GENTRACK GROUP LIMITED — Interim / Quarterly Report 2021

May 26, 2021

==> picture [285 x 100] intentionally omitted <==

Gentrack Group Limited Interim Financial Statements

For the six months ended 31 March 2021

Contents

• 3 Commentary

• 4 Interim Financial Statements

• 5 Condensed Statement of Comprehensive Income

• 6 Condensed Statement of Financial Position

• 7 Condensed Statement of Changes in Equity 8 Condensed Statement of Cash Flows

• 9 Notes to Condensed Financial Statements

• 21 Independent Review Report

• 23 Corporate Directory

==> picture [111 x 27] intentionally omitted <==

GENTRACK INTERIM FINANCIAL STATEMENTS / 2

COMMENTARY

The results for the half-year show an increase in revenue of 0.7% to $51.0m. Utilities revenue increased 6% during the period vs PCP driven by new customers and increases from existing customers.

Revenues were down in the Airports business by $2.1m due to the industry downturn but pleasingly annual recurring revenues (ARR) were up 5.8% reflecting the critical role of our product in our customers’ operations.

Underlying EBITDA of $7.0m is up 63.2% on H1’20. Costs were down 5% vs PCP due to various cost saving measures, while at the same time increasing our investment in human capital.

The Group achieved $5.6m net cash generation for the period resulting in $22.4m net cash as at 31 March 2021, up from $16.8m at 30 September 2020. There have been further improvements in working capital and cash savings from increased use of share-based incentives. The year-end cash position provides scope for additional investment in technology.

On the operational front, our global delivery organisation is improving throughput materially, managing several large-scale customer transformation projects effectively and are dedicated to delivering customer excellence. We have opened our new Indian Technology Centre where we have nearly 50 Dev-ops experts coming up to speed on our technologies. We see room for continued improvement in the operational effectiveness of the company.

Our commitment remains to have the best technology in this space and the increased headcount in the business reflects our investment in bringing the right people on board to deliver against this commitment.

We continue to have headwinds from prior year customer attrition and supplier failures in the UK. We have however, moved the business back to growth despite this revenue drag.

We see enormous potential in the clean tech market and the business is establishing a strong foundation for future success.

In light of the NPAT loss, the Board has decided not to pay an Interim dividend and will review the position at the year end.

This period has seen the business undergo a transformation with the new leadership team performing strongly and the business servicing our customers better.

Revenue is up from increasing customer demand for Total Cost of Ownership (TCO) improvements, regulatory compliance and cleantech innovations.

==> picture [138 x 42] intentionally omitted <==

Andy Green Chair

New logo pipeline is growing, and we have new wins in the period.

• Revenue: $51.0m – up 0.7% on H1’20 Headlines

• • EBITDA: $7.0m – up 63.2% H1’20 • Revenue: $51.0m – up 0.7% on H1’20 • Statutory NPAT: ($1.1m) loss

• • EBITDA: $7.0m – up 63.2% on H1’20 • Net cash: $22.4m up 33.5% on FY20 • No Interim Dividend payable • Statutory NPAT: ($1.1m) loss • No Interim Dividend payable

