GENTRACK GROUP LIMITED — Annual Report 2021

Nov 24, 2021

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Gentrack Group Limited Financial Statements

For the year ended 30 September 2021

Contents

• 3 Management Commentary

• 5 Independent Auditor’s Report

• 11 Financial Statements

• 12 Statement of Comprehensive Income

• 13 Statement of Financial Position

• 14 Statement of Changes in Equity

• 15 Statement of Cash Flows

• 16 Notes to the Financial Statements

• 47 Corporate Directory

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GENTRACK FINANCIAL STATEMENTS / 2

MANAGEMENT COMMENTARY

• Revenue: $105.7m – up 5.2% on FY20 and in line with guidance

• EBITDA: slightly ahead of guidance at $12.7m – up 5.0% on FY20

• Statutory NPAT: $3.2m

• Net cash: strong position $26.0m up 54.8% on FY20

• No dividend payable

Revenue growth was driven by an 8.8% increase in the Utilities business to $89.0m from $81.8m in FY20 with new customer wins and growth from existing customers offsetting previous years’ losses.

Veovo revenues were down from $18.7m in FY21 to $16.7m due to continued impact of Covid on the aviation industry, but pleasingly annual recurring revenues (ARR) were up 7.7% as new customers moved into live operation.

Underlying Group EBITDA of $12.7m is up 5.0% on FY20, slightly ahead of the guidance issued earlier this year. Costs were up 5.2% vs FY20 driven by increased investment in personnel, with continued savings in non-personnel costs.

The Group achieved strong net cash generation of $9.2m for the period resulting in $26.0m net cash at 30 September 2021, up from $16.8m at 30 September 2020.

We continue to deliver against the three strategic growth pillars outlined in our Strategy Presentation to the market in June – creating a strong customer base, winning new logos and growing our managed services business.

Over the past 12 months we have won 7 new logos, including 3 new B2B energy retailers, further strengthening our position as a leading provider of solutions to C&I retailers.

The Managed Services revenues remained generally flat from FY20 to FY21. Since prioritising Managed Services as a focus area of our strategy, we now have a healthy pipeline and order book which are setting us up for FY22 and future growth.

Although performing well against our pillars, we continue to experience a drag on revenue growth, from prior period losses and supplier failures in the UK. The number of B2C supplier failures in the UK has accelerated in the last 3 months due to the global energy crisis and Government enforced price cap for the B2C segment – with a total of 9 customer insolvencies occurring since the beginning of FY21 compared to 6 in total from FY17 through FY20.

This week, Bulb, a Gentrack customer, went into a special form of administration for larger supplier failures which has not been tested before. We will continue to support the business as required by the administrator as options for the business are assessed over the coming months.

Our strategic position with our existing customer base continues to strengthen. Customer status continues to improve with 72% of our customers at a ‘green’ high performance status.

We anticipate there may be some further supplier failures in the coming winter months after which our expectation is that the market will stabilise.

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GENTRACK FINANCIAL STATEMENTS / 3

AUDITORS REPORT

We have made allowances for a reasonable scenario for these additional potential failures.

In general, our revenue is diversified across airports and utilities, with our energy and water customers active in 6 countries, covering both B2B and B2C.

As a technology first company we continue to accelerate investment in both our Utilities cleantech capabilities and Veovo, in order to deliver innovation and profitability for a sustainable era. More customers are turning to Gentrack to deliver cloud native innovations and understand that Gentrack has the delivery expertise to roll out these innovations across diverse markets and at scale.

The business’ turnaround continues to progress, and despite the headwinds in the UK covered above, the organisation is in a strong state, and we are well positioned for accelerated growth.

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GENTRACK FINANCIAL STATEMENTS / 4

AUDITORS REPORT

We have fulfilled

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GENTRACK FINANCIAL STATEMENTS / 5

DIRECTORS RESPONSIBILITY STATEMENT

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GENTRACK FINANCIAL STATEMENTS / 6

DIRECTORS RESPONSIBILITY STATEMENT

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GENTRACK FINANCIAL STATEMENTS / 7

DIRECTORS RESPONSIBILITY STATEMENT

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GENTRACK FINANCIAL STATEMENTS / 8

DIRECTORS RESPONSIBILITY STATEMENT

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GENTRACK FINANCIAL STATEMENTS / 9

DIRECTORS RESPONSIBILITY STATEMENT

The Directors are required to prepare financial statements for each financial year that present fairly the financial position of Gentrack Group and its operations and cash flows for that period.

The Directors consider these financial statements have been prepared using accounting policies suitable to Gentrack Group’s circumstances, which have been consistently applied and supported by reasonable judgements and estimates, and that all relevant financial reporting and accounting standards have been followed.

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy, at any time, the financial position of Gentrack Group and to enable them to ensure that the financial statements comply with the Companies Act 1993. They are also responsible for safeguarding the assets of Gentrack Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Board of Directors of Gentrack Group authorised these financial statements for issue on 25 November 2021.

For and on behalf of the Board of Directors:

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Andy Green Chairman Date: 25 November 2021

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Fiona Oliver

Director Date: 25 November 2021

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GENTRACK FINANCIAL STATEMENTS / 10

Financial Statements 30 September 2021

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GENTRACK FINANCIAL STATEMENTS / 11

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 SEPTEMBER 2021

SECTION	2021	2020
	NZ$000	NZ$000
Revenue 3.2,3.3 Expenditure 3.4	105,723	100,533 (88,440)
	(92,996)
Profit before depreciation, amortisation, acquisition related costs, revaluation of financial liabilities, impairment of goodwill and intangible assets, financing and tax	12,727	12,093
Depreciation and amortisation 3.5 Revaluation of acquisition related financial liability Impairment of goodwill and intangible assets 5.3	(10,864)	(12,354) 891 (34,511)
	-
	-
Profit/(Loss) before financing and tax	1,863	(33,881)
Net finance income/(expense) 3.6	3,701	(386)
Profit/(Loss) before tax	5,564	(34,267)
Income tax (expense)/benefit 7.1	(2,375)	2,561
Profit/(Loss) attributable to the shareholders of the company	3,189	(31,706)
OTHER COMPREHENSIVE INCOME Excess income tax benefit on share-based payments Translation of international subsidiaries		- (882)
	91
	(4,992)
Total comprehensive loss for the period	(1,712)	(32,588)
EARNINGS PER SHARE / (LOSS) ATTRIBUTABLE TO THE SHAREHOLDERS OF THE COMPANY (EXPRESSED IN DOLLARS PER SHARE) Basic earnings per share 6.4 Diluted earnings per share 6.4 WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES ISSUED Basic 6.4 Diluted 6.4		($0.32) ($0.32) 98,645 100,053
	$0.03
	$0.03
	98,761
	103,128

The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

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GENTRACK FINANCIAL STATEMENTS / 12

STATEMENT OF FINANCIAL POSITION

AS AT 30 SEPTEMBER 2021

SECTION	2021	2020
	NZ$000	NZ$000
CURRENT ASSETS Cash and cash equivalents 4.3 Trade and other receivables 5.1 Income tax receivable Inventory 5.8		19,321 18,951 151 464
	25,957
	21,746
	68
	362
Total current assets	48,133	38,887
NON-CURRENT ASSETS Property, plant and equipment 5.5 Lease assets 9.1 Goodwill 5.2 Intangibles 5.4 Deferred tax assets 7.2		2,763 10,338 106,599 45,428 4,649
	2,683
	8,162
	106,766
	37,698
	5,391
Total non-current assets	160,700	169,777
Total assets	208,833	208,664
CURRENT LIABILITIES Bank loans 4.2 Trade payables and accruals 5.6 Lease liabilities 9.1 Contract liabilities GST payable Employee entitlements 5.7 Income taxpayable		2,536 3,905 2,692 12,419 3,206 5,552 -
	-
	4,513
	1,376
	12,695
	1,931
	9,535
	1,322
Total current liabilities	31,372	30,310
NON-CURRENT LIABILITIES Lease liabilities 9.1 Employee entitlements 5.7 Deferred tax liabilities 7.2		12,435 428 4,997
	11,176
	539
	3,305
Total non-current liabilities	15,020	17,860
Total liabilities	46,392	48,170
Net assets	162,441	160,494
EQUITY Share capital 6.1 Share based payment reserve Foreign currency translation reserve Retained earnings		191,229 699 6,782 (38,216)
	191,699
	3,888
	1,790
	(34,936)
Total equity	162,441	160,494

The above Statement of Financial Position should be read in conjunction with the accompanying notes.

For and on behalf of the Board who authorised these financial statements for issue on 25 November 2021.

