). The company has in place an investor
relations programme to facilitate effective two-way
communications with shareholders.
The aim of the company ’s communications programme
is to provide shareholders with information about the
company and to enable them to actively engage with
the company and exercise their rights as shareholders
in an informed manner.
The company facilitates communications with
shareholders through written and electronic
communications and by facilitating shareholder
access to directors, management and the company ’s
auditor.
The company provides shareholders with
communications through the following channels:
•
The investor section of the company ’s website;
•
Full-year reporting and half-year results;
•
The annual shareholders’ meeting;
•
Regular disclosures on company performance
and news via stock exchange online disclosure
platforms; and
•
Disclosure of presentations provided to analysts
and investors during regular briefings.
Serko’s website is an important part of the company ’s
shareholder communications strategy. Included
on the website is a range of information relevant to
shareholders and others concerning the operation
of the company. Serko has prepared and published
on its website this ESG Report, which outlines its
governance practices.
34
Shareholders may, at any time, direct questions or
requests for information to directors or management
through Serko’s website or by sending emails to
investor.relations@serko.com.
Serko provides shareholders with the option to receive
communications from, and send communications to,
the company and its share registrar electronically. The
majority of Serko shareholders have elected to receive
electronic communications.
SHAREHOLDER VOTING RIGHTS
In accordance with the Companies Act 1993, Serko’s
Constitution and the NZX Listing Rules, Serko refers
major decisions that may change the nature of Serko
to shareholders for approval.
Serko conducts voting at its shareholder meetings by
way of polls, reflecting the principle of one share, one
vote. Further information on shareholder voting rights
is set out in Serko’s Constitution.
ANNUAL SHAREHOLDERS’ MEETING
Serko’s 2022 Annual Shareholders’ Meeting will be
held in August 2022. The meeting is intended to be
conducted as a hybrid meeting, enabling shareholders
to attend in person (subject to any Covid-19
restrictions) or participate in the meeting virtually. A
hybrid meeting is considered to provide the broadest
opportunity for shareholder engagement with the
company. Shareholders will be given an opportunity at
the meeting to ask questions and comment on relevant
matters. In addition, Serko’s auditor, Deloitte, will
be available to answer any questions about its audit
report. A Notice of Meeting will be sent to shareholders
in advance of the meeting.
ADDITIONAL EQUITY CAPITAL
As previously announced, Serko undertook an
underwritten placement to raise approximately NZ$75
million via an issue of new shares in November 2021
(the Placement). The Placement price of NZ$7.05 per
share was determined via a bookbuild.
The Placement was followed by a non-underwritten
retail offer (Retail Offer) that raised approximately
NZ$8.3 million from the issue of new shares issued to
existing shareholders (together with the Placement,
the Capital Raising).
The equity raised by the issue of new shares under the
Capital Raising is intended to enable Serko to continue
to execute on its global growth strategy.
Of the approximately 10.6 million shares issued under
the Placement, approximately 3.8 million were issued
to new investors and approximately 6.8 million were
issued to existing shareholders. Serko determined
the respective allocations of investors by applying the
following key objectives and criteria:
•
Serko used best efforts to allocate to existing
eligible shareholders, who bid for up to their
pro-rata share in placement shares under the
Placement, their full bid; and
•
For the remaining shares under the Placement,
bids from existing shareholders received
preferential treatment, and a limited number of
bids were accepted by select new investors with
investment strategies that Serko believes are
aligned with its business.
As far as Serko is aware, there were no significant
exceptions or deviations from those objectives and
criteria. Existing shareholders who did not participate
in the Placement were able to participate in the Retail
Offer.
In particular, the Retail Offer permitted each eligible
shareholder to apply for up to NZ$50,000 / A$46,500 of
new shares at an issue price of $6.85 per share, being
the five-day volume weighted average price of Serko
shares traded on the NZX during the last five days of
the Retail Offer period. The issue of shares under the
Retail Offer was undertaken, in New Zealand, pursuant
to NZX Listing Rules 4.3.1 (in respect of the first
$15,000 of new shares offered to eligible shareholders)
and 4.5 (in respect of the additional $35,000 of
new shares offered to eligible shareholders), and,
35
in Australia, in accordance with the relief granted
under ASIC Instrument 21-0975 (ASIC Relief) and
ASIC Corporations (Share and Interest Purchase
Plans) Instrument 2019/547 as amended by the ASIC
Instrument 21-0975 (ASIC Relief).
All applications under the Retail Offer were accepted in
full and no scaling was undertaken, allowing all existing
shareholders who chose to participate in the Retail
Offer to be allocated their full desired issue amount.
The Board determined, having received advice on
options for the structure of the Capital Raise, to
undertake the Capital Raising by way of the Placement
and Retail Offer for these reasons:
•
The Placement and Retail Offer could be, and
was, sized and structured in such a way as to
enable almost all shareholders to apply for at
least their pro rata shareholding in Serko;
•
By utilising the increased Retail Offer cap to
enable shareholders to apply for up to NZ$50,000
/ A$46,500 worth of shares in the Retail Offer
and by electing to allow for oversubscriptions,
approximately 97% of shareholders had the
ability to maintain their respective pro rata
shareholdings. Serko expects that shareholders
with holdings greater than this amount would
likely have been able to participate in the
Placement either directly as an institution or
indirectly through retail broker firms;
•
The Retail Offer enabled smaller shareholders
to participate in the equity raising at a price no
higher than the Placement Price but with the
benefit of having a longer offer period to consider
participation.
36
RISK
MANAGEMENT
37
RISK MANAGEMENT FRAMEWORK
Serko has designed and implemented a risk
management framework for the oversight and
management of financial and non-financial business
risks, as well as related internal compliance systems
that are designed to:
•Optimise the return to, and protect the interests of,
stakeholders;
•Safeguard the company ’s assets and maintain its
reputation;
•Improve the company ’s operating performance;
•Fulfil the company ’s strategic objectives; and
•Manage the risks associated with Serko’s operations.
In 2020 –2021, the material change in operating
environment due to Covid-19 caused Serko to
reassess many of its principal risks and increase their
risk ratings. Consequently, the Board significantly
increased its monitoring of principal risks during 2021
and continued that enhanced level of monitoring
throughout the financial year ending on 31 March
2022. As the pandemic continues to impact the
travel industry globally, Serko will continue to take
a cautious approach to managing and monitoring
related business risks. A comprehensive review of
Serko’s risk management framework and capabilities
was conducted in early 2022 and the Audit and Risk
Committee will oversee the implementation of the
recommendations resulting from the review. The Audit
and Risk Committee meets quarterly to consider risks
that could prevent Serko from achieving its strategic
goals.
Serko has in place mitigation strategies for managing
its key risks within Board-defined tolerances based on
the approved risk appetite statement. In addition to its
mitigation strategies, Serko maintains comprehensive
insurance coverage.
RISK MANAGEMENT
Serko is committed to proactively and consistently
managing risk to:
•Enhance and protect Serko’s value by delivering
on our commitments and meeting stakeholders’
expectations;
•Allow Serko to pursue opportunities in an informed
way and aligned with the Board’s risk appetite; and
•Ensure a safe and secure environment for Serko
people (employees and contractors), partners and
customers.
Serko’s Risk Management Policy is included in Serko’s
Corporate Governance Manual (published on Serko’s
website).
38
STRATEGICOPERATIONALFINANCIALEXTERNAL
INHERENT RISKS OF DOING BUSINESS
RISK APPETITE
ARC
1
BI
ANNUALLY
ON
STRATEGY RISKS
CONTROL AND MITIGATION
PRINCIPAL RISKS
ARC BI
ANNUALLY
CONTROL/DFA
2
FRAMEWORK
MONTHLY BOARD REVIEW
OPERATIONAL RISKS
PRINCIPAL RISKS
FINANCIAL RISKS
OPERATIONAL EXPOSURES
Low Tolerance:
O -Strategy, Compliance, Health and
Safety risks to be avoided.
1 Audit and Risk Committee
2 Delegated Financial Authority
39
PRINCIPAL BUSINESS RISKS:
The following table highlights some of the key business risks for Serko and the mitigation activities that are in place
or planned. Each of these risks, if realised, could impact Serko’s ability to achieve planned revenues or to execute
on its strategy:
RISKSMITIGATION STRATEGIES
Impact of global events: As a travel technology provider,
Serko faces exposure to changes in demand for business travel
services due to a variety of global events that could impact
the travel industry. Significantly weakened global conditions,
as a result of the pandemic, geo-political instabilities or other
events, could harm our business and financial condition
• Alternative operating models in place targeting different
traveller types, across multiple markets
• Monitoring key trends in global and regional travel
• Expanding offering to different content channels and
alternative, more sustainable modes of transportation
(e.g. rail)
• Maintaining sufficient capital reserves
Platform stability and data security: Serko faces exposure
to hacking, cyber-attack or similar due to its online software
hosting, Cloud/SaaS services revenue model and role as a data
processor. Serko may also suffer loss of service as the result
of failure or unplanned outage of IT hosting providers due to
its online software hosting and Cloud/SaaS services revenue
model.
• Business continuity and disaster recovery planning
• Continuous platform monitoring and incident response
process
• Platform modernisation and openisation initiative
• Payment Card Industry Data Security Standard (PCI DSS)
compliance and regular audits
• Data security awareness training for all Serko employees
• Governance and oversight by the Audit & Risk Committee and
maturity assessment programme
• Dedicated Chief Information Security Officer and Security
Team to manage data security risks on a daily basis
• External parties for independent testing as appropriate
• Incident management programme
• Implementation of ISO programme in progress
• Serko hosts its data in Microsoft Azure data centres in several
geographic locations. All locations have the same security
practices and procedures in place to protect Serko’s and our
customers’ information.
Attracting and retaining skilled employees: Serko’s business
strategy requires us to attract and retain highly skilled talent
in a competitive labour market globally. Covid-19 has had a
significant impact on the supply of talent and this is resulting
in increased mobility of talent globally.
• Focus on building strong sustainable pipelines of internal and
external talent for critical or hard to fill roles
• Identification of critical talent, execution of stay interviews
and retention planning
• Increased focus on career development pathways and learning
and development opportunities for our teams
• Review of our total reward structure to ensure we remain
competitive with the technology market
• Succession planning for senior leadership roles and critical
or hard to find roles
Competition and new technologies: Serko continues to face
exposure to a variety of new and existing competitors in new
and established markets. New technologies could alter the
existing value chain for travel and expense, disrupting existing
flows, processes, players and/or underlying technology that
Serko’s business is based on.
• A culture of continuous innovation
• Systems in place for monitoring and responding to competitor
and market activity
• Continued development of strategic partnerships
• Developing an acquisition strategy to gain greater control
of value chain
40
RISKSMITIGATIONS
Access to capital: Serko’s rapid growth in key markets and the
lingering effect of the Covid-19 pandemic continue to impact
Serko’s ability to forecast revenues with precision. Prudent
capital management is essential. Serko’s expansion into new
markets introduces many treasury complexities and also
requires careful capital management practices to ensure that
the level of investment in development work is appropriate and
that Serko can continue to fund its operations.
• Use of scenario planning in conjunction with forecasting and
budgeting processes with strict capital management targets
• Governance oversight of capital allocation and investment by
the board
• Monthly treasury and capital management reporting
to the board
• Strong investor relations programme
Key customer relationships: Serko relies on the strength of its
reseller relationships for its core online booking tool business.
• Developing unmanaged travel offering and different
content offerings
• Continuing to pursue global reseller relationships
in new geographies to reduce concentration risk
• Investing in Customer Advisory Group workshops to develop
community engagement with key customers
• Developing Serko’s channel partner program to support
sales and operational enablement for strong and healthy
reseller partnerships
Health and Safety: Serko has historically had a low risk of
serious health and safety workplace incidents due to the nature
of its business. During a global pandemic, however, the safety
of our people, their mental health and the risk of physical illness
can all be impacted.
• Dedicated programs to support employee wellbeing, including
flexible work arrangements and wellness
• Regular pulse and listening surveys
• Pandemic policies that are regularly reviewed to adapt to
the changing health & safety risks presented by pandemics
Operational risks associated with global expansion: Serko has
operations in NZ, Australia, China, USA and UK. As Serko grows
in these markets and expands globally, the complexity of its
business increases, as will a range of associated operational
and compliance risks.
• Strategic initiatives aligned top-down with operating plans
and OKRs to regularly measure progress
• Enhanced risk management framework and processes
• Detailed privacy risk assessment to be completed in 2022
• Privacy obligations assessments for new markets
Emerging Risks
Environmental risks (including risks associated with climate
change): Environmental disasters or catastrophic events and
the impact of such events on the travel industry or on the global
economy could have negative effects on our business, partners,
suppliers and customers. Those events could include impacts
of climate change, including the increased likelihood of extreme
weather events and longer-term impacts like the predicted risk
in global sea levels.
• Development of a comprehensive ESG programme
• Development of a roadmap underway to align with the Task
Force on Climate-related Financial Disclosures (TCFD) XRB
guidelines for climate reporting.
• Carbon emissions reduction assurance programme underway
• Offering sustainability tools to assist our customers to manage
their carbon emissions and climate related risks
Data privacy: Serko’s business involves the collection, use and
processing of personal data. The global data privacy landscape
is complex and evolving. As Serko’s business expands with
new products and into additional markets, Serko will become
subject to additional data privacy regulations. The failure to
protect personal data and comply with data privacy regulations
could result in financial penalties, operational inefficiencies,
intervention by regulators and negative impacts to reputation.
• Detailed privacy risk assessment to be completed in 2022
• Privacy obligations assessments for new markets
• Data security initiatives and protections as referred to above
41
Serko Environmental, Social & Governance Report 2022
www.serko.com
---
ANNUAL REPORT 2022
This Annual Report is dated 18 May 2022 and is signed on behalf of the Board of Directors (Board)
of Serko Limited by Claudia Batten, Chair, and Darrin Grafton, Chief Executive Officer (CEO).
DARRIN GRAFTON
CHIEF EXECUTIVE OFFICER
CLAUDIA BATTEN
CHAIR
Contents
Serko at a Glance 2
Chair & CEO Letter 4
Our Leadership 8
Our Strategy 10
Our Products 12
Sustainable Business Growth 14
Mission Zero 15
Management Commentary 16
Financial Statements 30
Independent Auditor’s Report 70
Corporate Governance & Disclosures 74
Glossary 89
Company Directory 90
We bring people together
Serko believes in the power of being face-to-face.
Our purpose is to bring people together. Our vision
is a connected, frictionless travel experience.
To deliver that, we’re building the world’s leading
business travel marketplace — connecting business
travellers everywhere with the content, information
and services they need at every stage of the journey.
About Serko
Serko is a leader in online travel booking and expense
management for the business travel market. Zeno is
Serko’s next generation travel management application,
using intelligent technology, predictive workflows and
a global travel marketplace to transform business travel
across the entire journey. Listed on the New Zealand
Stock Exchange Main Board (NZX:SKO) and Australian
Securities Exchange (ASX:SKO) Serko is headquartered
in New Zealand, with offices across Australia, China
and the United States.
Visit www.serko.com for more information.
2
EBITDAF is a non-GAAP (Generally Accepted Accounting Principle) measure representing Earnings
Before the deduction of costs relating to Interest, Taxation, Depreciation, Amortisation, Foreign
Currency (Gains)/Losses and Fair value remeasurement of contingent consideration. Segment revenue
is a non-GAAP measure reflecting Total Revenue and Other Income before deduction of consideration
payable to customers. See note 4 of the Financial Statements for a reconciliation to Total Income.
As travel volumes partially recovered from
the effects of Covid-19 and revenue from
the Booking.com for Business Partnership grew,
Serko continued to scale for future growth.
$124.5m
CASH AND SHORT-TERM DEPOSITS
($36m)
NET LOSS AFTER TAX
($28.1m)
EBITDAF LOSS
$18.9m
TOTAL INCOME
$ 1 9. 8 m
SEGMENT REVENUE
63%
INCREASE IN BOOKING
TRANSACTIONS
At a glance
3
Serko at a glance
Dear fellow shareholders,
Serko’s focus over the past year has been to
position the business to catch the wave of the
global travel recovery. It is therefore pleasing
to report that the recovery has commenced
and that the investments we have made are
starting to deliver a return.
The 2022 financial year has been one of careful cost
management while investing for the recovery of the business
travel market. This has required us to prioritise where we
invested, while also fuelling the company for growth.
Our priorities across Serko for the FY22 financial year were
to support our Australian and New Zealand business, invest
heavily into our travel platform for small and medium-sized
businesses in partnership with Booking.com and develop the
North American market.
KEY HIGHLIGHTS
•
The number of online travel bookings across all segments
for the 2022 financial year increased 67% year on year
to 2.15 million from 1.29 million, with 1.95 million travel
bookings in our Managed Travel segment (Australasia
and North America) and 0.21 million bookings in the
Unmanaged Travel segment (Booking.com for Business).
•
By the end of the financial year, Australasian booking
volumes had recovered to 78% of March 2019 (pre-COVID)
levels as the market emerged from Omicron. We are seeing
the recovery trend continue through April 2022 with
Australasian transactions at 83% of April 2019 numbers.
•
Booking.com for Business booking volumes have also
recovered and in April 2022 we saw continued growth
in rooms booked.
UNMANAGED TRAVEL
Our biggest investment was in the new Unmanaged Travel
segment, with the opportunity presented to us by Booking.com
to launch a new Booking.com for Business platform, powered
by Zeno, for its business customer base. This was a significant
engineering challenge with an accelerated schedule to support
the successful onboarding of 420,000 net new Booking.com
for Business customers registered onto the new platform
1
during the year.
With the migration achieved, our focus was the enhancement
of the customer experience to support customer acquisition
and conversion ahead of market growth. The platform is now
available in more than 190 countries across nine different
languages, with flights on offer in a number of these regions.
Following a dip between October 2021 and January 2022,
owing to seasonality and the impacts of Omicron, bookings
increased with 39,000 rooms booked in March 2022,
a 42% increase on the October 2021 figure.
MANAGED TRAVEL
We have also made solid progress in the customer
segment we call Managed Travel.
This segment encompasses the newer North American
market and the core Australian and New Zealand business
where we support our travel reseller partners to deliver
online travel and expense management services to many
of the region’s most significant businesses.
In the face of the significant challenges of the pandemic,
the Australia and New Zealand business has performed
exceptionally well. Not only have we retained the majority
of our customers through the pandemic we have also grown
our market share. With the virus now becoming endemic and
travel restrictions easing we are seeing a strong recovery
in business travel on our platforms in these markets.
1 We expect SME business booking behaviors will be different from our enterprise customers. It is uncertain when, and how often, migrated
customers and new sign-ups will transact, particularly during COVID-affected periods and as a result of intermittent travel needs of SME’s.
There is no guarantee that migrated/activated customers, or new sign-ups, will make bookings in the current financial period or at all.
5
chair & ceo letter
Our progress in Managed Travel in North America has been
more muted but it is important to acknowledge that we
launched into this market not long before the unprecedented
travel downturn.
North America is showing a travel recovery and continuing
signs that we can realise the potential we see for Serko.
Visa selected Zeno as its corporate booking tool and is now
live in North and South America and the Asia Pacific region,
and Zeno was also named a ‘Globally Preferred Booking Tool’
by our travel reseller partner CWT, one of the top three
global -Travel Management Companies.
While we are still in the early stages of establishing our
presence in North America, we remain optimistic about our
ability to realise the opportunities that we see in this market.
FINANCIAL PERFORMANCE AND FUNDING
Our financial performance, although showing a significant
improvement in revenue relative to the prior year, continues
to reflect the impact of the pandemic and our investments
in our products to drive the Booking.com for Business
opportunity and to position ourselves for the recovery
of global business travel.
Total income increased by 12% to $18.9 million. Revenue
grew by 44% to $17.9 million but this was partially offset
by government grant revenue down 77% to $1.0 million.
Segment revenue
2
was $19.8 million, a 17% increase on the
prior year and above the midpoint of our revenue guidance
of $18.5 million and $20.5 million. Revenue growth was driven
by a partial business travel recovery in Australasia over the
previous financial year, a strong contribution from Booking.
com for Business and a modest increase in revenue from
North American markets. These gains were diluted by the
lockdown and travel restrictions in New Zealand through
the third and fourth quarters of the financial year.
