EROAD FY20 Results Announcement
EROAD delivers strong result, while investing for future growth 19 June 2020
Transport technology services company EROAD (ERD.NZX) today released its financial results for the
2020 financial year. All numbers relate to the year ended 31 March 2020 and comparisons relate to
the year ended 31 March 2019.
Key highlights:
• Revenue increased 32% to $81.2m with strong contributions from the New Zealand and
North American markets
• EBITDA margin increased from 25% to 33%, reflecting improved operating leverage
• EROAD reported profit before tax of $1.4m, up from a loss of $5.1m in the prior year
• Growth of 21% in Total Contracted Units and 6% in Average SaaS Monthly Revenue per Unit
demonstrate continued execution against strategy
• Asset retention rate of 95%
• EROAD remains in a strong financial position and continues to focus on anticipated organic
and inorganic growth
EROAD is pleased to have delivered another period of strong growth in all key metrics, while also
advancing its strategy to invest for the future.
Revenue increased by 32% to $81.2m, up from $61.4m in the prior financial year. Average SaaS
Monthly Revenue per Unit (ARPU) increased to $58.38 per month from $55.08 and Future Contracted
Income increased by 14% to $134.4m from $117.4m.
Chief Executive, Steven Newman said: “EROAD delivered an EBITDA margin of 33% and a Profit before
tax of $1.4m demonstrating our increasing scale and improving operating leverage. The quality of our
products, the continued investment in research development and the quality of our customer
service is reflected in strong growth in contracted units of 21%, loyal customers with a 95% asset
retention rate and a rise in Average SaaS Monthly Revenue per Unit of 6%”.
New Zealand
The New Zealand business delivered a strong performance, demonstrating continuing growth
potential. Revenue increased by 21% to $53.4m from $44.2m and EBITDA increased by 25% to $34.9m
from $27.9m in the comparable period. The New Zealand business ended the year with 80,366 units,
adding 10,256 contracted units during the year, to achieve an annual growth rate of 15% through
expansion into existing customer fleets, combined with a solid underlying new customer run rate.
North America
Strong enterprise sales growth in the North American market resulted in a significant increase in
revenue of 62% to $24.8m from $15.3m and delivered an EBITDA increase to $7.5m from $0.4m.
The North American business added 9,342 contracted units, to deliver a growth rate of 38%, reflecting
the on-boarding of two enterprise customers in the first half of the year. Work is underway to
improve the small-to-medium businesses run-rate, with a number of planned product and service
launches expected to help build the growth momentum in this segment over the next year.
Australia
The Australian business is a relatively new market for EROAD. While the company is continuing to
build brand presence, a promising enterprise pipeline is already evident. During the year the Australian
business added 784 contracted units, reflecting growth in the small-to-medium business segment, to
deliver growth of 59%. This growth rate is expected to accelerate in FY21 through the Enterprise
customer segment. Revenue remained relatively flat at $0.7m from $0.6m, while EBITDA was $(1.3)m,
as EROAD continued to invest in sales and marketing activity in this new market to support future
growth.
Continuing to invest in Research and Development
EROAD invested $15.6m or 19% of revenue in research and development, in line with expectations.
As a result, the company launched seven new SaaS products and enhancements including the
innovative asset tracking system EROAD Where. The company also invested $6.9m to implement new
business systems that have enabled it to scale up to deliver future growth while also ensuring that
EROAD’s operating efficiency can support its growth ambitions.
Operating effectively during COVID-19 Crisis
EROAD’s global business continuity plan has ensured the company has been able to operate
effectively throughout the period of disruption caused by COVID-19. During this time, EROAD’s
employees, products and services have continued to support the supply chain and business activities
of our customers. Many of EROAD’s customers provide essential services that kept the New
Zealand, North American and Australian economies running, despite the operating restrictions
implemented to stop the spread of COVID-19.
EROAD remains well positioned
Despite economic uncertainty across all our markets, EROAD remains well positioned for FY21
reflecting its strong customer value proposition, future contracted income and diverse customer base
across regions, business size and industry. While uncertainty results in longer sales lead-times EROAD
remains confident in continued unit growth across all three markets, albeit it is likely to be lower than
delivered in FY20 and previously anticipated for FY21. EROAD continues to monitor economic
conditions and their impact on debtor collectability and asset retention rates. EROAD will continue to
focus on growing Monthly SaaS Average Revenue per Unit and investing to improve operating
leverage.
EROAD’s Board remains confident and ambitious about the company’s future prospects. EROAD’s
cashflow, combined with the recently announced refinancing will be deployed to support organic
growth opportunities. EROAD remains committed to seeking growth opportunities to deliver its long-
term strategy. Any medium to large opportunities, including acquisitions, will be equity funded.
In October 2019 EROAD announced it was considering seeking an ASX Foreign Exempt Listing, in
addition to its NZX listing, to facilitate greater access to capital, and provide alignment with the
company’s business operations and investor base. The Board is still evaluating this opportunity, in
light of the evolving COVID-19 situation, and will provide an update during the second quarter of
this financial year.
EROAD Chairman Graham Stuart said: “We are living in unprecedented times, and a great many things
have changed throughout the world. However, our passion and energy for solving our customers’
problems and the growth opportunities that presents, remain the same. With the investment we
continue to make in our markets, services and people, we are well placed to support sustained future
growth.”
Conference Call details:
EROAD’s Chief Executive Officer, Steven Newman and Chief Financial Officer, Alex Ball will give a
presentation on the company's financial and operational performance for FY20 via a teleconference
commencing at 10.30am NZST today.
Participants can register for the conference call by navigating to https://s1.c-
conf.com/diamondpass/100007583-invite.html and will receive dial in details upon registration.
An audio replay and transcript of the conference call will be available once it has been uploaded to
the EROAD website. Those will be found under ‘presentations’ on Eroad.co.nz/investors.
Ends
For Investor enquires please contact:
Alex Ball
Chief Financial Officer
ph: +64 29 772 5631
alex.ball@eroad.com
For Media enquiries please contact:
Sue-Ellen Craig
Director of Communications
ph: +64 21 577 685
sueellen.craig@eroad.com
Non-GAAP Measures
EROAD has used non-GAAP measures when discussing financial performance in this document. The directors
and management believe that these measures provide useful information as they are used internally to
evaluate performance of business units, to establish operational goals and to allocate resources. Non-GAAP
measures are not prepared in accordance with NZ IFRS (New Zealand International Financial Reporting
Standards) and are not uniformly defined, therefore the non-GAAP measures reported in this document may
not be comparable with those that other companies report and should not be viewed in isolation or
considered as a substitute for measures reported by EROAD in accordance with NZ IFRS. The Non-GAAP
measures EROAD have used are Annualised Monthly Recurring Revenue (AMRR), Costs to Acquire Customers
(CAC), Costs to Service & Support (CTS), EBITDA, EBITDA margin, Free Cash Flow and Future Contracted Income
(FCI) The definitions of these can be found on pages 135 and 136 of the Annual Report. All numbers relate to
the twelve months ended 31 March 2020 and comparisons relate to the twelve months ended 31 March
2019. All dollar amounts are in NZD.
---
19 June 2020
Results for announcement to the market
Name of issuer EROAD Limited
Reporting Period 12 months to 31 March 2020
Previous Reporting Period 12 months to 31 March 2019
Currency New Zealand Dollars
Amount (000s) Percentage change
Revenue from continuing
operations
$81,224 up 32%
Total Revenue $81,224 up 32%
Net profit/(loss) from
continuing operations
$1,042 up 121%
Total net profit/(loss) $1,042 up 121%
Interim/Final Dividend
Amount per Quoted Equity
Security
No dividend declared
Imputed amount per Quoted
Equity Security
Not Applicable
Record Date Not Applicable
Dividend Payment Date Not Applicable
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$0.13 $0.27
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
For commentary on the result, please refer to the Annual Report
for the year ended 31 March 2020.
Authority for this announcement
Name of person
authorised
to make this announcement
Alex Ball
Contact person for this
announcement
Alex Ball
Contact phone number +64 29 772 5631
Contact email address alex.ball@eroad.com
Date of release through MAP
19 June 2020
Audited financial statements for the year ended 31 March 2020 accompany this announcement.
TEL +64 9 927 4700 PO Box 305 394
FAX +64 9 927 4701 Triton Plaza, North Shore 0757 Page 1
FREE 0800 4 EROAD Auckland, New Zealand eroad.co.nz
---
EROAD ANNUAL REPORT
OUR
PURPOSE IS
SAFER, MORE
PRODUCTIVE
ROADS
34
SAFETY
TRUSTINTEGRITYTEAMINNOVATION
AN ENERGISED AND CAPABLE TEAM OF EROADERS
WE
PIONEERED
REGULATORY TELEMATICS
SAFER, MORE PRODUCTIVE ROADS
OUR PURPOSE
WHAT WE DO
Technology solutions to manage vehicle fleets,
support regulatory compliance, improve driver
safety and reduce costs associated with driving.
OUR VALUES
WE CHOOSE
TO GROW
NEXT MILESTONE:
250,000+
CONNECTED UNITS
GLOBAL LEADER
IN VEHICLE TELEMATICS
SUCCESFULLY
EXECUTING
OUR STRATEGY
116,488
TOTAL CONTRACTED UNITS
6,642
CUSTOMERS
>
95%
LOYAL CUSTOMERS
ASSET
RETENTION
RAT E
58.38
SELLING MORE SAAS PRODUCTS
MONTHLY
SAAS AVERAGE
REVENUE
PER UNIT
$
NEW ZEALAND
TOTAL
ADDRESSABLE
MARKET
NORTH AMERICA
AUSTRALIA
WHY OUR
CUSTOMERS
CHOOSE US
CUSTOMER
SERVICE
DIFFERENTIATED
SOLUTIONS
RELIABLE AND
ACCURATE
EASY
TO USE
OUR
UNIQUE
APPROACH
GLOBAL MARKET
DEVELOPMENT:
Listen to our
customers and
understand
regulation
R&D:
Build, validate,
experiment
and test
assumptions
GO TO MARKET:
Independent
verification, launch,
adapt, refine and
deliver value
Light
Commercial
Vehicles
Light
Commercial
Vehicles
Medium
Vehicles
Heavy VehiclesHeavy VehiclesHeavy Vehicles
150k
700k4m
620k
2.9m
10m
56
Our in-vehicle telematics solution
(Ehubo) collects data from the
vehicle which is then transmitted via
secure cellular link and appears in a
cloud-based web portal (Depot), for
customer access and easy reporting.
Our solution starts with keeping
track of fleets and simplifying
taxation. As fleets grow and current
customers become familiar with
the return on investment EROAD
products offer, their fleet compliance,
fleet management and safety needs
grow. This means EROAD grows
with them providing more innovative
products and services to help them.
SOLVING OUR
CUSTOMERS PROBLEMS
WITH INNOVATIVE
PRODUCTS AND SERVICES
Our customers have heavy
and light transport fleets.
They want their fleets to
comply with regulation, be
productive and be safe.
EROAD differentiates itself
by working in partnership
with its stakeholders and
customers, providing
differentiated products and
services that are reliable,
accurate and easy to use.
ELECTRONIC
LOGBOOK
AU FRINGE
BENEFIT TAX
EASY-TO-USE
ELD
IFTA
EASY FILE
ELECTRONIC
OREGON
WMT/RUAF
ELECTRONIC
IRP
NZ ERUC
EROAD
SHARE
E-TRACK
WIRED
PARTNER
INTEGRATIONS
TRIP
INVESTIGATOR
PROOF OF
SERVICE
DAILY FLEET
ACTIVITY
FUEL
MANAGEMENT
EROAD
POOL CAR
BOOKING
SERVICE
SCEDULING
AND ALERTS
DRIVER
LEADERBOARD
DRIVER
INSIGHT
DAILY DRIVER
ACTIVITY
SPEED
MONITORING
EROAD
ANALYTICS
SAFETY EVENT
MONITORING
CHAIN OF
RESPONSIBILITY
REGULATORY COMPLIANCE
FLEET MANAGEMENT
DRIVER MANAGEMENT & ROAD SAFETY
5
87
NEW ZEALANDFY20 AT A GLANCE
EROAD DELIVERS
ANOTHER PERIOD
OF STRONG GROWTH
INVESTING TO BUILD
FOUNDATIONS FOR
FUTURE GROWTH
32%
reflecting strong growth
in New Zealand and
North America
21%
reflecting two enterprise
customers in North America
and continued steady growth
in New Zealand
6.0%
95.2%
reflecting quality of service
and product offering
1.4m
73%
demonstrating increase
in scale and improving
operating leverage
contracted across
a diverse customer base
REVENUE
CONTRACTED UNIT GROWTH
MONTHLY SAAS AVERAGE
REVENUE PER UNIT (ARPU)
ASSET RETENTION RATE
PROFIT BEFORE TAX
FREE CASH FLOW
EBITDA
FUTURE CONTRACTED INCOME
UN-DRAWN DEBT FACILITIES
SPENT ON RESEARCH
AND DEVELOPMENT
7
key launches, adding to our
customer value proposition
CONTINUED INVESTMENT IN
PRODUCTS AND SERVICES
$
$
23.9m
following refinancing and expanding
debt facilities to $60m in March 2020
$
15.6m
$
INVESTED IN NEW GENERATION
BUSINESS SYSTEMS
6.9m
to scale for growth and improve
operating leverage
$
134.4m
$
FY20: $81.2m • FY19: $61.4m
FY19: $(5.1)m
FY19: $(13.1)m
FY20: $27.1m • FY19: $15.6m
FY19: 94.4%
FY20: $58.38 • FY19: $55.08
FY19: $117.4m
Drawn debt: FY20: $36.1m* • FY19: $34.7m
*after borrowing costs of $0.3m
(
12.8
)
m
or 19% of Revenue
109
LETTER FROM
THE CHAIR AND CEO
11
-
18
SAFER, MORE
PRODUCTIVE ROADS
19
-
26
OUR MARKETS
27
-
38
INVESTING FOR GROWTH
39
-
46
THE NUMBERS
47
-
50
SOCIAL AND ENVIRONMENTAL
RESPONSIBILITY
51
-
56
OUR PEOPLE, MANAGEMENT
AND BOARD
57
-
64
FINANCIALS
65
-
102
AUDITORS REPORT
103
-
110
CORPORATE GOVERNANCE
111
-
127
REGULATORY DISCLOSURES
129
-
134
GLOSSARY
135
-
136
CONTENTS
EROAD has used non-GAAP measures when discussing
financial performance in this report. The directors and
management believe that these measures provide useful
information as they are used internally to evaluate
performance of business units, to establish operational
goals and to allocate resources. Non-GAAP measures are
not prepared in accordance with NZ IFRS (New Zealand
International Financial Reporting Standards) and are not
uniformly defined, therefore the non-GAAP measures
reported in this document may not be comparable with
those that other companies report and should not be
viewed in isolation or considered as a substitute for
measures reported by EROAD in accordance with NZ IFRS.
The non-GAAP measures EROAD have used are Annualised
Monthly Recurring Revenue (AMRR), Costs to Acquire
Customers (CAC), Costs to Service & Support (CTS),
EBITDA, EBITDA margin, Free Cash Flow, Future Contracted
Income (FCI). The definitions of these can be found on
pages 135 and 136 of this report.
All numbers relate to the twelve months ended 31 March
2020 and comparisons relate to the twelve months ended
31 March 2019, unless stated otherwise. All dollar amounts
are in NZD.
This report covers the financial year ended 31 March 2020
and is dated 18 June 2020. The report has been approved
by the Board and is signed on behalf of EROAD Limited by
Graham Stuart, Chairman and Steven Newman, Managing
Director and Chief Executive Officer.
ABOUT THIS REPORT
Steven Newman
Graham Stuart
1211
LETTER FROM
THE CHAIR
AND CEO
Dear EROAD Shareholder
We are pleased to report to you our results for the year ended
31 March 2020 (FY20) and the further progress we have made in
delivering on our strategy.
We are living in unprecedented times, and a great many things
have changed throughout the world. However, our passion and
energy for solving our customer’s problems and the growth
opportunities that presents remain. Now, more than ever,
EROAD’s values of safety, trust, integrity, team, and innovation
position us well to deliver safety, efficiency and compliance
outcomes for our customers.
With the investment we continue to make in our markets, services
and people, we are well placed to support sustained future
growth. We remain committed to helping provide safer, more
productive roads, and growing into a business with 250,000+
connected vehicles and a global leader in vehicle telematics.
LETTER FROM THE CHAIR AND CEO
Graham Stuart, ChairmanSteven Newman, CEO
1413
DELIVERING
ANOTHER PERIOD
OF STRONG
GROWTH IN FY20
FY20 has been another year of significant
achievements for EROAD. In May 2019,
we reached a major milestone of 100,000
contracted units, something that only
took us nine years. We grew strongly at
a rate of 21% in FY20, ending the financial
year with 116,488 contracted units.
Our North American business onboarded
two large enterprise customers during the
year, bringing increased brand awareness
and credibility in a competitive market.
North America has delivered positive EBIT
since the first quarter of FY20.
These factors combined to deliver a
profit after tax, which reflects the strong
growth and improving operating leverage
we are achieving.
EROAD delivered a profit before tax of
$1.4m, an increase of $6.5m from the loss
before tax of $(5.1)m last year, reflecting
the transition of our North America
business to an established market
position and our continued success as
market leader in New Zealand. Revenue
increased by 32% to $81.2m and earnings
before interest, tax, depreciation and
amortisation (EBITDA) grew by 73% to
$27.1m. The value of future revenue from
existing contracted units (FCI) increased
by 14% to $134.4m.
Throughout FY20 the New Zealand
business continued to grow, adding
10,256 contracted units, to achieve an
annual growth rate of 15% with expansion
into existing customer fleets, together
with a solid underlying new customer
run rate, underpinning this result.
North America added 9,342 contracted
units, to deliver a growth rate of 38%,
reflecting the on-boarding of two
enterprise customers that added 5,281
units. Our small-to-medium run-rate was
lower than expected, as we did not see
the anticipated level of increase in sales
pipeline ahead of the AOBRD (Automatic
On-Board Recording Device) to ELD
(Electronic logging device) mandate
deadline at the end of December 2019.
However, work is underway in North
America to improve the small-to-medium
businesses run-rate, and we expect
various product and service launches to
help build the momentum in this segment
over the next year.
Our Australian business is a relatively
new market for EROAD. Here we have
continued to build our brand presence and
have built a promising Enterprise pipeline.
Over the year we saw 784 contracted units
added, reflecting growth in the small-to-
medium business segment. We anticipate
this level of growth to accelerate in FY21
through both the small-to-medium and
enterprise customer segments.
We have always been clear that
where we see opportunities we will
continue to invest for growth. As a result,
in FY20, we invested $15.6m or 19% of
revenue in research and development.
As a result, we launched seven new
SaaS products and enhancements, and
launched our innovative tracking system
EROAD Where.
We also invested $6.9m to implement new
business systems that have enabled us to
scale up to deliver future growth while also
ensuring that our operating efficiency can
support growth ambitions.
LETTER FROM THE CHAIR AND CEO
REVENUE
32
%
PROFIT
BEFORE TAX
73
%EBITDA
%
m
FUTURE
CONTRACTED
INCOME
14
$
1.4
1516
LETTER FROM THE CHAIR AND CEO
Ensuring we
have the right
skills around
the Board table
Strong governance is a key ingredient
to any successful company and even
more so for a growth company. Our
Board focuses on performance and risk,
encouraging innovation, understands the
big picture and ensures our senior leaders
are maximising shareholder value with the
right investment decisions.
The external independent review
of the EROAD Board which was
completed during 2019 identified the
areas of strength and opportunities for
improvement to ensure we have the right
skills and capabilities around the Board
table as we enter the next phase
of growth.
We were able to use these insights
as part of the director search process,
following which Barry Einsig was
appointed as an independent director
in January this year. Barry brings to the
Board a deep understanding of the
North American transport market,
combined with extensive and global
experience in connected vehicles and
smart transport networks.
Committed to providing
positive outcomes for
the communities we
operate in, and the
environment we share
There is nothing like a crisis to reveal a
company’s true capability and culture.
With the COVID-19 global crisis, we were
proud as the Board, management and
our over 300 EROAD’ers navigated a new
reality. Operating effectively under its
global business continuity plan, EROAD’s
employees, products and services
continued to support the supply chain
and activities of our customers.
Many of EROAD’s customers provided
essential services that kept the New
Zealand, North American and Australian
economies running, despite the operating
restrictions implemented to stop the
spread of COVID-19. We would like to take
this opportunity to thank all EROAD’ers
for both their continued successful
execution of strategy over FY20 and their
outstanding efforts during this time.
EROAD’s purpose is to deliver safer, more
productive roads – in short, our products
and services help change driver’s
behaviour, reducing speed and fatigue
to help reduce the risk of human injury
and even loss of life. Fleets using our
products and services can achieve fuel
savings – which reduces our customers
cost and helps the environment.
We have begun to formally move
towards a recognised sustainability
reporting framework and expect to adopt
the internationally recognised Global
Reporting Initiative (GRI) framework for
our FY21 Annual Report.
17
EROAD’s Board remains confident
and ambitious about the company’s
future prospects. EROAD’s cashflow,
combined with the recently announced
refinancing will be deployed to support
organic growth opportunities. EROAD
remains committed to seeking growth
opportunities to deliver its long-
term strategy. Any medium to large
opportunities, including acquisitions,
will be equity funded.
In October last year we announced that
we were considering seeking an ASX
Foreign Exempt Listing, in addition to our
NZX listing, to facilitate greater access to
capital, and alignment between EROAD’s
business operations and investor base. The
Board is still evaluating this opportunity,
in light of the evolving COVID-19 situation,
and will provide an update during the
second quarter of this financial year.
Thank you for your continued support of
EROAD and we look forward to updating
you on our progress at the Annual
Shareholders Meeting on 30 July.
Our customers are experiencing rapid
change as they adapt to a COVID-19
world. Balance sheets are stretched with
the short-term impacts from the tight
restrictions put in place on day-to-day
operations as governments around the
world fight the spread of the virus. Now
businesses – large and small, across all
sectors of the economy - are positioning
themselves for the longer-term impacts of
a global downturn. EROAD was founded
in a recession and we have always worked
with our customers to find solutions to
their problems and deliver return on
investment. Now is no different. Alongside
compliance and safety requirements –
which remain steadfast no matter what
the economic climate – the focus our
customers have on improving operational
efficiencies and reducing their cost
base can only increase. This is what our
products and services do best.
In April, our Board and senior leaders
undertook a full strategy review, including
scenario analysis on future cashflow
and expenditure, to ensure EROAD was
well positioned. We have taken prudent
measures to manage our cost base while
still investing in growth and we believe
EROAD is well positioned for FY21
and beyond.
Despite economic uncertainty across all
our markets, we remain well positioned
for FY21 reflecting its strong customer
value proposition, future contracted
income and diverse customer base across
regions, business size and industry. While
uncertainty results in longer sales lead-
times we remain confident in continued
unit growth across all three markets,
albeit it is likely to be lower than delivered
in FY20 and previously anticipated
in FY21. We will continue to monitor
economic conditions and its impact on
debtor collectability and asset retention
rates. In FY21 we will continue to focus on
growing Monthly SaaS Average Revenue
per Unit and investing to improve
operating leverage.
IN UNPRECEDENTED
TIMES, EROAD IS
WELL POSITIONED
WE STILL
CHOOSE
TO GROW
Steven Newman
Graham Stuart
LETTER FROM THE CHAIR AND CEO
18
2019
WE’RE MAKING
ROADS SAFER
USING A COMBINATION
OF EROAD SERVICES,
FURTHER REDUCES
THE FREQUENCY OF
SPEEDING EVENTS
OUR CRASH-HARM PREDICTION MODEL
Reducing the frequency and severity of
accidents that occur on our roads results
in more people making it home safely.
EROAD solutions directly impact road
safety: by improving driving behaviours,
reducing the well-known precursors to
road accidents, providing service and
maintenance monitoring to enable our
customers to run safer vehicles on our
roads and providing insights to help
businesses and governments make
better decisions.
The above graph shows the reduction in over speed events over time as product
enhancements have been added.
*Source: New Zealand Transport Authority
1
Comparing frequency of over-speed events between EROAD customers against
Ministry of Transport real and projected data for total NZ population.
-
5%
10%
15%
20%
25%
30%
35%
20152016201720182019
Ministry of Transport ProjectionEROAD
Frequency (events per 100km)
Driver Leaderboard
TM
Driver Login
TM
Posted Speed
TM
Overspeed Dashboard
TM
Drive Buddy
TM
56%
25
20
201620182020
15
10
-
DRIVERS THAT USE
EROAD, HAVE FEWER
SPEEDING EVENTS THAN
DRIVERS THAT DON’T
1
Percentage of vehicles that speed
New Zealand frequency of speeding events
RISK ELEMENTS
INTERVENTIONS
INTERVENTIONS
Static
Environmental
Static
No Crash /
Avoidance
Until next time...
Rear Ended
Crash
Personal
Vehicle
Behavioural
Situational
Dynamic
all elements
Somewhat
Known
Unknown
Known
Outcomes $4.8bn social cost
Loss of life and life quality
Vehicle cost
Medical cost
Legal cost
Asset cost
Economic cost
+ Partners
Faster Feedback Loop
Experimental Interventions
H
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A safe
road system
increasingly free of
death and
serious injury*
S
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Since installing EROAD, we have
noticed reductions in our fuel use,
RUC charges, overspeed events as well
as our service and maintenance costs.
The downstream benefits of having
EROAD technology in our vehicles is
really impressive.
Livestock Improvement Corporation (LIC)
FEEDBACK LOOP STARTS WITH DRIVER BEHAVIOUR
EROAD, working alongside Portland and Oregon State Universities, has developed a methodology that supports
faster government decision-making on road safety initiatives.
Using EROAD data to study precursors to crashes, faster insights are gained into the efficacy of crash interventions.
This enables a faster feedback loop and has piqued interest from the American Transportation Research Board.
SAFER, MORE PRODUCTIVE ROADS
21
GLOBAL RECOGNITION
The International Road Federation gave EROAD the 2019 Global Road
Achievement Award for Technology, Equipment and Manufacturing, in
recognition of EROAD’s innovative technology that is making a difference
to road safety.
INSURERS HAVE NOTICED
THE EROAD DIFFERENCE
OF EXCESS
WAIVED
OVER
1m
$
IAG (the largest general insurer across Australia and New Zealand) through
NZI and Lumley operates a Safe Driving Rewards Programme. Using EROAD
reporting to show whether an organisation’s drivers are among the 25% safest
drivers in New Zealand, could result in that company having its excess waived
should a driving accident occur.
Since installing EROAD, our insurance
claims have reduced by 77%, we also freed
up 3 FTE’s to work on other productive
work. EROAD definitely improves driving
behaviours – we’ve seen a 90% reduction
in speed events across the Contractor
fleet since installing Ehubo2’s mid-2017,
and to cap it off - we have significantly
reduced our compliance paperwork, and
all of the above has a direct affect on our
bottom line.
Foodstuffs North Island
Anecdotally, our Fleet Risk
Managers are seeing clients
who are actively using EROAD
data to improve their incidence
of claims.
IAG
SAFER, MORE PRODUCTIVE ROADS
22
24
EROAD IS THE BRIDGE BETWEEN THE
TRANSPORT INDUSTRY AND REGULATORS
Using real data enables more informed decision making that is more easily
adopted by those who use the roading networks. It also enables EROAD to
identify future technologies and product requirements.
IndustryAgency
Technology
Rules and
Regulations
There are no free roads, it is just a matter of how they are funded.
EROAD introduced the world’s first nationwide electronic road user charging (ERUC)
system. As at 31 March 2020, more than 47% of New Zealand’s electronic heavy
vehicle Road User Charges dollars were collected through EROAD attracting interest
from those researching or trialling funding options for transport networks.
In New Zealand, electronic payment of road user charges has overtaken those paying
with manual paperwork and over NZ$3b dollars has now been collected through
EROAD for the New Zealand Transport Agency.
The I-95 Corridor Coalition Mileage Based User Fee Pilots
The I-95 Corridor Coalition is conducting a multi-year trial that is investigating the effective funding of roads.
EROAD continues as a technology and research partner for this project. The initial learnings, from North America’s
1st Multi-State Truck pilot are due for release in the middle of this year.
The pilot has investigated how mileage-based user fees might function within the existing regulatory framework.
Through establishing a Motor Carrier Working Group and direct engagement of trucking companies through pilot
participation, the voice of the trucking industry has been brought to this national exploration. The next phase is
expected to commence late 2020, will be an extended pilot covering most of the United States.
RI
CT
AR
MO
IL
MS
IN
TN
ALGA
FL
OH
SC
WV
NC
VA
PA
NY
MD
DE
MA
NH
VR
ME
NJ
KY
55 Vehicles
across
27
States
Miles Driven
1,430,000
WE’RE MAKING
ROADS MORE
PRODUCTIVE
New Zealand has always led the
world in both the technology and
approach to road user charging
International Road Federation
Australian Department of Transport, Infrastructure, Regional
Development and Communication (DIRDC) road funding trial
EROAD was included in the small-scale road funding trial with DIRDC undertaken in Australia late last year. Due to its
success of that, government planning is currently underway for a much larger road funding trial that is anticipated to
commence in late 2020.
New Zealand Ministry of Transport weekly Dashboards
EROAD is the only non-government organisation to be supplying analytics to the Ministry of Transport (NZ) for inclusion
in their weekly traffic dashboards. These dashboards provide a broad range of transport facts for government, media,
research and public use and are often referred to for economic and planning purposes.
EROAD analytics working with universities to provide insights
EROAD worked with Oregon State University and the University of Washington to provide anonymised and aggregated
insights on commodity movements for the Idaho State-wide Freight Data and Commodity Supply-Chain Analysis. EROAD
also provided anonymised and aggregated data to Oregon State University for their project to predict freight flows for the
Oregon Department of Transportation.
SAFER, MORE PRODUCTIVE ROADS
23
2625
SUPPORTING OUR
ECONOMY’S ESSENTIAL
SERVICES DURING
COVID-19
JUST A LITTLE THANK YOU FOR THE
ESSENTIAL WORK OUR CUSTOMERS DO!
In New Zealand, well known media
personality Hilary Barry joined staff
in our ‘Thanks to the Truckies’ video
and we partnered with Z Energy to
give our essential drivers a coffee to
keep them going.
In Washington state, EROAD has
partnered with Washington Trucking
Associations to provide meals.
EROAD HEAVY VEHICLES ON THE ROAD
In Auckland, pre-lockdown and during alert levels
ALERT LEVEL 3 30th AprilALERT LEVEL 4 26th March
‘NORMAL’ 27th Feb
Many of EROAD’s customers provide essential services that keep the economy running, with over 30% of New Zealand heavy
customer vehicles, over 50% of total Australian customer vehicles and over 60% of total North American customer vehicles
continuing to operate during April despite the restrictions implemented to stop the spread of COVID-19.
MANY OF EROAD’S CUSTOMERS
WERE DEEMED ESSENTIAL
In Oregon we partnered with the
Oregon Trucking Association and Right
Weigh to hand out lunchboxes, water
and safety supplies to drivers.
SUPPORTING
ESSENTIAL SERVICES
DURING COVID-19
EROAD’s priority during the ongoing
COVID-19 global crisis is the safety of
our team and supporting our customers.
EROAD is well equipped and prepared
with our global business continuity plan
which was quickly activated when both
the North America and New Zealand
offices shifted to working from home.
Operating effectively throughout the
crisis, EROAD’s products and services
continued to support the supply chain
and activities of transport and essential
service providers.
During the lockdowns in all three of
our markets, EROAD was designated
an essential service provider. This was
due to the reliance on EROAD’s services
that other essential services providers
had needed to keep supply chains and
essential services open.
