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IkeGPS shares jump on expanded defence deal

IkeGPS shares jump on expanded defence deal

By Suze Metherell

Oct. 9 (BusinessDesk) - IkeGPS Group, the makers of remote measuring devices, says revenue will exceed its June prospectus forecasts after it expanded a deal with US defence technology investor In-Q-Tel, in a statement that left unclear the expected impact of the move. The shares jumped.

The Wellington-based company will partner with IQT to further develop its smartphone measuring tool, Spike, for US intelligence and security forces, it said in a statement. The new deal will "generate revenue more than the total amount of contract revenue forecast for both the 2014/15 and 2015/16 financial years, as set out in the prospective financial information", leaving unclear whether the expanded relationship will generate income greater than that forecast in its prospectus or will ensure prospectus forecasts are exceeded.

The company was not immediately available to clarify the statement.

According to its June prospectus, lodged with the companies office before it listed on the NZX in July, the company expected "revenue and other sources of income" to treble this financial year to $6.5 million, and rise again to $14.3 million in 2016. Other sources of income includes "contract revenue from discrete services contracts" which were "historically at the request of US defence and intelligence customers". Under revenue from contract services, the company expected nothing this year and $617,000 in 2016.

Shares of ike rose 25 percent to $1.06, the highest the stock has been since shortly after its July initial public offer, which raised $25 million in new capital through the sale of 22.7 million shares at $1.10 apiece. Existing shareholders, which include Jenny Morel’s No 8 Ventures and business partner General Electric, withdrew plans to sell $6 million of shares into the float. There was no public pool.

One market source told BusinessDesk the release was confusing, but the market seemed to like it.

IkeGPS is forecasting its net loss will widen 133 percent to $5.33 million this year, and extend further to a loss of $5.8 million in 2016, according to its prospectus. The company is forgoing profit as it chases growth in the US market, and sees particular opportunity in the intelligence and security sector. IQT, which is charged with accelerating innovation in the US defence sector, first invested in ike in 2012 and is a shareholder in the business, according to offer documents.

(BusinessDesk)

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