Serko FY21 Half-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, email@example.com Incorporated in New Zealand ARBN 611 613 980 Market Release 24 November 2021 Serko’s unaudited financial results for the half year to 30 September 2021 and launch of its $ 85 m capital raise SUMMARY FINANCIAL RESULTS 1, 2,3 • Total operating revenue increased 81% to $9.2 million from $5.1 million, while total income increased 16% to $9.9 million from $8.5 million. • Total travel booking volumes rose 157% to 1.3 million from 0.5 million, lifted by limited lockdowns in Australia and New Zealand during the first quarter, and new Booking.com for Business transactions. • Booking.com for Business migration completed, with over 300,000 business customers now on the new Zeno-powered platform. Average transactions have grown during the period and in September 2021 were generally in the range of 1,000 and 1,500 per weekday, despite ongoing COVID-19 related restrictions in the primary markets. • Average revenue per booking (ARPB 4 ) for the managed business was $7.38 compared to $8.76 during the full-year FY21 period due to a change in revenue mix. Booking.com for Business platform-related ARPB in September 2021 was just below NZ$20. • Net losses after tax increased by 50% to $15.2 million from $10.1 million reflecting the planned increase in expenditure to capitalise on the significant opportunities for Serko’s expansion into international markets. • EBITDA losses increased 76% to $11.8 million from $6.7 million. • Net cash burn averaged $2.9 million per month for the half year, within the $2 million to $4 million guidance range. • Cash and short-term deposits on 30 September 2021 totalled $62.3 million, down from $79.9 million on 31 March 2021. Serko (NZX & ASX:SKO), a leader in travel and expense management for business, today announces financial results for the half year to 30 September 2021 showing the company investing for the global opportunities emerging as travel markets recover from COVID-19. It also announces the launch of a $85 million capital raise to continue to execute on its global growth strategy. Serko plans to raise the capital via the issuance of ordinary shares in Serko by way of a NZ$75 million fully underwritten placement and a NZ$10 million non-underwritten retail offer. The funds raised will be used to: continue to invest for growth into the unmanaged travel segment through our Booking.com for Business partnership; accelerate the development of our global marketplace strategy, and pursue opportunities for inorganic global expansion. Further details of the capital raising are covered in the investor presentation and the associated documentation released to the NZX and ASX today. FINANCIAL RESULTS 1 All dollar amounts are New Zealand dollars (NZ$) unless otherwise stated 2 Comparative numbers are for the prior comparative period (H1 FY21) unless otherwise stated. 3 Non-GAAP measures used in this release are defined at the end of this release. 4 ARPB is a blended rate and includes all recurring revenue divided by online bookings. 2 In sharp contrast to the same period a year ago when COVID-19 disruptions to travel markets in Australasia peaked, limited lockdowns in the first quarter of this year, together with a contribution from Booking.com for Business, has resulted in total operating revenue of $9.2m, an 81% increase compared to 1H FY21. However, the gains were tempered by the impact of COVID-19 on other markets, as well as the strict lockdowns experienced during the second quarter in New Zealand and Australia. Total travel bookings on Serko’s platform rose 157% to 1.3 million from 0.5 million in the same period a year ago, lifted by more limited lockdowns in Australia and New Zealand during the first quarter, and new Booking.com for Business transactions. With increased travel during the period, the proportion of travel platform versus expense management revenue has changed compared to FY21. This resulted in a lower average revenue per booking (ARPB 5 ) for the managed business of $7.38 compared to $8.76 during the full-year FY21. Booking.com for Business platform-related ARPB in September was just below $20, this has subsequently increased to over $20 during October. Product design and development costs totalled $13.4 million during the period ($8.9 million in 1H FY21), of which $7.0 million was capitalised ($4.9 million in 1H FY21). EBITDA losses increased 76% to $11.8 million from $6.7 million, reflecting a slow return to travel globally, combined with a continued and deliberate increase in investment in our platform and markets ahead of the eventual market recovery. Net losses after tax increased 50% to $15.2 million from $10.1 million. Serko ended the period with cash and short-term deposits of $62.3 million, down on the $79.9 million at 31 March 2021. The cash burn over the six-month period averaged $2.9 million per month, within the $2 million to $4 million guidance range. This reflects continued prudent cash management, balancing investing for opportunity while managing for uncertainty. Further detail on the company’s financial performance for the six-month period is covered in an accompanying presentation and the unaudited half year financial statements released to the ASX and NZX today. AUSTRALIA AND NEW ZEALAND Serko continued to win new customers and occupy a strong market position in Australasia during the period. The number of Australasian corporates transacting in the peak month during the period, May 2021, was 5,249 compared to the low of 3,443 in September 2021. Prior to COVID-19, over 6,800 corporates were transacting on Serko’s platform. Serko’s reseller partners have continued to transition customers on to the Zeno platform, with Serko securing increased transaction fees as part of the migration arrangements. Zeno adoption has increased from 53% of active corporate customers in September 2020 to 67% in September 2021 and migrations are expected to continue over the next 12 months. 5 ARPB is a blended rate and includes all recurring revenue divided by online bookings. 3 Up until the imposition of the latest lockdown in mid-August, the New Zealand market was performing very well. In the first quarter travel volume in New Zealand was 151% of pre-COVID-19 levels, peaking at over 160% in June 2021 . With strict lockdowns reimposed in mid-August, volumes in New Zealand at the end of September were 47% of pre-COVID-19 levels, averaging 117% for the half year. The recovery in Australia was more tempered due to more extensive lockdowns, reaching a high of 72% of pre-COVID-19 levels in April 2021, with an average over the half year of 46%. For the Australasian region as a whole, average volume in the first quarter was 74% of pre-COVID-19 levels and 40% in the second quarter. NORTH AMERICA The validation phase in North America is now complete, and the Zeno brand has a presence in market that is driving pipeline growth. Serko is experiencing an uplift in inbound enquiries, with multiple requests to participate in RFPs by Fortune 500 companies. Serko is currently in discussions with several large global US corporations about providing the Zeno platform for use by employees globally. 6 Transaction volumes averaged more than 10% monthly growth from May 2021 to September 2021, despite the ongoing pandemic-related travel restrictions. Serko has 10 resellers signed, with active customers transacting across six of these partners, although volume remains at low levels. BOOKING.COM FOR BUSINESS We are delighted with the accelerated progress we have made on our partnership with Booking.com. The new Booking.com for Business offering in the unmanaged travel space is available in nine languages across 180 markets, providing accommodation options, with flights and rail content progressively being added. We successfully completed the migration of over 300,000 Booking.com for Business customers onto the new Zeno powered platform, with over 30,000 new sign-ups onto the platform since launch. 7 As announced to the market previously, the migration phase was extended by two months to the end of September to accommodate the transfer of remaining customers during a period of pandemic-related disruption but was overall delivered on a significantly accelerated timeline. We’ve been pleased to see transactions grow from a zero base to a range of between 1,000 and 1,500 transactions per weekday, despite ongoing COVID-related restrictions in primary markets. This migration completed Phase 1 of our journey with Booking.com to become a leading digital travel platform for small and medium sized businesses in the unmanaged travel space. The foundations of the new platform are in place, and Serko and Booking.com are now looking to expeditiously undertake the next phase of the roll-out to maximise and capture revenue opportunities, and grow transactions, as global business travel recovers. 6 There is no guarantee that these inbound enquiries and RFPs will result in a signed agreement on the terms currently envisaged or at all. 7 We expect SME business booking behaviours 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 beyond. 4 Through the initial migration phase, we believe we have captured less than 10% of the pre-COVID opportunity, presenting exciting growth opportunities for Serko as global business travel recovers and planned investment is made into additional product functionality and content. STRATEGIC UPDATE Serko Chair Claudia Batten said: “The COVID-19 pandemic is a rare event that is reshaping the business travel industry landscape, impacting both the suppliers of travel content and services and the evolving needs of business travel buyers. “This shift is giving rise to consolidation and disruption within the market, and as business travel returns over the coming years, we believe there will be a handful of players who will have an outsized opportunity through the recovery. “Serko is positioning itself to be a player of global standing that is able to take advantage of these opportunities. We are continuing to invest in the global growth opportunities being presented, notwithstanding the ongoing headwinds of COVID, in the confidence that business travel will resume. “We have continued to guide Serko through the COVID pandemic, focused clearly on the opportunities that lie ahead. While all our markets are still weathering the pandemic, we have delivered results well ahead of the same period a year ago, when virus-related disruptions to travel markets were at their peak, particularly in the Australasia markets, which still contribute the majority of our revenue. “In the unmanaged travel sector, we successfully completed the migration of the Booking.com for Business customer base in September 2021. “We are also making progress laying the foundations for growth in North American managed travel markets and are in discussions with several large entities to expand our presence in that region. “In Australasia, activity on our travel booking platforms is still well below pre-COVID-19 levels, but Serko continues to occupy a strong market position in this region. “We have achieved this while operating within the clear capital management framework we established at the start of the pandemic, balancing investment to take advantage of the opportunities we see, while managing for uncertainty.” Serko Chief Executive and Co-Founder Darrin Grafton said: “We are poised for growth out of this pandemic and the investment to date has proven our ability to grow from a regional leader to a truly global player. Our focus is now on scaling the business to activate the opportunities we have ahead of us. “The significant progress we have made is underpinned by a dedicated team that have stayed focussed on the strategy and execution needed in a very complex environment. We have invested in the foundational work that enabled us to commence our global strategy. “We have built a platform that has scaled to handle thousands of customers migrating onto the platform every day and maintained and built a system that has scaled with the demands to date. “This project has required a huge effort from the Serko and Booking.com teams during a time where the teams often had to work remotely. 