EROAD also supported organisations
to protect their staff and customers
against the spread of COVID-19 with our
technology enabled solutions that include
EROAD construction management site
strategy, EROAD contact tracing service
and all our products and services that
allow paperless operations. Cashflow
management was made easier for
customers with reminders about eRUC
reduction and claiming off-road refunds.
SAFER, MORE PRODUCTIVE ROADS
28
MARKET
LEADER
IN NEW
ZEALAND
96.1%
ANZ Asset
Retention Rate
LOYAL CUSTOMERS
New Zealand Monthly SaaS
Average Revenue per Unit
FY19: $53.74
55. 78
$
GROWING WITH OUR CUSTOMER
15%
WINNING CUSTOMERS
to 80,366
contracted units
FY19: 70,110
34.9m
EBITDA
FY19: 27.9m
DELIVERING RETURNS
$
We have an agreement with St John who are our
preferred monitoring supplier in New Zealand for
our Crash and Rollover Alerts product
OUR MARKETS
27
3029
OUR MARKETS
STILL SIGNIFICANT
GROWTH
OPPORTUNITIES
GROWING CONTRACTED UNITS
WITH NEW AND EXISTING CUSTOMERS
FY20 ACHIEVEMENTS
FY21 FOCUS
STRATEGIC
PRIORITIES
GROW THROUGH
RETENTION AND
ACCOUNT EXPANSION
CONTINUE
EXPANSION INTO
SAFETY AND COST
CONSCIOUS MARKET
LEVERAGE
NETWORK
INTO NEW
OPPORTUNITIES
96.1% ANZ asset
retention rate
• Renewed 8,136 contracted
units. 6,283 of these were
on EHubo1, of which 42%
upgraded to Ehubo2
• Implemented customer
success model across sales
and support teams
Increased contracted units
by 10,256, of which 30% were
new customers in sectors
such as Construction & Civil
Engineering and Agriculture/
Forestry
Launch of EROAD
Where business
Continued development
of data analytics
Partnered with St Johns
Ambulance to launch crash
& rollover alert functionality
which was influential in
winning Worksafe as a
customer
Continuing growth from current and new customers – growing
the number of contracted units, upgrading hardware and SaaS
products we sell to each customer.
Continuing to deliver new innovative products and services
that drive cost out of our customers businesses.
Supporting customers against the spread of COVID-19 with
our paper-less operations and contact tracing technologies.
UPGRADING HARDWARE
AND SELLING MORE SAAS PRODUCTS
CONTRACTED
ASSETS
(BY HARDWARE)
57%
EHUBO2
150k
620k
37%
EHUBO1
6%
ASSET
TOTAL
ADDRESSABLE
MARKET
LIGHT COMMERCIAL
VEHICLES
HEAVY VEHICLES
47%
EROAD COLLECTS
HEAVY TRANSPORT ROAD
USER CHARGES LICENSES
USING INSPECT
9%
USING LOGBOOK
6%
60%
IN NZ OVER
OF HEAVY TRANSPORT
ROAD USER CHARGES
LICENCES ARE COLLECTED
ELECTRONICALLY
Average Revenue per Unit should improve over the next few years due to the upgrade of the majority of Ehubo1
units to Ehubo2. In addition there is further opportunity tp sell more SaaS products such as Inspect and Logbook .
3132
2
large enterprise
customers
onboarded
GROWING OUR REPUTATION
IN A COMPETITIVE MARKET
ESTABLISHED
IN NORTH
AMERICA
65. 73
2
$
GROWING WITH OUR CUSTOMER
38%
WINNING CUSTOMERS
to 34,002
contracted units
FY19: 24,660
1
7.5m
EBITDA
FY19: 0.4m
DELIVERING RETURNS
$
NA Monthly SaaS
Average Revenue per Unit
FY 19: $60.08
1
North American units for FY19 is restated for data cleansing adjustments identified as part of the new ERP systems implementation
2
Stronger USD v NZD contributed $4.26 of the increase from the prior year
OUR MARKETS
3433
LARGE
MARKET
WITH MANY
OPPORTUNITIES
FY20 ACHIEVEMENTS
FY21 FOCUS
STRATEGIC
PRIORITIES
PURSUE SELECTIVE
ENTERPRISE
OPPORTUNITIES
BUILD SUSTAINABLE
RUNRATE BUSINESS
IN THE SMALL
AND MEDIUM
BUSINESS SPACE
CONSIDER
STRATEGIC GROWTH
OPPORTUNITIES
5,281 units deployed from
two large enterprise wins
in first half. These help with
referrals to other large
enterprise customers.
An average monthly small
and medium business run
rate of 338.
Continued to hold
discussions with potential
partners around a range of
opportunities to build the
product portfolio.
EROAD Go will be launched in HY21. This gives customers
the ability to dispatch, track proof of delivery and integrate
Transportation Management Systems solutions (required for fleet
sizes over 100 trucks). This launch, together with the release of
our camera increases our ability to access the addressable market
in the medium and enterprise customer space.
EROAD’s target market in
North America is all businesses
participating in regulated trucking.
The total number of commercial
motor vehicles in North America is
32m, including passenger cars and
light trucks, whose activities are
predominantly unregulated. The
regulated space includes medium
and heavy vehicles (class 3+, 10,000
pounds or greater) and light duty
vehicles that when towing a trailer
have a GVW of 10,000+ pounds.
EROAD’s target market includes all
vehicle class 3 or higher.
4m
48%
37%
8%
7%
10m
TOTAL
ADDRESSABLE
MARKET
MEDIUM VEHICLES
HEAVY VEHICLES
TOTAL FLEET
TOTA L TAX
OPPORTUNITIES
TO UPGRADE
ELD
OTHER
OPPORTUNITY TO UPGRADE CUSTOMER PLANS
AND SELLING SAAS PRODUCTS
OUR MARKETS
CONTRACTED
UNITS
EROAD GO
will be launched HY21
ETRACK WIRED
launched Q1 FY21
3536
BUILT OUT SALES TEAM
AND INCREASED
MARKETING EFFORTS
1st
trans-Tasman fleet of 355
contracted units onboarded
(160 of which were in Australia)
BUILDING BRAND
IN AUSTRALIA
LEVERAGING
TRANS-TASMAN
SYNERGIES
59%
WINNING CUSTOMERS
BUILDING BRANDS
annualised
growth in units
(
1.3m
)
EBITDA
FY19: $(0.6)m
INVESTING FOR GROWTH
$
OUR MARKETS
3837
MANY GROWTH
OPPORTUNITIES
2.9m
700k
HEAVY VEHICLES
LIGHT COMMERCIAL
VEHICLES
FY20 ACHIEVEMENTS
FY21 FOCUS
STRATEGIC
PRIORITIES
PURSUE SELECTIVE
ENTERPRISE
OPPORTUNITIES
BUILD SUSTAINABLE
RUNRATE BUSINESS
IN THE SMALL
AND MEDIUM
BUSINESS SPACE
MANAGE COST
BASE FOR
EFFICIENCIES
IN GROWTH
Continued to build
the strong enterprise pipeline
for Australia
(fleets of 500– 1000).
Had expected some
contracts finalised by
year-end but now
delayed due to COVID-19.
Added 784 units during FY20.
Increasing marketing and
informing potential customers
on EROAD’s customer value
proposition.
During the fourth quarter a
medium sized Trans-Tasman
customer fleet was deployed.
Customer support functions
continue to be provided
from New Zealand to ensure
cost to serve efficiencies at
this early stage of entry into
Australia.
The size of the in-market
sales team and marketing
activity is closely monitored
and increases are following
sales achievement and
pipeline growth.
Establishing market by focusing on strong enterprise
account pipeline, through product launches that leverage
off Enterprise products in other regions. Extending EROAD
Where to Australia in H2 FY21 further differentiates EROAD.
OPPORTUNITY TO GROW WITH A
FLIGHT TO QUALITY FROM FIRST-TIME
TELEMATICS BUYERS AND A CHANGING
REGULATORY ENVIRONMENT.
OUR MARKETS
TOTAL
ADDRESSABLE
MARKET
4039
INVESTING IN OUR
TECHNOLOGY AND
PROCESSES WILL ENSURE
WE CAN SCALE THE
BUSINESS EFFECTIVELY
INVESTING FOR GROWTH
6.9m
IN FY20 WE SPENT
INVESTING IN NEW GENERATION
BUSINESS SYSTEMS
INVESTING TIME IN OUR
CUSTOMERS, RESULTING
IN LOYAL CUSTOMERS
Ensuring complete product
utilisation & solution value
with on-demand guidance on
product adoption & value
Quarterly product roadmap
reviews & feature enhancements
where applicable
Management of
concrete success measures
Customer Exclusive Insights
that provide best practices,
new product features, and
industry-related topics
Client
advocacy
Proactive outreach ensuring
complete product utilisation &
solution value
Regular check-in’s
with Customer Success Manager
& quarterly business reviews
360
o
CUSTOMER
SUCCESS
Our customers are important to us, and we travel a journey
throughout their time with us. This ensures we know how to
best meet their needs, and increased customer loyalty.
PROJECTS COMPLETED OVER FY19 AND FY20
TRANSFORMATIONAL
CHANGE IN KEY
BUSINESS SYSTEMS
AUTOMATING
KEY
PROCESSES
INTEGRATING
BUSINESS
PLANNING
SIMPLIFYING,
STANDARDIZING,
AUTOMATING
$
4241
LEARNING
LOOPLower cost
NEW IDEA/
CHANGE
MAKE IT PAY
DELIVER VALUE
Customer
Strategy
Support
Customer Advisory Group
R&D
Sales
Regulatory/Govt
Tipping pointCommit to launch
LAUNCH
LOOPHigher cost
Continued investment
in Research and Development
is critical to delivering reliability,
scalability, quality and innovation
Our market growth is fuelled
by regulatory change. Our
customers start with compliance
needs and grow as our customers’
go on a maturity journey with
us. EROAD continues to invest
between 18-22% of Revenue in
research and development,
which is essential to ensure
EROAD’s ongoing reliability and
quality, and ensuring scalability
and growth in the future.
Our teams focus on ideas from
multiple inputs, funnelling these
through a process of rapid
learning, discarding most and
following through on the high
impact ideas. We are continually
learning and adapting to ensure
the high impact ideas pay and
deliver value.
BUILD.
MEASURE.
LEARN
Research
Experiment
Validate
Reduce risk
Increase confidence
Test assumptions
BUILD.
MEASURE.
LEARN
Build
Adapt
Refine
Pivot
Deliver Value
Discard
Discard
INVESTING FOR GROWTH
An environment encouraging innovation
4344
Continued investment in products and
services delivers growth, customer
retention and improved Monthly SaaS
Average Revenue per Unit
INVESTING FOR GROWTH
AUGUST
2019
NA
Drivers can select this ruleset from
within their truck, enabling them to
view and track their driving hours
in line with Texas regulations.
TEXAS INTRASTATE
RULE SET
JULY
2019
NA
EROAD FUEL TAX CREDIT
(FTC) SOLUTION
AUGUST
2019
AU
Provides customers a solution that
helps with claiming back their full
Fuel Tax Credit entitlement.
Consolidates key fleet metrics onto a single
view dashboard. Updated with a new map
experience in March 2020.
MYEROAD DASHBOARD
SEPTEMBER
2019
AU
NZ
CRASH & ROLL OVER ALERTS
(IN PARTNERSHIP WITH
ST JOHN AMBULANCE)
Delivers emergency alerts to the fleet
manager and the driver’s designated first
responders in the event of a serious collision
or rollover incident.
MARCH
2020
AU
NZ
FEBRUARY
2020
AU
NZ
PRIVATE MODE
Technology that complements vehicle policy
and compliance regulations around private and
company use of vehicles.
EROAD WHERE
DECEMBER
2019
Provides a cost-effective small
asset tracking solution.
NZ
Displays each driver’s available
hours. Ensures compliance with
regulation, drivers are safe and
fleets maximise their productivity.
HOURS OF
SERVICE RECAP
4546
THE NEXT
GENERATION OF
ASSET TRACKING
SOLUTIONS
Saves time, reduces costs
and helps businesses perform
better for a fraction of the cost of
traditional asset tracking solutions.
For businesses with a high volume of
assets that frequently move around
remote job sites, trying to keep track of
assets has been an ongoing struggle.
This creates waste in both time and cost
as assets are under-utilized, time is lost
locating assets for jobs, replacement
assets are purchased unnecessarily,
and assets are shifted around sites in an
inefficient manner to cover for those that
can’t be found.
EROAD Where saves time, reduces costs
and help businesses perform better, but
at a fraction of the cost of the traditional
Internet of Things solution.
EROAD Where is an affordable
asset tracking solution for moveable
assets which can be tracked through
our unique mesh network anywhere in
New Zealand. The platform has been
designed to communicate with
a variety of future devices, and we
have a roadmap of platform product
additions based on customer feedback
and sales opportunities, so EROAD
Where will continue to scale with our
customer’s needs.
This cost disruptive solution to asset
tracking was developed together with
our customers over the course of FY20
and launched in December 2019. It is early
days, however we are seeing increasing
demand and need for this product across
New Zealand and Australia.
ONE
PLATFORM
ROBUST
TAG
UNIQUE
MESH
NETWORK
BLUETOOTH
TECHNOLOGY
5+ YEAR
BATTERY
LIFE
INVESTING FOR GROWTH
4847
THE NUMBERS
REVENUE
Group Revenue increased 32% from $61.4m to $81.2m reflecting
strong growth in New Zealand and North America. New Zealand
Revenue increased by 21% to $53.4m from $44.2m in the comparable
period. The New Zealand business ended the year with 80,366 units,
adding 10,256 contracted units, to achieve an annual growth rate of 15%
through expansion into existing customer fleets, combined with a solid
underlying new customer run rate. Strong enterprise sales growth in the
North American market resulted in a significant increase in revenue of
62% to $24.8m from $15.3m. Revenue also benefited from the stronger
USD/NZD.. The North American business added 9,342 contracted
units, to deliver a growth rate of 38%, reflecting the on-boarding of two
enterprise customers in the first half of the year. During the year the
Australian business added 784 contracted units, reflecting growth in the
small-to-medium business segment, to deliver growth of 59%. Australian
Revenue remained relatively flat at $0.7m from $0.6m.
OPERATING EXPENSES
Operating expenses grew by $8.3m or 18% on the prior year figure. Of
this amount $5.1m related to staff costs, and also included approximately
$2.0m of non-recurring legal costs associated with a patent dispute.
EBITDA
EBITDA grew $11.5m or 73% to $27.1m reflecting the revenue growth in
New Zealand and North America. EBITDA for Australia fell from $(0.6)m
to $(1.3)m reflecting investment in sales and marketing activity in this new
market to support future growth.
EBITDA for the Corporate & Development segment’s was $(14.0)m,
from $(12.0)m reflecting the combination of investment in Research &
Development activities coupled with a focus on cost management to
improve operating leverage. The result included non-recurring patent
dispute costs of $2.0m.
($m)FY20FY19Movement
New Zealand 34.9 2 7. 9 7.0
Australia (1.3) (0.6) (0.7)
North America 7. 5 0.4 7.1
Corporate &
Development
(14.0)(12.0)(2.0)
Elimination of
inter-segment EBITDA
(0.0) (0.1)0.1
EBITDA 2 7.1 15.6 11.5
EBITDA MARGIN33%25%8%
DEPRECIATION & AMORTISATION
Total Depreciation & Amortisation of $22.6m increased by $4.7m on the
previous year. Depreciation of Property, Plant & Equipment increased by
$2.0m, $1.6m of which relates to Hardware Assets as a result of higher
contracted units. Amortisation of Contract Fulfilment and Customer
Acquisition Assets increased by $1.7m due to both increase in Total
Contracted Units and the stronger USD/NZD. Amortisation of Intangible
assets increased by $1.0m which reflects the continued investment
in Development Assets. The new business systems included within
Software Asset additions only went live late in the year and did not
materially contribute to the increase in amortisation for the year ended
31 March 2020.
PROFIT BEFORE TAX
Profit before tax of $1.4m, a $6.5m improvement on the $5.1m loss in the
previous year. This represents strong Revenue and EBITDA growth and
partly offset by higher depreciation, amortisation and finance costs.
EXTENDING THE PLATFORM
AND SCALING FOR GROWTH
EROAD continued to prioritise investment in research and development
to capitalise on potential growth opportunities across all of its markets. In
the year to 31 March 2020, a total of $15.6m was invested in research and
development, of which $9.6m was capitalised and $6.0m of previously
capitalised research and development was expensed/amortised. In-
line with our expectations, the total amount invested in research and
development represented 19% of revenue.
BALANCE SHEET
Cash reduced by $12.7m during the year to fund an increase in Research
& Development activities as well as investment of $6.9m in new
generation business systems. Property, Plant and Equipment increased
by $3.5m due to investment in hardware assets (excluding inventory
movements) which increased due to higher new unit volumes and a
stronger USD. Contract fulfilment aquisition assets increased by a net
$1.3m due to growth in contracted units. Intangible assets increased
by $9.0m with software additions $5.5m higher than in the prior year
as a result of the investment in new generation business systems and
processes.
FREE CASH FLOW
Operating cash flow increased strongly to $23.1m from $14.2m reflecting
an increased contribution from New Zealand and North America. Investing
cash flows increased to $(35.9)m from $(27.3)m, reflecting growth in
contracted units, continued investment in Development Assets and a
$6.9m investment in new generation business systems. As a result, Free
cash flow for the year ended 31 March 2020 improved by $0.3m on the
prior year to $(12.8)m. However, the free cashflow excluding amounts
spent on investing in the new generation of business systems was $(5.9)m
an improvement of $5.7m on the prior year figure of $(11.6)m.
DEBT REFINANCING
A three-year $60m syndicated debt facility was put into place on 26
March 2020 refinancing the previous facilities and providing additional
facilities to support future growth. Of this amount $36.1m was drawn
down after borrowing costs of $0.3m as at 31 March 2020, providing
EROAD with undrawn facilities of $23.9m as at that date.
FINANCIAL PERFORMANCE TRENDS
FY20FY19FY18
INCOME STATEMENT
Revenue $81.2m$61.4m$43.8m
Future contracted income $134.4m$117.4m$100.5m
EBITDA$27.1m$15.6m$10.5m
EBITDA margin 33%25%24%
Profit/(Loss) before tax$1.4m$(5.1)m$(5.9)m
Total comprehensive Profit/(loss) before tax$(0.3)m$(6.0)m$(3.7)m
BALANCE SHEET
Total Current Assets$34.0m$43.9m$46.6m
Total Non-Current Assets$91.8m$79.3m$64.5m
Total Liabilities$74.5m$71.9m$54.4m
CASH FLOW
Net cash inflow from operating activities$23.1m$14.2m$5.2m
Net cash outflow from investing activities $(35.9)m$(27.3)m$(23.8)m
Free Cash Flow$(12.8)m$(13.1)m$(18.6)m
PERFORMANCE METRICS
Total Contracted Units116,488 96,390 77,600
Asset Retention Rate95.2%94.4%95.8%
Monthly SaaS Average Revenue Per Unit $58.4$55.1$54.3
Annualised Monthly Recurring Revenue $86.0m$66.5mn/a
EROAD’S TRACK RECORD
THE NUMBERS
4950
THE FINANCIAL METRICS WE
MEASURE OURSELVES BY
EROAD HAS SEVEN KEY
FINANCIAL METRICS WE
AND OUR INVESTORS
CAN MONITOR OUR
PERFORMANCE BY
66.5
86.0
-
20.0
40.0
60.0
80.0
100.0
ANNUALISED MONTHLY RECURRING REVENUE ($M)
FY19FY20
LEADING GROWTH INDICATORS
ENTERPRISE VALUE FROM EXISTING CUSTOMER BASE
AMRR increase reflects growth in recurring revenues from
new units and SaaS ARPU.
RESEARCH AND DEVELOPMENT AS % OF REVENUE
22
22
12
14
10
19
12
7
8
-
5
10
15
20
25
R&D Expensed
R&D Capitalised
Total R&D
FY18FY19FY20
100.5
117.4
134.4
-
25.0
50.0
75.0
100.0
125.0
150.0
FY18FY19FY20
FUTURE CONTRACTED INCOME ($M)
FCI increased with new incremental contracted units
added and renewals, partially offset by recognition of
revenues for new and existing contracts.
R&D as % of Revenue within expected range of between
18-22% of Revenue.
Monthly SaaS ARPU has been trending upwards over the
past 12 months.
- Plan and hardware upgrades
- Above average pricing for new sales, including NA enterprise accounts
- Stronger USD vs NZD
Asset Retention Rate has remained stable and remains a
focus as we work to maintain this very high level through
renewal programmes in key markets.
54.32
55.08
58.38
-
10
20
30
40
50
60
70
FY18FY19FY20
MONTHLY SAAS AVERAGE REVENUE PER UNIT ($)
95.8
94.4
95.2
-
20
40
60
80
100
FY18FY19FY20
ASSET RETENTION RATE (%)
CAC as a % of Revenue would be expected to trend down
over time as revenue grows, reductions will be partly offset
by investment in CAC ahead of revenues in Australia.
CTS has remained within 4-5% of revenue range. There will be some
further operational leverage expected from FY21 as the business
realises benefits of system transformation investment.
CTS will improve over time as scale and leverage increases.
-
5
10
15
20
25
FY18FY19FY20
COST TO ACQUIRE CUSTOMERS AS % OF REVENUE
17
15
6
5
4
24
18
22
20
CAC Expensed
CAC Capitalised
Total CAC
5.0
4.6
4.6
-
1
2
3
4
5
6
CTS
COST TO SERVICE AND SUPPORT AS % OF REVENUE
FY18FY19FY20
PROFITABILITY
THE NUMBERS
AMRR has only been reported since FY19 following adoption of
IFRS 15 & 16
5152
WE ACT WITH SOCIAL
AND ENVIRONMENTAL
RESPONSIBILITY
RESPONSIBLE MANUFACTURING
SAFETY
• Improve road safety, reducing accident
rates and ultimately saving lives
• Ensure safer vehicles on our roads with
service and maintenance monitoring
• Driver management services improve
driver behaviour
PRODUCTIVITY
• Reduce compliance costs and improve
customer’s on-road productivity
• Help customers achieve fuel efficiency and
reduce emissions through data insights
• Improve infrastructure decisions by providing
our insights and analytics that informs
decision markers
OUR SOCIAL AND ENVIRONMENTAL IMPACT
PRIMARILY COMES FROM THE VALUE WE
ADD TO OUR CUSTOMERS THROUGH OUR
PRODUCTS AND SERVICES.
3G SUNSET IN NORTH AMERICA
REPORTING WHAT MATTERS TO OUR STAKEHOLDERS
In North America Verizon will sunset 3G CDMA in December 2020 and AT&T will complete
GSM 3G sunset in Feb 2022. This means an estimated 7.5 million in-vehicle devices in
the trucking industry will need to be replaced. As part of this, EROAD has a 3G device
transition project underway to replace around 21,000 3G devices with our 4G iteration. All
of these devices will be refurbished to help the environment and save cost. To date, we
have replaced around 8,000 of these 3G devices, the remainder will be replaced before
February 2022.
EROAD is committed to sustainable
business practices that recognise the
role our business plays in providing
positive outcomes for the communities
we operate in, and on the environment
we share. We know this is also important
to our customers, staff, investors and
the wider group of stakeholders that we
engage with.
EROAD was founded and operates on
principles that are closely aligned to this
philosophy and this year we have taken
our commitment one step further. We
have begun to formally move towards
a recognised sustainability reporting
framework and expect to adopt the
internationally recognised Global
Reporting Initiative (GRI) framework
for our FY21 Annual Report. This
process is already underway with early
data collection, internal work on our
materiality matrix in progress and external
stakeholder views soon to be added. This
will provide the foundation for developing
performance measures and goals in the
material areas for our business as we look
to improve our performance over time.
Our main manufacturing partner for our Ehubo product, located in the Philippines,
operates in full compliance with the laws, rules and regulations of the countries which
it operates in and is committed to international standards to advance social and
environmental responsibility. It also reports publicly against the UN SDG commitments.
Activities conducted to ensure social and environmental responsibility include:
• Supplier audits and assessments which
include levels and disposable methods
of hazardous substances
• A policy on conflict minerals
• A number of initiatives underway to
improve efficiency and usage of energy,
water and waste
• Respecting human rights and are
committed to improving company
culture
• Audited under the Responsible
Business Alliance Code of Conduct
v6.0 and extending the audit to its key
suppliers
WASTE REDUCTION
When a customer upgrades their hardware, or a customer comes to the end of
a contract, the used units are sent to our Global Service Centre based in Penrose
and are refurbished. In FY20 we refurbished 9,535 units (FY19: 7,278 units).
In FY20 we reclaimed 155kg of LiSOCI2 batteries, 33kg of PCB boards and 57kg
of Lead Acid Batteries.
EROAD Where tags can be returned to source for recycling at end of life.
RECYCLING
Both the New Zealand and North American office have recycling programs.
At the Albany office, old desks, that were being replaced with standing desks,
were donated to Northland Chamber of Commerce. These desks were used to
support small business start-ups.
SOCIAL AND ENVIRONMENTAL RESPONSIBILITY
51
5453
PROTECTING THE PRIVACY OF CUSTOMERS
SUPPORTING A BETTER FUTURE
We take cyber security and privacy of
our customers seriously. We screen key
suppliers for their privacy and security
credentials, we protect customer privacy
from third parties and importantly
continue to engage independent third
parties to conduct penetration testing on
our systems to understand vulnerabilities.
There has been an increase around
the world in cyber-attacks and privacy
data breaches so this is an area that is
constantly reviewed and refined.
In FY20, key areas of improvement
included:
• implementing a framework to support
compliance with the California
Consumer Privacy Act;
• adoption of privacy by design and
privacy by default principles in the
development of new products; and
• released a new privacy policy to
assist customers on how personal and
confidential information is collected,
used and disclosed.
Te Whangai Trust is a sustainable
ecological, social and educational
enterprise that supports, trains and
advocates for people who find it
challenging to enter the labour market.
EROAD donates products and services to
support this trust in running an efficient
business, so they have more time to
spend on empowering people to break
habits and change the inter-generational
cycle, creating a better life for themselves
and future generations.
TRUCKERS AGAINST TRAFFICKING
Making the roads safer means making
them safer for everyone. Human
trafficking is a global problem for our
industry. Every year we donate $2,500 to
Truckers Against Trafficking, an American
charity that’s raising awareness, providing
training and assisting in the fight against
human trafficking.
Our team were inspired by the incredible
work this charity does, raising a further
$1,000 from their “penny war”. Many
also took the Truckers Against Trafficking
online training course so they could join
the fight to identify victims of trafficking.
GIVING
BACK
EROADERS HAVE WORKED HARD TO
GIVE BACK TO THE COMMUNITY, RAISING
THOUSANDS OF DOLLARS FOR CHARITY.
Truckers Against Tracking
‘Penny War’
Gumboot Day
New Zealand
Australia
North America
Breast Cancer Foundation
Pink Ribbon Day
+$3,000
+$400
+$330
+$3,500
+$3,600
WE HAVE RAISED
Movember
Sausage sizzle & t-shirt drive
for Australian Red Cross
and Wildlife Trust
53
SOCIAL AND ENVIRONMENTAL RESPONSIBILITY
56
OUR SUPPLY
CHAIN
EROAD
Engineering
Customer
Local and International
Suppliers
Warehouse
Local, NZ, AU
and US Market
PROVISIONING
Refurbishment
Supply in NZ
National, Local
and Customer
Installers
Cloud
SOFTWARE UPDATE
SOCIAL AND ENVIRONMENTAL RESPONSIBILITY
5556
58
CELEBRATING TOGETHER
We like to celebrate both the big and small
moments. Recognition is peer-led and is
enabled through our quarterly EROAD’er
Awards program and our online rewards
platform, Bonusly. This year, we’ve had
120 nominations for EROADer awards
and over 33.5k Bonusly recognition
messages between our team. As well as
companywide celebrations for our big
milestones like the go-live of our major
system upgrade.
CREATING OPPORTUNITIES
FOR INNOVATION
Innovation is at the heart of what we do.
Our teams are always up for a challenge
and our Hackathon and Innovation Week
events throughout the year are a great
way to get more people involved in
innovation.
EROAD LIFE
Our WISH committee (Wellbeing,
Inclusion & Diversity, Social, Health &
Safety) is made up of volunteers from
across EROAD. Together, they plan and
deliver events and activities that are a core
part of EROAD life. Over FY20 we held
events such as family fun day, Cultural
Dress Day, Christmas sweater day and
International Women’s Day.
CARING FOR OUR PEOPLES’
SAFETY AND WELLBEING
We’ve made a big push this year to
advocate for better mental health.
Investing in a number of services to make
them free to access for EROAD’ers:
• Global Employee Assistance Program
• 18 EROADers trained as Mental Health
First Aiders
• Mentemia, a mental wellbeing app in
New Zealand & Australia
AN ENERGISED
AND CAPABLE
TEAM
WE HAVE AN OPEN,
INCLUSIVE CULTURE,
WHERE DIFFERENCE
IS CELEBRATED.
WE LEAD
WITH SAFETY
OUR VALUES
WE OPERATE
WITH TRUST
WE ACT WITH
INTEGRITY
WE PERFORM
AS ONE TEAM
WE CELEBRATE
INNOVATION
89%
RECOMMEND
EROAD AS A GREAT
PLACE TO WORK
EROADERS
89%
FEEL THAT EROAD IS AN
INCLUSIVE WORKPLACE WHERE
THEY CAN BE THEMSELVES
EROADERS
Our team enjoying our virtual event with John Kirwan
EROADers at our Hackathon in June 2019
Sausage sizzle to raise funds for Australian bush fire efforts
Our interns joined us for a month in February
and came up with innovative ideas as part of their project
Raising funds for Pink Ribbon Day
Celebrating the go-live of
our major system upgrade
in February 2020
Celebrating International Culture Day
OUR PEOPLE, MANAGEMENT AND BOARD
57
6059
INVESTING
IN OUR PEOPLE
OUR PEOPLE, MANAGEMENT AND BOARD
We’re investing in our people and future
leaders to build the capability we need to
grow our business into the future.
We continued to build capability in key
areas including R&D, M&A, Sales and
Customer Success in FY20.
LEADERSHIP DEVELOPMENT
We launched our new Leadership
Program in 2019 to lift our leadership
capability further. The one-year program
involves psychometric assessments,
expert coaching, offsite workshops and
team building.
PEER TO PEER
DEVELOPMENT
This year, we launched “Lean-In Circles”.
These provided a safe and supportive
environment for EROADers to share
their challenges or goals and help each
other develop.
OUR LEARNING
MANAGEMENT SYSTEM
EROADers can now access online training
in one place, with our new learning
management system, Propel. From
compliance and technical training to soft-
skill building – there’s a carefully crafted
range of courses to lift capability.
At EROAD we welcome, encourage
and value the unique experiences, skills
and backgrounds of our people. We
continually work on creating an inclusive,
collaborative and open space where
people feel safe and empowered to think
differently to create new ideas. Helping
bravely solve our customers’ complex
transportation problems.
35
EROADERS COME
FROM MORE THAN
COUNTRIES AROUND
THE WORLD
OVER
300
EROADERS
89 NEW
JOINERS
IN FY20
FEMALE PERCENTAGE
OF OUR TEAM
EROAD
FEMALE
39%
PEOPLE LEADERS
IT
SECTOR
EROAD
FEMALE
37%24%
FEMALE
DIVERSE
PERSPECTIVES,
FOSTERING
INNOVATION
AGE SPLIT
25-34
34%
35-44
29%
45-54
22%
55-64
10%
18-24
4%
65+
0%
6261
MANAGEMENT
TEAM
STEVEN NEWMAN
Executive Director/CEO
Steven co-founded Navman, which he grew into four business units, operating across
40 countries with global sales in excess of $500m. After completing his BEng he
become the NZ Group General Manager for Hennessy Europe. Steven has been the CEO
and a member of the EROAD board since 2007, receiving the North Harbour Business
Hall of Fame Laureate in 2018.
