IkeGPS forecasts annual losses as it ramps up sales of MapSight, Spike
By Jonathan Underhill
June 23 (BusinessDesk) - IkeGPS Group, which sells portable measuring devices and software with applications ranging
from the military to architecture and construction, is forecasting losses through until at least 2016 as it uses the
proceeds of an initial public offering to build a sales force and further develop its products.
The Wellington-based company, which counts Jenny Morel's No 8 Ventures and business partner General Electric among its
shareholders, aims to raise $25 million by selling 22.7 million shares at $1.10 apiece. After the sale it will have
about 50 million shares on issue and an indicative market value of $55 million. Net proceeds will be $23.1 million,
assuming it meets its target.
IkeGPS is forecasting a three-fold increase in revenue to $6.5 million this financial year, rising to $14.3 million in
2016, with the bulk of the growth through its forecast horizon generated by its GE MapSight product.
At the same time, its net loss is forecast to widen by 133 percent to $5.3 million in the current year and widen further
to a loss of $5.8 million in 2016, according to the company's prospectus. Expenses triple this year to $11.5 million and
grow further to $19.6 million in 2016. Gross margin grows to 60 percent this year and 65 percent next year, according to
its forecasts. It doesn't expect to pay dividends.
"Ike is currently a loss-making business that is not anticipated to make a net profit in the prospective period as the
business invests in growth," the company said in its prospectus. "Although ike has been operating since April 2003, it
is only recently that ike’s current business model has been developed and so investors should treat ike as an
early-stage growth company."
IkeGPS and GE agreed in December that GE would sell ikeGPS's electricity market asset management product as the
GE-branded MapSight. Its Spike measuring product, which employs laser, camera and software in a mobile phone, will be
initially targeted at the architecture, engineering and construction sectors, it said. The company expects to ship 289
MapSight units this year and 626 in 2016, while Spike units shipped will rise to 2,533 this year and 2,712 next year.
The products were developed with the US Army Corps of Engineers, US intelligence agency developer In-Q-Tel and software
providers for electricity utilities, it said. The market for MapSight in the US could be worth US$700 million a year, it
said.
"Ike’s target markets are large, its current penetration is low and the business is highly scalable due to a business
model that features high gross margins and low marginal cost of sales," the company said.
Employee head count will grow to 84 in 2016 from 59 this year, of which almost two-thirds will be based in New Zealand
and the rest US-based.
Last week, ikeGPS said it had firm allocations from brokers and institutions for the entire $25 million it aims to raise
next month, while withdrawing plans to raise a further $6 million for existing shareholders. The offer is expected to
open on July 1 and close on July 21, ikeGPS said, adding that there would be no public pool.
No 8 Ventures, which is ultimately owned by Morel, husband and former central bank governor Alan Bollard and family
interests, currently holds about 28 percent of the company. Wellington businessman Alex Knowles owns about 12 percent
and former Wellington mayor Kerry Prendergast and husband Rex Nicholls hold 10.5 percent, Companies Office records show.
NYSE-listed General Electric, which has a trademark license agreement with IkeGPS, owns 5.9 percent.
The company currently has more than 200 electric utility and engineering customers, it says.
(BusinessDesk)