5 “We continue to advance our vision of the ‘connected trip’ with enhancements to our product and the addition of new content. These include tools that allow businesses to deliver on their sustainability commitments and better discharge the duty of care they owe to their travellers, such as informing them of COVID-19 protection measures.” OUTLOOK “Despite the ongoing disruption that is being seen in international travel markets, we remain very excited about the opportunities we see and remain confident in the return to business travel over time. We believe our target of reaching $100 million revenue in the mid-term remains achievable, but this revenue target has continued to be delayed as a result of the pandemic,” Darrin Grafton said. “The disruptions to global business travel arising from the pandemic and other factors continues to make it challenging to determine the timing of realisation of revenues from these opportunities. “Earlier in the year, when lockdowns in Australia and New Zealand were lifted, domestic travel activity resumed quickly, and we therefore expect to see similar trends play out in these markets as we reach high vaccination levels and following the adoption of a ‘live with’ policy. We have already seen an uplift as a result of the recent easing of travel restrictions within Australia, with transactions in the first half of November averaging over 52% of pre-COVID levels. “We are in discussions to actively establish growth in North America and, while sales cycles tend to be relatively slow in this market, we believe the market continues to provide a significant growth opportunity over time and as business travel resumes. “We are excited to embark on the next phase of the multi-year journey to activate and engage Booking.com for Business customers as they return to travel, and to fully realise the potential of the partnership with Booking.com. “Serko anticipates full-year revenue and other income of between $21 million and $25 million. This outlook assumes a general reduction of domestic travel restrictions within Australia and New Zealand and no significant lockdowns in Europe or North America. The assumptions underlying these expectations are subject to variation and are detailed in the accompanying investor presentation. At the lower end of the revenue range average monthly cash burn in the six months to 31 March 2022 is expected to average close to $4.0 million as investment is accelerated. “As announced today, we are raising capital to allow us to invest to capture the growth opportunities we continue to see in each market and realise our vision of transforming from an online booking tool into a global marketplace, while retaining a prudent cash buffer to protect against a slower than expected COVID- 19 recovery and other uncertainties.” ENDS Released for and on behalf of Serko Limited by: Shane Sampson Chief Financial Officer 6 Serko Chief Executive Darrin Grafton and Chief Financial Officer Shane Sampson will this morning host conference call and webcast at 11.30 am NZT to discuss the capital raising and the results for the half year. Details of the call are available on serko.com/investors . A webcast of the call can also be accessed at the following link: https://event.webcasts.com/starthere.jsp?ei=1503170&tp_key=fab313a1a2 For further information : Investor relations: Media: Shane Sampson Richard Inder Chief Financial Officer, Serko Media Consultant to Serko +64 9 884 5916 +64 21 645 643 firstname.lastname@example.org email@example.com 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 useful to provide information to investors to assess business performance. A reconciliation of Net Profit to EBITDA can be found in the Investor Presentation dated the same date as this announcement. • Total operating revenue (a non-GAAP measure) is revenue excluding income from grants and finance income; total income includes grants. • Average Revenue Per Booking (ARPB) is a non-GAAP measure. Serko uses this as a useful indicator of the revenue value per travel booking. It is calculated by taking total Recurring product revenue divided by the total number of online bookings. • Recurring product revenue is a non-GAAP measure. Recurring revenue is derived from transactions and usage of Serko products by contracted customers. It excludes revenues from customised software development (services revenue). • Product design and development costs is a non-GAAP measure representing the internal and external costs related to research, development, design and maintenance of software, both expensed and capitalised but excluding depreciation and amortisation. • Operating costs is a non-GAAP measure which excludes costs relating to taxation, interest, depreciation, and amortisation charges. • Total travel bookings include both online and offline transactions unless otherwise stated. • EBITDA is a non-GAAP measure representing Earnings Before the deduction of costs relating to Interest, Taxation, Depreciation and Amortisation. All dollar amounts are New Zealand dollars (NZ$) unless otherwise stated. RESULTS ANNOUNCEMENT 24 November 2021 Results for announcement to the market Name of issuer Serko Limited (“SKO”) Reporting Period 6 months to 30 September 20 2 1 Previous Reporting Period 6 months to 30 September 2020 Currency New Zealand Dollars Amount (000s) Percentage change Revenue from continuing operations $9,878 Up 16% Total Revenue $9,878 Up 16% Net profit/(loss) from continuing operations ($15,163) Increase of 50% Total net profit/(loss) ($15,163) Increase of 50 % 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 57.68 cents 34.50 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 unaudited interim financial statements 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 firstname.lastname@example.org Date of release through MAP 24 /11/20 2 1 Unaudited financial statements for the six months ended 30 September 2021 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, email@example.com Incorporated in New Zealand ARBN 611 613 980 Interim results for the half year to 30 September 2021 and $ 85 m Capital Raising Investor Presentation – 24 November 2021 DISCLAIMER The following notice and disclaimer applies to this investor presentation and you must read this carefully before reading or mak ing any other use of this presentation or any information contained in this presentation. By accepting this presentation you represent and warrant that you are entitled to receive thi s p resentation in accordance with the restrictions, and agree to be bound by the limitations, contained within it. This presentation has been prepared by Serko Limited (Serko) in relation to an offer of new shares in Serko (New Shares) by w ay of a: • placement to selected investors (Placement); and • retail offer to Serko's existing shareholders with an address either in New Zealand or Australia (Retail Offer), under clause 19 of Schedule 1 of the Financial Markets Conduct Act 2013 (together, the Offer). All information is current at the date of this presentation, unless stated otherwise. All currency amounts are in NZ dollars un less stated otherwise. Information : This presentation contains summary information about Serko and its activities. The information in this presentation is of a ge neral nature and does not purport to be complete, nor does it contain all the information which a prospective investor may require in evaluating a possible investment in Serko or tha t would be required in a product disclosure statement for the purposes of the Financial Markets Conduct Act 2013 or a prospectus or other disclosure document for the purpose of the Corpor ati ons Act 2001 ( Cth ). This presentation should be read in conjunction with Serko's other periodic and continuous disclosure announcements, which are available at www.nzx.com and www.asx.com.au . Not financial product advice : This presentation is for information purposes only and is not financial or investment advice or a recommendation to acquire Se rko securities, and has been prepared without taking into account the objectives, financial situation or needs of individuals. Before making an investment de cision, prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and consult a broker, or solicitor, a cco untant and/or other professional adviser. Past performance : Any information given in this presentation regarding Serko's historical performance (whether financial or otherwise) is giv en for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance. No representations or warranties are made as to the accuracy or completeness of such information. Future performance : The information contained in this presentation may include forward - looking statements about Serko and the environment in whic h Serko operates, such as indications of, and guidance on, future earnings and financial positions and performance. You are strongly cautioned not to place undue reliance on forward - looking statements, particularly in light of the significant volatility, uncertainty and disruption caused by the outbreak of COVID - 19. Forward - looking information is inherently uncertain and subject to contingencies, known and unknown risks and uncertainties and other factors outside of Serko's control, and may involve significant elements of subject judgeme nt and assumptions as to future events which may or may not be correct. 2 | DISCLAIMER Forward - looking statements may also assume the success of Serko's business strategies. The success of any of these strategies i s subject to uncertainties and contingencies beyond Serko's control, and no assurance can be given that any of the strategies will be effective or that the anticipated benefits from the st rategies will be realised in the period for which the forward looking statements may have been prepared or otherwise. Refer to the key risks described in the appendix to this presentation for a non - exhaustive summary of certain key business, offer and general risk factors that may affect Serko. No assurance can be given that actual outcomes or performance will not materially differ fr om the forward - looking statements. A number of important factors could cause Serko's actual results or performance to differ materially from these statements, particularly as a result of the im pacts of COVID - 19. The forward - looking statements are based on information available to Serko as at the date of this presentation. Except as required by law or regulation (including the NZX Listing Rules), Serko undertakes no obligation to provide any additional or updated information whether as a result of new information, future events or otherwise. Non - GAAP financial information : Certain financial measures included in this presentation are non - GAAP financial information. Non - GAAP financial information d oes 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 provi de investors to assess business performance. Please refer to the definitions section for further detail on non - GAAP measures used by management and referred to in this presentation. Distribution of presentation : This presentation must not be distributed in any jurisdiction to the extent that its distribution in that jurisdiction is r est ricted or prohibited by law or would constitute a breach by Serko of any law. 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Disclaimer : To the maximum extent permitted by law, none of Craigs Investment Partners Limited, Cameron Partners Limited, Ord Minnett Limited or any of their respective subsidiaries, related companies, shareholders, directors, officers or employees, or any other person, makes any representation or warranty, or prov ide s any undertaking, in relation to any information contained in this presentation and they shall have no liability (including for negligence) for: any errors or omissions in the information or failure to correct or update the information, or any other written or oral communications provided in relation to the information or any claim, loss or damage (whether foreseeable or not) arising fr om the use of any of the information or otherwise arising in connection with the information. The information in this presentation remains subject to change without notice. Serko reserve s t he right to withdraw the Offer or vary the timetable for the Offer without notice. Determination of eligibility of investors for the purposes of the Retail Offer is determined by reference to a number of matters, including legal regimes and the discretion of Serko. Serko, Craigs Investment Partners Limited, Cameron Partners Limited, and Ord Minnett Limited disclaim all liability in respect of the exercise of that discretion to the maximum extent permitted by law. 3 | Capital Raising Overview Executing Into Our Global Strategy Strategic Priorities Contents Financial Update and Outlook Company Snapshot and Key Risks 4 | Executive Summary • The COVID - 19 pandemic is a rare event that is reshaping the business travel industry landscape, impacting both the suppliers of travel content and services and the evolving needs of business travel buyers. • This shift is giving rise to consolidation and disruption within the market, and as business travel returns over the coming y ear s, we believe there will be only a handful of players who will have an outsized opportunity through the recovery. • Serko is positioning itself to be a player of global standing that is able to take advantage of these opportunities. We inten d t o continue investing in the global growth opportunities being presented, notwithstanding the ongoing head - winds of COVID, in the confidence that business travel will resume. • 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. We are at the early stages of our journey to globalize as we realise our vision of a business travel marketplace and have only just started to capture the opportunities of our partnership with Booking.com and the North American market. • We are raising capital to: • Invest for growth into the unmanaged travel segment through our Booking.com for Business partnership; • Accelerate the development of our global marketplace strategy; and • Pursue opportunities for inorganic global expansion. • The money raised is intended to ensure Serko retains sufficient capital resilience to pursue these opportunities in the event th at business travel takes longer to recover than is currently anticipated. 