ALEX BALL
Chief Financial Officer
Alex’s career has spanned five countries, delivering a broad range of commercial,
financial and governance capabilities gained across corporate management, board
directorship and professional services. Alex joined EROAD in January 2019, with
his previous roles including CFO at Transpower, TelstraClear, Vector and he has a
background in sales and engineering. His qualifications include BEng (Hons), ACGI, FCA
(ICAEW), CA (CAANZ), SA Fin, MInstD (NZ) and AF IMNZ.
JARRED CLAYTON
Chief Technology Officer
Jarred leads product, design and engineering at EROAD. He has worked in telematics
for over a decade and is experienced in bringing large scale enterprise solutions to
market. Prior to joining EROAD, he worked in product and consulting companies within
the UK, America and Australia. Jarred holds a BEng (hons) and is a graduate of the
Stanford Business School executive program.
MATT DALTON
EVP Operations
Matt is responsible for delivering globally cohesive operational procedures for both
supply chain and business systems. Before joining EROAD in March 2019 he led internal
service teams and software development for companies like Yellow, Fiserv and Barclays
Capital. Matt has a BCom in addition to extensive software development experience.
NORM ELLIS
President – North America
Norm leads our North American business. He has nearly 20 years experience in both
transport and then telematics. Norm joined EROAD in 2017, after being the COO at
ID Systems, Inc., a producer of wireless asset management systems for the transport
sector. Prior to that he led sales, services and marketing for Qualcomm/Omnitracs in
the US and Canada for nearly 17 years. He is a graduate of the Executive Leadership
programs from both Stanford Business School and University of Virginia Darden School
of Business and he holds a BA in Economics and Business Management.
MARK HEINE
EVP General Counsel and Company Secretary
As General Counsel and Company Secretary, Mark works with the team on all aspects of
company and product legal compliance and data privacy. His legal and risk experience
encompasses IP, technology, privacy, disputes, mergers & acquisitions, corporate
governance as well as competition and consumer law. Mark joined EROAD in 2015 after
a legal career working at Bell Gully, as a Barrister in Auckland and Allens in Sydney. He
graduated from Otago University with an LLB / BA.
MIKE SWEET
Chief People Officer
Mike joined EROAD in January 2019 to develop our people and culture. His global HR
work experience includes NZ, Australia, the UK and the USA. He’s worked in global
bluechip companies and successfully scaled start-ups. Mike’s most recent role was
General Manager HR at Spark. He holds a BA BCA, MHRINZ, GPHR, and PHR-CA.
GENEVIEVE TEARLE
Chief Marketing Officer and General Manager EROAD Where
Genevieve leads our global marketing strategy, demand generation, and product
marketing management. Prior to joining EROAD in October 2018 she held key marketing
roles in global corporates like Philips and Fisher & Paykel, working across Europe, Asia,
and Americas in both B2C and B2B environments. Genevieve holds a BMS, MMS and is a
certified Lean Practitioner.
SARAH THOMPSON
Chief Product Officer
Sarah joined EROAD in March 2019 to oversee our product research and development.
She brings a wealth of experience to this global role that includes creating and
executing product strategy across a range software companies, delivering to health and
large insurance organisations globally. Sarah joined from a similar role at Orion Health.
She holds a B(Des) and has attended the Executive Leadership Development program
at Stanford Business School.
TONY WARWOOD
General Manager Australia & New Zealand
Tony leads our New Zealand and Australian business. Tony joined EROAD with our first
customers back in 2009. A qualified mechanic, he brings first-hand experience of the
challenges our customers face, given his foundational career included being a heavy
vehicle mechanic and fleet manager.
OUR PEOPLE, MANAGEMENT AND BOARD
6463
STRONG GOVERNANCE
SUPPORTING GROWTH
ASPIRATIONS
GRAHAM STUART
Chairman, Independent Director, Member of Remuneration, Talent and Nomination Committee
Graham joined the EROAD Board in January 2018 and was appointed Chairman in August of the
same year. He was previously CEO of Sealord Group, CFO then Director of Strategy & Growth at
Fonterra and has had extensive business experience in South East Asia, Europe, the UK and Latin
America.
MICHAEL BUSHBY
Independent Director, Member of the Finance, Risk and Audit Committee
and the Remuneration, Talent and Nomination Committee
Michael stepped down as Chairman in August 2018, having led the Board since 2012. Michael is
based in Australia where he is a consultant at WSP Australia and previously held roles as General
Manager of the Ventia Asset and Infrastructure Services division and CEO at the Roads and Traffic
Authority in New South Wales.
BARRY EINSIG
Independent Director, Member of Remuneration, Talent and Nomination Committee
Barry joined the Board in January 2020. Located in Pennsylvania, Barry brings considerable transport
knowledge of the North American market as well as global automated and connected vehicle
expertise. He is currently a principal at CAVita, has held other directorships within the transport
industry and has advised Singapore’s Ministry of Transportation on their Highly Automated Vehicle
Program. In addition, Mr Einsig has reviewed work undertaken by the Transportation Research Board
and created patent-approved technology used in Public Safety Networks.
TONY GIBSON
Independent Director, Chairman of Remuneration, Talent and Nomination
Committee and Member of Finance, Risk and Audit Committee.
Tony is the Chief Executive of Ports of Auckland and one of New Zealand’s most experienced
transport professionals. He has worked in various senior management roles in Africa, Asia and
Europe. In 2008 the Minister of Transport appointed him to the Road User Review Group. Tony
joined the Board in October 2009.
CANDACE KINSER
Independent Director, Member of Remuneration, Talent and Nomination
Committee and the Finance, Risk and Audit Committee.
Candace is an experienced board director and business executive, known for her work with high
growth and technology focused companies. She was previously the CEO of NZTech and science
software company Biomatters, an advisor for global data analytics company Palantir, is a NZTE
beachheads advisor and is on the boards of Livestock Improvement, WEL Networks, UltraFast Fibre,
Regional Facilities Auckland and the Cancer Society. She joined the EROAD board in May 2014.
SUSAN PATERSON
Independent Director, Chair of the Finance, Risk and Audit Committee
and Member of Remuneration, Talent and Nomination Committee.
Susan joined the Board in March 2019. She is an appointed Officer of New Zealand Order of Merit
(services to governance) and currently chairs Steel and Tube Holdings and IT consultancy Theta
Systems and is a member of the boards of the Electricity Authority, RBNZ, Arvida Group, Goodman
New Zealand, Les Mills Holdings, and Sky Network Television.
STEVEN NEWMAN
Executive Director / CEO
Steven has been EROAD’s chief executive and a member of the EROAD Board since 2007. He
co-founded Navman where his COO and CEO roles provided the opportunity for him to establish
Navman as a leading international brand delivering annual sales in excess of NZ $500m.
EROAD is committed to best practice governance
principles and maintains the highest ethical standards.
The Board is focused on measuring the right things
(not just financial), setting the tone of compliance for
the organisation, staying ahead of the business and
anticipating potential risks and opportunities.
Having the right expertise and diversity of thought
supports the senior leadership team in creating
shareholder value. Over the last two years the Board
has been going through a period of renewal to ensure
it has the right expertise. An independent review
of the Board’s current capabilities was undertaken
last year. It identified the areas of strength and
opportunities for improvement to ensure we have
the right skills and capabilities around the Board
table. It also helped identify those that are likely to be
needed in the future to ensure we’re well positioned
to support the next stages of EROAD’s growth. The
review’s insights were used in the director search
process, following which Barry Einsig was appointed
as an independent director in January this year.
The Board has determined that to operate
effectively and to meet its responsibilities it requires
competencies in disciplines including executive
leadership and strategy, growth and innovation,
governance, digital and technology, transport, finance
and capital markets, risk and compliance, legal and
regulatory, and people.
The current directors possess an appropriate mix of
skills, commitment, experience, expertise (including
knowledge of the Group and the relevant industries
in which the Group operates) and diversity to enable
the Board to discharge its responsibilities effectively
and deliver the company’s strategic priorities. Where
specific additional skills are required the Board
engages expert advice.
CEO/EXECUTIVE
LEADERSHIP
FINANCE/
RISK
TECHNOLOGY
(SAAS/SOFTWARE)
CUSTOMER/
MARKETING
M&A
INTERNATIONALINDUSTRYLISTED
INNOVATION/
GROWTH
BEEN ON THE
JOURNEY
COMBINED BENCH STRENGTH
OUR PEOPLE, MANAGEMENT AND BOARD
66
FINANCIALS
EROAD LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
AS AT 31 MARCH 2020
GROUP
31 March 202031 March 2019
Notes$M's$M's
Revenue381.261.4
Operating Expenses4(54.1)(45.8)
Earnings before interest, taxation, depreciation and amortisation 2 7.115.6
Depreciation of Property, Plant and Equipment14(8.6)(6.6)
Amortisation of Intangible Assets16(7.5)(6.5)
Amortisation of Contract and Customer Acquisition Assets7(6.5)(4.8)
Earnings/(Loss) before interest and taxation4.5(2.3)
Financing costs8(3.1)(2.8)
Profit/(Loss) before tax 1.4(5.1)
Income tax (expense)/benefit9(0.4)0.2
Profit / (Loss) after tax for the period attributable to the shareholders1.0(4.9)
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss(1.3)(1.1)
Total comprehensive loss for the year(0.3)(6.0)
Profit / (Loss) per share - Basic (cents) 1.55(7.31)
Profit / (Loss) per share - Diluted (cents) 1.53(7.24)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
FINANCIALS
65
6768
FINANCIALS
EROAD LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2020
GROUP
31 March 202031 March 2019
Notes $M's$M's
CURRENT ASSETS
Cash and cash equivalents123.416.1
Restricted bank accounts1214.012.7
Trade and other receivables1310.710.5
Contract fulfilment costs73.22.4
Costs to obtain contracts72.72.2
Total Current Assets34.043.9
NON-CURRENT ASSETS
Property, plant and equipment143 7. 433.9
Intangible assets1642.133.1
Contract fulfilment costs72.72.7
Costs to obtain contracts72.12.1
Deferred tax assets107. 57. 5
Total Non-Current Assets91.879.3
TOTAL ASSETS125.8123.2
CURRENT LIABILITIES
Borrowings182.217.2
Trade payables and accruals178.26.1
Payables to transport agencies1213.912.5
Contract liabilities193.65.8
Lease liabilities151.00.8
Employee entitlements1.81.3
Total Current Liabilities30.743.7
NON-CURRENT LIABILITIES
Borrowings
1833.617.5
Contract liabilities
194.64.2
Lease liabilities
155.36.2
Deferred tax liabilities100.30.3
Total Non-Current Liabilities
43.828.2
TOTAL LIABILITIES74 . 571.9
NET ASSETS51.351.3
EQUITY
Share capital1180.780.6
Translation reserve(2.9)(1.6)
Accumulated losses(26.5)(27.7)
TOTAL SHAREHOLDERS' EQUITY51.351.3
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
EROAD LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
AS AT 31 MARCH 2020
GROUP
Share
Capital
Accumulated
Losses
Translation
Reserve
Total
Notes$M's$M's$M's$M's
Balance as at 1 April 2018 80.3 (23.0) (0.5) 56.8
Loss after tax for the year - (4.9) - (4.9)
Other comprehensive income - - (1.1) (1.1)
Total comprehensive loss for the period, net of tax - (4.9) (1.1) (6.0)
Equity settled share-based payments 0.1 0.2 - 0.3
Share capital issued11 0.2 - - 0.2
Balance at 31 March 2019 80.6 (27.7) (1.6) 51.3
Balance as at 1 April 2019 80.6 (27.7) (1.6) 51.3
Profit after tax for the year - 1.0 - 1.0
Other comprehensive income
-
- (1.3) (1.3)
Total comprehensive profit for the period, net of tax - 1.0 (1.3) (0.3)
Equity settled share-based payments 0.1 0.2 - 0.3
Share capital issued11 - - - -
Balance at 31 March 2020 80.7 (26.5) (2.9) 51.3
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Chair of the Finance, Risk and Audit Committee, 18 June 2020Chairman, 18 June 2020
6970
FINANCIALS
EROAD LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
AS AT 31 MARCH 2020
GROUP
31 March 202031 March 2019
Notes
$M's$M's
Cash flows from operating activities
Cash received from customers79.262.3
Payments to suppliers and employees(53.4)(45.5)
Interest paid(2.7)(2.8)
Tax refund - 0.2
Net cash inflow from operating activities23.114.2
Cash flows from investing activities
Payments for investment in property, plant & equipment14(11.6)(10.9)
Payments for investment in intangible assets16(16.5)(9.7)
Payments for investment in contract fulfilment assets7(4.4)(3.5)
Payments for investment in customer acquisition assets7(3.4)(3.2)
Net cash outflow from investing activities(35.9)(27.3)
Cash flows from financing activities
Receipts from bank loans181 7. 723.6
Repayments of bank loans18(16.5)(15.4)
Payment of lease liability15(1.1)(0.9)
Net cash inflow from financing activities0.17. 3
Net increase/(decrease) in cash held(12.7)(5.8)
Cash at beginning of the year1216.121.9
Closing cash and cash equivalents 123.416.1
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
EROAD LIMITED
RECONCILIATION OF OPERATING CASH FLOWS
WITH REPORTED LOSS AFTER TAX
AS AT 31 MARCH 2020
GROUP
31 March 202031 March 2019
$M's$M's
Profit /(loss) after tax for the year attributable to the shareholders1.0(4.9)
Add/(less) non-cash items
Tax asset recognised-(0.3)
Depreciation and amortisation22.518.0
Other non-cash (income)(1.0)(0.6)
21.51 7.1
Add/(less) movements in other working capital items:
(Increase) /decrease in trade and other receivables(0.2)1.1
Decrease/(increase) in current tax payables-(0.1)
Decrease in contract liabilities(1.8)(0.2)
Increase in trade payables, interest payable and accruals2.61.2
0.62.0
Net cash from operating activities23.114.2
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
7172
FINANCIALS
EROAD LIMITED
NOTES TO THE FINANCIAL STATEMENTS
AS AT 31 MARCH 2020
NOTE 1 REPORTING ENTITY AND STATUTORY BASE
EROAD Limited (the “Company”) is a company domiciled in New Zealand registered under the Companies Act 1993 and listed
on the New Zealand Stock Exchange (NZX) Main Board. The Company is a FMC reporting entity for the purposes of the Financial
Markets Conduct Act 2013 and the financial statements have been prepared in accordance with the requirements of that Act and
the Financial Reporting Act 2013. The consolidated financial statements comprise EROAD Limited and its subsidiaries (the “Group”).
The Group provides electronic on-board units and software as a service to the transport industry.
The consolidated financial statements of the Group for the year ended 31 March 2020 were authorised for issue in accordance with
resolution of the directors on 18 June 2020.
NOTE 2 BASIS OF ACCOUNTING
(a) Basis of preparation
The financial statements of the Group have been prepared in accordance with Generally Accepted Accounting Practice in New
Zealand (NZ GAAP). The Group is a for-profit entity for the purposes of complying with NZ GAAP. The consolidated financial
statements comply with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) for Tier 1 entities, other
New Zealand accounting standards, and authoritative notices that are applicable to entities that apply NZ IFRS. The consolidated
financial statements also comply with International Financial Reporting Standards.
Other than where described below, or in the notes, the consolidated financial statements have been prepared using the historical
cost convention.
The consolidated financial statements are presented in New Zealand dollars ($) Items included in the financial statements of each
of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the
“functional currency”).
(b) Changes in accounting policies
The accounting policies and disclosures adopted are consistent with those of the previous year.
(c) Going concern
The directors have carefully considered the ability of the Group to continue to operate as a going concern for at least the next
12 months from the date the financial statements are authorised for issue. It is the conclusion of the directors that the Group will
continue to operate as a going concern and the financial statements have been prepared on that basis.
In reaching their conclusion the directors have considered the following factors :
-Cash reserves as at 31 March 2020 of $3.4 million and bank borrowing facility of $60 million of which $23.9 million was undrawn
as at 31 March 2020, after including borrowing cost of $0.3m. This provides sufficient level of headroom to help support the
business for at least the next twelve months;
-The Future Contracted Income of $134.4 million provides certainty of forecast revenue; and
-The directors have made due enquiry into the appropriateness of the assumptions underlying the budgetary forecasts.
(d) Basis of measurement
The financial statements are prepared on the historical cost basis, except for certain financial instruments carried at fair value.
(e) Presentation currency
The financial statements are presented in New Zealand dollars and all values are rounded to million dollars to one decimal place
($M’s) except where stated. The functional currency of EROAD Limited is New Zealand Dollars (NZD).
(f) Standards or interpretations issued but not yet effective and relevant to the Group
There are no standards or amendments that have been issued but are not yet effective that are expected to have a significant
impact on the Group.
The Group has not adopted, and currently does not anticipate adopting, any standards prior to their effective dates.
(g) Critical accounting estimates and judgements
In applying the Group’s accounting policies, management continually evaluates judgements, estimates and assumptions based
on experience and other factors, including expectations of future events that may have an impact on the Group. All judgements,
estimates and assumptions made are believed to be reasonable based on the most current set of circumstances available to the
Group. Actual results may differ from the judgements, estimates and assumptions.
The significant judgements, estimates and assumptions made by management in the preparation of these financial statements are
outlined within the financial statement notes to which they relate. These are:
-Determining whether a contract contains a lease (refer note 3),
-Recognition of deferred tax assets (refer to note 10).
-Impairment testing – key assumptions underlying recoverable amounts, including recoverability of development costs.(refer to Note 16)
Impact of COVID-19
On 11 March 2020 the World Health Organisation declared a global pandemic as a result of the outbreak and spread of COVID-19.
Following this, in each of EROAD’s markets of New Zealand, the United States and Australia, lockdowns of varying severity were
introduced. These lockdowns continued in these markets from late March and while some lockdown restrictions have eased in each
of the markets, a range of preventive measures still remain such that each of the markets has yet to return to the level of economic
trading conditions prevalent prior to the COVID-19 crisis.
Following the lockdowns being initiated EROAD was designated an essential service in each of its three markets and remained
operational under its communicable illness business continuity plan. Despite this designation, EROAD still experienced a loss in
customer demand for new or replacement units and services, aside from those customers who themselves were designated as
essential services. Accordingly, each of EROAD’s markets were impacted differently due to the differences in lockdown conditions,
as well as the differing proportion of essential services customers in its total customer base.
As a result, EROAD took a number of actions to defer aspects of discretionary spend until the fuller impact of the lockdowns could
be determined as well as revising its provisions for expected losses to be realised in EROAD’s trade receivables.
The longer-term effects of COVID-19 on EROAD’s business remain uncertain and the potential impacts of the pandemic continue to
evolve rapidly.
An assessment of the impact of COVID-19 on the EROAD statement of financial position is set out below, based on information
available at the time of preparing these financial statements:
Statement of
Financial Position ItemCOVID-19 assessmentNotes
Cash and cash equivalentsNo impact to the carrying value of cash and cash equivalents12
Trade and other receivablesEROAD has updated the provisions for doubtful debts for the increase in expected credit losses.13
Contract fulfilment costs
EROAD has considered the impact of COVID-19 on the carrying values of these assets and
concluded no impairment was necessary.
7
Costs to obtain contracts7
Property, plant and equipment
EROAD has reconsidered the useful economic life of Ehubo hardware assets as well as the net
realisable of Capital Work-in Progress at the year end. EROAD has no evidence that there has
been a decline in the value of these assets post COVID-19.
14
Intangible assets
EROAD has reconsidered the carrying values of development assets within intangibles as a result
of COVID-19. EROAD has no evidence that there has been an impairment in the carrying value of
these assets post COVID-19.
16
Deferred tax assets
EROAD has reconsidered the carrying values of the deferred tax assets recognised on the
statement of financial position as a result of COVID-19. EROAD has no evidence that the carrying
values of these assets will not be recovered.
10
Borrowings
EROAD has reconsidered the carrying and face values of the borrowings recognised on the
statement of financial position as a result of COVID-19. EROAD asserts that future covenant
compliance as forecast indicates sufficient headroom .
18
Trade payables and accruals No impact to the value of trade payables and accruals.17
Payables to transport agencies No impact to the value of payables to transport agencies.12
Contract liabilities No impact to the value of contract liabilities.19
Leases LiabilitiesLease recorded as per lease contract. 15
NOTE 2 BASIS OF ACCOUNTING (CONTINUED)
7374
FINANCIALS
COVID-19 Provisions
The Group has recorded the following expected credit loss to account for the impacts of the COVID-19 pandemic on the
31 March 2020 financial results:
AreaRecognition in Statement of Comprehensive IncomeAmount
($M)
Doubtful DebtsOperating Expenses0.1
Doubtful Debts
EROAD has performed an assessment of estimated credit losses not yet identified but driven by the increase in credit default risk for its
customers and provided for these based on a risk weighting. The criteria for the risk weightings includes:
• whether the customer is an essential service;
• which industry the customer belongs to, given EROAD’s vehicular movement data has been analysed to assess the impact of COVID-19
lockdown by industry to determine the correlated impact on customers’ revenue generating activity;
• EROAD’s understanding and experience with the customer; and
• EROAD has recorded additional estimated credit loss provisions to account for the estimated financial impact of any future defaults.
NOTE 3 REVENUE FROM CONTRACTS WITH CUSTOMERS
GROUP
20202019
$M's$M's
Revenue from contracts with customers
Software as a Service (SaaS) revenue76.357. 4
Other
Transaction fee revenue 2.42.4
Grant revenue0.90.9
Other revenue1.60.7
Total Revenue81.261.4
Set out above is the disaggregation of the Group’s revenue from contracts with customers. The disaggregation reflects the nature,
amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Specifically, software as a service
(SaaS) revenue represents revenue earned from customer contracts for the sale or rental of hardware, installation services and
provision of software services. Transaction fee revenue relates to the collection of Road User Charges (RUC) fees.
Transaction price allocated to the remaining performance obligations
The below table represents the revenue allocated to performance obligations that are unsatisfied or partially unsatisfied at the
period end. The revenue amounts yet to be recognised under non-cancellable contract agreements at 31 March are expected to be
recognised by EROAD based on the time bands disclosed below.
GROUP
20202019
$M's$M's
Software as a Service (SaaS) revenue
Not later than one year64.156.4
Later than one year not later than five years70.361.0
Total price allocated to remaining performance obligations134.4117.4
The Group reports the Non-GAAP measure, Future Contracted Income, the definition of Future Contracted Income includes all future
hardware and SaaS cash inflows relating to income under non-cancellable long-term agreements. The disclosure above aligns with the
Future Contracted Income reported by the Group.
Software as a service revenue
The Group has determined EROAD’s customers do not have the right to direct the use of EROAD’s asset (Ehubo) as EROAD continues
to have the right and ability to change how the asset operates during the customer’s contract period. These contracts are therefore
accounted for as service contracts. The Group generates revenue through the sale of hardware assets, rental of hardware assets,
installation of hardware assets and provision of software services as part of contracts with customers as part of a bundled package.
These hardware units enable customers to access the software platform offered by the Group. The transaction involving hardware
and accessories do not convey a distinct good or service. The sale does not transfer control to the customer as the Group provides
a significant service of integrating the software service to produce a combined output. The sale of the hardware, accessories and
software service are referred to as Software as a Service (SaaS) revenue, which is recognised on a straight line basis over the contract
period. There are no variable consideration terms within the contracts.
A contract liability is recognised where consideration is received in advance of the completion of associated performance obligations.
The contract liability is derecognised over time. As a result there is a financing component which the group recognise as a finance cost
when consideration is received in advance.
The Group offers installation services as part of a number of promises to transfer goods and services within each contract. Installation
services do not convey a distinct good or service and therefore are not a separate performance obligation as the installation is a set-up
activity that does not provide the customer a direct benefit other than access to the software services. As a result, the installation
service is considered as part of the single performance obligation; referred to as Software as a Service (SaaS) revenue, which includes
the software service and hardware sale or rental for which the customer simultaneously receives and consumes the benefit of the
service. Where installation revenue is received in advance of satisfying the performance obligation a contract liability is recognised. The
contract liability is derecognised over time evenly over the period of the contract as the customer derives the benefit evenly from the
services provided over the contract period. The majority of contracts are for 3 years and can be for a term of up to 5 years. As a result
there is a financing component which the group recognises as a finance cost when consideration is received in advance.
Transaction fees
The Group acts as an agent for transport authorities in the market that is operates in. Where fees are collected on their behalf, the
Group charges a commission. The revenue recognised is the net amount of the commission fee earned by the Group.
Grant income
Government grants are recognised at fair value in the statement of comprehensive income over the same periods as the costs for
which the grants are intended to compensate. No unfulfilled conditions or contingencies exist related to the government grants.
NOTE 4 EXPENSES
GROUP
20202019
Note
$M's$M's
Personnel expenses - net of capitalised employee remuneration626.321.2
Administrative and other operating expenses18.31 7.1
SaaS platform costs8.66.7
Directors fees0.40.4
Auditor's remuneration - KPMG0.20.2
Other assurance services - KPMG0.10.1
Tax compliance services - KPMG0.10.1
Tax advisory services - KPMG0.1-
Total operating expenses54.145.8
Other assurance services includes half year review, Callaghan review and NZTA reasonable assurance.
During the year the costs expensed for Research and Development was $6.0M (2019: $5.1M).
NOTE 2 BASIS OF ACCOUNTING (CONTINUED)NOTE 3 REVENUE FROM CONTRACTS WITH CUSTOMERS (CONTINUED)
7576
FINANCIALS
NOTE 5 SEGMENTAL NOTE
Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items comprise income tax.
The Group has four segments as described below, which are the Group’s strategic divisions. The strategic divisions offer different
services and are managed separately because they require different technology, services and marketing strategies. For each
strategic division, the Group’s CEO (the chief operating decision maker) reviews internal management reports. The following
summary describes the operations in each of the Group’s segments.
EROAD reports selected financial information segmented by geographic location for operating companies and corporate and
development costs.
• Corporate & Development: Corporate head office costs and R&D activities for development of new and existing products
and services
• North America: Operating companies serving customers in North America
• Australia: Operating companies serving customers in Australia
• New Zealand: Operating companies serving customers in New Zealand
Reportable segment information
Information related to each reportable segment is set out below. Segment result represents Earnings before Interest, Taxation,
Depreciation & Amortisation (EBITDA), which is the measure reported to the chief operating decision maker. The New Zealand and
Australia data have been restated for 2019.
Corporate &
Development
North America New ZealandAustralia
20202019202020192020201920202019
$M’s$M’s$M’s$M’s$M’s
Restated
$M’ss$M’s
Restated
$M’s
Revenue
Software as a Service (SaaS) revenue--24.815.350.841.50.70.6
Transaction fee revenue ----2.42.4--
Other revenue ₁1 7. 712.91.00.40.20.3--
1 7. 712.925.815.753.444.20.70.6
Earnings Before Interest, Taxation,
Depreciation & Amortisation
(14.0)(12.0)7. 50.434.92 7. 9(1.3)(0.6)
Depreciation of Property, Plant &
Equipment
(1.1)(0.8)(4.2)(3.2)(4.7)(3.7)(0.1)(0.1)
Amortisation of Intangible Assets(7.5)(6.5)------
Amortisation of Contract and Customer
Acquisition Assets
--(1.8)(1.1)(4.6)(3.7)(0.1)(0.1)
₁ Revenue from Corporate & Development Markets includes R&D Grant Income of $1.4M (31 March 2019: $0.9M).
Reconciliation of information on reportable segments
GROUP
20202019
$M's$M's
Revenue
Total revenue for reportable segments 9 7. 6 73.4
Elimination of inter-segment revenue(16.4)(12.0)
Consolidated Revenue 81.2 61.4
EBITDA
Total EBITDA for reportable segments 2 7. 0 15.8
Elimination of inter-segment EBITDA - (0.1)
Consolidated EBITDA 2 7. 0 15.7
Depreciation
Total depreciation for reportable segments(10.0)(7.7)
Elimination of inter-segment depreciation 1.5 1.1
Consolidated Depreciation(8.5)(6.6)
Geographic information
The geographic information below analyses the Group’s revenue by the Company’s country of domicile and other countries. In
presenting the following information segment revenue has been based on the geographic location of customers.
GROUP
20202019
$M's$M's
Revenue
New Zealand54.745.1
All foreign countries:
USA25.815.7
Australia0.70.6
Total revenue81.261.4
Corporate &
Development
North America New Zealand Australia
20202019202020192020201920202019
$M’s$M’s$M’s$M’s$M’s$M’s$M’s$M’ss
Total assets79.385.423.118.842.340.72.71.3
NOTE 5 SEGMENTAL NOTE (CONTINUED)
7778
FINANCIALS
Reconciliation of information on reportable segments
GROUP
20202019
$M's$M's
Total assets
Total assets for reportable segments1 47. 4146.2
Elimination of inter-segment balances(21.9)(23.0)
Consolidated Total Assets125.5123.2
Allocation of Development Assets
Included within Total Assets are Development Assets of $32.7M as at 31 March 2020 (31 March 2019: $29.8M) which for
the purpose of the segment note have been allocated to the Corporate & Development Market based on the ownership of
intellectual property. The amortisation for these assets are also presented in the Corporate & Development segment. For
impairment testing purposes management allocate the Development Assets to the cash generating units (CGUs) based on
the specific CGU that the Development Asset relates to, or if the Development Asset is developed for use globally across all
CGU’s, the asset is allocated to CGU’s based on the proportionate share of the Group’s contracted units. At 31 March 2020
there was $22.4M (31 March 2019: $18.9M) of global Development Assets that have been allocated across CGU’s based on the
contracted units. The allocation of the Development Assets to CGU’s within the following reportable segments for the purpose
of impairment testing was as follows:
20202019
$M's$M's
North America
14.013.4
New Zealand 17.215.7
Australia1.50.6
32.729.7
Geographic information
The geographic information below analyses the Group’s non-current assets by the Company’s country of domicile and other
countries. In presenting the following information segment assets were based on the geographic location of the assets.
20202019
$M's$M's
Non-current assets
New Zealand 66.2 58.3
All foreign countries:
USA 17.2 13.3
Australia 0.9 0.2
Total non-current assets 84.3 71.8
Non-current assets exclude financial instruments and deferred tax assets.
NOTE 6 PERSONNEL EXPENSES
GROUP
20202019
$M's$M's
Salaries and wages - net of capitalised commission costs
30.723.7
Annual leave 0.40.2
Performance bonus0.70.7
Share-based payments0.30.4
Salaries and wages capitalised to Development and Software Assets(5.8)(3.8)
26.321.2
NOTE 7 CONTRACT FULFILMENT AND COSTS TO OBTAIN CONTRACTS
Capitalised contract fulfilment costs
The Group capitalises incremental costs of fulfilling customer contracts, typically distribution and installation costs. Contract
fulfilment costs are amortised evenly over the period of the contract. The majority of contracts are for 3 years and can be for a
term of up to 5 years.
Capitalised contract acquisition costs
The Group has applied a policy of capitalising only costs that are incremental in obtaining contracts with customers, typically
sales commissions. Contract acquisition costs are amortised evenly over the period of the contract. The majority of contracts are
for 3 years and can be for a term of up to 5 years.