Average revenue per booking (ARPB) for travel-related
revenue increased during the year by 8% to $5.80, driven
primarily by the strong average revenue per completed
room booking of over $20 for Booking.com for Business.
EBITDAF losses increased 26% to $28.1 million from
$22.3 million in the same period a year ago, with the rise
reflecting an increase in operating expenses as we scaled
up and invested for future growth. Net losses after tax
increased 22% to $36.0 million from $29.4 million.
Serko remains well funded as a result of the $83.3 million
capital raising ($80.1 million net of costs) undertaken towards
the end of 2021. Cash and cash equivalents at 31 March 2022
were $124.5 million, an increase of 56% or $44.6 million on
the prior year end. Cash burn over the year was $35.5 million,
an average of $3.0 million per month. Average monthly cash
burn for the 6 months to 31 March 2022 was $3.0 million,
lower than our guidance of close to $4 million, partly reflecting
additional non-recurring payments from customers.
OUR PRIORITIES
We have identified five strategic priorities for the next
three financial years that we believe will drive the Company
towards its aspiration of $100 million in annual revenue.
Our first priority is to deliver an exceptional customer
experience. We know that customer satisfaction will underpin
customer acquisition and conversion, and given the scale
of the Booking.com opportunity and our vision to deliver
a frictionless travel offering in both the unmanaged and
managed travel spaces this is a crucial investment area
for us in FY23.
Our second priority is to drive growth in Unmanaged Travel
with Booking.com for Business. We are collaborating
with Booking.com to use its data driven approach to
focus investment in the platform and content to deliver
increased customer conversion and acquisition.
Our third priority is to extend our leadership in Managed
Travel within the Australasian markets and drive growth
into North America in partnership with travel resellers and
by building on the nascent efforts with direct customers.
Our fourth priority is to build the foundations of our business
travel marketplace vision; an open platform with a content
hub that enables the scalable connection of additional supply
partners. Over the last year we have expanded content
2 Segment revenue (a non-GAAP measure) is Total Income before it is reduced to reflect consideration payable to customers. In the period,
consideration payable to customers comprised Serko’s share of jointly agreed marketing expenses. See note 4 of the Financial Statements
for a reconciliation to Total Income.
6
DARRIN GRAFTON
CEO & CO-FOUNDER
CLAUDIA BATTEN
CHAIR
offerings across multiple markets, including flight and
other content into Booking.com for Business. In alignment
with Serko’s environmental, social and governance (ESG)
principles we launched integrated environmental impact
and carbon offsets for flights, among other initiatives.
Our fifth priority is to continue to grow our culture of engaged,
innovative and customer-obsessed Serkodians. In many
respects, this is, and always has been, our top priority.
Our people supported the Company through the pandemic
and are as excited as we are about the return of business
travel. On behalf of all Serko shareholders, we thank the
team for their continuing commitment and effort.
Our team is the heart of all our customer-led innovation;
they are the reason our customers are deeply loyal to Serko,
and they are core champions of our evolving programmes
to ensure that material environmental, social and governance
matters are integrated into our strategy. We were proud
this year to be part of the Booking.com and United Nations
initiative to support the refugee crisis in Eastern Europe.
Further details of these and other initiatives are included
in our latest ESG report, which is available on the investor
section of our website.
OUTLOOK
Two years on from the onset of COVID-related global travel
restrictions, it is gratifying to see the strong recovery, both in
Australasia and the new markets we are pursuing. Transaction
volumes in April 2022 show the recovery of business travel has
been sustained into the new financial year.
That said, we cannot be complacent about the ongoing risks,
including geo-political uncertainty, the potential resurgence
of COVID and additionally the structural changes to the travel
market that have occurred through the pandemic.
Nevertheless, the proof points of the current market continue
to give us confidence about our prospects for the year to
31 March 2023 and we expect revenue to approximately double
from the prior year.
The disruption of the last two years has sharpened our
focus on building upon the strengths of our technology
and carefully targeting new market segments.
We plan to increase our rate of investment into our products
and markets in line with revenue projections over the six
months to 30 September 2022 to support future growth.
However, we are tightly focused on execution and the
application of capital to directly drive the outcomes related
to both our strategy and shareholder return while maintaining
prudent cash management practices.
We continue to negotiate the potential acquisition of a travel
technology business. There is no certainty that this acquisition
will proceed, and we will update the market as appropriate.
The potential acquisition would be earnings accretive and
assist Serko to accelerate the execution of its strategic
priorities. The total consideration payable is expected to
be primarily payable in scrip with a smaller cash component.
It is likely that a significant portion of the total consideration
would be deferred and performance based.
We thank shareholders for their ongoing support and look
forward to providing an update at our annual shareholders
meeting in August.
7
chair & ceo letter
Our Board of Directors
Darrin Grafton
executive Director, chief executive officer & co-Founder
appointed 5 april 2007, elected august 2019
Darrin has more than 30 years’ experience in travel technology and is a recognised industry innovator,
previously named as one of the top 25 most influential executives in the travel industry by the BTN Group.
Darrin has held directorships and senior management positions across a number of private and public
companies, including the Gullivers Travel Group. In 2021 Darrin was awarded the INFINZ Leadership Award
and has previously been awarded the NZX Hi-Tech Entrepreneur Award. He is a member of the Institute
of IT Professionals NZ and the Institute of Directors NZ.
Bob Shaw
executive Director, chief Strategy officer & co-Founder
appointed 5 april 2007, re-elected august 2021
Bob has been involved in transforming the travel industry since 1987, collaborating with the world’s
leading airlines, travel agencies and global distribution systems. He has held a number of directorships
and senior management positions in various high-profile ventures, including Gullivers Travel Group and
Interactive Technologies. Bob has been a past finalist for the EY Entrepreneur of the Year Award. He is
a member of the Institute of IT Professionals NZ, the Institute of Directors NZ/Australia and NZCDP.
Claudia Batten
independent non-executive Director, chair, new Zealand
appointed 30 april 2014, re-elected august 2020
Claudia has been a founding member of two highly successful entrepreneurial ventures and is
a strong supporter of the New Zealand start-up scene as an active mentor and adviser. She is a director
of Air New Zealand and Vista Group and is also the digital adviser to the Board of Westpac New Zealand.
Claudia returned from the United States to live in New Zealand in June 2021. She holds an LLB (Hons)
and BCA from Victoria University (Wellington).
Jan Dawson
independent non-executive Director, new Zealand
appointed on 18 august 2021
Jan is Chair of Ports of Auckland Limited and a director of Meridian Energy Limited. She is a member
of the University of Auckland Council and the Capital Investment Committee of the National Health Board.
Jan was previously Chair of Westpac New Zealand, Deputy Chair for Air New Zealand, and director of
Beca and AIG NZ. She was a partner of KPMG for 30 years and the Chair and Chief Executive of KPMG
New Zealand from 2006 until 2011. She holds a Bachelor of Commerce from the University of Auckland
and is a fellow of the New Zealand Institute of Chartered Accountants and a fellow of the Institute of
Directors in New Zealand.
Clyde McConaghy
independent non-executive Director, australia
appointed 30 april 2014, re-elected august 2019
Clyde is based in Australia. He is the founder of Optima Boards, providing independent director and
advisory services to public, private, family office and charitable entities around the world. Clyde has
worked in publishing, media, online and technology sectors, living in the UK, Germany, China and Australia.
He is a director of Neuroscience Research Australia and MindGardens and holds a BBus (University of
South Australia), as well as an MBA from Cranfield University (UK). Clyde is a fellow of the Australian
Institute of Company Directors.
8
Our Executive Team
Nick Whitehead
chief Marketing officer
Nick has a 20-year track record of
commercialising technology through the
development of effective go-to-market
strategies and leads Serko’s global
marketing and communications function.
Murray Warner
head of australasian Market
Murray has 20 years’ experience working
with cloud software technology, building
new sales and revenue operations. He has
previously held several senior management
positions with Concur Technologies, an SAP
company, across Asia-Pacific, Europe and
North America.
Shane Sampson
chief Financial officer (cFo)
Shane joined Serko with over 30 years’
experience in finance and commercial
leadership roles at Vector, Spark and
Pulse Energy and most recently as the
CFO of PushPay. Shane has a BCA and
LLB (Hons) from Victoria University of
Wellington and is a member of Chartered
Accountants Australia and New Zealand.
Rachael Satherley
chief People officer
Rachael has 20 years of experience in
people leadership roles across Europe,
North America and Asia-Pacific, most
recently with Expedia Group. She has
a passion for unlocking individual, team
and organisational potential through
transformation.
Duanne O’Brien
chief technology officer
Duanne is a technology leader with over
25 years’ experience, specialising in building
global enterprise SaaS (software as a service)
platforms. Duanne leads the largest of
our global teams, designing, building and
running Serko’s platforms and products.
Charlie Nowaczek
chief operating officer (coo)
Charlie has over 25 years’ experience
as an operations executive and
management adviser, specialising in
business transformation and operational
excellence. Over the last decade he has
been COO for a number of technology
start-ups in the US and Canada.
Sarah Miller
general counsel & company Secretary
Sarah has over 20 years’ experience leading
in-house legal functions for dual-listed
entities, consulting to a range of companies
on capital markets and M&A (mergers
and acquisitions) transactions, providing
governance advice and working for major
law firms in New Zealand and the UK.
Tony D’Astolfo
Senior Vice President, noraM
Tony is a 35-year travel industry veteran, with
rich expertise in travel and technology and
a passion for moving the industry forward. His
career includes senior leadership positions
at Deem, Phocuswright, GroundLink, Sabre/
GetThere and United Airlines. Tony is a long-
time member of GBTA and ACTE and a former
member of the board of directors of both
ACTE and WINiT for Women.
9
our leaDerShiP
FY23
Objectives
Conversion
Grow revenue from
the unmanaged travel
segment by focusing on
customer conversion
Product health
foundations
Increase customer
satisfaction by continuing
to enhance the performance
and usability of our products
Our
Purpose
We bring people together
Our Vision
+ Mission
To create a connected, frictionless
travel experience by building the world’s
leading business travel marketplace
3 yr
Strategic
Goals
21
Unmanaged
revenue
Establish significant
market share in
unmanaged travel market
Customer
success
Deliver exceptional
customer experience (CX)
through experimentation-
driven development
Our Strategy
10
Platform
foundations
Build the marketplace
foundations through
technology enablement of
an open integration platform
Retain
and grow
Scale growth in North
America and extend our
leadership in the Australia
and New Zealand markets
Organisational
alignment
Maximise alignment
across our teams and
minimise friction for
customers to increase
organisational efficiency
43
Marketplace
and content
Commercialise
connected trip
experience through
an open platform
Managed
revenue
Consistently grow market
share in global managed
travel market through
TMC partnerships and
inorganic growth
Culture
Grow a culture of
engaged Serkodians
aligned to our purpose,
mission and values
5
Our strategy provides our stakeholders
with a clear sense of what drives us,
where we are heading and how we
will create long-term value.
11
our Strategy
Zeno is an integrated travel and expense platform that is revolutionising
the world of corporate travel and expense management globally.
Our products
Zeno Travel
Zeno Travel is an Online Booking Tool (OBT) that is used by
corporate travellers to book flights, trains, hotels, rental cars
and airport transfers in line with their corporate travel policies.
This provides the oversight and control that travel managers
need to ensure that spend is effectively managed, with the
ease of use and personalised experience that encourages
corporate travellers to use the OBT and avoid travel program
‘leakage’ to supplier websites or leisure travel retailers.
Zeno achieves this with an intuitive interface that makes
booking business travel super simple, intelligent technology
that provides personalised itinerary recommendations based
on traveller preferences and a global marketplace that allows
travellers to connect with preferred suppliers at every stage
of the journey.
Zeno Expense
Zeno Expense automates the process of corporate card
and out-of-pocket expense submission, reconciliation and
reimbursement. Employees capture receipts via the mobile
app, or email receipts directly to Zeno, add a description
or cost centre if needed and submit for approval there and
then. To make it even simpler, Zeno also offers automated
integrations with providers such as Uber for Business.
Zeno’s intelligent technology proactively identifies and
manages out-of-policy claims, preventing expense claim
fraud and dramatically streamlining the expense
administration function.
Zeno also provides managers and finance teams with
a full suite of analysis tools that help them to run their
travel and expense budgets more effectively, identify
problem areas and optimise expense policies.
Serko generates revenue through corporate customers paying
a booking fee per transaction and through supplier commission.
Serko generates revenue through corporate customers paying
a fee per active user or per expense report submitted.
12
Booking.com for Business · Powered by Zeno
In 2019 Booking Holdings extended its partnership with Serko to enable Booking.com to resell
the Zeno platform white-labelled under the Booking.com for Business brand, with a commercial
partnership based on a revenue share model between Booking.com and Serko.
Dedicated teams at both companies worked together to bring to market an initial product that
went live in the UK and Ireland in May 2020 ahead of a global roll out that began in early 2021.
The platform is now available in local language versions across more than 190 countries.
The new Booking.com for Business platform powered by Zeno aims to provide a one-stop-shop for
all business travel needs, helping save time and money and making life easier for business travellers
and their administration teams alike. In addition to Booking.com accommodation content, we are
continuing to build a global connected trip offer, including flights and rail content in selected countries.
Serko generates revenue through supplier commission from
travel bookings completed through Booking.com for Business.
13
our ProDuctS
Building sustainable
long-term business growth
We believe strong ESG practices give Serko its social licence to operate,
as well as creating long-term value. Here’s how:
Continuously innovating —
to adapt to rapid environmental
changes and deliver sustainable
and innovative products to
our customers
Powering our people —
to do amazing work that
drives our business and
sustainability goals
Being a brand you can count
on — trusted by our employees,
customers, investors
and partners
Serko’s 2022 ESG Report
available now
READ THE REPORT
14
SuStainable buSineSS growth
Mission Zero, launched in our Zeno booking
platform in 2021, allows our customers to
actively reduce the environmental impact
of their travel activity.
Mission Zero empowers business travellers to choose
environmentally friendly booking options by providing carbon
offset data for flights, highlighting lower emission rental
car options and enabling customers to select a targeted
environmental programme to offset emissions.
We have partnered with Tasman Environmental Markets (TEM)
to integrate BlueHalo®, an end-to-end technology solution that
enables Zeno to calculate and offset the emissions of a flight.
TEM’s ability to provide granular, dynamic carbon offset data
based on choice of fare gives our customers the ability to build
a robust carbon offset program for their businesses.
Serko’s vision for supporting efficient business travel
with Mission Zero is built around four principles:
1. Real-time data
Serko is collaborating with its partners to enable Zeno users
to measure the impact of their entire trips in real-time,
including flights, accommodation and rental car options.
2. Informed choice
Travel programs can be designed to minimise environmental
impact, not just financial cost. The most efficient flight routes,
cabin classes and vehicle types can be identified at the point
of purchase to drive more sustainable buying behaviour.
3. Impact visibility
By providing complete visibility of a business travel program’s
environmental impacts, Zeno enables organisations to make
policy choices that get their travellers where they need to go,
while treading as lightly as possible.
4. Net Zero impact
Through our partnership with TEM, Mission Zero offers
organisations a measurable and credible way to offset their
greenhouse emissions by investing in carefully chosen carbon
offset projects that deliver social and economic benefits
to communities, as well as emissions reduction.
Mission Zero also recently introduced ‘sustainability badges’,
which allow Booking.com users to search for accommodation
that meets certain sustainability criteria.
Mission Zero
Assisting business travellers to
minimise their environmental impacts
15
MiSSion Zero
MANAGEMENT
COMMENTARY
Please read the following commentary with the financial statements and the related notes in this
report. Some parts of this commentary include information regarding the plans and strategy for
the business and include forward-looking statements that involve risks and uncertainties.
Actual results and the timing of certain events may differ materially from future results expressed
or implied by the forward-looking statements contained in the following commentary. All amounts
are presented in New Zealand dollars (NZD), except where indicated. All references to a year are
the financial year ended 31 March, unless otherwise stated.
Non-GAAP (generally accepted accounting practice) measures have been included, as we
believe they provide useful information for readers to assist in understanding Serko’s financial
performance. Non-GAAP financial measures do not have standardised meanings and should not
be viewed in isolation or considered as substitutes for measures reported in accordance with New
Zealand Equivalents to International Financial Reporting Standards (NZ IFRS). These measures
have not been independently audited or reviewed.
16
Revenue increased 44% to $17.9 million as travel volumes partially recovered from Covid-19
effects. Total income for the year to 31 March 2022 increased 12% to $18.9 million. Operating
costs increased by 23% to $55.1 million, as the Company continued to scale to drive future
growth opportunities. Serko recorded a net loss result after tax of $36.0 million, an increase
of 22% against the prior year net loss of $29.4 million.
The Group recognised $1.0 million in other income (primarily grants), a decrease of $3.5m or 77%
from the prior year. Other income primarily comprised Covid-19 subsidies and the new research
and development tax credit (RDTI). Covid-19 subsidy income of $0.6m was down from $3.4m
partially offsetting the increased revenue as the travel market partially recovered. In the prior
year, other income included $0.9m of Callaghan Innovation grants which were replaced by
$0.3 million of RDTI in the current year. Grant income of $1.4 million was claimed but was treated
as deferred income as the costs to which the grants related had been capitalised. This deferred
income will be recognised in future years over the useful lives of the related assets.
Foreign exchange losses decreased 97% to $0.0 million. Net finance income increased 134%
to $0.6m primarily reflecting interest on the higher short-term investments as a result of the
capital raises in late 2021.
BUSINESS RESULTS
Year ended 31 March20222021Change%
$ (000)$ (000)$ (000)
Revenue17,85512,4205,43544%
Other income1,0194,476(3,457)-77%
Total income18,87416,8961,97812%
Operating expenses(55,057)(44,854)(10,203)-23%
Percentage of revenue-308%-361%
Foreign exchange gains/(losses)(35)(1,337)1,302-97%
Net finance (expense)/income578247331134%
Net (loss) before tax(35,640)(29,048)(6,592)-23%
Percentage of revenue-200%-234%
Income tax benefit/(expense)(319)(341)226%
Net (loss) after tax(35,959)(29,389)(6,570)-22%
Percentage of revenue-201%-237%
($36m)
NET LOSS AFTER TAX
17
ManageMent coMMentary
EBITDAF is a non-GAAP measure representing Earnings Before the deduction of costs relating to Interest,
Taxation, Depreciation, Amortisation, Foreign Currency (Gains)/Losses and Fair value remeasurement.
EBITDAF declined by $5.8 million from a loss of $22.3 million to a loss of $28.1 million reflecting
increased operating expenses partially offset by higher Total Income.
Depreciation and amortisation increased by $2.4 million over the prior year primarily reflecting
an increase in the average balance of computer software assets over the prior year. Depreciation
includes right-of-use assets (leased premises) under IFRS-16 (
Leases) adoption of $0.9 million
(FY21 $1.1 million).
Movements from foreign exchange rates resulted in losses of $0.0 million for the year compared
to losses of $1.3 million in the prior year.
EBITDAF
($28m)
EBITDAF LOSS
Year ended 31 March20222021Change%
$ (000)$ (000)$ (000)
Net (loss) after tax
(35,959)(29,389)(6,570)-22%
Deduct: net finance (expense)/income(578)(247)(331)134%
Add back: income tax3193 41(22)-6%
Add back: depreciation and
amortisation
8,0385,6332,40543%
Add back: net foreign exchange (gains)/
losses
351,337(1,302)-97%
EBITDAF (loss)(28,145)(22,325)(5,820)-26%
Percentage of revenue-158%-180%
18
Total income increased by 12% to $18.9 million. Segment revenue increased 17% to $19.8 million.
Travel platform revenue increased by 42% to $9.0 million. Expense platform revenue,
which includes fixed components to pricing, was flat at $4.0 million.
Supplier commissions before consideration payable increased by $3.8 million (710%) to
$4.4 million reflecting increased travel volumes and growth in revenue from Booking.com for
Business. After deducting consideration payable to customers supplier commissions revenue
increased by 541% to $3.5 million.