5 | Executing Into Our Global Strategy 6 | SERKO HAS INVESTED FOR GROWTH AGAINST THE HEAD - WINDS OF COVID PROGRESS SINCE OCTOBER 2020 Booking.com Delivered a self - service solution to on - board customers to book and manage accommodation with a connected trip offering including flights available in select countries and rail content expected to be available in 2H22. Completed an accelerated migration of 300,000+ existing Booking.com for Business customers onto the Zeno platform. Transitioned from migration to activation phase with multiple product enhancements to support the needs of unmanaged SME business travellers. From a zero base grew to a range of between 1,000 – 1,500 bookings per weekday despite ongoing COVID related restrictions in primary markets. 7 | North America Moved beyond market validation and now positioned for growth. Seeing an increase in market engagement through inbound enquiries and RFPs 1 . Added two new TMC resellers and now have a total of ten across US and Canada, with six active and producing transactions albeit at low levels due to COVID. 2 Launched a refreshed version of Zeno Expense to complement Zeno Travel and position Serko as an innovative alternative to existing travel & expense solutions in North America. Australia / New Zealand Demonstrated resilience through strong customer retention in the face of recurrent travel shutdowns. Continued to deliver market growth with NZ volumes up over 160% on 2019 volumes in June 2021, before lockdowns imposed. Continued customer migration from Serko Online, with 67% of customers currently booking on Zeno. 3 1 There is no guarantee that these inbound enquiries and RFPs will result in a signed agreement on the terms currently envisage d o r at all. 2 One reseller terminated i ts contract with Serko during the period following acquisition by a competitor. 3 As at 31 October 2021. 8 | OUR GROWTH OPPORTUNITY HAS GLOBAL SCALE THE ZENO TRAVEL PLATFORM IS NOW AVAILABLE IN 180 COUNTRIES § In 2019, Zeno Travel was available in English and Te Reo Maori, primarily distributed across Australia and New Zealand with nascent market entry in North America and the UK. § 2021 was the year that redefined Serko’s global ambition, with investment in growth allowing us to expand to a total of 9 languages available in 180 countries via our partnership with Booking.com . § Serko is on a journey to solve the challenges of business travel globally, through partnerships with channel partners that have strong bases of business travel customers. 5 180 2019 2021 9 | SERKO IS NOW POISED TO ENTER THE NEXT PHASE OF GROWTH CONSOLIDATE GROWTH IN A/NZ ESTABLISH GROWTH IN NORAM ACTIVATE & ENGAGE BOOKING.COM FOR BUSINESS CUSTOMERS VALIDATION IN NORAM MIGRATE BOOKING.COM FOR BUSINESS CUSTOMERS ESTABLISH MARKET LEADERSHIP IN A/NZ We are here REGIONAL ONLINE BOOKING TOOL GLOBAL ONLINE BOOKING TOOL BECOME A MARKET LEADER IN A/NZ GLOBAL BUSINESS TRAVEL MARKETPLACE OPPORTUNITIES TO ACCELERATE MARKETPLACE STRATEGY A / NZ = Australia & New Zealand NORAM = North America WE ARE BUILDING A GLOBAL BUSINESS TRAVEL MARKETPLACE BY BRINGING THE WORLD’S TRAVEL SUPPLIERS AND TRAVEL BUYERS TOGETHER Enhance Zeno to become a distributed marketplace that aggregates content and simultaneously serves multiple market segments and regions. The world’s travel content The world’s business travel buyers Air Rail Accommodation Rental Car Ground Transport Dining 1 Meeting Rooms 1 Carbon Offset 1 Risk Management 1 Travel Spend Expense Management Disruption Management 1 SMEs Corporates Enterprise U N M A N A G E D M A N A G E D S E R V I C E S C O N T E N T 1 These content and service offerings are planned or in development. 10 | 11 | THROUGH A SINGLE PLATFORM TO SERVE MULTIPLE CUSTOMER SEGMENTS NB: These are representations of content suppliers and partners, not an exhaustive list of available providers. The world’s travel content The world’s business travel buyers C O N T E N T P A R T N E R S G L O B A L D I S T R I B U T I O N S Y S T E MS A G G R E G A T O R S MA N A G E D C O R P O R A T E S U N MA N A G E D S ME C U S T O ME R S T M C P A R T N E R S T M C S T O R E F R O N T S SERKO IS SOLVING THE FRICTION OF THE BUSINESS TRAVEL LIFECYCLE 12 | *These content and service offerings are planned or in development. ü ü ü ü ü ü § From pre - trip approval through in - trip purchasing to post - trip reporting, the current reality is that business travellers are required to interact with a multitude of disconnected systems, providers and data. § These challenges are generally consistent across the spectrum of small business (unmanaged) and large corporate and enterprise travellers (managed travel). § Serko’s vision of a business travel marketplace that supports a connected trip aims to reduce this friction through an integrated application encompassing travel, expense and payment. Strategic Priorities 13 | Our plan on a page O U R V I S I O N O U R M I S S I O N The reinvention of business travel retailing with the world’s first business travel marketplace . We’re on a mission to connect the world’s business travellers with the universe of travel suppliers, providing travel buyers with the content, information and services they need at every stage of the journey to create a connected trip. S T R AT E G I C S U M M A R Y Leverage our strength in A/NZ to expand into international markets through strategic alliances that enable the business model transformation from an Online Booking Tool to a B2B Marketplace. O U R 5 S T R AT E G I C P I L L A R S Expand A/NZ customer base through continued investment in product innovation. Drive into North America scaling growth in Managed TMCs and Global Corporates. Become the leading digital business travel platform for SMEs in partnership with Booking.com. Scale the technology and data platform to enable connectivity to a broader range of partners to deliver a connected trip offering in all markets. Attract, acquire and develop talent to create the organisation foundations for a successful scale - up with global coverage. 3 2 1 A/NZ NORAM BOOKING.COM 4 BUILD OUT THE MARKETPLACE MODEL 5 BUILD TEAM SERKO TO ENABLE SCALE - UP 14 | BOOKING.COM FOR BUSINESS MIGRATION PHASE 3: SCALING PHASE 2: ACTIVATING + ENGAGING PHASE 1: MIGRATION COMPLETE H2 FY22 - FY23 FY23 - FY24 1 • Mission to become the leading digital travel platform for small and medium sized businesses in the unmanaged travel space. • Successfully completed the migration of Booking.com for Business customers onto the new Zeno powered platform, having migrated over 300,000 existing customers onto the platform, with >30,000 new sign - ups onto the platform since launch. 1 As announced to the market previously, the migration phase was extended two months to the end of September to accommodate the transfer of remaining customers during a period of pandemic related disruption. • From a zero base grew to a range of between 1,000 and 1,500 transactions per week - day in October despite ongoing COVID related restrictions in primary markets. A verage Revenue per Booking in October was above the NZ$20 target we have previously communicated to the market. • The foundations of the new platform are in place, and Serko and Booking.com are now looking to expeditiously undertake the next phase of the roll - out to maximise and capture revenue opportunities as global business travel recovers. 1 We expect SME business booking behaviours will be different from our enterprise customers . I t 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. 15 | ACTIVATING & ENGAGING BOOKING.COM FOR BUSINESS PHASE 3: SCALING PHASE 2: ACTIVATING + ENGAGING PHASE 1: MIGRATION COMPLETE H2 FY22 - FY23 FY23 - FY24 1 16 | • Through the initial migration phase we believe we have captured under 10% of the pre - COVID opportunity and the journey to more fully realise the opportunity through our multi - year plan has begun. • In addition to the uplift that we expect from industry forecasts of business travel recovery, we are also bringing forward our investment in product and content to unlock further upside from this opportunity. • Key focus areas for attention and investment as we move into the next phase include: 1. Activating the existing base of migrated customers by increasing conversion rates through enhance ments to the user experience that reinforce the business tool value proposition, and launch of a mobile app offering to capture what has become an increasingly significant booking channel over the past 18 months. 2. Growing the base of SME customers through investment in content to support a more complete connected trip offering, expanded servicing options to address additional customer segments and expansion to regions that require complex language sets. BOOKING.COM RENTALCARS.COM AGODA PRICELINE OPEN TABLE LIVE IN DISCUSSION POTENTIAL FUTURE INTEGRATIONS ESTABLISHING GROWTH IN NORTH AMERICA • Validation phase in North America is complete, and the Zeno brand now has a presence in market that is driving pipeline growt h. • Focus is now on scaling growth over a multi year period through two market channels: 1. TMC resellers: • Serko now has 10 TMC resellers signed, with active customers transacting across 6 of these partners. • Transaction volumes have averaged more than 10% monthly growth from May 2021 to September 2021 despite ongoing pandemic related travel restrictions, although remain at low levels. • Activated additional expense channel partner through OMNIA Partners. 2. Direct to Corporate and White Label Deals: • Uplift in inbound enquiries with multiple requests to participate in RFPs for Fortune 500 companies. Currently in discussions wi th several large global US corporations about providing the Zeno platform for use by employees globally. 1 • Requests to white label the Zeno platform to non - TMC resellers who have existing business travel customers. 1 1 There is no guarantee that these negotiations will result in a signed agreement on the terms currently envisaged or at all. PHASE 3: SCALING PHASE 2: ESTABLISHING GROWTH PHASE 1: VALIDATION COMPLETE FY22 - FY23 FY24 2 17 | CONSOLIDATING OUR LEADERSHIP IN A/NZ MANAGED TRAVEL • The majority of Serko’s revenues come from domestic bookings in Australia and New Zealand. Serko continues to occupy a strong market position in Australasia, providing corporate travel content to a large share of managed travel customers in the region. • Despite the pandemic, Serko’s customer base has demonstrated resilience, winning new enterprise customers and achieving 60% adoption across the ASX 50 which should position Serko well when business travel returns. • Serko’s reseller partners have continued to transition customers on to Zeno, with Serko securing increased transaction fees as part of migration arrangements. Zeno adoption has increased from 53% of corporate customers in September 2020 to 67% in September 2021, and migrations are expected to continue over the next 12 months. 3 18 | * From September 2019 to February 2021 numbers are against the same month in the prior year. From March 2021 onwards transactions are measured against the same month in 2019 to reflect pre - Covid - 19 volumes. > < PRE POST Move Fly Work Stay Eat Play Rest Book + Change Book + Change 4 • Building out our connected trip vision is a core focus for Serko, creating an open platform with a content hub that enables the scalable connection of additional supply partners. • Progressively integrating n ew content within each market such as air, rail, car rentals and ground transport; activating Booking Holdings’ content brands (e.g. Agoda, Rentalcars.com) and bringing additional content brands to the platform (e.g. rail providers). • Continued product innovation with the vision to reduce the friction inherent in business travel and deliver additional customer benefits through value added content includes: • COVID - 19 health & safety and arrival requirements information from specialist providers. • Risk Management to ensure travellers and companies are informed of destination risk with appropriate approval workflows. 1 • Integrated environmental impact and carbon offset. 1 • Enhanced corporate travel policy compliance. 1 • NDC airline content. • Support the end - to - end travel buyer journey through further integration of expense management into a single business travel application. ESTABLISHING OUR GLOBAL OFFERING THROUGH ZENO TRANSFORMING FROM AN ONLINE BOOKING TOOL INTO A MARKETPLACE ECOSYSTEM PLATFORM 1 Integration of these capabilities into the Zeno platform is either in development or planned. 