Gentrack Group Limited Financial Statements For the year ended 3 0 September 2021 GENTRACK FINANCIAL STATEMENTS / 2 Contents 3 Management Commentary 5 Independent Auditor ’ s Report 1 1 Financial Statements 1 2 Statement of Comprehensive Income 1 3 Statement of Financial Position 1 4 Statement of Changes in Equity 1 5 Statement of Cash Flows 1 6 Notes to the Financial Statements 4 7 Corporate Directory MANAGEMENT COMMENTARY GENTRACK FINANCIAL STATEMENTS / 3 • Revenue: $ 105.7m – up 5.2 % on FY 20 and in line with guidance • EBITDA: slightly ahead of guidance at $ 12.7 m – up 5.0 % on FY 20 • Statutory NPAT: $ 3.2m • Net cash: strong position $ 26.0m up 54.8 % on FY20 • No dividend payable Revenue growth was driven by an 8.8 % increase in the Utilities business to $89.0m from $81.8m in FY20 with new customer wins and growth from existing customers offsetting previous years’ losses. Veovo revenues were down from $18.7m in FY21 to $16.7m due to continued impact of Covid on the aviation industry, but pleasingly annual recurring revenues (ARR) were up 7.7% as new customers moved into live operation. Underlying Group EBITDA of $ 12.7m is up 5.0 % on FY 20 , slightly ahead of the guidance issued earlier this year . Costs were up 5.2% vs FY20 driven by increased investment in personnel, with continued savings in non - personnel costs . The Group achieved strong net cash generation of $9.2m for the period resulting in $ 26.0m net cash at 30 September 2021, up from $ 16.8 m at 30 September 2020. We continue to deliver against the three strategic growth pillars outlined in our Strategy Presentation to the market in June – creating a strong custome r base, winning new logos and growing our managed services business. Our strategic position with our existing customer base continues to strengthen. Customer status continues to improve with 72% of our customers at a ‘green’ high performance status. Over the past 12 months we have won 7 new logos, including 3 new B2B energy retailers, further strengthening our position as a leading provider of solutions to C&I retailers. The Managed Services revenues remained generally flat from FY20 to FY21. Since prioritising Managed Services as a focus area of our strategy, we now have a healthy pipeline and order book which are setting us up for FY22 and future growth. Although performing well against our pillars, we continue to experience a drag on revenue grow th, from prior period losses and supplier failures in the UK. The number of B2C supplier failures in the UK has accelerated in the last 3 months due to the global energy crisis and Government enforced price cap for the B2C segment – with a total of 9 cust omer insolvencies occurring since the beginning of FY21 compared to 6 in total from FY17 through FY20. This week, Bulb, a Gentrack customer, went into a special form of administration for larger supplier failures which has not been tested before. We will continue to support the business as required by the administrator as options for the business are assessed over the coming months. We anticipate there may be some further supplier failures in the coming winter months after which our expectation is that the market will stabilise. GENTRACK FINANCIAL STATEMENTS / 4 AUDITORS REPORT We have made allowances for a reasonable scenario for these additional potential failures . In general, our revenue is diversified across airports and utilities, with our energy and water customers active in 6 countries, covering both B2B and B2C. As a technology first company we continue to accelerate investment in both our Utilities cleantech capabilities and Veovo , in order to deliver innovation and profitability for a sustainable era. More customers are turning to Gentrack to deliver cloud nati ve innovations and understand that Gentrack has the delivery expertise to roll out these innovations across diverse markets and at scale. The business’ turnaround continues to progress, and despite the headwinds in the UK covered above, the organisation is in a strong state, and we are well positioned for accelerated growth. GENTRACK FINANCIAL STATEMENTS / 5 AUDITORS REPORT We have fulfilled DIRECTORS RESPONSIBILITY STATEMENT GENTRACK FINANCIAL STATEMENTS / 6 DIRECTORS RESPONSIBILITY STATEMENT GENTRACK FINANCIAL STATEMENTS / 7 DIRECTORS RESPONSIBILITY STATEMENT GENTRACK FINANCIAL STATEMENTS / 8 DIRECTORS RESPONSIBILITY STATEMENT GENTRACK FINANCIAL STATEMENTS / 9 DIRECTORS RESPONSIBILITY STATEMENT GENTRACK FINANCIAL STATEMENTS / 10 The Directors are required to prepare financial statements for each financial year that present fairly the financial position of Gentrack Group and its operations and cash flows for that period. The Directors consider these financial statements have been prepared using accounting policies suitable to Gentrack Group’s circumstances, which have been consistently applied and supported by reasonable judgements and estimates, and that all relevant financial reporting and accounting standards have been followed. The Directors are responsible for keeping proper accounting rec ords that disclose with reasonable accuracy, at any time, the financial position of Gentrack Group and to enable them to ensure that the financial statements comply with the Companies Act 1993. They are also responsible for safeguarding the assets of Gentr ack Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Board of Directors of Gentrack Group authorised these financial statements for issue on 2 5 November 202 1 . For and on behalf of the Board of Directors: Andy Green Fiona Oliver Chairman Date: 25 November 2021 Director Date: 25 November 2021 GENTRACK FINANCIAL STATEMENTS / 11 Financial Statements 30 September 2021 STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 12 2021 2020 SECTION NZ$000 NZ$000 Revenue 3.2,3.3 105,723 100,533 Expenditure 3.4 (92,996) (88,440) Profit before depreciation, amortisation, acquisition related costs, revaluation of financial liabilities, impairment of goodwill and intangible assets, financing and tax 12,727 12,093 Depreciation and amortisation 3.5 (10,864) (12,354) Revaluation of acquisition related financial liability - 891 Impairment of goodwill and intangible assets 5.3 - (34,511) Profit/(Loss) before financing and tax 1,863 (33,881) Net finance income/(expense) 3.6 3,701 (386) Profit/(Loss) before tax 5,564 (34,267) Income tax (expense)/benefit 7.1 (2,375) 2,561 Profit/(Loss) attributable to the shareholders of the company 3,189 (31,706) OTHER COMPREHENSIVE INCOME Excess income tax benefit on share - based payments 91 - Translation of international subsidiaries (4,992) (882) Total comprehensive loss for the period (1,712) (32,588) EARNINGS PER SHARE / (LOSS) ATTRIBUTABLE TO THE SHAREHOLDERS OF THE COMPANY (EXPRESSED IN DOLLARS PER SHARE) Basic earnings per share 6.4 $0.03 ($0.32) Diluted earnings per share 6.4 $0.03 ($0.32) WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES ISSUED Basic 6.4 98,761 98,645 Diluted 6.4 103,128 100,053 The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes. STATEMENT OF FINANCIAL POSITION AS AT 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 13 2021 2020 SECTION NZ$000 NZ$000 CURRENT ASSETS Cash and cash equivalents 4.3 25,957 19,321 Trade and other receivables 5.1 21,746 18,951 Income tax receivable 68 151 Inventory 5.8 362 464 Total current assets 48,133 38,887 NON - CURRENT ASSETS Property, plant and equipment 5.5 2,683 2,763 Lease assets 9.1 8,162 10,338 Goodwill 5.2 106,766 106,599 Intangibles 5.4 37,698 45,428 Deferred tax assets 7.2 5,391 4,649 Total non - current assets 160,700 169,777 Total assets 208,833 208,664 CURRENT LIABILITIES Bank loans 4.2 - 2,536 Trade payables and accruals 5.6 4,513 3,905 Lease liabilities 9.1 1,376 2,692 Contract liabilities 12,695 12,419 GST payable 1,931 3,206 Employee entitlements 5.7 9,535 5,552 Income tax payable 1,322 - Total current liabilities 31,372 30,310 NON - CURRENT LIABILITIES Lease liabilities 9.1 11,176 12,435 Employee entitlements 5.7 539 428 Deferred tax liabilities 7.2 3,305 4,997 Total non - current liabilities 15,020 17,860 Total liabilities 46,392 48,170 Net assets 162,441 160,494 EQUITY Share capital 6.1 191,699 191,229 Share based payment reserve 3,888 699 Foreign currency translation reserve 1,790 6,782 Retained earnings (34,936) (38,216) Total equity 162,441 160,494 The above Statement of Financial Position should be read in conjunction with the accompanying notes. For and on behalf of the Board who authorised these financial statements for issue on 2 5 November 202 1 . Andy Green Fiona Oliver Chair Director Date: 2 5 November 202 1 Date: 2 5 November 202 1 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 14 2021 SHARE CAPITAL SHARE BASED PAYMENT RESERVE RETAINED EARNINGS TRANSLATION RESERVE TOTAL EQUITY NZ$000 SECTION Balance as at 1 October 191,229 699 (38,216) 6,782 160,494 Profit attributable to the shareholders of the company - - 3,189 - 3,189 Other comprehensive income/(loss) - - 91 (4,992) (4,901) Total comprehensive income/(loss) for the period, net of tax - - 3,280 (4,992) (1,712) TRANSACTION WITH OWNERS Issue of share capital 6.1, 6.2 470 (413) 57 Share - based payments 6.2 - 3,602 - - 3,602 Balance at 30 September 191,699 3,888 (34,936) 1,790 162,441 2020 SHARE CAPITAL SHARE BASED PAYMENT RESERVE RETAINED EARNINGS TRANSLATION RESERVE TOTAL EQUITY NZ$000 SECTION Balance as at 1 October 191,229 389 (1,673) 7,664 197,609 Change in accounting policy - - (1,833) - (1,833) Restated total equity at 1 October 191,229 389 (3,506) 7,664 195,776 Loss attributable to the shareholders