GENTRACK GROUP LIMITED — Audit Report / Information 2016

Nov 23, 2016

G e n t r a c k G r o u p L i m i t e d F i n a n c i a l S t a t e m e n t s

F o r t h e y e a r e n d e d 3 0 S e p t e m b e r 2 0 1 6

GENTRACK GROUP FINANCIAL STATEMENTS 2016_

www.gentrack.com

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Independent Auditor’s Report

To the Shareholders of Gentrack Group Limited.

Report on the Audit of the Consolidated Financial Statements

Opinion

In our opinion, the accompanying Consolidated Financial Statements of Gentrack Group Limited (the Company) and its subsidiaries (the Group):

We have audited the Consolidated Financial Statements which comprise:

• the consolidated statement of financial position as at 30 September 2016;

• i. Present fairly in all material respects the Group’s financial position as at 30 September 2016 and its financial performance and cash flows for the year ended on that date; and

• the consolidated statement of comprehensive income, statement of changes in equity, and statement of cash flows for the year then ended; and

• ii. Comply with New Zealand Equivalents to International Financial Reporting Standards and International Financial Reporting Standards.

• Notes, including a summary of significant accounting policies and other explanatory information.

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Basis for opinion

We conducted our Audit in accordance with International Standards on Auditing (New Zealand) (ISA’s (NZ)). We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Our responsibilities under International Standards on Auditing (New Zealand) are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report.

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Materiality

The scope of our audit was influenced by our application of materiality. Materiality helped us to determine the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and on the consolidated financial statements as a whole. The materiality for the consolidated financial statements as a whole was set at $630,000 determined with reference to a benchmark of Group profit before tax. We chose the benchmark of profit before tax as the Group is a profit oriented business and we consider this represents a key measure of performance.

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Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements in the current period. We summarise below those matters and our key audit procedures to address those matters in order that the shareholders as a body may better understand the process by which we arrived at our audit opinion. Our procedures were undertaken in the context of and solely

© 2016 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

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for the purpose of our statutory audit opinion on the consolidated financial statements as a whole and we do not express discrete opinions on separate elements of the consolidated financial statements.

The key audit matter

How the matter was addressed in our audit

1. Revenue from implementation services Refer to note 3 of the consolidated financial We focused our procedures on the implementation statements. service projects that were in progress at balance date, based on their significance of the project revenue to total The Group has reported revenues of $52.7m revenue, and those that are potentially loss making (2015: $42.1m) which includes implementation projects.

The Group has reported revenues of $52.7m revenue, and those that are potentially loss making (2015: $42.1m) which includes implementation projects. services revenue of $17.9m. We focussed on the revenue from implementation services as a key For the projects selected for testing we checked that audit matter due to inherent complexities of revenue recognised is consistent with the contractual software implementation projects and the terms, including considering how the initial licence fee, estimates involved. design and implementation, and maintenance phases of the contract are arranged. Revenue from implementation services is recognised based on the stage of completion We recalculated the stage of completion based on hours calculated using the proportion of actual hours at to date as a proportion of total forecast hours. We the reporting date compared to managements critically assessed the forecast hours through discussion estimates for total forecast hours. with project managers and senior management and challenged key assumptions, including considering Accurate recording of revenue is highly dependent alternative scenarios and how management has planned on: for risks in the contract.

• Detailed knowledge of individual characteristics of a contract, including unique terms, knowledge of software and length of time to complete contractual milestones;

We agreed significant changes in total forecast hours to correspondence with customers, legal documentation or contract variations. We evaluated potential exposures to liquidated damages through relevant legal correspondence and correspondence with customers.

• Ongoing adjustments to estimates of forecast hours for changes in scope, estimated timing and project delays; and

We also agreed a sample of milestone billings to invoice and cash receipts. In addition we considered the historical accuracy of managements’ estimates of forecast hours by analysing previous forecasts to actual hours.

• Changes to total project revenue based on variations to the contract or additional billing for changes in scope or additional hours incurred.

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Other Information

The Directors, on behalf of the Company, are responsible for the other information included in the entity’s Annual Report. Other information may include the Chairman’s report, Chief Executive’s report, disclosures relating to corporate governance and statutory information. Our opinion on the consolidated financial statements does not cover any other information and we do not express any form of assurance conclusion thereon.

The annual report is expected to be made available to us after the date of this audit report. Our responsibility is to read the Annual Report when it becomes available and consider whether the other information it contains is materially inconsistent with the consolidated financial statements, or our knowledge obtained in the audit, or otherwise appear misstated. If so, we are required to report such matters to the Directors.

A U D I T O R ’ S R E P O R T / 3

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Use of this Audit Report

This report is made solely to the shareholders as a body. Our audit work has been undertaken so that we might state to the shareholders those matters we are required to state to them in the Auditor’s Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the shareholders as a body, for our audit work, this report or any of the opinions we have formed.

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Independence

We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.

Our firm has also provided other services to the Group in relation to taxation compliance and advisory services for transfer pricing. These matters have not impaired our independence as auditor of the Group. The firm has no other relationship with, or interest in, the Group.

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Responsibilities of Directors for the Consolidated Financial Statements

The Directors, on behalf of the Company, are responsible for:

• the preparation and fair presentation of the consolidated financial statements in accordance with generally accepted accounting practice in New Zealand (being New Zealand Equivalents to International Financial Reporting Standards) and International Financial Reporting Standards;

• implementing necessary internal control to enable the preparation of consolidated financial statements that are fairly presented and free from material misstatement, whether due to fraud or error; and

• assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate or to cease operations, or have no realistic alternative but to do so.

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Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objective is:

• to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error; and

• to issue an Auditor’s Report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standards on Auditing (New Zealand) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

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A further description of our responsibilities for the Audit of these consolidated financial statements is located at the External Reporting Board (XRB) website at:

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page1.aspx. This description forms part of our Auditor’s Report.

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Jason Doherty KPMG Auckland 23 November 2016

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D I R E C T O R S ’ R E S P O N S I B I L I T Y S TAT E M E N T _

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

The Directors consider these financial statements have been prepared using accounting policies suitable to the 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 the 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Board of Directors of the Company authorised these financial statements for issue on 23 November 2016.

For and on behalf of the Board of Directors:

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John Clifford Chairman Date: 23 November 2016

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Graham Shaw Director Date: 23 November 2016

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S TAT E M E N T O F C O M P R E H E N S I V E I N C O M E _

FOR THE YEAR ENDED 30 SEPTEMBER 2016

($000)	NOTES	2016	2015
Revenue	3	52,734	42,069
Expenditure	4	(36,007)	(27,605)
Profit before depreciation, amortisation, financing and tax		16,727	14,464
Depreciation and amortisation	5	(2,377)	(2,302)
Profit before financing and tax		14,350	12,162
Finance income		187	822
Finance expense		(1,395)	(14)
Net finance (expense)/income	6	(1,208)	808
Profit before tax		13,142	12,970
Income tax expense	7	(3,534)	(3,605)
Profit attributable to the shareholders of the company		9,608	9,365
OTHER COMPREHENSIVE INCOME
Translation of international subsidiaries		78	41
Total comprehensive income
for the year		9,686	9,406
EARNINGS PER SHARE FROM PROFIT ATTRIBUTABLE TO ORDINARY EQUITY
HOLDERS OF THE PARENT (EXPRESSED IN DOLLARS PER SHARE)
Basic and diluted earnings per share	9	$0.13	$0.13

The accompanying notes form part of these financial statements.