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Andy Green Chair Date: 25 November 2021

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Fiona Oliver Director Date: 25 November 2021

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GENTRACK FINANCIAL STATEMENTS / 13

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 SEPTEMBER 2021

2021 SHARE CAPITAL NZ$000 SECTION	SHARE BASED PAYMENT RESERVE RETAINED EARNINGS	TRANSLATION RESERVE TOTAL EQUITY
Balance as at 1 October 191,229 Profit attributable to the shareholders of the company - Other comprehensive income/(loss) -	699 (38,216)	6,782 160,494
	- 3,189	- 3,189
	- 91	(4,992) (4,901)
Total comprehensive income/(loss) for the period, net of tax - TRANSACTION WITH OWNERS Issue of share capital 6.1, 6.2 470 Share-based payments 6.2 -
	- 3,280	(4,992) (1,712)
	(413)	57
	3,602 -	- 3,602
Balance at 30 September 191,699	3,888 (34,936)	1,790 162,441

2020 SHARE CAPITAL NZ$000 SECTION	SHARE BASED PAYMENT RESERVE RETAINED EARNINGS	TRANSLATION RESERVE TOTAL EQUITY
Balance as at 1 October 191,229 Change in accounting policy -	389 (1,673) - (1,833)	7,664 197,609 - (1,833)
Restated total equity at 1 October 191,229 Loss attributable to the shareholders of the company - Other comprehensive loss -	389 (3,506) - (31,706) - -	7,664 195,776 - (31,706) (882) (882)
Total comprehensive income for the period, net of tax - TRANSACTION WITH OWNERS Dividend paid 6.3 - Share-based payments 6.2 -	- (31,706) - (3,004) 310 -	(882) (32,588) - (3,004) - 310
Balance at 30 September 191,229	699 (38,216)	6,782 160,494

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

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GENTRACK FINANCIAL STATEMENTS / 14

STATEMENT OF CASHFLOWS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

SECTION	2021	2020
	NZ$000	NZ$000
CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Lease liability finance charge 9.1 Income tax paid		110,731 (83,547) (931) (4,287)
	103,251
	(85,957)
	(814)
	(3,535)
Net cash inflow from operating activities	12,945	21,966
CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment 5.5 Purchase of intangible assets 5.4 Payment of acquisition related option		(324) (331) (2,419)
	(663)
	-
	-
Net cash outflow from investing activities	(663)	(3,074)
CASH FLOWS FROM FINANCING ACTIVITIES Payments for lease liabilities Drawdown of borrowings Repayment of borrowings Interest paid Dividends paid 6.3		(2,497) 5,007 (6,871) (375) (3,004)
	(2,678)
	-
	(2,564)
	(176)
	-
Net cash outflow from financing activities	(5,418)	(7,740)
Net increase in cash held Foreign currency translation adjustment Cash at beginning of the financial period	6,864	11,152 (457) 8,626
	(228)
	19,321
Closing cash and cash equivalents	25,957	19,321

The above Statement of Cash Flows should be read in conjunction with the accompanying notes.

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GENTRACK FINANCIAL STATEMENTS / 15

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

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GENERAL INFORMATION

ACCOUNTING POLICES

CRITICAL JUDGEMENTS

GENERAL INFORMATION

The notes are consolidated into nine sections. Each section contains an introduction and general information which is indicated by the symbol above. The layout of these financial statements has been streamlined to present them in a way that is more intuitive for readers to follow. This is achieved by laying out the accounting policies and critical judgements alongside the notes and focusing information in a way which provides increased clarity and ease of understanding.

The first section details general information about Gentrack Group and guidance on how to navigate through the financial statements.

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ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these financial statements are set out throughout the document where they are applicable. These policies have been consistently applied to all the years presented, unless otherwise stated. Certain comparatives have been updated to ensure consistency with current year presentation.

Accounting policies are identified by this symbol above.

CRITICAL JUDGEMENTS

The preparation of the financial statements requires management to make judgements,

estimates and assumptions that affect the reported amounts in the financial statements.

Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue, and expenses. Management bases its judgements and estimates on historical experience and on various other factors it believes to be reasonable under the circumstances, the result of which form the basis of the carrying values for assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods.

Further details of the nature of these critical judgements and estimates may be found throughout the financial statements as they are applicable and are identified by this symbol.

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GENTRACK FINANCIAL STATEMENTS / 16

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

1. GENERAL INFORMATION

Gentrack Group Limited is a limited liability company, domiciled and incorporated in New Zealand and registered under the New Zealand Companies Act 1993. The registered office of the Company is 17 Hargreaves Street, St Marys Bay, Auckland 1011, New Zealand.

The financial statements presented are for Gentrack Group Limited and its subsidiaries (Gentrack Group) for the year ended 30 September 2021. Prior year comparatives are for the year ended 30 September 2020.

The financial statements of Gentrack Group for the year ended 30 September 2021 were authorised for issue in accordance with a resolution of the directors on 25 November 2021.

Gentrack Group’s principal activity is the development, integration, and support of enterprise billing and customer management software solutions for the utility (energy and water) and airport industries.

COVID-19 PANDEMIC

At 30 September 2021, the financial impact of COVID-19 on Gentrack Group overall has not been material. COVID-19 has not adversely impacted Gentrack Group’s Utility business, however the Airport business has been impacted by COVID-19 with project cancellations and delays because of the uncertainty caused by COVID-19. Gentrack Group continues to closely monitor the longer-term financial and economic implications of COVID-19 on its operations.

In preparing these financial statements Gentrack Group has considered the increased level of uncertainty resulting from COVID-19 in applying its accounting estimates and judgements, details of the significant judgements and estimates are provided below:

Accounting estimate and judgement area Reference License and project service revenue - Stage of completion Section 3.2 Recoverability of trade receivables Section 5.1 Impairment testing – Five-year cashflow forecasts Section 5.3

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GENTRACK FINANCIAL STATEMENTS / 17

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

2. BASIS OF PREPARATION AND ACCOUNTING POLICIES

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This section outlines the legislation and accounting standards which have been followed in the preparation of the financial statements along with explaining how the information has been consolidated and presented.

2.1 KEY LEGISLATION AND ACCOUNTING STANDARDS

The financial statements of Gentrack Group have been prepared in accordance with New Zealand Generally Accepted Accounting Practice (NZ GAAP). They comply with the New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) and other applicable Financial Reporting Standards as appropriate to profit-oriented entities. The financial statements comply with International Financial Reporting Standards (IFRS).

Gentrack Group is an FMC entity for the purposes of the Financial Reporting Act 2013 and Financial Markets Conduct Act 2013 and is listed on the New Zealand Stock Exchange (NZX) and the Australian Securities Exchange (ASX).

The financial statements have been prepared in accordance with the requirements of the Financial Reporting Act 2013, Financial Markets Conduct Act 2013 and the Companies Act 1993.

2.2 BASIS OF CONSOLIDATION

Subsidiaries are entities over which Gentrack Group has control. Gentrack Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and can affect those returns through its power over the entity. In assessing control, potential voting rights that currently are exercisable are considered. Subsidiaries are fully consolidated from the date that control is transferred to Gentrack Group. They are deconsolidated from the date that control ceases.

The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by Gentrack Group.

Intra-group balances and any unrealised income and expenses arising from intra-group transactions, are fully eliminated in preparing the financial statements.

FUNCTIONAL AND PRESENTATION CURRENCY

Items included in the financial statements of each of Gentrack Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The financial statements are presented in New Zealand dollars (NZD) which is Gentrack Group’s presentation currency. All financial information has been presented rounded to the nearest thousand dollars ($000) in the financial statements.

TRANSACTIONS AND BALANCES

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income. Foreign exchange gains and losses are presented in the statement of comprehensive income within net finance expense.

FOREIGN CURRENCY TRANSLATION RESERVE (FCTR)

Gentrack Group translates the results of its foreign operations from their functional currencies to the presentation currency using the closing exchange rate at balance date for assets and liabilities and the average monthly exchange rates for income and expenses. The difference arising from the translation of the statement of financial position at the closing rates and the statement of comprehensive income at the average rates is recorded within the foreign currency translation reserve within the statement of changes in equity.

2.3 BUSINESS COMBINATIONS

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to Gentrack Group. Control is the exposure or right to variable returns from involvement with the entity and the ability to affect those returns through power over the entity.

Gentrack Group recognises the fair value of all identifiable assets, liabilities, and contingent liabilities of the acquired business. Goodwill is measured as the excess cost of the acquisition over the recognised assets and liabilities. When the excess is negative (negative goodwill), the amount is recognised immediately in the statement of comprehensive income.

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GENTRACK FINANCIAL STATEMENTS / 18

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

2.3 BUSINESS COMBINATIONS (CONTINUED)

Gentrack Group applies the anticipated acquisition method where it has the right and the obligation to purchase any remaining non-controlling interest (so-called put/call arrangements). Under the anticipated acquisition method, the interests of the non-controlling shareholder are derecognised when Gentrack Group’s liability relating to the purchase of its shares is recognised. The recognition of the financial liability implies that the interests subject to the purchase are deemed to have been acquired already. Therefore, the corresponding interests are presented as already owned by

Gentrack Group even though legally they are still non-controlling interests. The initial measurement of the fair value of the financial liability recognised by Gentrack Group forms part of the consideration for the acquisition.

Gentrack Group has not made any acquisitions during the year ended 30 September 2021 or 2020. For details of acquisitions made in prior years refer to the 2018 Annual Report.