of the company - - (31,706) - (31,706) Other comprehensive loss - - - (882) (882) Total comprehensive income for the period, net of tax - - (31,706) (882) (32,588) TRANSACTION WITH OWNERS Dividend paid 6.3 - - (3,004) - (3,004) Share - based payments 6.2 - 310 - - 310 Balance at 30 September 191, 229 699 (3 8 , 216 ) 6,782 16 0,494 The above Statement of Changes in Equity should be read in conjunction with the accompanying notes. STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 15 2021 2020 SECTION NZ$000 NZ$000 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 103,251 110,731 Payments to suppliers and employees (8 5 , 95 7) (83,547) Lease liability finance charge 9.1 (814) (931) Income tax paid (3,5 35 ) (4,287) Net cash inflow from operating activities 12, 945 21,966 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment 5.5 (663) (324) Purchase of intangible assets 5.4 - (331) Payment of acquisition related option - (2,419) Net cash outflow from investing activities (663) (3,074) CASH FLOWS FROM FINANCING ACTIVITIES Payments for lease liabilities (2,678) (2,497) Drawdown of borrowings - 5,007 Repayment of borrowings (2,564) (6,871) Interest paid (176) (375) Dividends paid 6.3 - (3,004) Net cash outflow from financing activities (5,418) (7,740) Net increase in cash held 6, 864 11,152 Foreign currency translation adjustment (228) (457) Cash at beginning of the financial period 19,321 8,626 Closing cash and cash equivalents 25,957 19,321 The above Statement of Cash Flows should be read in conjunction with the accompanying notes. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 16 GENERAL INFORMATION ACCOUNTING POLICES CRITICAL JUDGEMENTS GENERAL INFORMATION The notes are consolidated into nine sections. Each section contains an introduction and general information which is indicated by the symbol above. The layout of these financial statements has been streamlined to present them in a way that is more intuitive for readers to follow. This is achieved by laying out the accounting policies and critical judgements alongside the notes and focusing information in a way which provides incre ased clarity and ease of understanding. The first section details general information about Gentrack Group and guidance on how to navigate through the financial statements. ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of these financial statements are set out throughout the document where they are applicable. These policies have been consistently applied to all the years presented, unless otherwise stated. Certain comparatives have been updated to ensure consistency wit h current year presentation. Accounting policies are identified by this symbol above. CRITICAL JUDGEMENTS The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue , and expenses. Management bases its judgements and estimates on historical experience and on various ot her factors it believes to be reasonable under the circumstances, the result of which form the basis of the carrying values for assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under di fferent assumptions and conditions and may materially affect financial results or the financial position reported in future periods. Further details of the nature of these critical judgements and estimates may be found throughout the financial statements a s they are applicable and are identified by this symbol. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 17 1. GENERAL INFORMATION Gentrack Group Limited is a limited liability company, domiciled and incorporated in New Zealand and registered under the New Zealand Companies Act 1993. The registered office of the Company is 17 Hargreaves Street, St Marys Bay, Auckland 1011, New Zealand. The financial statements presented are for Gentrack Group Limited and its subsidiaries (Gentrack Group) for the year ended 30 September 202 1 . Prior year com paratives are for the year ended 30 September 20 20 . The financial statements of Gentrack Group for the year ended 30 September 202 1 were authorised for issue in accordance with a resolution of the directors on 2 5 November 202 1 . Gentrack Group’s principal a ctivity is the development, integration, and support of enterprise billing and customer management software solutions for the utility (energy and water) and airport industries. COVID - 19 PANDEMIC At 3 0 September 202 1 , the financial impact of COVID - 19 on Gen track Group overall has not been material. COVID - 19 has not adversely impacted Gentrack Group’s Utility business, however the Airport business has been impacted by COVID - 19 with project cancellations and delays because of the uncertainty caused by COVID - 19 . Gentrack Group continues to closely monitor the longer - term financial and economic implications of COVID - 19 on its operations. In preparing these financial statements Gentrack Group has considered the increased level of uncertainty resulting from COVID - 19 in applying its accounting estimates and judgements, details of the significant judgements and estimates are provided below: Accounting estimate and judgement area Reference License and p roject serv ice revenue - Stage of completion Section 3.2 Recoverability of trade receivables Section 5.1 Impairment testing – Five - year cashflow forecasts Section 5. 3 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 18 2. BASIS OF PREPARATION AND ACCOUNTING POLICIES This section outlines the legislation and accounting standards which have been followed in the preparation of the financial statements along with explaining how the information has been consolidated and presented . 2.1 K EY LEGISLATION AND ACCOUNTING STANDARDS The financial statements of Gentrack Group have been prepared in accordance with New Zealand Generally Accepted Accounting Practice (NZ GAAP). They comply with the New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) and other applicable Financial Reporting Standards as appropriate to profit - oriented entities. The financial statements comply with International Financial Reporting Standards (IFRS). Gentrack Group is an FMC entity for the purposes of the Financial Reporting Act 2013 and Financial Markets Conduct Act 2013 and is listed on the New Zealand Stock Exchange (NZX) and the Australian Securities Exchange (ASX). The financial statements have been prepared in accordance with the requirements of the Financial Reporting Act 2013, Financial Markets Conduct Act 2013 and the Companies Act 1993. 2.2 B ASIS OF CONSOLIDATION Subsidiaries are entities over which Gentrack Group has control. Gentrack Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and can affect those returns through its power over the entity . In assessing control, potential voting rights that currently are exercisable are considered . Subsidiaries are fully consolidated from the date that control is transferred to Gentrack Group. They are deconsolidated from the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by Gentrack Group. Intra - group balances and any unrealised income and expenses arising from intra - group transactions, are fully eliminated in prepa ring the financial statements. FUNCTIONAL AND PRESENTATION CURRENCY Items included in the financial statements of each of Gentrack Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the functi onal currency). The financial statements are presented in New Zealand dollars (NZD) which is Gentrack Group’s presentation currency. All financial information has been presented rounded to the nearest thousand dollars ($000) in the financial statements. TR ANSACTIONS AND BALANCES Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year - end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income. Foreign exchange gains and losses are presented in the statement of comprehensive income within net finance expense. FOREIGN CURRENCY TRANSLATION RESERVE (FCTR) Gentrack Group translates the results of its foreign operations from their functional currencies to the presentation currency using the closing exchange rate at balance date fo r assets and liabilities and the average monthly exchange rates for income and expenses. The difference arising from the translation of the statement of financial position at the closing rates and the statement of comprehensive income at the average rates is recorded within the foreign currency translation reserve within the statement of changes in equity. 2.3 B USINESS COMBINATIONS Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to Gentrack Group. Control is the exposure or right to variable returns from involvement with the entity and the ability to affect those returns through power over the entity. Gentrack Group recognises the fair value of all identifiable assets, liabilities , and contingent liabilities of the acquired business. Goodwill is measured as the excess cost of the acquisition over the recognised assets and liabilities. When the excess is negative (negative goodwill), the amount is rec ognised immediately in the statement of comprehensive income. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 19 2.3 B USINESS COMBINATIONS (C ONTINUED ) Gentrack Group applies the anticipated acquisition method where it has the right and the obligation to purchase any remaining non - controlling interest (so - called put/call arrangements). Under the anticipated acquisition method, the interests of the non - controlling shareholder are derecognised when Gentrack Group’s liability relating to the purchase of its shares is recognised. The recognition of the financial liability implies that the interests subject to the purchase are deemed to have been acquired already. Therefore, the corresponding interests are presented as already owned by Gentrack Group even though legally they are still non - controlling interests. The initial measurement of the fair value of the financial liability recognised by Gentrack Group forms part of the consideration for the acquisition. Gentrack Group has not made any acquisitions during the year ended 30 September 202 1 or 20 20 . For details of acquisitions made in prior years refer to the 2018 Annual Report. 