Services revenue declined by 12% to $1.0 million, while other revenues declined by 17% to
$0.3 million.
Recurring product revenue was up 49% to $16.8 million reflecting partial recovery in travel
volumes from the effects of Covid-19 and growth in revenue from Booking.com for business.
Consideration payable to customers was $0.9 million (FY21: $0.0 million) and comprised Serko’s
share of jointly agreed marketing expenses incurred by customers. As required by NZ IFRS 15
Serko reduces revenue by the amount of consideration payable to customers.
SEGMENT REVENUE AND ACTIVITY
Year ended 31 March20222021Change%
$ (000)$ (000)$ (000)
Revenue – transaction and usage fees:
Travel platform booking revenue9,0426,3542,68842%
Expense platform revenue4,0393,997421%
Supplier commissions revenue4,3585383,820710%
Services revenue1,0071,145(138)-12%
Other revenue320386(66)-17%
Other Income1,0194,476(3,457)-77%
Segment revenue19,78516,8962,88917%
Consideration payable to customers(911)-(911)
Total revenue and other income in
accordance with NZ GAAP
18,87416,8961,97812%
Total travel bookings (000)
2,5561,56699063%
Online bookings (000)
2,1531,28786667%
ARPB (travel related revenue only/
online bookings)
5.805.360.448%
ARPB (recurring revenue/online
bookings)
7.838.76(0.93)-11%
Travel related revenue includes travel platform booking revenue and supplier commissions revenue.
Recurring revenue (a non-GAAP measure) is the revenue from customers excluding services revenue
and other income.
Segment revenue (a non-GAAP measure) is Total Income before it is reduced to reflect consideration
payable to customers. In the period, consideration payable to customers comprised Serko’s share
of jointly agreed marketing expenses.
Total income includes revenue from customers and other income such as grants but excludes
finance income.
12%
TOTAL REVENUE
AND OTHER INCOME
17%
SEGMENT REVENUE
19
ManageMent coMMentary
In the fourth quarter of the 2020 financial year, the Covid-19 pandemic became widespread, significantly affecting booking volumes
and materially impacting Serko’s performance over the 2021 financial year. Responses to the pandemic worldwide, including
lockdowns and the suspension of all non-essential travel, had a material adverse effect on booking transactions made on Serko’s
online travel booking platforms, which generate the majority of Serko’s revenue. In order to assess the impacts of Covid-19 on
booking volumes Serko benchmarks volumes against the equivalent month in 2019. We measure total Australia and New Zealand
volumes but also separate out Australia and New Zealand as Covid-19 impacts varied in each country.
Travel volumes in Australia and New Zealand began to recover in early calendar 2021 and the recovery continued into the start of the
financial year to 31 March 2022. New Zealand volumes peaked in June 2021 at 163% of 2019 volumes reflecting both travel recovery
and increased market share in New Zealand before further lockdowns and travel restrictions began to impact from August 2021. In
Australia volumes recovered to 72% of 2019 before further lockdowns caused volumes to fall hitting a low of 29% of 2019 levels in
August 2021. With high vaccination levels and significant reductions in Covid-19 related restrictions travel volumes in March 2022
recovered to 78% of 2019 levels in Australia and to 75% of 2019 levels in New Zealand.
Under NZ IFRS-15 (Revenue from Contracts) Serko records revenue from its portfolio of contracts with reference to actual
transactions, forecast transactions and minimum contracted commitments. With Covid-19 impacting the entire travel industry,
Serko agreed to a number of changes to contracts, including changes to schedules of contracted minimum revenue. This had the
effect of reducing the revenue that Serko recorded.
During the year Serko migrated 390,000 Booking.com customers to the Zeno powered Booking for Business platform. A further
54,000 new signups to the platform occurred over the year. The Booking.com for Business revenues are primarily from European
countries where booking volumes have been impacted by Covid-19 and to a lesser extent bookings have been impacted by the
Russian invasion of Ukraine since February. Revenue from Booking.com for Business primarily comprises Supplier commissions
revenue from hotel bookings and revenue is recognised on the date the hotel stay is completed. This results in a portion of revenue
being recognised in months after the month of booking. After an initial peak in room nights completed in October 2021 we saw a dip
as a result of Covid-19 and normal seasonal lows over Christmas and New Year. Room nights completed have grown strongly since
that date, despite the Russian invasion of Ukraine, reaching 51,442 in March 2022. Booking growth was even stronger, however many
of the March 2022 bookings will be completed in the financial year to 31 March 2023. The average revenue per completed room night
(ARPCRN) for the year to 31 March 2022 was €6.93. Bookings can be for multiple rooms and room nights are higher than the number
of rooms booked so that average revenue per completed booking is higher than the ARPCRN. The ARPCRN is impacted by the price
of the hotel room.
Mar 2022
australasia transactions as % of Pre covid-19 transactions
new Zealand tMcs
total australasian
transactions
australian tMcs
apr 2021
0%
60%
120%
180%
20
ACTIVITY
Travel platform bookings by volume increased 63% over the prior year. Total travel bookings
during FY22 were 2.56 million. Total travel bookings include 0.40 million Offline bookings (system
automated bookings) that don’t contribute significantly to revenue or are bundled into the ‘Online’
booking rate. Online bookings for the year increased 67% to 2.15 million.
Average Revenue Per Booking (ARPB) for travel-related revenue (Travel platform and supplier
commissions) increased during the year by 8% to $5.80 from $5.36 based on Online bookings and
was largely related to increases in pricing for the Zeno platform. ARPB for recurring revenue (total
recurring revenue divided by Online bookings) at $7.83 declined by 11% from $8.76 in the prior
year. Recurring revenue includes Expense platform revenue which has a higher average value and
therefore as Travel platform bookings increased the ARPB declines due to the lower weighting of
Expense platform revenue within the calculation. Expense platform revenue was not as adversely
affected as Travel platform revenue by Covid-19 .
63%
TRAVEL PLATFORM
BOOKINGS
8%
TRAVEL ARPB
21
ManageMent coMMentary
Year ended 31 March20222021Change%
$ (000)$ (000)$ (000)
Australia10,6867,5203,16642%
New Zealand1,5392,154(615)-29%
North America2,5972,36922810%
Europe and Other3,0333772,656705%
Total Revenue17,85512,4205,43544%
Serko earned 60% (FY21: 61%) of revenue from Australia and 9% (FY21: 17%) from New Zealand sources, with New Zealand-sourced
income down 29% and Australian-sourced income up 42% over the prior year. Both Australia and New Zealand have been adversely
affected by Covid-19 travel restrictions but in Australia the impact was lower than in FY21.
North American revenue increased by 10% but declined as a proportion of total revenue due to the growth in Australia and Europe
and Other.
Europe and Other revenue increased by 705% to $3.0 million driven by growth in revenues from the Booking.com partnership.
Europe and Other revenue before consideration payable to customers, which is a non-GAAP measure, has increased by 946%
to $3.9m. Consideration payable to customers was $0.9m (FY21: nil).
REVENUE BY GEOGRAPHY
22
HOW SERKO MAKES MONEY
Serko’s main source of revenue is Travel platform revenue from Serko Online and Zeno however Supplier commissions revenue is
growing.
Travel platform revenue is made up of transaction fees, ancillary service fees and contracted minimum payments (where applicable)
and is stated net of volume-related rebates and discounts. Travel platform revenue is generally recognised at the time a booking is
made.
Serko also earns commission income on a portion of bookings when corporates opt to book Serko-sourced hotel and other traveller-
related services. Serko is paid directly from the suppliers of these services, therefore income from this source through its platforms
is included in supplier commissions. The Booking.com for Business platform provided in partnership with Booking.com is a free
service with Booking.com receiving commissions from suppliers, primarily hotels. The commissions earned through this platform
are recognised under supplier commissions. Supplier commission revenue is recognised at the time the relevant stay is completed
as bookings which are cancelled do not result in revenue.
Serko also earns income from its expense management platform Serko Expense, which allows registered users of corporate
customers to process travel and expense claims for accounting and reimbursement. Revenues are derived from a combination of
fees for active users, registered users and reports processed.
Other revenue includes income from Serko Mobile licence fees and other miscellaneous revenues.
Services revenue is derived from installation service and customised software development undertaken on behalf of the TMCs. It
also includes the fees charged to develop connections to third party systems wanting to integrate with Serko’s platforms. The basis
of charging can vary depending on the contractual terms with the customer, which may specify time and materials, capped or fixed
pricing.
Other income historically has been primarily government grants for research and development projects and international growth
grants. However, in FY21 and FY22, Serko received government grants related to Covid-19 subsidies. With the change of R&D grants
to a tax credit regime, Serko no longer receives research and development grants and instead receives research and development
tax incentives (RDTI).
business traveller
submits receipts using
Serko platforms
Monthly
user fee
$
business traveller
makes a booking via
Serko platforms
business traveller books
a hotel, car or taxi via
Serko platforms
Supplier
commissions
booking &
other fees
$$
23
ManageMent coMMentary
1 Booking volumes are total volumes and include Offline and Custom Bookings, which can be either bundled into a price per Online booking
or at a reduced rate, as these are primarily automated bookings but processed through the booking tool.
Revenue trend
Booking trend
1
Travel platform
booking trend over
the last 9 years
Room nights
completed
Booking.com for
Business platform
$15m
$10m
$5m
$0m
0m
1m
2m
3m
4m
$20m
$25m
Fy13
Fy13
Fy14
Fy14
Fy15
Fy15
Fy16
Fy16
Fy17
Fy17
Fy18
Fy18
Fy19
Fy19
Fy20
Fy20
Fy21Fy22
Fy21Fy22
Services
Supplier commissions and other
expense platform
travel platform
other and custom bookings
online bookings
oct 21nov 21Dec 21Jan 22Feb 22Mar 22
24
OPERATING EXPENSES
Selling and marketing expenses comprise all the direct costs of sales that are not people
or salary related.
Remuneration and benefits are the total costs of employees and contractors engaged
within the business during the financial year, including gross salary, additional payroll taxes,
superannuation and KiwiSaver, bonuses, commissions and the value of any share-based
remuneration or awards.
Other administration expenses include listed market costs, training, travel and other
miscellaneous office costs.
Year ended 31 March20222021Change%
$ (000)$ (000)$ (000)
Marketing expenses1,5361,05448246%
Third party connection costs89453535967%
Other selling costs65746719041 %
Total selling and marketing expenses3,0872,0561,03150%
Hosting expenses4,9322,7102,22282%
Employee renumeration26,05925,0839764%
Contribution to pension plans1,30388042348%
Share-based payment expenses4,0953,18491129%
Other remuneration and benefits61738023762%
Total remuneration and benefits32,07429,5272,5479%
Auditor remuneration and other
assurance fees
27517110461%
Directors’ fees4934029123%
Movement of expected credit loss
allowance on receivables
(23)(19)(4)21%
Bad debts written off19563132210%
Rental and operating lease expenses1721027069%
Professional fees1,61885176790%
Computer licences1,3061,14815814%
Insurance costs70543826761%
Recruitment fees365536(171)-32%
Donations1-1n /a
Other administration expenses1,8191,23658347%
Total administration expenses6,9264,9281,99841%
Amortisation of intangibles6,3863,9092,47763%
Depreciation1,6521,724(72)-4%
Total amortisation and depreciation8,0385,6332,40543%
Total operating expenses excluding
foreign exchange gains/(losses)
55,05744,85410,20323%
Percentage of revenue308%361%
23%
OPERATING EXPENSES
25
ManageMent coMMentary
Total operating expenses increased 23% to $55.1 million.
Selling and marketing expenses increased 50% to $3.1 million. Third party connection costs grew 67% in line with the growth
in the number of online bookings. As travel recovered we increased marketing expenses by 46% to help drive customer growth.
Hosting costs increased 82% to $4.9 million primarily driven by the increase in online booking volumes of 67% and costs
of maintaining elevated hosting capacity relative to actual requirements. We maintained elevated levels of hosting capacity
to ensure resiliency as we undertook the successful migration of Booking for Business customers to our platform and to
ensure capacity was available as travel booking volumes in Australia and New Zealand rebounded.
Remuneration and benefits (R&B) increased by 9% to $32.1 million owing to the increased average head count relative to the
prior year and increased compensation per employee. As at 31 March 2022 Serko had 312 employees, an increase of 9% from
31 March 2021. Share-based payments increased 29% to $4.1 million reflecting new employees joining the scheme and the
impacts of the expansion of the long-term incentive scheme to most employees in the prior year.
Administration costs grew 41% to $6.9 million. Within administration costs, professional fees increased by 90% to $1.6 million
with the increase primarily driven by professional fees relating to a potential acquisition and consulting services to support the
design and development of a new mobile app.
Amortisation increased by 63% to $6.4 million primarily reflecting an increase in the average balance of computer software assets
relative to the prior year.
26
Year ended 31 March20222021Change%
$ (000)$ (000)$ (000)
Total Product Design & Development25,54819,2036,34533%
Percentage of revenue143%155%
Less: capitalised product development
costs
(15,320)(7,231)(8,089)112%
Percentage of Product Design & Development costs60%38%
Total Product Design & Development
(excluding amortisation)
10,22811,972(1,744)-15%
Percentage of revenue57%96%
Add: Amortisation of capitalised
development costs
6,3863,9092,47763%
Total16,61415,8817335%
Percentage of revenue93%128%
Total PD&D costs increased by 33% to $25.5 million reflecting increased average PD&D
headcount. As a percentage of revenue PD&D costs reduced by 12 percentage points to 143%.
Capitalised PD&D costs increased by 112% to $15.3 million reflecting the increased Total PD&D
costs and an increase in the proportion of PD&D costs capitalised to 60%.
PRODUCT DESIGN AND DEVELOPMENT (PD&D) COSTS
Product design and development (PD&D) costs is a non-GAAP measure representing the internal and
external costs related to PD&D that have been included in operating costs or capitalised as computer
software development during the period. PD&D includes all activities related to the design, development and
maintenance of Serko’s product but excludes operating costs such as Hosting expenses. PD&D expenses
include employee and contractor remuneration related to these activities.
33%
INCREASE TOTAL
PD&D COSTS
27
ManageMent coMMentary
Serko’s staff numbers increased by a net 25 during the year to 312 full-time equivalent (FTE) staff,
an increase of 9%. By country at 31 March 2022 Serko had 200 staff based in New Zealand,
18 in Australia, 53 in China and 41 in the US. The increase in staff is primarily in product
development and reflects the investment Serko is making in its product to drive growth
in the Northern Hemisphere markets.
EMPLOYEES AND AVERAGE REVENUE PER FTE
Year ended 31 March20222021Change%
Product development and maintenance2161932312%
Sales and marketing1416(2)-13%
Customer support4548(3)-6%
Administration3730723%
Total employee numbers at end of the
year (FTE)
312287259%
Average revenue per FTE (NZD $000)4967(18)-27%
9%
INCREASE
FTE
28
Receipts from customers grew by 47% to $22.9 million reflecting revenue growth and additional
payments from customers. Grant income receipts declined 58% to $1.8m reflecting lower
Covid-19 subsidies. Other operating cash outflows increased by 14% to $43.2 million reflecting
increases in operating expenses. Net operating cash outflows for the year increased 2% to
$18.5 million.
Other investing cash flows, which include cash outflows for property, plant and equipment
and intangibles, reflecting capitalised internal development, increased 107% to $16.1 million.
During the year $45 million was placed on short term deposits bringing total short-term
deposits to 31 March 2022 to $90 million.
Financing cash flows of $79.2 million primarily comprised capital raised during the year of
$83.3 million. Capital was raised through a fully underwritten placement of $75 million in
November 2021 and $8.3 million in a retail offer completed in December 2021. Net of costs
of the capital raise of $3.2 million Serko raised a net $80.1 million from the capital raises.
Cash balances and short-term deposits increased 56% to $124.5 million as at 31 March 2022.
Excluding funds from the capital raise, net cash burn for the year was $35.5 million, an average
of $3.0 million per month.
Prior to the capital raise, Serko targeted an average cash burn of $2 – 4 million per month.
Following the capital raise, Serko continued to invest in scaling the business and the planned
cash burn was close to $4 million per month. The second-half cash burn, excluding net funds
from the capital raise, was $3.0 million average per month, lower than the planned, in part
due to additional payments from customers which are expected to reverse in the financial
year to 31 March 2023.
CASH FLOWS
Year ended 31 March20222021Change%
$ (000)$ (000)$ (000)
Receipts from customers22,87815,5427,33647%
Grant income receipts1,8184,280(2,462)-58%
Other operating cash flows(43,152)(37,864)(5,288)14%
Total cash flows from operating
activities
(18,456)(18,042)(414)2%
Short term deposits(45,000)(45,000)-n /a
Other Investing cash flows(16,094)(7,790)(8,304)107%
Total cash flows from investing
activities
(61,094)(52,790)(8,304)16%
Financing cash flows79,16763,92715,24024%
Total net cash flows(383)(6,905)6,522-94%
Net foreign exchange differences(23)(567)544-96%
Closing cash and cash equivalents
balances
34,51334,919(406)-1%
Short-term deposits90,00045,00045,000100%
Cash and short-term deposits124,51379,91944,59456%
56%
INCREASE
CASH & SHORT TERM
DEPOSITS
29
ManageMent coMMentary
FINANCIAL
STATEMENTS
CONTENTS
Consolidated statement of comprehensive income32
Consolidated statement of changes in equity33
Consolidated statement of financial position34
Consolidated statement of cash flows35
Notes to the financial statements36 – 69
Independent auditor’s report70 – 73
30
The directors of Serko Limited are pleased to present the financial
statements for Serko Limited and its subsidiaries (the Group) for the
year ended 31 March 2022 to shareholders.
The directors are responsible for presenting financial statements in
accordance with New Zealand law and generally accepted accounting
practice, which fairly present the financial position of the Group as at
31 March 2022 and the results of its operations and cash flows for the
year ended on that date.
The directors consider the financial statements of the Group have
been prepared using accounting policies that 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 believe that proper accounting records have been
kept that enable, with reasonable accuracy, the determination of
the financial position of the Group and facilitate compliance of the
financial statements with the Companies Act 1993, NZX Listing Rules,
Financial Reporting Act 2013 and the Financial Markets Conduct Act
2013.
The directors consider they have taken adequate steps to safeguard
the assets of the Group and to prevent and detect fraud and other
irregularities. Internal control procedures are also considered to
be sufficient to provide a reasonable assurance as to the integrity
and reliability of the financial statements.
The financial statements are signed on behalf of the Board
of Directors on 18 May 2022 by:
JAN DAWSON
CHAIR OF AUDIT AND RISK COMMITTEE
CLAUDIA BATTEN
CHAIR
31
Financial StateMentS
Notes20222021
$ (000)$ (000)
Revenue4 17,85512,420
Other income4 1,0194,476
Total income18,87416,896
Operating Expenses
Selling and marketing expenses(3,087)(2,056)
Hosting expenses(4,932)(2,710)
Remuneration and benefits(32,074)(29,527)
Administration expenses(6,926)(4,928)
Amortisation and depreciation(8,038)(5,633)
Total operating expenses5 (55,057)(44,854)
Loss before finance items(36,183)(27,958)
Foreign exchange gains/(losses) – net(35)(1,337)
Finance income5 696380
Finance expenses5 (118)(133)
Loss before income tax(35,640)(29,048)
Income tax expense6 (319)(341)
Net loss attributable to the shareholders of the company(35,959)(29,389)
Movement in foreign currency reserve(57)43
Total comprehensive loss for the year(36,016)(29,346)
Earnings per share
Basic and diluted earnings/(loss) per share (dollars)17 (0.33)(0.30)
Consolidated Statement of Comprehensive Income
The accompanying notes form part of these financial statements.