• Net cash: $22.4m up 33.5% on FY20

==> picture [111 x 27] intentionally omitted <==

GENTRACK INTERIM FINANCIAL STATEMENTS / 3

Interim Financial Statements 31 March 2021

==> picture [483 x 442] intentionally omitted <==

==> picture [111 x 27] intentionally omitted <==

GENTRACK INTERIM FINANCIAL STATEMENTS / 4

CONDENSED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 31 MARCH 2021

NOTE	6 MONTHS 31 MARCH 2021 6 MONTHS 31 MARCH 2020 UNAUDITED UNAUDITED	12 MONTHS 30 SEPTEMBER 2020 AUDITED
	NZ$000 NZ$000	NZ$000
Revenue 3 Expenditure 4	50,953 50,623 (43,983) (46,353)	100,533 (88,440)
Profit before depreciation, amortisation, revaluation of financial liabilities, impairment of goodwill and intangible assets, financing and tax	6,970 4,270	12,093
Depreciation and amortisation Revaluation of acquisition related financial liability Impairment of goodwill and intangible assets	(5,382) (6,407) - (38) - (12,218)	(12,354) 891 (34,511)
Profit/(Loss) before financing and tax	1,588 (14,393)	(33,881)
Net finance (expense)/income 5	(1,345) 881	(386)
Profit/(Loss) before tax	243 (13,512)	(34,267)
Income tax (expense)/income	(1,360) 709	2,561
Loss attributable to the shareholders of the company	(1,117) (12,803)	(31,706)
OTHER COMPREHENSIVE INCOME Translation of international subsidiaries	1,264 6,017	(882)
Total comprehensive income/(loss) for the period	147 (6,786)	(32,588)
EARNINGS PER SHARE LOSS ATTRIBUTABLE TO THE SHAREHOLDERS OF THE COMPANY (EXPRESSED IN DOLLARS PER SHARE) Basic and diluted loss per share WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES ISSUED Basic Diluted	($0.01) ($0.13) 98,645 98,645 101,588 99,054	($0.32) 98,645 100,053

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

==> picture [111 x 27] intentionally omitted <==

GENTRACK INTERIM FINANCIAL STATEMENTS / 5

CONDENSED STATEMENT OF FINANCIAL POSITION

AS AT 31 MARCH 2021

NOTE	31 MARCH 2021 31 MARCH 2020 UNAUDITED UNAUDITED	30 SEPTEMBER 2020 AUDITED
	NZ$000 NZ$000	NZ$000
CURRENT ASSETS Cash and cash equivalents 6 Trade and other receivables 7 Income tax receivable Inventory	24,966 11,120 21,148 25,088 336 - 347 588	19,321 18,951 151 464
Total current assets	46,797 36,796	38,887
NON-CURRENT ASSETS Property, plant and equipment Lease assets 12 Goodwill 13 Intangibles 15 Deferred tax assets	2,595 3,239 9,364 11,591 107,085 131,032 41,767 55,386 7,728 6,108	2,763 10,338 106,599 45,428 4,649
Total non-current assets	168,539 207,356	169,777
Total assets	215,336 244,152	208,664
CURRENT LIABILITIES Bank loans 8 Trade payables and accruals Lease liabilities 12 Contract liabilities GST payable Employee entitlements Income taxpayable	2,555 - 4,800 5,080 2,204 2,643 13,690 14,470 3,298 1,557 7,578 4,943 - 1,382	2,536 3,905 2,692 12,419 3,206 5,552 -
Total current liabilities	34,125 30,075	30,310
NON-CURRENT LIABILITIES Bank loans 8 Related party loan Lease liabilities 12 Employee entitlements Deferred tax liabilities	- 4,684 - 483 11,736 13,857 458 418 6,223 8,675	- - 12,435 428 4,997
Total non-current liabilities	18,417 28,117	17,860
Total liabilities	52,542 58,192	48,170
Net assets	162,794 185,960	160,494
EQUITY Share capital 9 Share based payment reserve 11 Foreign currency translation reserve Accumulated deficit	191,229 191,229 2,852 363 8,046 13,681 (39,333) (19,313)	191,229 699 6,782 (38,216)
Total equity	162,794 185,960	160,494

The above Condensed 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 27 May 2021