2.4 G ROUP INFORMATION The financial statements include the following subsidiaries: ENTITY PRINCIPAL ACTIVITY COUNTRY OF INCORPORATION SHAREHOLDING 2021 SHAREHOLDING 2020 Gentrack Group Australia Pty Limited Holding company Australia 100% 100% Gentrack Pty Limited Software sales and support Australia 100% 100% Veovo Holdings (Denmark) ApS Holding company Denmark 100% 100% Veovo A/S (formally Blip Systems A/S) Software development sales and support Denmark 100% 100% CA Plus Limited Software development sales and support Malta 100% 100% Veovo Group Limited Holding company New Zealand 100% 100% Gentrack Limited Software development sales and support New Zealand 100% 100% Gentrack Holdings (UK) Limited Holding company United Kingdom 100% 100% Gentrack UK Limited Software development sales and support United Kingdom 100% 100% Junifer Systems Limited Dormant United Kingdom 100% 100% Evolve Parent Limited Holding company United Kingdom 100% 100% Evolve Analytics Limited Dormant United Kingdom 100% 100% Gentrack (Singapore) Pte Limited Software sales and support Singapore 100% 100% Veovo Inc Software sales and support USA 100% 100% Veovo NZ Limited Software sales and support New Zealand 100% 100% Veovo UK Limited Software sales and support United Kingdom 100% 100% Veovo IP Limited Software Development New Zealand 100% 100% 2. 5 IMPACT OF STANDARDS ISSUED BUT NOT YET ADOPTED The International Accounting Standards Board has issued IFRS 17 Insurance Contracts, as well as amendments to existing international accounting standards. Gentrack Group will adopt IFRS 17 when mandatory and does not expect IFRS 17 to have a ny impact on its financial statements . NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 20 3. G ROUP PERFORMANCE This section outlines further details of Gentrack Group’s financial performance by building on the information presented in the statement of comprehensive income. 3.1 O PERATING SEGMENTS An operating segment is a component of an entity that engages in business activities from which it may earn revenue and incur expenses, whose operating results are regularly reviewed by the entity’s Chief Operating Decision Maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is avail able. Operating segments are aggregated for disclosure purposes where they have similar products and services, production processes, customers, distribution methods and regulatory environments. Gentrack Group currently operates in two business segments, u tility billing software and airport management software . Consistent with prior years, Gentrack Group’s corporate costs are included in the Utility segment. These segments have been determined based on the reports reviewed by the Board (Chief Operating Deci sion Maker) to make strategic decisions. The assets and liabilities of Gentrack Group are reported to and reviewed by the Chief Operating Decision Maker in total and are not allocated by business segment. Therefore, operating segment assets and liabilities are not disclosed . 2021 UTILITY AIRPORT TOTAL NZ$000 NZ$000 NZ$000 TIMING OF REVENUE RECOGNITION Point in time 10,973 1,636 12,609 Over time 77,982 15,132 93,114 Total revenue 88,955 16,768 105,723 Expenditure (79,60 4 ) (13,392) (92,996) Segment contribution (1) 9,35 1 3,376 12,727 2020 UTILITY AIRPORT TOTAL NZ$000 NZ$000 NZ$000 TIMING OF REVENUE RECOGNITION Point in time 7,379 2,018 9,397 Over time 74,397 16,739 91,136 Total revenue 81,776 18,757 100,533 Expenditure (71,565) (16,875) (88,440) Segment contribution (1) 10,211 1,882 12,093 (1) Segment contribution is defined as Profit before depreciation, amortisation, revaluation of financial liabilities, impairment of goodwill and intangible assets, financing, and tax. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 21 3.1 O PERATING SEGMENTS (CONTINUED) A reconciliation of segment contribution to profit attributable to the shareholders of the company is as follows: 2021 2020 NZ$000 NZ$000 Segment contribution (1) 12,727 12,093 Depreciation and amortisation (10,864) (12,354) Revaluation of acquisition related financial liabilities - 891 Impairment of goodwill and intangible assets - (34,511) Net finance income/(expense) 3,701 (386) Income tax (expense)/benefit (2,375) 2,561 Profit/(Loss) attributable to the shareholders of the company 3,189 (31,706) 2021 2020 NZ$000 NZ$000 REVENUE BY DOMICILE OF ENTITY Australia 25,359 22,659 New Zealand 13,467 16,447 United Kingdom 60,302 55,458 Rest of World 6,595 5,969 Total revenue 105,723 100,533 REVENUE BY DOMICILE OF CUSTOMER Australia 27,509 25,755 New Zealand 8,696 8,456 United Kingdom 57,382 52,746 Rest of World 12,136 13,576 Total revenue 105,723 100,533 In 202 1 and 20 20 , no single customer including their subsidiaries accounted for 10% or more of Gentrack Group’s revenue. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 22 3. 2 OPERATING REVENUE Gentrack Group recognises revenue from customers when the performance obligation has been accomplished. A performance obligation is accomplished when the customer has received all the benefits promised under the performance obligation s and payment is generally due within 30 to 60 days from invoices being raised . The following sections detail th e type of revenue recognised within each category. Revenue recognition of license and project services is recognised based on the stage of completion which requires judgement to be applied . This process uses estimations of time required to complete the project and is based on detailed information on hours worked to date, prior experience , and project scheduling tools. Gentrack Group employs project managers to provide regular information to management on the progress of all projects. All est imates are reviewed by management prior to revenue recognition . A NNUAL FEES Annual fees include software support and maintenance charged on software licenses, software subscriptions and managed services. Revenue from annual fees is generally recognised ove r the period as the benefits are consumed by the customer. SUPPORT SERVICES Support services are post implementation value - add professional services related to ongoing upgrades, minor software revisions and extended support. Support services revenue is recognised when the service is complete or on a stage of completion basis. LIC ENSES Revenue from license fees is recognised when the customer can benefit from the licensed software. License fees that are highly interrelated with project services are recognised based on a stage of completion of the project. PROJECT SERVICES Revenue f rom project services is recognised based on the stage of completion of the project. This is typically in accordance with the achievement of contract milestones and/or hours expended and forecast hours to complete the project. OTHER Other revenue is primari ly revenue from hardware and the recharge of ad - hoc costs that are recharged to customers. Revenue from hardware sales is recognised when the hardware has been delivered to the customer. 2021 2020 SECTION NZ$000 NZ$000 OPERATING REVENUE: Annual fees 57,787 60,394 Support services 20,977 20,636 Project services 18,727 13,286 Licenses 2,758 2,177 Other 4,771 2,070 Total operating revenue 105,020 98,563 OTHER INCOME: Government grants 3.3 703 1,970 Total revenue 105,723 100,533 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 23 3.3 OTHER INCOME GOVERNMENT GRANTS Government grants are recognised at their fair value where there is a reasonable assurance that the grant will be received, and Gentrack Group will comply with all attached conditions. When a grant relates to an expense item, it is recognised as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate. During 202 1 , Gentrack Group recognised a total of $0 .7 m (20 20 : $2.0m) of grants from Callaghan Innovation in New Zealand . Th is government grant provide d a percentage return for eligible Research and Development conducted by Gentrack Group. At balance date, there are no amounts outstanding in relation to the Callaghan Grant. Effective from 1 April 2021 for Gentrack Group the Callaghan Grant has been replaced by the Research and Development Tax Incentive (RDTI) where a tax incentive is provided for eligible Research and Development conducted by Gentrack Group. The RDTI and the Research a nd D evelopment E xpenditure C redit (RDEC) in the UK are tax incentive s and the benefit of these tax incentives are applied to Gentrack Group’s income tax payable when the income tax return s for 30 September 202 1 are filed . 3. 4. EXPENDITURE The table below provides a detailed breakdown of the total expenditure presented in the statement of comprehensive income . 2021 2020 NZ$000 NZ$000 PROFIT / (LOSS) BEFORE TAX INCLUDES THE FOLLOWING SPECIFIC EXPENSES: Employee entitlements 70,296 65,780 Administrative costs 3,862 6,721 Third party customer - related costs 5,438 6,450 Advertising and marketing 1,191 898 Consulting and subcontracting 9,353 5,754 Other operating expenses 2,856 2,837 Total expenditure 92,996 88,440 In cluded in the total expenditure above, Gentrack Group has expensed $ 12 . 