EROAD continues to grow, despite difficult conditions
Market Release 26 November 2020
EROAD continues to grow, despite difficult macro-economic conditions
Transportation technology services company EROAD today released its financial results for the first
half of the 2021 financial year.
All numbers are stated in New Zealand dollars (NZ$) and relate to the six months ended 30 September
2020 (H1 FY21) and comparisons relate to the six months ended 30 September 2019 (H1 FY20) or the
six months ended 30 June 2020 (H2 FY21), unless stated otherwise.
Key highlights:
• Revenue continued to grow to $45.8m, up 19% from H1 FY20 and 7% from H2 FY20
reflecting growth across all regions
• EBITDA of $15.3m was up 29% from H1 FY20 and flat on H2 FY20 reflecting accelerated R&D
and spend-to-save initiatives
• EROAD grew contracted units by 5,705, while keeping ARPU and asset retention stable in the
six months despite challenging macro-economic conditions
• Launched EROAD Day Logbook, EROAD Go and EROAD Clarity Dashcam which will support
future growth
• EROAD listed on the ASX as a Foreign Exempt Listing and raised $53m to accelerate growth
strategies
“EROAD delivered a 19% increase in Revenue and 29% improvement in EBITDA period-on-period. In
a period of extreme uncertainty and operating restrictions across our markets, the continued growth
in contracted units, stable SaaS Average Revenue Per Unit and asset retention rate is reflective of
EROAD’s strong customer value proposition.” said Steven Newman, Chief Executive Officer.
EROAD Chair Graham Stuart says: “Now, more than ever before our customers face significant change
and increasingly require telematics solutions that give visibility, data and insights to manage vehicles,
reduce costs and improve efficiencies within their business. As the pioneer of regulatory telematics,
we are in the ideal position to find and deliver the solutions to their problems. Now is the time to be
bold and accelerate our growth strategies to capture the significant growth opportunity for EROAD
once uncertainty recedes.”
Revenue increased period on period by 19% from $38.5m to $45.8m, reflecting both the growth
in contracted units from 108,414 to 122,193 as well as an increase in Average Monthly Revenue per
Unit (ARPU) from $57.60 to $58.80. In the same period our asset retention rate remained steady
at 95%. Our Annualised Monthly Recurring Revenue metric (AMRR) provides a forward view of
revenue. This increased from $84.0m at 31 March 2020 to $84.8m as at 30 September 2020, reflecting
the growth in both new units and SaaS Average Revenue per Unit, partly offset by foreign exchange
translation impacts.
Operating expenditure increased from $27.5m to $30.5m period on period reflecting increased
research and development operating expenditure and further ongoing spend on initiatives to deliver
longer-term improvements in operating leverage.
New Zealand
New Zealand was the least impacted of EROAD’s markets by COVID-19 restrictions, and growth rates
in the markets returned to pre-COVID-19 levels relatively quickly once restrictions were lifted. New
Zealand revenue increased by 13% period on period to $27.4m and EBITDA increased period on
period by 14% to $18.5m. The growth in units of 4,160 since 31 March 2020 was driven
pr edominantly from new customers across a range of industries with medium sized fleets, as well as
further extension into the fleets of several larger existing customers.
North America
Revenue for North America increased by $2.6m to $13.9m and EBITDA increased period on period
from $3.2m to $5.9m. North America’s growth slowed adding only 1,292 units during
the period, reflecting the challenging market conditions. The majority of these units added were from
new customers. The launch of ‘EROAD Go’ and ‘EROAD Clarity Dashcam’ are considered critical steps
in further expanding the North America addressable market and being able to win more medium and
enterprise customers.
Australia
Growth in Australia was also heavily impacted by COVID-19 restrictions, particularly in Victoria. 253
units were added during the six-month period. Revenue for the Australian business was $0.5m,
compared to H1 FY19 of $0.3m. EBITDA was $(0.4)m, as EROAD continued to invest into this new
market to support future growth.