19 | BUILDING TEAM SERKO TO ENABLE SCALE - UP INVESTING IN THE PEOPLE , BUSINESS PROCESSES AND TECHNOLOGY FOUNDATIONS • Serko is focused on developing our employee experience to engage and retain a global, diverse workforce in a competitive talent landscape and aligning our people to organisational objectives through OKRs 1 . • Developing our operational model to support the transition to a marketplace platform encompassing organisational design to scale and building robust leadership to amplify our capability and expertise. • Building a next generation data platform by investing in the people and technology to enable advanced analytics, machine learning and AI to support an enhanced in - trip customer experience (e.g. proactive disruption management) and intelligent customer preferencing. • Establishing a centre of excellence to design, build and run content connectors for Serko and 3 rd parties to plug and play additional content partners cost - effectively at scale. • Ensuring Serko stays current with developments in payment and verification technology and continuing investment and certification in ISO27001 compliance and SOC2 assessment. 5 Serko is shortlisted for the 2021 AFR Best Places to Work List 20 | 1 OKRs refer to Objectives and Key Results. ESG: SERKO LAUNCHES MISSION ZERO • In October 2021 Serko announced the launch of Mission Zero. As a company providing travel - related booking tools that are used by thousands of organisations around the world to book millions of trips, we recognised we could play a key role in helping reduce the environmental impact of our customers’ activity. By providing insight into travel - related CO2 emissions and environmental impact at point of sale, and enabling corporates to integrate the offset of their travellers’ carbon footprints into the booking, the Mission Zero capabilities can shape user behaviour to preference lower impact options and develop more sustainable travel programs. • While we can have our biggest impact through the way we serve our customers, we also want to have a big impact as a global corporate citizen. We aim to achieve this through: 1. Focusing on long - term growth and business sustainability; 2. Applying best practice governance and risk management procedures; 3. Cultivating an inclusive workplace of diverse and engaged staff; and 4. Enabling environmentally sustainable choices through technology. 21 | UPDATE ON M&A ACTIVITY • As part of its growth strategy Serko regularly assesses potential strategic acquisitions which would accelerate realisation of its strategic goals, particularly the global marketplace strategy. • Serko is currently in negotiations regarding the potential acquisition of a global travel technology business. Serko anticipa tes that the total consideration payable for the acquisition, primarily in scrip, would be between NZD$50m and $75m. There would be a smaller cash component. It is likely that a significant portion of the total consideration would be deferred and performance - based. • No definitive transaction documents have been signed in respect of the potential acquisition and Serko's due diligence is not complete. Consistent with Serko's rigorous approach to assessing potential acquisitions, a transaction will only proceed if t he strategic business case is proven out, due diligence is successfully completed, and binding terms that meet Serko's investmen t criteria can be agreed. • There is therefore no certainty that this acquisition will proceed, and Serko will update the market if and when definitive transaction documents are signed. • If the potential acquisition was to proceed, the earliest would be in Q1 2022. 22 | Financial Update and Outlook UNAUDITED FINANCIAL RESULTS FOR THE HALF YEAR TO 30 SEPTEMBER 2021 23 | PROFIT (LOSS) REVENUE ACTIVITY COSTS NET LOSS AFTER TAX (15.2m) EBITDA 1 loss $(11.8m) OPERATING REVENUE 81% Operating revenue from core products plus services revenue $9.2m RECURRING REVENUE 2 81% Recurring revenue (core product revenue only) 91% of total operating revenue $8.4m TOTAL INCOME 16% Total income from all sources including grants $9.9m PEAK ATMR 3 95% Indicator of future growth potential based on current trading $20.3m TRAVEL BOOKINGS 4 157% Travel platform bookings for the period 1.3m PRODUCT DESIGN & DEVELOPMENT 5 52% 147% of Revenue Capex $7m $13.4m OPERATING EXPENSES 42% Net FTE 6 increase in the past 12 months of 60 to a total of 295 employees $25.3m Notes 1 - 6: Refer to Appendix for definitions and descriptions of the non - GAAP measures used by management. 1HFY22: WEATHERING THE PANDEMIC, INVESTING FOR GROWTH PERFORMANCE COMPARED TO PRIOR COMPARABLE PERIOD 24 | 25 | NET PROFIT SUMMARY/ EBITDA RECONCILATION • Operating Revenue of $9.2m is up 81% from H1 FY21 (when COVID - 19 disruptions to Australasia travel markets had peaked). • Other income includes Grants of which $0.6m relates to COVID - 19 government subsidies recognised in income. • EBITDA loss of $(11.8m) is $(5.1m) more than the previous year with the increase in Operating expenses more than offsetting revenue improvements, representing the deliberate increase in investment in our platform and markets. • Net loss for the period was $(15.2m). H1 FY22 $000 9,150 728 9,878 (25,301) - 277% (15,163) - 166% 106 - ( 15,163 ) (106) - 3,663 (154) (11,760) - 129 % Net Profit Summary EBITDA Reconciliation Revenue Other income (including Grants) H1 FY21 $000 5,061 3,472 Total income Operating expenses 8,533 (17,850) Percentage of operating revenue - 353% Net profit /loss) before tax ( 10,027 ) Percentage of operating revenue - 198 % Net finance income/(expense) (158) Income tax expense ( 84 ) Net loss after tax (10,111) A dd back: net interest and dividend income Add back: income tax Add back: depreciation and amortisation Add back: net foreign exchange (gains)/losses 158 84 2,619 552 EBITDA (6,698) EBITDA margin - 132 % $000 4,089 (2,744) 1,345 (7,451) (5,136) 264 84 (5,052) (264) (84) 1,044 ( 706 ) (5,062) % 81% - 79 % 16 % 42 % 51% - 167% - 100 % 50 % - 167 % - 100% 40% - 128% - 76% FY21 $000 12,420 4,476 16,896 (44,854) - 361 % (29,048) - 234 % 247 (341) (29,389) (247) 341 5,633 1,337 (22,325) - 180 % 6 months change change 6 months 12 months Foreign exchange gains/(losses) 154 (552) 706 - 128% (1,337) 26 | REVENUE ANALYSIS • Recurring product revenue is up 81%. • Travel platform revenue is up 170% primarily due to increased travel compared to H1 FY21. • Content commissions is up 94% reflecting increased volume. • Average Revenue per Booking (ARPB) (based on total recurring revenue/online bookings) for the period was $7.38, down 31% from $10.76 1 during the same period last year and $8.76 for the full year. The decrease is a result in the change of the proportion of travel revenue vs expense management between the periods. H1 FY22 H1 FY21 FY21 Revenue and Other Income by Type Travel platform revenue Expense platform revenue Content commissions Other revenue Recurring product revenue Recurring revenue % operating revenue Services revenue Total operating revenue Total revenue and other income Australia New Zealand North America Other Operating Revenue by Geography $000 5,826 1,966 408 159 8,359 91 % 791 9,150 9,878 5,614 1,045 1,342 1,149 9,150 Total operating revenue $ 000 2,159 2,013 210 225 4,607 91 % 454 5,061 8,533 3,359 377 1,231 94 5,061 $000 3,667 (47) 198 (66) 3,752 337 4,089 1,345 2,255 668 111 1,055 4,089 % 170% - 2 % 94% - 29 % 81% 74 % 81% 16% 67 % 177% 9 % 1122% 81% $000 6,354 3,997 538 386 11,275 91% 1,145 12,420 16,896 7,520 2,154 2,369 377 12,420 Total other income Government grants Sundry income 72 3 5 3,023 449 (2 ,300) (444) - 76% - 99% 4,382 94 728 3,472 (2,744) - 79 % 4,476 6 months change change 6 months 12 months Total travel bookings (000) Online bookings (000) ARPB (recurring revenue/online bookings) 1 ARPB (travel related revenue only/online bookings) 1,345 1,133 $7.38 $5.50 523 428 $10.76 $5.54 822 705 ($3.38) ($0.04) 157% 165% - 31% - 0.7% 1,566 1,287 $8.76 $5.36 1 In the 1H FY21 report Serko disclosed Recurring revenue/online + offline bookings of $8.80. At 1H FY22, ARPB is shown as Recurring revenue /online bookings only which is consistent with the FY21 full year disclosure. 27 | TRANSACTION ANALYSIS - A/ NZ • In the first quarter, NZ booking volumes averaged 151% of pre - COVID - 19 levels; peaking in June at over 160%. • In Australia, the first quarter recovery was slower, averaging at 62% of pre - COVID - 19 levels and peaking at 72% in April 2021. • The peak average for all of Australasia was 84%, averaging 74% in the first quarter. • With extended travel restrictions starting in late June in Australia and August in NZ, transaction volume in 1H FY22 compared to pre - COVID - 19 in NZ was 117% (a low of 47%) and 46% in Australia (low of 29%). • In September 2021, NZ bookings were 47%, and Australian bookings 33%, of pre - COVID - 19 levels. • In Australia transactions in the first half of November 2021 are averaging 52% of pre - COVID - 19 levels. * From September 2020 to February 2021 numbers are against the same month in the prior year. From March 2021 onward transactions are measured against the same month in 2019 to reflect pre - Covid - 19 volumes. 0% 20% 40% 60% 80% 100% 120% 140% 160% 180% Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Australasia transactions as % of pre - COVID - 19* New Zealand TMCs Australian TMCs Australasia 27 | 28 | OPERATING EXPENSES • Operating expenses increased compared to H1 FY21 in all categories with higher activity and increased remuneration and benefits (R&B) which increased 33%, with increased headcount. • R&B before capitalisation was $21.8m in H1 FY22 compared to $16.1m in H1 FY21. • Headcount increased to 295 at 30 September 2021 up from 235 at 30 September 2020 and 287 at 31 March 2021. H1 FY22 $000 25,301 1,903 2,269 14,878 2,588 3,663 277% Operating Expenses Total Operating Expense H1 FY21 $000 17,850 Selling and marketing Hosting Remuneration and benefits Administration Amortisation and Depreciation 913 1,230 11,213 1,87 5 2,619 353 % $000 7,451 990 1,039 3,665 713 1,044 % 42 % 108 % 84% 33% 38% 40% FY21 $000 44,854 2,056 2,710 29,527 4,928 5 ,633 361% Percentage of Operating Revenue 6 months change change 6 months 12 months Number of Employees at period end 295 235 60 33% 287 Note: A further breakdown of Operating Expenses can be found in Note 3 of the financial statements. 28 | 29 | PRODUCT DESIGN AND DEVELOPMENT • Product design and development costs is a non - GAAP measure representing the internal and external costs related to research, development, design and maintenance of software, both expensed and capitalised but excluding depreciation and amortisation. • This incorporates research and development costs previously disclosed but provides a wider view of all Product Design and Development expenditure. • During the period, Serko invested $4.6m more in product design and development than the comparative period. • 52% of these costs were included as capitalised product development costs (55% in the comparative period). • Taking into account amortisation of previously capitalised development costs, the total impact on Comprehensive Income in the period was $9.3m ($5.7m in H1 FY21). H1 FY22 $000 6,491 13,442 147 % 2,852 (6,951) 9,343 102 % Product Design and Development Expenditure Total Product Design & Development (excluding amortisation ) H1 FY21 $000 3,963 Total Product Design & Development 8,861 Percentage of operating revenue 175 % Add: Amortisation of capitalised development costs 1,746 Less: capitalised product development costs (4,898) Total 5,709 Percentage of operating revenue 113 % $000 2,528 4,581 1,106 (2,053) 3,634 % 64 % 52 % 63 % 42% 64 % FY21 $000 11,972 19,203 155% 3,909 ( 7,231 ) 15,881 128 % 52% Percentage of Product Design & Development costs 55% 3 8% 71% Percentage of operating revenue 78 % 96% 6 months change change 6 months 12 months 30 | BALANCE SHEET • Average monthly cash burn in the half year was $2.9m, below the midpoint of the guidance of $2m - $4m. • Cash and Short - term deposits reduced by $17.6m since 31 March 2021. • Other current assets increased by $1.1m since 31 March 2021 reflecting anticipated government grant income and BBZ receivable. • Intangible assets increased by $4.0m since 31 March 2021 reflecting capital product development costs of $7.0m less amortisation of $2.9m. H1 FY22 $000 98,624 62,346 6,464 27,343 2,471 Balance Sheet Total assets H1 FY21 $000 61,442 Cash and Short - term d eposits Other current a ssets Intangible Assets Other n on - current a ssets 31,504 4,071 23,089 2,778 $000 37,182 30,842 2,393 4,254 - 307 % 61 % 98 % 59% 18% - 11% FY21 $000 111,309 79,919 5,400 23,304 2,686 30 Sep 20 change change 30 Sep 21 31 Mar 21 Current liabilities Non - current liabilities Equity Total equity and liabilities 98,624 61,442 37,182 61 % 111,309 8,857 832 88,935 5,671 707 55,064 3,186 125 33,871 56 % 18% 62% 8,363 418 102,528 • Serko continues to see strong growth opportunities and we believe our target of reaching $100 million revenue in the mid - term re mains achievable. This revenue target