==> picture [138 x 42] intentionally omitted <==

==> picture [160 x 59] intentionally omitted <==

Andy Green Chair Date: 27 May 2021

Fiona Oliver Director Date: 27 May 2021

==> picture [111 x 27] intentionally omitted <==

GENTRACK INTERIM FINANCIAL STATEMENTS / 6

CONDENSED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 31 MARCH 2021

31 MARCH 2021 UNAUDITED NOTE	SHARE CAPITAL	SHARE BASED PAYMENT RESERVE ACCUMULATED DEFICIT	TRANSLATION RESERVE TOTAL EQUITY
	NZ$000	NZ$000 NZ$000	NZ$000 NZ$000
Balance at 1 October Loss attributable to the shareholders of the company Other comprehensive income	191,229	699 (38,216)	6,782 160,494
	-	- (1,117)	- (1,117)
	-	- -	1,264 1,264
Total comprehensive loss for the period, net of tax TRANSACTION WITH OWNERS Dividend paid Share based payments 11	-	- (1,117)	1,264 147
	-	- -	- -
	-	2,153 -	- 2,153
Balance at 31 March	191,229	2,852 (39,333)	8,046 162,794

31 MARCH 2020 UNAUDITED	SHARE CAPITAL	SHARE BASED PAYMENT RESERVE ACCUMULATED DEFICIT	TRANSLATION RESERVE TOTAL EQUITY
	NZ$000	NZ$000 NZ$000	NZ$000 NZ$000
Balance at 1 October Change in accounting policy - NZ IFRS 16	191,229 -	389 (1,673) - (1,833)	7,664 197,609 - (1,833)
Adjusted total equity at 1 October Loss attributable to the shareholders of the company Other comprehensive income	191,229 - -	389 (3,506) - (12,803) - -	7,664 195,776 - (12,803) 6,017 6,017
Total comprehensive loss for the period, net of tax TRANSACTION WITH OWNERS Dividend paid Share based payments	- - -	- (12,803) - (3,004) (26) -	6,017 (6,786) - (3,004) - (26)
Balance at 31 March	191,229	363 (19,313)	13,681 185,960
30 SEPTEMBER 2020 AUDITED	SHARE CAPITAL	SHARE BASED PAYMENT RESERVE ACCUMULATED DEFICIT	TRANSLATION RESERVE TOTAL EQUITY
	NZ$000	NZ$000 NZ$000	NZ$000 NZ$000
Balance at 1 October Change in accounting policy - NZ IFRS 16	191,229 -	389 (1,673) - (1,833)	7,664 197,609 - (1,833)
Adjusted total equity at 1 October Loss attributable to the shareholders of the company Other comprehensive income	191,229 - -	389 (3,506) - (31,706) - -	7,664 195,776 - (31,706) (882) (882)
Total comprehensive loss for the period, net of tax TRANSACTION WITH OWNERS Dividend paid Share based payments	- - -	- (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 Condensed Statement of Changes in Equity should be read in conjunction with the accompanying notes.

==> picture [111 x 27] intentionally omitted <==

GENTRACK INTERIM FINANCIAL STATEMENTS / 7

CONDENSED STATEMENT OF CASHFLOWS

FOR THE SIX MONTHS ENDED 31 MARCH 2021

NOTE	6 MONTHS 31 MARCH 2021 6 MONTHS 31 MARCH 2020 UNAUDITED UNAUDITED	12 MONTHS 30 SEPTEMBER 2020 AUDITED
	NZ$000 NZ$000	NZ$000
CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Lease liability finance charge 12 Income tax paid	50,826 60,036 (39,825) (46,747) (421) (480) (3,465) (2,839)	110,731 (83,547) (931) (4,287)
Net cash inflow from operating activities	7,115 9,970	21,966
CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment Purchase of intangibles 15 Payment of acquisition related option Proceeds from sale of property, plant and equipment	(187) (293) - (780) - (2,419) - (1)	(324) (331) (2,419) -
Net cash outflow from investing activities	(187) (3,493)	(3,074)
CASH FLOWS FROM FINANCING ACTIVITIES Payments for lease liabilities 12 Drawdown of borrowings Repayment of borrowings Interest paid Dividends paid	(1,314) (1,238) - 5,007 - (4,400) (96) (266) - (3,004)	(2,497) 5,007 (6,871) (375) (3,004)
Net cash outflow from financing activities	(1,410) (3,901)	(7,740)
Net increase in cash held Foreign currency translation adjustment Cash at beginning of the financial period	5,518 2,576 127 (82) 19,321 8,626	11,152 (457) 8,626
Closing cash and cash equivalents	24,966 11,120	19,321