Launching innovative products to solve customers’ problems
Continuing to launch innovative products into our markets aimed at solving key customer issues is
expected to deliver further growth in contracted unit numbers and ARPU as well as retaining
customers.
During the period EROAD launched the new EROAD Day Logbook for New Zealand. This simplifies
fatigue management by enabling drivers to capture work and rest hours via a smart phone or
tablet. EROAD customers can then use the investigative tools on the web portal to examine the
driver’s workday, enabling easier compliance and reporting. Since the launch in Q1 FY21, EROAD has
sold 1,373 logbook subscriptions by 30 September.
In September 2020, ‘EROAD Go’, a mobile workflow application that connects with customers’
transport management systems, was launched in North America. This product allows critical data to
flow between the driver, dispatch, safety, compliance, accounts and back office which allows real-
time management of logistics, routing between deliverables and monitoring driver safety and
compliance improving safety and cash-flow for the customer.
A virtual launch event for EROAD Clarity Dashcam was held during October 2020. ‘EROAD Clarity
Dashcam’, which is integrated into EROAD’s Ehubo, improves safety, enables driver coaching and
incident prevention, and provides proof of facts. Strong demand is anticipated as customers look to
improve safety and reduce insurance premiums. ‘EROAD Clarity Dashcam’ sales from Q3 FY21 are
expected to grow ARPU, retain customers, and help EROAD win more medium and enterprise
customers.
Improving capital structure and investing for growth
In a significant milestone for the company, EROAD was admitted onto the Australian Stock Exchange
(ASX) on 16 September as a Foreign Exempt Listing. The Board determined that it was also the
appropriate time to raise capital to accelerate the execution of our growth strategies, increase
liquidity and to broaden EROAD’s investor base. EROAD successfully raised $53m via a private
placement ($42m) and an oversubscribed share purchase plan ($11m)
These funds will be used to extend and increase the scalability of the platform to focus on winning
medium and enterprise customers in North America and Australia, developing integration and data
analytics capability further and increase sales and marketing activity.
H2 FY21 and FY22 Outlook
Looking ahead to the second half of the financial year, EROAD is anticipating a small increase in revenue
compared to the first half. EBITDA is anticipated to be similar to the first half’s figure (adjusted for one-off
items) reflecting the acceleration of product development and increased sales and marketing costs associated
with the launches of key products.
For FY22, EROAD anticipates that the percentage revenue growth in FY22 will strengthen, but not be
at the level experienced in FY20. In New Zealand, EROAD expects similar growth to the last four years.
In North America, targeting an increased addressable market through improved product market fit, to
deliver increased unit growth. In Australia, growth during the next 2 years will come predominantly
from an Enterprise pipeline of 15-20,000 vehicles. As EROAD continues to accelerate new product
delivery for future growth in FY23 and FY24, it anticipates spending 24-27% of revenue on R&D during
FY22. However, the company anticipates EBITDA margin to be maintained but improving at the end of
FY22, to provide further increased EBITDA margin.
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 the FY20 Half Year via a
teleconference commencing at 10.30am NZDT.
Register in advance for this webinar:
https://us02web.zoom.us/webinar/register/WN_kiL0P29mSECiDj7-ngLKxA
After registering, you will receive a confirmation email containing information about joining the
webinar. A replay of this conference call will be available once it has been uploaded to the EROAD
website under ‘presentations’ on https://www.eroadglobal.com/global/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:
A
nna Bonney
Merlin Consulting
ph: +64 21 844155
anna@merlinconsulting.co.nz
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 Adjusted EBITDA, 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 37 of the investor presentation.
All numbers relate to the six months ended 30 September 2020 (H1 FY21) and comparisons relate to
the six months ended 30 September 2019 (H1 FY20), unless stated otherwise. All dollar amounts are
in NZD.