2.4 GROUP INFORMATION

The financial statements include the following subsidiaries:

ENTITY	PRINCIPAL ACTIVITY	COUNTRY OF INCORPORATION	SHAREHOLDING 2021	SHAREHOLDING 2020
Gentrack Group Australia Pty Limited	Holding company	Australia	100%	100%
Gentrack Pty Limited	Software sales and support	Australia	100%	100%
Veovo Holdings (Denmark) ApS	Holding company	Denmark	100%	100%
Veovo A/S (formally Blip Systems A/S)	Software development sales and support	Denmark	100%	100%
CA Plus Limited	Software development sales and support	Malta	100%	100%
Veovo Group Limited	Holding company	New Zealand	100%	100%
Gentrack Limited	Software development sales and support	New Zealand	100%	100%
Gentrack Holdings (UK) Limited	Holding company	United Kingdom	100%	100%
Gentrack UK Limited	Software development sales and support	United Kingdom	100%	100%
Junifer Systems Limited	Dormant	United Kingdom	100%	100%
Evolve Parent Limited	Holding company	United Kingdom	100%	100%
Evolve Analytics Limited	Dormant	United Kingdom	100%	100%
Gentrack (Singapore) Pte Limited	Software sales and support	Singapore	100%	100%
Veovo Inc	Software sales and support	USA	100%	100%
Veovo NZ Limited	Software sales and support	New Zealand	100%	100%
Veovo UK Limited	Software sales and support	United Kingdom	100%	100%
Veovo IP Limited	Software Development	New Zealand	100%	100%

2.5 IMPACT OF STANDARDS ISSUED BUT NOT YET ADOPTED

The International Accounting Standards Board has issued IFRS 17 Insurance Contracts, as well as amendments to existing international accounting standards. Gentrack Group will adopt IFRS 17 when mandatory and does not expect IFRS 17 to have any impact on its financial statements.

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GENTRACK FINANCIAL STATEMENTS / 19

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

3. GROUP PERFORMANCE

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This section outlines further details of Gentrack Group’s financial performance by building on the information presented in the statement of comprehensive income.

3.1 OPERATING SEGMENTS

An operating segment is a component of an entity that engages in business activities from which it may earn revenue and incur expenses, whose operating results are regularly reviewed by the entity’s Chief Operating Decision Maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Operating segments are aggregated for disclosure purposes where they have similar products and services, production processes, customers, distribution methods and regulatory environments.

Gentrack Group currently operates in two business segments, utility billing software and airport management software. Consistent with prior years, Gentrack Group’s corporate costs are included in the Utility segment. These segments have been determined based on the reports reviewed by the Board (Chief Operating Decision Maker) to make strategic decisions.

The assets and liabilities of Gentrack Group are reported to and reviewed by the Chief Operating Decision Maker in total and are not allocated by business segment. Therefore, operating segment assets and liabilities are not disclosed.

2021	UTILITY AIRPORT	TOTAL
	NZ$000 NZ$000	NZ$000
TIMING OF REVENUE RECOGNITION Point in time Over time
	10,973 1,636	12,609
	77,982 15,132	93,114
Total revenue Expenditure	88,955 16,768	105,723
	(79,604) (13,392)	(92,996)
Segment contribution (1)	9,351 3,376	12,727
2020	UTILITY AIRPORT	TOTAL
	NZ$000 NZ$000	NZ$000
TIMING OF REVENUE RECOGNITION Point in time Over time	7,379 2,018 74,397 16,739	9,397 91,136
Total revenue Expenditure	81,776 18,757 (71,565) (16,875)	100,533 (88,440)
Segment contribution (1)	10,211 1,882	12,093

(1) Segment contribution is defined as Profit before depreciation, amortisation, revaluation of financial liabilities, impairment of goodwill and intangible assets, financing, and tax.

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GENTRACK FINANCIAL STATEMENTS / 20

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

3.1 OPERATING SEGMENTS (CONTINUED)

A reconciliation of segment contribution to profit attributable to the shareholders of the company is as follows:

	2021	2020
	NZ$000	NZ$000
Segment contribution (1) Depreciation and amortisation Revaluation of acquisition related financial liabilities Impairment of goodwill and intangible assets Net finance income/(expense) Income tax (expense)/benefit	12,727	12,093 (12,354) 891 (34,511) (386) 2,561
	(10,864)
	-
	-
	3,701
	(2,375)
Profit/(Loss) attributable to the shareholders of the company	3,189	(31,706)

	2021	2020
	NZ$000	NZ$000
REVENUE BY DOMICILE OF ENTITY Australia New Zealand United Kingdom Rest of World		22,659 16,447 55,458 5,969
	25,359
	13,467
	60,302
	6,595
Total revenue	105,723	100,533
REVENUE BY DOMICILE OF CUSTOMER Australia New Zealand United Kingdom Rest of World		25,755 8,456 52,746 13,576
	27,509
	8,696
	57,382
	12,136
Total revenue	105,723	100,533

In 2021 and 2020, no single customer including their subsidiaries accounted for 10% or more of Gentrack Group’s revenue.

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GENTRACK FINANCIAL STATEMENTS / 21

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

3.2 OPERATING REVENUE

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Gentrack Group recognises revenue from customers when the performance obligation has been accomplished. A performance obligation is accomplished when the customer has received all the benefits promised under the performance obligations and payment is generally due within 30 to 60 days from invoices being raised. The following sections detail the type of revenue recognised within each category.

Revenue recognition of license and project services is recognised based on the stage of completion which requires judgement to be applied. This process uses estimations of time required to complete the project and is based on detailed information on hours worked to date, prior experience, and project scheduling tools. Gentrack Group employs project managers to provide regular information to management on the progress of all projects. All estimates are reviewed by management prior to revenue recognition.

ANNUAL FEES

Annual fees include software support and maintenance charged on software licenses, software subscriptions and managed services. Revenue from annual fees is generally recognised over the period as the benefits are consumed by the customer.

SUPPORT SERVICES

Support services are post implementation value-add professional services related to ongoing upgrades, minor software revisions and extended support. Support services revenue is recognised when the service is complete or on a stage of completion basis.

LICENSES

Revenue from license fees is recognised when the customer can benefit from the licensed software. License fees that are highly interrelated with project services are recognised based on a stage of completion of the project.

PROJECT SERVICES

Revenue from project services is recognised based on the stage of completion of the project. This is typically in accordance with the achievement of contract milestones and/or hours expended and forecast hours to complete the project.

OTHER

Other revenue is primarily revenue from hardware and the recharge of ad-hoc costs that are recharged to customers. Revenue from hardware sales is recognised when the hardware has been delivered to the customer.

SECTION	2021	2020
	NZ$000	NZ$000
OPERATING REVENUE: Annual fees Support services Project services Licenses Other		60,394 20,636 13,286 2,177 2,070
	57,787
	20,977
	18,727
	2,758
	4,771
Total operating revenue	105,020	98,563
OTHER INCOME: Government grants 3.3		1,970
	703
Total revenue	105,723	100,533

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GENTRACK FINANCIAL STATEMENTS / 22

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

3.3 OTHER INCOME

GOVERNMENT GRANTS

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Government grants are recognised at their fair value where there is a reasonable assurance that the grant will be received, and Gentrack Group will comply with all attached conditions. When a grant relates to an expense item, it is recognised as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate.

During 2021, Gentrack Group recognised a total of $0.7m (2020: $2.0m) of grants from Callaghan Innovation in New Zealand. This government grant provided a percentage return for eligible Research and Development conducted by Gentrack Group. At balance date, there are no amounts outstanding in relation to the Callaghan Grant. Effective from 1 April 2021 for Gentrack Group the Callaghan Grant has been replaced by the Research and Development Tax Incentive (RDTI) where a tax incentive is provided for eligible Research and Development conducted by Gentrack Group.

The RDTI and the Research and Development Expenditure Credit (RDEC) in the UK are tax incentives and the benefit of these tax incentives are applied to Gentrack Group’s income tax payable when the income tax returns for 30 September 2021 are filed.

3.4. EXPENDITURE

The table below provides a detailed breakdown of the total expenditure presented in the statement of comprehensive income.

comprehensive income.
	2021	2020
	NZ$000	NZ$000
PROFIT / (LOSS) BEFORE TAX INCLUDES THE FOLLOWING SPECIFIC EXPENSES: Employee entitlements Administrative costs Third party customer-related costs Advertising and marketing Consulting and subcontracting Other operating expenses		65,780 6,721 6,450 898 5,754 2,837
	70,296
	3,862
	5,438
	1,191
	9,353
	2,856
Total expenditure	92,996	88,440

Included in the total expenditure above, Gentrack Group has expensed $12.7m in Research and Development expenditure (2020: $15.7m). This Research and Development expenditure includes payroll costs, employee benefits and other employee related costs, direct overheads, and other directly attributable costs related to performing Research and Development activities.

.

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GENTRACK FINANCIAL STATEMENTS / 23

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

3.5 DEPRECIATION AND AMORTISATION

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Depreciation on assets is calculated using the straight-line method to allocate the difference between their original costs and their residual values over their estimated useful lives.

Except for goodwill and brands, intangible assets are amortised on a straight-line basis in the statement of comprehensive income over their estimated useful lives, from the date that they are available for use.