has been delayed during this COVID - affected year, and impacts from the pandemic and other factor s continue to make it challenging to determine the timing of realisation of revenues from these opportunities. • We are raising capital to allow us to invest to capture the growth opportunities while retaining a prudent cash buffer to gua rd against potential ongoing impacts of COVID - 19 and other uncertainties. • Serko anticipates full year revenue and other income of between $21m and $25m. This outlook assumes a general reduction of do mes tic travel restrictions within Australia and New Zealand and no significant lockdowns in Europe or North America. • The upper end of the FY22 range assumes: • A/NZ transaction volumes in the December quarter at 50% of 2019 levels rising in the March quarter to 75% of 2019 levels as l ock down restrictions lift. • Booking.com for Business revenues grow from current levels through to March 2022 as enhancements are made to the offering with a similar COVID - 19 rebound as that assumed for A/NZ. • The lower end of the range assumes: • A/NZ transaction volumes in the December quarter at 50% of 2019 levels rising to only 60% of 2019 levels in the March quarter . • Limited growth in Booking.com for Business revenues with increasing COVID impacts offsetting the impact of new feature enhancements to the offering. • At the lower end of the revenue range average monthly cash burn in the six months to 31 March 2022 is expected to be close to $4 .0 million as investment is accelerated. • In the second half Serko does not expect to be eligible for New Zealand government wage subsidies due to the growth in revenu e f rom Booking.com for Business. FY22 OUTLOOK 31 | Capital Raising Overview 32 | 33 | USE OF PROCEEDS 1. Investing for growth with Booking.com for Business (~35%) • Following the successful migration of Booking.com business customers onto the new Zeno powered Booking.com for Business platf orm , Serko will undertake targeted investment to optimise customer engagement and extend the offering across global markets to maximise the potential of the opportunity. • This second acceleration phase includes expanding new content such as air, rail and car rentals within target regions as well as investing in mobile and user experience enhancements to optimize delivery of the content, thereby extending the connected trip offering. • As we move to increase both the languages and features available, we believe we will create broader global appeal to scale up ou r platform allowing for an increasing focus on new customer acquisition through targeted marketing activity and strategic partnerships. 2. Develop global marketplace strategy (~40%) • Drive the strategy to transform to a distributed marketplace, creating an ecosystem of travel content suppliers and business tra vel market segments connected through the Zeno platform. • Expand sales and support capacity for increased demand of customer and reseller onboarding to drive volume across all markets , p articularly in North America, as global deals we are in the process of negotiating progress 1 . • Continue to scale up the technology and data powering our platform, as well as Serko’s operational capabilities to execute ar oun d the globe. 3. Inorganic acceleration of global expansion opportunities (~25%) • Fund potential acquisition opportunities aligned to strategy, if and when they arise. In this respect, Serko has an active M& A s trategy, and is assessing opportunities that would enable it to expand global volume and content efficiently to support acceleration of our m ark etplace strategy. Serko will use current cash on hand of approximately $62m to maintain a prudent working capital buffer and preserve a high le vel of balance sheet flexibility, in acknowledgement of the ongoing risks presented by COVID - 19 and other uncertainties. 1 There is no guarantee that these negotiations will result in a signed agreement on the terms currently envisaged or at all. CAPITAL RAISING OVERVIEW Offer size - NZ$85 million 1 equity raising, comprising: - NZ$75 million fully underwritten Placement - NZ$10 million non - underwritten Retail Offer together representing approximately 11.2% of Serko’s currently issued capital 2 Issue price - New shares to be offered under the Placement at a price to be determined via a book build process today (subject to a floor p ric e of NZ$7.05 per share), representing: - 10.2% discount to the last close (NZ$7.85); and - 11.0% discount to the 5 - day VWAP of NZ$7.92 prior to announcement - The Australian dollar Placement price will be determined using the AUD/NZD exchange rate as at 3.00pm (NZT) on 24 November 20 21 - New shares from the Retail Offer will be priced at the lower of the Placement price or the 5 - day VWAP over the last five days of the Retail Offer period Retail Offer - Serko is offering up to NZ$10 million of newly issued ordinary shares to Serko’s eligible existing shareholders resident in A ust ralia and New Zealand (up to a maximum of NZ$50,000/A$46,500 per shareholder) under a Retail Offer - Serko, at its discretion, has the ability to accept Retail Offer oversubscriptions Ranking - The new shares to be issued under both the Placement and Retail Offer will rank equally in all respects with Serko’s existing or dinary shares from allotment Arranging - Craigs Investment Partners and Cameron Partners are acting as Joint Arrangers, and Craigs Investment Partners and Ord Minnett are acting as Bookrunners and Underwriters 1 The Serko board reserves the right to vary the size of the placement based on the size, quality and price level of investor d ema nd. 2 At the underwritten floor price of NZ$7.05 per share. 34 | TIMELINE Offer announcement Wednesday, 24 November 2021 Placement Conduct placement Wednesday, 24 November 2021 Trading halt on NZX and ASX Wednesday, 24 November 2021 Announce completion and resume trading Thursday, 25 November 2021 Settlement on the ASX Tuesday, 30 November 2021 Settlement on the NZX Wednesday, 1 December 2021 Allotment and trading of shares on NZX and ASX Wednesday, 1 December 2021 Retail Offer Retail Offer Record Date Tuesday, 23 November 2021 Retail Offer Opens Tuesday, 30 November 2021 Retail Offer Closes Tuesday, 14 December 2021 Settlement on the ASX Monday, 20 December 2021 Settlement on the NZX Tuesday, 21 December 2021 Allotment of shares on NZX and ASX Tuesday, 21 December 2021 Trading of shares on NZX Tuesday, 21 December 2021 Trading of shares on ASX Wednesday, 22 December 2021 35 | 36 Company Snapshot and Key Risks 37 | 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. The majority of Serko’s revenue comes from Travel Management Companies (TMCs) (“Resellers”), who provide our online travel booking (OBT) solution to their corporate customers. 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 signed reseller agreements in North America and a global agreement to power an upgraded Booking.com for Business offering. 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 300 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.com and its 2021 Annual Report which can be found under Investor Centre . 38 | Zeno Travel Zeno 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 39 | KEY RISKS Like any investment, there are risks associated with an investment in Serko shares. Before investing in Serko, you should be awa re than an investment in Serko has a number of risks, some of which are specific to Serko and some of which relate to listed securities generally, and many of which are beyond the control of Serko. Additionally, some risks may be unknown and other risks, currently believed to be immaterial, could turn out to be material. Whilst the section below aims to highlight some of the k ey risks, it is not exhaustive. Investors should be aware that the spread of COVID - 19 and the actions taken in response by governments in New Zealand and other countries, including border controls and travel restrictions, and the resulting effects on the global economy have had, and are likely to continue to have, a material adverse effect on Se rko , its financial performance and position, liquidity, financial condition and results of operations. It is also likely that there will be further unforeseen negative impacts from the COVID - 19 pandemic, of an as - yet unknown magnitude and duration. It is not currently clear when these negative impacts will begin to abate. Serko will continue to respond to the challenges facing it, but there is no certainty as to the severity or likelihood of such unforeseen impacts arising nor whether any mitigating action can be taken or will be effective. Before deciding whether to invest in Serko shares, you must make your own assessment of the risks associated with the investm ent , including the inherent uncertainties due to the impact of COVID - 19 noted above, and consider whether such an investment is suitable for you having regard to all other Serko continuous di sclosure announcements and publicly available information, and consult your financial adviser and other professional advisers. Travel industry disruption and the impact of COVID - 19 Serko's operating and financial performance is dependent on the health of the travel industry generally. A decline in the do mes tic and/or international travel industry, whether as the result of a particular event (such as a war, terrorist attack, outbreak of disease epidemic/pandemic or a natural disaster, such as earth qua kes or volcanic ash clouds), economic conditions (such as a decrease in consumer and business demand), or any other factors would have a material adverse effect on Serko's operating and fi nancial performance. The events relating to COVID - 19 have resulted in unprecedented restrictions on domestic and international travel, major reductio ns in airline capacity and general disruption to the tourism industry. The extent of the effects of the COVID - 19 outbreak on Serko's business, results of operations, cash flows and growth prospects i s highly uncertain and will ultimately depend on future developments. These include, but are not limited to, the severity, extent and duration of the global pandemic and its impact on the travel industry and consumer spending more broadly; actions taken by national, state and local governments to contain the disease or treat its impact, including travel restrictions and ban s, required closures of non - essential businesses, vaccination levels and aid and economic stimulus efforts, the speed and extent of the recovery across the broader travel ecosystem; short - term and long - term changes in travel patterns, including business travel; and the duration, timing and severity of the impact on customer spending, including the economic recession resulting from the pa ndemic. There is no certainty that demand for Serko's services will normalise to a level existing prior to the impact of COVID - 19 (or how long such normalisation could take), even once the do mestic and international travel restrictions are lifted. 40 | KEY RISKS (continued) Global travel trends generally Serko’s revenue is highly dependent on transaction volumes in the global travel industry, particularly air travel transaction vo lumes. Serko's revenue is largely tied to travel suppliers’ transaction volumes booked via the Serko platform rather than to the unit pricing for travel products booked (e.g. airplane tickets or ho tel rooms). This revenue is generally not contractually committed to recur annually under Serko's agreements with its travel suppliers and as a result, is highly dependent on the health of the g lob al travel industry. Serko’s revenue is therefore highly susceptible to declines in or disruptions to business travel that may be caused by factors entirely out of Serko's control. It is currently unc lear what the medium to long - term impact of the COVID - 19 pandemic will be on the level of demand for business and other travel. Various other factors may cause temporary or sustained disrupti on to leisure and business travel. The impact these disruptions would have on Serko’s business depend on the magnitude and duration of such disruption. Such factors include, amongst others, an in cre ased focus on the environmental impact of travel, which may include travelers electing not to fly (and instead traveling via rail or other ground travel) as a result of an increased glo bal focus on reducing carbon emissions. To the extent that there is a sustained decline in business travel that continues after the government restrictions and other short - term factors impacting glo bal business travel have been lifted, whether due to lingering health and safety concerns, changes in attitudes towards business travel, the increased use of alternatives such as video con fer encing, or for other reasons, this could have a materially adverse impact on Serko’s financial performance. Booking.com for Business platform Serko’s current revenue forecast includes expected revenue generation from the Zeno powered Booking.com for Business platform (“ BBZ”) and the anticipated growth of the BBZ platform’s use in the business travel marketplace. Serko is currently looking to expeditiously undertake the next stage of the roll - out of BBZ to maximise and capture revenue opportunities as global business travel recovers. Despite this, BBZ is a new product offering and as such, any revenue forecasts are sufficiently uncertain. I n a ddition to the extent and pace of global business travel recovery as noted above, there are also risks in growing the BBZ platform that the costs of the roll - out are higher than forecast, uptake an d growth less than forecast, and that revenues do not materialize as anticipated. The market for the services Serko offers, including BBZ, is increasingly and intensely competitive. Serko fac es increased competition in the business travel booking solutions space, including by other corporate travel management service providers. Some of these competitors may have more financial resources , g reater name recognition, well - established client bases, differentiated business models or a broader global presence than Serko, which may make it difficult for Serko to retain or at tra ct new corporate travel clients in this next phase of the BBZ roll - out, which may result in BBZ revenues being less than forecast. 