About EROAD
EROAD Limited (ASX: ERD; NZX: ERD) (“EROAD”) purpose is safer, more productive roads. EROAD
develops and markets technology solutions to manage vehicle fleets, support regulatory compliance,
improve driver safety and reduce the costs associated with operating a fleet of vehicles and
inventory of assets. EROAD has a proven SaaS business model and is experiencing continuing growth
in installed units and revenue. EROAD has operations in New Zealand, North America and Australia
with customers ranging in size from small fleets through to large enterprise customers. For more
information visit https://www.eroadglobal.com/global/investors/
---
Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
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
26 November 2020
Results for announcement to the market
Name of issuer Eroad Limited
Reporting Period 6 months to 30 September 2020
Previous Reporting Period 6 months to 30 September 2019
Currency New Zealand Dollars
Amount ($m) Percentage change
Revenue from continuing operations $45.8 up 19%
Total Revenue $45.8 up 19%
Net profit/(loss) from continuing
operations
$1.0 up 1200%
Total net profit/(loss) $1.0 up 1200%
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
$0.62 $0.20
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 Interim Report for the
six months ended 30 September 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
22 November 2019
Unaudited financial statements are contained in the Interim Report for the six months ended
30 September 2020 that accompanies this announcement.
---
EROAD
FINANCIAL RESULTS
FOR THE SIX MONTHS ENDED
30 SEPTEMBER 2020 (H1 FY21)
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.
AGENDA
HIGHLIGHTS
4-5
OPERATING
UPDATE
6-11
FINANCIAL
UPDATE
12-24
GROWTH
OPPORTUNITIES
25-33
H2 FY21 AND
FY22 OUTLOOK
34
CONTINUE
TO GROW
DESPITE
DIFFICULT
MACRO-
ECONOMIC
CONDITIONS
AMRR
84.8
m
$
PROFIT BEFORE TAX
1.2
$
m
reflecting growth in EBITDA
and increased depreciation
and amortisation
reflecting unit sales, FX impacts and
timing of renewals
IN REVENUE
reflecting continued growth in units
and ARPU
19%
(H1 FY21: $45.8m • H1 FY20: $38.5m)
(H1 FY20: Loss of $0.2m)(H2 FY20: $84.0m H1 FY20: $75.8m)
OPERATING
EXPENDITURE
reflecting accelerated R&D and
spend-to-save initiatives
m
$
3.4
EBITDA
which includes a non-recurring
items (+$0.8m) and COVID-19
debtor provision (-$0.9m)
(H1 FY21: $15.3m• H1 FY20: $11.9m)(H1 FY21: $30.5m • H1 FY20: 26.6m)
representing 20% of revenue
(H1 FY20: $8.2m)
SPENT ON R&D
9.3
$
m
3.9m
$
04
05
ACCELERATING
GROWTH
STRATEGIES
KEY RELEASES OF
SAAS PRODUCTS
5
adding to our customer
value proposition
LISTED ON
16 SEPTEMBER
ASX
to increase liquidity and broaden
investor base
1
$40m raised (net of $2m transaction costs) via placement. A further $11m was raised via share purchase plan which completed after period end.