The following table provides information about contract fulfilment and costs to obtain contracts with customers:
GROUPGROUP
Contract FulfilmentCosts to obtain contracts
2020201920202019
$M's$M's$M's$M's
Opening Net Book Value
5.1 4.4 4.3 3.1
Additions 4.4 3.5 3.4 3.2
Amortisation(3.6)(2.8)(2.9)(2.0)
Closing Net Book Value 5.9 5.1 4.8 4.3
Current 3.2 2.4 2.7 2.2
Non-current 2.7 2.7 2.1 2.1
NOTE 5 SEGMENTAL NOTE (CONTINUED)
7980
FINANCIALS
NOTE 8 FINANCING COSTS
GROUP
20202019
$M's$M's
Finance expenses
Interest expense(2.0)(2.1)
Interest expense - Lease Liabilities(0.4)(0.2)
Interest expense - Contract Liabilities(0.4)(0.5)
Foreign exchange losses(0.3)-
Financing costs(3.1)(2.8)
NOTE 9 INCOME TAX EXPENSE
GROUP
20202019
$M's$M's
(a) Reconciliation of effective tax rate
Profit/(Loss) before income tax1.4(5.1)
Income tax using the Company's domestic tax rate of 28% (0.4)1.5
-
Reduction in tax rate--
Non-deductible expense-(1.0)
Temporary differences--
Losses and timing differences not recognised--
Effect of different tax rates-(0.3)
Income tax (expense) /benefit(0.4)0.2
(b) Current tax (expense) /benefit
Current year--
--
(c) Deferred tax (expense) /benefit
Current year(0.4)0.2
(0.4)0.2
At 31 March 2020 there were no imputation credits available to shareholders (31 March 2019: Nil)
Income tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss except to the
extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the period, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous periods. Current tax
payable also includes any tax liability arising from the declaration of dividends.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to
be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by
the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and
they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they
intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is
probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
NOTE 10 DEFERRED TAX ASSETS / (LIABILITIES)
GROUP
20202019
$M's$M's
Recognised deferred tax assets and liabilities
Deferred tax assets and (liabilities) are attributable to the following:
Tax loss carry forward9.29.3
Property, plant and equipment (0.6)(1.3)
Deferred development expenditure(4.0)(3.6)
Provisions, accruals and other liabilities2.52.6
Equity-settled share-based payments0.30.3
Revenue recognition(0.2)(0.1)
Total deferred tax asset/(liability)7. 27. 2
The movement in temporary differences has been recognised in profit or loss. Deferred tax assets have been recognised at a
rates between 21% to 30% at which they are expected to be realised.
Movement in temporary differences during the year:
GROUPBalance
31 March 2020
Recognised in
profit or loss
Under/(over)
from prior
periods
Currency
Translation
Balance
31 March 2019
$M's$M's$M's$M's$M's
Tax loss carry forward9.2-(0.1)-9.3
Property, plant and equipment(0.6)0.3-0.4(1.3)
Deferred development expenditure(4.0)(0.4)--(3.6)
Provisions, accruals and other liabilities2.5(0.1)--2.6
Equity-settled share-based payments0.3---0.3
Revenue recognition(0.2)(0.1)--(0.1)
Total7. 2(0.3)(0.1)0.47. 2
NOTE 9 INCOME TAX EXPENSE (CONTINUED)
8182
FINANCIALS
The New Zealand tax group consists of EROAD Limited, EROAD New Zealand Limited and EROAD Financial Services Limited.
Losses incurred within this Group are transferred within the Group with no compensation being recognised. Deferred tax assets
have been recognised in respect of these items as based on the expected profitability of the New Zealand Tax Group as it is
considered that future taxable profit will be available for utilisation against the carried forward losses.
Determining the extent to which losses will be utilised requires judgement. The Group has forecast expected utilisation of tax losses.
Key assumptions included Total Contracted Units, revenue and expense forecasts in line with Group budget and three-year forecast
supported by a robust strategic and business planning process, in addition to the estimated impact of group transfer pricing
policies and the forecast impact of timing differences. The Group’s three-year budget and forecast used for impairment testing
purposes included managements assessment of the impact of Covid-19 on the Group’s forecast contracted unit growth, potential
additional debtors provisioning and operating expenses.
The result of the forecasting indicate that there will be sufficient profitability within the New Zealand tax group to utilise the existing
tax losses. Losses incurred in recent years have been the result of a large investment creating the North American market. Whilst
the business is now entering a new market in Australia, the Group considers this can be achieved at a lower cost than the entry
into North America, by leveraging our New Zealand expertise and cost and customer base. The Group expect to be able to report
significant improvements in profitability over the next three years as the business reaches a sufficiently large subscriber base
to self-fund operating and corporate costs. Due to the cumulative subscription nature of our business model as well as certain
operating expenses that do not scale at the same rate of unit and revenue growth, the business is expected to be able to achieve its
forecast growth in profitability.
The Group performed sensitivity analysis on the forecast utilisation of tax losses based on a scenario with a more significant and
sustained reduction in incremental unit growth, a slower than anticipated recovery from the impact of Covid-19 and a more significant
deterioration in debtors. Under both base case and sensitivity scenarios, the Group expects that unused tax losses will be utilised
within 3 to 4 years.
NOTE 11 PAID UP CAPITAL
All issued shares are fully paid up and have equal voting rights and share equally in dividends and surplus on winding up.
GROUPNumber of
ordinary shares
Issue price
$
Issued Capital
$
At 31 March 201968,278,77280.6
Issue of shares to staff under LTI schemes 73,026 $1.69 0.1
Held in trust as treasury stock (73,026)
At 31 March 202068,278,77280.7
At 31 March 2020 there was 68,278,772 authorised and issued ordinary shares (31 March 2019: 68,278,772). 874,557 (31 March 2019:
972,487) shares are held in trust for employees in relation to the long-term incentive plan and are accounted for as treasury stock.
The calculation of both basic and diluted loss per share at 31 March 2020 was based on the profit attributable to ordinary
shareholders of $1.0M (31 March 2019: Loss of ($4.9M)). The weighted number of ordinary shares on 31 March 2020 was 67,361,474
(31 March 2019: 67,283,918) for basic earnings per share and 68,124,652 for diluted earnings per share (31 March 2019: 67,903,457).
Other components of equity include:
• Translation reserve - comprises foreign currency translation differences arising from the translation of financial statements of
the Group’s foreign subsidiaries into New Zealand Dollars.
• Accumulated losses - includes all current and prior period retained profits and share-based employee remuneration.
NOTE 12 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
GROUP
20202019
$M's$M's
Cash and bank3.416.1
Restricted bank accounts14.012.7
1 7. 428.8
Cash and cash equivalents exclude restricted bank accounts. Restricted bank accounts are presented separately from cash and
cash equivalents on the face of the Statement of Financial Position and movements in restricted bank accounts are excluded
from the Statement of Cash Flows. The restricted bank accounts relate to Road Users Tax collected from clients due for payment
to the appropriate government agency. At 31 March 2020 the amount payable to transport agencies was $13.9M (2019: $12.5M).
Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less.
NOTE 13 TRADE AND OTHER RECEIVABLES
GROUP
20202019
$M's$M's
Trade receivables 8.6 6.5
Expected credit losses(1.1)(0.7)
7. 5 5.8
Prepayments and other receivables 3.2 4.7
10.7 10.5
In addition to the movement in the expected credit losses, the Group has written off $0.5M (2019: $0.3M) of bad debts to the
statement of comprehensive income during the year ended 31 March 2020. The Group’s trade receivables are subject to NZ IFRS
9’s expected credit loss model. The Group has applied the NZ IFRS 9 simplified approach to measuring expected credit losses
which uses a lifetime expected credit loss allowance and the future collectability for all trade receivables.
(a) Credit risk
In relation to trade receivables, it is the Group’s policy that all customers who wish to trade on terms are subject to credit verification
on an ongoing basis with the intention of minimising bad debts. The nature of the Group’s trade receivables is represented by regular
turnover of product and billing of customers based on the Group’s contractual payment terms. In North America, the Group requires
that customers under a certain fleet size to purchase the hardware with an upfront payment regardless of credit verification.
NOTE 10 DEFERRED TAX ASSETS / (LIABILITIES) (CONTINUED)
8384
FINANCIALS
The aging of the Group’s Trade receivables at the reporting date was as follows:
GROUP
Gross 2020
Allowance for
doubtful debts
2020 Gross 2019
Allowance for
doubtful debts
2019
$M's$M's$M's$M's
Not past due 3.8 - 3.7-
Past due 1-30 days 3.0 - 1.3-
Past due 31-60 days 0.6 (0.1)0.5(0.1)
Past due over 61 days 1.2 (1.0)1.0(0.6)
8.6 (1.1)6.5(0.7)
NOTE 14 PROPERTY, PLANT AND EQUIPMENT
The carrying amounts of the Group’s assets other than inventories are reviewed at each balance date to determine whether there is any
objective evidence of impairment. If any such indication exists, the assets recoverable amount is estimated.
If the estimated recoverable amount of an asset is less than its carrying amount, an impairment test is undertaken to reduce the carrying
amount of assets to the estimated recoverable amount and an impairment loss is recognised in the statement of comprehensive income.
Estimated recoverable amount of other assets is the greater of their fair value less costs to sell and value in use. Value in use is determined
by estimating future cash flows from the use and ultimate disposal of the asset and discounting these to their present value using a
pre-tax discount rate that reflects current market rates and the risks specific to the asset. For an asset that does not generate largely
independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
GROUP
Right of Use
Assets
Hardware
Assets
Plant and
equipment
Leasehold
improvements
Motor
vehicles
Office
equipment
Computers
Total
$M's$M's$M's$M's$M's$M's$M's$M's
Year ended 31 March 2019
Opening net book amount 1.520.80.20.40.40.30.223.8
Additions5.48.70.11.40.20.10.316.2
Disposals(2.7)---(0.1)--(2.8)
Depreciation charge(0.8)(5.1)(0.1)(0.1)(0.2)(0.1)(0.2)(6.6)
Depreciation recovered2.50.9--0.1--3.5
Effect of movement in
exchange rates
0.1(0.3)-----(0.2)
Closing net book amount6.025.00.21.70.40.30.333.9
Cost6.940.40.62.51.01.12.955.4
Accumulated depreciation(0.9)(15.4)(0.4)(0.8)(0.6)(0.8)(2.6)(21.5)
Net book amount6.025.00.21.70.40.30.333.9
GROUP
Right of Use
Assets
Hardware
Assets
Plant and
equipment
Leasehold
improvements
Motor
vehicles
Office
equipment
Computers
Total
$M's$M's$M's$M's$M's$M's$M's$M's
Year ended 31 March 2020
Opening net book amount6.025.00.21.70.40.30.333.9
Additions-10.80.10.30.10.10.211.6
Depreciation charge(1.0)(6.7)(0.1)(0.3)(0.2)(0.1)(0.2)(8.6)
Depreciation recovered-0.7-----0.7
Effect of movement in
exchange rates
0.1(0.3)-----(0.2)
Closing net book amount5.129.50.21.70.30.30.337. 4
Cost7.151.20.72.91.11.23.167. 3
Accumulated depreciation(2.0)(21.7)(0.5)(1.2)(0.8)(0.9)(2.8)(29.9)
Net book amount5.129.50.21.70.30.30.337. 4
Included in the Hardware Assets is equipment under construction of $7.7M (2019: $7.0M).
Items of plant and equipment are stated at cost, less accumulated depreciation and impairment losses. Cost includes the purchase
consideration, and those costs directly attributable to bringing the asset to the location and condition necessary for its intended use.
Where an item of plant and equipment is disposed of, the gain or loss recognised in the statement of comprehensive income is calculated
as the difference between the net sales price and the carrying amount of the asset.
Subsequent costs
The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when
that cost is incurred if it is probable that the future economic benefits embodied within the item will flow to the Group and the cost of the
item can be measured reliably. All other costs are recognised in the statement of comprehensive income as an expense in the period they
are incurred.
Depreciation
Depreciation begins when the asset is in the location and condition necessary for it to be capable of operating in the manner intended by
management. The following rates have been used on a straight line basis:
Leasehold improvements 3 to 9 years
Hardware assets 3 to 6 years
Plant and equipment 3 to 11 years
Computer/Office equipment 1 to 3 years
Motor vehicles 3 to 5 years
Right of Use Assets 3 to 9 years
The above rates reflect the estimated useful lives of the respected categories. Leasehold improvements are depreciated over the
contracted lease term.
NOTE 14 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)NOTE 13 TRADE AND OTHER RECEIVABLES (CONTINUED)
8586
FINANCIALS
NOTE 15 LEASES AS A LESSEE
Property, plant and equipment’ disclosed in Note 14 comprises owned and leased assets.
GROUP
20202019
Note$M's$M's
Right-of-use assets - Property leases5.16.0
145.16.0
The Group leases relate to land and buildings for its office space. The leases of office space typically run for a period of 1 to 9 years. Some
leases provide for additional rent payments that are based on changes in local price indices. Information about leases for which the Group
is a lessee is presented below.
GROUP
20202019
Right-of-use assets Note$M's$M's
Opening Net Book Value
6.01.5
Additions
-5.4
Disposals-(2.7)
Depreciation(1.0)(0.8)
Depreciation recovered-2.5
Effect of movement in exchange rates0.10.1
Closing Net Book Value145.16.0
GROUP
20202019
Lease Liabilities$M's$M's
Maturity analysis - contractual undiscounted cash flows
Less than one year1.41.2
One to five years4.94.6
More than five years1.63.1
Total undiscounted lease liabilities7. 98.9
Lease liabilities included in the statement of financial position6.37.0
Current 1.00.8
Non-current5.36.2
Amounts recognised in Statement of Comprehensive Income
GROUP
20202019
$M's$M's
Interest expense on lease liabilties 0.40.2
Depreciation on right of use assets1.00.8
Amounts recognised in Statement of Cash Flows
GROUP
20202019
$M's$M's
Total cash outflow for leases1.10.9
The Group recognises a right-of-use asset and a lease liability at the commencement date. The right-of-use asset is initially measured at
cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date,
plus any initial direct costs incurred and an estimate of costs to restore the underlying asset or the site on which it is located, less any lease
incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end
of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on
the same basis as those of property, plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses,
if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted
using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally,
the Group uses its incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease liability comprise the following:
-fixed payments, including in-substance fixed payments;
-variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
-amounts expected to be payable under a residual guarantee;
-the exercise price under a purchase option that the Group is reasonably certain to exercise;
-lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option; and
-penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest rate method. It is remeasured when there is a change in
future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to
be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or
termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or
is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Group presents right-of-use assets in Note 14 ‘Property, plant and equipment’. Lease liabilities are presented separately in the
Statement of Financial Position.
Short-term leases and leases of low-value items
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term property leases and leases of low-value
assets including office equipment. The Group recognises the lease payments associated with these leases as an expense on a straight-line
basis over the lease term.
NOTE 15 LEASES AS A LESSEE (CONTINUED)
8788
FINANCIALS
NOTE 16 INTANGIBLE ASSETS
GROUPDevelopmentSoftwareTotal
$M's$M's$M's
Year ended 31 March 2019
Opening net book amount26.93.029.9
Additions8.31.49.7
Disposals---
Amortisation charge(5.4)(1.1)(6.5)
Closing net book amount29.83.333.1
Cost46.46.953.3
Accumulated amortisation(16.6)(3.6)(20.2)
Net book amount29.83.333.1
GROUPDevelopmentSoftwareTotal
$M's$M's$M's
Year ended 31 March 2020
Opening net book amount29.83.333.1
Additions9.66.916.5
Disposals---
Amortisation charge(6.7)(0.8)(7.5)
Closing net book amount32.79.442.1
Cost55.913.969.8
Accumulated amortisation(23.2)(4.5)(27.7)
Net book amount32.79.442.1
The useful lives of the Group’s Intangible Assets are assessed to be finite. Assets with finite lives are amortised over their
useful lives and tested for impairment whenever there are indications that the assets may be impaired. Where an indicator
of impairment exists the Group makes a formal assessment of the recoverable amount. Where the carrying value of an asset
exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. The recoverable
amount is the greater of fair value less costs to sell of the assets value in use. For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
Recoverability of development costs
The wider economic impacts of Covid-19 are anticipated to have a short to medium term impact on incremental contracted unit
growth and debtors recoverability across all markets. Management consider the initial economic impacts of Covid-19 to be an
indicator of impairment and therefore formal assessments of impairment were performed for all three cash generating units
(CGUs).
For impairment testing purposes the corporate Development & Software Assets are allocated to the CGUs based on the specific
CGU that the asset relates to, or if the asset is developed for use globally across all CGU’s, the asset is allocated to CGU’s based
on the proportionate share of the Group’s contracted units. The recoverable amount of the CGU that these corporate assets
relate to was estimated based on the present value of future cash flows expected to be derived from the CGU (value in use)
Discount and terminal growth rate assumptions are outlined below. Other key assumptions for the impairment review included
contracted unit growth and related revenue and expense forecasts in line with Group’s budget and three-year forecast. The
Group’s three-year budget and forecast used for impairment testing purposes included managements assessment of the impact
of Covid-19 on the Group’s forecast contracted unit growth, potential additional debtors provisioning and operating expenses.
Sensitivity analysis was performed for each CGU by reviewing impairment based on a scenario with a more significant and
sustained reductions in incremental unit growth, a slower than anticipated recovery from the impacts of Covid-19 and a
more significant deterioration in debtors at base case discount and terminal growth rates. A separate sensitivity analysis was
performed by increasing the discount rate to 17% and lowering the terminal growth rate to 0.5% for each CGU at base case
forecast cash flows. The results of both sensitivity scenarios still resulted in headroom between the recoverable amount of the
CGU and its carrying value. The Group concluded that the recoverable amount of the CGU to be higher than its carrying value
and therefore no impairment was considered necessary.
Discount
Rate
Terminal
Growth Rate
Allocated Corporate
Development & Software Assets
$M’s$M’s
North America14%1.9% 16.7
New Zealand11%1.5% 23.7
Australia 14%1.5% 1.6
Research and Development
Expenditure on research activities, undertaken with the prospect of gaining new technical knowledge and understanding, is
recognised in the statement of comprehensive income when incurred.
Development activities involve a plan or design for the production of new or substantially improved products and processes.
Development expenditure is capitalised only if development costs can be measured reliably, the product or process is technically
and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to
complete development and to use or sell the asset. The expenditure capitalised includes the cost of materials, direct labour
and overhead costs that are directly attributable to preparing the asset for its intended use. Other development expenditure is
recognised in the statement of comprehensive income when incurred.
Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated impairment losses.
Other intangible assets
Other intangibles assets that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated
amortisation and accumulated impairment losses.
Subsequent expenditure
Subsequent expenditure is only capitalised when it increases the future economic benefits embodied in the specific asset to
which is relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in the
statement of comprehensive income when incurred.
Amortisation
Amortisation is recognised in the statement of comprehensive income on a straight line basis over the estimated useful life of
intangible asset. The estimated useful lives for the current and comparative periods are as follows:
Development Hardware & Platform 7-15 years
Development Products 5-10 years
Software 5-7 years
NOTE 16 INTANGIBLE ASSETS (CONTINUED)
8990
FINANCIALS
NOTE 17 TRADE PAYABLES AND ACCRUALS
GROUP
20202019
$M's$M's
Trade creditors4.13.5
Sundry accruals4.12.6
8.26.1
NOTE 18 BORROWINGS
GROUP
20202019
$M's$M's
Current borrowings
Term Loans - NZ $ denominated2.56.2
Term Loans - US $ denominated-8.5
NZ Growth Funding - Committed Cash Advance Facility -1.8
US Growth Funding - Committed Cash Advance Facility -0.8
Capitalised borrowing costs(0.3)(0.1)
2.217.2
Non-current borrowings
Term Loans - NZ $ denominated33.61.5
Term Loans - US $ denominated-10.2
NZ Growth - Committed Cash Advance Facility -4.3
US Growth - Committed Cash Advance Facility -1.5
33.617.5
Terms and debt repayment schedule
GROUP
Nominal
Interest
Year of
Maturity
2020
Face Value
2020
Carrying
amount
2019
Face Value
2019
Carrying
Amount
$M's$M's$M's$M's
Term Loans - NZ $ denominated4.45%202336.136.17. 76.8
Term Loans - US $ denominated5.55%2020--18.719.6
NZ Growth - Committed Cash
Advance Facility
4.47%2020--6.16.1
US Growth - Committed Cash
Advance Facility
4.98%2020--2.22.2
Capitalised borrowing costs-2020-(0.3)-(0.1)
36.135.834.734.6
Current financial year
On 26 March 2020, in order to support funding requirements in connection with the Group’s growth and to manage the related
working capital requirements, the Company entered into a new syndicated three-year debt facility with the Bank of New Zealand
(BNZ) and China Construction Bank (CCB). At 31 March 2020, EROAD had the following facilities in place:
$18.0M (NZD) Term Loan Facility A – to refinance existing debt. The Term Loan has a term of 36 months from the March 2020 refinance
date, with the facility having a maturity date in March 2023. The interest rate is variable with reference the to base rate (BKBM bid rate)
for the selected interest period plus a margin of 3.5%. EROAD may select an interest period of 1,2,3 or 6 months. Principal payments of
$1.25m are to be made quarterly commencing from December 2020 with the full outstanding balance payable on termination date.
$18.1M (NZD) Term Loan Facility B – used to refinance existing debt and general corporate purposes. The Term Loan has a term of 36
months from the March 2020 refinance date, with the facility having a maturity date in March 2023. The interest rate is variable with
reference the to base rate (BKBM bid rate) for the selected interest period plus a margin of 3.5%. EROAD may select an interest period
of 1,2,3 or 6 months. This is an interest only term facility full repayment on the termination date.
$20.0M Capital Expenditure Facility – to fund growth capital expenditure requirements. The Capital Expenditure Facility has a 36
month term from the March 2020 refinance date, with the facility having a maturity date in March 2023. Drawings can be made on the
facility in NZD or USD. The interest rate is variable with reference the to base rate (BKBM bid rate for NZD drawings and US LIBOR for
USD drawings) for the selected interest period plus a margin of 3.5%. EROAD may select an interest period of 1,2,3 or 6 months. Interest
payments are made on the last day of the determined interest period. In addition, a Commitment Fee of 45% of the per annum margin
(1.58%) is payable on the undrawn balance of the facility quarterly in arrears. The full outstanding balance is payable on termination
date.
$3.9M Overdraft Facilities – for general working capital purposes. This is an on demand facility with the interest rate based on the
Market Connect Overdraft Prime Rate plus a margin of 1.5%.
EROAD’s operating covenants to support the above facilities include Debt Service Cover Ratio, Interest Cover Ratio, Leverage Ratio and
Obligor Assets to Group Assets. EROAD was compliant with all covenants during the period and at 31 March 2020.
The security package for the Multi-Option Credit Facility Agreement includes an all obligations cross-guarantee granted by EROAD
Australia Pty Limited and EROAD Inc in favour of the BNZ (in its capacity as Security Trustee for the banking syndicate). In respect of
the obligations of EROAD Limited, and a General Security Agreements granted by EROAD Limited, EROAD Inc and EROAD Australia
Pty Limited in favour of the BNZ (in its capacity as Security Trustee for the banking syndicate).
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part
of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.
Prior year comparative
On 3 July 2017, in order to support funding requirements in connection with the Group’s growth and to manage the related working
capital requirements, the Company entered into a Multi-Option Credit Facility Agreement with the Bank of New Zealand (BNZ). The
agreement was subsequently amended and restated in December 2017 and October 2018. This facility remained in place until the 26
March 2020 when amounts were refinanced into the new syndicated debt facility outlined above. For the comparative period at 31
March 2019, EROAD had the following facilities in place:
$5.3M Term Loan Facility A – used to restructure previous term facilities. The Term Loan had a term of 24 months from the October
2018 refinance date. The interest rate was variable based on the 3-month BKBM bid plus a margin of 3.10%. Principal and interest
payments were made quarterly in line with a 30 month repayment profile.
$6.0M (NZD) Term Loan Facility B – used to restructure the Outstanding Amount under the Committed Cash Advances Facility as
at the First Amendment Date in December 2017. The Term Loan had a term of 24 months from the October 2018 refinance date.
The interest rate was variable based on the 3-month BKBM bid plus a margin of 3.10%. Principal and interest payments were made
quarterly in line with a 33 month repayment profile.
NOTE 18 BORROWINGS (CONTINUED)
9192
FINANCIALS
$2.2M (USD) Term Loan Facility B – used to restructure the Outstanding Amount under the Committed Cash Advances Facility as
at the First Amendment Date in December 2017. The Term Loan had a term of 24 months from the October 2018 refinance date.
The interest rate was variable based on the 3-month US LIBOR plus a margin of 3.10%. Principal and interest payments were made
quarterly in line with a 33 month repayment profile.
$13.0M (NZD) Term Loan Facility E – used to restructure the Outstanding Amount under the Committed Cash Advances Facility as
at the Second Amendment Date in October 2018. The Term Loan had a term of 24 months from the October 2018 refinance date.
The interest rate was variable based on the 3-month BKBM bid plus a margin of 3.10%. Principal and interest payments were made
quarterly in line with a 33 month repayment profile.
$3.3M (USD) Term Loan Facility E – used to restructure the Outstanding Amount under the Committed Cash Advances Facility as
at the Second Amendment Date in October 2018. The Term Loan had a term of 24 months from the October 2018 refinance date.
The interest rate was variable based on the 3-month US LIBOR plus a margin of 3.10%. Principal and interest payments were made
quarterly in line with a 33 month repayment profile.
$20.0M Committed Cash Advance Facility – to finance the up-front costs in connection with securing Future Contracted Income.
The Committed Cash Advance Facility had a term of 24 months from the October 2018 refinance date. Structurally the facility was
paid down and redrawn (revolving credit) each time the Company presented a certificate outlining the Group’s growth in new Future
Contracted Income on a monthly basis. For drawings in New Zealand Dollars of a 1-month duration, the interest rate was the 1-month
BKBM plus margin of 2.50%. For drawings in USD of a 1-month duration, the interest rate was the 1 month US LIBOR plus a margin of
2.50%. In addition there was a 1.50% line fee on the total facility limit, payable quarterly in advance.
$5.2M Overdraft Facilities – for general working capital purposes. This was an on demand facility with the interest rate based on the
Market Connect Overdraft Prime Rate plus a margin of 1%.
EROAD’s operating covenants to support the above facilities include Loan to Total FCI Ratio, Interest Cover Ratio, Total Assets
(Obligators) to Total Assets (Group) ratio, and an umbrella limit on the aggregate of all facilities being below $40,000,000. EROAD was
compliant with all covenants during the period and at 31 March 2019.
The security package for the Multi-Option Credit Facility Agreement included an all obligations cross-guarantee granted by EROAD
Australia Pty Limited and EROAD Inc in favour of the BNZ in respect of the obligations of EROAD Limited, and a General Security
Agreements granted by EROAD Limited, EROAD Inc and EROAD Australia Pty Limited in favour of the BNZ the secured party.
NOTE 19 CONTRACT LIABILITIES
The group enters into contracts with customers for the provision of software services over a contracted period. As stated in the
accounting policies, this revenue is recognised over time as the customer simultaneously receives and consumes the benefit
of the service. The Group has determined that the benefit of the services provided is consumed evenly over the period of the
contract, and thus the performance obligations are satisfied evenly over the period. Where the Group receives a portion of the
transaction price of a contract in advance, this is recognised as a contract liability and released over the contract period as the
Group satisfies its performance obligations.
GROUP
20202019
$M's$M's
Opening balance 10.010.2
Amounts deferred during the period1.25.1
Amount recognised in the statement of comprehensive income(3.0)(5.3)
8.210.0
Current3.65.8
Non-current4.64.2
At 31 March 2020, $3.6M is expected to be recognised in the statement of comprehensive income in the next financial period and
has been classified as current in the balance sheet (2019: $5.8M).
NOTE 20 FINANCIAL RISK MANAGEMENT
As a result of the Group’s operations and sources of finance, it is exposed to credit risk, liquidity risk and market risks which include foreign
currency risk, commodity price risk and interest rate risk. These risks are described below.
Recognition and initial measurement
Trade receivables are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised
when the Group becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without
a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or
loss, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component
is initially measured at the transaction price.
Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as measured at amortised cost.
Financial assets - subsequent measurement and gains and losses.
Financial assets at amortised cost. These assets are subsequently measured at amortised cost using the effective interest method. The
amortised cost is reduced by impairment losses. Interest income , foreign exchange gains and losses and impairment are recognised in
profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
Derecognition
Financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the
right to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial
asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does
not retain control of the financial asset.
The Group enters into transactions whereby it transfers assets recognised in its statement of financial position, but retains either all or
substantially all of the risks and rewards of the transferred asset. In theses cases, the transferred assets are not derecognised.
Financial liabilities
The Group derecognises a financial liability when the contractual obligations are discharged or cancelled, or expire. The Group also
derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which
case a new financial liability based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (Including
any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.
NOTE 18 BORROWINGS (CONTINUED)
9394
FINANCIALS
The Group holds the following financial assets and liabilities:
GROUP
20202019
$M's$M's$M's$M's
Amortised costs
Other
amortised costAmortised costs
Other
amortised cost
Financial assets
Cash and cash equivalents3.4-16.1-
Restricted bank account14.0-12.7-
Trade receivables8.6-6.5-
26.0-35.3-
Financial liabilities
Borrowings-35.8-34.7
Employee Entitlements-1.8-1.3
Contract Liabilities-8.2-10.3
Lease liabilities-6.3-7.0
Trade and other payables-8.2-6.1
Payables to transport agencies-13.9-12.5
-74 . 2-71.9
(a) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and it arises principally from the Group’s trade receivables from customers in the normal course of business.
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The creditworthiness of
a customer or counterparty is determined by a number of qualitative and quantitative factors. Qualitative factors include external
credit ratings (where available), payment history and strategic importance of customer or counterparty. Quantitative factors include
transaction size, net assets of customer or counterparty, and ratio analysis on liquidity, cash flow and profitability.
The carrying amount of the Group’s financial assets represents the maximum credit exposure as summarised above.
Refer to note 13 for an aging profile for the Group’s trade receivables at reporting date.
(b) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they become due and payable.
The Group’s approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when they become due and payable, under both normal and stressed conditions, without incurring unacceptable losses or
risking damage to the Group’s reputation.
The Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 90 days, including the
servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted,
such as natural disasters.
Maturities of financial liabilities
The following table details the Group’s contractual maturities of financial liabilities, including estimated interest payments and
excluding the impact of netting agreements, as at the reporting date. Refer to note 15 for the maturity profile.
GROUP
2020
1 year or less
Over 1 to 5
years
Over 5
years
Total contractual
cash flows
Carrying amount of
liabilities
$M's$M's$M's$M's$M's
Non-derivative financial liabilities
Borrowings2.533.3-35.835.8
Employee Entitlements1.8--1.81.8
Trade and other payables8.2--8.28.2
Payable to transport agencies13.9
-
-13.9
13.9
26.433.3-59.759.7
GROUP
2019
1 year or less
Over 1 to 5
years
Over 5
years
Total contractual
cash flows
Carrying amount of
liabilities
$M's$M's$M's$M's$M's
Non-derivative financial liabilities
Borrowings17.217.5-34.734.7
Employee Entitlements1.3--1.31.3
Trade and other payables6.1--6.16.1
Payable to transport agencies12.5--12.512.5
37.117.5-54.654.6
Under previous facilities, whilst each drawdown on borrowings had a maximum 365 day term, the Company had the ability to re-draw
amounts until the end of the term of the facility and as a result the loan was been classified as non-current in the prior period. There is
no such limit on the term of drawdowns under the current facility.
(c) Market risk
Market risk is the risk that changes in market prices, such as commodity prices, foreign exchange rates and interest rates, will affect the
Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimising the return on risk.
Foreign currency risk
The Group is exposed to currency risk on sales transactions that are denominated in a currency other than the respective functional
currencies of Group entities, primarily the US Dollar (USD) and Australian Dollar (AUD). The Group is also exposed to currency risk on
expense transactions that are denominated in a currency other than the respective functional currencies of Group entities, primarily the
US Dollar (USD), Australian Dollar and Euro (EUR). The Group, may on occasion, enter into forward exchange contracts to hedge the
exposure to foreign currency fluctuations on sales receipts.