For the year ended 31 March 2022
32
Consolidated Statement of Changes in Equity
Notes
Share
capital
Share-based
payment
reserve
Foreign
currency
reserve
Accumulated
losses
Total
$ (000)$ (000)$ (000)$ (000)$ (000)
Balance as at 1 April 2021 153,706 4,509 (179) (55,508) 102,528
Net loss for the year - - - (35,959) (35,959)
Other comprehensive loss* - - (57) - (57)
Total comprehensive loss for the year - - (57) (35,959) (36,016)
Transactions with owners
Issue of share capital83,281--- 83,281
Cost of equity issued(3,188)--- (3,188)
Equity-settled share-based payments1,0552,929-- 3,984
Shares vested with employees via Restricted
Share Plan
-95-- 95
Shares forfeited by employees via Restricted
Share Plan
-(3)-- (3)
Non-executive director’s settlement of non-
recourse loan
247(47)-- 200
Balance as at 31 March 202216 235,101 7,483 (236) (91,467) 150,881
Balance as at 1 April 2020 87,751 2,374 (222) (26,119) 63,784
Net loss for the year - - - (29,389) (29,389)
Other comprehensive income* - - 43 - 43
Total comprehensive income/(loss) for the year - - 43 (29,389) (29,346)
Transactions with owners
Issue of share capital 67,500 - - - 67,500
Cost of equity issued (2,541) - - - (2,541)
Equity-settled share-based payments 684 1,807 - - 2,491
Shares vested with employees - 391 - - 391
Shares forfeited by employees - (13) - - (13)
Non-executive directors’ settlement
of non-recourse loan
303 (50) - - 253
Shares issued in respect of directors’ services 9 - - - 9
Balance as at 31 March 202116 153,706 4,509 (179) (55,508) 102,528
*Items in other comprehensive income may be reclassified to the income statement and are shown net of tax.
The accompanying notes form part of these financial statements.
For the year ended 31 March 2022
33
Financial StateMentS
Consolidated Statement of Financial Position
For and on behalf of the Board of Directors, who authorise these financial statements for issue on 18 May 2022
as at 31 March 2022
The accompanying notes form part of these financial statements.
JAN DAWSON
CHAIR OF AUDIT AND RISK COMMITTEE
CLAUDIA BATTEN
CHAIR
Notes20222021
$ (000)$ (000)
Current assets
Cash at bank and on hand11 34,51334,919
Short-term deposits11 90,00045,000
Receivables7 6,2265,393
Income tax receivable-7
Total current assets130,73985,319
Non-current assets
Property, plant and equipment9 4,3192,569
Intangible assets 10 32,05823,304
Deferred tax asset6 75117
Total non-current assets36,45225,990
Total assets167,191111,309
Current liabilities
Trade and other payables12 11,3087,142
Deferred income14 1,008-
Interest-bearing loans and borrowings15 2862
Lease liabilities13 8201,017
Derivative financial instruments8 16142
Income tax payable120-
Total current liabilities13,3008,363
Non-current liabilities
Deferred income14 853-
Interest-bearing loans and borrowings15 -28
Lease liabilities13 2,157390
Total non-current liabilities3,010418
Total liabilities16,3108,781
Equity
Share capital16 235,101153,706
Share-based payment reserve16 7,4834,509
Foreign currency reserve(236)(179)
Accumulated losses(91,467)(55,508)
Total equity150,881102,528
Total equity and liabilities167,191111,309
34
Consolidated Statement of Cash Flows
Notes20222021
$ (000)$ (000)
Cash flows from operating activities
Receipts from customers22,87815,542
Receipts from government grants - Covid-19 subsidies9623,268
Interest received228349
Receipts from other grants8561,012
Taxation paid(44)(253)
Payments to suppliers and employees(43,637)(38,406)
Interest payments on lease liabilities(69)(87)
Net GST refunded370533
Net cash flows used in operating activities20 (18,456)(18,042)
Cash flows from investing activities
Purchase of property, plant and equipment(774)(559)
Capitalised development costs and other intangible assets(15,320)(7,231)
Short-term deposits(45,000)(45,000)
Net cash flows used in investing activities(61,094)(52,790)
Cash flows from financing activities
Issue of ordinary shares83,28167,544
Cost of new share issue(3,188)(2,541)
Payment of lease liabilities(1,064)(1,266)
Non-executive directors non-recourse loan 200250
Net repayment of loans(62)(60)
Net cash flows from financing activities79,16763,927
Net decrease in total cash(383)(6,905)
Net foreign exchange difference(23)(567)
Cash and cash equivalents at beginning of period34,91942,391
Cash and cash equivalents at the end of the period34,51334,919
Cash and cash equivalents comprises the following:
Cash at bank and on hand11 34,51334,919
34,51334,919
The accompanying notes form part of these financial statements.
For the year ended 31 March 2022
35
Financial StateMentS
For the year ended 31 March 2022
In reaching their conclusion the Board has considered the
following factors:
•
Cash reserves (Cash at bank and Term Deposits) at 31
March 2022 of $124.5 million provides a sufficient level
of headroom to help support the business for at least
the next 12 months; and
•
Over the second half of the financial year, average
monthly cash burn was $3.0 million.
c) Statement of compliance
The financial statements have been prepared in
accordance with New Zealand Generally Accepted
Accounting Practice. They comply with New Zealand
equivalents to International Financial Reporting Standards
(NZ IFRS) and International Financial Reporting Standards,
as appropriate for profit-oriented entities.
d) Application of new and revised standards,
amendments and interpretations
There are no new revised or amended IFRS Standards that
are applicable to the Group for the year. The accounting
policies adopted are consistent with the prior year.
e) Basis of consolidation
The consolidated financial statements comprise the
financial statements of Serko Limited and its subsidiaries
as at and for the year ended 31 March each year.
Control is achieved when the Group is exposed, or has
rights, to variable returns from its involvement with
the investee and has the ability to affect those returns
through its power over the investee. Specifically, the Group
controls an investee if, and only if, the Group has:
•
Power over the investee (i.e. existing rights that give
it the current ability to direct the relevant activities of
the investee);
•
Exposure, or rights, to variable returns from its
involvement with the investee; and
•
The ability to use its power over the investee to affect
its returns.
When the Group has less than a majority of the voting
or similar rights of an investee, the Group considers all
relevant facts and circumstances in assessing whether it
has power over an investee, including:
1 CORPORATE INFORMATION
The financial statements of Serko Limited (‘the Company ’
or ‘Serko’) and subsidiaries (‘the Group’) were authorised for
issue in accordance with a Board resolution.
The Company is a limited liability company domiciled and
incorporated in New Zealand under the Companies Act 1993
and is listed on the New Zealand Stock Exchange (NZX) and
the Australian Securities Exchange (ASX) as an ASX Foreign
Exempt Listing. Its registered office is at Unit 14d, 125 The
Strand, Parnell, Auckland.
The Group provides online business travel booking software
solutions and is headquartered in Auckland, New Zealand.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation
of these consolidated financial statements are set out in
the respective notes and in this note. These policies have
been consistently applied to all the years presented, unless
otherwise stated.
a) Basis of preparation
The financial statements have been prepared in
accordance with generally accepted accounting practice
in New Zealand (NZ GAAP) and the requirements of
the Financial Markets Conduct Act 2013. The financial
statements have been prepared on a historical cost basis,
modified by the revaluation of certain assets and liabilities
as identified in specific accounting policies.
The financial statements are presented in New Zealand
dollars and all values are rounded to the nearest thousand
dollars unless stated otherwise.
The financial statements provide comparative information
in respect of the previous period.
b) Going concern
The Board has considered the ability of the Group to
continue to operate as a Going Concern for at least the
next 12 months from the date the financial statements are
authorised for issue. It is the conclusion of the Board that
the Group will continue to operate as a going concern and
the financial statements have been prepared on that basis.
Notes to the Financial Statements
36
•
The contractual arrangement with the other vote
holders of the investee;
•
Rights arising from other contractual arrangements;
and
•
The Group’s voting rights and potential voting rights.
The Group reassesses whether or not it controls an
investee if facts and circumstances indicate there are
changes to one or more of the three elements of control.
Consolidation of a subsidiary begins when the Group
obtains control over the subsidiary and ceases when the
Group ceases control of the subsidiary. Assets, liabilities,
income and expenses of a subsidiary acquired or disposed
of during the year are included in the financial statements
from the date the Group gains control until the date the
Group ceases to control the subsidiary.
A change in the ownership interest of a subsidiary,
without a cease of control, is accounted for as an equity
transaction. If the Group ceases control over a subsidiary,
it:
•
Derecognises the assets (including goodwill) and
liabilities of the subsidiary;
•
Derecognises the carrying amount of any non-
controlling interests;
•
Derecognises the cumulative translation differences
recorded in equity;
•
Recognises the fair value of the consideration
received;
•
Recognises the fair value of any investment retained;
•
Recognises any surplus or deficit in profit or loss; and
•
Reclassifies the parent’s share of components
previously recognised in other comprehensive income
to profit or loss or retained earnings, as appropriate, as
would be required if the Group had directly disposed of
the related assets or liabilities.
The acquisition of subsidiaries is accounted for using the
acquisition method of accounting. The acquisition method
of accounting involves recognising at acquisition date,
separately from goodwill, the identifiable assets acquired,
liabilities assumed and any non-controlling interest in the
acquiree. The identifiable assets acquired and liabilities
assumed are measured at their acquisition date fair values.
Acquisition-related costs are expensed as incurred and
recognised in profit or loss.
The difference between the above items and the fair value
of the consideration is recorded as either goodwill or gain
on bargain purchase. After initial recognition, goodwill is
measured at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired
in a business combination is, from the acquisition date,
allocated to each of the Group’s cash-generating units
expected to benefit from the combination, irrespective
of whether other assets or liabilities of the acquiree are
assigned to those units.
Goodwill is tested annually for impairment, or immediately
if events or changes in circumstances indicate that it
might be impaired and carried at cost less accumulated
impairment losses. Impairment losses on goodwill are not
reversed.
Any gain on bargain purchase is recognised immediately on
acquisition to profit and loss.
Inter-company transactions, balances and unrealised gains
and losses on transactions between Group companies are
eliminated.
Non-controlling interests are allocated their share of
comprehensive income after tax in the statement of
comprehensive income and are presented within equity
in the consolidated statement of financial position,
separately from the equity of the owners of the parent.
f) Foreign currency translation
i) Functional and presentation currency
Items included in these 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 ’). These financial
statements are presented in New Zealand dollars, which
is the Group’s presentation currency and the parent’s
functional currency.
Key factors supporting the determination that New Zealand
dollars are the parent’s functional currency are:
Serko is NZX listed and has raised capital in New Zealand
dollars;
Serko generates revenue in multiple currencies; and
New Zealand dollars are the primary currency for labour,
operating cost and capital expenditure.
ii) Transactions and balances
Transactions in foreign currencies are initially recorded
in the functional currency by applying the exchange rates
ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies are
retranslated at the rate of exchange ruling at balance date.
Non-monetary items measured in terms of historical cost
in a foreign currency are translated using the exchange
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Continued
37
noteS to Financial StateMentS
rate as at the date of the initial transaction. Non-monetary
items measured at fair value in a foreign currency are
translated using the exchange rates at the date when the
fair value was determined.
Foreign exchange gains and losses resulting from the
settlement of such transactions, and from the translation
at year end of exchange rates for monetary assets
and liabilities denominated in foreign currencies, are
recognised in profit or loss.
iii) Foreign Currency Translation Reserve
For the purposes of presenting these consolidated
financial statements, the assets and liabilities of the
Group’s foreign operations are translated into currency
units using exchange rates prevailing at the end of each
reporting period. Income and expense items are translated
at the average exchange rates for the period, unless
exchange rates fluctuate significantly during that period,
in which case the exchange rates at the dates of the
transactions are used. Exchange differences arising, if
any, are recognised in other comprehensive income and
accumulated in the foreign currency translation reserve.
g) Financial instruments
Cash at bank and on hand, short term deposits and
receivables are financial assets measured at amortised
cost. When financial assets are recognised initially they
are measured at fair value plus directly attributable
transaction costs. The Group determines the classification
of its financial assets on initial recognition and, when
allowed and appropriate, re-evaluates this designation at
each financial year end.
Derivative financial instruments are recognised at fair
value through profit or loss.
i) Amortised cost
Financial assets measured at amortised cost are those
held within a business model whose objective is to hold
financial assets to collect contractual cash flows and
the contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
They arise when the Group provides money, goods or
services directly to a debtor with no intention of selling
the receivable. Such assets are subsequently carried
at amortised cost using the effective interest method.
Expected credit loss movements are recognised in
profit or loss when the contract assets and liabilities
are derecognised or impaired, as well as through the
amortisation process.
ii) Financial liabilities
Financial liabilities are classified as ‘other financial
liabilities’. Other financial liabilities, including
interest-bearing loans and borrowings, are initially
measured at fair value, net of transaction costs. Other
financial liabilities are subsequently measured at
amortised cost using the effective interest method.
The effective interest method calculates the amortised
cost of a financial liability and allocates the interest
expense over the relevant period. The effective interest
rate is the rate that exactly discounts estimated future
cash payments through the expected life of the financial
liability or, where appropriate, a shorter period to the net
carrying amount of the liability.
Financial liabilities are classified as current liabilities
unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after
balance date.
iii) Impairment of financial assets
The Group recognises a loss allowance for expected
credit losses (ECL) on investments in debt instruments
that are measured at amortised cost or at fair value
through comprehensive income, lease receivables, trade
receivables and contract assets, as well as on financial
guarantee contracts. The amount of expected credit
losses is updated at each reporting date to reflect changes
in credit risk since initial recognition of the respective
financial instrument.
The Group always recognises lifetime ECL for trade
receivables, contract assets and lease receivables. The
expected credit losses on these financial assets are
estimated using a provision matrix based on the Group’s
historical credit loss experience, adjusted for factors that
are specific to the debtors, general economic conditions
and an assessment of both the current, as well as the
forecast direction of conditions at the reporting date,
including time value of money where appropriate.
Special consideration has been given to ECL in light of
the economic impact of Covid-19 throughout the travel
industry and the capacity of our customers to meet their
obligations to us.
For all other financial instruments the Group recognises
lifetime ECL when there has been a significant increase
in credit risk since initial recognition. However, if the
credit risk on the financial instrument has not increased
significantly since initial recognition, the Group measures
the loss allowance for that financial instrument at an
amount equal to 12-month ECL.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Continued
38
Lifetime ECL represents the expected credit losses
that will result from all possible default events over
the expected life of a financial instrument. In contrast,
12-month ECL represents the portion of lifetime ECL that
is expected to result from default events on a financial
instrument that are possible within 12 months after the
reporting date.
The Group writes off a financial asset when there is
information indicating that the debtor is in severe financial
difficulty and/or there is no realistic prospect of recovery,
e.g. when the debtor has been placed under liquidation or
has entered into bankruptcy proceedings or, in the case of
trade receivables, when the amounts are over two years
past due, whichever occurs sooner.
h) Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of a qualifying asset are
capitalised as part of the cost of that asset. A qualifying
asset is one that takes 12 months or longer to prepare
for its intended use or sale. Other borrowing costs are
expensed when incurred.
i) Other taxes
Revenues, expenses and assets are recognised net of the
amount of goods and services tax (GST) except where the
GST incurred on a purchase of goods and services is not
recoverable from the taxation authority, in which case
the GST is recognised as part of the cost of acquisition of
the asset or as part of the expense item as applicable. All
receivables and payables are stated GST inclusive.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables or
payables in the statement of financial position.
Commitments and contingencies are disclosed net of
the amount of GST recoverable from, or payable to, the
taxation authority.
j) Comparatives
Certain comparative amounts have been reclassified to
conform to the current year’s presentation. The definition
of Key management (note 19 (c)) has been redefined from
‘Chief Executive Officer and Chief Strategy Officer, the
executive management team and their direct reports’ to
‘Serko’s board of directors, the Chief Executive Officer and
direct reports’.
3 SIGNIFICANT ACCOUNTING JUDGEMENTS,
ESTIMATES AND ASSUMPTIONS
The preparation of the Group’s consolidated financial
statements requires the Group to make judgements,
estimates and assumptions that affect the reported
amounts of revenues, expenses, assets and liabilities and
the accompanying disclosures.
In the process of applying the Group’s accounting policies,
the following judgements have been applied, which have
an effect on the amounts recognised in the consolidated
financial statements.
a) Covid-19 pandemic
The Covid-19 pandemic has again disrupted the travel
industry during the current financial year, however Serko
has taken this as an opportunity to invest for growth in the
business. During the past year we have rolled-out our Zeno
platform globally in partnership with Booking.com, laying
solid foundations for growth as business travel resumes.
Since February 2022 we have seen positive transaction
growth, especially in Australia, as well as consistently
increasing volumes from Booking.com for Business during
the final quarter of the current financial year. The impact
of the pandemic on current year revenue has had an impact
on judgements around future forecast revenue and costs.
b) Revenue recognition (note 4)
Some customer agreements contain annual minimum
transaction volume commitments. These are normally for
the period of the agreement and span multiple financial
reporting periods. Based on this, the Company needs to
make a judgement about estimated future transaction
volumes to determine forecast related revenue for each
financial reporting period.
c) Development costs (note 10)
Development costs of a project are capitalised
in accordance with the accounting policy. Initial
capitalisation of costs is based on the Group’s judgement
that technological and economic feasibility is confirmed,
usually when a product development project has reached
a defined milestone according to an established project
management model. In determining the amounts to be
capitalised, management makes assumptions regarding
the expected future cash generation of the project and the
expected period of benefits.
d) Amortisation of Intangible assets (note 10)
The technology landscape is constantly changing and
evolving and as such has required Serko to evaluate the
useful life of internally developed software (computer
software). Based on current product development and
accounting principles we have assessed a useful life for
computer software assets of between 3 and 5 years (FY21:
5 years).
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Continued
39
noteS to Financial StateMentS
b) Revenue from services
Revenue from a contract to provide services is recognised
by reference to the completion of the contract or services
completed at balance date.
c) Contract assets
Contract assets primarily relate to accrued revenue for
contractual minimum guarantees (refer note 7). The
contract asset is reclassified to trade receivables at the
point at which it is invoiced to the customer. Contract
modifications arising from changes in pricing minimum
guaranteed volumes are assessed on an individual basis
and are accounted for prospectively, rather than adjusting
the revenue for already satisfied performance obligations.
d) Contract liabilities
If payments received exceed the revenue recognised to
date, a contract liability is recognised for the difference
(refer note 14).
e) Impairment (note 10 – Intangibles)
The Group reviews the carrying value of intangible and
non-financial assets on an annual basis, in particular,
goodwill, computer software and development work in
progress. Consideration is placed on a number of factors,
depending on the specific asset in question, which may
include discounted cash flow forecasts, the ability to
continue to generate discrete cash flow and returns,
any changes or anticipated changes in the business or
product circumstances and the nature of the events that
originally gave rise to the recognition of any non-financial
assets. The Group has considered reduced travel owing
to Covid-19 and made various assumptions and estimates
relating to the expected recovery profile of travel in various
geographies and its impact on Serko’s activities.
4 REVENUE & OTHER INCOME
Revenue is recognised and measured at the fair value of
the consideration received or receivable to the extent it
is probable that the entity will collect the consideration
to which it will be entitled in exchange for the goods or
services that will be transferred to the customer. Revenue
is disclosed net of credit notes, rebates and discounts.
a) Revenue from transaction and usage fees
Revenue from transaction and usage fees is recorded
at the time of travel or expense transactions processed
through Serko’s platforms. Contracts that have fixed
minimum booking volume arrangements are recognised
over the period of volume commitment. For contracts
without fixed consideration we have applied the ‘as
invoiced’ basis. Serko records revenue from its portfolio of
contracts with reference to actual transactions, forecast
transactions and minimum contracted commitments.
Owing to Covid-19 impacting the entire travel industry,
Serko has agreed to a number of changes to contracts with
customers, including changes to schedules of contracted
minimum revenue. This has had the effect of reducing the
revenue that Serko expected to record in the current year.
Serko Expense revenue is invoiced monthly on an active
user basis and revenue is recognised at a point in time.
Supplier commission revenue, predominantly from hotel
bookings, is recognised when the performance obligation
is fulfilled, which is when the reservation has been
completed (completed stay).