S TAT E M E N T O F C O M P R E H E N S I V E I N C O M E / 7

S TAT E M E N T O F F I N A N C I A L P O S I T I O N _

AS AT 30 SEPTEMBER 2016

($000)	NOTES	2016	2015
CURRENT ASSETS
Cash and cash equivalents	13	18,818	12,372
Trade and other receivables	14	9,791	10,522
Total current assets		28,609	22,894
NON-CURRENT ASSETS
Property,plant and equipment	15	1,024	671
Goodwill	16	40,277	40,277
Intangibles	17	16,366	18,216
Deferred tax asset	8	1,914	983
Total non-current assets		59,581	60,147
Total assets		88,190	83,041
CURRENT LIABILITIES
Tradepayables and accruals	18	1,570	1,556
Deferred revenues		8,479	5,592
GSTpayable		501	248
Employee entitlements	19	3,299	1,709
Income taxpayable		972	1,345
Total current liabilities		14,821	10,450
NON-CURRENT LIABILITIES
Employee entitlements	19	334	282
Deferred tax liabilities	8	2,072	2,805
Total non-current liabilities		2,406	3,087
Total liabilities		17,227	13,537
Net assets		70,963	69,504
EQUITY
Share capital	10	60,396	60,396
Share basedpayment reserve	11	61	-.
Foreign currencytranslation reserve		240	162
Retained earnings	12	10,266	8,946
Total shareholders’ equity		70,963	69,504

The accompanying notes form part of these financial statements.

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S TAT E M E N T O F C H A N G E S I N E Q U I T Y _

FOR THE YEAR ENDED 30 SEPTEMBER 2016

			SHARE BASED
		SHARE	PAYMENT	RETAINED	TRANSLATION	TOTAL
($000)	NOTES	CAPITAL	RESERVE	EARNINGS	RESERVE	EQUITY
Balance as at 1 October 2014		60,396	-.	5,179	121	65,696
Profit attributable to the shareholders
of the company		-.	-.	9,365	-.	9,365
Other comprehensive income		-.	-.	-.	41	41
Total comprehensive income for the
year, net of tax		-.	-.	9,365	41	9,406
TRANSACTIONS WITH OWNERS:
Dividends paid		-.	-.	(5,598)	-.	(5,598)
Balance as at 30 September 2015		60,396	-.	8,946	162	69,504
Balance as at 1 October 2015		60,396	-.	8,946	162	69,504
Profit attributable to the shareholders
of the company		-.	-.	9,608	-.	9,608
Other comprehensive income		-.	-.	-.	78	78
Total comprehensive income for the year,
net of tax			-.	9,608	78.	9,686
TRANSACTIONS WITH OWNERS:
Share based payments	11	-.	61	-.	-.	61
Dividends paid		-.	-.	(8,288)	-.	(8,288)
Balance at 30 September 2016		60,396	61	10,266	240	70,963

The accompanying notes form part of these financial statements.

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S TAT E M E N T O F C A S H F L O W S _

FOR THE YEAR ENDED 30 SEPTEMBER 2016

($000)	NOTES	2016	2015
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers		55,242	44,753
Payments to suppliers and employees		(33,832)	(27,716)
Income tax paid		(5,651)	(3,813)
Net cash inflow from operating activities	27(a)	15,759	13,224
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment		(745)	(391)
Purchase of intangibles		(165)	-.
Net cash outflow from investing activities		(910)	(391)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of borrowings		-.	(6)
Net interest received		187	138
Dividends paid		(8,288)	(5,598)
Net cash (outflow) from financing activities		(8,101)	(5,466)
Net increase in cash held		6,748	7,367
Foreign currency translation adjustment		(302)	(244)
Cash at beginning of the financial year		12,372	5,249
Closing cash and cash equivalents		18,818	12,372

The accompanying notes form part of these financial statements.

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N O T E S T O T H E F I N A N C I A L S TAT E M E N T S _

FOR THE YEAR ENDED 30 SEPTEMBER 2016

1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 25 College Hill, Auckland 1011, New Zealand.

The financial statements presented are for Gentrack Group Limited and its subsidiaries (together ‘the Group’) for the year ended 30 September 2016. Last year comparatives are for the year ended 30 September 2015.

The consolidated financial statements of the Group for the year ended 30 September 2016 were authorised for issue in accordance with a resolution of the directors on 23 November 2016.

The 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.

(a) CHANGES IN ACCOUNTING POLICY

The accounting policies adopted are consistent with those of the previous year.

Certain comparatives have been updated to ensure consistency with current year presentation.

(b) BASIS OF PREPARATION

The financial statements 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’).

The Company 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). Both these acts became effective for financial years beginning on or after 1 April 2014, and the Financial Reporting Act 1993 was repealed with effect from this date.

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.

Presentation currency

The financial statements are presented in New Zealand dollars unless otherwise stated and all values are rounded to the nearest $1,000 (where rounding is applicable). The functional currency is New Zealand dollars (‘NZD’).

Use of estimate and judgements

In preparing the financial statements, management has to make certain judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue and expenses. The actual outcome may differ from these judgements, estimates and assumptions. Judgements, estimates and assumptions are reviewed on an ongoing basis and are based on historical experience and various other factors, including expectations about future events, which are believed to be reasonable under the circumstances. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

The significant judgements, estimates and assumptions made by management in the preparation of these financial statements are outlined below.

(i) Impairment of goodwill and other assets

The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 1(f). The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of assumptions. Refer to note 16 for details of these assumptions and the potential impact of changes to the assumptions. All other assets are reviewed for indicators or object evidence of impairment. If indicators or objective evidence exists, the recoverable amount is reviewed.

(ii) Revenue recognition

Revenue recognition involves certain revenue streams being recognised based on the stage of completion. This is discussed in more detail in note 3.

(iii) Doubtful debts

In providing for doubtful debts, management have used assumptions and estimates. The actual outcome may differ from the reported position.

(c) BASIS OF CONSOLIDATION

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 the 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.

The 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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N O T E S T O T H E F I N A N C I A L S TAT E M E N T S _

FOR THE YEAR ENDED 30 SEPTEMBER 2016

1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued...

Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control, potential voting rights that currently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group.

Transactions eliminated on consolidation

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

(d) SALES TAX

The Statement of Comprehensive Income and the Statement of Cash Flows have been prepared so that all components are stated exclusive of sales tax, except where sales tax is not recoverable. All items in the Statement of Financial Position are stated net of sales tax with the exception of receivables and payables, which include sales tax invoiced.

Commitments and contingencies are disclosed net of the amount of sales tax recoverable from, or payable to, the taxation authority.

Sales tax includes Goods and Services Tax (GST) and Value Added Tax (VAT) where applicable.

(e) FOREIGN CURRENCY TRANSLATIONS

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in New Zealand dollars ($) (the ‘presentation currency’), which is the Company’s functional currency. 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 costs.

The Group translates the results of its foreign operations from their functional currencies to the presentation currency of the Group 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.