The Group reports in New Zealand dollars. Movements in foreign currency exchange rates affect reported financial results, financial
position and cash flows. Where practical, the Group attempts to reduce this risk by matching revenues and expenditures, as well as
assets and liabilities, by country and by currency.
NOTE 20 FINANCIAL RISK MANAGEMENT (CONTINUED)NOTE 20 FINANCIAL RISK MANAGEMENT (CONTINUED)
9596
FINANCIALS
Foreign exchange rates applied against the New Zealand Dollar, at 31 March are as follows:
20202019
$$
AUD 1
0.970.95
USD 10.600.68
The Group’s exposure to foreign currency risk at the reporting date was as follows (all amounts are denominated in New Zealand Dollars):
2020AUDUSD
$M's
$M’s
Cash and cash equivalents
0.11.2
Finance lease receivables--
Trade receivables0.13.0
Lease liabilities-0.6
Borrowings--
2019AUDUSD
$M’s$M’s
Cash and cash equivalents
0.11.9
Trade receivables0.12.0
Lease liabilities-0.8
Borrowings-21.0
Interest rate risk
At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:
GROUP
2019
Carrying
amount
2018
Carrying
amount
%$M’s%$M’s $
Term Loans - NZ $ denominated4.45%36.15.00%7. 7
Term Loans - US $ denominated0.00%-5.55%18.7
NZ Growth - Committed Cash Advance Facility 0.00%-4.47%6.1
US Growth - Committed Cash Advance Facility 0.00%-4.98%2.2
Net exposure to interest rate risk36.134.7
NOTE 20 FINANCIAL RISK MANAGEMENT (CONTINUED)NOTE 20 FINANCIAL RISK MANAGEMENT (CONTINUED)
Summarised sensitivity analysis
The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to foreign currency risk and interest
rate risk.
GROUP
2020-10%+10%-100bps+100bps
Profit
$M’s
Equity
$M’s
Profit
$M’s
Equity
$M’s
Profit
$M’s
Equity
$M’s
Profit
$M’s
Equity
$M’s
Cash and cash equivalents(0.1)(0.1)0.10.1----
Finance lease receivables--------
Trade receivables(0.2)(0.2)0.20.2----
Borrowings----0.40.4(0.4)(0.4)
Total increase/ (decrease)
(0.3)(0.3)0.30.30.40.4(0.4)(0.4)
GROUP
2019-10%+10%-100bps+100bps
Profit
$M’s
Equity
$M’s
Profit
$M’s
Equity
$M’s
Profit
$M’s
Equity
$M’s
Profit
$M’s
Equity
$M’s
Cash and cash equivalents(0.1)(0.1)0.10.1(0.2)(0.2)0.20.2
Trade receivables(0.1)(0.1)0.10.1----
Borrowings(1.4)(1.4)1.41.40.30.3(0.3)(0.3)
Total increase/ (decrease)(1.6)(1.6)1.61.60.10.1(0.1)(0.1)
(1)
The foreign currency sensitivity above represents a 10% decrease and increase in spot foreign exchange rates.
(2)
The interest rate sensitivity above represents a 100 basis point (bps) decrease and increase in variable interest rates.
(d) Capital management
The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future
development of the business. The Board monitors the return on capital employed, which the Group defines as reported EBIT (Earnings
Before Interest and Tax) divided by capital employed.
(e) Fair value measurement
The carrying amounts of the Groups financial assets and liabilities approximate their fair value due to their short maturity periods or fixed
rate nature.
NOTE 21 SHARE-BASED PAYMENTS
At 31 March 2019, the Group had the following share-based payment arrangements:
FY20 Performance Share Rights
Under the FY20 Long Term Incentive (LTI) plan, 770,474 performance share rights (PSRs) were issued (for nil consideration) to
participants which convert to shares (for nil consideration) if targets are met. PSRs do not entitle the holder to receive dividends or other
distributions, or vote in respect of EROAD Limited ordinary shares, although under the terms of the plan an additional number of shares
will be issued on conversion of fully vested PSRs to reflect dividends paid to EROAD Limited shares prior to exercise. On becoming
exercisable, each PSR entitles the holder to one fully paid ordinary EROAD Limited share, subject to adjustment in accordance with the
plan rules and the performance hurdles, ranking equally with all other EROAD Limited ordinary shares.
For the FY20 LTI plan, the award is linked to growth in EROAD’s Total Contracted Units (TCUs) between 1 April 2019 and 31 March
2022. Participants bear the tax liability of the LTI plan. The Board retains discretion over the final outcome of PSR payments, to allow
appropriate adjustments where unanticipated circumstances may impact performance over the measurement period.
9798
FINANCIALS
EROAD LTI Plan (equity-settled)
Eligible employees were invited to purchase EROAD shares under the EROAD LTI plan. Under the terms of the scheme the purchase of
the shares is funded by a loan granted to the eligible employees by EROAD Limited. At the end of the vesting period the employee will
be paid a net bonus in relation to the shares that vest to the employee, equal to the amount of their loan outstanding to the Company,
enabling the loan to be repaid.
Shares issued under the scheme are held in trust for the employees during a 3 year restrictive period. If the employee ceases to be an
employee during the restrictive period the Trustees will repurchase the employees shares at the original issue price.
The eligible employees must meet certain performance conditions during each year of the restrictive period, as determined by the
remuneration committee and approved by the board. 50% of the scheme shares initially granted will be forfeited for each year the
participant fails to achieve their performance conditions. Additionally the employee’s shares will also be forfeited if the enterprise value of
the Company has not doubled by the end of the restrictive period.
Employee’s shares that are forfeited due to failure to meet market and non-market performance conditions will be repurchased by the
Trustee at the original grant date price.
The EROAD LTI Plan has been accounted for as grant of shares to employees in accordance with NZ IFRS 2. The key terms and conditions
relating to the grants under this Scheme are disclosed in the table below.
EROAD US President Incentive Scheme
The US President was invited to purchase EROAD shares under the EROAD US President Incentive Scheme. Under the terms of the
scheme the purchase of the shares is funded by a loan granted to the employee by EROAD Limited. At the end of the vesting period the
employee will be paid a net bonus in relation to the shares that vest to the employee, equal to the amount of their loan outstanding to the
Company, enabling the loan to be repaid.
Shares issued under the scheme are held in trust for the employee during a 3 year restrictive period. If the employee ceases to be an
employee during the restrictive period the Trustees will repurchase the employees shares at the original issue price.
Key operational measures and targets for the North American business are outlined in the employees grant letter, these include Total
Contract Units, Average Revenue Per Unit, Customer Acquisition Cost Payback Period, and Renewal Rate targets. Each operational
measure has a percentage weighting for each of the three-year periods, with the performance for each year being calculated based on
the percentage of target achieved multiplied by the percentage weighting for each operational measures. The total percentage of shares
to vest at the end of the restrictive period is calculated based on the average percentage performance over the three years. If the total
average performance is less than 60% then all shares granted under the scheme will be forfeited.
Employee’s shares that are forfeited due to failure to meet the non-market performance conditions will be repurchased by the Trustee at
the original grant date price.
The EROAD US President Incentive Scheme has been accounted for as grant of shares to employees in accordance with NZ IFRS 2. The
key terms and conditions relating to the grants under this Scheme are disclosed in the table below.
EROAD’s LTI Plan II (equity-settled)
Eligible employees were invited to purchase EROAD shares under the EROAD LTI plan. Under the terms of the scheme the purchase of
the shares is funded by a loan granted to the eligible employees by EROAD Limited. At the end of the vesting period the employee will
be paid a net bonus in relation to the shares that vest to the employee, equal to the amount of their loan outstanding to the Company,
enabling the loan to be repaid.
Shares issued under the scheme are held in trust for the employees during a 3 year restrictive period. If the employee ceases to be an
employee during the restrictive period the Trustees will repurchase the employees shares at the original issue price. For the shares to vest
the Company’s Total Shareholder Return (TSR) must exceed the median TSR of the NZX50 Group over the Relevant Assessment Period,
with a progressive vesting scale for performance between 50th and 75th percentiles, and 100% vesting if company performance is equal
to or above the 75th percentile of the NZX50 Group.
Employee’s shares that are forfeited due to failure to meet market and non-market performance conditions will be repurchased by the
Trustee at the original grant date price.
The EROAD LTI Plan has been accounted for as grant of shares to employees in accordance with NZ IFRS 2. The key terms and conditions
relating to the grants under this Scheme are disclosed in the table below.
EROAD LTI Plans
Grant date/employees entitledVesting conditionsVesting period
Apr-17Sep-18
Shares granted to key
management personnel
EROAD LTI Plan II (FY18) - 197,890
• 3 years service from grant date
• Company’s Total Shareholder Return (TSR) must exceed
the median TSR of the NZX50 Group over the Relevant
Assessment Period (1 April 2017 to 1 April 2021).
• progressive vesting scale for performance between 50th and
75th percentiles, and 100% vesting if company performance is
equal to or above the 75th percentile of the NZX50 Group.2.5 years
EROAD LTI Plan II (FY19) - 85,276
• 3 years service from grant date
• Company’s Total Shareholder Return (TSR) must exceed
the median TSR of the NZX50 Group over the Relevant
Assessment Period (1 April 2018 to 1 April 2021).
• progressive vesting scale for performance between 50th and
75th percentiles, and 100% vesting if company performance is
equal to or above the 75th percentile of the NZX50 Group.
2.5 years
EROAD US President Incentive
Scheme
490,000 -
• 3 years service from grant date
• Meet minimum targets for key operational metrics: Total
Contracted Units, Average Revenue per Unit, Cost of Customer
Acquisition Payback and Renewal Rates.
• Each years performance is measured on a weighted calculation
of percentage achieved vs. target for operational metrics.
• The percentage of shares to vest is calculated based on the
average of each years weighted percentage achieved. If the
vested amount is less than 60% all shares will be forfeited.
3 years
Shares granted to other employees
EROAD LTI Plan II (FY18) - 87,995
• 3 years service from grant date
• Company’s Total Shareholder Return (TSR) must exceed
the median TSR of the NZX50 Group over the Relevant
Assessment Period (1 April 2017 to 1 April 2021).
• progressive vesting scale for performance between 50th and
75th percentiles, and 100% vesting if company performance is
equal to or above the 75th percentile of the NZX50 Group. 2.5 years
EROAD LTI Plan II (FY19) - 25,977
• 3 years service from grant date
• Company’s Total Shareholder Return (TSR) must exceed the
median TSR of the NZX50 Group over the Relevant Assessment
Period (1 April 2018 to 1 April 2021).
• progressive vesting scale for performance between 50th and
75th percentiles, and 100% vesting if company performance is
equal to or above the 75th percentile of the NZX50 Group.2.5 years
490,000 397,138
NOTE 21 SHARE-BASED PAYMENTS (CONTINUED)NOTE 21 SHARE-BASED PAYMENTS (CONTINUED)
99100
FINANCIALS
EROAD Performance Share Rights
Grant date/employees entitledVesting conditionsVesting period
Oct-19
Performance Shares Rights
granted to key management
personnel
FY20 Performance Share Rights 374,238
• 2.4 years service from grant date
• The award is linked to growth in EROAD’s Total Contracted
Units (TCUs) between 1 April 2019 and 31 March 2022.
Participants bear the tax liability of the PSR plan. The Board
retains discretion over the final outcome of PSR payments,
to allow appropriate adjustments where unanticipated
circumstances may impact performance over the measurement
period.2.4 years
Performance Shares Rights
granted to other employees
FY20 Performance Share Rights 396,236
• 2.4 years service from grant date
• The award is linked to growth in EROAD’s total contracted units
(TCUs) between 1 April 2019 and 31 March 2022. Participants
bear the tax liability of the PSR plan. The Board retains
discretion over the final outcome of PSR payments, to allow
appropriate adjustments where unanticipated circumstances
may impact performance over the measurement period.
2.4 years
7 70, 474
Measurement of fair value
The fair value of the shares issued under the EROAD LTI plans during the year ended 31 March 2020 was determined with reference to
the Company’s share price on the NZX at grant date. A discount was applied to the fair value of the shares issued under the EROAD LTI
scheme to reflect the non-vesting market conditions.
The number of shares granted and forfeited during the period were as follows:
EROAD LTI Plans
GROUP
20202019
Outstanding at 1 April 972,487663,475
Granted during the period-397,138
Forfeited during the period(24,903)(75,982)
Vested during the period(73,027)(12,144)
Outstanding at 31 March 874,557972,487
EROAD Performance Share Rights
GROUP
20202019
Outstanding at 1 April --
Granted during the period7 70, 474-
Forfeited during the period--
Vested during the period--
Outstanding at 31 March 7 70, 474-
During the year-ended 31 March 2020 an amount of $0.3M (2019: $0.3M) was recognised as an expense within the statement of
comprehensive income in relation to share-based payments for all share plans.
NOTE 22 RELATED PARTY TRANSACTIONS
The subsidiaries of the Company are:
CompanyCountry of IncorporationInterest %Principal activity
EROAD Financial Services LtdNew Zealand100Financing activities within group
EROAD LTI Trustee LimitedNew Zealand100LTI Scheme Trustee
EROAD (Australia) Pty LimitedAustralia100Transport Technology & SaaS
EROAD IncUnited States of America100Transport Technology & SaaS
Key management personnel compensation comprised:
20202019
$M’s$M’s
Short-term employee benefits2.7702.349
Share-based payments0.2450.195
3.0152.544
(a) Loans to key management personnel
There have been no loans to management personnel.
(b) Other transactions with key management personnel
NOTE 21 SHARE-BASED PAYMENTS (CONTINUED)NOTE 21 SHARE-BASED PAYMENTS (CONTINUED)
101102
FINANCIALS
There were no other transactions with key management personnel during the period. From time to time, key management personnel
of the Group may purchase goods from the Group.
(c) Remuneration of Non-executive Directors
2020
$M’s
2019
$M’s
Michael Bushby0.0550.083
Anthony Gibson0.0630.063
Candace Kinser0.0550.055
Gregg Dal Ponte-0.055
Graham Stuart (Chair)0.1100.096
Susan Paterson0.087-
Barry Einsig0.045-
0.4150.352
No additional fees were paid to any Directors for consultancy work provided to the Company (2019: None paid).
(d) Remuneration of Executive Director
2020
$M’s
2019
$M’s
Salary and bonus0.8390.567
Share-based payments0.0880.058
0.927 0.625
NOTE 23 CAPITAL COMMITMENTS
As at 31 March 2020 the Group had confirmed purchase orders open with its third party manufacturer of hardware units amounting to
$1.2M (31 March 2019: $0.7M).
NOTE 24 CONTINGENT LIABILITIES
In the year ended 31 March 2019, the Group was approached by a third party who asserted that EROAD had infringed a number of its
patents. From our internal review of the patent claims asserted by the other party, the Group believed that there were grounds to support
why we had not infringed their patents and also strong grounds that the patents would likely be considered invalid if EROAD was to
challenge them. Litigation was commenced by EROAD on the basis that EROAD had not infringed the patents and that the patents were
invalid. EROAD sought declarations to this effect and recovery of attorney fees. Subsequently the litigation was settled. As we firmly
believed that we not infringed any patents no amounts had been provided for in relation to this claim in the year ended 31 March 2019.
No contingent liability existed as at 31 March 2020 related to this matter. The Group incurred legal costs in defending this claim over year
ended 31 March 2020 and provided for settlement of this claim.
EROAD has applied to a tax department before balance date to retroactively amend rules applied to potential liabilities. It is the Directors
NOTE 22 RELATED PARTY TRANSACTIONS (CONTINUED)expectation that this application is common practice and that this ruling will be granted. The Directors therefore consider it not probable
that a liability will arise. No liability has been recognised at balance date in respect of this matter. If the ruling is declined then the Group will
be subject to payment of these liabilities and potential penalties, to be quantified at the time.
NOTE 25 NET TANGIBLE ASSETS PER SHARE
2020
$M’s
2019
$M’s
Net assets (equity)51.351.3
Less intangibles(42.1)(33.1)
Total net tangible assets9.218.2
$$
Net tangible assets per share ($) 0.13 0.27
The non-GAAP measure above is disclosed for consistency with the information disclosed in EROAD’s results announced under the NZX
listing rules.
NOTE 26 EVENTS SUBSEQUENT TO BALANCE DATE
There are no reportable events subsequent to balance date except as disclosed in note 2(g) related to impacts of COVID-19
(31 March 2019: Nil).
104
AUDITORS REPORT
AUDITORS
REPORT
103
© 2020 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
Independent Auditor’s
Report
To the shareholders of EROAD Limited
Report on the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated financial
statements of EROAD Limited (the company) and its
subsidiaries (the Group) on pages 66 to 102:
i. present fairly in all material respects the Group’s
financial position as at 31 March 2020 and its
financial performance and cash flows for the year
ended on that date; and
ii. comply with New Zealand Equivalents to
International Financial Reporting Standards
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated statement of financial position as
at 31 March 2020;
— the consolidated statement of comprehensive
income, changes in equity and cash flows for the
year then ended; and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for
Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the Group
financial statements section of our report.
Our firm has also provided other services to the Group in relation to other assurance services and non-audit services for
tax compliance and tax advisory. Subject to certain restrictions, partners and employees of our firm may also deal with the
Group on normal terms within the ordinary course of trading activities of the business of the Group. These matters have
not impaired our independence as auditor of the Group. The firm has no other relationship with, or interest in, the Group.
Scoping
The scope of our audit is designed to ensure that we perform adequate work to be able to give an opinion on the Group
financial statements as a whole, taking into account the structure of the Group, the financial reporting systems, processes
and controls, and the industry in which it operates.
104
© 2019 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
Independent Auditor’s
Report
To the shareholders of EROAD Limited
Report on the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated financial
statements of EROAD Limited (the company) and its
subsidiaries (the Group) on pages 63 to 104:
i. present fairly in all material respects the Group’s
financial position as at 31 March 2019 and its
financial performance and cash flows for the year
ended on that date; and
ii. comply with New Zealand Equivalents to
International Financial Reporting Standards
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated statement of financial position as
at 31 March 2019;
— the consolidated statement of comprehensive
income, changes in equity and cash flows for the
year then ended; and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for
Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the Group
financial statements section of our report.
Our firm has also provided other services to the Group in relation to tax compliance, tax advisory and corporate finance.
Subject to certain restrictions, partners and employees of our firm may also deal with the Group on normal terms within
the ordinary course of trading activities of the business of the Group. These matters have not impaired our independence
as auditor of the Group. The firm has no other relationship with, or interest in, the Group.
Scoping
The scope of our audit is designed to ensure that we perform adequate work to be able to give an opinion on the Group
financial statements as a whole, taking into account the structure of the Group, the financial reporting systems, processes
and controls, and the industry in which it operates.
The context for our audit is set by the Group’s major activities in the financial year ended 31 March 2020. The Group’s
finance function is located at the head office in Auckland and in the USA office in Oregon. All audit work in respect of the
consolidated financial statements was performed by the Group engagement team.
Materiality
The scope of our audit was influenced by our application of materiality. Materiality helped us to determine the nature,
timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and on the Group
financial statements as a whole. The materiality for the Group financial statements as a whole was set at $800,000
determined with reference to a benchmark of Group revenue. We chose the benchmark because, in our view, this is a key
measure of the Group’s performance.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
Group’s consolidated financial statements in the current period. We summarise below those matters and our key audit
procedures to address those matters in order that the shareholders as a body may better understand the process by which
we arrived at our audit opinion. Our procedures were undertaken in the context of and solely for the purpose of our
statutory audit opinion on the Group financial statements as a whole and we do not express discrete opinions on separate
elements of the Group financial statements.
Key changes in the assessment of audit risks
COVID-19
The COVID-19 pandemic has created significant additional risks across a number of areas of the business. All forward
looking assumptions are inherently more uncertain during these unprecedented times. The underlying audit risk has
increased, particularly in the forecasted financing of the Group and the assessment of revenue collectability. In response
we have included a new key audit matter “Financing”. While the key audit matter “Revenue Recognition”, detailed below,
is unchanged from last year the extent and nature of audit evidence that we had to gather has increased. Further
information about the impact of COVID-19 on the business can be found in note 2g.
The key audit matter How the matter was addressed in our audit
Revenue Recognition ($81.2m)
Refer to Note 3 of the consolidated
financial statements.
The majority of the Group’s contracts
are accounted for as a service contract
and the associated revenues recognised
over the contract term.
We focused on this area because the
accounting determination of whether or
not the contract contains a lease is a
significant judgement and the outcome
has a significant impact on the
recognition of profit and loss and the
financial position.
We assessed the judgement in revenue recognition by:
— Assessing whether the Group’s customer contract terms and conditions
meet the definition of service contracts to be recognised over time;
— Reviewing any changes or new contractual terms and conditions entered
into with new customers during the period to identify any potential
impact on performance obligations required to satisfy the contract;
— Selecting a sample of customer contracts to compare the revenue
recognised to the contractual period.
— Selecting a sample of contracts immediately after implementation of the
new billing software to compare the associated invoicing and revenue to
the start of the service being provided to the customer;
The key audit matter How the matter was addressed in our audit
The Group has also implemented a new
billing system at the end of the financial
year which added a layer of complexity
to our audit.
Furthermore, judgement is also required
when assessing the recoverability of this
revenue in light of the economic
conditions from COVID-19.
— Checking a sample of customer invoices immediately prior to and after
year end to confirm revenue is recognised in accordance with the service
start date of the contract; and
— Challenging management’s assumptions used to determine the
recoverability of revenue particularly in context of COVID-19.
We did not identify any matters that indicated that the reported revenue is
materially misstated.
Development asset capitalisation and impairment ($32.7m)
Refer to note 16 of the consolidated
financial statements.
The Group has reported a development
asset of $32.7m (2019: $29.8m). This
investment requires significant
judgement as to whether the largely
internal costs should be expensed or
capitalised, and if there are indicators of
impairment particularly given the
impact of COVID-19. We focused on this
area due to the quantum of the
development costs capitalised.
The Group’s process for calculating the
amount of internally developed
platform costs to be capitalised is
judgmental and involves estimating the
hours which staff spend developing
software and determining the costs
attributable to that time.
The Directors have assessed whether
any impairment indicators existed for
each major development asset by
considering, among other factors, sales
achieved to date and the overall
operating and cash performance of the
entity.
The Group has performed an
impairment tests of the development
assets on a value in use basis. This
assessment requires judgment when
forecasting future sales and the related
cash flows, including considering the
impacts of COVID-19.
We assessed the judgement related to the internal costs capitalised by:
— Understanding the nature and background of the activities that are
capitalised through inquiry of the key operational, financial, legal, and
engineering personnel;
— Challenging whether costs capitalised during the year were directly
attributable and able to be recovered from future use or sale; and
— Selecting a sample of timesheets and recalculating the amount of internal
costs capitalised based on the hours which staff spend developing
software plus attributable costs.
We assessed management’s impairment testing of the development asset by
obtaining the supporting models and assessing the methodology and key
assumptions made including:
— Comparing the market strategy inherent in the impairment test with
management discussions and minutes of Board meetings;
— Using our corporate finance experts to challenge and assess the
appropriateness and mathematical accuracy of management’s
impairment models as well as the reasonableness of key inputs such as
weighted average cost of capital and long term growth rates;
— Challenging management’s future cash flow forecasts. This included
comparing previous forecasts to actual results and other relevant
supp
orting documentation to evidence the feasibility of the forecasts and
to assess the reliability of historical forecasting; and
— Challenging management’s forecasts by performing sensitivity analysis
over the forecasted sales volumes, discount rate, and expenses
considering COVID-19 impacts.
We did not identify any factors that indicated that management’s overall
conclusions were not supportable.
106105
AUDITORS REPORT
© 2019 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
Independent Auditor’s
Report
To the shareholders of EROAD Limited
Report on the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated financial
statements of EROAD Limited (the company) and its
subsidiaries (the Group) on pages 63 to 104:
i. present fairly in all material respects the Group’s
financial position as at 31 March 2019 and its
financial performance and cash flows for the year
ended on that date; and
ii. comply with New Zealand Equivalents to
International Financial Reporting Standards
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated statement of financial position as
at 31 March 2019;
— the consolidated statement of comprehensive
income, changes in equity and cash flows for the
year then ended; and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for
Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the Group
financial statements section of our report.
Our firm has also provided other services to the Group in relation to tax compliance, tax advisory and corporate finance.
Subject to certain restrictions, partners and employees of our firm may also deal with the Group on normal terms within
the ordinary course of trading activities of the business of the Group. These matters have not impaired our independence
as auditor of the Group. The firm has no other relationship with, or interest in, the Group.
Scoping
The scope of our audit is designed to ensure that we perform adequate work to be able to give an opinion on the Group
financial statements as a whole, taking into account the structure of the Group, the financial reporting systems, processes
and controls, and the industry in which it operates.
The key audit matter How the matter was addressed in our audit
Deferred Tax Asset ($7.2m)
Refer to note 10 of the consolidated
financial statements.
The Group has a net deferred tax asset
balance of $7.2m, of which $9.2m
relates to deferred tax assets arising
from past tax losses. We focused on the
deferred tax asset from tax losses
arising in New Zealand as its
recoverability is sensitive to the Group’s
expected future profitability and its
entitlement to offset these losses
against future profits.
This is a key risk due to the significance
of the deferred tax asset to the financial
position of the Group and the
judgement applied by management in
determining the extent to which
convincing evidence exists to which a
deferred tax asset should be recognised.
Our procedures included the following:
— We evaluated the Group’s assessment of whether there is sufficient taxable
profits in future periods to support the carrying value of the deferred tax
asset in New Zealand;
— We compared the assumptions used in the forecasts of taxable profit to
those applied in management’s FY21 budgets;
— We challenged the key assumptions in the revised COVID-19 forecasts
presented particularly in context of COVID-19;
— We also considered whether the recognition of additional deferred tax
assets in relation to current year tax losses and previously unrecorded
losses were able to be recovered through future taxable profits;
— We examined correspondence with the Inland Revenue Department
supporting the calculation of available tax losses;
— We used our tax specialists to assess whether the shareholder continuity
requirements under New Zealand tax legislation had been maintained in
the current financial reporting period.
The results of our procedures did not identify any inconsistencies with
management’s conclusion that the recognition of unrecognised losses and
current year losses meets the criteria for recognition.
Financing – basis of preparation
Refer to Note 2(c) and Note 18 of the
consolidated financial statements
The Group have determined that the
use of going concern assumption is
appropriate in preparing the
consolidated financial statements. The
assessment of going concern was based
on a forecast model incorporating Profit
& Loss, Balance Sheet and Cashflows.
The preparation of these forecasts
incorporated a number of assumptions
and actions undertaken prior to and
subsequent to balance date.
In assessing this Key Audit Matter, we
involved senior audit team members
and specialists who understand the
Group’s business, industry, and the
Our audit procedures included:
— Reviewing agreements with financiers to understand the actions the
Group had taken prior to balance date including entering into a new
syndicated three-year debt facility;
We assessed management’s cashflow forecasts by obtaining the supporting
models and assessing the methodology and key assumptions made including:
— Using our corporate finance experts to challenge and assess the
appropriateness and mathematical accuracy of management’s forecast
models as well as the reasonableness of key inputs such as forecasted
contracted units, average revenue per unit, operating expenses and
working capital requirements;
— Challenging management’s future cash flow forecasts. This included
comparing previous forecasts to actual results and other relevant
supporting documentation to evidence the feasibility of the forecasts and
to assess the reliability of historical forecasting;
The key audit matter How the matter was addressed in our audit
economic environment in which it
operates.
— Challenging management’s forecasts by performing sensitivity analysis
over the forecasted sales volumes, expenses and debt covenant
compliance when considering COVID-19 impacts; and
— We evaluated the Group’s going concern disclosures in the consolidated
financial statements by comparing them to our understanding of the
matter, the events or conditions incorporated into the cash flow
projection assessment, the Group’s plans to address those events or
conditions, and accounting standard requirements.
We found the Group has appropriately considered the impacts of current and
future financial performance on the going concern assumption, and disclosures
made appropriately describe actions undertaken to support the use of the
going concern assumption.
Other information
The Directors, on behalf of the Group, are responsible for the other information included in the entity’s Annual Report. Other
information includes the Letter from the Chairman and CEO, Safer More Productive Roads, Our Markets, Investing for
Growth, The Numbers, Social and Environmental Responsibility, Our People, Management and Board, Corporate
Governance, Regulatory Disclosures and Glossary and are included in the Annual Report. Our opinion on the Group financial
statements does not cover any other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the Group financial statements our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the Group financial statements or our
knowledge obtained in the audit or otherwise appears materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
Use of this independent auditor’s report
This independent auditor’s report is made solely to the shareholders as a body. Our audit work has been undertaken so
that we might state to the shareholders those matters we are required to state to them in the independent auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the shareholders as a body for our audit work, this independent auditor’s report, or any of the opinions
we have formed.
108107
AUDITORS REPORT
© 2019 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
Independent Auditor’s
Report
To the shareholders of EROAD Limited
Report on the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated financial
statements of EROAD Limited (the company) and its
subsidiaries (the Group) on pages 63 to 104:
i. present fairly in all material respects the Group’s
financial position as at 31 March 2019 and its
financial performance and cash flows for the year
ended on that date; and
ii. comply with New Zealand Equivalents to
International Financial Reporting Standards
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated statement of financial position as
at 31 March 2019;
— the consolidated statement of comprehensive
income, changes in equity and cash flows for the
year then ended; and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for
Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the Group
financial statements section of our report.
Our firm has also provided other services to the Group in relation to tax compliance, tax advisory and corporate finance.
Subject to certain restrictions, partners and employees of our firm may also deal with the Group on normal terms within
the ordinary course of trading activities of the business of the Group. These matters have not impaired our independence
as auditor of the Group. The firm has no other relationship with, or interest in, the Group.
Scoping
The scope of our audit is designed to ensure that we perform adequate work to be able to give an opinion on the Group
financial statements as a whole, taking into account the structure of the Group, the financial reporting systems, processes
and controls, and the industry in which it operates.
Responsibilities of the Directors for the consolidated financial
statements
The Directors, on behalf of EROAD Limited, are responsible for:
— the preparation and fair presentation of the Group financial statements in accordance with generally accepted
accounting practice in New Zealand (being New Zealand Equivalents to International Financial Reporting Standards)
and International Financial Reporting Standards;
— implementing necessary internal control to enable the preparation of a Group set of financial statements that is fairly
presented and free from material misstatement, whether due to fraud or error; and
— assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless they either intend to liquidate or to cease operations,
or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial
statements
Our objective is:
— to obtain reasonable assurance about whether the Group financial statements as a whole are free from material
misstatement, whether due to fraud or error; and
— to issue an independent auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs
NZ will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these Group financial
statements.
A further description of our responsibilities for the audit of these Group financial statements is located at the External
Reporting Board (XRB) website at:
http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/
This description forms part of our independent auditor’s report.
The engagement partner on the audit resulting in this independent auditor's report is Ross Buckley
For and on behalf of
KPMG
Auckland
18 June 2020
AUDITORS REPORT
110109
112
The Board of EROAD Limited (EROAD, the Company) is committed to fulfilling our
corporate governance obligations and responsibilities in the best interests of the
company and our stakeholders by ensuring that the Company adheres to best practice
governance principles and maintains the highest ethical standards. The Board regularly
reviews and assesses EROAD’s governance framework and processes to ensure that
they are consistent with best practice.
This statement provides an overview of the Company’s governance framework and processes. It is structured to
follow the NZX Corporate Governance Code (NZX Code) and discloses EROAD’s practices for each of the NZX Code’s
eight principles.