7 m in Research and Development expenditure (2020: $15.7m) . This Research and Development expenditure includes payroll costs, employee benefits and other employee related costs, direct overheads, and other directly attributable costs related to performing Research and Development activities . . NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 24 3.5 D EPRECIATION AND AMORTISATION Depreciation on assets is calculated using the straight - line method to allocate the difference between their original costs and their residual values over their estimated useful lives . Except for goodwill and brands, intangible assets are amortised on a straight - line basis in the statement of comprehensive income over their estimated useful lives, from the date that they are available for use. 2021 2020 NZ$000 NZ$000 Depreciation 3,084 3,289 Amortisation 7,780 9,065 Total depreciation and amortisation 10,864 12,354 3.6 . NET FINANCE EXPENSES Finance income comprises interest income and foreign currency gains that are recognised in the statement of comprehensive income. Interest income is recognised as it accrues, using the effective interest method. Finance expense comprises interest expense on borrowings, lease liability finance charges, foreign currency losses and impairment losses recognised on the financial assets (except for trade receivables) that are recognised in the statement of comprehensive income. All borrowing costs are recognised in the statement of comprehensive income using the effective interest method. 2021 2020 SECTION NZ$000 NZ$000 FINANCE INCOME Interest income 26 7 26 7 FINANCE EXPENSE Interest expense (203) (383) Lease liability finance charges 9.1 (814) (931) Interest paid - NPV discount - (7) Foreign exchange gains 4,692 928 3,675 (393) Net finance income/(expense) 3,701 (386) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 25 4. CASH, BORROWINGS AND CASH FLOWS This section outlines further from the statement of cashflows and provides details on the cash and cash equivalents held in the statement of financial position. Cash comprises cash at bank and on hand . 4.1 RECONCILIATION OF NET SURPLUS TO CASH FLOWS 2021 2020 SECTION NZ$000 NZ$000 RECONCILIATION OF OPERATING CASH FLOWS WITH NET PROFIT/(LOSS) AFTER TAX: Profit/(Loss) after tax 3,189 (31,706) ADJUSTMENTS FOR NON - CASH ITEMS Deferred tax 7.2 (2,590) (4,237) Impairment provision - Trade receivables 4 1,939 Gain on foreign exchange transactions (4,692) (928) Share based payments 3 ,566 310 Net interest expense 3.6 176 375 Revaluation and interest on financial liability - (884) Other non - cash items - (3) Depreciation and amortisation 3.5 10,864 12,354 Impairment of goodwill and other intangibles - 34,511 Non - cash items 10 , 517 11,731 ADD/(DEDUCT) MOVEMENTS IN OTHER WORKING CAPITAL ITEMS: (Increase) / Decrease in trade and other receivables ( 3,167 ) 10,850 Increase/(Decrease) in tax payable 1, 430 (2,611) (Decrease)/Increase in GST payable (1,284) 1,215 Increase in contract liabilities 413 196 Increase in employee entitlements 4,177 965 Increase/(Decrease) in trade payables and accruals 859 (380) Net working capital movements 2, 428 10,235 Net cash inflow from operating activities 12, 945 21,966 4.2 B ANK FACILITIES AND BORROWINGS Gentrack Group has a NZ$20m multi - currency facility with ASB Bank Limited to provide additional funding as required for acquisitions and general corporate purposes. This facility expires on 28 March 2022 , during 2021 the facility balance was fully repaid leaving $Nil dra wn under the facility agreement at 30 September 2021 (20 20 : $ 2 . 5 m). The facility is secured by a general security agreement under which ASB has a security interest in Gentrack Group assets. Covenants are in place an d compliance is reported quarterly. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 26 4.3 . CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise cash in hand, deposits held at call with banks, other short - term and highly liquid investments with original maturities of three months or less. 2021 2020 NZ$000 NZ$000 Bank balances 25,957 19,320 Cash on hand - 1 Total cash and cash equivalents 25,957 19,321 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 27 5. ASSETS AND LIABILITIES This section outlines further details of Gentrack Group’s financial position by building on information presented in the statement of financial position. 5.1 . TRADE AND OTHER RECEIVABLES G entrack Group recognises trade and other receivables initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. An impairment provision for trade receivables consists of the expec ted credit loss in accordance with NZ IFRS 9 and a specific provision. A specific provision is established when there is objective evidence that Gentrack Group will not be able to collect all amounts due according to the original terms of the receivables . The carrying amount of an asset is reduced using provision accounts, and the amount of the loss is recognised in the statement of comprehensive income. When a receivable is uncollectible, it is written off against the specific impairment provision accoun t. Subsequent recoveries of amounts previously written off are credited against the statement of comprehensive income. 2021 2020 NZ$000 NZ$000 Trade receivables 18,422 15,084 Impairment provision - Expected credit loss (334) (390) Impairment provision - Specific provision (2,945) (3,460) Provision for volume discounts (104) (131) Contract assets 4,865 5,683 Sundry receivables and prepayments 1,842 2,165 Total trade and other receivables 21,746 18,951 MOVEMENT IN TRADE RECEIVABLES IMPAIRMENT PROVISION 2021 2020 NZ$000 NZ$000 Opening balance 3,850 2,868 Increase in impairment provision 1,563 2,618 Write back in impairment provision (2,089) (566) Effect of movement in foreign exchange (21) 13 Bad debt written off (24) (1,083) Total trade receivables impairment provision 3,279 3,850 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 28 5 . 1 TRADE AND OTHER RECEIVABLES (CONTINUED) The expected credit loss provision for trade receivables has been measured using the same techniques as the prior year, determined as follows . 2021 CURRENT 1 - 60 DAYS PAST DUE 61 - 120 DAYS PAST DUE 121 - 180 DAYS PAST DUE OVER 180 DAYS PAST DUE TOTAL NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 Gross carrying amount 13,318 2,260 591 327 1,926 18,422 Baseline 34 17 9 8 96 164 Aging and Customer duration 1 - 6 10 97 114 Country, Customer and Market 26 6 3 2 19 56 Total expected credit loss rate 0.45% 1.02% 3.02% 6.25% 11.05% 1.81% Expected credit loss allowance 60 23 18 20 213 334 2020 CURRENT 1 - 60 DAYS PAST DUE 61 - 120 DAYS PAST DUE 121 - 180 DAYS PAST DUE OVER 180 DAYS PAST DUE TOTAL NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 Gross carrying amount 8,513 3,214 356 806 2,195 15,084 Baseline 21 21 5 20 106 173 Aging and Customer duration 1 6 3 39 112 161 Country, Customer and Market 16 8 2 6 24 56 Total expected credit loss rate 0.45% 1.09% 2.84% 8.08% 11.03% 2.59% Expected credit loss allowance 38 35 10 65 242 390 5.2 GOODWILL Goodwill represents the difference between the cost of acquisition and the fair value of the net identifiable assets acquired. Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash - generating units (CGU) and is not amortised but is teste d annually for impairment . 2021 2020 NZ$000 NZ$000 Opening balance 106,599 134,434 Goodwill impairment - (28,040) Exchange rate differences 167 205 Net book value 106,766 106,599 Goodwill allocated to Utilities 103,866 103,699 Goodwill allocated to Veovo 2,900 2,900 Net book value 106,766 106,599 During the year due to the further alignment of the Airport 20/20 and Blip Systems CGU , these CGU’s have been combined to form the Veovo CGU. With further alignment , it is no longer possible to meaningfully separate the cashflows of these CGU’s and therefore are now reported as a single CGU. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 29 5.3 I MPAIRMENT TESTING I MPAIRMENT TESTING OF GOODWILL AND OTHER ASSETS At each reporting date, Gentrack Group assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, Gentrack Group makes a formal estimate of the recoverable amount. Where the carrying value of an asset exceeds its recoverable amount, the asse t is considered impaired and is written down to its recoverable amount. Recoverable amount is the greater of fair value less costs to sell or the asset’s value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for wh ich there are separately identifiable cash flows (cash - generating units). Non - financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. In assessing value in use, the estim ated future cash flows are discounted to their present value using a pre - tax discount rate that reflects the current market assessments and the time value of money and the risks specific to the asset. Value in use is determined by discounting the future ca sh flows generated by each CGU. Cash flows were projected based on five - year business plans. The Weighted Average Cost of Capital (WACC) is based on CAPM methodology using market specific inputs. The WACC for each CGU is reviewed at least annually. The key assumptions are detailed in the table below. Gentrack Group tests annually whether goodwill has suffered any impairment or more often as required, in accordance with the accounting policy stated above. The recoverable amounts of cash - generating units have been determined based on value in use calculations . Preparing five - year