40
20222021
$ (000)$ (000)
Geographic information
Australia10,6867,520
New Zealand1,5392,154
US2,5972,369
Europe and Other3,033377
Total revenue17,85512,420
4 REVENUE & OTHER INCOME Continued
Notes20222021
$ (000)$ (000)
Revenue – transaction and usage fees:
Travel platform booking revenue9,0426,354
Expense platform revenue4,0393,997
Supplier commissions revenue3,447538
Services revenue1,0071,145
Other revenue320386
Total revenue17,85512,420
Government grants14 1,0064,382
Other1394
Total other income1,0194,476
Total revenue and other income18,87416,896
41
noteS to Financial StateMentS
Notes20222021
$ (000)$ (000)
Revenue – transaction and usage fees:
Travel platform booking revenue9,0426,354
Expense platform revenue4,0393,997
Supplier commissions revenue4,358538
Services revenue1,0071,145
Other revenue320386
Other income1,0194,476
Segment revenue19,78516,896
Consideration payable to customers(911)-
Total revenue and other income in accordance with NZ GAAP18,87416,896
Segment revenue
The Board and Executive team monitors the results of the Group’s operations as a whole for the purpose of making decisions
about resource allocation and performance assessment and therefore the Board has determined the Group is a single reportable
operating segment. This reporting segment is predominantly made up of revenue generated from transaction and usage fees,
which includes Travel platform bookings, supplier commissions and Expense revenue. As required under NZ IFRS 8 Serko is
required to report on major customers making up more than 10% of the revenue for the year. Under this disclosure Serko advises
that three customers (2021: two) had revenue more than 10% of the revenue for the Group. These customers accounted for
$9,335,635 of the revenue for the year ended 31 March 2022 (2021: $5,076,192).
Serko evaluates the performance of the operating segment based on revenue before consideration payable to customers.
As required by IFRS 15 Serko reduces revenue by the amount of consideration payable to customers. In the period the
consideration payable to customers comprised Serko’s share of jointly agreed marketing expenses. The marketing expenses are
not set by reference to the amount of revenue received from the customer.
4 REVENUE & OTHER INCOME Continued
42
5 EXPENSES
*Directors’ fees include $25,000 earned by a director of subsidiary, Serko India Private Limited.
20222021
$ (000)$ (000)
Operating loss before taxation includes the following expenses:
Marketing expenses1,5361,054
Third party connection costs894535
Other selling costs657467
Total selling and marketing expenses3,0872,056
Hosting expenses4,9322,710
Employee remuneration26,05925,083
Contributions to pension plans1,303880
Share-based payment expenses4,0953,184
Other remuneration and benefits617380
Total remuneration and benefits32,07429,527
Auditor remuneration and other assurance fees275171
Directors’ fees*493402
Movement of expected credit loss allowance on receivables(23)(19)
Bad debts written off19563
Rental and operating lease expenses172102
Professional fees1,618851
Computer licences1,3061,148
Insurance costs705438
Recruitment fees365536
Donations1-
Other administration expenses1,8191,236
Total administration expenses6,9264,928
Amortisation on intangibles6,3863,909
Depreciation1,6521,724
Total amortisation and depreciation8,0385,633
Expenses from ordinary activities55,05744,854
43
noteS to Financial StateMentS
Auditor remuneration
*Other assurance services relate to review of the Group’s compliance with Callaghan Innovation Grant requirements.
20222021
$ (000)$ (000)
Finance income and expenses includes:
Finance income
Interest received695379
Dividends received11
Total finance income696380
Finance expenses
Interest expense on lease liabilities(69)(87)
Other finance expenses(49)(46)
Total finance expenses(118)(133)
Total finance income and expenses578247
20222021
$ (000)$ (000)
Amounts for services performed by Deloitte Limited:
Audit of financial statements267147
Tax services-17
Other assurance services*87
Total audit fees275171
5 EXPENSES Continued
44
6 INCOME TAX
Tax assets and liabilities for the current period are measured at the amount expected to be recovered from, or paid to, the
taxation authorities based on the current period’s taxable income. The tax rates and tax laws used to compute the amounts are
those that are enacted or substantively enacted in the jurisdictions in which the Group operates at the reporting date.
Current income tax relating to items recognised directly in equity is recognised in equity and not in the statement of
comprehensive income. Management periodically evaluates positions taken in the tax returns, with respect to situations in which
applicable tax regulations are subject to interpretation, and establishes provisions where appropriate.
Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
•
Where the entity has unrecognised losses sufficient to cover the deferred income tax liability; and
•
For a deferred income tax liability arising from the initial recognition of goodwill; and
•
Where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a
business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
Deferred income tax assets are recognised for all deductible temporary differences and unused tax losses, to the extent that it is
probable that taxable profit will be available against which the deductible temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset
is realised or the liability is settled, based on tax rates (and tax laws) relevant to the appropriate tax jurisdiction, that have been
enacted or substantively enacted at the balance date.
20222021
$ (000)$ (000)
Current income tax
Current income tax charge41 9225
Adjustments in respect of income tax(141)(17)
278208
Deferred income tax
Origination and reversal of temporary differences41133
Income tax expense/(benefit) reported in the statement of comprehensive income319341
45
noteS to Financial StateMentS
20222021
Statement
of financial
position
Statement of
comprehensive
income
Statement
of financial
position
Statement of
comprehensive
income
$ (000)$ (000)$ (000)$ (000)
Deferred income tax liabilities recognised
Intangibles(72)(19)(53)267
Deferred income tax asset recognised
Intangibles and non-current assets*---(106)
Employee entitlements147(22)170(180)
Bonus provision---(8)
Share-based payments---(41)
Net deferred tax asset recognised75(41)117(68)
Deferred income tax asset not recognised2,546-1,688483
The prima facie tax payable on profit before income tax is reconciled to the income tax expense as follows:
20222021
$ (000)$ (000)
Accounting loss before income tax(35,640)(29,048)
At the statutory income tax rate of 28% (2021:28%) (9,979)(8,133)
Non-deductible items2,6173,108
Adjustments in respect of income tax(141)(17)
Foreign taxes460358
Tax losses and temporary differences unrecognised7,6505,174
Effect of tax on overseas subsidiaries at different rate(329)(149)
Income tax (benefit)/expense278341
At effective income tax rate of:-0.8%-1.2%
6 INCOME TAX Continued
Deferred income tax at 31 March relates to the following:
*Net of lease liabilities.
Unrecognised tax losses carried forward include $74.5m (2021: $44m) relating to New Zealand and $7.2m (2021: $3.6m) relating
to foreign jurisdictions.
The New Zealand group has a history of tax losses. Given the current uncertainty that exists, no recognition of New Zealand
temporary or tax loss assets has occurred.
46
7 RECEIVABLES
Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method, less provision for impairment.
Collectibility of receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off when
identified. Trade receivables are assessed for impairment and an expected credit loss (ECL) provision made based on lifetime
expected credit losses. The ECL model considers various aspects of credit risk within a risk matrix, considering history of debtor
write off, ageing of invoices, country, market and product risk.
Serko has also made decisions with respect to ECL that reflect the prevailing level of uncertainty in the travel industry and the
impact of Covid-19 on our customers’ businesses and their capacity to pay.
The impairment, and any subsequent movement, including recovery, is recognised in the statement of comprehensive income.
20222021
$ (000)$ (000)
Trade receivables2,3542,852
Expected credit loss provision(192)(215)
Trade receivables (net)2,1622,637
GST receivable312130
Sundry debtors66777
Contract assets2,3731,037
Prepayments1,313800
Funds held in trust-12
Total receivables6,2265,393
Foreign currency risk
The carrying amounts of the group’s receivables are denominated in the following
currencies:
New Zealand dollars2,7022,082
Australian dollars1,7162,091
US dollars430402
Other6518
4,9134,593
Total0-30 days31-60 days61-90 days91+ days
$ (000)$ (000)$ (000)$ (000)$ (000)
At 31 March the ageing analysis of receivables was as follows:
2022Trade receivables2,3541,6543 4186273
2021Trade receivables2,8521,64180368340
47
noteS to Financial StateMentS
Allowance for impairment loss – Trade receivables
Group trade receivables over 60 days were $359,000 (2021: $408,000). This balance of $359,000 has been assessed as part of
Covid-19’s impact on the recovery of trade receivables. An ECL provision of $192,000 (2021: $215,000) has been made as required
under NZ IFRS 9 resulting in a movement for the period of $23,000. Additionally, the Group recognises an allowance of individual
receivables if there is objective evidence of credit impairment or non-collectability.
Trade receivables are non-interest bearing and are generally on 30 - 60-day terms. Serko has historically low levels of
impairment on trade receivables.
Movement in ECL provision during the year was as follows:
7 RECEIVABLES Continued
20222021
$ (000)$ (000)
Balance at 1 April 2021215237
Bad Debts written off(195)(63)
Expected credit loss provision17241
Balance at 31 March 2022192215
Derivative financial instruments have been determined to be within level 2 of the fair value hierarchy. Foreign currency forward
exchange contracts have been fair valued using published market foreign exchange rates and contract forward rates discounted
at rates that reflect the credit risk of the counterparties.
20222021
$ (000)$ (000)
Current:
Foreign currency forward exchange contracts (liability)(16)(142)
Contractual amounts of forward exchange contracts outstanding were as follows:
Foreign currency forward exchange contracts2,8535,031
8 FINANCIAL INSTRUMENTS
Derivative financial instruments
The Group uses derivatives in the form of forward exchange contracts (FECs) to reduce the risk that movements in the exchange
rate will affect the Group’s New Zealand dollar cash flows. Such derivative financial instruments are initially recognised at fair
value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are
carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
The following table presents the Group’s foreign currency forward exchange contracts measured at fair value:
48
9 PROPERTY, PLANT AND EQUIPMENT
All items of property, plant and equipment are recorded
at cost less accumulated depreciation and impairment.
Initial cost includes purchase consideration and those
costs attributable to bringing the asset to the location and
condition necessary for its intended use. Where an item is
self-constructed, its construction cost includes the cost
of materials, direct labour and an appropriate proportion of
production overheads.
Subsequent expenditure relating to an item of property,
plant and equipment is added to its gross carrying amount
when such expenditure either increases the future
economic benefits beyond its existing service potential or
is necessarily incurred to enable future economic benefits
to be obtained and if that expenditure would have been
included in the initial cost of the item had it been incurred
at that time. The carrying amount of any replaced part is
derecognised.
All other repairs and maintenance expenditure is
recognised in profit or loss as incurred.
Depreciation is calculated on a straight-line basis over
the estimated useful life of the asset. The residual value
of assets is reviewed and adjusted, if appropriate, at each
balance date.
The following estimates have been used:
•
Leasehold improvements - Term of lease (7% - 16.7%)
•
Furniture and fittings - 10% - 13.5%
•
Computer equipment - 17.5% - 48%
•
Right-of-use asset - Term of lease
a) Impairment
The carrying values of property, plant and equipment
are reviewed for impairment when events or changes in
circumstances indicate the carrying value may not be
recoverable.
If any such indication exists and where the carrying values
exceed the estimated recoverable amount, the assets are
written down to their recoverable amounts.
b) Disposal
An item of property, plant and equipment is derecognised
upon disposal or when no further future economic benefits
are expected from its use or disposal. Any gain or loss
arising on derecognition of the asset (calculated as the
difference between the net disposal proceeds and the
carrying amount of the asset) is included in profit or loss in
the year the asset is derecognised.
49
noteS to Financial StateMentS
*Right-of-use assets relate to premises leases.
Leasehold
improvement
Furniture &
fittings
Computer
equipment
Right-of-use
asset*
Total
$ (000)$ (000)$ (000)$ (000)$ (000)
2022
Cost or valuation
Balance at 1 April 20216088271,8463,0916,372
Additions-427322,6283,402
Disposals--(9)(641)(650)
Currency translation115815
Balance at 31 March 20226098702,5745,0869,139
Depreciation
Balance at 1 April 20213453371,1631,9583,803
Depreciation expense130845209181,652
Disposals--(9)(641)(650)
Currency translation2-6715
Balance at 31 March 20224774211,6802,2424,820
Net carrying amount1324498942,8444,319
2021
Cost or valuation
Balance at 1 April 20206108141,3902,9015,715
Additions-31528362921
Disposals--(13)(117)(130)
Currency translation(2)(18)(59)(55)(134)
Balance at 31 March 20216088271,8463,0916,372
Depreciation
Balance at 1 April 20202182988389792,333
Depreciation expense122763881,1381,724
Disposals--(13)(117)(130)
Currency translation5(37)(50)(42)(124)
Balance at 31 March 20213453371,1631,9583,803
Net carrying amount2634906831,1332,569
9 PROPERTY, PLANT AND EQUIPMENT Continued
50
10 INTANGIBLES
Intangible assets acquired separately or in a business
combination are initially measured at cost. The cost of
an intangible asset acquired in a business combination
is its fair value as at the date of acquisition. Following
initial recognition, intangible assets are carried at cost
less any accumulated amortisation and any accumulated
impairment losses. Costs related to internally generated
intangible assets, excluding capitalised development
costs, are not capitalised and expenditure is recognised
in profit or loss in the year in which the expenditure is
incurred.
The useful lives of intangible assets are assessed to be
either finite or indefinite. Intangible assets with finite
lives are amortised over useful lives and tested for their
impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation period
and the amortisation method for an intangible asset with a
finite useful life is reviewed at least at each financial year
end. Changes in the expected useful life or the expected
pattern of consumption of future economic benefits
embodied in the asset, are accounted for prospectively
by changing the amortisation period or method, as
appropriate, which is a change in accounting estimate. The
amortisation expense on intangible assets with finite lives
is recognised in profit or loss.
Intangible assets with indefinite useful lives are tested
for impairment annually at the cash-generating unit level.
Such intangibles are not amortised. An intangible asset
with an indefinite useful life is reviewed at each reporting
period to determine whether indefinite life assessment
continues to be supportable. If not, the change in
the useful life assessment from indefinite to finite is
accounted for as a change in an accounting estimate and is
thus accounted for on a prospective basis.
Gains or losses arising from derecognition of an intangible
asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset
and are recognised in profit or loss when the asset is
derecognised.
A summary of the policies applied to the Group’s intangible
assets is as follows:
•
Goodwill and Other intangible assets (indefinite useful
life, tested annually for impairment);
•
Intellectual property (finite, amortised on 5 years
straight-line basis); and
•
Computer software (finite, amortised between 3 and 5
years on a straight-line basis).
Research and development
Research and maintenance costs are expensed as
incurred. An intangible asset arising from development
expenditure on an internal project is recognised only when
the Group can demonstrate the technical feasibility of
completing the intangible asset so that it will be available
for use or sale, its intention to complete and its ability to
use or sell the asset. Also considered is how the asset
will generate future economic benefits, the availability of
resources to complete the development and the ability
to reliably measure the expenditure attributable to the
intangible asset during its development. Following initial
recognition of the development expenditure, the cost
model is applied requiring the asset to be carried at cost
less any accumulated amortisation and impairment losses.
Any expenditure capitalised is amortised over the period of
expected benefit from the related project.
Intangible assets under development at balance date are
recorded as capital work in progress and are not subject to
amortisation.
Impairment of non-financial assets
Intangible assets that have indefinite useful lives or are
not yet completed are not subject to amortisation and are
tested annually for impairment or more frequently if events
or changes in circumstances indicate that they might be
impaired. Other assets are tested for impairment whenever
events or changes in circumstances indicate that the
carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which
the asset’s carrying amount exceeds its recoverable
amount. Recoverable amount is the higher of an asset’s fair
value less costs to sell, and value in use. For the purposes
of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash
inflows that are largely independent of the cash inflows
from other assets or groups of assets (cash-generating
units (‘CGUs’). Non-financial assets, including development
work in progress and computer software, are assessed for
impairment at a Group level under one reporting segment.
Non-financial assets, other than goodwill that suffered
impairment, are tested for possible reversal of the
impairment whenever events or changes in circumstances
indicate that the impairment may have reversed.
51
noteS to Financial StateMentS
The recoverable amount of the cash-generating unit is
determined from a value-in-use calculation that uses a
discounted cash flow analysis. The key assumptions for the
value-in-use calculation are those regarding the discount
rate, growth rates and forecast financial performance and
cash flows. Management estimates the discount rate using
rates that reflect current market assumptions of the time
value of money and risk specific to the cash-generating
unit. The growth rates are based on management’s best
estimate. Forecast revenues, direct and indirect costs,
are based on historical experience/past practices and
expectations of future changes in the markets the Group
operates in and services.
Domestic and international air travel is susceptible to
travel restrictions owing to Covid-19. Serko is at the rapid
growth stage in new markets. Consequently, there is
uncertainty relating to Serko’s forecast cash flows. Serko
experienced a significant reduction in travel bookings and
Serko Expense platform system use in the year ending
31 March 2022 relative to 2019 levels (pre-Covid-19). The
ongoing impacts may continue to affect travel. Serko’s
forecasts are based on the information available to the
Group at the time of preparing these financial statements
and were arrived at with reference to various data
sources, including airlines, the International Air Transport
Association (‘IATA’), external management consultancy
reports and TMC resellers.
Serko’s estimates of travel recovery and growth rates
remain uncertain and dependent on a number of factors
with respect to Covid-19, including timing of return to
domestic travel, border controls for international travel
and public demand and behaviour with respect to travel
and airline scheduling. The longer-term effects of Covid-19
on Serko’s business remain uncertain as the potential
impacts of the pandemic continue to evolve.
In undertaking an impairment review of the cash-
generating unit the following assumptions were used in the
impairment model:
•
Cash flow projections across a five-year forecast
period;
•
The assumptions with the greatest impact on
impairment testing are as follows:
–
The Australian and New Zealand travel industry
recovers to 80% of 2019 levels over FY23 and
recovers fully in FY25;
–
A combination of product enhancements and Covid
recovery drives strong volume growth on the Booking
for Business platform over the five year period; and
–
Northern Hemisphere travel markets are assumed to
return to 2019 levels in FY25.
•
A pre tax discount rate of 15.6%, equivalent to a post
tax weighted average cost of capital of 12.2% (FY21:
13.8%)
•
The Discount factor is applied using a mid-year
convention; and
•
Terminal growth rate of 2% (FY21: 2%).
In assessing the sensitivity of the forecasts to errors in
assumptions, an analysis in key underlying assumptions
was performed and applied to the weighted average
scenario. This included reducing the estimated revenue
in the fifth year by 20%, reducing the terminal growth
rate by 2% and increasing the discount rate by 1%. These
reasonably possible changes in assumptions did not result
in any impairment.
10 INTANGIBLES Continued
52
Goodwill
Intellectual
property
Other
intangible
assets
Development
work in
progress
Computer
software
Total
$ (000)$ (000)$ (000)$ (000)$ (000)$ (000)
2022
Cost
Balance at 1 April 20211,4451,524781,34526,36830,760
Additions---15,320-15,320
Transfer of cost---(10,433)10,433-
Currency translation(109)(115)-43(27)(208)
Balance at 31 March 20221,3361,409786,27536,77445,872
Amortisation and impairment
Balance at 1 April 2021-668--6,7887,456
Amortisation-286--6,1006,386
Currency translation-(26)--(2)(28)
Balance at 31 March 2022-928--12,88613,814
Net carrying amount1,336481786,27523,88832,058
2021
Cost
Balance at 1 April 20201,5221,714784,56415,95423,832
Additions---7,231-7,231
Transfer of cost---(10,408)10,408-
Currency translation(77)(190)-(42)6(303)
Balance at 31 March 20211,4451,524781,34526,36830,760
Amortisation and impairment
Balance at 1 April 2020-482--3,2403,722
Amortisation-301--3,6083,909
Currency translation-(115)--(60)(175)
Balance at 31 March 2021-668--6,7887,456
Net carrying amount1,445856781,34519,58023,304
10 INTANGIBLES Continued
53
noteS to Financial StateMentS
11 CASH AT BANK AND ON HAND AND SHORT-TERM DEPOSITS
Cash in the statement of financial position comprise cash at bank, and on hand, short-term highly liquid investments with an
original maturity of three months or less.