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

==> picture [111 x 27] intentionally omitted <==

GENTRACK INTERIM FINANCIAL STATEMENTS / 8

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 31 MARCH 2021

1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES

These unaudited interim financial statements of Gentrack Group Limited (the Company) and its subsidiaries (together “Gentrack Group”) have been prepared in accordance with the New Zealand equivalent of International Accounting Standard 34: Interim Financial Reporting (NZ IAS 34) and New Zealand Generally Accepted Accounting Practice (NZ GAAP). In complying with NZ IAS 34, these statements comply with International Accounting Standard 34: Interim Financial Reporting.

Gentrack Group is a profit-oriented entity for financial reporting purposes.

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

These unaudited consolidated condensed interim financial statements of Gentrack Group for the six months ended 31 March 2021 have been prepared using the same accounting policies and methods of computation as, and should be read in conjunction with, the financial statements and related notes included in Gentrack Group’s Annual Report for the year ended 30 September 2020.

COVID-19 PANDEMIC

On 11 March 2020, the World Health Organisation declared a global pandemic as a result of the outbreak and spread of COVID-19. Gentrack Group, like most other organisations is impacted by COVID-19 in a variety of ways, both financially and operationally. In late March 2020 due to restrictions imposed to contain the spread of COVID-19 many businesses were forced to close or move to remote ways of working. Gentrack Group had the necessary infrastructure in place and had thoroughly tested its ability to support remote working and during this period Gentrack Group has been able to largely operate as normal.

At 31 March 2021, the financial impact of COVID-19 on Gentrack Group has been immaterial, but the longer-term implications are still somewhat uncertain particularly for the Airport business which customers have been severely impacted 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 interim financial statements Gentrack Group has considered the increased level of uncertainty resulting from COVID-19 in applying its accounting estimates and judgements, details of these are provided below:

Accounting estimate and judgement area	Reference
Recoverability of trade receivables	Note 7
Assessment of impairment indicators	Note 14

==> picture [111 x 27] intentionally omitted <==

GENTRACK INTERIM FINANCIAL STATEMENTS / 9

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 31 MARCH 2021

2. OPERATING SEGMENTS

Gentrack Group currently operates in two business segments: utility billing software and airport management software. 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.

6 MONTHS 31 MARCH 2021 UNAUDITED	UTILITY	AIRPORT TOTAL
	NZ$000	NZ$000 NZ$000
TIMING OF REVENUE RECOGNITION Point in time Over time
	4,500	745 5,245
	37,928	7,780 45,708
Total revenue Expenditure	42,428	8,525 50,953
	(36,988)	(6,995) (43,983)
Segment contribution (1)	5,440	1,530 6,970
6 MONTHS 31 MARCH 2020 UNAUDITED	UTILITY	AIRPORT TOTAL
	NZ$000	NZ$000 NZ$000
TIMING OF REVENUE RECOGNITION Point in time Over time	3,574 36,439	1,392 4,966 9,218 45,657
Total revenue Expenditure	40,013 (37,270)	10,610 50,623 (9,083) (46,353)
Segment contribution (1)	2,743	1,527 4,270

12 MONTHS 30 SEPTEMBER 2020 AUDITED	UTILITY	AIRPORT TOTAL
	NZ$000	NZ$000 NZ$000
TIMING OF REVENUE RECOGNITION Point in time Over time	7,379 74,397	2,018 9,397 16,739 91,136
Total revenue Expenditure	81,776 (71,565)	18,757 100,533 (16,875) (88,440)
Segment contribution (1)	10,211	1,882 12,093