(f) IMPAIRMENT

At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the 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.

(g) LOANS AND RECEIVABLES

The Group classifies its financial assets as loans and receivables. Management determines the classifications of its financial assets at initial recognition. The Group’s loans and receivables are nonderivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting date. These are classified as non-current assets. The Group’s loans and receivables comprise ‘trade and other receivables’ and cash and cash equivalents in the Statement of Financial Position. Loans and receivables are carried at amortised cost using the effective interest method. The Group assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired. Impairment testing of trade receivables is described in Note 14.

(h) PROVISIONS

The Group recognises a provision when it has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as an interest expense in the Statement of Comprehensive Income.

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N O T E S T O T H E F I N A N C I A L S TAT E M E N T S _

FOR THE YEAR ENDED 30 SEPTEMBER 2016

1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued...

(i) STANDARDS OR INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE AND RELEVANT TO THE GROUP

The International Accounting Standards Board has issued a number of standards, amendments and interpretations which are not yet effective and which may have an impact on the Group’s financial statements. These are detailed below. The Group has not applied these in preparing these financial statements and will apply each standard in the period in which it becomes mandatory:

(a) NZ IFRS 9 – Financial Instruments – Classification and Measurement

This standard addresses the classification, measurement and de-recognition of financial assets, financial liabilities, impairment of financial assets and hedge accounting, and will be effective for the year ended 30 September 2019.

(b) NZ IFRS 15 – Revenue from Contracts with Customers

This standard establishes the framework for revenue recognition, and will be effective for the year ended 30 September 2019.

(c) NZ IFRS 16 – Leases

This standard requires a lessee to recognise a lease liability reflecting the future lease payments and a ‘right-of-use asset’ for substantively all lease contracts, and will be effective for the year ended 30 September 2020.

The Group has not yet assessed the potential impact of the above standards.

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N O T E S T O T H E F I N A N C I A L S TAT E M E N T S _

FOR THE YEAR ENDED 30 SEPTEMBER 2016

2 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.

The Group currently operates in two business segments, utility billing software and airport management software, as at 30 September 2016. 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 the 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.

($000)	UTILITY	AIRPORT	TOTAL
GROUP – FOR THE YEAR ENDED 30 SEPTEMBER 2016
External revenue	44,770	7,964	52,734
Total expenditure	(30,771)	(5,236)	(36,007)
Segment contribution before depreciation, amortisation,
financingand tax	13,999	2,728	16,727
Depreciation and amortisation			(2,377)
Finance income			187
Finance expense			(1,395)
Income tax expense			(3,534)
Profit attributable to the shareholders of the company			9,608
GROUP – FOR THE YEAR ENDED 30 SEPTEMBER 2015
External revenue	35,621	6,448	42,069
Total expenditure	(23,159)	(4,446)	(27,605)
Segment contribution before depreciation, amortisation,
financingand tax	12,462	2,002	14,464
Depreciation and amortisation			(2,302)
Finance income			822
Finance expense			(14)
Income tax expense			(3,605)
Profit attributable to the shareholders of the company			9,365
($000)		2016	2015
REVENUE BY DOMICILE OF ENTITY
Australia		25,436	19,849
New Zealand		27,298	22,220
		52,734	42,069
REVENUE BY DOMICILE OF CUSTOMER
Australia		26,618	21,891
New Zealand		9,939	10,133
United Kingdom		12,543	7,152
Rest of World		3,634	2,893
		52,734	42,069

Revenues of approximately $14,395,000 (2015: $4,987,000) are derived from single customers and their subsidiaries from which revenue is 10% or more of the Group’s revenue. These revenues are attributable to the utilities business segment.

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N O T E S T O T H E F I N A N C I A L S TAT E M E N T S _

FOR THE YEAR ENDED 30 SEPTEMBER 2016

3 REVENUE

Revenues are recognised at the fair value of the consideration received or receivable.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities as described below. The Group bases its estimates on the historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Revenue is recognised for the major business activities as follows:

SOFTWARE LICENCE FEE REVENUE

Revenue from licence fees due to software sales is recognised on the transferring of significant risks and rewards of control of the licensed software under agreement between the Company and the customer.

IMPLEMENTATION AND CONSULTING SERVICES REVENUE FOR LICENSED SOFTWARE

Revenue from implementation and consulting services attributable to licensed software is recognised based on the stage of completion, typically in accordance with the achievement of contract milestones and/or hours expended, and forecast.

POST SALES CUSTOMER SUPPORT REVENUE FOR LICENSED SOFTWARE

Post sales customer support (‘PSCS’) revenue for licensed software comprises fees for ongoing upgrades, minor software revisions and helpline support. PSCS revenue is allocated between annual fees for helpline support and fees for rights of access to ongoing upgrades and minor software patches. At each reporting date, the unearned portion of the revenue is assessed and deferred to be recognised over the period of service.

PROJECT SERVICES REVENUE

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

DEFERRED REVENUES

Consideration received prior to the goods or service being rendered is recognised in the Statement of Financial Position as deferred revenues.

ACCRUED INCOME

Revenue for which goods or services have been rendered but invoices have not been issued is recognised within the Statement of Financial Position as accrued income and included within trade and other receivables.

GOVERNMENT GRANTS

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the 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.

($000)	2016	2015
OPERATING REVENUE:
Recurring	14,424	12,993
Non-recurring	3,626	3,467
Professional services	34,172	25,240
	52,222	41,700
OTHER INCOME:
Government grants	512	369
Total revenue	52,734	42,069

Government grants revenue relates to a 3 year agreement for ‘Technology Development Grant Funding’ with Callaghan Innovations. This is effective from 1 January 2014 to 31 December 2016.

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N O T E S T O T H E F I N A N C I A L S TAT E M E N T S _

FOR THE YEAR ENDED 30 SEPTEMBER 2016

4 EXPENDITURE

($000)	2016	2015
Profit before income tax includes the followingspecific expenses:
Employee entitlements	24,813	19,156
Superannuation costs	765	611
Staff recruitment	669	162
Thirdpartycustomer-related costs	1,882	1,984
Occupancycosts	1,659	1,706
Travel related	1,060	811
Advertisingand marketing	985	746
Consultingand subcontracting	1,998	835
Communication and office administration	718	715
Doubtful debts	299	(36)
Directors’ fees	332	290
Auditors’ remuneration (1)	290	312
Other operatingexpenses	537	313
Total expenditure	36,007	27,605
RESEARCH AND DEVELOPMENT EXPENSES
Expenditure on research and development	2,567	1,887

Research and development expenses include payroll overhead, employee benefits and other employee-related costs associated with product development. Technological feasibility for software products is generally reached shortly before products are released for commercial sale to customers. Costs incurred after technological feasibility is established are not material, and accordingly, all research and development costs are expensed when incurred.

Research and development expenses include a portion of employee costs shown above, directly attributable to research and development activities. This excludes expenses relating to customer paid development.

($000)	2016	2015
(1) AUDITORS’ REMUNERATION
KPMG – audit fees	130	120
KPMG – review fees	25	25
KPMG – taxation	120	132
KPMG – other services	15	35
Total feespaid to auditors	290	312

In 2016, other services of $15,000 included work undertaken in relation to transfer pricing matters and other advisory work (2015: $35,000).