20222021
$ (000)$ (000)
Cash at bank – New Zealand dollar balances27,32328,842
Cash at bank – foreign currency balances7,1906,077
Cash at bank and on hand34,51334,919
The carrying amounts of the group’s cash at bank and on hand are denominated in the
following currencies:
New Zealand dollars27,32328,842
Australian dollars6613,224
Chinese Yuan896523
US dollars2,5522,330
European Euros3,081-
34,51334,919
Short term deposits90,00045,000
Cash includes USD$1.5 million of restricted cash in the form of a minimum bank balance required in the US to provide same-day
clearance for expense reimbursement services.
The Group has an indemnity guarantee over the Australian leased property of $108,000.
Short-term deposits of $90 million (2021: $45 million) represent term deposits with a maturity period of more than 90 days, but
less than one year. Short-term deposits are all New Zealand dollars denominated.
54
12 TRADE AND OTHER PAYABLES
Employee benefits
Liabilities for wages and salaries, including non-monetary benefits, long-service leave and annual leave expected to be settled
within 12 months of the reporting date, are recognised in respect of employees’ services up to the reporting date. They are
measured at the amounts expected to be paid when the liabilities are settled.
Trade and other payables
Trade and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group
prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in
respect of the purchase of these goods and services.
The average credit period on trade payables is approximately 30 days.
20222021
$ (000)$ (000)
Trade payables1,9451,772
Other payables3,376-
Accrued expenses3,6283,549
Annual leave accrual2,3591,821
Total trade and other payables11,3087,142
Disclosed as:
Current11,3087,142
Non-current--
11,3087,142
55
noteS to Financial StateMentS
13 LEASE LIABILITIES
Recognition and measurement of Serko leasing activities
The Group leases property for fixed periods of between one and six years and some include extension options. These extension
options are usually at the discretion of The Group and are included in the measurement of the lease asset if management intends
to exercise the extension.
Lease liabilities include the net present value of fixed payments less any lease incentives receivable. The lease payments are
discounted using the lessee’s incremental borrowing rate, being the rate that the lessee would have to pay to borrow the funds
necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.
The amortisation of the discount applied on recognition of the lease liability is recognised as interest expense in the income
statement.
Key movements relating to lease balances are presented below.
20222021
$ (000)$ (000)
Balance at 1 April 20211,4072,345
Leases entered into during the period2,628362
Principal repayments(1,064)(1,266)
Foreign exchange adjustment6(34)
Closing balance2,9771,407
Classified as:
Current8201,017
Non-current2,157390
Closing balance2,9771,407
Maturity analysis - contractual undiscounted cash flows:
Less than 1 year1,0231,061
Later than 1 year and not later than 2 years96241 0
Later than 2 years and not later than 5 years1,365-
Total undiscounted lease liabilities at 31 March3,3501,471
56
14 GOVERNMENT GRANTS AND DEFERRED INCOME
Deferred income is presented in the table below:
Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions
attaching to them and that the grants will be received.
The Research and development tax credit is recognised as income as it is expected to be recognised in cash.
Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises
as expenses the related costs for which the grants are intended to compensate. As some grants relate to costs capitalised
to depreciable assets, amounts are recognised as deferred income in the consolidated statement of financial position and
transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.
Income relating to grants is presented in the table below:
20222021
$ (000)$ (000)
Opening deferred income
--
Covid-19 government subsidies(377)-
Research and development tax credit (RDTI)(994)-
Contract liabilities(490)-
Closing deferred income(1,861)-
Deferred income disclosed as:
Current(1,008)-
Non-current(853)-
(1,861)-
20222021
$ (000)$ (000)
During the year, the Group claimed the following grants:
Covid-19 government subsidies9693,437
Research and development tax credit (RDTI)1,337-
Callaghan R&D grant-930
Other government grants7615
Total compensation2,3824,382
Income recognised
Covid-19 government subsidies5873,437
Research and development tax credit (RDTI)343-
Callaghan R&D grant-930
Other government grants7615
Total income recognised1,0064,382
57
noteS to Financial StateMentS
20222021
$ (000)$ (000)
Current
Leasehold fitout loan2862
2862
Non-current
Leasehold fitout loan-28
-28
Total Interest-bearing loans and borrowings2890
15 INTEREST-BEARING LOANS AND BORROWINGS
58
2022202120222021
Number of
shares
Number of
shares
$ (000)$ (000)(000)(000)
Ordinary shares
Balance at 1 April153,70687,751107,82292,739
Issue of shares pursuant to institutional capital placement75,00047,50010,63810,439
Issue of shares pursuant to Share Purchase Plan (SPP) placement8,28120,0001,2094,396
Transaction costs for issue of new shares(3,188)(2,541)--
Non-executive director’s settlement of non-recourse loan247303--
Issue of shares pursuant to US Options plan457116
Issue of shares pursuant to RSU scheme1,051627251229
Issue of shares in respect of director services-9-3
Share capital at 31 March235,101153,706119,921107,822
Share-based payment reserve
Balance at 1 April4,5092,374
RSUs allocated to employees4,0512,397
Shares vested to employees via RSU scheme(1,051)(596)
RSUs forfeited by employees(108)(46)
Shares vested to employees via RSP95391
Shares forfeited by employees via RSP(3)(13)
Non-executive director’s settlement of non-recourse loan(47)(50)
Share-based payments - employee share options3752
Share-based payment reserve at 31 March7,4834,509
16 EQUITY
Ordinary share capital is recognised at the fair value of the consideration received. Transaction costs relating to the listing
of new ordinary shares and the simultaneous sale and listing of existing shares are allocated to those transactions on a
proportional basis.
Transaction costs relating to the sale and listing of existing shares are not considered costs of an equity instrument as no equity
instrument is issued and, consequently, costs are recognised as an expense in the statement of comprehensive income when
incurred. Transaction costs relating to the issue of new share capital are recognised directly in equity as a reduction of the share
proceeds received.
During the year the Group allocated the following restricted shares to Serko employees (refer to note 18):
•
In respect of the Restricted Share Plan (RSP), the Group allocated nil shares (2021: nil). Unallocated shares are 1,263,865
(2021: 1,262,784); and
•
In respect of Restricted Share Units (RSU), the Group allocated 801,984 (2021: 1,220,061).
59
noteS to Financial StateMentS
17 EARNINGS PER SHARE (EPS)
Basic EPS amounts are calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the profit / (loss) attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the year, plus the weighted average number of shares that
would be issued on conversion of all of the dilutive potential ordinary shares into ordinary shares. Potential ordinary shares are
treated as dilutive when their conversion to ordinary shares would decrease EPS or increase the loss per share.
The following reflects the income and share data used in the basic and diluted EPS computations:
Net tangible assets per security is a non-GAAP measure and is provided for NZX reporting purposes. Net tangible assets per security is
calculated as Total assets less Total liabilities less Intangible assets divided by the issued ordinary shares (excluding treasury shares)
as at 31 March.
20222021
$ (000)$ (000)
Loss attributable to ordinary equity holders of the parent
Continuing operations(35,959)(29,389)
(35,959)(29,389)
20222021
CentsCents
Net tangible assets per security100.1474.59
Notes20222021
NumberNumber
(000)(000)
Basic earnings per share
Issued ordinary shares16119,921107,822
Weighted average of issued ordinary shares111,83999,659
Adjusted for unallocated employee restricted share plan shares(1,264)(1,607)
Weighted average of issued ordinary shares outstanding110,57598,052
Basic and diluted earnings/(loss) per share (dollars)
(0.33)(0.30)
60
20222021
Number of sharesNumber of shares
Unvested shares at 1 April343,880662,292
Forfeited during the year(1,081)(5,937)
Vested during the year(342,799)(312,475)
Unvested shares at 31 March - allocated to employees-343,880
Ageing of unvested shares
Vest within one year-343,880
Ageing of unvested shares at 31 March - allocated to employees-343,880
Unallocated shares - held by trustee
1,263,8651,262,784
18 SHARE-BASED PAYMENTS
Employees of the Group receive remuneration at the Board’s discretion in the form of share-based payment transactions, where
services are provided as consideration for the receipt of equity instruments.
The cost of share-based payment transactions are recognised, together with a corresponding increase in equity, over the period
in which the service conditions are fulfilled. The cumulative expense recognised for share-based transactions at each reporting
date, until the vesting date, reflects the extent to which the vesting period has expired and the Group’s best estimate of the
number of equity instruments that will ultimately vest. The expense or credit for a period represents the movement in cumulative
expenses recognised at the beginning and end of that period.
No cumulative expense is recognised for awards that do not ultimately vest except where vesting is conditional upon a market
condition.
Employee Restricted Share Plan
The Serko Limited Employee Restricted Share Plan (RSP) was introduced for selected executives and employees of the Group but
has been superseded by the Restricted Share Units scheme (RSUs). There were no new shares granted under the RSP during the
year. Under the RSP, ordinary shares in Serko Limited are issued to a trustee, Serko Trustee Limited, a wholly-owned subsidiary,
and allocated to participants, on grant date, using funds lent to them by the Company.
Under the RSP, shares are beneficially owned by the participants. The length of retention period before the shares vest is
between one and three years. If the individual is still employed by the Group at the end of this specific period, the employee is
awarded a cash bonus that must be used to repay the loan and shares are then transferred to the employee. The Group has no
legal or constructive obligation to repurchase the shares or settle the RSP for cash.
The number of shares awarded pursuant to the RSP does not equal the number of shares created for the scheme, as the scheme
had an allocated pool of shares upon set up and forfeited shares are held in the trust and reissued.
61
noteS to Financial StateMentS
Employee Restricted Share Units scheme (RSUs)
The Serko Limited Employee Restricted Share Units scheme (RSUs) was introduced to replace the RSP. Under the RSUs, ordinary
shares in Serko Limited are allocated to employees at grant date with a zero-exercise price and will be taxable to the employee in
the income year when the awards vest.
Vesting conditions are based on:
•
Continued employment at vesting date and/or;
•
Performance hurdles, such as performance against revenue targets.
The weighted average grant date fair value of RSUs issued during the year was determined by either the volume weighted
average price (VWAP) of shares traded in the previous 20 trading days preceding the date of grant or closing price the day before
issue.
2022202220212021
Weighted average
exercise price ($)
Options
Weighted average
exercise price ($)
Options
Outstanding at 1 April - 168,667 - 128,287
Granted to employees during the year - - 4.80 59,619
Cancelled during the year 3.61 (19,365) 4.80 (3,109)
Exercised during the year 3.32 (993) 2.68 (16,130)
Outstanding at 31 March148,309168,667
Employee incentive share options scheme
There were no options granted during the year, as this scheme has been replaced with employees now receiving RSUs.
Options are conditional on the completion of the necessary years of service (the vesting period) as appropriate to that tranche.
The options are considered graded equity instruments that vest in tranches over two to five years from the grant date. No
options can be exercised later than five years from grant date. There were 37 holders of options at 31 March 2022 (2021: 41).
The Group has no legal or constructive obligation to repurchase or settle the options in cash.
Movements in the number of options outstanding and their related weighted average exercise prices are as follows:
18 SHARE-BASED PAYMENTS Continued
2022202220212021
Weighted
average
price NZ$
Number
of RSUs
Weighted
average
price NZ$
Number
of RSUs
Outstanding at 1 April1,514,291590,617
Allocated to employees during the year6.79801,984 3.99 1,220,061
Cancelled during the year5.7(68,114) 3.08 (67,764)
Vested during the year4.19(250,939) 2.74 (228,623)
Outstanding at 31 March1,997,2221,514,291
62
20222021
GrantedExpiry date
Grant price
(NZ$)
OptionsOptions
2018-19 2023-24 2.68-3.32 56,52167,988
2019-20 2023-24 3.95-4.49 42,75043,707
2020-21 2023-24 4.80 49,03856,973
148,309168,668
Options outstanding at 31 March fall within the following ranges:
Non-executive director shares
The Group’s non-executive directors were granted shares in 2014 that are to be settled by way of a non-recourse loan. The non-
recourse loans were due for repayment on 30 June 2020, following an extension to the previous loan due 30 June 2017. The loan
extension was valued using the Black-Scholes model, with the incremental fair value recognised in the profit and loss.
During the year Mr McConaghy ’s loan was settled following an extension to 30 June 2021.
18 SHARE-BASED PAYMENTS Continued
63
noteS to Financial StateMentS
19 RELATED PARTIES
a) Subsidiaries
The consolidated financial statements include the financial statements of Serko Limited and subsidiaries as listed in the following
table:
% Equity interest
Principal activity2022
Serko Australia Pty LimitedSales and marketing100%
Serko Trustee LimitedTrustee100%
Serko India Private LimitedNon-trading100%
Serko Investments LimitedNon-trading100%
Foshan Sige Information Technology LimitedResearch and development services100%
Serko IncSales and marketing100%
InterplX IncExpense management100%
20222021
$ (000)$ (000)
Restated*
Non-executive director’s remuneration468367
Salary and other short-term benefits3,5953,217
Share-based payments2,0931,902
Total compensation6,1565,486
b) Transactions with related parties
There were no transactions with related parties for the year other than key management remuneration.
c) Key management remuneration*
* Key management personnel includes Serko’s board of directors, the Chief Executive Officer and direct reports. Share-based payments
represent the value movement in the unvested share-based payments granted that will vest in future years.
d) Terms and conditions of transactions with related parties
Outstanding balances at year end are unsecured and settlement occurs in cash.
For the year ended 31 March 2022 the Group has not made any allowance for impairment loss relating to amounts owed by related
parties (2021: $nil). An impairment assessment is undertaken each financial year by examining the financial position of the
related party and the market in which the related party operates, to determine whether there is objective evidence that a related
party receivable is impaired. When such objective evidence exists, the Group recognises an allowance for the impairment loss.
64
20222021
$ (000)$ (000)
Net loss after tax(35,959)(29,389)
Add non-cash items
Amortisation6,3863,909
Depreciation1,6521,724
Deferred tax loss41133
Loss on foreign exchange transactions271,372
Share-based compensation - directors’ fees-9
Share-based compensation4,0762,869
(23,777)(19,373)
Add/(less) movements in working capital items
(Increase)/decrease in receivables(833)1,185
(Increase)/decrease in income tax receivable12777
Increase in trade and other payables6,02769
5,3211,331
Net cash flow used in operating activities(18,456)(18,042)
20 RECONCILIATION OF OPERATING PROFIT TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES
65
noteS to Financial StateMentS
21 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments comprise cash at bank and on hand, short-term deposits, derivatives, receivables,
payables and loans.
The Group manages its exposure to key financial risks, including currency risk, in accordance with the Group’s financial risk
management policy. The objective of the policy is to support the delivery of the Group’s financial targets whilst protecting future
financial security.
Group capital consists of share capital and retained earnings. To maintain or adjust the capital structure, the Group may adjust
amounts of dividends paid to shareholders, return capital to shareholders, issue new shares or amend capital spending plans.
The main risks arising from the Group’s financial instruments are foreign currency, interest, credit and liquidity risk. The Group
uses different methods to measure and manage the different types of risks to which it is exposed. These include monitoring
levels of exposure to foreign exchange risk and assessments of market forecasts for foreign exchange. Ageing analyses
and monitoring of specific credit allowances are undertaken to manage credit risk. Liquidity risk is monitored through the
development of future rolling cash flow forecasts.
The Board reviews and agrees policies for managing each of these risks as summarised below.
a) Risk exposures and responses
i) Interest rate risk
At balance date this year and prior year, the Group did not have any financial liabilities exposed to variable interest rate risk.
Excess funds over the forecasted requirements for the 12-month period following year end are invested in short-term deposits
with a mixture of maturity dates to manage interest rate risk and liquidity risks.
ii) Liquidity and interest rate risk
Liquidity risk represents the Group’s ability to meet its financial obligations on time. In terms of managing its liquidity risk,
the Group holds sufficient cash reserves to meet its obligations arising from its financial liabilities.
66
Weighted
average
effective
interest rate %
Contractual
cash flows
6 months
or less
6-12
months
1-2 years2-5 years
More than 5
years
$ (000)$ (000)$ (000)$ (000)$ (000)$ (000)
Group - 2022
Trade and other payables0%11,30811,308----
Leasehold fitout loan8%2828----
Lease liability8% 3,350 548 475 962 1,365 -
14,68611,8844759621,365-
Group - 2021
Trade and other payables0%7,1427,142----
Leasehold fitout loan8%90313128--
Lease liability7%1,471531531409
8,7037,704562437--
The following table sets out the contractual cash flows for all non-derivative financial liabilities settled on a gross
cash flow basis:
b) Currency risk
The Group has exposure to foreign exchange risk as a result of transactions denominated in foreign currencies. The risk
specifically relates to the variability of foreign exchange rates for the currencies the Group trades in and the impact this
has on the Group’s financial results. The majority of the Group’s expenditure occurring in New Zealand dollars, however,
sales to overseas customers are transacted in Euros, Australian dollars and US dollars.
Refer to notes 7 (receivables), 11 (cash at bank and on hand and short-term deposits) and 12 (trade and other payables)
for further details on the Group’s foreign currency denominated accounts receivable, accounts payable and cash and
short-term deposit balances.
21 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES Continued
67
noteS to Financial StateMentS
Foreign currency risk
+15%-15%
Carrying
amount
Post-tax
profit
Equity
Post-tax
profit
Equity
$ (000)$ (000)$ (000)$ (000)$ (000)
2022
Foreign exchange balances
Cash at bank7,190675675(914)(914)
Trade receivables2,211288288(390)(390)
Trade payables(2,196)(206)(206)279279
Net exposure7,205757757(1,025)(1,025)
2021
Foreign exchange balances
Cash at bank6,077571571(772)(772)
Trade receivables2,511252252(341)(341)
Trade payables(1,467)(138)(138)186186
Net exposure7,121685685(927)(927)
The following table summarises the sensitivity to foreign currency exchange rate movements. A sensitivity of +/- 15% (2021: +/-
15%) has been selected owing to exchange rate volatility observed:
The sensitivity table below is excluding the impact of foreign exchange contracts:
c) Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash at bank and on hand, short-term deposits,
receivables and contract assets. The Group’s exposure to credit risk arises from potential default of the counterparty, with a
maximum exposure equal to the carrying amount of these instruments. Exposure at balance date is addressed in each applicable
note.
The Group does not hold any credit derivatives to offset its credit exposure.
The Group monitors and manages the exposure to credit risk by ensuring customers have an appropriate credit history.
The credit risk associated with Expense customers is small owing to the inherently low transaction value and the distribution
over a large number of customers.
At reporting date the Group held 53% of cash and short-term deposits with one bank and 47% in other banks (2021: 96% held
with one bank). The Group has no other concentrations of credit risk.
d) Fair value
The Board considers that the carrying amounts of financial assets and financial liabilities recognised in the consolidated
financial statements approximate their fair value.
21 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES Continued
68
22 EVENTS AFTER BALANCE SHEET DATE
There were no significant events between the balance sheet date and the date these financial statements were
authorised for issue.
23 CONTINGENT LIABILITIES
There were no contingent liabilities at balance date (2021: $nil).
69
noteS to Financial StateMentS
Independent Auditor’s Report
OPINION
We have audited the consolidated financial statements
of Serko Limited and its subsidiaries (the ‘Group’), which
comprise the consolidated statement of financial position
as at 31 March 2022, and the consolidated statement of
comprehensive income, statement of changes in equity
and statement of cash flows for the year then ended,
and notes to the consolidated financial statements,
including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial
statements, on pages 32 to 69, present fairly, in all material
respects, the consolidated financial position of the Group as
at 31 March 2022, and its consolidated financial performance
and cash flows for the year then ended in accordance with
New Zealand Equivalents to International Financial Reporting
Standards (‘NZ IFRS’) and International Financial Reporting
Standards (‘IFRS’).
BASIS FOR OPINION
We conducted our audit in accordance with International
Standards on Auditing (‘ISAs’) and International Standards
on Auditing (New Zealand) (‘ISAs (NZ)’). Our responsibilities
under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Consolidated Financial
Statements section of our report.
We 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
International Code of
Ethics for Assurance Practitioners (including International
Independence Standards) (New Zealand) issued by the
New Zealand Auditing and Assurance Standards Board and
the International Ethics Standards Board for Accountants’
International Code of Ethics for Professional Accountants
(including International Independence Standards), and we
have fulfilled our other ethical responsibilities in accordance
with these requirements.