The Board’s view is that, as at 31 March 2020, EROAD’s governance practices were in compliance with the NZX
Code’s recommendations. The Company also complies with the corporate governance requirements of the NZX
Listing Rules.
EROAD’s corporate governance policies, practices and procedures can be found on our website at
http://www.eroadglobal.com/global/investors/. The Investor website page is used in this statement as a reference to
the website page where the set of governance documents are located.
This Corporate Governance Statement was approved by the Board on 18 June 2020.
EROAD’S PRINCIPAL ACTIVITIES
The Company creates and delivers compliance products, telematics and asset tracking devices, and supplies
Software as a Service end-to-end products for:
(a) transportation taxes, including road user charging, fuel and vehicle registration;
(b) record keeping and compliance for fleets, mobile assets (vehicles) and drivers (including fatigue);
(c) commercial services used to improve fleet efficiency and operational and safety outcomes; and
(d) Bluetooth asset tracking.
There were no significant changes to EROAD’s principal activities during the financial year. In FY20 EROAD launched
its EROAD Where asset tracking solution. This solution uses EROAD’s mesh network and Bluetooth technology to
locate small assets.
PRINCIPLE 1: CODE OF ETHICAL BEHAVIOUR
EROAD’s purpose is safer and more productive roads. EROAD’s values are key to achieving this purpose. The values
are:
• Lead with SAFETY;
• Operate with TRUST;
• Act with INTEGRITY;
• Perform as one TEAM;
• Celebrate INNOVATION.
The values reflect EROAD’s commitment to delivering the best outcomes for EROAD, our team, our customers,
shareholders and stakeholders.
The Company’s Code of Ethics provides guidance regarding the behaviours that will enable the directors, employees,
independent contractors and advisers of EROAD and our related companies (“EROADers”) to align their conduct,
actions and decisions with EROAD’s purpose and values.
STRONG GOVERNANCE
SUPPORTING GROWTH
ASPIRATIONS
CORPORATE
GOVERNANCE
CORPORATE GOVERNANCE
111
113114
Broadly, the behaviours will lead to all EROADers enjoying an open, transparent, positive and high-performing culture
with the following attributes: full commitment across the Company to the success of EROAD’s future; constructive
relationships being developed and maintained in an open, professional and respectful manner; good career
development and opportunities being provided within EROAD; consultation on matters concerning EROADers and the
business; and everyone incorporating EROAD’s values into their work to collectively achieve EROAD’s purpose. The
Code of Ethics also addresses, amongst other things, confidentiality; conflicts of interest and corporate opportunities;
receipt of gifts and personal benefits; expected conduct; and whistleblowing or reporting concerns regarding breaches
of the code, other policies and the law.
Several other policies and documents are regarded as being important in ensuring high ethical standards are
maintained. The Market Disclosure Policy sets out the Company’s commitment to the promotion of investor
confidence by ensuring that the trading of EROAD shares takes place in an efficient, competitive and informed market.
The Securities Trading Policy clearly sets out for directors and employees of EROAD when they may buy or sell the
Company’s shares and the approvals that are required before trading. The underlying principle of the Policy is that
EROAD is committed to ensuring our directors, officers, employees and advisers do not trade EROAD shares while in
possession of inside information. An Interests Register is kept, in accordance with the requirements of the Companies
Act 1993 and the Financial Markets Conduct Act 2013, to ensure all relevant transactions and matters involving the
directors are recorded. The Whistleblower Policy supplements the Code of Ethics’ provisions with regard to reporting
concerns by providing a clear pathway for resolving issues that may have arisen.
EROAD’s Code of Ethics, Market Disclosure, Securities Trading and Whistle-Blower policies can be found at the
Investor website page.
PRINCIPLE 2: BOARD COMPOSITION AND PERFORMANCE
Responsibilities of the Board and Executive Management
The business and affairs of EROAD are managed under the direction of the Board of Directors. Broadly, the role of
the Board is to approve the purpose, values and strategic direction of the Group, to guide and monitor EROAD’s
management in accordance with the purpose, values and strategic plans, and to oversee good governance practice.
The Board Charter sets out internal Board procedures and defines the Board’s specific roles and responsibilities that
include, amongst other things:
• appointment of a Chair;
• in consultation with the Chief Executive Officer (CEO), providing strategic direction and approving EROAD’s strategies
and objectives;
• advancing major strategies for achieving EROAD’s objectives;
• setting a risk appetite for the management of risks;
• determining the overall policy framework within which the business of EROAD is conducted; and
• monitoring management’s performance with respect to these matters.
The Board also deals with issues relating to the appointment or removal of the CEO, ensuring adequate resources
are available to management to run the business, overseeing director appointments and reappointments, approving
financial and business plans, and considering matters that are outside delegated authority levels. The Board uses
Committees to address certain issues that require detailed consideration by members of the Board who have specialist
knowledge and experience.
Management of the day-to-day operations and responsibilities of EROAD together with delivery of the strategic
direction and goals is delegated to the executive management team under the leadership of the CEO. The Board
holds management accountable for the performance of our delegated functions. In doing so the Board constructively
challenges management’s proposals and decisions, and seeks to instil a culture of accountability throughout the
Group. This is achieved by monitoring management’s performance by receiving reports and plans, maintaining an
active programme of engagement with senior management and through the Board’s annual work programme.
If circumstances arise where a director needs to obtain independent advice, that director is, as a matter of practice,
able to seek such advice at the expense of EROAD.
Board Composition
EROAD is committed to ensuring that the composition of the Board includes directors who collectively bring an
appropriate mix of skills, commitment, experience, expertise and diversity (including gender diversity) to Board
decision-making. As at 31 March 2020 EROAD had seven directors, six of whom are non-executive directors. Steven
Newman, the CEO, is the only executive director.
Gregg Dal Ponte resigned from the Board on 30 April 2019 and on 13 January 2020 Barry Einsig was appointed as an
independent director.
A brief biography of each Board member, including experience, length of service and expertise is set out in the
“Board of Directors” section of this report.
The Board does not have a tenure policy but it is of the view that the profile, represented by the length of service of
each of our directors, is appropriately balanced such that Board succession and renewal planning is managed over
the medium to longer term.
The following table sets out the period of appointment for directors.
Director period of appointment as at 31 March0-3 years3-9 years9 years +
Number of directors322
Independence of Directors
The factors that EROAD takes into account when assessing the independence of its directors are set out in the Board
Charter. A copy of the Board Charter can be found on EROAD’s website. After consideration of these factors, EROAD
is of the view that:
1. No non-executive director is a substantial shareholder of EROAD or an officer of, or otherwise associated directly with, a
substantial shareholder of EROAD.
2. Steven Newman is a director who, within the last five years, has been employed in an executive capacity by EROAD and is
a substantial shareholder.
3. No director has been a principal of a material professional adviser to EROAD, or an employee materially associated with
such service provider, within the last three years.
4. No director is a material supplier or material customer of EROAD, or an officer of, or otherwise associated directly or
indirectly with, a material supplier or material customer.
5. No director has a material contractual relationship with EROAD other than as a director of EROAD except as follows:
Steven Newman is an employee of EROAD and substantial shareholder.
6. No director has served on the Board for a period which could, or could reasonably be perceived to, materially interfere with
the director’s ability to act in the best interests of EROAD.
7. All directors are free from any close family ties with any person who falls within the above categories.
8. All directors are free from any interest or any business or other relationship which could, or could reasonably be
perceived to, materially interfere with the director’s ability to act in the best interests of EROAD.
Based on these assessments, EROAD considers that, as at 31 March 2020, Graham Stuart, Michael Bushby, Tony
Gibson, Candace Kinser, Barry Einsig and Susan Paterson were independent directors.
Director nomination, appointment, retirement and re-election
The Board is responsible for appointing directors and has established a Renumeration, Talent and Nominations
Committee to assist it with the selection, appointment and reappointment of directors to the Board. The Committee
also has oversight of EROAD’s overall human resources strategy. The Committee’s specific responsibilities are set out
in our Charter, which is available at the Investor website page.
The Appointment and Selection of New Directors Policy sets out the criteria and process that the Committee
will follow during the process of selecting and appointing new directors as and when a vacancy arises and in
considering whether to recommend the reappointment of existing directors. Where a candidate is recommended
by the Committee, the Board will assess that candidate against a range of criteria including background, experience,
professional qualifications, personal qualities, the potential for the candidate’s skills to augment the existing Board
and the candidate’s availability to commit to the Board’s activities. In line with the NZX Code recommendations,
checks are made for any material adverse information before a candidate is recommended to the Board. Where
appropriate, external consultants are engaged to assist in searching for candidates.
CORPORATE GOVERNANCE
115116
Last year, Steven Newman stood for re-election and Susan Paterson stood for election following her appointment to
the Board. This year, Tony Gibson and Michael Bushby will stand for re-election and Barry Einsig will stand for election.
The Board aims to include in the Notice of Meeting for annual meetings all material information that is considered
relevant to a decision on whether or not to elect or re-elect a director.
All new and reappointed directors enter into a written agreement with EROAD, which sets out the terms of their
appointment. New directors also complete a comprehensive induction programme that enables them to meet with the
Chairman, the Audit and Risk Committee Chairman and senior management to gain an insight into EROAD’s values
and culture, our business operations, key risks and regulatory and legal framework. The program also includes site
visits. Each director’s induction program is tailored based on the director’s existing skills, knowledge and experience.
All directors are expected to maintain the skills required to discharge their obligations to the company. On an ongoing
basis, directors are provided with papers, presentations and briefings on matters which may affect EROAD’s business
or operations to assist the directors in regard to understanding key developments in the industry in which EROAD
operates. Directors are also encouraged to undertake continuing education and training relevant to the discharge of
their obligations as directors of the company.
Board Performance
Performance evaluations for the Board, the Board’s committees, individual directors and executives are undertaken
regularly.
The Board Charter requires the Board to undertake a regular performance evaluation of itself that:
• compares the performance of the Board with the requirements of our Charter;
• reviews the performance of the Board’s committees and individual directors; and
• makes improvements to the Board Charter where considered appropriate.
During the 2019 calendar year, a review of the Board’s performance and composition was led by the Chairman
together with an external consultant.
Company Secretary
Mark Heine has been appointed as the Company Secretary. He is accountable to the Board, through the Chairman, on
all matters to do with the proper functioning of the Board. Mr Heine works closely with the Chairman to manage the
flow of information between EROAD’s Board, our committees and senior executives. He is responsible for all aspects of
legal compliance at EROAD together with the Company’s relationship with regulators and evaluating new regulatory
opportunities in New Zealand.
Diversity and Inclusion
EROAD and our Board are committed to a workplace culture that promotes and values diversity and inclusion. The
Company pursues a broad programme of diversity by recognising, valuing and considering our employees’ different
backgrounds, knowledge, skills, needs and experiences.
The Board recognises that diversity and inclusion lead to a better experience at work for EROAD’s employees,
makes teams stronger, leads to greater creativity and performance, contributes to a more meaningful relationship
with customers and stakeholders, and, ultimately, increases value to shareholders. When there is a variety of
thinking styles, backgrounds, experiences, perspectives and abilities, employees are more able to understand
customers’ needs and to respond effectively to them, thus best equipping EROAD for future growth.
EROAD encourages diversity and inclusion by:
• having a WISH Commitee (Wellbeing, Inclusion, Social, Health & Safety) which is made up of volunteers across EROAD.
The Commitee has a sub-commitee specifically focused on diversity and inclusion;
• having a robust recruitment process in place to attract capable, motivated, engaged, creative and diverse candidates; and
• fostering a culture and environment of inclusion through various initiatives, policies and development opportunities.
To deliver on our strategy, EROAD has designed a scalable and diverse organisation with the right skillset to grow
and mature the Company’s operations in new markets and geographies. We explain this in more detail in the “Our
people” section of this report.
The Board has adopted a Diversity and Inclusion Policy in accordance with the NZX Code. The policy is available
at the Investor website page. To ensure continued focus and prioritisation, the policy requires the Board to set,
review and report on measurable objectives for achieving and promoting diversity across EROAD’s business.
CORPORATE GOVERNANCE
Implementation of actions to achieve the objectives is the responsibility of the CEO. Progress has been made in
FY20 in achieving the objectives, One of the achievements is that the percentage of female employees exceeds the
percentage of female employees in the technology sector generally. EROAD employees also cover a broad age range
(currently 18 through to 71 years) and come from over 35 different countries.
Further, EROAD has maintained the following key goals regarding Diversity & Inclusion:
• Culture & Values
EROAD delivers a diverse range of cultural celebrations and social events, with a broad range of people on relevant
committees. This includes events such as: Cultural Day, Matariki Day, 4th July, Diwali, and International Women’s Day.
Diversity and Inclusion also plays a role in talent planning designed to enable all employees the opportunity for career
advancement. Further, EROAD undertakes regular review of employee remuneration to ensure pay equity.
• Inclusion
For EROAD, inclusion means that key discussions are not limited to small groups and involve a wide selection of
people to promote diversity of thought.
EROAD creates a safe environment which actively encourages EROADers to share their opinions. Leadership role
modelling, regular cultural awareness and celebration opportunities, toastmasters and wellness programmes are
some of the mechanisms EROAD supports for staff participation. Everyone has the freedom and opportunity to
voice their opinions. Diverse groups contribute to business strategy and planning activity, and inter-departmental
social and work project interactions connect people. Frameworks and managerial education are provided to promote
inclusion such as flexible workplace practices.
• Leadership and People Development
A significant emphasis is given to developing our leaders and people across EROAD. A Leadership Program was
launched in 2019 to ensure a consistent leadership approach is applied across all teams, as well as giving a wide
range of employees, new opportunities to develop as leaders.
It is encouraging to see that participation in our Leadership Program has gender balance (53% female). This means
there is a great pipeline of future leaders. EROAD’s “Lean-In Circles” provide a safe environment for employees to
help each other develop. EROAD is moving to an annual review of diversity of all promotions to further strengthen
our equal opportunities philosophy.
• Recruitment
Our goal is to ensure that our recruitment campaigns generate a diverse pool of talent with value on experiential and
cognitive diversity and that all hiring decisions are based on merit.
To achieve this EROAD: continues to advertise and promote on a broad range of recruitment advertising channels;
leaders and managers complete unconscious and conscious bias training; applies a diversity and inclusion lens to
recruitment to maximise the appeal to a diverse candidate pool; and we have a scholarship which has a preference
for Maori or Pasifika candidates.
• Communication
EROAD’s expectations around diversity and inclusion are communicated often and clearly, with a top down
approach. Training for leaders and education for all employees on holding effective meetings is a core programme.
Diversity initiatives such as cultural events and flexible working are widely promoted. EROAD’s careers site supports
recruitment diversity. The value of diversity in EROAD’s labour sourcing is communicated to the talent acquisition
team and external agencies.
Gender balance
The table below shows the respective number of men and women on the Board, in executive management positions
(as “Officers”) and across the whole organisation, including both full time and part time employees, as at 31 March
2019 and 31 March 2020. Almost 39% of EROAD staff are female, which is above average in our industry, and almost
one third of EROAD female employees are in leadership roles.
20192020
FemaleMaleFemaleMale
Board2 (29%)5 (71%)2 (29%)5 (71%)
Officers1 (11%)8 (89%)2 (20%)8 (80%)
Other employees99 (40%)151 (60%)111 (38%)178 (62%)
“Officers” are the CEO and senior executives reporting directly to the CEO.
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PRINCIPLE 3: BOARD COMMITTEES
The Board has established a Finance, Risk and Audit Committee and a Remuneration, Talent and Nomination Committee.
These Board committees support the Board by working with management and advisers on relevant issues at a
suitably detailed level. Recommendations are reported to the Board. The committees’ charters set out their objectives,
procedures, composition and responsibilities. Copies of these charters are available at the Investor website page.
All directors have a standing invitation to attend committee meetings where there is no conflict of interest.
Finance, Risk and Audit Committee
The Finance, Risk and Audit Committee assists the Board in fulfilling our oversight responsibilities relating to EROAD’s
risk management and internal control framework, the integrity of our financial reporting and the auditing processes and
activities. Four meetings of the Finance, Risk and Audit Committee were held during the year ended 31 March 2020.
Under the Finance, Risk and Audit Committee Charter, the Committee must be comprised of non-executive directors,
all of whom must be independent. Further, the Chair of the Committee must be an independent director and cannot
be the Chairman of the Board.
Employees only attend the Finance, Risk and Audit Committee meetings at the invitation of the Committee. In the year
ended 31 March 2020, the CEO, the Chief Financial Officer (CFO) and General Counsel were invited to attend each of
the four meetings of the Finance, Risk and Audit Committee.
The current members of the Finance, Risk and Audit Committee are Susan Paterson (Chair), Michael Bushby, Tony
Gibson and Candace Kinser. All members of the Finance, Risk and Audit Committee are independent non-executive
directors.
The Chairperson of the Committee reported to the Board on the Committee’s proceedings following each meeting.
Remuneration, Talent and Nomination Committee
The Remuneration, Talent and Nomination Committee oversees, amongst other things, the remuneration and benefits
policies; the CEO’s performance review and performance objectives; remuneration of EROAD’s executives; succession
planning and associated management development for the CEO and the executive team; and the effectiveness of
the Diversity and Inclusion Policy. It also oversees the director appointment process when a vacancy arises and the
reappointment of sitting directors.
The current members of the Remuneration, Talent and Nomination Committee are Anthony Gibson (Chairman), Graham
Stuart, Candace Kinser, Susan Paterson, Michael Bushby and Barry Einsig. Mr Einsig was appointed to the Committee on
13 January 2020. Gregg Dal Ponte was a member of the Committee until his resignation on 30 April 2019.
All current members of the Remuneration, Talent and Nomination Committee are independent directors. Steven Newman
attended the three Remuneration, Talent and Nomination Committee meetings at the invitation of the Committee.
The Chairperson of the Committee reported to the Board on the Committee’s proceedings following each meeting.
Board Processes
The Board held six meetings during the year ended 31 March 2020.
Board
Finance, Risk and
Audit Committee
Remuneration,
Talent and
Nomination Committee
Eligible
to attend
Attended Eligible
to attend
Attended Eligible
to attend
Attended
Graham Stuart661132
Michael Bushby664433
Anthony Gibson664433
Candace Kinser664433
Steven Newman664433
Susan Paterson664433
Barry Einsig*220000
* Barry Einsig joined the Board on 13 January 2019. He attended the February and March Board meetings.
Takeover protocol
The Board has a formal written protocol that sets out the procedure to be followed in the event that a takeover offer
is received by EROAD.
PRINCIPLE 4 – REPORTING & DISCLOSURE
Making timely and balanced disclosure
EROAD is committed to promoting shareholder confidence through open, timely and accurate market
communication. The Company has procedures in place to ensure compliance with our disclosure obligations under
the NZX Listing Rules. The Board has a Disclosure Committee that comprises the CEO, CFO and one Independent
Director. This Committee is responsible for administering EROAD’s compliance with our Market Disclosure Policy,
including our NZX continuous disclosure obligations, and can approve the release of documents to the NZX Market
Announcements Platform.
EROAD’s Finance, Risk and Audit Committee Charter oversees the quality and integrity of external financial reporting
including the accuracy, completeness, balance and timeliness of financial statements. It reviews interim and annual
financial statements and makes recommendations to the Board concerning accounting policies, areas of judgement,
compliance with financial reporting standards, NZX and legal requirements, and the results of the external audit. All
matters required to be addressed and for which the Committee has responsibility were addressed during the period
under review.
All interim and full-year financial statements are prepared in accordance with relevant financial standards.
Non-financial reporting
Safety, communities and environment are at the heart of EROAD’s culture. Our philosophy and achievements are
outlined in the pages 19 to 26 and pages 51 to 54 of this report.
EROAD is committed to an awareness of environmental, economic, and social sustainability factors. The Board
receives reports on a series of performance measures that are considered key indicators of EROAD’s performance in
areas across all of the business units. Recommendations based on the performance measures are incorporated into
agreed actions to mitigate the identified risks. Further information is available in the Risks section of this statement.
As noted in the Remuneration section, up to 60% of the Short Term Incentive scheme targets are based on the
achievement of strategic (non-financial) program targets from the annual plan.
EROAD is looking forward to providing further reporting on sustainability factors in the 2021 annual report.
Governance policies
Copies of the Board and its sub-commitees’ charters, its Code of Ethics and other Governance policies are available
on EROAD’s Investor Page website.
PRINCIPLE 5 – REMUNERATION
Directors’ Remuneration
The Remuneration, Talent and Nomination Committee is responsible for establishing and monitoring remuneration
policies and guidelines for directors which enable EROAD to attract, motivate and retain the high calibre of
directors who will contribute to the successful governing of EROAD and create value for shareholders. EROAD has
a Director and Senior Manager Remuneration Policy which is available on EROAD’s Investor Page website.
When determining the fees for directors and Chairs of the Board and our committees, the Board considers
the median director fee levels for comparable listed companies in New Zealand. In FY20, the total of fees paid
to directors was less than the aggregate fee pool of $500,000 per annum approved at EROAD’s 2018 annual
shareholders meeting.
CORPORATE GOVERNANCE
119120
Current non-executive directors’ remuneration is as follows:
• NZ$110,000 for the Chair of the Board,
• NZ$55,000 for the New Zealand and Australia based non-executive directors,
• USD$96,000 for the North America based non-executive director,
• NZ$25,000 for the Chair of the Finance, Risk and Audit Committee, and
• NZ$8,000 for the Chair of the Remuneration, Nomination and Talent Committee.
Non-executive directors received the following directors’ fees from EROAD in the year ended 31 March 2020.
All fees are in NZD unless otherwise indicated:
Base fee Fee for Finance,
Risk and Audit
Committee
Fee for Remuneration,
Nomination and Talent
Committee
Total remuneration received
for FY20
Graham Stuart$110,000
(Chairman)
$0$0$110,000
Michael Bushby$55,000$0$0$55,000
Barry Einsig*USD $96,000$0$0$44,627
Anthony Gibson$55,000$0$8,000 (Chair)$63,000
Candace Kinser$55,000$0$0$55,000
Susan Paterson**$55,000$25,000 (Chair)$0$80,000
Gregg dal Ponte***$55,000$0$0$0
* Barry Einsig was appointed to the board on 13 January 2020.
** Susan Paterson joined the Board on 28 March 2019. Ms Paterson received an additional $6,667 in fees for attendance at Board meetings in FY19.
*** Gregg dal Ponte resigned from the Board on 30 April 2019.
Directors do not take a portion of their remuneration under a share plan. Ownership of EROAD shares by directors
is encouraged rather than being a requirement. When directors are acquiring shares they are encouraged to buy
on-market. Their ownership interests are disclosed in the “Directors’ Shareholdings” section of this report.
Non-executive directors are entitled to be reimbursed for reasonable costs directly associated with attending the
Board meetings.
Steven Newman, in his capacity as an executive director, does not receive remuneration as a director of EROAD.
No director of any EROAD subsidiary receives or retains any remuneration or other benefits in their capacity as a
director of that subsidiary.
Executive Remuneration
The Remuneration, Talent and Nomination Committee is responsible for reviewing the remuneration of EROAD’s senior
employees in consultation with EROAD’s CEO. The Board is responsible for approving remuneration of the senior employees
on the recommendation of the Committee.
EROAD’s remuneration policy for members of the executive team and other senior staff, including the CEO, provides the
opportunity for them to receive, where performance merits, a total remuneration package made up of three components:
Fixed RemunerationShort-term Incentives (STIs)Long-term Incentives (LTIs)
Market pay based on role and effectiveness6 monthly plan.
To drive key outcomes linked
to annual strategy.
Encourages and rewards right
behaviours near-term.
3 year plan.
Ensuring company grown
strategy is set and delivered.
Encouraging long-term value
adding actions and retention.
Fixed Remuneration
Fixed remuneration consists of base salary and benefits. EROAD’s policy is to set fixed remuneration in line with external
market trends, the intrinsic value of a job and internal relativities. Fixed remuneration is reviewed, but not necessarily
increased, annually. Any remuneration increases for the executive team must be approved by the Board. In conducting
reviews, EROAD considers the individual performance of each executive.
Short-term Incentives
Short-term incentives (STIs) are at-risk payments designed to motivate and reward for performance, typically in that
financial year. The target value of an STI payment is set annually, usually as a percentage of the executive’s base salary.
It creates alignment between shareholder value creation and employee reward. Participation in EROAD’s STI plan is by
invitation only, subject to CEO approval. Invitations to participate will generally be extended to executives and other senior
leaders in key roles each year. Employees who are invited to participate during an STI period will be eligible to receive
a pro-rated amount of the STI bonus, provided that they are part of the program for at least 3 months. To be eligible
for payment, an employee must be employed by EROAD as of the last day of the STI period and not be subject to any
disciplinary proceedings.
For the year ended 31 March 2020, the STI amount payable is based on group performance against shared team goals.
• 40% = performance against financial metrics;
• 60% = achievement of strategic program targets from the annual plan.
Team target achievement Pay-out
<75%No pay out
75%50%
75% - 100%
Linear up to 100% (E.g. 80% = 60% pay-out, 90% =
80% pay-out etc)
100%100%
≥ 100%
Achievement rate capped at 150% pay-out (E.g. 120%
= 120% pay-out, 200% = 150% pay-out)
An essential component of the STI is strong leadership, led with behaviour that aligns with EROAD’s values. This includes
behaviour and leadership which is ethical, and not to the detriment of customers, other employees or EROAD. In a situation
where it is deemed that the achievement of objectives has not been aligned with the culture and values of EROAD, or an
executive is not leading their teams as required by EROAD, their leadership and values multiplier will be less than 100%. The
STI payment is at the discretion of the Board. Entitlement is not guaranteed even where performance criteria has been met.
Long-term Incentives
The purpose of the long term incentive (LTI) plan is to attract, motivate, retain and reward executive employees who
can influence the performance and strategic direction of EROAD.
• FY18/FY19 LTI plans
Under the terms of the FY18/FY19 LTI plan, eligible senior employees were invited by the CEO, with the approval of the
Board, to purchase EROAD shares. The purchase of the shares is funded by a loan granted to eligible senior employees
by EROAD. At the end of the vesting period, the senior employee will be paid a net bonus in relation to the shares that
vest to the senior employee, equal to the amount of their loan outstanding to EROAD, enabling the loan to be repaid.
Shares issued under the scheme are held in trust for the senior employees during a three-year restrictive period by
EROAD LTI Trustee Ltd (‘Trustee’). If the employee ceases to be an employee during the restrictive period, the Trustee
will repurchase the employees shares at the original issue price.
CORPORATE GOVERNANCE
121122
The award is subject to a relative total shareholder return (TSR) measure over the three-year performance period. TSR
represents the change in the value of EROAD’s share price over a period, plus reinvested dividends, expressed as a
percentage of the opening value of the shares as follows:
TSR Formula
TSR = (Price-begin – Price-end + Dividends) / Price-begin
Price-begin = Share price at the beginning of the financial year
Price-end = Share price at the end of the financial year
Dividends = Dividends paid during the financial year
The TSR performance condition compares EROAD’s TSR for a three-year period with the TSR of the NZX50 index
(company listings as at the grant date). The vesting scale is as follows:
Performance levelRelative TSR percentile rankingVesting%
<Threshold<500%
Threshold & TargetP5050%
>Target & >Stretch>P50 & <P75Pro rata
Stretch>P75100%
Achievement against these performance hurdles and vesting scales is assessed at the end of the three-year
measurement period. Employee’s shares that are forfeited due to failure to meet performance conditions are
repurchased by the Trustee at the original grant date price. The Board retains discretion over the final outcome of LTI
payments.
• FY20 LTI plan
Under the FY20 LTI plan, performance share rights (PSR’s) have been issued (for nil consideration) to participants
which convert to shares (for nil consideration) if targets are met. For the FY20 LTI plan, the award is linked to growth in
EROAD’s Total Contracted Units (TCUs) between 1 April 2019 and 31 March 2022. Participants bear the tax liability of
the LTI scheme. As with the STI payments, the Board retains discretion over the final outcome of LTI payments, to allow
appropriate adjustments where unanticipated circumstances may impact performance over the measurement period.
CEO Remuneration
The CEO’s remuneration is made up of three components: fixed remuneration, STI and LTI as follows:
CEO Remuneration FY18 and FY19
Fixed
Remuneration
Performance Based
Remuneration
Chief ExecutiveSalarySTI*
Total Cash
Remuneration
LTI**
LTI Plan
Status
Total
Remuneration
Total
Remuneration
Earned
Steven Newman FY16$524,000$95,403$619,403-Plan ended$619,403$619,403
Steven Newman FY17 $551,499$89,525$641,024-Plan ended$641,024$641,024
Steven Newman FY18 $555,859$116,760$672,619$150,000**
In progress
- $0 vested
$822.619$672,619
Steven Newman FY19$567,120-$567,120$181,478.40**
In progress
- $0 vested
$748,598.40$567,120
Steven Newman FY20$590,000***$96,288$686,288$354,000****
In progress
- $0 vested
$1,040,288$686,288
*Historically, performance under each STI plan is assessed following the end of each financial year and payment is based on the performance achieved. E.g.
the FY18 STI payment was based on performance in FY17 and was paid out in FY18. The STI payment for FY20 is for performance in the first half of FY20.
**The LTI shares were granted during FY19 under both the FY18 LTI plan to the value of $150,000 and the FY19 LTI Plan to the value of $181,478.40. These
plans do not vest until 1 April 2021. The amount to be vested may be lower than these amounts.
***Effective 1 June 2019, salary was increased to $590,000.
****Under the FY20 LTI plan, PSRs to the value of $354,000 were granted to Mr Newman under a three-year plan. This plan does not vest until
1 April 2022 and the amount of PSRs granted was in a three-year block. Previous LTI plans had shares granted in one-year blocks to be earned over a three
year period. This is why the FY20 LTI PSR granted amount is higher that for the previous years. The amount to be vested may be lower than this amount.
DescriptionPerformance measuresPerformance hurdles and shares vested
STISet at 32% of at-risk pay. Based
on a combination of financial
and non-financial performance
measures.
40% = performance against financial metrics.EROAD weighting considers EROAD’s
performance against the metrics of EBITDA, the
ratio of gross margin to sales and the ratio of
working capital to sales.
60% = achievement of strategic program
targets from the annual plan.
Individual performance considers performance
under the CEO’s objectives and key results for
the year. Each objective has a specific target and
stretch level of performance, as described under
the “Short-term Incentives” section above.
LT IConditional awards of shares
under the long term incentive
scheme.
For FY18 and FY19 LTI plans, which vest on
1 April 2021, the award is subject to relative
total shareholder return (TSR) measure over
the next three-year performance period.
For the FY20 LTI plan, which vests on 1
April 2022, the award is linked to growth
in EROAD’s Total Contracted Units (TCUs)
between 1 April 2019 and 31 March 2022.
For the FY18 and 19 LTI plans, the TSR
performance condition compares EROAD’s
TSR for a three-year period with the TSR of
the NZX50 index (company listings as at the
grant date).
For the FY20 LTI plan, performance share
rights (PSRs) have been issued (for nil
consideration) to participants which convert
to shares (for nil consideration) if TCU growth
targets are met.
CORPORATE GOVERNANCE
123124
The following graphs show the CEO’s salary and total remuneration earned for the last five years compared to EROAD’s revenue
and EBITDA.
Employee Remuneration
EROAD and our subsidiaries have employees in New Zealand, the United States and Australia. Remuneration market
levels differ between the three countries. The overseas remuneration amounts are converted into New Zealand dollars.