forecasts in a COVID - 19 environment has been a challenging task due to the uncertainty of the future. In preparing the five - year forecasts, management has re viewed the assumptions and weighed up the information available at the time to ensure the forecasts are appropriate given the CGU’s position and the prevailing market conditions. These calculations require the use of assumptions, the details of these assum ptions are presented below and for both CGU’s a Terminal Growth Rate of 1.85% has been applied . CASH GENERATING UNIT 2021 REVENUE GROWTH 2022 - 2026 WACC 2021 2020 REVENUE GROWTH 2021 - 2025 WACC 2020 Utilities 5.1% CAGR 9.6% 4% CAGR 9.8% Veovo 10.6% CAGR 10.7% 5% CAGR 10.1% I MPAIRMENT TESTING RESULTS The calculations confirmed there was no impairment of goodwill during the year for the Utilities or Veovo CGU’s. Management believes that any reasonable possible change in the key assumptions for either CGU would not cause the carrying amount to exceed the recoverable amount. Changes in key assumptions were considered as sensitivities. These are summarised in the table below. CASH GENERATING UNIT RECOVERABLE AMOUNT EBITDA +5% EBITDA - 5% WACC +1% WACC - 1% Utilities 199,784 206,8 7 3 189,310 176,189 228,849 Veovo 9,724 11,058 9,218 8,641 12,037 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 30 5.4 I NTANGIBLE ASSETS C APITALISED DEVELOPMENT Costs that are directly associated with the development of software are recognised as intangible assets where the following criteria are met: • it is technically feasible to complete the software product so that it will be available for use . • management intends to complete the software product and use or sell it . • there is an ability to use or sell the software product . • it can be demonstrated how the software product will generate probable future economic benefits . • adequate technical, financial , and other resources to complete the development and to use or sell the software product are available; and • the expenditure attributable to the software product during its development can be reliably measured. Software development costs that meet the above criteria are capitalised. Other development expenditure that does not meet the above criteria is recognised as an expense as incurred. Development costs previously recognised as expenses are not recognised as assets in a subsequent period. Software development costs recognised as assets are amortised over their estimated useful lives. B RANDS Brands are considered to have an indefinite useful life and are held at cost and are not amortised but are subject to an annual impairment test consistent with the methodology outlined for goodwill above. OTHER INTANGIBLE ASSETS Other intangible assets consist of internal use software, acquired source code, trade - marks , and customer relationships. They have finite useful lives and are measured at cost less accumulated amortisation and accumulated impairment losses. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 31 5.4 I NTANGIBLE ASSETS (CONTINUED) AMORTISATION Except for goodwill and brands, intangible assets are amortised on a straight - line basis in the statement of comprehensive i ncome over their estimated useful lives, from the date that they are available for use. The estimated useful lives for the current and comparative periods are as follows: • Acquired source code 10 years • Internal use software 3 years • Customer relationships 10 years • Trademarks 4 years • Capitalised development 5 years Amortisation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate. 2021 SOFTWARE CUSTOMER RELATIONSHIPS BRAND NAMES TRADEMARKS CAPITALISED DEVELOPMENT TOTAL NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 Opening balance 25,046 12,888 5,024 454 2,016 45,428 Amortisation (4,666) (2,405) - (165) (544) (7,780) Movement in foreign exchange 33 18 - - (1) 50 Closing net book value 20,413 10,501 5,024 289 1,471 37,698 Cost 45,025 24,169 5,024 841 2,729 77,788 Accumulated amortisation (24,612) (13,668) - (552) (1,258) (40,090) Net book value 20,413 10,501 5,024 289 1,471 37,698 2020 SOFTWARE CUSTOMER RELATIONSHIPS BRAND NAMES TRADEMARKS CAPITALISED DEVELOPMENT TOTAL NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 Opening balance 31,413 15,718 5,024 621 7,706 60,482 Additions - - - - 331 331 Amortisation (4,861) (2,473) - (169) (1,562) (9,065) Impairment (1,616) (390) - - (4,464) (6,470) Movement in foreign exchange 110 33 - 2 5 150 Closing net book value 25,046 12,888 5,024 454 2,016 45,428 Cost 44,945 24,128 5,024 839 2,726 77,662 Accumulated amortisation (19,899) (11,240) - (385) (710) (32,234) Net book value 25,046 12,888 5,024 454 2,016 45,428 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 32 5.5 P ROPERTY PLANT AND EQUIPMENT In the statement of financial position property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation on assets is calculated using the straight - line method to allocate the difference between their original costs and their residual values over their estimated useful liv es, as follows: • Furniture & equipment 7 years • Computer equipment 3 to 7 years • Leasehold improvements Term of lease The assets’ residual values and useful lives are reviewed and adjusted if appropriate at each balance date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are recognised in the statement of comprehensive income . 2021 FURNITURE & EQUIPMENT COMPUTER EQUIPMENT LEASEHOLD IMPROVEMENTS TOTAL NZ$000 NZ$000 NZ$000 NZ$000 Opening balance 788 522 1,453 2,763 Additions 28 631 4 663 Depreciation (170) (396) (171) (737) Movement in foreign exchange (4) ( 2 ) - ( 6 ) Net book value 642 755 1,286 2,683 Cost 2,086 4,371 2,088 8,545 Accumulated depreciation (1,444) (3,616) (802) (5,862) Net book value 642 755 1,286 2,683 2020 FURNITURE & EQUIPMENT COMPUTER EQUIPMENT LEASEHOLD IMPROVEMENTS TOTAL NZ$000 NZ$000 NZ$000 NZ$000 Opening balance 969 849 1,635 3,453 Additions 22 300 2 324 Depreciation (197) (556) (185) (938) Disposals - (16) - (16) Movement in foreign exchange (6) (55) 1 (60) Net book value 788 522 1,453 2,763 Cost 2,097 3,918 2,088 8,103 Accumulated depreciation (1,309) (3,396) (635) (5,340) Net book value 788 522 1,453 2,763 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 33 5.6 T RADE PAYABLES AND ACCRUALS Gentrack Group recognises trade and other payables initially at fair value and subsequently measured at amortised cost using the effective interest method. They represent liabilities for goods and services provided prior to the end of the financial year that are unpaid. The amounts are unsecured, non - inter est bearing and are usually paid within 45 days of recognition. 2021 2020 NZ$000 NZ$000 Trade creditors 1,929 1,803 Sundry accruals 2,584 2,102 Total trade payables and accruals 4,513 3,905 5.7 EMPLOYEE ENTITLEMENTS Liabilities for salaries and wages, including non - monetary benefits, long service leave , and annual leave are recognised in employee benefits in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilit ies are settled. Cost for non - accumulating sick leave is recognised when the leave is taken and measured at the rates paid or payable. 2021 2020 NZ$000 NZ$000 CURRENT Long service leave 448 611 Other short - term employee benefits 9,087 4,941 9,535 5,552 NON - CURRENT Long service leave 539 428 Total employee entitlements 10,074 5,980 5. 8 INVENTORY Inventories are stated at the lower of cost and net realisable value. Cost is calculated using a weighted average method and includes expenditure incurred to purchase the inventory and transport it to its current location. Net realisable value is the estimated selling price of the inventory in the ordinary course of business less costs necessary to make the sale. The cost of inv entories consumed during the year are recognised as an expense and included in expenditure in the statement of comprehensive income. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 34 6. C APITAL STRUCTURE This section outlines Gentrack Group’s capital structure and details of share - based employee incent ives which have an impact on Gentrack Group’s equity. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects. Where any Gentrack Group company purchases the Company’s equity share capital (treasury shares), the consideration paid is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or transferred outside Gentrack Group. Ordinary shares are fully paid and have no par value. The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company and rank equally with regard to the Company’s residual assets. 6.1 CAPITAL MANAGEMENT The capital structure of Gentrack Group consists of equity raised by the issue of ordinary shares in the parent company. Gentrack Group manages its capital to ensure that companies in the Group can continue as going concerns. Gentrack Group is not subject to any externally imposed capital requirement s . SHARES ISSUED SHARE CAPITAL 2021 2020 2021 2020 000 000 NZ$000 NZ$000 Ordinary Shares 98,645 98,645 191,229 191,229 Issue of new ordinary shares 302 - 470 - 98,947 98,645 191,699 191,229 During 202 1 Performance Rights of 274,105 in relation to Long Term Incentive Schemes vested , resulting in the same number of new shares being issued. Also 28,389 shares were issued as part payment of Gentrack Group Directors fees . 