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

==> picture [111 x 27] intentionally omitted <==

GENTRACK INTERIM FINANCIAL STATEMENTS / 10

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 31 MARCH 2021

A reconciliation of segment contribution (1) to profit attributable to the shareholders of the company is as follows:

	6 MONTHS 31 MARCH 2021 6 MONTHS 31 MARCH 2020 UNAUDITED UNAUDITED	12 MONTHS 30 SEPTEMBER 2020 AUDITED
	NZ$000 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 income / (expense)	6,970 4,270 (5,382) (6,407) - (38) - (12,218) (1,345) 881 (1,360) 709	12,093 (12,354) 891 (34,511) (386) 2,561
Loss attributable to the shareholders of the company	(1,117) (12,803)	(31,706)

	6 MONTHS 31 MARCH 2021 6 MONTHS 31 MARCH 2020 UNAUDITED UNAUDITED	12 MONTHS 30 SEPTEMBER 2020 AUDITED
	NZ$000 NZ$000	NZ$000
REVENUE BY DOMICILE OF ENTITY Australia New Zealand United Kingdom Rest of World	11,159 10,070 6,520 9,264 29,682 27,747 3,592 3,542	22,659 16,447 55,458 5,969
Total revenue	50,953 50,623	100,533
REVENUE BY DOMICILE OF CUSTOMER Australia New Zealand United Kingdom Rest of World	12,219 11,737 4,356 4,579 28,015 26,462 6,363 7,845	25,755 8,456 52,746 13,576
Total revenue	50,953 50,623	100,533

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

==> picture [111 x 27] intentionally omitted <==

GENTRACK INTERIM FINANCIAL STATEMENTS / 11

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 31 MARCH 2021

3. REVENUE

3. REVENUE
	6 MONTHS 31 MARCH 2021 6 MONTHS 31 MARCH 2020 UNAUDITED UNAUDITED	12 MONTHS 30 SEPTEMBER 2020 AUDITED
	NZ$000 NZ$000	NZ$000
OPERATING REVENUE: Annual fees Support services Project services Licenses Other	29,817 29,733 9,621 10,029 7,953 7,192 804 1,350 1,637 1,439	60,394 20,636 13,286 2,177 2,070
Total operating revenue	49,832 49,743	98,563
OTHER INCOME: Government grants	1,121 880	1,970
Total revenue	50,953 50,623	100,533

4. EXPENDITURE

4. EXPENDITURE
	6 MONTHS 31 MARCH 2021 6 MONTHS 31 MARCH 2020 UNAUDITED UNAUDITED	12 MONTHS 30 SEPTEMBER 2020 AUDITED
	NZ$000 NZ$000	NZ$000
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	34,601 33,904 2,095 3,612 2,784 3,738 392 617 2,730 3,046 1,381 1,436	65,780 6,721 6,450 898 5,754 2,837
Total expenditure	43,983 46,353	88,440

==> picture [111 x 27] intentionally omitted <==

GENTRACK INTERIM FINANCIAL STATEMENTS / 12

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 31 MARCH 2021

5. NET FINANCE EXPENSES

	6 MONTHS 31 MARCH 2021 6 MONTHS 31 MARCH 2020 UNAUDITED UNAUDITED	12 MONTHS 30 SEPTEMBER 2020 AUDITED
	NZ$000 NZ$000	NZ$000
FINANCE INCOME Interest income Foreign exchange gains	8 4 - 1,635	7 928
FINANCE EXPENSE Interest expense Lease liability finance charges Interest paid - NPV discount Foreign exchange losses	8 1,639 (103) (270) (421) (480) - (8) (829) -	935 (383) (931) (7) -
	(1,353) (758)	(1,321)
Net finance (expense) / income	(1,345) 881	(386)