41 | KEY RISKS (continued) Competitor risks / reseller relationships Serko competes globally with both online and traditional travel reservation and related services. The markets for the service s S erko offers is intensely competitive, constantly evolving and subject to rapid change, and current and new competitors can launch new services at a relatively low cost. Serko also competes with cer tain companies that it does business with, including some of its travel partners and related parties. Travel service providers, including airlines, hotel chains and rental car companies with wh ich Serko conducts business, compete with Serko in online channels to drive consumers to their own platforms in lieu of third - party distributors such as Serko. Further, the consolidation of Serk o’s competitors and travel partners may affect Serko’s relative competitiveness and its travel partner relationships. Travel technology is rapidly evolving as travel suppliers seek new or i mpr oved means of accessing their customers and increasing value. Serko must continue to innovate and evolve to respond to the changing needs of travel suppliers and meet in ten se competition. As travel suppliers adopt innovative solutions that function across channels, Serko’s operating results could suffer if it does not foresee the need for new products or ser vic es to meet competition. In addition, Serko’s competitors are constantly evolving, including increasing their product and service offerings through organic research and development or thr oug h strategic acquisitions. As a result, Serko must continue to invest significant resources in research and development in order to continually improve the speed, accuracy and comprehensiv ene ss of our services and Serko may be required to make changes to its technology platforms or increase its investment in technology, increase marketing, adjust prices or business m ode ls and take other actions, which could affect Serko’s financial performance and liquidity Key person risk Serko’s operating and financial success is dependent upon the experience of its directors, key senior management and staff ge ner ally. The loss of any personnel, as well as high staff turnover could cause disruption to the conduct of Serko’s business in the short term and negatively affect Serko’s operating and finan cia l performance. Serko is dependent on the continuing service of its directors as well as other key executives. The loss of key executives or the delay in their replacement, or the inability to at tract key executives with the requisite skills and experience, could materially and adversely affect Serko’s ability to implement its business strategies. Serko’s success also depends on the co nti nued efforts and ability to hire and retain skilled travel and other professionals (including, for example, information technology, business development, product management, sales and finance pr ofe ssionals) with the requisite industry and/or technical experience. The dynamic and rapid changes in the travel industry requires Serko’s skilled professionals to keep abreast of c han ging industry standards and trends to adapt to the changing requirements and business environment. Competition to attract such skilled professionals and personnel is intense and there is no assurance that Serko will be successful in retaining or attracting skilled professionals and the lack of availability of such skills may materially and adversely affect operations, per formance and reputation of Serko. 42 | KEY RISKS (continued) Information technology and cybersecurity risk Serko relies on the performance, reliability and availability of its information technology, communication and other business sy stems. Any damage or interruption to, or failure of, Serko's key systems may result in significant disruptions to Serko's business. Any failures of, or malicious attacks on, Serko's busines s s ystems, a breach of Serko's cybersecurity measures or any other compromise to the security of data (including any personal information / data) held by Serko may similarly impact both Serko' s b usiness and its reputation. Financial penalties for data breaches can be significant, which if levied on Serko could have an adverse effect on the reputation and the financial performance of Ser ko. General economic conditions Serko's operating and financial performance is influenced by a variety of general economic and business conditions in New Zea lan d and overseas. A prolonged deterioration in general economic conditions, including a decrease in consumer and business demand, would likely have a material adverse effect on Ser ko' s business or financial condition (or both). This risk is heightened in the current uncertain economic environment. In light of recent New Zealand and global macroeconomic events, including but not limited to the global impact of COVID - 19, it i s possible that New Zealand and Australia will experience an economic downturn of uncertain severity and duration which is likely to affect spending on travel by businesses and the opera tin g and financial performance of Serko. Furthermore, containment measures implemented in response to COVID - 19 are expected to result in significant and prolonged dislocation to economies global ly, including in many of the markets in which Serko operates, which could affect spending on travel in those markets, which would in turn impact on the operating and financial performance of Serko. Market volatility of Serko's shares Any investment in equity capital carries general risks. Serko's shares are currently listed on NZX and ASX and are subject t o t he usual market - related forces which impact on Serko's share price. There can be no assurance that trading in the shares following the offer will not result in the share price trading at levels be low the price paid by investors in the offer. The equity markets have in recent times been subject to pronounced volatility due to the continuing impacts of COVID - 19. There is no certainty that this re cent volatility will not continue or worsen, which could have a materially adverse impact on the market price of Serko's shares. Factors such as the risk factors disclosed in this presentation as well as other factors could cause the market price of Serk o's shares to decline or to materially fluctuate. It also is possible that new market risks may develop as a result of the New Zealand or Australian markets experiencing extreme stress, or due to existing ri sks (including the impacts of COVID - 19) manifesting themselves in ways that are not currently foreseeable. A weakening in the New Zealand dollar as against other currencies will cause the value of the shares to decline in any portfo lio which is denominated in a currency other than New Zealand dollars. 43 | Appendix: Foreign Selling Restrictions 44 | FOREIGN SELLING RESTRICTIONS International Offer Restrictions This document does not constitute an offer of ordinary shares (New Shares) of Serko in any jurisdiction in which it would be unl awful. In particular, this document may not be distributed to any person, and the New Shares may not be offered or sold, in any country outside New Zealand except to the extent permitted belo w. Australia This document and the offer of New Shares under the Placement is only made available in Australia to persons to whom a disclo sur e document is not required to be given under Chapter 6D of the Australian Corporations Act 2001 ( Cth ) (Australian Corporations Act). This document is not a prospectus, product disclosure statement or any other form of formal “di sclosure document” for the purposes of the Australian Corporations Act, and is not required to, and does not, contain all the information which woul d b e required in a disclosure document under the Australian Corporations Act. If you are in Australia, this document is made available to you provided you are a person to whom an offer of securities can be made without a disclosure document such as a professional investor, sophisticated investor or wholesale client for the purposes of Chapter 6D of the Australian Corporatio ns Act. This document has not been lodged or registered with the Australian Securities and Investments Commission. The persons referred to in this document may not hold Australian financial ser vices licences and may not be licensed to provide financial product advice in relation to securities. No “cooling - off” regime will apply to an acquisition of any interest in Serko. This do cument does not take into account the investment objectives, financial situation or needs of any particular person. Accordingly, before making any investment decision in relation to this document, yo u should assess whether the acquisition of any interest in Serko is appropriate in light of your own financial circumstances or seek professional advice. If you acquire the New Shares under the Placement in Australia then you: • represent and warrant that you are a wholesale client; and • represent and warrant that you are a professional or sophisticated investor; • agree not to sell or offer for sale any New Shares issued under the Placement in Australia within 12 months from the date of the ir issue under the Placement, except in circumstances where: • disclosure to investors would not be required under Chapter 6D of the Australian Corporations Act; or • such sale or offer is made pursuant to a disclosure document which complies with Chapter 6D or Chapter of the Australian Corp ora tions Act. 45 | FOREIGN SELLING RESTRICTIONS Hong Kong WARNING: The contents of this document have not been reviewed by any regulatory authority in Hong Kong. You are advised to ex erc ise caution in relation to the Placement. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice. This document has not be en, and will not be, registered as a prospectus under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32, Laws of Hong Kong) (the “C(WUMP)O”), nor has it been a uth orised by the Securities and Futures Commission in Hong Kong pursuant to the Securities and Futures Ordinance (Cap. 571) of Hong Kong (the “SFO”). No action has been taken in H ong Kong to authorise or register this document or to permit the distribution of this document or any documents issued in connection with it. Accordingly, ( i ) the New Shares may not be offered or sold in Hong Kong by means of this document or any other document other than (a) to "professional investors" as defined in the SFO and any rules made under the SFO; or (b) in o the r circumstances which do not result in the document being a "prospectus" as defined in the C(WUMP)O or which do not constitute an offer to the public within the meaning of the C(WUMP)O; an d (ii) no person shall issue or possess for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the New Shares which is direc ted at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the New Shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the SFO and any rules made under the SFO. No pers on allotted New Shares may sell, or offer to sell, such shares in circumstances that amount to an offer to the public in Hong Kong within six months following the date of issue of such shares . Singapore This document and any other materials relating to the New Shares has not been and will not be registered as a prospectus with th e Monetary Authority of Singapore (“MAS”). Accordingly, the New Shares may not be offered or sold or made the subject of an invitation for subscription or purchase, nor may this documen t o r any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the New Shares be circulated or distributed, whether directly or indi rec tly, to any person in Singapore other than ( i ) to an "institutional investor" or an "accredited investor" pursuant to the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), in ac cor dance with the conditions of any other applicable provision (including resale restrictions) of the SFA. Notification under Section 309B(1)(c) of the SFA - in connection with Section 309B o f the SFA and the Securities and Futures (Capital Markets Products) Regulations 2018 (the “CMP Regulations 2018”) of Singapore, Serko has determined the classification of the New Shares as pres cri bed capital markets products (as defined in the CMP Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04 - N12: Notice on the Sale of Investment Produc ts and MAS Notice FAA - N16: Notice on Recommendations on Investment Products). 