9 Spokes International : Full Year Statutory Accounts

For personal use only

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p. 9 Independent Auditor's Report

p. 13 Consolidated Statement of Profit or Loss and Other Comprehensive Income

p. 14 Consolidated Statement of Changes in Equity p. 15 Consolidated Statement of Financial Position p. 16 Consolidated Statement of Cash Flows

p. 17 Notes to the Consolidated Financial Statements

p. 46 New Zealand Statutory Information

p. 50 Additional Information for ASX Listed Companies p. 57 Company directory

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9 Spokes International Limited	4
Chairman and Chief Executive's report

For personal use only

Dear Shareholders,

Financial Performance:

Our financial performance this year largely mirrored our prior year results, save for two cost pressures on the business. The tech industry is experiencing significant inflationary pressure on wages which is being exasperated by high demand across sectors for IT talent. We also received a non-binding, indicative proposal to acquire all of the equity interests in the Company. The Board appropriately gave this proposal its full consideration and incurred material costs in doing so. However, the exercise also provided additional business development collateral and foundation analysis for our capital plan. Outside of these pressures we operated in line with our expenditure plan.

	2022	2021	Variance	Variance
	NZ$ million	NZ$ million	NZ$ million	%
Total revenue	6.0	6.6	(0.6)	-9%
Total expenses	(12.2)	(11.6)	(0.6)	-5%
Net finance expense	0.0	(0.1)	0.1	100%
Net loss before income tax	(6.2)	(5.1)	(1.1)	-22%

Revenue

Total income for the year was $6.0 million (2021: $6.6 million). Our reported revenues comprise of implementation fees, annual platform license fees, development fees, and other revenue. Implementation fees are invoiced and receipted at the time of deployment and are then recognised over the initial term of a bank partner's contract. For the year ended 31 March 2022, recognised implementation revenue was $1.0 million (2021: $1.0 million); deferred implementation fee revenue was $1.9 million (2021: $1.7 million). Platform access revenue for the year was $4.2 million (2021: $4.2 million).

The Group generated revenue of $0.2 million (2021: $0.5 million) from additional services provided to existing bank partners and development revenue. Grant income of $0.5 million (2021 $0.7 million) has reduced due to less research and development work being completed and more iterative work being focused on.

Expenditure

Total expenditure for the year ended 31 March 2022 was $12.2 million (2021: $11.6 million). The increase in expenditure was due to the work completed to properly consider the non-binding, indicative offer received and from pressures on the labour market leading to increases in the employee benefit expense to meet the market and retain staff. Cost management and control continue to be a key objective as we enter FY23.

Cash flow

Annual net cash outflows from operations were $5.2 million (2021: $5.0 million). The Group had an increase in receipts from customers as a result of the implementation fees received from Virgin

9 Spokes International Limited	5
Chairman and Chief Executive's report

For personal use only

Money and the early receipt of customer licence fees from one customer. The transition from the Callaghan Growth Grant to the Research and Development Tax Incentive ("RDTI") has resulted in a decrease in the receipts from government grants due to differences in the schemes. The Growth Grant was paid quarterly with the final FY21 payment being receipted in FY22 while the RDTI scheme is a tax incentive, and any eligible payments will be receipted subsequent to filing our tax return. Payments to employees and suppliers increased by $0.8 million due to the work completed to properly consider the non-binding, indicative offer received with a dual focus on a future capital raise alongside pressures on the labour market leading to the employee benefit expense increasing to meet the market and retain staff.

Cash and bank as at 31 March 2022 was $3.0 million (2021: $8.8 million).

Other:

The Company requested voluntary suspension from the ASX on 30 May 2022.

The Company subsequently announced a AU$1.119m conditional equity placement and a proposed debt facility to provide working capital and to undertake a Strategic Review of the Company and its operations on 18 July 2022.

Subsequent to balance date, Paul Reynolds and Thomas Power resigned from the Board and Kevin Phalen was elected as Chairman.

Approved for and on behalf of the Board on 29 July 2022.

Kevin Phalen	Adrian Grant
Chairman	Chief Executive Officer