6. CASH AND CASH EQUIVALENTS

6. CASH AND CASH EQUIVALENTS
	6 MONTHS 31 MARCH 2021 6 MONTHS 31 MARCH 2020 UNAUDITED UNAUDITED	12 MONTHS 30 SEPTEMBER 2020 AUDITED
	NZ$000 NZ$000	NZ$000
Bank balances Cash on hand	24,965 11,119 1 1	19,320 1
Total cash and cash equivalents	24,966 11,120	19,321

7. TRADE AND OTHER RECEIVABLES

	6 MONTHS 31 MARCH 2021 6 MONTHS 31 MARCH 2020 UNAUDITED UNAUDITED	12 MONTHS 30 SEPTEMBER 2020 AUDITED
	NZ$000 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	18,245 17,183 (368) (476) (2,569) (2,827) (377) (159) 4,367 8,685 1,850 2,682	15,084 (390) (3,460) (131) 5,683 2,165
Total trade and other receivables	21,148 25,088	18,951

Due to the uncertainty caused by COVID-19 a specific provision of $0.2m is being held against the Airport segments trade receivables to cover potential impairment.

==> picture [111 x 27] intentionally omitted <==

GENTRACK INTERIM FINANCIAL STATEMENTS / 13

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 31 MARCH 2021

7. TRADE AND OTHER RECEIVABLES (CONTINUED)

	6 MONTHS 31 MARCH 2021 6 MONTHS 31 MARCH 2020 UNAUDITED UNAUDITED	12 MONTHS 30 SEPTEMBER 2020 AUDITED
	NZ$000 NZ$000	NZ$000
Opening balance Movement in impairment provision Effect of movement in foreign exchange Bad debt written off	3,850 2,868 (919) 650 6 151 - (366)	2,868 2,052 13 (1,083)
Total trade receivables impairment provision	2,937 3,303	3,850

8. LOANS AND BORROWINGS

Gentrack Group has a NZ$20 million 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.

The facility is secured by a general security agreement under which the bank has a security interest in Gentrack Group assets. Covenants are in place and compliance is reported quarterly. At all times during the period Gentrack Group has met the covenant requirements.

At 31 March 2021, $2.6m (2020: $4.7m) has been drawn down for working capital and to fund potential acquisitions.

9. SHARE CAPITAL

	SHARES ISSUED	SHARES ISSUED	SHARE CAPITAL
	31 MARCH 2021 31 MARCH 2020 UNAUDITED UNAUDITED	30 SEPTEMBER 2020 31 MARCH 2021 AUDITED UNAUDITED	31 MARCH 2020 30 SEPTEMBER 2020 UNAUDITED AUDITED
	000 000	000 NZ$000	NZ$000 NZ$000
Ordinary Shares Issue of new ordinary shares	98,645 98,645 - -	98,645 191,229 - -	191,229 191,229 - -
	98,645 98,645	98,645 191,229	191,229 191,229

10. RELATED PARTIES

Key management personnel that have the authority and responsibility for planning, directing, and controlling the activities of Gentrack Group, directly or indirectly and include the Directors, the Chief Executive Officer and their direct reports.

Key management personnel compensation for the period was $2.3m (2020: $2.0m). Directors fees were $0.2m for the period (2020: $0.2m).

Related parties are materially consistent with those disclosed in the 2020 Annual Report.

==> picture [111 x 27] intentionally omitted <==

GENTRACK INTERIM FINANCIAL STATEMENTS / 14

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 31 MARCH 2021

11. EMPLOYEE SHARE SCHEME

During the period Gentrack Group granted at total of 1,756,298 (2020: 217,141) unlisted performance rights for nil consideration to employees under the Senior Management Long Term Incentive Scheme (1,163,947) and The Gentrack Long Term Incentive Scheme (592,351). Vesting is conditional on the completion of the necessary years’ service to the vesting date and performance goals over the vesting period for the Senior Management Long Term Incentive Scheme.

During the period, no performance rights vested (2020: nil) and the unvested performance rights were forfeited. Please refer to the 2020 Annual Report for further information on the Senior Management Long Term Incentive Share Scheme.