	2021	2020
	NZ$000	NZ$000
Depreciation Amortisation	3,084	3,289 9,065
	7,780
Total depreciation and amortisation	10,864	12,354

3.6. NET FINANCE EXPENSES

Finance income comprises interest income and foreign currency gains that are recognised in the statement of comprehensive income. Interest income is recognised as it accrues, using the effective interest method.

Finance expense comprises interest expense on borrowings, lease liability finance charges, foreign currency losses and impairment losses recognised on the financial assets (except for trade receivables) that are recognised in the statement of comprehensive income. All borrowing costs are recognised in the statement of comprehensive income using the effective interest method.

comprehensive income using the effective interest method.
SECTION	2021	2020
	NZ$000	NZ$000
FINANCE INCOME Interest income		7
	26
FINANCE EXPENSE Interest expense Lease liability finance charges 9.1 Interest paid - NPV discount Foreign exchange gains	26	7 (383) (931) (7) 928
	(203)
	(814)
	-
	4,692
	3,675	(393)
Net finance income/(expense)	3,701	(386)

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GENTRACK FINANCIAL STATEMENTS / 24

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

4. CASH, BORROWINGS AND CASH FLOWS

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This section outlines further from the statement of cashflows and provides details on the cash and cash equivalents held in the statement of financial position.

Cash comprises cash at bank and on hand.

4.1 RECONCILIATION OF NET SURPLUS TO CASH FLOWS

4.1 RECONCILIATION OF NET SURPLUS TO CASH FLOWS
SECTION	2021 2020
	NZ$000 NZ$000
RECONCILIATION OF OPERATING CASH FLOWS WITH NET PROFIT/(LOSS) AFTER TAX: Profit/(Loss) after tax ADJUSTMENTS FOR NON-CASH ITEMS Deferred tax 7.2 Impairment provision - Trade receivables Gain on foreign exchange transactions Share based payments Net interest expense 3.6 Revaluation and interest on financial liability Other non-cash items Depreciation and amortisation 3.5 Impairment of goodwill and other intangibles	3,189 (31,706) (2,590) (4,237) 4 1,939 (4,692) (928) 3,566 310 176 375 - (884) - (3) 10,864 12,354 - 34,511
Non-cash items	10,517 11,731
ADD/(DEDUCT) MOVEMENTS IN OTHER WORKING CAPITAL ITEMS: (Increase) / Decrease in trade and other receivables Increase/(Decrease) in tax payable (Decrease)/Increase in GST payable Increase in contract liabilities Increase in employee entitlements Increase/(Decrease) in trade payables and accruals	(3,167) 10,850 1,430 (2,611) (1,284) 1,215 413 196 4,177 965 859 (380)
Net working capital movements	2,428 10,235
Net cash inflow from operating activities	12,945 21,966

4.2 BANK FACILITIES AND BORROWINGS

Gentrack Group has a NZ$20m multi-currency facility with ASB Bank Limited to provide additional funding as required for acquisitions and general corporate purposes. This facility expires on 28 March 2022, during 2021 the facility balance was fully repaid leaving $Nil drawn under the facility agreement at 30 September 2021 (2020: $2.5m).

The facility is secured by a general security agreement under which ASB has a security interest in Gentrack Group assets. Covenants are in place and compliance is reported quarterly.

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GENTRACK FINANCIAL STATEMENTS / 25

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

4.3. CASH AND CASH EQUIVALENTS

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Cash and cash equivalents comprise cash in hand, deposits held at call with banks, other short-term and highly liquid investments with original maturities of three months or less.

	2021 2020
	NZ$000 NZ$000
Bank balances Cash on hand	25,957 19,320 - 1
Total cash and cash equivalents	25,957 19,321

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GENTRACK FINANCIAL STATEMENTS / 26

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

5. ASSETS AND LIABILITIES

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This section outlines further details of Gentrack Group’s financial position by building on information presented in the statement of financial position.

5.1. TRADE AND OTHER RECEIVABLES

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Gentrack Group recognises trade and other receivables initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. An impairment provision for trade receivables consists of the expected credit loss in accordance with NZ IFRS 9 and a specific provision.

A specific provision is established when there is objective evidence that Gentrack Group will not be able to collect all amounts due according to the original terms of the receivables. The carrying amount of an asset is reduced using provision accounts, and the amount of the loss is recognised in the statement of

comprehensive income. When a receivable is uncollectible, it is written off against the specific impairment provision account. Subsequent recoveries of amounts previously written off are credited against the statement of comprehensive income.

comprehensive income.
	2021	2020
	NZ$000	NZ$000
Trade receivables Impairment provision - Expected credit loss Impairment provision - Specific provision Provision for volume discounts Contract assets Sundry receivables and prepayments	18,422	15,084 (390) (3,460) (131) 5,683 2,165
	(334)
	(2,945)
	(104)
	4,865
	1,842
Total trade and other receivables	21,746	18,951

MOVEMENT IN TRADE RECEIVABLES IMPAIRMENT PROVISION

MOVEMENT IN TRADE RECEIVABLES IMPAIRMENT PROVISION
	2021	2020
	NZ$000	NZ$000
Opening balance Increase in impairment provision Write back in impairment provision Effect of movement in foreign exchange Bad debt written off	3,850	2,868 2,618 (566) 13 (1,083)
	1,563
	(2,089)
	(21)
	(24)
Total trade receivables impairment provision	3,279	3,850

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GENTRACK FINANCIAL STATEMENTS / 27

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

5.1 TRADE AND OTHER RECEIVABLES (CONTINUED)

The expected credit loss provision for trade receivables has been measured using the same techniques as the prior year, determined as follows .

2021 CURRENT 1-60 DAYS PAST DUE	61-120 DAYS PAST DUE 121-180 DAYS PAST DUE	OVER 180 DAYS PAST DUE TOTAL
NZ$000 NZ$000	NZ$000 NZ$000	NZ$000 NZ$000
Gross carrying amount 13,318 2,260 Baseline 34 17 Aging and Customer duration 1 - Country, Customer and Market 26 6 Total expected credit loss rate 0.45% 1.02%	591 327	1,926 18,422
	9 8	96 164
	6 10	97 114
	3 2	19 56
	3.02% 6.25%	11.05% 1.81%
Expected credit loss allowance 60 23	18 20	213 334
2020 CURRENT 1-60 DAYS PAST DUE	61-120 DAYS PAST DUE 121-180 DAYS PAST DUE	OVER 180 DAYS PAST DUE TOTAL
NZ$000 NZ$000	NZ$000 NZ$000	NZ$000 NZ$000
Gross carrying amount 8,513 3,214 Baseline 21 21 Aging and Customer duration 1 6 Country, Customer and Market 16 8	356 806 5 20 3 39 2 6	2,195 15,084 106 173 112 161 24 56
Total expected credit loss rate 0.45% 1.09%	2.84% 8.08%	11.03% 2.59%
Expected credit loss allowance 38 35	10 65	242 390

5.2 GOODWILL

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Goodwill represents the difference between the cost of acquisition and the fair value of the net identifiable assets acquired. Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units (CGU) and is not amortised but is tested annually for impairment.

	2021	2020
	NZ$000	NZ$000
Opening balance Goodwill impairment Exchange rate differences	106,599	134,434 (28,040) 205
	-
	167
Net book value	106,766	106,599
Goodwill allocated to Utilities Goodwill allocated to Veovo	103,866	103,699 2,900
	2,900
Net book value	106,766	106,599

During the year due to the further alignment of the Airport 20/20 and Blip Systems CGU, these CGU’s have been combined to form the Veovo CGU. With further alignment, it is no longer possible to meaningfully separate the cashflows of these CGU’s and therefore are now reported as a single CGU.

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GENTRACK FINANCIAL STATEMENTS / 28

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

5.3 IMPAIRMENT TESTING

IMPAIRMENT TESTING OF GOODWILL AND OTHER ASSETS

At each reporting date, Gentrack Group assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, Gentrack Group makes a formal estimate of the recoverable amount. Where the carrying value of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Recoverable amount is the greater of fair value less costs to sell or the asset’s value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market assessments and the time value of money and the risks specific to the asset. Value in use is determined by discounting the future cash flows generated by each CGU. Cash flows were projected based on five-year business plans. The Weighted Average Cost of Capital (WACC) is based on CAPM methodology using market specific inputs. The WACC for each CGU is reviewed at least annually. The key assumptions are detailed in the table below.

Gentrack Group tests annually whether goodwill has suffered any impairment or more often as required, in accordance with the accounting policy stated above. The recoverable amounts of cash-generating units have been determined based on value in use calculations. Preparing five-year forecasts in a COVID-19 environment has been a challenging task due to the uncertainty of the future. In preparing the five-year forecasts, management has reviewed the assumptions and weighed up the information available at the time to ensure the forecasts are appropriate given the CGU’s position and the prevailing market conditions.

These calculations require the use of assumptions, the details of these assumptions are presented below and for both CGU’s a Terminal Growth Rate of 1.85% has been applied.