Of the 135 employees, not being directors of EROAD and our subsidiaries, noted in the table below who received
remuneration and other benefits that exceed NZ$100,000 in value, 27 (20%) are employed by EROAD in the United
States of America and 5 (4%) in Australia:
NZ$Total
100,000 – 110,00027
110,001 – 120,00018
120,001 – 130,00020
130,001 – 140,00014
140,001 – 150,0009
150,001 – 160,00014
160,001 – 170,0001
170,001 – 180,0005
180,001 – 190,0005
190,001 – 200,0003
200,001 – 210,0002
220,001 – 230,0002
240,001 – 250,0001
260,001 - 270,0002
270,001 - 280,0004
280,001 - 290,0001
300,001 - 310,0001
330,001 - 340,0001
340,001 - 350,0001
350,001 - 360,0001
390,001 - 400,0001
490,001 - 500,0001
560,001 - 570,0001
TOTAL135
CORPORATE GOVERNANCE
Revenue % change
Revenue $m
% change
% change
% change
% change
$m
$m
$(000)
$(000)
Revenue ($m)
EBITDA % change
EBITDA $m
EBITDA ($m)
CEO Salary % change
CEO Salary $k
CEO Salary (‘000)
Total Remuneration
Earned % change
Total Remuneration
Earned $k
Total Remuneration
Earned (‘000)
-
20
40
60
80
100
-
20%
40%
60%
80%
100%
20162017201820192020
-
5
10
15
20
25
30
-
20%
40%
60%
80%
100%
20162017201820192020
20%
40%
60%
80%
100%
400
500
600
700
800
-
20162017201820192020
20%
40%
60%
80%
100%
400
500
600
700
800
20162017201820192020
-20%
-
125126
PRINCIPLE 6 - RISK MANAGEMENT
Risk Management Framework
EROAD is committed to the identification, monitoring and management of material financial and non-financial risks
associated with our business activities. The Board ultimately has responsibility for internal compliance and controls. It
recognises that a sound culture is fundamental to an effective risk management framework. The Company’s purpose,
values and Code of Ethics are important contributors to instilling effective risk management and awareness, and to
support appropriate behaviours and judgements about risk taking within parameters. EROAD’s risk management
framework provides for the oversight and management of financial and non- financial material business risks, as well as
related internal systems. The framework is designed to:
• optimise the return to, and protect the interests of, stakeholders;
• safeguard EROAD’s assets and maintain our reputation;
• improve EROAD’s operating performance; and
• support EROAD’s strategic objectives.
EROAD’s Risk Management Policy is available at the Investor website page.
EROAD’s risk management strategy enhances strategic planning and prioritization, as well as assisting in the achievement
of key objectives. The strategy also strengthens EROAD’s ability to be agile when responding to challenges that may be
faced. The risk management framework requires senior executives and the wider leadership team to review risks against
the risk limits and triggers in the risk appetite statement (Risk Appetite), to enact the appropriate mitigations and to
update the Risk Register on a periodic basis.
The register identifies all known risks, including those that are key to EROAD’s strategy and business priorities. The Risk
Register records risks by impact, probability, and trending, and records the controls for those risks. Risk mitigation for
high risk projects must be addressed from inception and be supervised by the appropriate executive team members. The
executive team reviews the Risk Register in setting EROAD’s strategy and budgets.
The Finance, Risk and Audit Committee undertakes quarterly reviews of the Risk Appetite, the Risk Register and other
relevant aspects of the risk management framework. In addition, a review is undertaken, with the external auditors and
management, of the policies and procedures in relation to material business risks.
The Finance, Risk and Audit Committee, in conjunction with management, reports to the Board on the effectiveness of
EROAD’s management of our material business risks and whether the risk management framework is operating effectively
in all material respects.
Risk Appetite
In FY2020, EROAD reviewed our risk management framework and introduced a risk appetite. EROAD’s risk
appetite has been set by the Board alongside the executive team to provide guidance to EROADers, contractors,
and suppliers. EROAD’s risk appetite sets out the amount and type of risk that EROAD is willing to accept in order
to meet our strategic objectives and create value for our customers and stakeholders. EROAD is a strategically
focused and risk aware, but not risk averse, organization. Risks are taken in alignment with EROAD’s purpose and in
accordance with EROAD’s values. EROAD has no appetite for risks that do not align with these.
EROAD has five key risk categories and adopts a different risk appetite for each identifiable risk within these
categories. The five risk categories are:
• Growth & Strategy
• Financial
• Customer Expectations
• People
• Regulatory & Governance
EROAD remains committed to innovation and has a high-risk appetite for this, alongside learning and knowledge,
growth and partnerships, and acquisitions.
A summary of EROAD’s risk appetite is set out below.
In managing the Company’s business risks, the Board approves and monitors policy and procedures in areas such as treasury
management, financial performance, taxation and delegated authorities.
Insurance
EROAD has insurance policies in place covering areas where risk to our assets and business can be insured at a
reasonable cost.
Health and Safety Risk Management
The Board considers ensuring safety and wellbeing at EROAD to be one of our core roles. Our specific responsibilities are
set out in the Board Charter. The Board is committed to ensuring that safety and wellbeing is a top priority for EROAD and
is embedded into every aspect of EROAD’s business. EROAD’s Safety and Wellbeing Policy is a management policy that
provides for the oversight and management of health and safety risks on behalf of the Board.
EROAD’s Safety and Wellbeing Management System Framework outlines safety and wellbeing activities at EROAD and
articulates safety and wellbeing responsibilities for the Board, the executive team and the people performing work for
EROAD. The framework requires objectives and key results to be established and incorporated into business planning
processes to enable the Safety and Wellbeing Policy’s intent and related strategies and procedures to be achieved. The
framework also requires the safety and wellbeing strategy to be reviewed every three years to ensure alignment with
EROAD’s values, the overall business strategy and the safety and wellbeing vision.
Each month, members of the Board are provided with a safety and wellbeing report summarising EROAD’s risk profile
and management actions, the current safety and wellbeing focus, lead and lag indicators and updates from the Safety
and Wellbeing staff committee. In the year ended 31 March 2020, there have been no notifiable events to report to
WorkSafe NZ.
CORPORATE GOVERNANCE
RISK APPETITE
LEVEL
GROWTH AND
STRATEGY
FINANCIAL
CUSTOMER
EXPECTATIONS
PEOPLE
REGULATORY AND
GOVERNANCE
Very high
High• Strategic risk
• Partnerships
and acquisitions
• Growth
constraints
• Innovation• Capability
• Learning /
knowledge
Medium• Regulatory
environment
Low• Strategic
execution
• Working capital
• Cost of Capital
• Shareholder
liquidity
• Supply chain
and inventory
• Customer
interactions
• Product
delivery
• Key roles, single
point of failure
Very low• IT and cyber
security
• Quality and
resilience
• Privacy
• Governance risk
No appetite• Banking
covenants
• Product
compliance
• Health and
Safety
• Purpose and
values
• Illegal & Unethical
Behaviour
128127
PRINCIPLE 7 – AUDITORS
Oversight of the Company’s external audit arrangements to safeguard the integrity of financial reporting is the
responsibility of the Finance, Risk and Audit Committee. The External Auditor Independence Policy ensure that audit
independence is maintained, both in fact and appearance. It covers:
• The selection and appointment process for the external auditor;
• Rotation of external audit partners;
• Policy to ensure external auditors’ independence;
• Provision of non-audit services; and
• Reporting to the Finance, Risk and Audit Committee.
The policy is available at the Investor website page.
The role of the external auditor is to audit the financial statements of the Company in accordance with applicable
auditing standards in New Zealand and to report on their findings to the Board and shareholders of the Company.
EROAD’s external auditors attend the annual shareholder’s meeting to answer questions from shareholders in
relation to audits.
EROAD does not have an internal audit function. The Finance, Risk & Audit Committee pays particular attention to
matters raised by the company’s auditor. It also requires the Executive Team to report periodically on areas identified
as most sensitive to risk together with recommendations for improvements and changes to internal controls.
Through the steps outlined under the Risk Management section, the Board ensures EROAD is reviewing, evaluating
and continually improving the effectiveness of our risk management framework.
PRINCIPLE 8 – SHAREHOLDER RIGHTS AND INTERESTS
EROAD recognises the importance of providing our shareholders and the broader investment community with
access to up-to-date high quality information to enable them to: monitor the Company’s performance; participate in
decisions required to be put to owners; and provide avenues for two-way communication between the company, the
Board and shareholders. The Shareholder Communication Policy sets out how EROAD engages with shareholders
and other stakeholders to provide them with written communications, electronic communications and access to the
Board, management and auditors. It is one of the corporate governance policies included at the Investor website
page.
EROAD’s website is an important information portal and is kept up to date with relevant information, including copies
of shareholder reports, presentations and market announcements. Releases and reports are published to the website
once they have been provided to and publicly released by NZX. The website also contains Board and management
profiles together with information on EROAD’s history, awards and a rich library of product information.
Shareholders can easily communicate with EROAD, including by way of email to the address investors@eroad.com.
EROAD’s major communications with shareholders during the financial year include our annual and half-year results,
annual report and the annual meeting of shareholders. The annual report is available in electronic and hard-copy
formats. Shareholders have the option to receive communications from EROAD electronically.
Shareholders have the right to vote on major decisions as required by the NZX Listing Rules.
The Notice of Meeting is sent to shareholders and published on EROAD’s website at least 20 working days prior to
the annual shareholders’ meeting each year.
CORPORATE GOVERNANCE
130
DIRECTORS
The persons who held office as directors of EROAD Limited at any time during the year ended 31 March 2020,
are as follows:
Graham Stuart Chairman, Non-Executive, Independent
Steven Newman Chief Executive Officer
Candace Kinser Non-Executive, Independent
Anthony Gibson Non-Executive, Independent
Michael Bushby Non-Executive, Independent
Susan Paterson Non-Executive, Independent
Gregg Dal Ponte Non- Executive, Independent*
Barry Einsig Non-Executive, Independent**
*Gregg Dal Ponte resigned from the EROAD Board effective 30 April 2019.
**Barry Einsig joined the EROAD Board on 13 January 2020.
SUBSIDIARY COMPANY DIRECTORS
The persons who held office as directors of subsidiary companies at 31 March 2020 are as follows:
EROAD Financial Services Limited (New Zealand)
Anthony Gibson
EROAD (Australia) Pty Limited (Australia)
Michael Bushby, Steven Newman
EROAD Inc. (USA)
Michael Bushby, Steven Newman
EROAD LTI Trustee Limited (New Zealand)
Anthony Gibson, Candace Kinser
INTERESTS REGISTER
In accordance with Section 140(2) of the Companies Act, the directors named below have made a general disclosure
of interest by a general notice disclosed to the Board and entered in the Company’s interests register. General notices
given by directors which remain current as at 31 March 2020 are as follows:
Michael Bushby
• Director, Lowelly Pty Limited
• Consultant, WSP Australia
• President, Roads Australia*
Graham Stuart
• Director, Tower Limited
• Director, Tower Insurance Limited
• Director, Tower Financial Services Group Limited
• Director and Shareholder, Leroy Holdings Limited
• Director, Vinpro Limited
• Director, Northwest Healthcare Properties Management
Limited
• Director, Metro Performance Glass Limited*
Anthony Gibson
• Chief Executive Officer, Ports of Auckland Limited
• Chairman, North Tugz Limited
• Director, AMG Consulting Limited
• Director, Seafuels Limited
• Director, Waikato Freight Hub Limited
• Director, Marsden Maritime Holdings Limited
• Chair, Nexus Logistics Limited*
• Chair, Conlixx Limited*
Candace Kinser
• Director, Kinser Trustee Limited
• Director, Sagitas Consulting Limited
• Director, Livestock Improvement Corporation Limited
• Advisor, Return on Science Program for the University
of Auckland
• Beachheads Advisor, New Zealand Trade & Enterprise
• Director, WEL Networks Limited
• Director, Ultrafast Fibre Limited
• Director, Regional Facilities Auckland
• Director, New Zealand Escargot Ltd*
• Director, National Cancer Society*
STATUTORY DISCLOSURES
REGULATORY
DISCLOSURES
129
131132
Steven Newman
• Director, NMC Trustees Limited
Susan Paterson
• Director, Goodman (NZ) Limited and associated
companies
• Director, Arvida Group Limited
• Director, Sky Network Television Limited
• Director, Les Mills Holdings Limited
• Chair, Steel & Tube Holdings Limited
• Chair, Theta Systems Limited
• Board member, Electricity Authority
• Board member, Reserve Bank of New Zealand*
Barry Einsig
• Senior Manager, Econolite
• Principal, CAVita LLC
* Indicates a new appointment since 31 March 2019.
ANNUAL SHAREHOLDERS’ MEETING
EROAD’s 2020 annual shareholders’ meeting will be held at The Chairman’s Lounge at Eden Park, Auckland on Thursday, 30 July
2020 commencing at 4:45pm.
DISTRIBUTION OF SHAREHOLDERS AND HOLDINGS
Holding Range
Number
of holders
%
Number of
ordinary shares
%
1 to 99927617.12129,5590.19
1,000 to 4,99974 045.911,750,0132.56
5,000 to 9,99924815.381,620,4722.37
10,000 to 49,99926316.325,244,4197.68
50,000 to 99,999332.012,299,2253.37
100,000 and over523.2357,235,08483.83
Total1,61299.9768,278,772100
The details set out above were as at 9 June 2020.
The Company only has one class of shares on issue, ordinary shares, and these shares are quoted on the
NZX Main Board.
SUBSTANTIAL PRODUCT HOLDERS
According to notices given under the Financial Markets Conduct Act 2013, the substantial product holders in ordinary shares (being
the only class of quoted voting products) of the Company and their relevant interests according to the substantial product holder
file as at 31 March 2020, were as follows:
Substantial product holderDate of
Notice
Number of
shares
% of shares
on issue at 31
March 2020
Steven Newman (includes NMC Trustees Limited’s relevant
interest)
15/12/201714,505,88121.24
Mitsubishi UFJ Financial Group, Inc, Colonial First State Asset
Management (Australia) Limited
5/08/20195,996,8098.783
National Nominees Ltd ACF Australian Ethical Investment
Limited
07/06/20195,296,5677. 76
Jarden Securities26/02/20203,429,4805.023
The total number of ordinary shares (being the only class of quoted voting products) on issue in the Company as at
31 March 2020 was 68,278,772.
SHAREHOLDER
INFORMATION
STATUTORY DISCLOSURES
The following details included in the Company’s interests register as at 31 March 2019 have been removed as at 31 March 2020:
• Michael Bushby is no longer a director of 45 Mimosa Pty Limited
• Candace Kinser is no longer an advisor to BECA New Ventures Team Advisory Board nor a Director of Talent
International Limited (Australia)
Share dealings by directors
In accordance with Section 148(2) of the Companies Act, the Board has received disclosures from the directors
named below of acquisitions or dispositions of relevant interests in the company between 1 April 2019 and 31
March 2020, and details of those dealings were entered in the company’s interests register. The particulars of such
disclosures are:
Michael Bushby
• 1) Sold 1,071 ordinary shares, at $3.18 per share, on 28 January 2020; 2) Sold 3,871 ordinary shares, at $3.18 per
share, on 29 January 2020; 3) Sold 5,529 ordinary shares, at $3.18 per share, on 30 January 2020; 4) Sold 4,950
ordinary shares, at $3.16 per share, on 31 January 2020; 5) Sold 5,472 ordinary shares, at $3.15 per share, on 4
February 2020; 6) Sold 2,491 ordinary shares, at $3.15 per share, on 5 February 2020.
Use of Company information
There were no notices from directors of the Company requesting to use Company information received in their
capacity as directors that would not otherwise have been available to them.
Directors’ and officers’ insurance and indemnity
EROAD has arranged, as provided for under the Company’s constitution, policies of directors’ and officers’ liability
insurance which, with a Deed of Indemnity entered into with all directors, ensures that generally directors will incur
no monetary loss as a result of actions undertaken by them as directors. Certain actions are specifically excluded, for
example, the incurring of penalties and fines that may be imposed in respect of breaches of the law.
Directors’ relevant interests
The following directors held relevant interests in the following ordinary shares in the Company as at 31 March 2020:
NameOrdinary shares
Steven Newman14,505,881
Graham Stuart40,000
Anthony Gibson567,999
Candace Kinser41,999
Michael Bushby (Lowelly Pty Limited)137,671
133134
PRINCIPAL SHAREHOLDERS
The names and holdings of the twenty largest registered shareholders in the Company as at 9 June 2020 were:
Holder NameShares%
NMC Trustees Limited 14,379,45821.05
National Nominees Limited – NZCSD7,164,74010.5
Citibank Nominees (New Zealand) Limited - NZCSD6,841,86610.0
FNZ Custodians Limited5,560,8348.14
HSBC Nominees (New Zealand) Limited - NZCSD2,740,0194.0
BNP Paribas Nominees (NZ) Limited - NZCSD2,431,2703.6
Accident Compensation Corporation - NZCSD1,758,2232.6
David Murray Jarrett and Julie Patricia Jarrett1,735,9342.54
HSBC Nominees (New Zealand) Limited A/C State Street 1,320,6241.9
BNP Paribas Nominees (NZ) Limited - NZCSD1,056,7781.5
John Grant Sinclair899,3191.32
Andrew Bowker 660,0060.96
Anthony Gibson567,9990.83
Paul Geoffrey Hewlett & Catherine Patricia Carter & Hoffman Trustees Limited550,6590.8
EROAD LTI Trustee Limited490,0000.71
JBWERE (NZ) Nominees Limited477,7040.69
Jarden Securities Limited471,2860.69
SOMAC Holdings Limited412,7400.6
Arden Capital Limited409,9340.6
FNZ Custodians Limited386,1700.56
OTHER INFORMATION
NZX WAIVERS
On 28 April 2020 EROAD notified the NZX that it was relying on the Class Waiver for Periodic Reporting Requirements
issued by NZX on 3 April 2020. Under this Class Waiver, issuers could extend the date by which they release their
results announcement from 60 days after the end of the financial year to 90 days. In reliance on this Class Waiver,
EROAD stated that it intended to release its results announcement and Annual Report for the year ended 31 March
2020 on Friday 19 June 2020.
DISCIPLINARY ACTION TAKEN BY THE NZX
The NZX has not taken any disciplinary action against the company during the year ended 31 March 2020.
AUDITOR’S FEES
KPMG has continued to act as auditor of EROAD and our subsidiaries. The amount payable by EROAD and our
subsidiaries to KPMG as audit fees during the year ended 31 March 2020 was $333,841. The amount of fees payable
to KPMG for non-audit work during the year ended 31 March 2020 was $132,043. Note 4 in the Financial Statements
section of this Annual Report includes a detailed breakdown of auditor’s fees for audit and non-audit work.
DONATIONS
EROAD and our subsidiaries made donations totalling $5,888 during the year ended 31 March 2020.
CREDIT RATING
EROAD does not currently have a credit rating.
STATUTORY DISCLOSURES
135136
GLOSSARY
ANNUALISED MONTHLY RECURRING
REVENUE (AMRR)
Annualised monthly recurring revenues (AMRR) is a non-GAAP
measure representing monthly Recurring Revenue for the last
month of the period, multiplied by 12. It provides a 12 month
forward view of revenue, assuming unit numbers, pricing and
foreign exchange remain unchanged during the year.
AUDITOR
KPMG
ASSET RETENTION RATE
The number of Total Contracted Units at the beginning of the 12
month period and retained as Total Contracted Units at the end
of the 12 month period, as a percentage of Total Contracted
Units at the beginning of the 12 month period.
COMPANIES ACT
Companies Act 1993
COMPANY
EROAD Limited
COSTS TO ACQUIRE CUSTOMERS (CAC)
Costs to Acquire Customers (CAC) is non-GAAP measure of
costs to acquire customers. Total CAC represents all costs sales
& marketing related costs. CAC capitalised includes incremental
sales commissions for new sales, upgrades and renewals which
are capitalised and amortised over the life of the contract.
All other CAC related costs are expensed when incurred and
included within CAC expensed.
COSTS TO SERVICE & SUPPORT (CTS)
Is a non-GAAP measure of costs to support and service
customers. Total CTS represents all customer success
and product support costs. These costs are included in
Administrative and other Operating Expenses reported in Note
4 Expenses of the Financial Statements.
CUSTOMER RETENTION RATE
Asset Retention Rate excluding contraction in existing
customer Total Contracted Units when customer remained with
EROAD.
EBITDA
Is a non-GAAP measure representing Earnings before Interest,
Taxation, Depreciation and Amortisation (EBITDA). Refer
Condensed Consolidated Statement of Comprehensive Income
in Financial Statements.
EBITDA MARGIN
Is a non-GAAP measure representing EBITDA divided by
Revenue.
EHUBO1 AND EHUBO2 (GEN1 AND GEN2)
EROAD’s first and second generation electronic distance
recorder which replaces mechanical hubodometers. Ehubo is a
trade mark registered in New Zealand, Australia and the United
States.
ELECTRONIC LOGGING DEVICE (ELD)
An electronic solution that synchronises with a vehicle engine
to automatically record driving time and hours of service
records.
FREE CASH FLOW
Is a non-GAAP measure representing operating cash flow and
investing cash flow reported in the Statement of Cash Flows.
FUTURE CONTRACTED INCOME (FCI)
A non-GAAP measure which represents contracted Software
as a Service (SaaS) income to be recognised as revenue in
future periods. Refer Revenue Note 3 of Financial Statements.
FY
Financial year ended 31 March
GROUP
EROAD Limited and its subsidiaries
HARDWARE ASSETS
Any physical asset required to be fitted into or onto a
customer’s vehicle or asset in order to facilitate the provision of
EROAD’s SaaS services. These include Ehubo units, accessories
and hardware assets under construction.
HEAVY VEHICLE
A truck, or a truck and trailer, weighing over:3.5 tonnes in New
Zealand (required to pay RUC); 12 tonnes in Oregon (required
to pay for WMT), for non WMT purposes means Class 3+,
10,000 pounds or greater; or 4.5 tonnes in Australia.
INTERNATIONAL FUEL TAX AGREEMENT
(IFTA)
A cooperative agreement between all states (excluding Alaska
and Hawaii) of the United States, and the Canadian provinces,
designed to make it simpler for inter-jurisdictional carriers to
report and pay fuel excise taxes, requiring only one fuel licence to
operate across multiple jurisdictions.
INTERNATIONAL REGISTRATION PLAN (IRP)
An agreement between all states (excluding Alaska, Hawaii
and Washington D.C.) of the United States, and the Canadian
provinces, for the registration of inter-jurisdictional vehicles.
Registration fees are paid to a fleet’s base jurisdiction, which
then distributes them to other jurisdictions based on the miles
travelled in each member jurisdiction. Refer Revenue Note 3 in
the Financial Statements.
LISTING RULES
The listing rules applying to the NZX Main Board as amended
from time to time.
MONTHLY SAAS AVERAGE REVENUE PER
UNIT (ARPU)
Monthly Software as Service (SaaS) Average Revenue Per Unit
is a non-GAAP measure that is calculated by dividing the total
SaaS revenue for the year reported in Note 3 of the Financial
Statements, by the total of the TCU balances at the end of each
month during the year.
RECURRING REVENUE
The Software as a Service (SaaS) revenues EROAD recognises
on a recurring monthly basis in accordance with the groups
revenue recognition policy.
ROAD USER CHARGES (RUC)
Charges payable under the New Zealand Road User Charges Act
2012 in respect of the distance travelled by a RUC vehicle on a
road. In New Zealand, RUC is payable for heavy vehicles and all
vehicles powered by a fuel not taxed at source. The charges go
towards the cost of repairing roads.
NZ GAAP OR GAAP
New Zealand Generally Accepted Accounting Practice.
NZ IAS
NZ equivalent of International Accounting Standards that
prescribe the basis for presentation of general purpose financial
statements.
NZ IFRS
New Zealand equivalents to International Financial Reporting
Standards.
NZX
NZX Limited.
NZX MAIN BOARD
The main board equity security market, operated by NZX.
SAAS
Software as a Service, a method of software delivery in which
software is accessed online via a subscription rather than bought
and installed on individual computers.
TOTAL CONTRACTED UNITS
Total Contracted Units represents the Total Units subject to a
customer contract and includes both Units on Depot and Units
pending installment.
GLOSSARY AND NON-GAAP DEFINITIONS
138
REGISTERED OFFICE
IN NEW ZEALAND
Level 3
260 Oteha Valley Road,
Albany, Auckland
New Zealand
INVESTOR RELATIONS
AND SUSTAINABILITY
ENQUIRES
Address: EROAD Limited,
PO Box 305 394
Triton Plaza
North Shore, Auckland
Email: investors@eroad.com
Telephone: 0800 437 623
LEGAL ADVISORS
Chapman Tripp
Level 35
23 Albert Street
Auckland 1010
PO Box 2206, Auckland 1140
Telephone: +64 9 357 9000
INFORMATION
FOR SHAREHOLDERS
MANAGING YOUR SHAREHOLDING ONLINE
Changes in address and investment portfolios can be viewed and updated online:
www.computershare.co.nz/investorcentre.
You will need your CSN and FIN numbers to access this service.
Alternatively, enquiries may be addressed to the Share register.
Computershare Investments Services Limited
Private Bag 92119,
Victoria Street West Auckland 1142,
New Zealand
INVESTOR INFORMATION
Our investor centre www.eroadglobal.com/global/investors is a good source
of information about what’s happening at EROAD. Here you will find investor
communications, information about our latest operating and financial results and news.
KEY INVESTOR DATES
30 July 2020
Annual Shareholders Meeting
November 2020
Half Year Results
REGISTERED OFFICE
IN NORTH AMERICA
7618 SW Mohawk Street
Tualatin, OR 97062
USA
MANAGING YOUR
SHAREHOLDING ONLINE
Changes in address and
investment portfolios can be
viewed and updated online:
www.computershare.co.nz/
investorcentre.
You will need your CSN and FIN
numbers to access this service.
BANKERS
Bank of New Zealand
China Construction Bank
National Australian Bank
Wells Fargo
REGISTERED OFFICE
IN AUSTRALIA
Level 36, Tower 2
Collins Square
727 Collins Street
Docklands, VIC 3008
Australia
SHARE REGISTER -
NEW ZEALAND
Computershare Investments
Services Limited
Private Bag 92119,
Victoria Street
West Auckland 1142,
New Zealand
Email:
enquiry@computershare.co.nz
Telephone: +64 9 488 8777
Website:
www.computershare.co.nz/
investorcentre
DIRECTORY
137
ANNUAL REPORT 2020
---
FOR THE 12 MONTHS ENDED 31 MARCH 2020
EROAD INVESTOR PRESENTATION FY20
IMPORTANT INFORMATION
The information in this presentation is of a general nature
and does not constitute fi nancial product advice, investment
advice or any recommendation. Nothing in this presentation
constitutes legal, fi nancial, tax or other advice.
This presentation may contain projections or forward-looking
statements regarding a variety of items. Such projections or
forward-looking statements are based on current expectations,
estimates and assumptions and are subject to a number of
risks, uncertainties and assumptions.
There is no assurance that results contemplated in any
projections or forward-looking statements in this presentation
will be realised. Actual results may diff er materially from
those projected in this presentation. No person is under any
obligation to update this presentation at any time after its
release to you or to provide you with further information about
EROAD.
While reasonable care has been taken in compiling this
presentation, none of EROAD nor its subsidiaries, directors,
employees, agents or advisers (to the maximum extent
permitted by law) gives any warranty or representation
(express or implied) as to the accuracy, completeness or
reliability of the information contained in it nor takes any
responsibility for it. The information in this presentation has not
been and will not be independently verifi ed or audited.
NON-GAAP MEASURES
EROAD has used non-GAAP measures when discussing
fi nancial performance in this document. The directors and
management believe that these measures provide useful
information as they are used internally to evaluate performance
of business units, to establish operational goals and to allocate
resources.
Non-GAAP measures are not prepared in accordance with
NZ IFRS (New Zealand International Financial Reporting
Standards) and are not uniformly defi ned, therefore the
non-GAAP measures reported in this document may not be
comparable with those that other companies report and should
not be viewed in isolation or considered as a substitute for
measures reported by EROAD in accordance with NZ IFRS.
The non-GAAP measures are not subject to audit or review.
Defi nitions can be found in the Glossary on page 37 of this
presentation.
01
02
EROAD DELIVERS
ANOTHER PERIOD
OF STRONG
GROWTH
UN-DRAWN DEBT
FACILITIES
following refinancing and expanding
debt facilities in March 2020
Drawn debt: FY20: $36.1m*, FY19: $34.7m
23.9m
$
FUTURE
CONTRACTED INCOME
FY20: $134.4m • FY19: $117.4m
*after borrowing costs of $0.3m
1 7.0
$
m
IN REVENUE
reflecting strong growth in
New Zealand and North America
32%
FY20: $81.2m • FY19: $61.4m
PROFIT BEFORE TAX
after $2.0m costs
associated with
patent dispute
1.4m
$
FREE
CASH FLOW
31%
EBITDA MARGIN
demonstrating
operating leverage
FY20: 33% • FY19: 25%
(
12.8
)
$
m
which includes a $5.2m increase
in software development costs
FY19: $(13.1)m
03
CONTRACTED
UNIT GROWTH
reflecting onboarding of 2
enterprise customers in North
America and continued steady
growth in New Zealand
adding to our customer
value proposition
representing
19% of Revenue
21%
SPENT ON
RESEARCH AND
DEVELOPMENT
KEY LAUNCHES OF
SAAS PRODUCTS
AND ENHANCEMENTS
7
INVESTED IN
NEW GENERATION
BUSINESS SYSTEMS
to scale for growth,
improve operating leverage and
customer experience
6.9
m
$
ASSET
RETENTION RATE
reflecting quality of service
and product offering
%
95.2
15.6
$
m
58.38
IN MONTHLY SAAS
AVERAGE REVENUE
PER UNIT (ARPU)
$
with customers subscribing to
additional SaaS services
FY19: $55.08
INVESTING
TO BUILD
FOUNDATIONS
FOR THE FUTURE
0404
OPERATIONAL
UPDATE
Steven Newman
Chief Executive Officer
05
UNIT GROWTH
6-YEAR ANNUAL
CAGR OF 42%
2014201520162017201820192020
9,973
14,332
19,864
26,031
31,298
36,953
43,430
48,041
59,538
77,600
85,989
96,390
109,380
-
20,000
40,000
60,000
80,000
100,000
120,000
9,97314,33219,26424,04128,14032,45238,12941,93949,80259,84365,03471,44675,674
1,513
600
1,990
3,158
4,501
5,301
6,102
9,736
17,757
20,955
24,944
32,193
116,488
80,366
2,120
34,002
Australia
North America
New Zealand
ANZ
• Continued strong growth in
New Zealand refl ecting continuing
expansion into existing customer
fl eets and a solid underlying new
customer run rate
• Two large Enterprise customers
on-boarded in North America
adding 7,150 units
STRONG H1 GROWTH
REFLECTIVE OF
ON-BOARDING OF
NORTH AMERICAN
ENTERPRISE
ACCOUNTS
• Solid SMB run-rate in New Zealand
across the year
• In North America 3,631 units
from EROAD’s largest enterprise
customer win were deployed and a
second large enterprise customer
was won and deployed (1,650
units) in H1
• Australian SMB run rate
improvement in Q4
• COVID-19 meant delay in fi nalising
contracts across all regions with
customers towards the end of FY20
2,2162,0522,4201,8922,4733,2041,8351,9753,0904,7734,7775,2642,5912,8513,2712,8902,8652,699
897
271
796
547
422
378
392
409
1,321
2,313
5,076
2,945
1,581
1,617
1,104
2,885
2,904
4,345
43
134
3,113
2,323
3,216
2,439
2,895
3,582
2,227
2,384
4,411
7,086
9,853
8,209
4,172
4,468
4,375
5,775
5,812
7,178
4,123
3,951
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
20162017201820192020
2,555 2,137
1,398
1,377
170
437
Australia
North America
New Zealand
ANZ
H1 20 Two Largest
North American
Enterprise Customers
COVID-19
H2 18 ELD Mandate and
Strong Enterprise
Growth in New Zealand
06
CONTRACTED UNITS
07
LAUNCHED NEW SAAS PRODUCTS AND ENHANCEMENTS
AUGUST
2019
NA
Drivers can select this ruleset from
within their truck, enabling them to
view and track their driving hours
in line with Texas regulations.