6.2 S HARE BASED PAYMENTS Gentrack Group operates equity settled, share - based payments schemes under which it receives services from employees, as consideration for equity instruments of Gentrack Group. A valuation is completed for each scheme at the grant date to estimate the fair value of the performance rights granted . Management also makes estimates about the number of performance rights that are expected to vest which determines the expense recorded in the statement of comprehensive income. The fair value of the performance rights is determined at the grant date using the Black Scholes valuation method , the key input into the valuation model is the grant date share price . The fair value of the performance rights is recorded as an expense in the statement of comprehensive income over the vesting period, based on Gentrack Group’s estimate of the number of performance rights that will vest, with a corresponding entry to the share - based payment reserve within equity. During the year ended 30 September 2021 , $ 3 . 6 m has been recognised in the s tatement of c omprehensive i ncome (2020: $0.3m). During the year ended 30 September 2021 , two new equity settled share - based payment schemes were introduced and additional participants were granted performance rig hts under the existing scheme. The existing scheme has b een renamed as the Senior Leadership Long Term Incentive. The two new equity settled share - based payment schemes introduced during the year are the Gentrack Long Term Incentive Scheme and the CEO Long Term Incentive Scheme . SENIOR LEADERSHIP LONG TERM INCENTIVE SCHEME During the year the Gentrack Group Board approved the sixth annual grant of performance rights in the Senior Leadership Long Term Incentive Scheme, this scheme was first i ntroduced i n 2016 for selected key personnel. The scheme is intended to attract and reward key personnel to focus on long - term performance. The number of perfor mance rights allocated is based on a percentage of salary or other such percentage and are calculated with NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 35 6.2 SHARE BASED PAYMENTS (CONTINUED) reference to the 10 - trading day volume weighted average price (VWAP) of shares traded on the NZX based on dates indicated in the issue documentation. The number of performance rights subject to the E arnings P er S hare (EPS) hurdle that will vest after three years depends on achievement of the EPS performance hurdle. The performance hurdle is that 50% of the EPS Perf ormance Rights will vest if EPS C ompounding Annual Growth Rate (C AGR ) of Gentrack Group over the three financial years is 7%, with the number of performance rights that vest increasing on a linear basis to 100% if EPS CAGR of 12% is achieved. During 2021, 24,105 Performance Rights in the Senior Leadership Long Term Incentive vested with a weighted average vesting date share price of $ 2.10 per share . B elow are the d etails of the outstanding performance rights in the Senior Leadership Long Term Incentive Scheme : GRANT DATE EXPIRY DATE TOTAL VALUE OF GRANTED PERFORMANCE RIGHTS PERFORMANCE RIGHTS GRANTED 2021 NZ$000 000 EPS SCHEMES 2018 - 2021 1 October 2018 30 November 2021 310 65 1 October 2019 30 November 2022 351 160 1 April 2020 1 April 2023 1,023 769 1 October 2020 1 April 2022 97 3 66 6 1 October 2020 30 November 2023 99 6 68 2 Total Senior Leadership LTI Schemes 3,65 3 2,342 GRANT DATE EXPIRY DATE TOTAL VALUE OF GRANTED PERFORMANCE RIGHTS PERFORMANCE RIGHTS GRANTED 2020 NZ$000 000 EPS SCHEMES 2017 - 2020 1 October 2017 30 November 2020 318 55 1 October 2018 30 November 2021 411 86 1 October 2019 30 November 2022 1,055 217 1 April 2020 1 April 2023 1,364 1,026 1 August 2020 1 August 2021 28 24 Total Senior Leadership LTI Schemes 3,176 1,408 GENTRACK LONG TERM INCENTIVE SCHEME On 24 December 2020 Gentrack Group announced the establish ment of a new Long Term Incentive Scheme (Gentrack Long Term Incentive Scheme). Th e Gentrack Long Term Incentive Scheme has been introduced to: - Assist with the retention of eligible employees - Significantly increase the number of Gentrack Group employees th at have a stake in Gentrack Group - Give eligible employees a share in Gentrack Group’s future performance The participants of the Gentrack Long Term Incentive Scheme are offered Performance Rights for nil consideration, which on vesting will entitle them t o receive one ordinary share in Gentrack Group . The se Performance Rights will vest subject to the participants continuing to be employed by Gentrack Group at the end of the vesting period which commences 1 October 2022 . Gentrack Group issued 592,352 Performance Rights to employees under the Gentrack Long Term Incentive Scheme during 2021 . 535,819 Performance Rights are outstanding at 30 September 2021 with a grant date fair value of $0.8m and an expiry date of 1 October 2 022 . NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 36 6.2 SHARE BASED PAYMENTS (CONTINUED) CEO LONG TERM INCENTIVE SCHEME Gary Miles was appointed to the role of Managing Director and Chief Executive Officer (CEO) from 1 October 2020 and included in the remuneration package are Performance Rights granted for nil consideration. During 2021, a total of 1,248,604 Performance Rights were issued under the CEO Long Term Incentive Scheme, which 500,000 were an initial grant with 250,000 of these vesting immediately and the remaining 250,000 to vest on the one - year anniversary of starting employment with Gentrack Group. There are no vesting conditions or performance hurdles in regard to the initi al grant . The remaining 748,604 Performance Rights granted are an initial annual grant and will vest at the end of a 13 - month performance period, vesting subject to performance hurdles set by the Board of Directors and is aligned with initial business tran sformation and the financial performance during 2021 . During 2021 a total of 250,000 Performance Rights have vested with a weighted average share price on the vesting date of $ 1.57 per share. 998,604 Performance Rights remain outstanding at 30 September 20 21 , with a total grant date fair value of $1.54m and an expiry date of 31 October 2021 . PERFORMANCE RIGHTS MOVEMENTS Below is a summary of all performance rights , granted, exercised and forfeited across all the equity settled share - based payments schemes operated by Gentrack Group during 202 1 : 2021 2020 GRANT DATE AVERAGE EXERCISE PRICE PER PERFORMANCE RIGHT NUMBER OF PERFORMANCE RIGHTS AVERAGE EXERCISE PRICE PER PERFORMANCE RIGHT NUMBER OF PERFORMANCE RIGHTS 000 000 As at 1 October $2.25 1,408 $4.49 268 Granted during the year $1.49 3,253 $1.93 1,267 Exercised during the year $1.51 (274) - - Forfeited during the year $2.08 (511) $3.78 (127) As at 30 September $1.54 3,876 $2.25 1,408 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 37 6.3 D IVIDENDS Details of the dividends paid during the year ended 30 September 202 1 are provided below: CENTS PER SHARE DIVIDENDS PAID 2021 2020 2021 2020 NZ$000 NZ$000 Final dividend paid - 3.0c - 3,004 Interim dividend paid - - - - 3.0c - 3,004 6.4 E ARNINGS PER SHARE Gentrack Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the net profit attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares on issue during the year, excluding shares purchased and held as treasury shares. Diluted EPS is determined by adjusting the net profit attributable to ordinary shareholders and the weighted average number of ordinary shares on issue for the effects of the dilutive impact of potential ordinary shares, which comprise performance share rights granted to employees. Potential ordinary shares are treated as dilutive when, and only when, their conversion to ordinary shares would decrease EPS or increase the profit per share. 2021 2020 Profit/(Loss) attributable to the shareholders of the company 3,189 (31,706) Profit/(Loss) attributable to the shareholders of the company adjusted for the effect of dilution 3,189 (31,706) Basic weighted average number of ordinary shares issued 98,761 98,645 Shares deemed to be issued for no consideration in respect of share - based payments 3 ,8 7 6 1,408 Weighted average number of shares used in diluted earnings per share 10 2 , 637 100,053 Basic earnings per share $0.03 ($0.32) Diluted earnings per share $0.03 ($0.32) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 38 7. T AX 7.1 I NCOME TAX EXPENSE In the statement of comprehensive income, the income tax expense comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax payable also includes any tax li ability arising from the declaration of dividends . 2021 2020 NZ$000 NZ$000 INCOME TAX EXPENSE COMPRISES: Current tax expense 4,965 1,676 Deferred tax expense (2,590) (4,237) Tax expense/(benefit) 2,375 (2,561) RECONCILIATION OF INCOME TAX EXPENSE The relationship between the expected income tax expense based on the domestic effective tax rate of Gentrack Group at 28% (20 20 : 28%) and the reported tax expense in the statement of comprehensive income can be reconci led as follows : 2021 2020 NZ$000 NZ$000 Profit/(Loss) before tax 5,564 (34,267) Taxable income 5,564 (34,267) Domestic tax rate for Gentrack Group 28% 28% Expected tax expense/(benefit) 1,558 (9,595) Non - deductible expense 1,345 8,350 Foreign subsidiary company tax (40) 1,009 Prior period adjustments (488) (2,325) Actual tax expense/(benefit) 2,375 (2,561) As at 30 September 202 1 Gentrack Group has $ 9.4 m (20 20 : $8.7m) of imputation credits available for use in subsequent reporting periods. 7.2 D EFERRED TAX ASSETS AND LIABILITIES Deferred tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised , or the deferred incom e tax liability is settled. Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except for deferred income tax liabilities where the timing of the reversal of the temporary difference is controlled by Gentrack G roup and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities a nd when the deferred income tax assets and liabilities relate to income tax levied by the same taxation authority on either the same taxable entity or different entities where there is an intention to settle the balance on a net basis. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 39 7.2 D EFERRED TAX AS SETS AND LIABILITIES (CONTINUED) Additional income tax expenses that arise from the distribution of cash dividends are recognised while the liability to pay the related dividend is recognised. Gentrack Group does not distribute non - cash assets as dividends to its shareholders. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related benefits will be realised. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised. Management applies judgement when reviewing current business plans and forecasts to ascertain the likelihood of future taxable profits. The movement in temporar y differences has been recognised in the statement of comprehensive income. Deferred tax has been recognised at a rate at which they are expected to be realised: 28% for New Zealand entities, 30% for Australian entities, 1 9 % for UK entities, 22% for Denmark entities and 35% for Malta entities. Movement in temporary timing differences during the year: 2021 OPENING BALANCE TEMPORARY MOVEMENT RECOGNISED CURRENCY TRANSLATION CLOSING BALANCE NZ$000 NZ$000 NZ$000 NZ$000 Trade and other receivables (84) 66 4 (14) Intangible assets (4,913) 1,631 (9) (3,291) Contract liabilities 871 140 (28) 983 Provisions 1,738 973 (35) 2,676 Losses carried forward 2,016 (203) (86) 1,727 Other 24 (17) (2) 5 Net deferred tax (348) 2,590 (156) 2,086 2020 OPENING BALANCE TEMPORARY MOVEMENT RECOGNISED CURRENCY TRANSLATION CLOSING BALANCE NZ$000 NZ$000 NZ$000 NZ$000 Trade and other receivables (68) (15) (1) (84) Intangible assets (7,196) 2,303 (20) (4,913) Contract liabilities 661 202 8 871 Provisions 1,056 673 9 1,738 Losses carried forward 1,076 944 (4) 2,016 Other (97) 130 (9) 24 Net deferred tax (4,568) 4,237 (17) (348) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 40 8. FINANCIAL RISK MANAGEMENT Gentrack Group is exposed to credit risk, liquidity risk and market risks which include foreign currency risk, commodity price risk and interest risk. This section details of each of these financial risks and how they are managed by Gentrack Group. The Board of Directors has overall responsibility for the establish ment and oversight of Gentrack Group’s risk management framework. Gentrack Group’s risk management policies are established to identify and analyse (amongst other risks) the financial risks faced by Gentrack Group, to set appropriate risk limits and contro ls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and Gentrack Group’s activities. 8.1 C REDIT RISK Credit risk is the risk of financial loss to Gentrack Group if a customer or counter party to a financial instrument fails to meet its contractual obligations, and it arises principally from Gentrack Group’s trade receivables from customers in the normal course of business. Gentrack Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The credit worthiness of a customer or counter party is determined by several qualitative and quantitative factors. Qualitative factors include external credit ratings (where available), payment history and strategic importance of customer or counter party. Quantitative factors include transaction size, net assets of customer or counter party, and ratio analysis on liquidity, cash flow and profitability. In relation to trade receivables, it is Gentrack Group’s policy that all customers who wish to trade on terms are subject to credit verification on an ongoing basis with the intention of minimising bad debts. The nature of Gentrack Group’s trade receivables is represented by regular turnover of product and billing of customers based on the contractual payment terms. Gentrack Group has an impairment provision that represents its estimate of future incurred losses in respect of trade and other receivables. The impairment provision consists of the expected credit loss provision in accordance with NZ IFRS 9 and a specific doubtful debt provision used where there is objective evidence that indicates a trade receivable is impaired. The carrying amount of Gentrack Group’s financial assets represents the maximum credit exposure as summarised in the table below: 2021 2020 GROSS IMPAIRMENT PROVISION GROSS IMPAIRMENT PROVISION NZ$000 NZ$000 NZ$000 NZ$000 Current 13,318 (348) 8,513 (38) Past due 1 - 60 days 2,260 (454) 3,214 (918) Past due 61 - 120 days 591 (261) 356 (178) Past due 121 - 180 days 327 (315) 806 (600) Past due over 180 days 1,926 (1,901) 2,195 (2,116) 18,422 (3,279) 15,084 (3,850) Gentrack Group’s trade receivables are not exposed to any significant credit exposure to any single counterparty or group of counterparties having similar characteristics. Trade receivables consist of several customers in various geographical areas. Based on historic information about customer default rates, management considers the credit quality of trade receivables that are not past due or impaired to be good. As at 30 September 202 1 there are no significant concentrations of credit risk for financial as sets designated as at amortised cost or at fair value. The carrying amount reflects Gentrack Group’s maximum exposure to credit risk for these financial assets. Judgement has been applied to the recovery of all trade receivables, with management confirming that all carrying amounts are deemed to be recoverable and not impaired. The credit risk for cash and cash equivalents is considered negligible since the counterparties are highly reputable financial intuitions with high quality external credit ratings. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 41 8 .2 M ARKET RISK Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect Gentrack Group’s income or the value of its holdings of financial instruments. The objective of market risk management is t o manage and control market risk exposures within acceptable parameters, while optimising the return on risk. FOREIGN CURRENCY RISK Gentrack Group is exposed to currency risk on transactions that are denominated in a currency other than the functional currency of Gentrack Group (NZD), primarily the following currencies Australian Dollar (AUD), Pound Sterling (GBP), EURO (EUR) , US Dollar (USD), and Danish Kroner (DKK). Gentrack Group’s exposure to foreign currency risk at the reporting date wa s as follows (all amounts are denominated in New Zealand Dollars): AUD GBP EUR USD DKK 2021 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 Cash and cash equivalents 10,756 8,002 496 855 183 Trade and other receivables 4,503 10,074 1,493 874 1,915 Trade and other payables (132) (2,608) (72) (354) (562) Bank loans - - - - - Net exposure 15,127 15,468 1,917 1,375 1,536 2020 Cash and cash equivalents 5,634 10,675 70 1,029 96 Trade and other receivables 4,790 8,874 1,056 1,369 1,521 Trade and other payables (218) (1,479) (507) (1,768) (103) Bank loans - (2,536) - - - Net exposure 10,206 15,534 619 630 1,514 The following table summarises the sensitivity of profit or loss and equity with regards to Gentrack Group’s financial assets and financial liabilities affected by AUD/NZD exchange rate, the GBP/NZD exchange rate, the EUR/NZD exchange rate, the USD/NZD exc hange rate, and the DKK/NZD exchange rate with all other aspects being equal. It assumes a +/ - 10% change in the NZD to the currency exchange rate for the year ended 30 September 202 1 (20 20 : 10%). These +/ - 10% sensitivities have been determined based on the average market volatility in exchange rates in the preceding 12 months. PROFIT/EQUITY AUD GBP EUR USD DKK NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 2021 10% strengthening in NZD (1,375) (1,406) (174) (125) (140) 10% weakening in NZD 1,681 1,719 213 153 171 2020 10% strengthening in NZD (928) (1,412) (56) (57) (138) 10% weakening in NZD 1,134 1,726 69 70 168 Gentrack Group’s exposure to foreign exchange rates varies during the year depending on the volume of foreign currency transactions. Even so, the analysis above is representative of Gentrack Group’s exposure to market risk. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 42 8.3 L IQUIDITY RISK Liquidity risk is the risk that Gentrack Group will not be able to meet its financial obligations as and when they become due and payable. Gentrack Group’s approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when they become due and payable, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to Gentrack Group’s reputation. Gentrack Group has sufficient cash to meet its requirements in the foreseeable future. The following table details Gentrack Group’s contractual maturities of financial liabilities, as at the reporting date: ON DEMAND LESS THAN 3 MONTHS 3 TO 12 MONTHS 1 TO 5 YEARS >5 YEARS TOTAL NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 2021 Bank loan - - - - - - Trade payables - 1,929 - - - 1,929 Financial liabilities - - - - - - - 1,929 - - - 1,929 2020 Bank loan - - 2,536 - - 2,536 Trade payables - 1,803 - - - 1,803 Financial liabilities - - - - - - - 1,803 2,536 - - 4,339 8.4 I NTEREST RATE RISK Gentrack Group’s interest rate risk primarily arises from short term bank borrowing, cash , and advances from related parties. Borrowings and deposits at variable interest rates expose Gentrack Group to cash flow interest rate risk. Borrowings and deposits at fixed rates expose Gentrack Group to fair value interest rate risk. The following tables detail the interest rate repricing profile and current interest rate of the interest - bearing financial assets and liabilities. EFFECTIVE INTEREST RATE FLOATING FIXED UP TO 3 MONTHS FIXED UP TO 6 MONTHS FIXED UP TO 5 YEARS TOTAL NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 ASSETS Bank balances - 25,957 - - - 25,957 Total exposure 25,957 - - - 25,957 EFFECTIVE INTEREST RATE +1% EFFECTIVE INTEREST RATE - 1% NZ$000 NZ$000 Bank balances 262 (262) Total exposure 262 (262) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 43 8.5 FINANCIAL INSTRUMENTS Gentrack Group’s financial assets are measured at amortised cost. Gentrack Group’s financial assets are held within a business model whose objective is to hold the financial asset to collect contractual cash flows and the financial asset gives rise to contractual cash flows on specified dates that are payments of principal and interest on the principal outstandin g. Gentrack Group’s financial liabilities are measured at amortised cost except for contingent consideration which is required to be measured at fair value through profit and loss. Gentrack Group’s financial assets and liabilities by category are summaris ed as follows: C ASH AND CASH EQUIVALENTS Cash and cash equivalents comprise of cash at bank and on hand and the carrying amount is equivalent to fair value. TRADE RECEIVABLES These assets are short term in nature and are reviewed for impairment; the carrying value approximates their fair value. TRADE PAYABLES These liabilities are mainly short term in nature with the carrying value approximating the fair value. LOANS AND BORROWINGS Loans and borrowings have a floating interest rate. Fair value is estimated using the discounted cash flow model based on current market interest rate for a similar product; the carrying value approximates their fair value. FAIR VALUES Gentrack Group’s financial instruments that are measured after initial recognition at fair values are grouped into levels based on the degree to which their fair value is observable: • Level 1 – fair value measurements derived from quoted prices in active markets for identical assets. • Level 2 – fair value measurements derived from inputs othe r than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly. • Level 3 – fair value measurements derived from valuation techniques that include inputs for the asset or liability which are not bas ed on observable market data. There have been no transfers between levels or changes in the valuation methods used to determine the fair value of Gentrack Group’s financial instruments during the period. As at 30 September 202 1 Gentrack Group has n o of lev el 3 financial instruments (2020: $N il) . F INANCIAL INSTRUMENTS BY CATEGORY 2021 2020 NZ$000 NZ$000 FINANCIAL ASSETS MEASURED AT AMORTISED COST Cash and cash equivalents 25,957 19,321 Trade and other receivables 21,746 18,951 47,703 38,272 FINANCIAL LIABILITIES MEASURED AT AMORTISED COST Loans and borrowings - (2,536) Trade payables (1,929) (1,803) FINANCIAL LIABILITIES MEASURED AT FAIR VALUE Financial Liabilities - - (1,929) (4,339) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 44 9. O THER INFORMATION 9.1 L EASE ASSETS AND LEASE LIABILITIES R ECOGNITION AND MEASUREMENT OF GENTRACK GROUP LEASING ACTIVITIES Gentrack Group predominantly leases property for fixed periods of 1 - 12 years and may have extension options. These extension options are usually at the discretion of Gentrack Group and are included in the measurement of the lease asset if management intends to exercise the extension. Lease terms are negotiated on an individual basis and contain a variety of terms and conditions. However, th ese lease agreements do not impose any covenants. L eases are recognised as a right of use asset (lease asset) and a corresponding lease liability at the date at which the leased asset is available for use. Each lease payment is allocated between the liabil ity and finance cost. The finance cost is charged to profit or loss over the lease period. The lease asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight - line basis. Assets and liabilities arising from a lease a re initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: • fixed payments (including in - substance fixed payments), less any lease incentives receivable • variable lease payments that a re based on an index or a rate • amounts expected to be payable by the lessee under residual value guarantees • the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and • payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option. 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. Lease assets are measured at cost comprising the following: • the amount of the initial measurement of lease liability • any lease payments made at or before the commencement date less any lease incentives received • any initial direct costs, and • restoration costs. Key movements related to the lease assets and lease liabilities are presented below: LEASE ASSETS 2021 2020 NZ$000 NZ$000 Balance at 1 October 10,338 12,671 Lease amendments 185 - Depreciation charges (2,347) (2,350) Exchange differences (14) 17 Lease assets at 30 September 8,162 10,338 Property 8,156 10,302 Office equipment 6 36 Lease assets at 30 September 8,162 10,338 Office equipment includes Coffee Machines and Printer/Copiers. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 45 9.1 L EASE ASSETS AND LEASE LIABILITIES ( CONTINUED ) LEASE LIABILITIES 2021 2020 NZ$000 NZ$000 Balance at 1 October 15,127 17,620 Lease amendments 185 - Principal repayments (2,748) (2,457) Exchange differences (12) (36) Lease liabilities at 30 September 12,552 15,127 Less than one year 1,376 2,692 One to five years 5,486 5,229 More than five years 5,690 7,206 Lease liabilities at 30 September 12,552 15,127 LEASE EXPENSES 2021 2020 NZ$000 NZ$000 Depreciation charges 2,347 2,351 Finance charges 814 931 Lease expenses 3,161 3,282 9.2 A UDITORS REMUNERATION The table below outlines the amounts paid to auditors during the year ended 30 September 2021 . Gentrack Group’s current Group auditor is EY after switching from KPMG at the beginning of the year. 2021 2020 NZ$000 NZ$000 KPMG - audit fees 86 517 KPMG - review fees - 116 KPMG - taxation services 301 221 EY - audit fees 40 0 - Entrust - audit fees 6 6 Total fees paid to auditor(s) 79 3 860 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 0 SEPTEMBER 202 1 GENTRACK FINANCIAL STATEMENTS / 46 9 . 3 KEY MANAGEMENT AND RELATED PARTIES Key management personnel are defined as those persons having authority and responsibility for planning, directing, and controlling the activities of Gentrack Group, directly or indirectly, and include the Directors, the Chief Executive, their direct reports. The following table summarises remuneration paid to key management personnel . 2021 2020 NZ$000 NZ$000 Salaries, bonus and other benefits 4,526 4,157 Share - based payments 465 - Directors' fees 606 386 Remuneration paid to Key Management Personnel 5,597 4,543 Gentrack Group’s Directors are also directors of other companies. During the year ended 30 September 202 1 no transactions have occurred between Gentrack Group and any of these companies. Some of the Directors and key management personnel are shareholders in Gentrack Group Limited. Gentrack Group does not transact with the Directors or key management personnel, and their related parties, other than in their capacity as Directors, consultants, and employees. Refer to note 2.4 for more information on other related parties. 9.4 O THER DI SCLOSURES CAPITAL COMMITMENTS There are no capital commitments at 30 September 202 1 (2020: $Nil). CONTINGENCIES ASB New Zealand has provided guarantees of $ 1 . 1 m (20 20 : $0.9m) on behalf of the Gentrack Group, these guarantees are in place for software implementation projects, property leases and credit card programs . EVENTS AFTER BALANCE DATE There were no material events after balance date. On 2 4 November 202 1 , the Gentrack Group Board determined that no final dividend will be paid out for the 202 1 financial year (20 20 : nil ). CORPORATE DIRECTORY GENTRACK FULL YEAR FINANCIAL STATEMENTS / 47 REGISTERED OFFICE Gentrack Group Limited 17 Hargreaves Street, St Marys Bay, Auckland 1011, New Zealand Phone: +64 9 966 6090 Facsimile: +64 9 376 7223 Level 9, 390 St Kilda Road, Melbourne, VIC 3004 Australia Phone: +61 3 9867 9 100 Facsimile: +61 9867 9140 POSTAL ADDRESS PO Box 3288, Shortland Street, Auckland 1140 New Zealand NEW ZEALAND INCORPORATION NUMBER 3768390 AUSTRALIAN REGISTERED BODY NUMBER (ARBN) 169 195 751 DIRECTORS Andy Green , Chai r Nicholas Luckock Fiona Oliver St ewart She r riff Darc Rasmussen Gary Miles COMPANY SECRETARY Pip White AUDITOR EY EY Building, 2 Takutai Square, Britomart Auckland 1010 Phone: +64 9 377 4790 LEGAL ADVISERS BELL GULLY BANKERS ASB BANK LIMITED ANZ LIMITED HSBC PLC NORDEA DENMARK A/S BANK OF VALLETTA PLC TRUIST FINANCIAL CORPORATION SHARE REGISTRAR NEW ZEALAND LINK MARKET SERVICES LIMITED Level 11, Deloitte Centre, 80 Queen Street, Auckland 1010 PO Box 91 976, Auckland 1142 Phone: +64 9 375 5998 Facsimile: +64 9 375 5990 Email: enquiri firstname.lastname@example.org AUSTRALIA LINK MARKET SERVICES LIMITED Level 12, 680 George Street, Sydney, NSW 2000 Locked Bag A14, Sydney South, NSW 1235 Phone: +61 1300 554 474 Facsimile: +2 9287 0303 Email: email@example.com CORPORATE DIRECTORY GENTRACK FULL YEAR FINANCIAL STATEMENTS / 48
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