CGU’s a Terminal Growth Rate of 1.85% has been applied.
CASH GENERATING UNIT 2021 REVENUE GROWTH 2022 - 2026 WACC 2021 2020 REVENUE GROWTH 2021 - 2025	WACC 2020
Utilities 5.1% CAGR 9.6% 4% CAGR Veovo 10.6% CAGR 10.7% 5% CAGR	9.8% 10.1%

IMPAIRMENT TESTING RESULTS

The calculations confirmed there was no impairment of goodwill during the year for the Utilities or Veovo CGU’s. Management believes that any reasonable possible change in the key assumptions for either CGU would not cause the carrying amount to exceed the recoverable amount.

Changes in key assumptions were considered as sensitivities. These are summarised in the table below.

CASH GENERATING UNIT RECOVERABLE AMOUNT	EBITDA +5% EBITDA -5%	WACC +1% WACC -1%
Utilities 199,784 Veovo 9,724	206,873 189,310	176,189 228,849
	11,058 9,218	8,641 12,037

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GENTRACK FINANCIAL STATEMENTS / 29

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

5.4 INTANGIBLE ASSETS

CAPITALISED DEVELOPMENT

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Costs that are directly associated with the development of software are recognised as intangible assets where the following criteria are met:

• it is technically feasible to complete the software product so that it will be available for use.

• management intends to complete the software product and use or sell it.

• there is an ability to use or sell the software product.

• it can be demonstrated how the software product will generate probable future economic benefits.

• adequate technical, financial, and other resources to complete the development and to use or sell the software product are available; and

• the expenditure attributable to the software product during its development can be reliably measured.

Software development costs that meet the above criteria are capitalised. Other development expenditure that does not meet the above criteria is recognised as an expense as incurred. Development costs previously recognised as expenses are not recognised as assets in a subsequent period. Software development costs recognised as assets are amortised over their estimated useful lives.

BRANDS

Brands are considered to have an indefinite useful life and are held at cost and are not amortised but are subject to an annual impairment test consistent with the methodology outlined for goodwill above.

OTHER INTANGIBLE ASSETS

Other intangible assets consist of internal use software, acquired source code, trade-marks, and customer relationships. They have finite useful lives and are measured at cost less accumulated amortisation and accumulated impairment losses.

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GENTRACK FINANCIAL STATEMENTS / 30

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

5.4 INTANGIBLE ASSETS (CONTINUED)

AMORTISATION

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Except for goodwill and brands, intangible assets are amortised on a straight-line basis in the statement of comprehensive income over their estimated useful lives, from the date that they are available for use.

The estimated useful lives for the current and comparative periods are as follows:

•	Acquired source code	10 years
•	Internal use software	3 years
•	Customer relationships	10 years
•	Trademarks	4 years
•	Capitalised development	5 years

Amortisation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.

2021	SOFTWARE CUSTOMER RELATIONSHIPS	BRAND NAMES TRADEMARKS	CAPITALISED DEVELOPMENT TOTAL
	NZ$000 NZ$000	NZ$000 NZ$000	NZ$000 NZ$000
Opening balance Amortisation Movement in foreign exchange	25,046 12,888	5,024 454	2,016 45,428
	(4,666) (2,405)	- (165)	(544) (7,780)
	33 18	- -	(1) 50
Closing net book value	20,413 10,501	5,024 289	1,471 37,698
Cost Accumulated amortisation	45,025 24,169	5,024 841	2,729 77,788
	(24,612) (13,668)	- (552)	(1,258) (40,090)
Net book value	20,413 10,501	5,024 289	1,471 37,698

2020	SOFTWARE CUSTOMER RELATIONSHIPS	BRAND NAMES TRADEMARKS	CAPITALISED DEVELOPMENT TOTAL
	NZ$000 NZ$000	NZ$000 NZ$000	NZ$000 NZ$000
Opening balance Additions Amortisation Impairment Movement in foreign exchange	31,413 15,718 - - (4,861) (2,473) (1,616) (390) 110 33	5,024 621 - - - (169) - - - 2	7,706 60,482 331 331 (1,562) (9,065) (4,464) (6,470) 5 150
Closing net book value	25,046 12,888	5,024 454	2,016 45,428
Cost Accumulated amortisation	44,945 24,128 (19,899) (11,240)	5,024 839 - (385)	2,726 77,662 (710) (32,234)
Net book value	25,046 12,888	5,024 454	2,016 45,428

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GENTRACK FINANCIAL STATEMENTS / 31

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

5.5 PROPERTY PLANT AND EQUIPMENT

In the statement of financial position property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation on assets is calculated using the straight-line method to allocate the difference between their original costs and their residual values over their estimated useful lives, as follows:

•	Furniture & equipment	7 years
•	Computer equipment	3 to 7 years
•	Leasehold improvements	Term of lease

The assets’ residual values and useful lives are reviewed and adjusted if appropriate at each balance date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are recognised in the statement of comprehensive income.

2021	FURNITURE & EQUIPMENT	COMPUTER EQUIPMENT LEASEHOLD IMPROVEMENTS	TOTAL
	NZ$000	NZ$000 NZ$000	NZ$000
Opening balance Additions Depreciation Movement in foreign exchange	788	522 1,453	2,763
	28	631 4	663
	(170)	(396) (171)	(737)
	(4)	(2) -	(6)
Net book value	642	755 1,286	2,683
Cost Accumulated depreciation	2,086	4,371 2,088	8,545
	(1,444)	(3,616) (802)	(5,862)
Net book value	642	755 1,286	2,683

2020	FURNITURE & EQUIPMENT	COMPUTER EQUIPMENT LEASEHOLD IMPROVEMENTS	TOTAL
	NZ$000	NZ$000 NZ$000	NZ$000
Opening balance Additions Depreciation Disposals Movement in foreign exchange	969 22 (197) - (6)	849 1,635 300 2 (556) (185) (16) - (55) 1	3,453 324 (938) (16) (60)
Net book value	788	522 1,453	2,763
Cost Accumulated depreciation	2,097 (1,309)	3,918 2,088 (3,396) (635)	8,103 (5,340)
Net book value	788	522 1,453	2,763

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GENTRACK FINANCIAL STATEMENTS / 32

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

5.6 TRADE PAYABLES AND ACCRUALS

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Gentrack Group recognises trade and other payables initially at fair value and subsequently measured at amortised cost using the effective interest method. They represent liabilities for goods and services provided prior to the end of the financial year that are unpaid. The amounts are unsecured, non-interest bearing and are usually paid within 45 days of recognition.

	2021	2020
	NZ$000	NZ$000
Trade creditors Sundry accruals	1,929	1,803 2,102
	2,584
Total trade payables and accruals	4,513	3,905

5.7 EMPLOYEE ENTITLEMENTS

Liabilities for salaries and wages, including non-monetary benefits, long service leave, and annual leave are recognised in employee benefits in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Cost for non-accumulating sick leave is recognised when the leave is taken and measured at the rates paid or payable.

	2021	2020
	NZ$000	NZ$000
CURRENT Long service leave Other short-term employee benefits		611 4,941
	448
	9,087
NON-CURRENT Long service leave	9,535	5,552 428
	539
Total employee entitlements	10,074	5,980

5.8 INVENTORY

Inventories are stated at the lower of cost and net realisable value. Cost is calculated using a weighted average method and includes expenditure incurred to purchase the inventory and transport it to its current location. Net realisable value is the estimated selling price of the inventory in the ordinary course of business less costs necessary to make the sale. The cost of inventories consumed during the year are recognised as an expense and included in expenditure in the statement of comprehensive income.

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GENTRACK FINANCIAL STATEMENTS / 33

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

6. CAPITAL STRUCTURE

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This section outlines Gentrack Group’s capital structure and details of share-based employee incentives which have an impact on Gentrack Group’s equity.

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects. Where any Gentrack Group company purchases the Company’s equity share capital (treasury shares), the consideration paid is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or transferred outside Gentrack Group.

Ordinary shares are fully paid and have no par value. The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company and rank equally with regard to the Company’s residual assets.

6.1 CAPITAL MANAGEMENT

The capital structure of Gentrack Group consists of equity raised by the issue of ordinary shares in the parent company.

Gentrack Group manages its capital to ensure that companies in the Group can continue as going concerns. Gentrack Group is not subject to any externally imposed capital requirements .

	SHARES ISSUED	SHARE CAPITAL
	2021 2020	2021 2020
	000 000	NZ$000 NZ$000
Ordinary Shares Issue of new ordinary shares	98,645 98,645 302 -	191,229 191,229 470 -
	98,947 98,645	191,699 191,229

During 2021 Performance Rights of 274,105 in relation to Long Term Incentive Schemes vested, resulting in the same number of new shares being issued. Also 28,389 shares were issued as part payment of Gentrack Group Directors fees.

6.2 SHARE BASED PAYMENTS

Gentrack Group operates equity settled, share-based payments schemes under which it receives services from employees, as consideration for equity instruments of Gentrack Group. A valuation is completed for each scheme at the grant date to estimate the fair value of the performance rights granted. Management also makes estimates about the number of performance rights that are expected to vest which determines the expense recorded in the statement of comprehensive income.