To the Shareholders of Serko Limited
Other than in our capacity as auditor and the provision
of assurance services, we have no relationship with or
interests in the Company or any of its subsidiaries, except
that partners and employees of our firm may deal with the
Company and its subsidiaries on normal terms within the
ordinary course of trading activities of the business of
the Company and its subsidiaries.
AUDIT MATERIALITY
We consider materiality primarily in terms of the magnitude
of misstatement in the financial statements of the Group that
in our judgement would make it probable that the economic
decisions of a reasonably knowledgeable person would be
changed or influenced (the ‘quantitative’ materiality). In
addition, we also assess whether other matters that come to
our attention during the audit would in our judgement change
or influence the decisions of such a person (the ‘qualitative’
materiality). We use materiality both in planning the scope
of our audit work and in evaluating the results of our work.
We determined materiality for the Group financial statements
as a whole to be $1,300,000.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
consolidated financial statements of the current period.
These matters were addressed in the context of our audit
of the consolidated financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate
opinion on these matters.
70
Key audit matterHow our audit addressed the key audit matter
REVENUE RECOGNITION
The Group has reported total revenue of $17.9 million,
as set out in note 4 ‘Revenue and other income’.
Revenue is based on multiple customer contracts that
contain different pricing schedules and varying revenue
recognition triggers. Complexity exists because of the
specific nature of each customer contract, which can
include transactional and usage fees, establishment
and installation fees, and chargeable work orders.
Management judgement is required to estimate revenue
recognition where cash flows do not align to contract
performance obligations, in particular when minimum
transaction volume commitments have period end dates
that do not align to the financial year end.
The recognition of revenue is a key audit matter due to
the significance of revenue to the financial statements
and the specific nature of individual customer contracts.
We considered the ongoing impact of NZ IFRS 15:
Revenue
from Contracts with Customers for new and material contracts
or significant variations entered into during the year.
We evaluated the systems, processes and controls in place
over the major operating revenue streams.
We engaged our Information Technology specialists to test
the IT environment in which bookings occur and interfaces
with the general ledger.
We recalculated revenue recognised for a sample of material
customers by reconciling transactions recorded in the relevant
IT systems to the general ledger and validating pricing inputs
to invoices and signed customer contracts.
We tested samples of manual journal entries recorded outside
of normal business processes by profiling for unusual revenue
impacting journals.
We assessed key judgements adopted by the Group in
recognising revenue including the timing and disclosure
of revenue net of credit notes, rebates and discounts and
the extent that forecast volumes are impacted by Covid-19.
71
inDePenDent auDitor'S rePort
CAPITALISATION OF SOFTWARE DEVELOPMENT
INCLUDING IMPAIRMENT CONSIDERATIONS
The Group capitalised $10.4 million in relation to
software development, as set out in note 10 ‘Intangibles’.
Development work in progress is $6.3 million at balance date.
Capitalisation of software development
As a Software as a Service (“SaaS”) provider, the Group
incurs significant expenditure in developing and enhancing
software products.
Judgement is required to determine whether the recognition
criteria under NZ IAS 38
Intangible Assets have been met
in order to capitalise the applicable costs of development.
This includes considering whether the costs are directly
attributable to the development of an asset, and whether the
Group can demonstrate that the asset is in the development
stage. This includes demonstrating the technical feasibility
of completing the intangible asset so that it will be available
for use, the Group’s intention to complete the asset, how the
asset will generate future economic benefits, the viability of
resources to complete the asset development and the ability
of the Group to reliably measure the expenditure attributable
to the intangible asset.
Impairment assessment
The Group must also assess each period whether there
are any indications that the software development assets
are impaired and must perform impairment testing on any
capitalised development costs for which there are indicators
of impairment or which relate to software that is not yet
available for use.
Serkos estimates of travel recovery and growth rates remain
uncertain and dependent on a number of factors with respect
to Covid-19, including timing of the recovery of domestic and
international travel and public demand and behavior with
respect to travel and airline scheduling.
Cashflows are sensitive to Australia, New Zealand and the
Northern Hemisphere travel markets recovering fully in
FY25, and strong volume growth on the Booking for Business
platform over the five year period.
We have included capitalisation and impairment considerations
of software development as a key audit matter due to the level
of judgement required.
Capitalisation of software development
We evaluated the nature of expenditure, the stage of product
development, and how the Group distinguishes expenditure
between research, development and maintenance costs.
We assessed the Group’s processes and controls for recording
time spent on products and the allocation between research
or software development to be capitalised under NZ IAS 38.
We tested a sample of additions to evaluate whether
the recognition criteria under NZ IAS 38 have been met.
Impairment assessment
We considered existing software for technical obsolescence,
by ensuring appropriate revenues exist for those products
and corroborating with management whether features or
product enhancements previously capitalised are still in use.
We challenged the key assumptions within the cash
flow forecasts by considering historical cashflows, our
understanding of the business strategy and other relevant
external information.
We used our internal valuation specialists to assist in
evaluating the assumptions used in the Group’s discounted
cash flow model, specifically the discount rate and terminal
growth rates used, to support the carrying value of assets
as at 31 March 2022.
We performed a sensitivity analysis over key drivers in the
Group’s impairment model, particularly assumptions around
forecast travel bookings and volume growth on Booking for
Business platform.
Key audit matterHow our audit addressed the key audit matter
72
OTHER INFORMATION
The directors are responsible on behalf of the Group for
the other information. The other information comprises
the information in the Annual Report that accompanies the
consolidated financial statements and the audit report.
Our opinion on the consolidated financial statements does
not cover the other information and we do not express any
form of assurance conclusion thereon.
Our responsibility is to read the other information and
consider whether it is materially inconsistent with the
consolidated financial statements or our knowledge obtained
in the audit or otherwise appears to be materially misstated.
If so, we are required to report that fact. We have nothing to
report in this regard.
DIRECTORS’ RESPONSIBILITIES FOR THE CONSOLIDATED
FINANCIAL STATEMENTS
The directors are responsible on behalf of the Group for the
preparation and fair presentation of the consolidated financial
statements in accordance with NZ IFRS and IFRS, and for such
internal control as the directors determine is necessary to
enable the preparation of consolidated financial statements
that are free from material misstatement, whether due to
fraud or error.
In preparing the consolidated financial statements, the
directors are responsible on behalf of the Group for assessing
the Group’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either
intend to liquidate the Group or to cease operations, or have
no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE
CONSOLIDATED FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with ISAs
and ISAs (NZ) will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated
financial statements.
A further description of our responsibilities for the audit
of the consolidated financial statements is located on the
External Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-
practitioners/auditors-responsibilities/audit-report-1
This description forms part of our auditor’s report.
RESTRICTION ON USE
This report is made solely to the Company ’s shareholders,
as a body. Our audit has been undertaken so that we might
state to the Company ’s shareholders those matters we are
required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than
the Company ’s shareholders as a body, for our audit work,
for this report, or for the opinions we have formed.
Bryce Henderson, Partner
for Deloitte Limited
Auckland, New Zealand
18 May 2022
73
inDePenDent auDitor'S rePort
OVERVIEW OF SERKO’S GOVERNANCE STRUCTURE
The Serko Board has been appointed by shareholders to
protect and enhance the long-term value of Serko and to act
in the best interests of Serko and its shareholders. The Board
is the ultimate decision-making body of the Company and is
responsible for the corporate governance of the Company.
The role and responsibilities of the Board are set out in the
Board Charter, which can be found in the Company Corporate
Governance Manual on the investor centre of the Company ’s
website.
The Board currently comprises an independent non-executive
Chair, two independent non-executive directors and two
executive directors, as detailed on page 8 of this Annual
Report. These directors held office throughout the financial
year ended 31 March 2022 with one change occurring, Simon
Botherway retiring and Jan Dawson being appointed.
The Board has established two standing Board Committees to
assist in the execution of the Board’s responsibilities:
•
Audit and Risk Committee – The current members
of the Committee are Jan Dawson (Chair), Clyde
McConaghy and Claudia Batten. All members
are independent, non-executive directors. Their
qualifications and experience are set out under Board
of Directors in this Annual Report; and
•
People, Remuneration and Culture Committee (formerly
the Remuneration and Nominations Committee) –
The current members of the Committee are Clyde
McConaghy (Chair), Jan Dawson and Claudia Batten. All
members are independent, non-executive directors.
Their qualifications and experience are set out under
Board of Directors in this Annual Report.
The role of the Nomination Committee is currently carried
out by the full Board. This role was previously carried out
by the Remuneration and Nominations Committee, which
was superseded by the People, Remuneration and Culture
Committee during FY22.
For the year ended 31 March 2022
INTRODUCTION
The Board and management of Serko Limited (Serko or the
Company) are very committed to ensuring that Serko maintains
best practice corporate governance and adheres to the highest
ethical standards.
The Board has considered the NZX Listing Rules and a
number of corporate governance recommendations when
establishing its governance framework, including the current
NZX Corporate Governance Code dated 10 December 2020
(NZX Code) and the Fourth Edition of the Australian Securities
Exchange (ASX) Corporate Governance Council Principles and
Recommendations.
The NZX Listing Rules require Serko to formally report its
compliance against the recommendations contained in the
NZX Code. Serko’s implementation of these recommendations
is set out in Serko’s Corporate Governance Statement,
which is included in its
ESG Report and can be found on
the investor centre of the Company ’s website. Go to:
www.serko.com/investors.
The Board considers that Serko’s corporate governance
structures, practices and processes have followed all of the
recommendations in the NZX Code during the financial year
ended 31 March 2022, except that it chose to undertake a
capital raising via a placement and share purchase plan (refer
to NZX Code recommendation 8.4) during the financial year
ended 31 March 2022. See the
ESG Report located on the
investor centre of the Company ’s website for more information
on the capital raising structure utilised during the financial
year.
Serko’s governance charters and policies can also be found
on the investor centre of the Company ’s website. Serko’s
corporate governance charters and policies have been
approved by the Board and are regularly reviewed by the Board
and amended (as appropriate) to reflect developments in
corporate governance practices and/or changes to relevant
recommendations.
STOCK EXCHANGE LISTINGS
Serko is listed on the New Zealand Stock Exchange (NZX Main
Board) and on the Australian Securities Exchange (ASX) as an
ASX Foreign Exempt Listing. As an ASX Foreign Exempt Listing,
Serko needs to comply with the NZX Listing Rules (other than
as waived by NZX) but does not need to comply with the vast
majority of the ASX Listing Rule obligations.
Serko is incorporated in New Zealand.
Corporate Governance & Disclosures
74
Remuneration and value of other benefits received
Name of director
Non-executive
directors’ Board
fees
Audit & Risk
Committee fees
People,
Remuneration &
Culture Committee
fees
Shares and other
payments or
benefits
Total remuneration
Claudia Batten$162,029 $9,452 $9,452 - $180,932
Clyde McConaghy$112,757 $9,392 $20,871 - $143,020
Jan Dawson$77,059 $13,065 $5,879 - $96,003
Simon Botherway$41,292 $5,322 $1,652 - $48,266
TOTA L$393,137 $37,231 $37,853 - $468,220
NON-EXECUTIVE DIRECTOR REMUNERATION
In 2021, Serko’s shareholders approved a total cap of NZD$600,000 per annum for non-executive directors’ fees for the purposes
of the NZX Listing Rules, providing flexibility for Serko to appoint an additional (fourth) non-executive director in the future as part
of the Board’s succession plans and to provide headroom to pay ad hoc special fees to directors for services outside of their usual
duties for Serko.
The Board has agreed that the following fixed annual fees will apply to all non-executive directors for the year ending 31 March 2023,
notwithstanding the increase to the aggregate amount available to pay non-executives. The FY23 fees are the same as that paid for
the majority of FY22:
Non-executive directors received the following directors’ fees, remuneration and other benefits from the Company in the year ended
31 March 2022:
1 The figures shown are gross amounts, which have been converted into NZD from AUD and exclude GST (where applicable).
2 Fees include special fees of NZ$15,000 paid to each non-executive director for ad hoc committee meetings held during the year in respect of the
capital raising undertaken, mergers and acquisitions (M&A) activity and to manage Covid-19-related risks.
In addition to directors’ fees, Serko meets costs incurred by non-executive directors that are incidental to the performance of their
duties. This includes paying the costs of directors’ travel. As these costs are incurred by Serko to enable directors to perform their
duties. No value is attributable to them as benefits to directors for the purposes of the above table.
More information about remuneration payable to directors is set out in Serko’s Corporate Governance Statement, which is included in
the ESG Report located on the investor centre of the Company ’s website.
* Indicates Chair of the Board/Committee. Jan Dawson took over the role of Audit & Risk Committee Chair from Simon Botherway in August 2021.
PositionFees per annum (AUD)
Board of Directors
Chair140,000
Non-executive directors95,000
Audit & Risk Committee
Committee Chair20,000
Committee Member9,000
People, Remuneration & Culture Committee
Committee Chair20,000
Committee Member9,000
1
2
*
*
*
*
75
corPorate goVernance & DiScloSureS
EXECUTIVE DIRECTOR REMUNERATION
The executive directors, Darrin Grafton and Bob Shaw, receive remuneration and other benefits in their respective executive roles as
Chief Executive Officer and Chief Strategy Officer and, accordingly, do not receive directors’ fees. Their remuneration packages are
set by the Board to reflect the scope and complexity of each role, with reference to comparative market data.
Darrin Grafton and Bob Shaw ’s remuneration comprises a fixed base salary and a short-term incentive up to a maximum target value
of 50% of their base salaries. They each also take part in the Employee Incentive Share Scheme (EISS) up to a maximum target value
of 100% of their base salaries. This remuneration composition will carry forward into FY23.
During the period ended 31 March 2022, both Darrin Grafton and Bob Shaw ’s variable remuneration components were based on
Company and individual performance against a scorecard, including both financial and strategic OKR (Objective and Key Result)
measures relating to:
•
Delivery of operational value drivers linked to Serko’s strategy;
•
Delivering shareholder value;
•
Development of an extensible technology platform;
•
Meeting performance targets in respect of customer satisfaction and retention; and
•
Maintaining a positive culture and safe working environment.
A scorecard based on similar criteria will be applied for assessing the performance and incentive outcomes of the executive
directors in FY23.
76
The following equity-based incentives previously granted to the executive directors vested during the financial period ended 31
March 2022:
1 Represents the NZX closing price of SKO (Serko) ordinary shares on the day prior to the vesting date, multiplied by the number of securities
vested.
The tables below (and accompanying notes) set out the total remuneration and value of other benefits earned by, or paid to, each
executive director of Serko during, and in respect of, the financial period ended 31 March 2022:
EXECUTIVE DIRECTOR REMUNERATION Continued
1 Base salary includes employer contributions towards KiwiSaver at 3% (if applicable). The executive directors also receive carparks and life
insurance, which do not have individually allocated values.
2 The short-term incentive and other bonuses stated was earned in FY22, of which $100,375 will be paid in FY23. Darrin Grafton’s potential short-
term incentive payment for FY22 was $200,750. A short-term incentive of $90,125 was earned in FY21 and paid in FY22.
3 The short-term incentive and other bonuses stated was earned in FY22 and will be paid in FY23. Bob Shaw ’s potential short-term incentive
payment for FY22 was $145,037.50. A short-term incentive of $35,406 was earned in FY21 and paid in FY22.
4 An equity-based incentive was granted in August 2021 for non-cash consideration, following partial achievement of performance targets based
on FY21 performance. The restricted share units will vest at one third a year over three years after the allocation date. The value stated is the
gross amount earned and is calculated based on the 20-day volume weighted average price of Serko (SKO) shares on NZX at the time of grant.
DirectorGrant yearSecuritiesPerformance period Shares vested Value on vesting
Darrin GraftonFinancial Year 2019Restricted sharesJuly 2018 - July 2021 43,252 $328,715.20
Bob ShawFinancial Year 2019Restricted sharesJuly 2018 - July 2021 24,921 $189,399.60
Base salary
Pay for performance
Total
remuneration
STI & otherEISSSubtotal
Darrin Grafton$412,208 $117,616
$259,559 in the form of 35,752
restricted share units
$377,175 $789,383
Bob Shaw$281,931 $72,519
$113,299 in the form of 15,606
restricted share units
$185,818 $467,749
1
3
4
4
2
1
77
corPorate goVernance & DiScloSureS
EMPLOYEE REMUNERATION
The table below shows the number of employees and former employees of Serko and its subsidiaries, not being directors (including
executive directors) of Serko, who, in their capacity as employees, received remuneration and other benefits during the year ended
31 March 2022 totalling at least NZ$100,000.
The remuneration of those employees paid outside of New Zealand has been converted into New Zealand dollars. No employee
appointed as a director of a subsidiary company of Serko receives any remuneration or other benefits for acting in that capacity.
The table below includes base salaries, short-term incentives, contributions to pension plans and vested or exercised equity-based
payments. The table does not include equity-based incentives that have been granted and have not yet vested.
1 Specifies total number of employees within the range whose remuneration includes equity-based payments that have vested during the period.
Remuneration range (NZD)
Number of employees whose remuneration
includes vested share-based payments
Total number of
employees in range
$100,000 - $110,000120
$110,000 - $120,000121
$120,000 - $130,000515
$130,000 - $140,000219
$140,000 - $150,000217
$150,000 - $160,000215
$160,000 - $170,000112
$170,000 - $180,000311
$180,000 - $190,00003
$190,000 - $200,00016
$200,000 - $210,00003
$210,000 - $220,00013
$220,000 - $230,00013
$230,000 - $240,00002
$240,000 - $250,00013
$250,000 - $260,00012
$260,000 - $270,00015
$270,000 - $280,00011
$280,000 - $290,00011
$360,000 - $370,00002
$390,000 - $400,00011
$400,000 - $410,00001
$540,000 - $550,00022
$610,000 - $620,00011
$880,000 - $890,00011
$890,000 - $900,00011
$1,190,000 - $1,200,00011
Total number of employees and former employees32172
1
78
Female
20222021
no.%no.%
All directors240%120%
Non-executive directors267%133%
Officers220%330%
Senior employees1352%419%
All workforce 12941 %10836%
Male
20222021
no.%no.%
All directors360%480%
Non-executive directors133%267%
Officers880%770%
Senior employees1248%1781%
All workforce 18359%18964%
DIVERSITY
The respective numbers and proportions of men and women at various levels within the Serko workforce as at 31 March 2021 and 31
March 2022 are set out in the table below:
1 Officers are considered to be the Chief Executive Officer and his direct reports (the Executive Team). Note that Chief Executive Officer,
Darrin Grafton, and Chief of Strategy, Bob Shaw, are included in both the number of directors and officers reported.
2 Direct reports to the Executive Team with managerial responsibilities.
3 Reclassified to all workforce. Prior year figures are restated.
Our Diversity and Inclusion Policy articulates our commitment to achieving diversity in the skills, attributes and experience of Serko’s
Board members, management and staff across a broad range of criteria (including but not limited to, culture, gender and age).
The Board as a whole is responsible for overseeing and implementing the Diversity and Inclusion Policy but has delegated to the
Remuneration, People and Culture Committee the responsibility to develop, recommend and assess measurable objectives to the
Board that are designed to adhere to Serko’s Diversity and Inclusion Policy.
Progress to date against measurable objectives is set out in the latest
ESG Report, which can be found on the investor centre of the
Company ’s website.
1
1
2
3
3
2
79
corPorate goVernance & DiScloSureS
Director attendanceBoard
Audit & Risk
Committee
People, Remuneration
& Culture Committee
Claudia Batten12/127/74/4
Simon Botherway5/54/42/2
Jan Dawson7/73/32/2
Darrin Grafton12/12**
Clyde McConaghy12/127/74/4
Bob Shaw12/12**
BOARD AND COMMITTEE ATTENDANCE
The table below shows the Board and Committee meeting attendance during the year ended 31 March 2022:
*Indicates the director is not a member of the Committee (although they may have been in attendance for these meetings).
1. Simon Botherway retired from the Board, and Jan Dawson was appointed to the Board, part way through the year on 18 August 2021.
In addition, during the year directors participated in 21 additional Special Board Meetings and Board Sub-Committee meetings
primarily associated with the 2021 capital raising, M&A activity and managing risks associated with the Covid-19 pandemic.