5 DEPRECIATION AND AMORTISATION

($000)	2016	2015
Depreciation	362	285
Amortisation	2,015	2,017
	2,377	2,302

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N O T E S T O T H E F I N A N C I A L S TAT E M E N T S _

FOR THE YEAR ENDED 30 SEPTEMBER 2016

6 NET FINANCE COST

Finance income comprises interest income, changes in the fair value of financial assets at fair value through the Statement of Comprehensive Income, foreign currency gains, and gains on hedging instruments that are recognised in the Statement of Comprehensive Income. Interest income is recognised as it accrues, using the effective interest method.

Finance expenses comprise interest expense on borrowings, foreign currency losses, changes in the fair value of the financial assets at fair value through the Statement of Comprehensive Income, impairment losses recognised on the financial assets (except for trade receivables), and losses on hedging instruments 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.

($000)	2016	2015
FINANCE INCOME
Interest income	187	152
Foreign exchange gains – realised	-.	842
	187	994
FINANCE EXPENSES
Interest expense	-.	(14)
Foreign exchange losses – realised	(348)	-.
Foreign exchange losses – unrealised1	(1,047)	(172)
	(1,395)	(186)
Net finance (expense)/income	(1,208)	808

1Foreign exchange losses included a $623,000 (2015: $130,000) unrealised loss on intercompany loans.

7 INCOME TAX EXPENSES

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.

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 consolidated financial statements.

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

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. 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.

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 the 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.

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

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FOR THE YEAR ENDED 30 SEPTEMBER 2016

7 INCOME TAX EXPENSES (CONTINUED)

($000)	2016	2015
(a) RECONCILIATION OF EFFECTIVE TAX RATE
Profit before tax for theyear	13,142	12,970
Income tax usingthe Company’s domestic tax rate of 28%	3,680	3,632
Non-deductible expense	14	18
Difference in tax rates of overseas subsidiaries	35	28
(Over)provided inpriorperiods	(195)	(73)
Income tax expense	3,534	3,605
($000)	2016	2015
(b) INCOME TAX CHARGE IS REPRESENTED AS FOLLOWS:
Taxpayable in respect of currentyear	5,393	4,665
Deferred tax benefit	(1,664)	(987)
(Over)provided inpriorperiods	(195)	(73)
	3,534	3,605

8 DEFERRED TAX ASSET/(LIABILITY)

($000)	2016	2015
RECOGNISED DEFERRED TAX ASSETS
Deferred tax assets are attributable to the following:
Trade and other receivables	(99)	(219)
Deferred revenue	988	470
Provisions including employee entitlements and doubtful trade debtors	1,025	712
Other	-.	20
Total deferred tax asset	1,914	983
RECOGNISED DEFERRED TAX LIABILITIES
Deferred tax liabilities are attributable to the following:
Intangible assets	(2,072)	(2,805)
Total deferred tax liabilities	(2,072)	(2,805)

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 and 30% for Australian entities.

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N O T E S T O T H E F I N A N C I A L S TAT E M E N T S _

FOR THE YEAR ENDED 30 SEPTEMBER 2016

8 DEFERRED TAX ASSET/(LIABILITY) (CONTINUED)

Movement in temporary timing differences during the year:

		TEMPORARY		TEMPORARY
	BALANCE	MOVEMENTS	BALANCE	MOVEMENTS	BALANCE
($000)	1 OCT 2014	RECOGNISED	30 SEP 2015	RECOGNISED	30 SEP 2016
Trade and other receivables	(332)	113	(219)	120	(99)
Intangible assets	(3,284)	479	(2,805)	734	(2,071)
Deferred revenue	266	204	470	518	988
Provisions including employee
entitlements and doubtful trade debtors	613	99	712	312	1,024
Other	(72)	92	20	(20)	-.
Total	(2,809)	987	(1,822)	1,664	(158)
IMPUTATION CREDITS
($000)				2016	2015
NZ Imputation credits available for use in subsequent reporting periods				3,384	1,781

9 EARNINGS PER SHARE

The 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 all dilutive potential ordinary shares, which comprise performance share rights grnted to employees. Potential ordinary share are treated as dilutive when, and only when, their conversion to ordinary shares would decrease EPS or increase the profit per share.

($000)		2016	2015
Profit attributable to the shareholders of the company	($000)	9,608	9,365
Basic weighted average number of ordinary shares issued	(000)	72,699	72,699
Basic and diluted earnings per share (dollars)		0.13	0.13

10 CAPITAL

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 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 the Group.

	SHARES	ISSUED	SHARE	CAPITAL
(000)	2016	2015	2016	2015
Ordinary Shares	72,699	72,699	60,396	60,396

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.

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FOR THE YEAR ENDED 30 SEPTEMBER 2016

11 EMPLOYEE SHARE PLAN

The Group operates an equity based share rights scheme for selected senior employees. If the unlisted performance share rights vest, ordinary shares will be issued to the employees at or around the vesting date. The issue price of the shares was determined by reference to the 10 trading day volume weighted average price of shares traded on the NZX immediately following the announcement of the annual financial results to which the commencement date of the share rights performance period relates.

Vesting is conditional on the completion of the necessary years’ service to the vesting date and performance goals over the vesting period.

The share rights scheme is an equity settled scheme and is measured at fair value at the date of the grant. The fair value determined at the grant date of the equity-settled share based payments is expensed over the vesting period, based on the Group’s estimate that the shares will vest. These options were valued using the Black Scholes valuation model and the option cost for the year ending 31 March 2016 of $61,000 has been recognised in the Group’s Statement of Comprehensive Income for that period (2015: Nil).

Details of the unlisted performance share rights scheme are:

Commencement date	2 May2016
Issueprice	2.2441
Vestingdate	31 January2019
Granted	152,400
% of shares vested	0%

The share rights scheme commenced in May 2016, so there is no prior year comparative information.

12 RETAINED EARNINGS

($000)	2016	2015
Opening balance	8,946	5,179
Profit for theyear	9,608	9,365
Dividendpaid	(8,288)	(5,598)
Balance at 30 September	10,266	8,946

13 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.

($000)	2016	2015
Bank balances	18,813	12,367
Cash on hand	5	5
	18,818	12,372

14 TRADE AND OTHER RECEIVABLES

The 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. A provision for impairment of trade receivables is established when there is objective evidence that the 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 through the use of a provision account, 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 provision account for receivables. Subsequent recoveries of amounts previously written off are credited against the Statement of Comprehensive Income.

($000)	2016	2015
Trade debtors	5,921	6,401
Provision for doubtful debts	(115)	(395)
Provision for warrantyclaims	(15)	(15)
Work inprogress/accrued debtors	3,235	3,276
Sundryreceivables andprepayments	765	1,255
	9,791	10,522

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N O T E S T O T H E F I N A N C I A L S TAT E M E N T S _

FOR THE YEAR ENDED 30 SEPTEMBER 2016

14 TRADE AND OTHER RECEIVABLES (CONTINUED)

(a) CREDIT RISK

The aging of the Group’s trade debtors at the reporting data was as follows:

($000)		GROSS		ALLOWANCE FOR DOUBTFUL DEBTS	ALLOWANCE FOR DOUBTFUL DEBTS
	2016		2015	2016	2015
Notpast due	4,922		3,817	-.	-.
Past due 1-30 days	555		1,197	-.	-.
Past due 31-60 days	240		323	-.	-.
Past due 61-90 days	75		95	-.	-.
Past due over 90 days	129		969	115	395
	5,921		6,401	115	395

The movement in the provision for doubtful debts during the year was as follows:

($000)	2016	2015
Openingbalance	395	448
Increase inprovision	387	-.
Write back ofprovision	-.	(36)
Effect of movement in foreign exchange	(77)	68
Bad debt written off	(590)	(85)
Balance at 30 September	115.	395

15 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:

• Office equipment, fixtures and fittings 7 years

• • Computer equipment 3 to 7 years • Leasehold improvements Terms 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.