12. LEASE ASSETS AND LEASE LIABILITIES

RECOGNITION AND MEASUREMENT OF GENTRACK GROUP’S LEASING ACTIVITIES

Gentrack Group predominantly leases property for fixed periods of 1-12 years and may have extension options. These extension options are 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.

Prior to 1 October 2019, leases of property, plant and equipment were classified as either finance or operating leases. Payments made under operating leases (net of any incentives received from the lessor) were charged to profit or loss on a straight-line basis over the period of the lease.

From 1 October 2019, 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 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.

==> picture [111 x 27] intentionally omitted <==

GENTRACK INTERIM FINANCIAL STATEMENTS / 15

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 31 MARCH 2021

12. LEASE ASSETS AND LEASE LIABILITIES (CONTINUED)

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

LEASE ASSETS

LEASE ASSETS
	6 MONTHS 31 MARCH 2021 6 MONTHS 31 MARCH 2020 UNAUDITED UNAUDITED	12 MONTHS 30 SEPTEMBER 2020 AUDITED
	NZ$000 NZ$000	NZ$000
Opening balance Lease amendments Depreciation charges Exchange differences	10,338 12,671 185 - (1,157) (1,182) (2) 102	12,671 - (2,350) 17
Total lease assets	9,364 11,591	10,338
Property Office equipment	9,346 11,536 18 55	10,302 36
Total lease assets	9,364 11,591	10,338

LEASE LIABILITIES

LEASE LIABILITIES
	6 MONTHS 31 MARCH 2021 6 MONTHS 31 MARCH 2020 UNAUDITED UNAUDITED	12 MONTHS 30 SEPTEMBER 2020 AUDITED
	NZ$000 NZ$000	NZ$000
Opening balance Lease amendments Principal repayments Exchange differences	15,127 17,620 185 - (1,386) (1,246) 14 126	17,620 - (2,457) (36)
Total lease liabilities	13,940 16,500	15,127
Less than one year One to five years More than five years	2,204 2,643 5,340 5,914 6,396 7,943	2,692 5,229 7,206
Total lease liabilities	13,940 16,500	15,127

LEASE EXPENSES

LEASE EXPENSES
	6 MONTHS 31 MARCH 2021 6 MONTHS 31 MARCH 2020 UNAUDITED UNAUDITED	12 MONTHS 30 SEPTEMBER 2020 AUDITED
	NZ$000 NZ$000	NZ$000
Depreciation charges Finance charges	1,157 1,182 421 480	2,351 931
Lease expenses	1,578 1,662	3,282

==> picture [111 x 27] intentionally omitted <==

GENTRACK INTERIM FINANCIAL STATEMENTS / 16

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 31 MARCH 2021

13. GOODWILL

Goodwill represents the difference between the cost of the 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 or when indicators of impairment are present.

	6 MONTHS 31 MARCH 2021 6 MONTHS 31 MARCH 2020 UNAUDITED UNAUDITED	12 MONTHS 30 SEPTEMBER 2020 AUDITED
	NZ$000 NZ$000	NZ$000
Opening balance Goodwill impairment Exchange rate differences	106,599 134,434 - (8,710) 486 5,308	134,434 (28,040) 205
Closing net book value	107,085 131,032	106,599
Goodwill allocated to Utilities Goodwill allocated to Airport 20/20	104,185 128,132 2,900 2,900	103,699 2,900
Net book value	107,085 131,032	106,599

14. IMPAIRMENT TESTING

At each reporting date, Gentrack Group assesses whether there is any indication that an asset may be impaired. For the period ended 31 March 2021 no indicators of impairment were present and as a result no impairment testing was required to be carried out.