DIRECTOR INDEPENDENCE
The Board currently comprises five directors – being the two co-founders and executive directors, Darrin Grafton and Bob Shaw, and
three non-executive directors – Claudia Batten, Jan Dawson and Clyde McConaghy.
The Board has determined, based on information provided by directors regarding their interests, which has been evaluated against
the criteria in the Board Charter, that as at 31 March 2022 and the date of this Annual Report, Claudia Batten, Jan Dawson and Clyde
McConaghy are independent directors. The Board has also determined that Darrin Grafton and Bob Shaw are not independent
directors owing to also being executives and major shareholders in Serko.
Key: Attended meeting / eligible to attend meeting
1
80
DirectorEntityRelationship
Claudia Batten
AIDER International Limited
Broadli Inc
Serko Inc
Westpac New Zealand Limited
Vista Group Limited
Air New Zealand Limited
Ceased to be Adviser
Director
Director
Board Adviser
Director
Appointed Director
Darrin Grafton
Financial Equities Limited
Grafton-Howe No.2 Trust
InterplX Inc
Serko Australia Pty Limited
Serko Inc
Serko India Private Limited
Serko Investments Limited
Travelog World for Windows Pty. Limited
Director / Shareholder
Trustee / Beneficiary
Director
Director
Director
Director
Director
Director
Clyde McConaghy
Chapman Eastway Pty Limited
Optima Boards
Ceased to be Chair (Advisory Board)
Director
Bob Shaw
Financial Equities Limited
Ripon Trust
Serko Australia Pty Limited
Serko India Private Limited
Serko Investments Limited
Travelog World for Windows Pty. Limited
Director / Shareholder
Trustee / Beneficiary
Director
Director
Director
Director
Jan Dawson
Ports of Auckland Limited
Meridian LTI Trustee Limited
Meridian Energy Limited
Jan Dawson Limited
AIG Insurance New Zeland Limited
Director
Director
Director
Director
Director
DIRECTOR INTEREST DISCLOSURES
There were no disclosures of interests pursuant to section 140(1) of the Companies Act 1993 recorded in Serko’s Interests Register
during the financial year ended 31 March 2022.
Directors have given general notices disclosing interests pursuant to section 140(2) of the Companies Act 1993. All of those interests,
and any changes to interests notified and recorded in Serko’s Interests Register during the financial year ended 31 March 2022 and
subsequently, are set out below:
1 Serko subsidiary as detailed on page 87.
2 Ceased 1 April 2022 (after financial year end)
3 Simon Botherway was a director until 18 August 2021. During the financial year he recorded in the Interests Register that he had ceased his role
as a Guardian of the New Zealand Super Fund.
1
1
3
1
1
1
1
2
1
1
1
81
corPorate goVernance & DiScloSureS
In accordance with section 148(2) of the Companies Act 1993, directors disclosed the following acquisitions or disposals of relevant
interests in Serko ordinary shares during the financial year ended 31 March 2022:
DIRECTOR INTEREST DISCLOSURES Continued
1 For more details on the now grand-fathered Non-executive Director Fixed Trading Plan refer to Serko’s Corporate Governance Statement in the
ESG Report on the investor centre of Serko’s website. These shares may not be disposed of while the holder remains a director of Serko.
2 These shares are subject to a deed restricting exercise of any voting rights attached to the shares/any shares issued upon vesting.
3 By virtue of Darrin Grafton’s personal relationship, he is implied to have the power to exercise, or to control the exercise of, any right to vote
attached to these shares by virtue of a personal relationship with the beneficial holder of these shares (Donna Bailey). These shares are subject
to a deed restricting exercise of voting rights attached to the shares.
4 The consideration for on-market trades is stated as the market price paid, excluding fees and taxes.
NameNature of relevant interest
Number of securities
acquired/(disposed)
Consideration paid/
received
Date of
acquisition/
disposal
Claudia BattenOn-market automated sale by the
custodian under the Non-Executive
Director Fixed Trading Plan to settle
administration fees arising in relation to
the administration and management of
the Plan (following completion of the term
of the Plan)
(111.84)
(124.26)
(115.11)
$779.55
$989.08
$613.83
1-Apr-21
2-Sep-21
1-Jan-22
Darrin GraftonRegistered holder and beneficial interest
in ordinary shares issued upon vesting of
restricted shares pursuant to the Serko
Limited Employee Restricted Share Plan
43,252Nil / Services6-Jul-21
Indirect interest in ordinary shares
issued upon vesting of restricted shares
pursuant to the Serko Limited Employee
Restricted Share Plan, by virtue of a
personal relationship with the registered
holder
1,125Nil / Services6-Jul-21
Beneficial interest in unlisted restricted
share units granted under the Serko Long
Term Incentive Plan
35,752Nil / Services 16-Aug-21
Indirect interest in unlisted restricted
share units granted under the Serko
Long Term Incentive Plan, by virtue of a
personal relationship with the registered
holder
979Nil / Services 16-Aug-21
Bob ShawRegistered holder and beneficial interest
in ordinary shares issued upon vesting of
restricted shares pursuant to the Serko
Limited Employee Restricted Share Plan
24,921Nil / Services6-Jul-21
Beneficial interest in unlisted restricted
share units granted pursuant to the Serko
Long Term Incentive Plan
15,606Nil / Services 16-Aug-21
1
2
4
2,3
2,3
2
2
2
82
NameRelevant interestPercentage
Darrin Grafton12,238,74510.21%
Bob Shaw 9,192,760 7.67%
Jan Dawson00.00%
Clyde McConaghy182,9090.15%
Claudia Batten125,877.150.10%
In accordance with the NZX Listing Rules, as at 31 March 2022, directors had a relevant interest (as defined in the Financial Markets
Conduct Act 2013) in Serko shares as follows:
1 The relevant interest includes: 10,867,629 ordinary shares held via a trust in which the director is a trustee and beneficiary; 142,306 ordinary
shares held directly; and an indirect interest in 1,228,810 ordinary shares by virtue of a personal relationship with the beneficial holder of these
shares.
Darrin Grafton is also the registered holder and beneficial owner of 112,714 unlisted restricted share units allocated pursuant to the Employee
Incentive Share Scheme and has an indirect interest in 2,703 unlisted restricted share units by virtue of a personal relationship with the
beneficial owner.
2 The relevant interest includes: 9,130,000 shares held via a trust in which the director is a trustee and beneficiary and 62,760 ordinary shares
held directly.
Bob Shaw is also the registered holder and beneficial owner of 58,538 unlisted restricted share units allocated pursuant to the Employee
Incentive Share Scheme.
3 181,818 ordinary shares are held via a trust in which the director is a trustee and beneficiary.
4 42,423.15 ordinary shares are held in custody pursuant to the Serko Non-executive Director Fixed Trading Plan.
DIRECTOR INTEREST DISCLOSURES Continued
1
2
4
3
83
corPorate goVernance & DiScloSureS
Size of shareholdingNumber of holders%Number of ordinary shares%
1 - 1,000 1,600 48.69 711,471 0.59
1,001 - 5,000 1,128 34.33 2,698,435 2.25
5,001 - 10,000 269 8.19 2,013,351 1.68
10,001 - 50,000 206 6.27 4,374,793 3.65
50,001 - 100,000 32 0.97 2,373,188 1.98
100,001 and over 51 1.55 107,749,359 89.85
TOTA L100100
Date of disclosureDirectorParticulars of Board authorisation
18-May-21
Simon Botherway
Claudia Batten
Clyde McConaghy
The payment of remuneration and the provision of other benefits by the Company to
the non-executive directors on the terms detailed in the Board minutes dated 18 May
2021 and on the grounds set out in the corresponding directors’ certificate.
8-Aug-21Jan Dawson
The payment of remuneration and provision of other benefits by the Company
to a newly appointed non-executive director on the terms detailed in the Board
Resolutions dated 8 August 2021 and on the grounds set out in the corresponding
directors’ certificate.
13-Aug-21
Bob Shaw
Darrin Grafton
The payment of remuneration and the provision of other benefits (the granting of
long term incentives) by the Company to the executive directors on the terms set out
in the resolution dated 13 August 2021, in accordance with the terms of the Serko
Employee Restricted Share Scheme documentation, and on the grounds set out in the
corresponding directors’ certificate.
27-Jan-22
Claudia Batten
Clyde McConaghy
Jan Dawson
The payment of remuneration (in the form of Special Fees) by the Company to the non-
executive directors on the terms detailed in the Board Resolution dated 27 January
2021 and on the grounds set out in the corresponding directors’ certificate.
For the purposes of section 161 of the Companies Act 1993, the following entries were made in the Interests Register in relation to the
payment of remuneration and other benefits to directors:
For the purposes of section 162 of the Companies Act 1993, an entry was made in the Interests Register in relation to insurance
effected for directors and officers of Serko in relation to any act or omission in their capacity as directors.
There were no entries made in the subsidiary company Interests Registers during the financial reporting period.
SHAREHOLDING INFORMATION
As at 30 April 2022 there were 119,920,597 Serko ordinary shares on issue, each conferring on the registered holder the right to vote
on any resolution at a meeting of shareholders. These shares were held as follows:
1 Includes 1,263,865 ordinary shares with restrictive conditions held by Serko Trustee Limited (all unallocated) pursuant to the Serko Restricted
Share Plan. The last tranche of allocated restricted shares vested during FY22. Restricted shares, when allocated, have voting rights attached,
which are exercised on behalf of a beneficial holder by the Trustee at the direction of the beneficial holder.
DIRECTOR INTEREST DISCLOSURES Continued
1
84
Shareholder Number of ordinary shares held %
1TEA Custodians Limited 13,914,355 11.6
2Darrin Grafton & Geoffrey Robertson Ashley Hosking 10,867,629 9.06
3Robert James Shaw & Michael John Moore 9,130,000 7.61
4HSBC Custody Nominees (Australia) Limited 6,291,342 5.25
5Citibank Nominees (NZ) Ltd 6,022,532 5.02
6Coronado Pte Limited 5,406,431 4.51
7Custodial Services Limited 4,933,129 4.11
8Hobson Wealth Custodian Limited 3,982,206 3.32
9Premier Nominees Limited 3,364,709 2.81
10HSBC Nominees (New Zealand) Limited 2,949,047 2.46
11Accident Compensation Corporation 2,838,221 2.37
12BNP Paribas Nominees NZ Limited Bpss40 2,703,175 2.25
13JPMORGAN Chase Bank 2,684,921 2.24
14New Zealand Superannuation Fund Nominees Limited 2,043,023 1.7
15Citicorp Nominees Pty Limited 1,962,629 1.64
16Pt Booster Investments Nominees Limited 1,902,646 1.59
17New Zealand Depository Nominee 1,860,078 1.55
18National Nominees New Zealand Limited 1,594,317 1.33
19HSBC Nominees (New Zealand) Limited 1,472,310 1.23
20FNZ Custodians Limited 1,457,316 1.22
As at 30 April 2022, the following securities were on issue:
•
1,263,865 ordinary shares with restrictive conditions held by Serko Trustee Limited (all unallocated) pursuant to the Serko
Restricted Share Plan. The last tranche of allocated restricted shares vested during FY22;
•
38 participants holding a total of 148,309 options pursuant to the Serko (US) Share Incentive Plan; and
•
184 participants holding a total of 1,997,219 restricted share units pursuant to the Serko Employee Long Term Incentive
Scheme (ANZ) and Serko Employee Share Incentive Plan (US).
Further information on these incentive plans is contained in note 19 to the financial statements and in Serko’s
ESG Report, which can
be found on the investor centre of the Company ’s website. Go to: www.serko.com/investors.
Set out below are details of the 20 largest shareholders of Serko as at 30 April 2022:
1 The shareholding of New Zealand Central Securities Depository Limited (custodian for members trading through NZClear) has been reallocated
to the applicable members.
SHAREHOLDING INFORMATION Continued
1
85
corPorate goVernance & DiScloSureS
Substantial product holder
Number of ordinary shares in which relevant
interest is held
% of class held at balance date
Darrin Grafton 12,238,745 10.21%
Geoffrey Hosking10,867,6299.06%
Robert Shaw9,192,7607.67%
Michael Moore 9,130,000 7.61%
Harbour Asset Management Limited10,768,1978.98%
Fisher Funds Management Limited9,304,9647.76%
Jarden Securities Limited 1,038,798 0.87%
According to Serko records and notices given to Serko under the Financial Markets Conduct Act 2013, the following persons were
substantial product holders as at 31 March 2022. As at the balance date (31 March 2022) there were 119,920,597 Serko ordinary shares
on issue:
1 Harbour Asset Management Limited and Jarden Securities Limited (formerly First NZ Capital Group Limited) file joint substantial product holder
notices.
2 Based on Serko’s records and on the last substantial product holder notice filed prior to 31 March 2022.
3 Based on last substantial product holder notice filed prior to 31 March 2022.
4 Based on issued share capital of 119,920,597 as at 31 March 2022.
SHAREHOLDING INFORMATION
1
1
2
3
2
3
2
3
2
4
86
SubsidiaryDirectors
Foshan Sige Information Technology Limited (China)Gerard Nielsen
InterplX Inc. (US)
Darrin Grafton
Tony D’Astolfo
Serko Australia Pty Limited (Australia)
Darrin Grafton
Bob Shaw
Murray Warner
Serko Inc (US)
Darrin Grafton
Claudia Batten
Serko India Private Limited (India)
Darrin Grafton
Bob Shaw
Yogita Chadha
Serko Investments Limited (New Zealand)
Darrin Grafton
Bob Shaw
Serko Trustee Limited (New Zealand)
Sarah Miller
Rachael Satherley
SUBSIDIARY COMPANY DIRECTORS
With the below exception, directors of Serko’s subsidiaries do not receive any remuneration or other benefits in respect of their
appointments. The remuneration and other benefits of any such directors who are employees of the group totalling $100,000 or
more during the year ended 31 March 2022 are included in the relevant bandings for remuneration disclosed on page 78 of this Annual
Report.
Serko has agreed to pay Yogita Chadha NZ$25,000 per year in relation to acting as a director of Serko India Private Limited. During
the financial year ended 31 March 2022, she earned, and was paid, NZ$25,000 during the year.
The following persons held office as directors of subsidiary companies as at 31 March 2022:
1 J Challis retired and M Warner was appointed to Serko Australia Pty Limited on 8 September 2021.
2 S Putt and F Rockel retired and S Miller and R Satherley were appointed to Serko Trustee Limited on 31 May 2021.
1
2
87
corPorate goVernance & DiScloSureS
REGULATORY MATTERS
No NZX waivers were relied on during the financial year. Refer to the
ESG Report for ASIC relief obtained during the financial year in
respect of the capital raising undertaken in 2021.
DONATIONS
Refer to the Notes to the Financial Statements and
ESG Report for any donations made during FY22.
CREDIT RATING
Serko does not presently have an external credit rating status.
DISTRIBUTIONS / DIVIDENDS
There were no dividends or distributions paid to shareholders during the financial period.
Dividends and other distributions with respect to the shares are only made at the discretion of the Serko Board. Serko is a growth
technology company and is not intending to pay a dividend for FY23.
88
Glossary
ANZ: Australia and New Zealand
ARPB: Average Revenue Per Booking
Asia Pacific: Vietnam, Thailand, Taiwan, Sri Lanka,
South Korea, South Africa, Singapore, Philippines,
Pakistan, New Zealand, Malaysia, Japan, Indonesia,
India, Hong Kong, China, Bangladesh and Australia
for the purposes of this Annual Report
ASX: ASX Limited, also known as the Australian
Securities Exchange
ATMR: ATMR (Annualised Transactional Monthly Revenue)
is a non-GAAP measure. It is based on the monthly
transactions and average revenue per booking (for its
Travel platform revenue) and monthly user charges
(for its Expense platform revenue) annualised
AUD or A$: Australian dollars
Australasia: New Zealand and Australia for the purposes
of this Annual Report
Booking.com for Business: A global online travel booking
offering targeting small to medium sized companies with
Booking.com for Business branding powered by Zeno
BBZ: An abbreviation of Booking.com for Business (see above)
Board or Board of Directors: The board of directors of Serko
Cloud or cloud-based: Cloud computing is when the software
and associated data is hosted outside the customer’s premises
and delivered over a network or the Internet as a service,
which allows immediate access to the software
Company or Serko: Serko Limited, a New Zealand
incorporated company
EBITDAF (refer page 18): EBITDAF is a non-GAAP measure
representing Earnings Before the deduction of costs relating
to Interest, Taxation, Depreciation, Amortisation, Impairment,
Foreign Exchange gains/losses and Fair value remeasurements
ESG: Environmental Social Governance
FTE: Full-time equivalent
FX: Foreign exchange
FY: Financial year ended, or ending, on 31 March
(unless otherwise stated)
GST: Goods and Services Tax
IFRS: International Financial Reporting Standards
Independent Directors: Claudia Batten, Clyde McConaghy
and Jan Dawson
IPO: Initial Public Offering
Listing: The date Serko shares started trading on the
NZX Main Board, 24 June 2014
NDC or New Distribution Capability: A data exchange
format for airlines to create and distribute relevant offers
to the customer regardless of the distribution channel
NORAM: North America
NZ: New Zealand
NZD or NZ$: New Zealand dollars
NZ GAAP or GAAP: New Zealand Generally Accepted
Accounting Practice
NZ IFRS or IFRS: New Zealand equivalents to International
Financial Reporting Standards
NZX: NZX Limited, also known as the New Zealand
Stock Exchange
NZX Listing Rules or Listing Rules: The Listing Rules applying
to the NZX Main Board as amended from time to time
NZX Main Board: The New Zealand main board equity security
market operated by NZX
R&D: Research and Development expenditure
SaaS: Software-as-a-service
Serko Expense Management: Serko’s online expense
management solution that enables the capture and processing
of corporate credit cards and out-of-pocket claims
Serko Mobile: Serko’s mobile app for iPhones and Android
devices that gives users access to information and travel
booking functionality on their mobile devices
Serko Online: Serko’s legacy cloud-based online travel
booking solution for large organisations
SME: Small and medium enterprise
TMC, Travel Agency or Travel Management Company:
A travel management company that provides specialised
travel-related services to corporate customers
USD or US$: United States dollars
Zeno: Serko’s premium cloud-based online travel
booking platform
Zeno Expense: Serko’s Expense management solution
$: All figures are in New Zealand dollars, unless otherwise
stated
89
gloSSary
Company Directory
Serko’s ESG Report, which includes its Corporate Governance Statement,
can be found at www.serko.com/investors.
Serko is a company incorporated with limited liability under
the New Zealand Companies Act 1993
New Zealand Companies Office registration number 1927488
Australian Registered Body Number (ARBN) 611 613 980
For investor relations queries contact: investor.relations@serko.com
REGISTERED OFFICE
New Zealand
Saatchi Building
Level 1, 125 The Strand
Parnell, 1010
+64 9 309 4754
Australia
Boardroom Pty Limited
Level 12, 225 George Street
Sydney 2000
NSW, Australia
PRINCIPAL ADMINISTRATION OFFICE
New Zealand
Saatchi Building
Level 1, 125 The Strand
Parnell, 1010
+64 9 309 4754
Australia
Level 8, 75 Elizabeth Street
Sydney 2000
NSW, Australia
+61 2 9435 0380
SHARE REGISTRAR
New Zealand
Link Market Services Limited
Level 30, PwC Tower
15 Customs Street West
Auckland 1010, New Zealand
+64 9 375 5998
serko@linkmarketservices.co.nz
Australia
Link Market Services Limited
Level 12, 680 George Street
Sydney 2000
NSW, Australia
+61 1300 554 474
DIRECTORSAUDITOR
Claudia Batten (Chair)
Jan Dawson
Robert (Clyde) McConaghy
Darrin Grafton
Robert (Bob) Shaw
Deloitte Limited
Deloitte Centre
80 Queen Street
Auckland 1040, New Zealand
+64 9 303 0700
90
coMPany Directory
31 MAR 2023
Financial-Year End
NOV 2022
Half-year Results Announced
30 SEP 2022
Half-Year End
31 AUG 2022
Annual Shareholders’ Meeting
Key Dates
Annual Report 2022 · Serko Limited
serko.com
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