46 | FOREIGN SELLING RESTRICTIONS Switzerland This document is not intended to constitute an offer or solicitation to purchase or invest in the New Shares described herein . T he New Shares may not be publicly offered, sold or advertised, directly or indirectly, in, into or from Switzerland but may be offered to individually approached professional investors as def ined in Article 4 of the Swiss Financial Services Act (" FinSA ") and no application has been or will be made to admit the New Shares to trading on any trading venue (exchange or multilateral tradin g f acility) in Switzerland. Neither this document nor any other offering or marketing material relating to the New Shares constitutes a prospectus compliant with the requirements of Article 65 2a or 1156 of the Swiss Code of Obligations or the listing rules of SIX Exchange Regulation or pursuant to the FinSA for a public offering of the New Shares and neither this document nor any other offering or marketing material relating to th e New Shares may be distributed or otherwise made publicly available in, into or from Switzerland. Neither this document nor any other offering or marketing material relating to the offering of the New Shares has been or wil l b e filed with or approved by any Swiss regulatory authority or any review body. This document is personal to the recipient only and not for general circulation in Switzerland. United Kingdom Neither this document nor any other document relating to the offer has been delivered for approval to the Financial Conduct A uth ority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services and Markets Act 2000, as amended (“FSMA”) has been published or is intended t o b e published in respect of the New Shares. This document is issued on a confidential basis to “qualified investors” (within the meaning of Section 86(7) of the FSMA) in the United Kingd om, and the New Shares may not be offered or sold in the United Kingdom by means of this document, any accompanying letter or any other document, except in circumstances which do not requir e t he publication of a prospectus pursuant to Section 86(1) of the FSMA. This document should not be distributed, published or reproduced, in whole or in part, nor may its contents be disc los ed by recipients to any other person in the United Kingdom. Any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) received in conn ect ion with the issue or sale of the New Shares has only been communicated or caused to be communicated and will only be communicated or caused to be communicated in the United Kingdom in ci rcumstances in which Section 21(1) of the FSMA does not apply to Serko. In the United Kingdom, this document is being distributed only to, and is directed at, persons ( i ) who have professional experience in matters relating to investments falling within Article 19(5) (investment professionals) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 20 05 (“FPO”), (ii) who fall within the categories of persons referred to in Article 49(2)(a) to (d) (high net worth companies, unincorporated associations, etc.) of the FPO or (iii) to whom it may othe rwi se be lawfully communicated (together “relevant persons”). The investments to which this document relates are available only to, and any offer or agreement to purchase will be engaged in o nly with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. 47 | FOREIGN SELLING RESTRICTIONS United States This document may not be distributed or released in the United States. This document does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or in any other jurisdiction in which such an offer would be illegal or impermissible. The New Shares have not been, and will not b e, registered under the U.S. Securities Act or the securities laws of any state or other jurisdiction of the United States and may not be offered or sold, directly or indirectly, in the United States un less they have been registered under the U.S. Securities Act (which Serko has no obligation or intention to do or procure) or are offered and sold in a transaction exempt from, or in a transact ion not subject to, the registration requirements of the U.S. Securities Act and other applicable securities laws. 48 | • Peak ATMR ( Annualised Transactional Monthly Revenue) is a non - GAAP measure. Serko uses this as an indicator of recurring revenues from Serko products. It is calculated by annualising the combination travel and expense platform monthly revenues for the most recent non - seasonal month. The travel platform revenue is annualised by taking the monthly online booking transactions divided by the number of weekdays for that month multiplied by the average ARPB and multiplied by 260 days. The expense platform revenue is based on the monthly revenue from active users mul tiplied by 12 month s. The impacts COVID - 19 is having on the current operating environment means ATMR is a less reliable indicator of future growth potential than it was pre - COVID. • ARPB (Average Revenue Per Booking) is a non - GAAP measure. Serko uses this as a useful indicator of the revenue value per travel booking. It is calculated by taking total Recurring Product Revenue divided by the total number of online bookings . • Total travel bookings include both online and offline transactions unless otherwise stated. • Total operating revenue (a non - GAAP measure) is revenue excluding income from grants and finance income; total income includes grants. • Recurring product revenue is a non - GAAP measure. Recurring revenue is derived from transactions and usage of Serko products by contracted customers. It excludes revenues from customised software development (services revenue). • Product design and development costs is a non - GAAP measure representing the internal and external costs related to research, dev elopment, design and maintenance of software, both expensed and capitalised but excluding depreciation and amortisation. • Operating costs is a non - GAAP measure which excludes costs relating to taxation, interest, depreciation, and amortisation charges. • EBITDA is a non - GAAP measure representing Earnings Before the deduction of costs relating to Interest, Taxation, Depreciation an d Amortisation . • FTE = Full time equivalent employee. DEFINITIONS Serko Limited, 125 The Strand, Parnell, Auckland, New Zealand T: +64 9 309 4754 firstname.lastname@example.org Incorporated in New Zealand ARBN 611 613 980 49 | Thank you 1 FY22 Interim report FY22 Interim Report FINANCIAL STATEMENTS For the six month period ended 30 September 2021 FY22 Interim report 2 CONTENTS Consolidated statement of comprehensive income 3 Consolidated statement of changes in equity 4 Consolidated statement of financial position 5 Consolidated statement of cash flows 6 Notes to the financial statements 7 3 FY22 Interim report Consolidated Statement of Comprehensive Income For the six months ended 30 September 2021 The accompanying notes form part of these financial statements. Notes 6 months Unaudited 6 months Unaudited 12 months Audited 30 Sep 2021 30 Sep 2020 31 Mar 2021 $ (000) $ (000) $ (000) Revenue 2 9,150 5,061 12,420 Other income 2 728 3,472 4,476 Total income 9,878 8,533 16,896 Operating Expenses Selling and marketing expenses (1,903) (913) (2,056) Hosting expenses (2,269) (1,230) (2,710) Remuneration and bene?ts (14,878) (11,213) (29,527) Administration expenses (2,588) (1,875) (4,928) Amortisation and depreciation (3,663) (2,619) (5,633) Total operating expenses 3 (25,301) (17,850) (44,854) Foreign exchange gains/(losses) – net 154 (552) (1,337) Finance income 163 157 380 Finance expenses (57) (315) (133) Loss before income tax (15,163) (10,027) (29,048) Income tax expense - (84) (341) Net loss attributable to the shareholders of the company (15,163) (10,111) (29,389) Movement in foreign currency reserve (162) 42 43 Total comprehensive loss for the period (15,325) (10,069) (29,346) Earnings per share Basic pro?t per share 11 ($0.14) ($0.11) ($0.30) Diluted pro?t per share 11 ($0.14) ($0.11) ($0.29) FY22 Interim report 4 Consolidated Statement of Changes in Equity For the six months ended 30 September 2021 The accompanying notes form part of these financial statements. *Items in other comprehensive income may be reclassified to the income statement and are shown net of tax. 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 period - - - (15,163) (15,163) Other comprehensive income/(loss)* - - (162) - (162) Total comprehensive income/(loss) for the period - - (162) (15,163) (15,325) Transactions with owners Shares allocated to employees 901 1,533 - - 2,434 Shares vested to employees - (920) - - (920) Shares forfeited from employees - (18) - - (18) Share-based payments — employee share options 4 32 - - 36 Non-executive directors’ settlement of non-recourse loan 247 (47) - - 200 Balance as at 30 September 2021 10 154,858 5,089 (341) (70,671) 88,935 Balance as at 1 April 2020 87,751 2,374 (222) (26,119) 63,784 Net loss for the period - - - (10,111) (10,111) Other comprehensive income/(loss)* - - 42 - 42 Total comprehensive income/(loss) for the period - - 42 (10,111) (10,069) Transactions with owners Shares allocated to employees 40 1,280 - - 1,320 Shares forfeited from employees - (37) - - (37) Share-based payments — employee share options 35 22 - - 57 Shares issued in respect of directors’ services 9 - - - 9 Balance as at 30 September 2020 87,835 3,639 (180) (36,230) 55,064 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/(loss)* - - 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) Shares forfeited from employees - (13) - - (13) Shares vested from employees - 391 - - 391 Equity-settled share-based payments 684 1,807 - - 2,491 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 2021 153,706 4,509 (179) (55,508) 102,528 5 FY22 Interim report Consolidated Statement of Financial Position As at 30 September 2021 For and on behalf of the Board of Directors, who authorise these financial statements for issue on 24 November 2021 The accompanying notes form part of these financial statements. DARRIN GRAFTON CEO CLAUDIA BATTEN CHAIRPERSON Notes 6 months Unaudited 6 months Unaudited 12 months Audited 30 Sep 2021 30 Sep 2020 31 Mar 2021 $ (000) $ (000) $ (000) Current assets Cash at bank and on hand 52,346 31,504 34,919 Short-term deposits 10,000 - 45,000 Receivables 4 6,298 4,017 5,393 Income tax receivable 13 54 7 Derivative ?nancial instruments 5 153 - - Total current assets 68,810 35,575 85,319 Non-current assets Property, plant and equipment 6 2,360 2,537 2,569 Intangible assets 7 27,343 23,089 23,304 Deferred tax asset 111 241 117 Total non-current assets 29,814 25,867 25,990 Total assets 98,624 61,442 111,309 Current liabilities Trade and other payables 8 7,900 4,372 7,142 Interest-bearing loans and borrowings 63 61 62 Lease liabilities 9 894 1,002 1,017 Derivative ?nancial instruments 5 - 236 142 Total current liabilities 8,857 5,671 8,363 Non-current liabilities Trade and other payables 8 662 - - Interest-bearing loans and borrowings - 60 28 Lease liabilities 9 170 647 390 Total non-current liabilities 832 707 418 Total liabilities 9,689 6,378 8,781 Equity Share capital 10 154,858 87,832 153,706 Share-based payment reserve 10 5,089 3,639 4,509 Foreign currency reserve (341) (179) (179) Accumulated losses (70,671) (36,228) (55,508) Total equity 88,935 55,064 102,528 Total equity and liabilities 98,624 61,442 111,309 FY22 Interim report 6 Consolidated Statement of Cash Flows For the six months ended 30 September 2021 The accompanying notes form part of these financial statements. Notes 6 months Unaudited 6 months Unaudited 12 months Audited 30 Sep 2021 30 Sep 2020 31 Mar 2021 $ (000) $ (000) $ (000) Cash flows from operating activities Receipts from customers 9,957 7,878 15,542 Receipts from government grants - Covid-19 subsidies 511 - 3,268 Interest received 188 157 349 Receipts from other grants 795 3,023 1,012 Taxation refunded/(paid) 26 (57) (253) Payments to suppliers and employees (21,673) (16,603) (38,406) Interest payments (28) (52) (87) Net GST refunded 403 336 533 Net cash ?ows used in operating activities 12 (9,821) (5,318) (18,042) Cash flows from investing activities Purchase of property, plant and equipment (372) (64) (559) Capitalised development costs and other intangible assets (6,951) (4,898) (7,231) Short-term deposits 35,000 - (45,000) Net cash ?ows from/(used