The fair value of the performance rights is determined at the grant date using the Black Scholes valuation method, the key input into the valuation model is the grant date share price. The fair value of the performance rights is recorded as an expense in the statement of comprehensive income over the vesting period, based on Gentrack Group’s estimate of the number of performance rights that will vest, with a corresponding entry to the share-based payment reserve within equity. During the year ended 30 September 2021, $3.6m has been recognised in the statement of comprehensive income (2020: $0.3m).

During the year ended 30 September 2021, two new equity settled share-based payment schemes were introduced and additional participants were granted performance rights under the existing scheme. The existing scheme has been renamed as the Senior Leadership Long Term Incentive. The two new equity settled share-based payment schemes introduced during the year are the Gentrack Long Term Incentive Scheme and the CEO Long Term Incentive Scheme.

SENIOR LEADERSHIP LONG TERM INCENTIVE SCHEME

During the year the Gentrack Group Board approved the sixth annual grant of performance rights in the Senior Leadership Long Term Incentive Scheme, this scheme was first introduced in 2016 for selected key personnel. The scheme is intended to attract and reward key personnel to focus on long-term performance. The number of performance rights allocated is based on a percentage of salary or other such percentage and are calculated with

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GENTRACK FINANCIAL STATEMENTS / 34

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

6.2 SHARE BASED PAYMENTS (CONTINUED)

reference to the 10-trading day volume weighted average price (VWAP) of shares traded on the NZX based on dates indicated in the issue documentation.

The number of performance rights subject to the Earnings Per Share (EPS) hurdle that will vest after three years depends on achievement of the EPS performance hurdle. The performance hurdle is that 50% of the EPS Performance Rights will vest if EPS Compounding Annual Growth Rate (CAGR) of Gentrack Group over the three financial years is 7%, with the number of performance rights that vest increasing on a linear basis to 100% if EPS CAGR of 12% is achieved.

During 2021, 24,105 Performance Rights in the Senior Leadership Long Term Incentive vested with a weighted average vesting date share price of $2.10 per share. Below are the

details of the outstanding performance rights in the Senior Leadership Long Term Incentive Scheme:

GRANT DATE EXPIRY DATE TOTAL VALUE OF GRANTED PERFORMANCE RIGHTS	PERFORMANCE RIGHTS GRANTED
2021 NZ$000	000
EPS SCHEMES 2018-2021
1 October 2018 30 November 2021 310	65
1 October 2019 30 November 2022 351	160
1 April 2020 1 April 2023 1,023	769
1 October 2020 1 April 2022 973	666
1 October 2020 30 November 2023 996	682
Total Senior Leadership LTI Schemes 3,653	2,342

GRANT DATE EXPIRY DATE TOTAL VALUE OF GRANTED PERFORMANCE RIGHTS	PERFORMANCE RIGHTS GRANTED
2020 NZ$000	000
EPS SCHEMES 2017-2020 1 October 2017 30 November 2020 318 1 October 2018 30 November 2021 411 1 October 2019 30 November 2022 1,055 1 April 2020 1 April 2023 1,364 1 August 2020 1 August 2021 28	55 86 217 1,026 24
Total Senior Leadership LTI Schemes 3,176	1,408

GENTRACK LONG TERM INCENTIVE SCHEME

On 24 December 2020 Gentrack Group announced the establishment of a new Long Term Incentive Scheme (Gentrack Long Term Incentive Scheme). The Gentrack Long Term Incentive Scheme has been introduced to:

• Assist with the retention of eligible employees

• Significantly increase the number of Gentrack Group employees that have a stake in Gentrack Group

• Give eligible employees a share in Gentrack Group’s future performance

The participants of the Gentrack Long Term Incentive Scheme are offered Performance Rights for nil consideration, which on vesting will entitle them to receive one ordinary share in Gentrack Group. These Performance Rights will vest subject to the participants continuing to be employed by Gentrack Group at the end of the vesting period which commences 1 October 2022.

Gentrack Group issued 592,352 Performance Rights to employees under the Gentrack Long Term Incentive Scheme during 2021. 535,819 Performance Rights are outstanding at 30 September 2021 with a grant date fair value of $0.8m and an expiry date of 1 October 2022.

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GENTRACK FINANCIAL STATEMENTS / 35

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

6.2 SHARE BASED PAYMENTS (CONTINUED)

CEO LONG TERM INCENTIVE SCHEME

Gary Miles was appointed to the role of Managing Director and Chief Executive Officer (CEO) from 1 October 2020 and included in the remuneration package are Performance Rights granted for nil consideration.

During 2021, a total of 1,248,604 Performance Rights were issued under the CEO Long Term Incentive Scheme, which 500,000 were an initial grant with 250,000 of these vesting immediately and the remaining 250,000 to vest on the one-year anniversary of starting employment with Gentrack Group. There are no vesting conditions or performance hurdles in regard to the initial grant. The remaining 748,604 Performance Rights granted are an initial annual grant and will vest at the end of a 13-month performance period, vesting subject to performance hurdles set by the Board of Directors and is aligned with initial business transformation and the financial performance during 2021.

During 2021 a total of 250,000 Performance Rights have vested with a weighted average share price on the vesting date of $1.57 per share. 998,604 Performance Rights remain outstanding at 30 September 2021, with a total grant date fair value of $1.54m and an expiry date of 31 October 2021.

PERFORMANCE RIGHTS MOVEMENTS

Below is a summary of all performance rights, granted, exercised and forfeited across all the equity settled sharebased payments schemes operated by Gentrack Group during 2021:

GRANT DATE	2021 2020	2021 2020
	AVERAGE EXERCISE PRICE PER PERFORMANCE RIGHT NUMBER OF PERFORMANCE RIGHTS AVERAGE EXERCISE PRICE PER PERFORMANCE RIGHT	NUMBER OF PERFORMANCE RIGHTS
	000	000
As at 1 October Granted during the year Exercised during the year Forfeited during the year	$2.25 1,408 $4.49 $1.49 3,253 $1.93 $1.51 (274) - $2.08 (511) $3.78	268 1,267 - (127)
As at 30 September	$1.54 3,876 $2.25	1,408

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GENTRACK FINANCIAL STATEMENTS / 36

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

6.3 DIVIDENDS

Details of the dividends paid during the year ended 30 September 2021 are provided below:

	CENTS PER SHARE DIVIDENDS PAID	CENTS PER SHARE DIVIDENDS PAID
	2021 2020 2021	2020
	NZ$000	NZ$000
Final dividend paid Interim dividend paid	- 3.0c - - -	3,004 -
	- 3.0c -	3,004

6.4 EARNINGS PER SHARE

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Gentrack Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the net profit attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares on issue during the year, excluding shares purchased and held as treasury shares.

Diluted EPS is determined by adjusting the net profit attributable to ordinary shareholders and the weighted average number of ordinary shares on issue for the effects of the dilutive impact of potential ordinary shares, which comprise performance share rights granted to employees.

Potential ordinary shares are treated as dilutive when, and only when, their conversion to ordinary shares would decrease EPS or increase the profit per share.

EPS or increase the profit per share.
2021	2020
Profit/(Loss) attributable to the shareholders of the company 3,189 Profit/(Loss) attributable to the shareholders of the company adjusted for the effect of dilution 3,189 Basic weighted average number of ordinary shares issued 98,761 Shares deemed to be issued for no consideration in respect of share-based payments 3,876 Weighted average number of shares used in diluted earnings per share 102,637 Basic earnings per share $0.03 Diluted earnings per share $0.03	(31,706) (31,706) 98,645 1,408 100,053 ($0.32) ($0.32)

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GENTRACK FINANCIAL STATEMENTS / 37

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

7. TAX

7.1 INCOME TAX EXPENSE

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In the statement of comprehensive income, the income tax expense comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax payable also includes any tax liability arising from the declaration of dividends.

	2021	2020
	NZ$000	NZ$000
INCOME TAX EXPENSE COMPRISES: Current tax expense Deferred tax expense		1,676 (4,237)
	4,965
	(2,590)
Tax expense/(benefit)	2,375	(2,561)

RECONCILIATION OF INCOME TAX EXPENSE

The relationship between the expected income tax expense based on the domestic effective tax rate of Gentrack Group at 28% (2020: 28%) and the reported tax expense in the statement of comprehensive income can be reconciled as follows:

reconciled as follows:
	2021	2020
	NZ$000	NZ$000
Profit/(Loss) before tax	5,564	(34,267)
Taxable income Domestic tax rate for Gentrack Group	5,564	(34,267) 28%
	28%
Expected tax expense/(benefit)	1,558	(9,595)
Non-deductible expense Foreign subsidiary company tax Prior period adjustments	1,345	8,350 1,009 (2,325)
	(40)
	(488)
Actual tax expense/(benefit)	2,375	(2,561)

As at 30 September 2021 Gentrack Group has $9.4m (2020: $8.7m) of imputation credits available for use in subsequent reporting periods.

7.2 DEFERRED TAX ASSETS AND LIABILITIES

Deferred tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

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Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is settled.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except for deferred income tax liabilities where the timing of the reversal of the temporary difference is controlled by Gentrack Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income tax levied by the same taxation authority on either the same taxable entity or different entities where there is an intention to settle the balance on a net basis.

