IkeGPS mulls acquisitions with residual capital raised   21 Sep 2016

Wednesday 21 September 2016 12:25 PM

IkeGPS mulls acquisitions with residual capital raised, maintains 2017 guidance

By Sophie Boot

Sept. 21 (BusinessDesk) - IkeGPS, the laser measurement toolmaker, could use funds left over from the $8 million raised in the past two months to make acquisitions and may look to raise more capital, as it works towards dual-listing on the Australian Securities Exchange.

The Wellington-based company announced a second capital raise of $3 million last month, in addition to the $5.25 million raised earlier in August. It said the money would be used to further expand sales and marketing in the US and the wider international market, to develop mobile apps to support customer needs and for working capital. The company has said it's on track to be cash breakeven in the fourth quarter of its 2017 financial year.

At its annual meeting in Wellington yesterday, chairman Rick Christie responded to a shareholder question about the use of funds raised by saying IkeGPS had looked at a few potential utility acquisitions last year, with the potential to pay in scrip, cash, or both, and those were "still live opportunities."

"It's hardly big enough to call a war chest, but it's important to have the opportunity to make those calls relatively quickly where we need to, without having to go back to shareholders," Christie said. The company didn't anticipate raising any more capital any time soon but that "depends what goes on."

"[Smartphone product] Spike has been hugely more successful than we expected it was going to be, there's a very large market and what we're going to need in capital, engineering, resources to meet all those verticals - we don't know," Christie said.

IkeGPS has maintained its full-year guidance for 2017, although it said first-half recognised revenue will be lower due to delayed unit shipping. It again upgraded its forecast for the Smart Measure Pro product, which was originally 26,000 units for the year before being upgraded by 17 percent in July, by a further 30 percent to 39,500 units due to additional EU market demand.

A shareholder asked why this upgrade had not made a difference to annual earnings guidance, and chief executive Glenn Milnes said the product was just one of its range of five, although the product upgrade was a positive sign.

The company had considered dual-listing in the US on the Nasdaq, but said that turned out to be difficult and expensive, while the market in Australia was "much more open and receptive," Christie said. IkeGPS anticipates the dual-listing being completed on Nov. 8, within 90 days of the second capital raising being completed yesterday.

Shares in ikeGPS last traded at 59 cents, down 15.7 percent since the start of the year.

(BusinessDesk)

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