in) investing activities 27,677 (4,962) (52,790) Cash flows from financing activities Issue of ordinary shares 3 35 67,544 Cost of new share issue - (3) (2,541) Payment of lease liabilities (509) (646) (1,266) Non-executive directors non-recourse loan 200 - 250 Net repayment of loans (27) (29) (60) Net cash ?ows (used in)/from ?nancing activities (333) (643) 63,927 Net increase/(decrease) in total cash 17,523 (10,923) (6,905) Net foreign exchange difference (96) 36 (567) Cash and cash equivalents at beginning of period 34,919 42,391 42,391 Cash and cash equivalents at the end of the period 52,346 31,504 34,919 Cash and cash equivalents comprises the following: Cash at bank and on hand 52,346 31,504 34,919 52,346 31,504 34,919 7 FY22 Interim report 1 BASIS OF PREPARATION AND ACCOUNTING POLICIES The unaudited interim consolidated financial statements (‘Interim Financial Statements’) of Serko Limited (‘the Company ’) and subsidiaries (‘the Group’) were authorised for issue in accordance with a Board resolution. a) Corporate Information 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 Company is an FMC Reporting Entity under the Financial Markets Conduct Act 2013 and the Financial Reporting Act 2013. The Group is involved in the provision of computer software solutions for corporate travel and expense management. The Group is headquartered in Auckland, New Zealand. b) Basis of preparation These Interim Financial Statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice and comply with the requirements of International Accounting Standard (IAS) 34 Interim Financial Reporting and with New Zealand Equivalent to International Accounting Standard (IAS) 34 Interim Financial Reporting. The unaudited interim financial statements have been prepared using the going concern assumption and are presented in thousands of New Zealand Dollars. The Company is a profit-oriented entity. c) Accounting policies and disclosures The Interim Financial Statements have been prepared using the same accounting policies and methods of computation as, and should be read in conjunction with, the financial statements and related notes included in the Group’s annual report for the financial year ended 31 March 2021. d) Comparatives Certain comparative expenses have been reclassified in the prior period Interim Financial Statements to conform to the current interim report presentation which is consistent with the classifications adopted in the audited Financial Statements for the year to 31 March 2021. Depreciation and Amortisation has been reclassified from Administration expenses and shown separately in the statement of comprehensive income. Foreign exchange gains/losses are shown separately in the statement of comprehensive income rather than included in Finance income/expenses. Notes to the Financial Statements For the six months ended 30 September 2021 FY22 Interim report 8 6 months Unaudited 6 months Unaudited 12 months Audited 30 Sep 2021 30 Sep 2020 31 Mar 2021 $ (000) $ (000) $ (000) Geographic information Australia 5,614 3,359 7,520 New Zealand 1,045 377 2,154 US 1,342 1,231 2,369 Other 1,149 94 377 Total revenue 9,150 5,061 12,420 6 months Unaudited 6 months Unaudited 12 months Audited 30 Sep 2021 30 Sep 2020 31 Mar 2021 $ (000) $ (000) $ (000) Revenue – transaction and usage fees: Travel platform booking revenue 5,826 2,159 6,354 Expense platform revenue 1,966 2,013 3,997 Supplier commissions revenue 408 210 538 Services revenue 791 454 1,145 Other revenue 159 225 386 Total revenue 9,150 5,061 12,420 Government grants - Covid-19 subsidies 614 3,023 3,437 Government grants - other 109 449 945 Other Covid-19 subsidies 5 - 94 Total other income 728 3,472 4,476 Total revenue and other income 9,878 8,533 16,896 Government grants and subsidies Revenue is recognised once the criteria of the grant application is met. When the grant relates to an expense item, it is recognised as income over the periods necessary to match the grant on a systematic basis to the costs it is intended to compensate. In the current period, the Group recognised $886,000 of wage subsidies from various governments (30 September 2020: $3,023,000) of which $614,000 was included in Other Income (30 September 2020: $3,023,000) and $272,000 in Deferred Revenue (30 September 2020: $nil). The Group also recognised $720,000 (30 September 2020: $nil) related to the New Zealand Research & Development Tax Incentive of which $109,000 has been recognised in Other Income and $611,000 in Deferred Revenue. In the prior period, the Group recognised $449,000 of grants from Callaghan Innovation in New Zealand. 2 REVENUE AND OTHER INCOME 9 FY22 Interim report 3 EXPENSES 6 months Unaudited 6 months Unaudited 12 months Audited 30 Sep 2021 30 Sep 2020 31 Mar 2021 $ (000) $ (000) $ (000) Operating profit before taxation includes the following expenses: Marketing expenses 638 499 1,054 Third party connection costs 431 150 535 Other selling costs 834 264 467 Total selling and marketing expenses 1,903 913 2,056 Hosting expenses 2,269 1,230 2,710 Employee remuneration 12,725 8,927 25,083 Contributions to pension plans 357 665 880 Share-based payment expenses 1,525 1,420 3,184 Other remuneration and benefits 271 201 380 Total remuneration and bene?ts 14,878 11,213 29,527 Auditor remuneration 152 83 171 Directors’ fees 218 182 402 Movement of expected credit loss allowance on receivables 56 (16) (19) Bad debts written off 53 (49) 63 Rental and operating lease expenses 43 2 102 Professional fees 180 346 851 Computer licences 578 455 1,148 Other administration expenses 1,308 872 2,210 Total administration expenses 2,588 1,875 4,928 Amortisation of intangibles 2,852 1,746 3,909 Depreciation 811 873 1,724 Total amortisation and depreciation 3,663 2,619 5,633 Expenses from ordinary activities 25,301 17,850 44,854 FY22 Interim report 10 4 RECEIVABLES 5 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: 6 months Unaudited 6 months Unaudited 12 months Audited 30 Sep 2021 30 Sep 2020 31 Mar 2021 $ (000) $ (000) $ (000) Trade receivables 2,054 1,960 2,852 Expected credit loss provision (130) (172) (215) Trade receivables (net) 1,924 1,788 2,637 GST receivable 262 139 130 Sundry debtors 36 19 777 Contract assets 2,370 1,333 1,037 Prepayments 1,706 726 800 Funds held in trust - 12 12 Total receivables 6,298 4,017 5,393 6 months Unaudited 6 months Unaudited 12 months Audited 30 Sep 2021 30 Sep 2020 31 Mar 2021 $ (000) $ (000) $ (000) Current: Foreign currency forward exchange contracts 153 (236) (142) Contractual amounts of forward exchange contracts outstanding were as follows: Foreign currency forward exchange contracts 6,607 8,315 5,031 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 a rate that reflects the credit risk of the counterparties. 11 FY22 Interim report 6 PROPERTY, PLANT AND EQUIPMENT 6 months Unaudited 6 months Unaudited 12 months Audited 30 Sep 2021 30 Sep 2020 31 Mar 2021 $ (000) $ (000) $ (000) Opening balance 2,568 3,382 3,382 Additions 598 64 921 Depreciation (811) (873) (1,724) Currency translation 5 (36) (10) Closing balance 2,360 2,537 2,569 7 INTANGIBLES 6 months Unaudited 6 months Unaudited 12 months Audited 30 Sep 2021 30 Sep 2020 31 Mar 2021 $ (000) $ (000) $ (000) Opening balance 23,304 20,110 20,110 Additions 6,951 4,898 7,231 Amortisation (2,852) (1,746) (3,909) Currency translation (60) (173) (128) Closing balance 27,343 23,089 23,304 8 TRADE AND OTHER PAYABLES 6 months Unaudited 6 months Unaudited 12 months Audited 30 Sep 2021 30 Sep 2020 31 Mar 2021 $ (000) $ (000) $ (000) Trade payables 1,580 969 1,772 Accrued expenses 3,388 1,761 3,549 Deferred revenue 928 - - Annual leave accrual 2,666 1,642 1,821 Total trade and other payables 8,562 4,372 7,142 Disclosed as: Current 7,900 4,372 7,142 Non-Current 662 - - 8,562 4,372 7,142 FY22 Interim report 12 9 LEASE LIABILITIES Recognition and measurement of The Group’s 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. 6 months Unaudited 6 months Unaudited 12 months Audited 30 Sep 2021 30 Sep 2020 31 Mar 2021 $ (000) $ (000) $ (000) Opening Balance 1,407 2,345 2,345 Leases entered into during the period 226 - 362 Principal repayments (570) (669) (1,266) Currency translation 1 (27) (34) Closing balance 1,064 1,649 1,407 Classified as: Current 894 1,002 1,017 Non-current 170 647 390 Closing balance 1,064 1,649 1,407 13 FY22 Interim report 10 EQUITY 6 months Unaudited 6 months Unaudited 12 months Audited 6 months Unaudited 6 months Unaudited 12 months Audited 30 Sep 2021 30 Sep 2020 31 Mar 2021 30 Sep 2021 30 Sep 2020 31 Mar 2021 $ (000) $ (000) $ (000) NUMBER OF SHARES (000) NUMBER OF SHARES (000) NUMBER OF SHARES (000) Ordinary shares Share capital at the beginning of the year 153,706 87,751 87,751 107,822 92,739 92,739 Issue of shares pursuant to institutional capital placement - - 47,500 - - 10,439 Issue of shares pursuant to Share Purchase Plan (SPP) placement - - 20,000 - - 4,396 Transaction costs for issue of new shares - (3) (2,541) - - - Issue of shares pursuant to Restricted Share Units (RSU) scheme 901 40 627 215 10 229 Issue of shares pursuant to US Options plan 4 35 57 1 13 16 Non-executive directors’ settlement of non-recourse loan 247 - 303 - - - Issue of shares in respect of directors’ services - 9 9 - 3 3 Share capital 154,858 87,832 153,706 108,038 92,765 107,822 Share-based payment reserve Balance at 1 April 4,509 2,374 2,374 Shares allocated to employees 1,533 1,287 2,788 Shares vested from employees (920) (7) (596) Shares forfeited from employees (18) (37) (59) Share-based payments - employee share options 32 22 52 Non-executive directors’ settlement of non-recourse loan (47) - (50) Share-based payment reserve 5,089 3,639 4,509 FY22 Interim report 14 11 EARNINGS PER SHARE (EPS) 6 months Unaudited 6 months Unaudited 12 months Audited 30 Sep 2021 30 Sep 2020 31 Mar 2021 $ (000) $ (000) $ (000) Loss attributable to ordinary equity holders of the parent Continuing operations (15,163) (10,111) (29,389) (15,163) (10,111) (29,389) Number Number Number Basic earnings per share Issued ordinary shares at the end of the period 108,038 92,765 107,822 Weighted average of issued ordinary shares at the end of the period 107,889 91,158 90,820 Adjusted for employee restricted share plan shares 106,599 89,551 98,053 Basic earnings per share (dollars) - weighted average (0.14) (0.11) (0.30) Diluted earnings per share Weighted average of issued ordinary shares at the end of the period 106,599 92,746 98,053 Weighted average of issued ordinary shares for diluted earnings per share 108,630 92,746 99,735 Diluted earnings per share (dollars) - weighted average (0.14) (0.11) (0.29) 6 months Unaudited 6 months Unaudited 12 months Audited 30 Sep 2021 30 Sep 2020 31 Mar 2021 Cents Cents Cents Net tangible assets per security 57.68 34.50 74.59 15 FY22 Interim report 12 RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES 6 months Unaudited 6 months Unaudited 12 months Audited 30 Sep 2021 30 Sep 2020 31 Mar 2021 $ (000) $ (000) $ (000) Net loss after tax (15,163) (10,111) (29,389) Add non-cash items Amortisation 2,852 1,746 3,909 Depreciation 811 873 1,724 Deferred tax liability - 9 133 (Gain) / Loss on foreign exchange transactions (355) 1,096 1,372 Share-based compensation 1,525 1,265 2,878 (10,330) (5,122) (19,373) Add/(less) movements in working capital items (Increase) / decrease in receivables (905) 2,561 1,185 Increase / (decrease) in trade and other payables 1,420 (2,702) 77 (Decrease) / increase in income tax (6) (55) 69 509 (196) 1,331 Net cash flows used in operating activities (9,821) (5,318) (18,042) 13 EVENTS AFTER BALANCE SHEET DATE On 23 November 2021 the Board authorised the launch of a capital raising via a $75 million fully underwritten placement and a $10 million offer to retail investors. 14 CONTINGENT LIABILITIES There were no contingent liabilities as at 30 September 2021 (30 September 2020: $nil). FY22 Interim report 16 New Zealand Saatchi Building Unit 14D 125 The Strand Parnell, 1010 +64 9 309 4754 New Zealand Saatchi Building Unit 14D 125 The Strand Parnell, 1010 +64 9 309 4754 Australia Level 8 75 Elizabeth Street Sydney 2000 NSW, Australia +61 2 9435 0380 Australia Link Market Services Limited Level 12 680 George Street Sydney 2000 NSW, Australia +61 1300 554 474 Australia c/- NFRA Nominees Pty Ltd Level 6 60 Martin Place Sydney 2000 NSW, Australia New Zealand Link Market Services Limited Level 11, 30, PwC Tower 15 Customs Street West Auckland 1140, New Zealand +64 9 375 5998 email@example.com Deloitte Limited Deloitte Centre 80 Queen Street Auckland 1040, New Zealand +64 9 303 0700 Claudia Batten (Chairperson) Simon Botherway (retired 18 August 2021) Jan Dawson (appointed 18 August 2021) Robert (Clyde) McConaghy Darrin Grafton Robert (Bob) Shaw 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: firstname.lastname@example.org PRINCIPAL ADMINISTRATION OFFICE REGISTERED OFFICE SHARE REGISTRAR DIRECTORS AUDITOR Company Directory FY22 Interim Report www.serko.com 17 FY22 Interim report FY22 Interim Report www.serko.com
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