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GENTRACK FINANCIAL STATEMENTS / 38

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

7.2 DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)

Additional income tax expenses that arise from the distribution of cash dividends are recognised while the liability to pay the related dividend is recognised. Gentrack Group does not distribute non-cash assets as dividends to its shareholders.

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related benefits will be realised.

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A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised. Management applies judgement when reviewing current business plans and forecasts to ascertain the likelihood of future taxable profits.

The movement in temporary differences has been recognised in the statement of comprehensive income. Deferred tax has been recognised at a rate at which they are expected to be realised: 28% for New Zealand entities, 30% for Australian entities, 19% for UK entities, 22% for Denmark entities and 35% for Malta entities.

Movement in temporary timing differences during the year:

2021	OPENING BALANCE	TEMPORARY MOVEMENT RECOGNISED CURRENCY TRANSLATION	CLOSING BALANCE
	NZ$000	NZ$000 NZ$000	NZ$000
Trade and other receivables Intangible assets Contract liabilities Provisions Losses carried forward Other	(84)	66 4	(14)
	(4,913)	1,631 (9)	(3,291)
	871	140 (28)	983
	1,738	973 (35)	2,676
	2,016	(203) (86)	1,727
	24	(17) (2)	5
Net deferred tax	(348)	2,590 (156)	2,086

2020	OPENING BALANCE	TEMPORARY MOVEMENT RECOGNISED CURRENCY TRANSLATION	CLOSING BALANCE
	NZ$000	NZ$000 NZ$000	NZ$000
Trade and other receivables Intangible assets Contract liabilities Provisions Losses carried forward Other	(68) (7,196) 661 1,056 1,076 (97)	(15) (1) 2,303 (20) 202 8 673 9 944 (4) 130 (9)	(84) (4,913) 871 1,738 2,016 24
Net deferred tax	(4,568)	4,237 (17)	(348)

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GENTRACK FINANCIAL STATEMENTS / 39

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

8. FINANCIAL RISK MANAGEMENT

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Gentrack Group is exposed to credit risk, liquidity risk and market risks which include foreign currency risk, commodity price risk and interest risk. This section details of each of these financial risks and how they are managed by Gentrack Group.

The Board of Directors has overall responsibility for the establishment and oversight of Gentrack Group’s risk management framework. Gentrack Group’s risk management policies are established to identify and analyse (amongst other risks) the financial risks faced by Gentrack Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and Gentrack Group’s activities.

8.1 CREDIT RISK

Credit risk is the risk of financial loss to Gentrack Group if a customer or counter party to a financial instrument fails to meet its contractual obligations, and it arises principally from Gentrack Group’s trade receivables from customers in the normal course of business.

Gentrack Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The credit worthiness of a customer or counter party is determined by several qualitative and quantitative factors. Qualitative factors include external credit ratings (where available), payment history and strategic importance of customer or counter party. Quantitative factors include transaction size, net assets of customer or counter party, and ratio analysis on liquidity, cash flow and profitability.

In relation to trade receivables, it is Gentrack Group’s policy that all customers who wish to trade on terms are subject to credit verification on an ongoing basis with the intention of minimising bad debts. The nature of Gentrack Group’s trade receivables is represented by regular turnover of product and billing of customers based on the contractual payment terms.

Gentrack Group has an impairment provision that represents its estimate of future incurred losses in respect of trade and other receivables. The impairment provision consists of the expected credit loss provision in accordance with NZ IFRS 9 and a specific doubtful debt provision used where there is objective evidence that indicates a trade receivable is impaired.

The carrying amount of Gentrack Group’s financial assets represents the maximum credit exposure as summarised in the table below:

the table below:
	2021 2020
	GROSS IMPAIRMENT PROVISION GROSS	IMPAIRMENT PROVISION
	NZ$000 NZ$000 NZ$000	NZ$000
Current Past due 1-60 days Past due 61-120 days Past due 121-180 days Past due over 180 days	13,318 (348) 8,513 2,260 (454) 3,214 591 (261) 356 327 (315) 806 1,926 (1,901) 2,195	(38) (918) (178) (600) (2,116)
	18,422 (3,279) 15,084	(3,850)

Gentrack Group’s trade receivables are not exposed to any significant credit exposure to any single counterparty or group of counterparties having similar characteristics. Trade receivables consist of several customers in various geographical areas. Based on historic information about customer default rates, management considers the credit quality of trade receivables that are not past due or impaired to be good.

As at 30 September 2021 there are no significant concentrations of credit risk for financial assets designated as at amortised cost or at fair value. The carrying amount reflects Gentrack Group’s maximum exposure to credit risk for these financial assets.

Judgement has been applied to the recovery of all trade receivables, with management confirming that all carrying amounts are deemed to be recoverable and not impaired.

The credit risk for cash and cash equivalents is considered negligible since the counterparties are highly reputable financial intuitions with high quality external credit ratings.

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GENTRACK FINANCIAL STATEMENTS / 40

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

8.2 MARKET RISK

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect Gentrack Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.

FOREIGN CURRENCY RISK

Gentrack Group is exposed to currency risk on transactions that are denominated in a currency other than the functional currency of Gentrack Group (NZD), primarily the following currencies Australian Dollar (AUD), Pound Sterling (GBP), EURO (EUR), US Dollar (USD), and Danish Kroner (DKK).

Gentrack Group’s exposure to foreign currency risk at the reporting date was as follows (all amounts are denominated in New Zealand Dollars):

2021	AUD GBP	EUR USD	DKK
	NZ$000 NZ$000	NZ$000 NZ$000	NZ$000
Cash and cash equivalents Trade and other receivables Trade and other payables Bank loans	10,756 8,002	496 855	183
	4,503 10,074	1,493 874	1,915
	(132) (2,608)	(72) (354)	(562)
	- -	- -	-
Net exposure	15,127 15,468	1,917 1,375	1,536
2020
Cash and cash equivalents Trade and other receivables Trade and other payables Bank loans	5,634 10,675 4,790 8,874 (218) (1,479) - (2,536)	70 1,029 1,056 1,369 (507) (1,768) - -	96 1,521 (103) -
Net exposure	10,206 15,534	619 630	1,514

The following table summarises the sensitivity of profit or loss and equity with regards to Gentrack Group’s financial assets and financial liabilities affected by AUD/NZD exchange rate, the GBP/NZD exchange rate, the EUR/NZD exchange rate, the USD/NZD exchange rate, and the DKK/NZD exchange rate with all other aspects being equal. It assumes a +/-10% change in the NZD to the currency exchange rate for the year ended 30 September 2021 (2020: 10%). These +/-10% sensitivities have been determined based on the average market volatility in exchange rates in the preceding 12 months.

		PROFIT/EQUITY
	AUD GBP	EUR USD	DKK
	NZ$000 NZ$000	NZ$000 NZ$000	NZ$000
2021 10% strengthening in NZD 10% weakening in NZD 2020 10% strengthening in NZD 10% weakening in NZD
	(1,375) (1,406)	(174) (125)	(140)
	1,681 1,719	213 153	171
	(928) (1,412) 1,134 1,726	(56) (57) 69 70	(138) 168

Gentrack Group’s exposure to foreign exchange rates varies during the year depending on the volume of foreign currency transactions. Even so, the analysis above is representative of Gentrack Group’s exposure to market risk.

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GENTRACK FINANCIAL STATEMENTS / 41

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

8.3 LIQUIDITY RISK

Liquidity risk is the risk that Gentrack Group will not be able to meet its financial obligations as and when they become due and payable. Gentrack Group’s approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when they become due and payable, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to Gentrack Group’s reputation.

Gentrack Group has sufficient cash to meet its requirements in the foreseeable future.

The following table details Gentrack Group’s contractual maturities of financial liabilities, as at the reporting date:

	ON DEMAND LESS THAN 3 MONTHS	3 TO 12 MONTHS 1 TO 5 YEARS	>5 YEARS TOTAL
	NZ$000 NZ$000	NZ$000 NZ$000	NZ$000 NZ$000
2021 Bank loan Trade payables Financial liabilities
	- -	- -	- -
	- 1,929	- -	- 1,929
	- -	- -	- -
	- 1,929	- -	- 1,929
2020 Bank loan Trade payables Financial liabilities	- - - 1,803 - -	2,536 - - - - -	- 2,536 - 1,803 - -
	- 1,803	2,536 -	- 4,339

8.4 INTEREST RATE RISK

Gentrack Group’s interest rate risk primarily arises from short term bank borrowing, cash, and advances from related parties. Borrowings and deposits at variable interest rates expose Gentrack Group to cash flow interest rate risk. Borrowings and deposits at fixed rates expose Gentrack Group to fair value interest rate risk.

The following tables detail the interest rate repricing profile and current interest rate of the interest-bearing financial assets and liabilities.