TEXAS INTRASTATE
RULE SET
JULY
2019
NA
EROAD FUEL TAX CREDIT
(FTC) SOLUTION
AUGUST
2019
AU
Provides customers a solution that
helps with claiming back their full
Fuel Tax Credit entitlement.
Consolidates key fl eet metrics onto a
single view dashboard. Updated with a
new map experience in March 2020.
MYEROAD DASHBOARD
SEPTEMBER
2019
AU
NZ
CRASH & ROLL OVER ALERTS
(IN PARTNERSHIP WITH
ST JOHN AMBULANCE)
Delivers emergency alerts to the driver and
their designated fi rst responders in the event
of a serious collision or rollover incident.
MARCH
2020
AU
NZ
FEBRUARY
2020
AU
NZ
PRIVATE MODE
Technology that complements vehicle policy
and compliance regulations around private and
company use of vehicles.
EROAD WHERE
DECEMBER
2019
Provides a cost-eff ective small
asset tracking solution.
NZ
Displays each driver’s available
hours. Ensures compliance with
regulation, drivers are safe and
fl eets maximise their productivity.
HOURS OF
SERVICE RECAP
08
EROAD’S THREE STRATEGIC
PRIORITIES IN THE NEW
ZEALAND MARKET ARE:
GROW THROUGH RETENTION
AND ACCOUNT EXPANSION
• 96.1% ANZ asset retention rate
-renewed 8,136 contracted units. 6,283 of these
were Ehubo1, of which 42% upgraded to Ehubo2
-implementation of customer success model
across sales and support teams
CONTINUE EXPANSION INTO SAFETY
AND COST CONSCIOUS MARKET
• Increased contracted units by 10,256, of which 30%
were new customers in sectors such as Construction
& Civil Engineering and Agriculture/Forestry
LEVERAGE NETWORK
INTO NEW OPPORTUNITIES
• Launch of EROAD Where business
• Continued development of data analytics
• Partnered with St Johns Ambulance to launch crash
& rollover alert functionality which was influential in
winning Worksafe as a customer
NEW ZEALAND
REMAINS A SIGNIFICANT
GROWTH OPPORTUNITY
GROWTH
IN UNITS
15%
NZ MARKET SUMMARY
EBITDA
FY19: $27.9m
34.9m
$
NZ MONTHLY
SAAS ARPU
FY19: $53.74
55.78
$
ASSET
RETENTION RATE
96.1%
09
EROAD’S THREE STRATEGIC
PRIORITIES IN THE NORTH
AMERICAN MARKET ARE:
PURSUE SELECTIVE
ENTERPRISE OPPORTUNITIES
• 5,281 units deployed from 2 large enterprise wins
in first half. These help with referrals to other large
enterprise customers
BUILD SUSTAINABLE RUNRATE BUSINESS IN
THE SMALL AND MEDIUM BUSINESS SPACE
• An average monthly small to medium business
runrate of 338 (H1: 328; H2: 348)
• Expect run rate to improve with product launches
over FY21
CONSIDER STRATEGIC
GROWTH OPPORTUNITIES
• Launch of EROAD Go Workflow logistics
management in HY21
• Continued to hold discussions with potential
partners around a range of opportunities to build
the product portfolio
NORTH AMERICA
IS NOW AN
ESTABLISHED MARKET
GROWTH
IN UNITS
1
38%
NA MARKET SUMMARY
LARGE ENTERPRISE
CUSTOMERS
ONBOARDED
2
1
North American units for FY19 are restated for data cleansing adjustments identified as part of the new ERP systems implementation
2
Stronger USD v NZD contributed $4.26 of the increase from the prior year
EBITDA
FY19: $0.4m
7. 5m
$
NA MONTHLY
SAAS ARPU
1,2
FY19: $60.08
65.73
$
10
EROAD’S THREE STRATEGIC
PRIORITIES IN THE
AUSTRALIAN MARKET ARE:
PURSUE SELECTIVE
ENTERPRISE OPPORTUNITIES
• Continued to build the strong enterprise pipeline for
Australia (fleets of 500–1000). Had expected some
contracts finalised by year-end, now delayed due to
COVID-19
BUILD SUSTAINABLE RUNRATE BUSINESS IN
THE SMALL AND MEDIUM BUSINESS SPACE
• During FY20 added 784 units
• Increased marketing to inform potential customers
on EROAD’s customer value proposition
• During the fourth quarter a medium sized
Trans-Tasman customer fleet was deployed
MANAGE COST BASE FOR
EFFICIENCIES IN GROWTH
• Customer support functions continue to be provided
from New Zealand to ensure cost to serve efficiencies
at this early stage of entry into Australia
• The size of the in-market sales team and marketing
activity is closely monitored and increases are
following sales achievement and pipeline growth
BUILDING BRAND IN
AUSTRALIA LEVERAGING
TRANS-TASMAN SYNERGIES
GROWTH
IN UNITS
59%
AU MARKET SUMMARY
EBITDA
FY19: $(0.6)m
(
1.3
)
m
$
ONBOARDED FIRST
TRANS-TASMAN
CUSTOMER OF 355 UNITS
BUILT OUT SALES
TEAM AND INCREASED
MARKETING EFFORTS
1111
FINANCIAL
UPDATE
Alex Ball
Chief Financial Officer
12
EROAD DELIVERS ANOTHER PERIOD OF STRONG GROWTH
+32%
10.0
-
20.0
30.0
40.0
50.0
60.0
70.0
90.0
80.0
FY19FY20
$
61.4m
$
81.2m
REVENUE
-
30
.0
25.0
20.0
15.0
10.0
5.0
+73%
$
15.6m
$
27.1m
EBITDA
FY19FY20
+31%
EBIT MARGIN
FY19FY20
10.0
5.0
15.0
20.0
25.0
30.0
35.0
-
33%
25
%
+14%
$
117.4m
$
134.4m
FUTURE
CONTRACTED INCOME
FY19FY20
-
25.0
50.0
75.0
100.0
125.0
150.0
+21%
96.1k
116.5
k
TOTAL
CONTRACTED UNITS
FY19FY20
20.0
40.0
60.0
80.0
100.0
120.0
-
13
CONTINUED STRONG EBITDA GROWTH
IN NEW ZEALAND AND NORTH AMERICA,
PARTLY OFFSET BY AUSTRALIAN
MARKET ENTRY
($m)FY20 FY19 Movement
New Zealand 34.9 2 7. 9 7.0
Australia (1.3) (0.6) (0.7)
North America 7. 5 0.4 7.1
Corporate & Development (14.0) (12.0) (2.0)
Elimination of inter-segment EBITDA (0.0) (0.1) 0.1
EBITDA 2 7.1 15.6 11.5
EBITDA Margin33%25%8%
EBITDA
13
NEW ZEALAND
Continued further growth into existing customer fleets,
together with a solid underlying new customer run rate
drove the increase in EBITDA for the NZ business to
$34.9m from the prior year’s $27.9m result.
NORTH AMERICA
The North American EBITDA result of $7.5m
(FY19: $0.4m) was driven by strong first half enterprise
customer growth with continuing small to medium
business runrate growth.
AUSTRALIA
Continuing sales and marketing investment in our
newest market, Australia, produced the EBITDA result
of $(1.3)m (FY19: $(0.6)m).
CORPORATE
The Corporate segment’s EBITDA was $(14.0)m from
$(12.0)m reflecting the combination of continuing
investment in R&D activities coupled with a focus on
cost management to improve operating leverage. The
result included non-recurring patent dispute costs of
$2.0m.
14
66.5
86.0
-
20.0
40.0
60.0
80.0
100.0
Annualised Monthly
Recurring Revenue
($m)
FY19FY20
100.5
117.4
134.4
-
25.0
50.0
75.0
100.0
125.0
150.0
FY18FY19FY20
Future Contracted
Income
($m)
Research and Development as % of Revenue
22
22
12
14
10
19
12
7
8
-
5
10
15
20
25
R&D Expensed
R&D Capitalised
Total R&D
FY18FY19FY20
AMRR increase reflects growth in recurring
revenues from new units and SaaS ARPU.
AMRR has only been reported since FY19
following adoption of IFRS 15 & 16
FCI increased with new incremental
contracted units added and renewals,
partially offset by recognition of
revenues for new and existing contracts.
R&D as % of Revenue within expected
range of between 18-22% of Revenue.
MONITORING PERFORMANCE
LEADING GROWTH INDICATORS
15
Monthly SaaS ARPU has been trending upwards over past 12 months.
- Plan and hardware upgrades
- Above average pricing for new sales, including NA enterprise accounts
- Stronger USD vs NZD contributed $1.23 of the increase from the prior year
Asset Retention Rate has remained stable and
remains a focus as we work to maintain this very high
level through renewal programmes in key markets.
$54.32
$55.08
$58.38
-
10
20
30
40
50
60
70
FY18FY19FY20
Monthly SaaS Average Revenue Per Unit (ARPU) ($)
95.8%
94.4%
95.2%
-
20
40
60
80
100
FY18FY19FY20
Asset Retention Rate (%)
MONITORING PERFORMANCE
ENTERPRISE VALUE FROM EXISTING CUSTOMER BASE
16
CAC as a % of Revenue would be expected to trend
down over time as revenue grows, reductions will be
partly offset by investment in CAC ahead of revenues
in Australia.
CTS has remained within 4-5% of revenue range. There will be some
further operational leverage expected from FY21 as the business realises
benefits of system transformation investment.
CTS will improve over time as scale and leverage increases.
17
15
6
5
4
24
18
22
20
-
5
10
15
20
25
FY18FY19FY20
CAC Expensed
CAC Capitalised
Total CAC
Cost to Acquire Customers as % of Revenue
5.0
4.6
4.6
-
1
2
3
4
5
6
CTS
Cost to Service and Support as % of Revenue
FY18FY19FY20
MONITORING PERFORMANCE
PROFITABILITY
17
SaaS Platform
Costs
Personnel
Expenses
Sub-Contractors
Other Employment
Sales and
Marketing
Software
and Systems
Legal
Costs
Other Professional
Fees
Overhead
Recoveries
Other
$5.0m
$10.0m
$15.0m
$20.0m
$25.0m
$30.0m
$35.0m
$40.0m
$45.0m
$50.0m
$55.0m
$60.0m
54.1
-
45.8
0.5
0.4
0.2
1.7
0.6
(0.7)(0.4)
1.9
5.1
FY19FY20
(0.9)
SCALECAPABILITYEXPANSION
STRATEGIC
INITIATIVES
PATENT
COSTS
Increased
Decreased
Total
OPERATING EXPENSES
18
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
ADDITIONS TO INTANGIBLE ASSETS
10.8
11.6
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
Total
PPE Additions*
($m)
8.7
10.8
Hardware
Asset Additions
($m)
6.5
9.0
7.5
0.7
Other
Capex
($m)
FY 19FY 20FY 19FY 20FY 19FY 20FY 19FY 20
*Excluding Additions to Right of Use Assets
Hardware Asset
Additions excluding
Inventory Management
($m)
9.7
16.5
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
8.3
9.6
1.4
6.9
FY 19FY 20FY 19FY 20FY 19FY 20
Total Intangible
Asset Additions
($m)
Development Asset
Additions
($m)
Software Asset
Additions
($m)
CAPITAL EXPENDITURE
18
CAPITAL EXPENDITURE
HAS INCREASED WITH
DEVELOPMENT SPEND
AND INVESTMENT IN
SCALABLE SYSTEMS
PROPERTY PLANT & EQUIPMENT
• Investment in Hardware Assets (excluding
inventory movements) has increased due to
higher new unit volumes and a stronger USD.
INTANGIBLE ASSETS
• R&D spend of $15.6m is within the signalled
range of 18-22% of revenues, $9.6m of which was
capitalised as Development Assets, an increase of
$1.3m on the prior period.
• Software additions are $5.5m higher as a result
of the investment in new generation business
systems and processes this year.
19
5.3
8.3
9.6
4.5
5.1
6.0
9.8
13.4
15.6
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
FY 18FY 19FY 20
R&D ExpensedR&D Capitalised
Research and Development ($m)
IncreaseDecreaseTotal
Movement in Development Assets ($m)
29.8
9.6
6.7
32.7
-
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
FY19Additions
AmortisationFY 20
CONTINUED INVESTMENT IN R&D
CRITICAL TO DELIVERING RELIABILITY, SCALABILITY, QUALITY AND GROWTH
20
Operating Cash Flows ($m)Investing Cash Flows ($m)
FY 19FY 18FY 20
(35.9)
(23.8)
(27.3)
14.2
23.1
5.2
FY 19FY 18FY 20
Free Cash Flows ($m)
(18.6)
(13.1)
(12.8)
FY 19FY 18FY 20
(40.0)
(30.0)
(20.0)
(10.0)
10.0
20.0
30.0
40.0
Operating Cash Flows:
• Have increased strongly this
year as a result of the increased
contribution from both New
Zealand and North American
markets.
Investing Cash Flows:
• $16.5m investment in
intangible assets, an increase
of $6.8m on FY19.$ 6.9m
of the total relates to
strategic investment in new
generation business systems.
Development asset investment
was $9.6m, $1.3m on FY19.
• $16.5m PPE largely investment
in Hardware Assets.
Free Cash Flows:
Free cash flows impacted by
investment in key strategic
initiatives:
• $1.3m EBITDA loss in
relation to AU market entry.
• $6.9m investment in
business and operating
systems.
• $2.2m higher R&D
compared to FY19.
FREE CASHFLOWS
FREE CASH FLOWS
IMPACTED BY INVESTMENT
IN STRATEGIC INITIATIVES
The Group expects to fund ongoing investment in
intangible assets with operating cash flows.
Operating cash flows will continue to improve with
continued growth and operating leverage.
In the short term, until the business becomes Free
Cash Flow positive, the Group expects that investing
cash flows will be able to be funded by operating cash
inflows and available debt facilities.
20
21
Inflows
Outflows
Total
-
34.9
7.5
(4.5)
(1.5)
(4.2)
(2.0)
(0.6)(0.1)
(0.3)(0.1)
(1.8)
(14.0)
(12.8)
-
(1.3)
-
10.0
(10.0)
(20.0)
30.0
20.0
40.0
CDE EBITDA
Other PPE
Development Assets
Software Assets
Interest Paid
Group Free Cash Flows FY20
(3.7)(0.1)
(0.6)
(9.6)
(6.9)
(2.7)
(1.2)
NEW ZEALAND
$25.1m (FY19: $18.1m)
NORTH AMERICA
$0.6m (FY19: ($3.6m))
AUSTRALIA
($1.7m) (FY19: ($0.4m))
CORPORATE & DEVELOPMENT
($33.8m) (FY19: ($26.3m))
$16.5m investing
for future growth
and scalability
Other Operating Cash Flows
EBITDA
Other PPE
CA Assets
H&A Assets
CF Assets
EBITDA
Other PPE
CA Assets
H&A
CF Assets
EBITDA
Other PPE
CA Assets
H&A
CF Assets
H&A under Construction
FREE CASH FLOW ANALYSIS BY SEGMENT
1
1
Group Free Cash Flows (FCF) for the purpose of this analysis refers to Operating Cash Flows Less Investing Cash Flows.
2
This FCF by market analysis provides an indicative view of FCF. Note that this does not represent actual FCF by market: Hardware & Accessories under Construction (inventories held) are presented in total and Other Operating Cash Flows (non-cash and working capital movements)
are presented in total and not allocated to specific seg ments. These amounts relate to all operating segments.
H&A Assets - Hardware & Accessory Assets • CA Assets - Customer Acquisition Assets • CF Assets - Contract Fulfilment Assets • CDE EBITDA - Corporate, Development and Elimination EBITDA • H&A under Construction - Hardware & Accessories under Construction
22
New Zealand
69%
North America
29%
Australia
2%
Small to
Medium
63%
Enterprise
37%
Construction &
Civil Engineering
28%
Services & Trade
6%
Other
32%
Agriculture/Forestry
10%
Freight &
Road Transport
24%
FINANCIAL UPDATE
WE REMAIN IN A
SOLID FINANCIAL
POSITION
• $134.4 million of future contracted
income and an average remaining
contract length of 2 years.
• EROAD’s customer base is diverse
across regions, business size and
industry.
• Positive contribution to operating
cash flow from the New Zealand
and North American businesses.
• Increase in banking facilities to $60
million, supporting organic growth.
CONTRACTED
UNITS
by region
CONTRACTED
UNITS
by business size
CONTRACTED
UNITS
by industry
22
23
FINANCIAL UPDATE
LEVERS AVAILABLE
IF NECESSARY
• Given COVID-19, EROAD has undertaken
a full review and scenario analysis on
future cashflow and expenditure
• Taken a number of prudent steps to
manage its cost base:
• Short-term cessation of recruitment,
non-essential travel, external research
and development expenditures
• Deferral of some marketing events
and activities.
• Additional measures have been identified
and can be implemented should some of
our worst case scenarios eventuate.
23
2424
OUTLOOK
Steven Newman
Chief Executive Officer
25
SAFER, MORE PRODUCTIVE ROADS
EXTENDING THE PLATFORMSCALING FOR GROWTH CHOOSING TO GROW
Launched EROAD Fuel Tax Credit solution
in Australia market
Launched Texas Intrastate Ruleset, HOS
Recap, Updated Map Experience and Optimal
service and maintenance scheduling improving
customer value proposition
Launched MyEROAD Dashboard, Private Mode
and Crash & Roll Alerts improving retention and
revenue
Launched EROAD Where in New Zealand
Completed roll-out of new generation of
business systems and supporting processes
Built further capability in sales and
customer support
Launched our new leadership programme
20,382 contracted units added in FY20
Built acquisition capability in FY20 so we
are ready to execute in FY21 as the right
opportunities are identified
Refinanced and extended $60m Debt funding
to support organic growth (40% undrawn)
ENERGISED AND CAPABLE TEAM OF EROADERS
CREATING SHAREHOLDER VALUE IN FY20
26
COVID-19
CRISIS
EROAD HEAVY VEHICLES ON THE ROAD(In Auckland, pre-lockdown and during alert levels)
In New Zealand, some sectors, such as ones that maintain our communities, saw
little disruption. While others, such as telecommunications, were busier than normal.
Many of EROAD’s customers continued to operate as they were deemed essential
In New Zealand, other sectors were greatly impacted but returned to normal quickly.
• Priority is safety of our people and
supporting our customers.
• Global business continuity plan was quickly
activated a week ahead of lockdown .
• Many of EROAD’s customers provided the
essential services that kept the economies
running in our markets .
• EROAD was designated an essential service
across our three markets, and continued to
operate supporting customers who were
also designated.
• With easing of lockdown restrictions,
EROAD has recommenced Ehubo and
EROAD Where hardware installation.
• Sales continued during lockdown – but only
to essentai services. The disruption led to
some delays in discussions with potential
new customers. Since the easing of
lockdown we have seen new sales resume
and discussions resume with potential new
customers.
• Off ering customers a contact tracing service
as part of our service bundle.
Over 30% of NZ heavy customer
vehicles, over 50% of total AU customer
vehicles and over 60% of total NA
customer vehicles continued to operate
despite the restrictions implemented
across the markets.
ELECTRICITY, GAS, WATER & WASTE SERVICES
AGRICULTURE, FORESTRY AND FISHING
INFORMATION, MEDIA & TELECOMMUNICATIONS
% change in distance travelled
% change in distance travelled
% change in distance travelled
% change in distance travelled
CONSTRUCTION
‘NORMAL’
Thursday 27th February
ALERT LEVEL 4
Thursday 26th March
ALERT LEVEL 3
Thursday 30th April
OUTLOOK
27
SIGNIFICANT
GROWTH AND
REVENUE
OPPORTUNITY
REMAINSAS
PENETRATION
OF TELEMATICS
CONTINUES IN
MARKETS
150k
620k
4m
10m
11.0m
10.0m
12.0m
14.0m
13.0m
-
620k
2
620k620k
0
620k620k
0k
620k
400k
600k
800k
150k150k
620k
NEW ZEALAND
700k
2.9m
2.0m
3.0m
4.0m
5.0m
Heavy VehiclesVehiclesV
Heavy VehiclesVehiclesV
Heavy VehiclesVehiclesV
Medium VehiclesVehiclesV
Light Commercial VehiclesVehiclesV
Light Commercial VehiclesVehiclesV
AUSTRALIANORTH AMERICA
EROAD is operating in a large and growing
Total Addressable Market (TAM)
OUTLOOK
28
OPPORTUNITIES
TO GROW ARPU
• New Zealand: Expect ARPU improvement
over the next few years due to the upgrade
of the majority of Ehubo1 units to Ehubo2.
In addition further opportunity to sell more
SaaS products such as Inspect and Logbook .
• In North America, still opportunity to
upgrade customers plans, as well as selling
the ETrack Wired and Go Workflow to
improve ARPU.
• Australia is a new market, with continued
focus on unit growth in both small-to-
medium and enterprise customers before
we begin to see significant amount of SaaS
upgrades.
Contract renewals, launches of a
number of new products and services
(including camera) in FY21 will all
provide opportunity to improve ARPU
CONTRACTED UNITSSAAS UPGRADES
36%
Opportunity
to upgrade
customer plans
-
25%
50%
75%
100%
NEW ZEALAND
8%
37%
48%
NORTH AMERICA
7%
Total Fleet
Total Tax
Other
ELD
NA
Ehubo2: SafeDriver
Ehubo2: Advance
Ehubo2: Connected
NZ
Ehubo1
53%
7%
6%
$
$$
$$$
$$$$
$$
NEW ZEALANDNEW ZEALANDNORTH AMERICA
USING INSPECT
USING LOGBOOK
9
%
6
%
AUSTRALIA
FUEL
TAX CREDITS
NORTH AMERICA
ETRACK WIRED
launched Q1 FY21
GO WORKFLOW
will be launched HY21
ETrack Wired
OUTLOOK
29
FY21
OUTLOOK
OUTLOOK
Despite economic uncertainty across
all our markets, EROAD remains well
positioned reflecting its strong customer
value proposition, future contracted income
and diverse customer base across regions,
business size and industry.
While uncertainty results in longer sales lead-times, we remain
confident in continued unit growth across all three markets,
albeit it is likely to be lower than delivered in FY20 and
previously anticipated in FY21.
Continue to monitor economic conditions and its impact on
debtor collectability and asset retention rates.
Continue to focus on growing Monthly SaaS Average Revenue
per Unit and investing to improve operating leverage.
30
WE ARE
WELL
POSITIONED
AND READY
• We will continue to support our
customers, many of which are necessary
to rebuild the global economy
• In a global downturn providing current
and new customers will look to our
products and services to drive efficiencies
in their operations and cost out
• We now have the right systems
and processes now in place to drive
efficiencies out of our business and
continue to grow and scale
• We have the cashflow and funding
facilities to support organic growth.
• We continue to look for growth
opportunities and evaluate the ASX listing
• We still choose to grow
30
3131
Q & A
32
YEAR ENDEDFY20FY19Movement
Revenue81.261.419.8
Expenses(54.1)(45.8)(8.3)
Earnings before interest, taxation, depreciation and
amortisation
2 7.115.611.5
Depreciation of Property, Plant & Equipment(8.6)(6.6)(2.0)
Amortisation of Intangible Assets
(7.5)(6.5)(1.0)
Amortisation of Contract and Customer Acquisition Assets(6.5)(4.8)(1.7)
Earnings before interest and taxation
4.5(2.3)6.8
Net Financing Costs
(3.1)(2.8)(0.3)
Profit/(loss) before tax
1.4(5.1)6.5
Income tax (expense) benefit(0.4)0.2(0.6)
Profit/(loss) after tax for the year attributable to the
shareholders
1.0(4.9)5.9
Other comprehensive income(1.3)(1.1)(0.2)
Total comprehensive income/(loss) for the year
(0.3)(6.0)5.7
32
APPENDIX
STATEMENT OF INCOME (NZ$m)
33
AS AT PERIOD ENDFY20FY19Movement
Cash3.416.1(12.7)
Restricted Bank Account14.012.71.3
Costs to Acquire and Contract Fulfilment Costs5.94.61.3
Other10.710.50.2
Total Current Assets34.043.9(9.9)
Property, Plant and Equipment3 7. 433.93.5
Intangible Assets42.133.19.0
Costs to Acquire and Contract Fulfilment Costs4.84.8-
Other7. 57. 5-
Total Non-Current Assets91.879.312.5
TOTAL ASSETS125.8123.22.6
Payables to Transport Agencies13.912.51.4
Contract Liabilities8.210.0(1.8)
Borrowings35.834.71.1
Other Liabilities16.614.71.9
Total Liabilities74 . 571.92.6
NET ASSETS51.351.3-
33
• Net PPE and Contract Fulfilment and Customer
Acquisition Assets increased by $4.8m due to
growth in contracted assets.
• Intangible assets have increased due to the
investment in new generation business systems
and continued key R&D investment, including
EROAD Where.
• Cash has reduced by $12.7m. Elevated investing
cash outflows as a result of investment in
business systems resulted in FCF of ($12.8)m.
BALANCE SHEET (NZ$m)
APPENDIX
34
YEAR ENDEDFY20FY19Movement
Cash flows from operating activities
Other operating cash flows25.81 7.08.8
Interest paid(2.7)(2.8)0.1
Net cash inflow from operating activities23.114.28.9
Cash flows from investing activities
Property, Plant and Equipment (including hardware assets)(11.6)(10.9)(0.7)
Intangible Assets(16.5)(9.7)(6.8)
Contract Fulfillment and Customer Acquisition Assets(7.8)(6.7)(1.1)
Net cash outflow from investing activities(35.9)(27.3)(8.6)
Cash flows from financing activities
Bank loans1.28.2(7.0)
Other financings cash flows(1.1)(0.9)0.2
Net cash outflow from financing activities0.17. 3(7.2)
Net increase/(decrease) in cash held
(12.7)(5.8)(6.9)
Cash at beginning of the financial period
16.121.9(5.8)
Closing cash and cash equivalents3.416.1(12.7)
CASH FLOW STATEMENT (NZ$m)
34
• Investing cashflows in intangibles consist of
$6.9m of spend in new generation business
systems and an incremental amount of spend
on key research and development activity.
• Financing cash inflows have reduced period on
period as a net effect of amounts drawn down
to fund up front hardware and installation
costs from new sales, less scheduled loan
repayments.
APPENDIX
35
Cash Receiptsfrom CustomersPayments to Employeesand SupliersInterest PaidOther OperatingCash FlowInvestmentin PPEInvestment inCustomer Acquisition AssetsNet drawdownfrom bankingfacilitiesInvestment inIntangibleAssetsInvestment inContractFulfilment Assets
3.4
-
16.1
(2.7)
(0.0)
(11.6)
(16.5)
1.2
Other FinancingCash Flows
(1.1)
79.2
(53.4)
April 19March 20
(4.4)
60.0
80.0
100.0
120.0
40.0
20.0
(3.4)
Increased
Decreased
Total
FY20 CASH FLOWS ($NZm)
36
YEAR ENDEDFY20FY19
Profit/(Loss) after tax for the year attributable to the shareholders1.0(4.9)
Add/(less) non-cash items
Tax asset recognised0.0(0.3)
Depreciation and amortisation22.518.0
Other non-cash expenses/(income)(1.0)(0.6)
Add/(less) movements in other working capital items:
Decrease/(increase) in trade and other receivables(0.2)1.1
Increase/(decrease) in current tax payables0.0(0.1)
Increase/(decrease) in contract liabilities(1.8)(0.2)
Increase /(decrease) in trade payables, interest payable and accruals2.61.2
Net Cash from operating activities23.114.2
RECONCILIATION OF PROFIT TO MOVEMENT IN CASH (NZ$m)
36
APPENDIX
37
• Annualised Monthly Recurring Revenue (AMRR)
Annualised monthly recurring revenues (AMRR) is a non-GAAP measure
representing monthly Recurring Revenue for the last month of the
period, multiplied by 12. It provides a 12 month forward view of revenue,
assuming unit numbers, pricing and foreign exchange remain unchanged
during the year.
• Asset Retention Rate
The number of Total Contracted Units at the beginning of the 12 month
period and retained as Total Contracted Units at the end of the 12 month
period, as a percentage of Total Contracted Units at the beginning of the
12 month period.
• Costs to Acquire Customers (CAC)
Costs to Acquire Customers (CAC) is non-GAAP measure of costs to
acquire customers. Total CAC represents all costs sales & marketing related
costs. CAC capitalised includes incremental sales commissions for new
sales, upgrades and renewals which are capitalised and amortised over
the life of the contract. All other CAC related costs are expensed when
incurred and included within CAC expensed.
• Costs to Service & Support (CTS)
Is a non-GAAP measure of costs to support and service customers. Total
CTS represents all customer success and product support costs. These
costs are included in Administrative and other Operating Expenses
reported in Note 4 Expenses of the Financial Statements.
• EBITDA
Is a non-GAAP measure representing Earnings before Interest, Taxation,
Depreciation and Amortisation (EBITDA). Refer Condensed Consolidated
Statement of Comprehensive Income in Financial Statements.
• EBITDA Margin
Is a non-GAAP measure representing EBITDA divided by Revenue.
• Ehubo1 and Ehubo2 (GEN1 and GEN2)
EROAD’s first and second generation electronic distance recorder which
replaces mechanical hubodometers. Ehubo is a trade mark registered in
New Zealand, Australia and the United States.
• Electronic Logging Device (ELD)
An electronic solution that synchronises with a vehicle engine to
automatically record driving time and hours of service records.
• Free Cash Flows
Is a non-GAAP measure representing Operating cash flow and Investing
cash flow reported in the Statement of Cash Flows.
• Future Contracted income (FCI)
A non-GAAP measure which represents contracted Software as a Service
(SaaS) income to be recognised as revenue in future periods. Refer
Revenue Note 3 of Financial Statements.
• Heavy Vehicle
A truck, or a truck and trailer, weighing over:3.5 tonnes in New Zealand
(required to pay RUC); 12 tonnes in Oregon (required to pay for WMT),
for non WMT purposes means Class 3+, 10,000 pounds or greater; or 4.5
tonnes in Australia.
• Monthly SaaS Average Revenue Per Unit (ARPU)
Monthly Software as Service (SaaS) Average Revenue Per Unit is a non-
GAAP measure that is calculated by dividing the total SaaS revenue for
the year reported in Note 3 of the Financial Statements, by the total of the
TCU balances at the end of each month during the year.
• Recurring Revenue
The Software as a Service (SaaS) revenues EROAD recognises on
a recurring monthly basis in accordance with the groups revenue
recognition policy.
• Road User Charges (RUC)
Charges payable under the New Zealand Road User Charges Act 2012 in
respect of the distance travelled by a RUC vehicle on a road. In New Zealand,
RUC is payable for heavy vehicles and all vehicles powered by a fuel not
taxed at source. The charges go towards the cost of repairing roads.
GLOSSARY
38
GLOBAL HEAD OFFICE
AND ANZ HEADQUARTERS
260 Oteha Valley Road, Albany
Auckland, New Zealand
www.eroad.co.nz
NORTH AMERICAN
HEAD OFFICE
7618 SW Mohawk Street
Tualatin, OR 97062, USA
www.eroad.com
AUSTRALIA
Level 36, Tower 2, Collins Square
727 Collins Street, Docklands
VIC 3008, Australia
www.eroad.com.au
NZX: ERD • investors@eroad.com • eroadglobal.com/investors
For further information please contact:
Alex Ball, Chief Financial Officer
alex.ball@eroad.com • 029 772 5631
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.