($000)	FURNITURE &	COMPUTER	LEASEHOLD	2016
	EQUIPMENT	EQUIPMENT	IMPROVEMENTS	TOTAL
YEAR ENDED 30 SEPTEMBER 2016
Openingbalance	162	327	182	671
Additions	166	407	175	748
Disposals	(10)	(3)	(7)	(20)
Depreciation charge	(52)	(241)	(69)	(362)
Effect of movement in foreign exchange	(6)	(1)	(6)	(13)
Closingnet book amount	260	489	275	1,024
Cost	827	1,626	615	3,068
Accumulated depreciation	(567)	(1,137)	(340)	(2,044)
Closingnet book amount	260	489	275	1,024

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S / 2 1

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S _

FOR THE YEAR ENDED 30 SEPTEMBER 2016

15 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

($000)	FURNITURE &	COMPUTER	LEASEHOLD	2015
	EQUIPMENT	EQUIPMENT	IMPROVEMENTS	TOTAL
YEAR ENDED 30 SEPTEMBER 2015
Opening balance	179	158	228	565
Additions	32	343	17	392
Depreciation charge	(48)	(174)	(63)	(285)
Effect of movement in foreign exchange	(1)	-.	-.	(1)
Closing net book amount	162	327	182	671
Cost	699	1,440	461	2,600
Accumulated depreciation	(537)	(1,113)	(279)	(1,929)
Closing net book amount	162	327	182	671

16 GOODWILL

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

($000)	2016	2015
Opening balance	40,277	40,277
Net book amount arising on acquisition	-.	-.
Closing net book amount	40,277	40,277
Goodwill allocated to Utility	37,377	37,377
Goodwill allocated to Airport	2,900	2,900
Net book amount	40,277	40,277

The goodwill arising out of the acquisition in 2012 has been allocated to the two cash generating units (CGUs) identified within the Group, namely the Utility and Airport operating units.

The tests conducted for impairment on these CGUs have been based on value-in-use calculations using projections derived from the Group’s five year forecast. The forecast has been based on management’s consideration of past performance and its assessment of future expectations.

In performing the value-in-use calculations for the CGUs the Group has applied a post-tax discount rate of 10.7% (2015: 13.0%). The discount rate used reflects specific risks associated with business conducted within the CGU, including those risks associated with the countries in which the Group operates. The growth rate used to extrapolate cash flows beyond the 5 year forecast is 2.5% (2015: 2.5%). This growth rate is consistent with forecast conducted in similar industry reports.

During the year ended 30 September 2016 no impairment arose as a result of the review of goodwill. The recoverable amounts of the two CGUs are greater than the carrying amounts and, based on sensitivity analysis performed, no foreseeable changes in the assumptions would cause the carrying amounts of the CGUs to exceed their recoverable amounts.

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N O T E S T O T H E F I N A N C I A L S TAT E M E N T S _

FOR THE YEAR ENDED 30 SEPTEMBER 2016

17 INTANGIBLE ASSETS

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 ASSET

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

AMORTISATION

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

• • Customer relationships 10 years • Internal use software 3 years

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

($000)	SOFTWARE	CUSTOMER	BRAND	TRADEMARKS	2016
		RELATIONSHIPS	NAMES		TOTAL
YEAR ENDED 30 SEPTEMBER 2016
Openingbalance	7,919	5,257	5,024	16	18,216
Additions	165	-.	-.	-.	165
Amortisation charge	(1,214)	(799)	-.	(2)	(2,015)
Closingnet book amount	6,870	4,458	5,024	14	16,366
Cost	12,241	7,986	5,024	22	25,273
Accumulated amortisation	(5,371)	(3,528)	-.	(8)	(8,907)
Net book amount	6,870	4,458	5,024	14	16,366
($000)	SOFTWARE	CUSTOMER	BRAND	TRADEMARKS	2015
		RELATIONSHIPS	NAMES		TOTAL
YEAR ENDED 30 SEPTEMBER 2015
Openingbalance	9,134	6,057	5,024	18	20,233
Additions	-.	-.	-.	-.	-.
Amortisation charge	(1,215)	(800)	-.	(2)	(2,017)
Closingnet book amount	7,919	5,257	5,024	16	18,216
Cost	12,075	7,986	5,024	22	25,107
Accumulated amortisation	(4,156)	(2,729)	-.	(6)	(6,891)
Net book amount	7,919	5,257	5,024	16	18,216

18 TRADE PAYABLES AND ACCRUALS

The 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 to the Group 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.

($000)	2016	2015
Trade creditors	683	766
Sundryaccruals	887	790
	1,570	1,556

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FOR THE YEAR ENDED 30 SEPTEMBER 2016

19 EMPLOYEE ENTITLEMENTS

Liabilities for wages and salaries, 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.

($000)	2016	2015
CURRENT
Liabilityfor longservice leave	346	383
Short term employee benefits	2,953	1,326
	3,299	1,709
NON-CURRENT
Liabilityfor longservice leave	334	282
	334	282

20 INTEREST BEARING LOANS AND BORROWINGS

FUNDING ACTIVITIES

The Group currently maintains a revolving facility with ANZ, on the terms outlined below.

Revolving facility

The Group has two revolving facilities with ANZ Bank, one in New Zealand (NZD$3.1m) and one in Australia (AUD$0.6m), both of which are subject to annual review. The purpose of the facility is to provide funding for general working capital management. Interest is payable at a rate calculated as a base rate plus a pre-determined margin.

The Group has provided a General Security Deed over all the present and after-acquired property of all entities in the consolidated Group.

At 30 September 2016 there were nil balances drawn down.

21 FINANCIAL RISK MANAGEMENT

The Group’s principal financial instruments include trade receivables and payables, cash and short term deposits, borrowings and loans.

As a result of the Group’s operations and sources of finance, it is exposed to credit risk, liquidity risk and market risks which include foreign currency risk, commodity price risk and interest risk. These risks are described below.

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Group’s risk management policies are established to identify and analyse the financial risks faced by the 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 the Group’s activities.

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis for measurement and the basis upon which income and expenses are recognised, in respect of each class of financial asset and financial liability are disclosed in the Statement of Accounting Policies and notes to the financial statements.