==> picture [111 x 27] intentionally omitted <==

GENTRACK INTERIM FINANCIAL STATEMENTS / 17

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 31 MARCH 2021

15. INTANGIBLE ASSETS

31 MARCH 2021 UNAUDITED	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	25,046 12,888	5,024 454	2,016 45,428
	- -	- -	- -
	(2,317) (1,194)	- (82)	(271) (3,864)
	- -	- -	- -
	132 67	- 2	2 203
Closing net book value	22,861 11,761	5,024 374	1,747 41,767
Cost Accumulated amortisation	45,179 24,247	5,024 845	2,734 78,029
	(22,318) (12,486)	- (471)	(987) (36,262)
Net book value	22,861 11,761	5,024 374	1,747 41,767

31 MARCH 2020 UNAUDITED	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 - - (2,498) (1,256) (1,627) (393) 1,529 752	5,024 621 - - - (85) - - - 32	7,706 60,482 779 779 (880) (4,719) (1,502) (3,522) 53 2,366
Closing net book value	28,817 14,821	5,024 568	6,156 55,386
Cost Accumulated amortisation	46,814 25,072 (17,997) (10,251)	5,024 887 - (319)	7,472 85,269 (1,316) (29,883)
Net book value	28,817 14,821	5,024 568	6,156 55,386

30 SEPTEMBER 2020 AUDITED	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

==> picture [111 x 27] intentionally omitted <==

GENTRACK INTERIM FINANCIAL STATEMENTS / 18

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 31 MARCH 2021

16. FINANCIAL INSTRUMENTS

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 fixed and floating interest rates. 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 subsequent to 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. At 31 March 2021, Gentrack Group has no level 3 financial instruments (2020: $Nil)

FINANCIAL INSTRUMENTS BY CATEGORY

	6 MONTHS 31 MARCH 2021 6 MONTHS 31 MARCH 2020 UNAUDITED UNAUDITED	12 MONTHS 30 SEPTEMBER 2020 AUDITED
	NZ$000 NZ$000	NZ$000
FINANCIAL ASSETS MEASURED AT AMORTISED COST Cash and cash equivalents Trade and other receivables	24,966 11,120 21,148 25,088	19,321 18,951
FINANCIAL LIABILITIES MEASURED AT AMORTISED COST Loans and borrowings Trade payables Lease liabilities	46,114 36,208 (2,555) (5,168) (4,800) (3,535) (13,940) (16,500)	38,272 (2,536) (1,803) (15,127)
	(21,295) (25,203)	(19,466)

==> picture [111 x 27] intentionally omitted <==

GENTRACK INTERIM FINANCIAL STATEMENTS / 19

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 31 MARCH 2021

17. CAPITAL COMMITMENTS

There are no capital expenditure commitments at 31 March 2021 (2020: $Nil).

18. CONTINGENCIES

ASB New Zealand has provided guarantees of $1.2m (2020: $0.8m) on behalf of Gentrack Group, these guarantees are in place for implementation projects, property leases and exchange listings.

19. EVENTS AFTER BALANCE DATE

On 27 May 2021, the Gentrack Group Board determined that no interim dividend will be paid out for the first half of this financial year (2020: $Nil).

==> picture [111 x 27] intentionally omitted <==

GENTRACK INTERIM FINANCIAL STATEMENTS / 20

==> picture [111 x 27] intentionally omitted <==

GENTRACK INTERIM FINANCIAL STATEMENTS / 21

==> picture [111 x 27] intentionally omitted <==

GENTRACK INTERIM FINANCIAL STATEMENTS / 22

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

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

SHARE REGISTRAR

NEW ZEALAND INCORPORATION NUMBER

NEW ZEALAND

3768390

LINK MARKET SERVICES LIMITED

AUSTRALIAN REGISTERED BODY NUMBER (ARBN)

169 195 751

DIRECTORS

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

COMPANY SECRETARY

Jon Kershaw

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

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

==> picture [111 x 28] intentionally omitted <==

GENTRACK INTERIM FINANCIAL STATEMENTS / 23

CORPORATE DIRECTORY

==> picture [111 x 28] intentionally omitted <==

GENTRACK INTERIM FINANCIAL STATEMENTS / 24