	EFFECTIVE INTEREST RATE FLOATING	FIXED UP TO 3 MONTHS FIXED UP TO 6 MONTHS	FIXED UP TO 5 YEARS TOTAL
	NZ$000 NZ$000	NZ$000 NZ$000	NZ$000 NZ$000
ASSETS Bank balances	- 25,957	- -	- 25,957
Total exposure	25,957	- -	- 25,957

		EFFECTIVE INTEREST RATE +1% EFFECTIVE INTEREST RATE -1%
		NZ$000 NZ$000
Bank balances		262 (262)
Total exposure		262 (262)

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GENTRACK FINANCIAL STATEMENTS / 42

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

8.5 FINANCIAL INSTRUMENTS

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Gentrack Group’s financial assets are measured at amortised cost. Gentrack Group’s financial assets are held within a business model whose objective is to hold the financial asset to collect contractual cash flows and the financial asset gives rise to contractual cash flows on specified dates that are payments of principal and interest on the principal outstanding.

Gentrack Group’s financial liabilities are measured at amortised cost except for contingent consideration which is required to be measured at fair value through profit and loss.

Gentrack Group’s financial assets and liabilities by category are summarised as follows:

CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise of cash at bank and on hand and the carrying amount is equivalent to fair value.

TRADE RECEIVABLES

These assets are short term in nature and are reviewed for impairment; the carrying value approximates their fair value.

TRADE PAYABLES

These liabilities are mainly short term in nature with the carrying value approximating the fair value.

LOANS AND BORROWINGS

Loans and borrowings have a floating interest rate. Fair value is estimated using the discounted cash flow model based on current market interest rate for a similar product; the carrying value approximates their fair value.

FAIR VALUES

Gentrack Group’s financial instruments that are measured after initial recognition at fair values are grouped into levels based on the degree to which their fair value is observable:

• Level 1 – fair value measurements derived from quoted prices in active markets for identical assets.

• Level 2 – fair value measurements derived from inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3 – fair value measurements derived from valuation techniques that include inputs for the asset or liability which are not based on observable market data.

There have been no transfers between levels or changes in the valuation methods used to determine the fair value of Gentrack Group’s financial instruments during the period. As at 30 September 2021 Gentrack Group has no of level 3 financial instruments (2020: $Nil).

FINANCIAL INSTRUMENTS BY CATEGORY

FINANCIAL INSTRUMENTS BY CATEGORY
	2021	2020
	NZ$000	NZ$000
FINANCIAL ASSETS MEASURED AT AMORTISED COST Cash and cash equivalents Trade and other receivables		19,321 18,951
	25,957
	21,746
FINANCIAL LIABILITIES MEASURED AT AMORTISED COST Loans and borrowings Trade payables FINANCIAL LIABILITIES MEASURED AT FAIR VALUE Financial Liabilities	47,703	38,272 (2,536) (1,803) -
	-
	(1,929)
	-
	(1,929)	(4,339)

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GENTRACK FINANCIAL STATEMENTS / 43

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

1. OTHER INFORMATION

2. 9.1 LEASE ASSETS AND LEASE LIABILITIES

RECOGNITION AND MEASUREMENT OF GENTRACK GROUP LEASING ACTIVITIES

Gentrack Group predominantly leases property for fixed periods of 1-12 years and may have extension options. These extension options are usually at the discretion of Gentrack Group and are included in the measurement of the lease asset if management intends to exercise the extension. Lease terms are negotiated on an individual basis and contain a variety of terms and conditions. However, these lease agreements do not impose any covenants.

Leases are recognised as a right of use asset (lease asset) and a corresponding lease liability at the date at which the leased asset is available for use. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period. The lease asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

• fixed payments (including in-substance fixed payments), less any lease incentives receivable

• variable lease payments that are based on an index or a rate

• amounts expected to be payable by the lessee under residual value guarantees

• the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and

• payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The lease payments are discounted using the lessee’s incremental borrowing rate, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.

Lease assets are measured at cost comprising the following:

• the amount of the initial measurement of lease liability

• any lease payments made at or before the commencement date less any lease incentives received

• • any initial direct costs, and

• restoration costs.

Key movements related to the lease assets and lease liabilities are presented below:

LEASE ASSETS

	2021	2020
	NZ$000	NZ$000
Balance at 1 October Lease amendments Depreciation charges Exchange differences		12,671 - (2,350) 17
	10,338
	185
	(2,347)
	(14)
Lease assets at 30 September	8,162	10,338
Property Office equipment		10,302 36
	8,156
	6
Lease assets at 30 September	8,162	10,338

Office equipment includes Coffee Machines and Printer/Copiers.

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GENTRACK FINANCIAL STATEMENTS / 44

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

9.1 LEASE ASSETS AND LEASE LIABILITIES (CONTINUED)

LEASE LIABILITIES

LEASE LIABILITIES
	2021	2020
	NZ$000	NZ$000
Balance at 1 October Lease amendments Principal repayments Exchange differences	15,127	17,620 - (2,457) (36)
	185
	(2,748)
	(12)
Lease liabilities at 30 September	12,552	15,127
Less than one year One to five years More than five years		2,692 5,229 7,206
	1,376
	5,486
	5,690
Lease liabilities at 30 September	12,552	15,127

LEASE EXPENSES

LEASE EXPENSES
	2021	2020
	NZ$000	NZ$000
Depreciation charges Finance charges		2,351 931
	2,347
	814
Lease expenses	3,161	3,282

9.2 AUDITORS REMUNERATION

The table below outlines the amounts paid to auditors during the year ended 30 September 2021. Gentrack Group’s current Group auditor is EY after switching from KPMG at the beginning of the year.

	2021	2020
	NZ$000	NZ$000
KPMG - audit fees KPMG - review fees KPMG - taxation services EY - audit fees Entrust - audit fees	86	517 116 221 - 6
	-
	301
	400
	6
Total fees paid to auditor(s)	793	860

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GENTRACK FINANCIAL STATEMENTS / 45

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

9.3 KEY MANAGEMENT AND RELATED PARTIES

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Key management personnel are defined as those persons having authority and responsibility for planning, directing, and controlling the activities of Gentrack Group, directly or indirectly, and include the Directors, the Chief Executive, their direct reports. The following table summarises remuneration paid to key management personnel .

management personnel.
	2021	2020
	NZ$000	NZ$000
Salaries, bonus and other benefits Share-based payments Directors' fees	4,526	4,157 - 386
	465
	606
Remuneration paid to Key Management Personnel	5,597	4,543

Gentrack Group’s Directors are also directors of other companies. During the year ended 30 September 2021 no transactions have occurred between Gentrack Group and any of these companies.

Some of the Directors and key management personnel are shareholders in Gentrack Group Limited. Gentrack Group does not transact with the Directors or key management personnel, and their related parties, other than in their capacity as Directors, consultants, and employees. Refer to note 2.4 for more information on other related parties.

9.4 OTHER DISCLOSURES

CAPITAL COMMITMENTS

There are no capital commitments at 30 September 2021 (2020: $Nil).

CONTINGENCIES

ASB New Zealand has provided guarantees of $1.1m (2020: $0.9m) on behalf of the Gentrack Group, these guarantees are in place for software implementation projects, property leases and credit card programs.

EVENTS AFTER BALANCE DATE

There were no material events after balance date.

On 24 November 2021, the Gentrack Group Board determined that no final dividend will be paid out for the 2021 financial year (2020: nil).

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GENTRACK FINANCIAL STATEMENTS / 46

CORPORATE DIRECTORY

REGISTERED OFFICE

Gentrack Group Limited 17 Hargreaves Street, St Marys Bay, Auckland 1011, New Zealand Phone: +64 9 966 6090 Facsimile: +64 9 376 7223

Level 9, 390 St Kilda Road, Melbourne, VIC 3004 Australia Phone: +61 3 9867 9100 Facsimile: +61 9867 9140

POSTAL ADDRESS

PO Box 3288, Shortland Street, Auckland 1140 New Zealand

NEW ZEALAND INCORPORATION NUMBER

3768390

AUSTRALIAN REGISTERED BODY NUMBER (ARBN)

169 195 751

DIRECTORS

Andy Green, Chair Nicholas Luckock Fiona Oliver Stewart Sherriff Darc Rasmussen Gary Miles

AUDITOR

EY

EY Building, 2 Takutai Square, Britomart Auckland 1010 Phone: +64 9 377 4790

LEGAL ADVISERS

BELL GULLY

BANKERS

ASB BANK LIMITED ANZ LIMITED HSBC PLC NORDEA DENMARK A/S BANK OF VALLETTA PLC TRUIST FINANCIAL CORPORATION

SHARE REGISTRAR

NEW ZEALAND

LINK MARKET SERVICES LIMITED

Level 11, Deloitte Centre, 80 Queen Street, Auckland 1010 PO Box 91 976, Auckland 1142 Phone: +64 9 375 5998 Facsimile: +64 9 375 5990 Email: enquiries@linkmarketservices.com

AUSTRALIA

LINK MARKET SERVICES LIMITED

COMPANY SECRETARY

Pip White

Level 12, 680 George Street, Sydney, NSW 2000 Locked Bag A14, Sydney South, NSW 1235 Phone: +61 1300 554 474 Facsimile: +2 9287 0303 Email: enquiries@linkmarketservices.com

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GENTRACK FULL YEAR FINANCIAL STATEMENTS / 47

CORPORATE DIRECTORY

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GENTRACK FULL YEAR FINANCIAL STATEMENTS / 48