The Group holds the following financial instruments:

($000)		2016			2015
	FAIR VALUE	LOANS AND	OTHER	FAIR VALUE	LOANS AND	OTHER
	THROUGH	RECEIVABLES	AMORTISED	THROUGH	RECEIVABLES	AMORTISED
	PROFIT & LOSS		COST	PROFIT & LOSS		COST
FINANCIAL ASSETS
Cash and cash equivalents	18,818	-.		12,372	-.	-.
Trade and other receivables	-.	5,806		-.	6,006	-.
	18,818	5,806		12,372	6,006	-.
FINANCIAL LIABILITIES
Borrowings	-.	-.		-.	-.	-.
Trade and otherpayables	-.	-.	683	-.	-.	766
	-.	-.	683	-.	-.	766

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N O T E S T O T H E F I N A N C I A L S TAT E M E N T S _

FOR THE YEAR ENDED 30 SEPTEMBER 2016

21 FINANCIAL RISK MANAGEMENT (CONTINUED)

(a) CREDIT RISK

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

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The creditworthiness of a customer or counter party is determined by a number of 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 the 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 the Group’s trade receivables is represented by regular turnover of product and billing of customers based on the Group’s contractual payment terms.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables.

The carrying amount of the Group’s financial assets represents the maximum credit exposure as summarised above.

Refer to Note 14 for an aging profile for the Group’s trade receivables at reporting date.

(b) LIQUIDITY RISK

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they become due and payable. The 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 the Group’s reputation.

The Group has sufficient cash to meet its requirements in the foreseeable future. The Group has no debt.

Working capital is supported by a NZD$3.1m (New Zealand) and a AUD$0.6m (Australian) working capital facility, both of which were unused as at 30 September 2016 (2015: $nil). Included in working capital is deferred revenues of $8.5m (2015: $5.6m) which are not repayable in cash.

Maturities of financial liabilities

The following table details the Group’s contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements, as at the reporting date:

2016 ($000)	1 YEAR OR	OVER 1 TO 5	OVER 5		TOTAL	CARRYING
	LESS	YEARS	YEARS		CONTRACTUAL	AMOUNT
					CASH FLOWS	LIABILITIES
NON-DERIVATIVE FINANCIAL LIABILITIES
Trade and otherpayables	683	-.		-.	683	683
	683	-.		-.	683	683
2015 ($000)	1 YEAR OR	OVER 1 TO 5	OVER 5		TOTAL	CARRYING
	LESS	YEARS	YEARS		CONTRACTUAL	AMOUNT
					CASH FLOWS	LIABILITIES
NON-DERIVATIVE FINANCIAL LIABILITIES
Trade and otherpayables	766	-.		-.	766	766
	766	-.		-.	766	766

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N O T E S T O T H E F I N A N C I A L S TAT E M E N T S _

FOR THE YEAR ENDED 30 SEPTEMBER 2016

21 FINANCIAL RISK MANAGEMENT (CONTINUED)

(c) MARKET RISK

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the 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

The Group is exposed to currency risk on sales transactions that are denominated in a currency other than the respective functional currencies of Group entities, primarily the Australian Dollar (AUD), Hong Kong Dollar (HKD), Pound Sterling (GBP), EURO (EUR) and US Dollar (USD).

Foreign exchange rates applied against the New Zealand Dollar, at 30 September are as follows:

	2016	2015
AUD	0.9628	0.8972
CAD	0.9558	0.8398
FJD	1.4911	1.3590
HKD	5.6627	4.9095
GBP	0.5553	0.4127
EUR	0.6514	0.5637
USD	0.7301	0.6335

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

2016 ($000)	AUD	CAD	FJD	GBP	EUR	USD	HKD
Cash and cash equivalents	7,984	-.	-.	1,197	-.	21	-.
Trade and other receivables	1,865	1	34	1,515	264	74	60.
Trade and other payables	(88)	(14)	-.	(144)	(48)	(10)	(4).
	9,761	(13)	34	2,567	216	85	56.
2015 ($000)	AUD	CAD	FJD	GBP	EUR	USD	HKD
Cash and cash equivalents	2,167	-.	-.	403	-.	229	-.
Trade and other receivables	2,615	16	91	1,029	61	147	278
Trade and other payables	(276)	-.	-.	(197)	(29)	(23)	-.
	4,506	16	91	1,235	32	353	278

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N O T E S T O T H E F I N A N C I A L S TAT E M E N T S _

FOR THE YEAR ENDED 30 SEPTEMBER 2016

21 FINANCIAL RISK MANAGEMENT (CONTINUED)

Summarised sensitivity analysis

The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to foreign currency risk.

2016 ($000)		FOREIGN CURRENCY RISK	FOREIGN CURRENCY RISK	1
		-10%		+10%
	PROFIT	EQUITY	PROFIT		EQUITY
Cash and cash equivalents	1,022	1,022	(837)		(837)
Trade and other receivables	424	424	(347)		(347)
Trade and other payables	35	35	85		85
Total increase/(decrease)	1,481	1,481	(1,098)		(1,098)
2015 ($000)		FOREIGN CURRENCY RISK		1
		-10%		+10%
	PROFIT	EQUITY	PROFIT		EQUITY
Cash and cash equivalents	311	311	(254)		(254)
Trade and other receivables	470	470	(385)		(385)
Trade and other payables	(26)	(26)	74		74
Total increase/(decrease)	755	755	(565)		(565)

1 The foreign currency sensitivity above represents a 10% decrease and increase in spot foreign exchange rates.

The Group was not exposed to any material interest rate risk during the current or previous year.

(d) CAPITAL MANAGEMENT

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

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

(e) FAIR VALUE MEASUREMENT

The carrying amounts of the Group’s financial assets and liabilities approximate their fair value due to their short maturity periods or fixed rate nature.

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S / 2 7

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S _

FOR THE YEAR ENDED 30 SEPTEMBER 2016

22 RELATED PARTIES

IDENTITY OF RELATED PARTIES

The Group has related party relationships with its subsidiaries. The related party transactions primarily consist of the purchase and sale of software products, provision of technical support, loan advances and repayments, consultancy services and management charges on commercial terms. Related parties to the Group are as follows:

Entity	Principal Activity
Gentrack Group Australia Pty Limited	Australian holding company
Talgentra Pacific Group Pty Limited	Australian holding company
Gentrack Pty Limited	Australian operating company – software development, sales and support
Talgentra NZ Holdings Limited1	New Zealand holding company
Gentrack Limited	New Zealand operating company – software development, sales and support
Gentrack UK Limited	United Kingdom dormant company

Management fees of $755,000 (2015: $767,000) were charged by Gentrack Limited, the New Zealand operating company, to related parties during the year to cover management type activities.

1 Talgentra NZ Holdings Limited was amalgamated into Gentrack Group Ltd on 1 August 2016.

23 OPERATING LEASE COMMITMENTS

($000)	2016	2015
NON-CANCELLABLE OPERATING LEASE
COMMITMENTS DUE:
Not later than one year	1,003	1,089
Later than one year, not later than five years	1,899	1,800
Later than five years	572	-.
	3,474	2,889

The Group leases premises, plant and equipment. Operating leases held over properties give the Group the right to renew the lease subject to redetermination of the lease rental by the lessor. There are no renewal options or options to purchase in respect of plant and equipment held under operating leases.

24 KEY MANAGEMENT PERSONNEL

Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, and include the Directors, the Chief Executive, his direct reports. This year the assessment of the key management personnel was expanded to include the Chief Executive’s direct reports. The 2015 comparative has been updated to reflect this change in definition. The following table summarises remuneration paid to key management personnel.

($000)	2016	2015
Salaries, bonuses and other benefits	2,392	2,376
Share based payments	61	-.
Post employment benefits	-.	25
Directors’ fees	322	290
Total salaries and benefits	2,775	2,691

OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL

There were no other transactions with key management personnel during the year.

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N O T E S T O T H E F I N A N C I A L S TAT E M E N T S _

FOR THE YEAR ENDED 30 SEPTEMBER 2016

25 CAPITAL COMMITMENTS

The capital expenditure commitments as at 30 September 2016 are $nil (2015: $nil).

26 CONTINGENCIES

ANZ New Zealand has provided the following guarantees on behalf of the Gentrack Group: NZD$262,640 (AUD$245,700) to Australia and New Zealand Banking Group. This guarantee is open ended. NZD$2,137,894 (AUD$2,000,000) to Australia and New Zealand Banking Group. This guarantee expires on 10 May 2017. NZD$178,801 (HKD$994,528) to ANZ Hong Kong. This guarantee expires on 24 September 2019. NZD$90,068 (EUR57,509) to Isavia Limited. This guarantee expires on 1 April 2017.

NZD$75,000 to NZX Limited. This guarantee has no expiry date.

27 CASH FLOW INFORMATION

($000)	2016	2015
(a) RECONCILIATION OF OPERATING CASH FLOWS WITH REPORTING PROFIT AFTER TAX:
Profit after tax	9,608	9,365
Add/(less) non-cash items
Deferred tax	(1,705)	(979)
Doubtful debts	299	(36)
Unrealised loss on foreign exchange transactions	1,047	172
Share basedpayments	61	-.
Other non-cash items	14	(1)
Depreciation and amortisation	2,377	2,302
	11,701	10,823
Add/(less) movements in other working capital items:
(Increase)/decrease in trade and other receivables	(360)	199
(Decrease)/increase in taxpayable	(411)	610
Increase/(decrease) in GSTpayable	265	(96)
Increase in deferred revenue	3,010	1,318
Increase in employee entitlements	1,696	381
Increase in tradepayables and accruals	45	127
	15,946	13,362
Items classified as financing activity
Net finance (income)	(187)	(138)
Net cash inflow from operating activities	15,759	13,224
(b) BANK FACILITIES:
Bank facility	3,623	3,672
Unused bank facility	3,623	3,672

28 EVENTS SUBSEQUENT TO BALANCE DATE

A final dividend of $5,597,862 ($0.077 per share) was declared on 23 November 2016 for the year ended 30 September 2016, and will be paid on 16 December 2016. During the year an interim dividend of $3,053,379 ($0.042 per share) was paid on 21 June 2016.

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S / 2 9

D I S C L O S U R E S _

ENTRIES RECORDED IN THE INTERESTS REGISTER

The Company maintains an Interest Register in accordance with the Companies Act 1993 and the Securities Markets Act 1988. The following are particulars of entries made in the Interests Register for the period 1 October 2015 to 30 September 2016.

DIRECTORS’ INTERESTS

Directors disclosed interest, or cessation of interest, in the following entities pursuant to section 140 of the Companies Act 1993 during the year ended 30 September 2016.

DIRECTOR/ENTITY	RELATIONSHIP
John Clifford
JCVC Pty Limited	Director
Uplands GroupPtyLimited in its capacityas trustee of the Uplands GroupTrust	Director
James Docking
Jametti Limited	Director
Leigh Warren
Warren FamilyBusiness PtyLimited in its capacityas trustee of the Warren FamilyBusiness Superannuation Fund	Director
Graham Shaw
PushpayHoldings Ltd	Director

SHARE DEALINGS OF DIRECTORS

Directors disclosed the following acquisitions and disposals of relevant interests in Gentrack shares during the year ended 30 September 2016.

			NUMBER OF
	DATE OF	CONSIDERATION	SHARES ACQUIRED/
SHARES	ACQUISITION/DISPOSAL	PER SHARE	(DISPOSED)
Graham Shaw	27 November 2015	$2.24	8,333
Jametti Ltd (James Docking)	3 June 2016	$2.80	(2,000,000)
JCVC Pty Ltd (John Clifford)	8 June 2016	AUD$2.75	(821,315)
Uplands Group Pty Ltd (John Clifford)	8 June 2016	AUD$2.75	821,315

SHAREHOLDINGS OF DIRECTORS AT 30 SEPTEMBER 2016

		2016	2015
	TYPE OF HOLDING	NUMBER OF SHARES	NUMBER OF SHARES
John Clifford	Beneficial Interest	9,151,374	9,151,374
AndyCoupe	Held Personally	20,833	20,833
James Docking	Beneficial Interest	5,358,196	7,358,196
David Ingram1	Held Personally	50,000	50,000
Graham Shaw	Held Personally	50,000	41,666
Leigh Warren	Beneficial Interest	629,184	629,184

1 David Ingram is a Director of the following subsidiary companies: Gentrack Limited, Gentrack Pty Limited, Gentrack Group Australia Pty Limited, Gentrack UK Limited, Talgentra NZ Holdings Limited, Talgentra Pacific Group Pty Limited.

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D I S C L O S U R E S _

REMUNERATION OF DIRECTORS

Details of the total remuneration of, and the value of other benefits received by, each Director of Gentrack Group Limited during the financial year ended 30 September 2016 are as follows:

	2016	2016	2015	2015
	FEES	REMUNERATION	FEES	REMUNERATION
John Clifford	100,000	-.	100,000	-.
AndyCoupe	60,000	-.	60,000	-.
James Docking1	42,500	128,797	-.	400,897
Graham Shaw2	70,000	-.	70,000	-.
Leigh Warren	60,000	-.	60,000	-.
	332,500	128,797	290,000	400,897

1 James Docking, now a Non-executive Director, was an Executive Director until he retired as CEO on 15 January 2016 and received remuneration from Gentrack in the form of a salary and short-term incentives until this date.

2 Graham Shaw was paid $60,000 for his role as Director and $10,000 for his role as the chair of the Audit and Risk Management Committee.

EMPLOYEE REMUNERATION

The number of current employees of the parent and subsidiaries receiving remuneration and benefits above $100,000 in the year ended 30 September 2016 are set out in the table below:

REMUNERATION	NUMBER OF EMPLOYEES
$100,001 – $110,000	14
$110,001 – $120,000	7
$120,001 – $130,000	7
$130,001 – $140,000	7
$140,001 – $150,000	2
$150,001 – $160,000	4
$160,001 – $170,000	3
$170,001 – $180,000	2
$180,001 – $190,000	2
$190,001 – $200,000	1
$200,001 – $210,000	1
$210,001 – $220,000	2
$230,001 – $240,000	1
$250,001 – $260,000	1
$260,001 – $270,000	1
$270,001 – $280,000	1
$330,001 - $340,000	1
Total	57

The analysis above includes the remuneration and benefits paid to employees, in the relevant bandings, where their annual remuneration and benefits exceed $100,000.

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D I S C L O S U R E S _

ANALYSIS OF SHAREHOLDING AT 30 SEPTEMBER 2016

SIZE OF HOLDING	NUMBER OF	FULLY PAID ORDINARY SHARES	% OF ISSUED
	HOLDERS	NUMBER OF SHARES1	CAPITAL
1 – 1,000	541	339,175	0%
1,001 – 5,000	1,025	2,878,309	4%
5,001 – 10,000	280	2,211,455	3%
10,0001 – 100,000	213	4,805,176	7%
100,001 and over	36	62,465,395	86%
TOTAL	2,095	72,699,510	100%

1 The total number of shares on issue as at 30 September 2016 was 72,699,510.

TWENTY LARGEST SHAREHOLDERS AT 30 SEPTEMBER 2016

The twenty largest shareholders of fully paid ordinary shares as at 30 September 2016 were:

NAME	NUMBER OF ORDINARY	% OF ISSUED
	SHARES HELD	SHARE CAPITAL
Uplands GroupPtyLimited	8,052,689	11.08
Tea Custodians Limited1	5,853,786	8.05
Jametti Limited	5,358,196	7.37
HSBC Nominees (New Zealand) Limited1	5,064,964	6.97
Nigel Peter Farleyand Richard John Burrell	4,712,661	6.48
J P Morgan Nominees Australia Limited	4,401,230	6.05
Roy Desmond Grant, Nina Catherine Maria Grant and
Adrienne Alexandra Wigmore	2,620,000	3.6
National Nominees Limited	2,353,559	3.24
Accident Compensation Corporation1	2,342,405	3.22
HSBC Nominees (New Zealand) Limited1	2,277,671	3.13
RBC Investor Services Australia Nominees PtyLtd	1,883,553	2.59
Terence De Montalt Maude and WendyFayWood	1,850,000	2.54
BNP Paribas Noms PtyLtd	1,500,000	2.06
Custodial Services Limited	1,254,485	1.73
Jcvc PtyLtd	1,098,685	1.51
Guardian Nominees No 2 Ltd1	865,574	1.19
JP Morgan Chase Bank1	839,683	1.16
Citibank Nominees (NZ) Limited1	623,402	0.86
Cogent Nominees (NZ) Limited1	613,046	0.84
Cogent Nominees Limited1	561,722	0.77

1 These shareholdings are held through New Zealand Central Securities Depository Limited (NZCSD) which allows electronic trading of securities to members.

The percentage shareholding of the 20 largest shareholders of Gentrack Group Limited fully paid ordinary shares was 74%.

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D I S C L O S U R E S _

SUBSTANTIAL SHAREHOLDERS AS AT 30 SEPTEMBER 2016

According to notices given under the Securities Markets Act 1988, the following persons were Substantial Shareholders in Gentrack Group Limited at 30 September 2016 in respect of the number of voting securities set opposite their names.

NAME	NUMBER OF ORDINARY	% OF ISSUED
	SHARES HELD	SHARE CAPITAL
First NZ Capital Group Limited	4,914,094	6.7
Uplands Group Pty Limited as trustees of Uplands Group Trust, JCVC Pty Limited as
trustees of JCVC Superannuation Fund, John Clifford and Valerie Clifford	9,151,374	12.6
Jametti Limited as trustees of the Fraxinus Aurea Trust	5,358,196	7.4
Nigel Peter Farley and Richard John Burrell as trustees of the Nigel Farley Family Trust	4,712,661	6.5
Mawer Investment Management Limited	5,719,847	7.8
Pie Funds Management Limited	4,344,000	6.0

Perpetual Limited ceased to be a substantial shareholder on 2 September 2016 and submitted a revised notice to ASX on 7 September 2016.

The total number of issued voting shares of Gentrack Group Limited at 30 September 2016 was 72,699,510. Where voting at a meeting of the shareholders is by voice or show of hands, every shareholder present in person or by representative has one vote, and on a poll, every shareholder present in person, or by representative has one vote for each fully paid ordinary share in the Company.

At 30 September 2016, there were 21 shareholders holding marketable parcels of less than $500.

SUBSIDIARY COMPANY DIRECTORS

The following people held office as Directors of subsidiary companies at 30 September 2016:

Gentrack Limited	John Clifford, Ian Black, David Ingram*
Talgentra NZ Holdings Limited1	John Clifford, Ian Black, David Ingram*
Gentrack Pty Limited	John Clifford, Ian Black, David Ingram
Gentrack Group Australia Pty Limited	John Clifford, Ian Black, David Ingram
Talgentra Pacific Group Pty Limited	John Clifford, Ian Black, Leigh Warren, David Ingram*
Gentrack UK Limited	Ian Black, David Ingram

Directors of the company’s subsidiaries do not receive any remuneration or other benefits in respect of their appointments.

Ian Black was appointed Director of the company’s subsidiaries on 27 April 2016.

*David Ingram was appointed Director on 27 April 2016

James Docking resigned from all six subsidiaries on 2 May 2016.

1 Talgentra NZ Holdings Limited was amalgamated into Gentrack Group Ltd on 1 August 2016.

DONATIONS

The Company made donations of $10,399 during the year ended 30 September 2016.

D I S C L O S U R E S / 3 3

D I S C L O S U R E S _

CREDIT RATING

The Company has no credit rating.

FOREIGN EXEMPT LISTING

ASX approved a change in the Company’s ASX admission category from an ASX Listing to an ASX Foreign Exempt Listing, effective from the commencement of trading on 30 March 2016.

The Company continues to have a full listing on the NZX Main Board, and the Company’s shares are still listed on the ASX. The Company is primarily regulated by the NZX, complies with the NZX Listing Rules, and is exempt from complying with most of the ASX Listing Rules (based on the principle of substituted compliance).

WAIVERS

Gentrack Group Limited had no NZX waivers granted or published by NZX within or relied upon in the 12 months ending 30 September 2016. Gentrack Group Limited has been granted waivers from the ASX which are standard for a New Zealand company listed on the ASX, including confirmation that ASX will accept financial statements denominated in New Zealand dollars and prepared and audited in accordance with New Zealand Generally Accepted Accounting Principles and Auditing Standards.

ANNUAL MEETING

Gentrack Group Limited’s Annual Meeting of Shareholders will be held in Auckland on 23 February 2017 at 4:00pm. A notice of Annual Meeting and Proxy Form will be circulated to shareholders in January 2017.

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C O R P O R AT E D I R E C T O R Y _

REGISTERED OFFICE

Gentrack Group Limited 25 College Hill, Freemans 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

AUDITOR

KPMG

18 Viaduct Harbour Avenue, Auckland, 1140 Phone: +64 9 367 5800 Facsimile: +64 9 367 5875

LEGAL ADVISERS

BELL GULLY

BANKERS

POSTAL ADDRESS

PO Box 3288, Shortland Street, Auckland 1140 New Zealand

NEW ZEALAND INCORPORATION NUMBER

3768390

ANZ LIMITED HSBC PLC

SHARE REGISTRAR

NEW ZEALAND

LINK MARKET SERVICES LIMITED

AUSTRALIAN REGISTERED BODY NUMBER (ARBN)

169 195 751

DIRECTORS

John Clifford, Chairman Andy Coupe James Docking Graham Shaw Leigh Warren

COMPANY SECRETARY

Jon Kershaw

Level 7, Zurich House, 21 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

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

C O R P O R AT E D I R E C T O R Y / 3 5