CONTRACTED
UNIT GROWTH
on H1 FY20 and 5% growth since
year-end, despite COVID-19
operating restrictions
13%95.3%
ASSET
RETENTION RATE
reflecting quality of service
and product offering
CAPITAL RAISED
TO ACCELERATE
GROWTH STRATEGIES
53
$
m
1
MONTHLY SAAS AVERAGE
REVENUE PER UNIT (ARPU)
with customers subscribing
to additional SaaS services
and FX impacts
(H1 FY20: $57.60)(H2 FY20: 95.2% H1 FY20: 94.9%)
58.80
$
05
06
OPERATIONAL
UPDATE
Steven Newman
Chief Executive Offi cer
06
07
5% GROWTH
SINCE FY2020,
DESPITE
COVID-19
Australia
North America
New Zealand
ANZ
• Contracted units continued to grow
• However, slower growth rates across all
markets, refl ecting longer sales lead times
• Continue to progress strong pipeline of
Enterprise opportunities in Australia and
North America
2
North America units for FY19 are restated for data cleansing adjustments identifi ed as part of the new business systems implementation
2021
2014201520162017201820192020
9,973
14,332
19,864
26,031
31,298
36,953
43,430
48,041
59,538
77,600
86,240
96,106*
108,414
-
20,000
40,000
60,000
80,000
100,000
120,000
9,97314,33219,26424,04128,14032,45238,12941,93949,80259,84365,28571,44675,674
1,513
600
1,990
3,158
4,501
5,301
6,102
9,736
17,757
20,955
24,660
31,227
116,488
80,366
2,120
34,002
122,193
84,526
2,373
35,294
2
TOTAL CONTRACTED UNITS
07
08
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
2,601
2,904
3,663
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
5,491
5,812
6,496
4,123
3,951
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
201620172018201920202021
2,555 2,137
1,398
1,377
170
437
2,326
3,379
2,222
1,036
121
1,938
256
132
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
H1 GROWTH
IMPACTED
BY COVID-19
• Growth in New Zealand quickly returned
close to pre COVID-19 levels once
operating restrictions lifted
• Growth in North America signifi cantly
impacted by COVID-19 in Q1. New product
launches will help improve SMB run-rates
and Enterprise opportunities
• Growth in Australia signifi cantly impacted
by COVID-19 trading conditions and
specifi cally for Victoria due to state-wide
lockdown
CONTRACTED UNITS ADDED
DURING THE QUARTER
08
09
CHALLENGING
MACRO-ECONOMIC
ENVIRONMENT
• Initial lockdown sales limited to essential services.
Run-rates returned close to normal following removal
of restrictions. Regional lockdown in August slightly
tempered recovery
• Increase in aged debtors leading to increased doubtful
debtor provisioning
CONTINUED EXECUTION
OF STRATEGY
• Asset Retention Rate of 95.7%
• Renewed 4,142 contracted units. 1,300 of these were
Ehubo1, of which 31% upgraded to Ehubo2
• Increased contracted units by 4,160, of which 30%
were new customers across a range of industries
• Launched ‘EROAD Day Logbook’ in Q1 FY21.
Strong take-up with 1,373 subscriptions sold by
30 September 2020
3
• Continued progress in broadening range of customers’
assets traced with 3,200 EROAD Where tags sold in
H1 FY21
GROWTH OPPORTUNITY
• Going forward expect similar growth to the last
4 years (added 9,000+ connected vehicles p.a)
NEW ZEALAND REMAINS
A SIGNIFICANT GROWTH OPPORTUNITY
GROWTH IN UNITS
SINCE H2 FY20
NZ MONTHLY
SAAS ARPU
5%
(H1 FY21: 84,526 H2 FY20: 80,366)
(H1 FY20: $54.15)
ASSET
RETENTION RATE
95.7%
(H1 FY20: 95.2%)
55.36
$
EBITDA
(H1 FY20: $16.2m)
18.5m
$
3
Restated from 1,070 as previously disclosed in the Q2 Operational Update
on 28 October 2020
10
CHALLENGING
MACRO-ECONOMIC
ENVIRONMENT
• COVID-19 restrictions for the whole of H1 FY21
• Initially growth reduced very significantly. Growth
run-rates now back toward pre COVID levels as remote
selling capability has increased and customers have
become used to purchasing remotely
• Increase in aged debtors leading to increased doubtful
debtor provisioning
CONTINUED EXECUTION
OF STRATEGY
• Added 236 contracted units in Q1 FY21 and 1,026 units
in Q2 FY21
• ELD rating improved from #2 to #1 /33 on ELD
Ratings4
• Launched ‘EROAD Go’ and ‘EROAD Go+’ workflow
logistics management late September
GROWTH OPPORTUNITY
• Targeting ~2.62 million vehicles. Launch of
our ‘EROAD Go’ and ‘EROAD Clarity Dashcam’ will
increase addressable market
NORTH AMERICA IS NOW AN
ESTABLISHED MARKET
GROWTH IN UNITS
SINCE H2 FY20
NZ MONTHLY
SAAS ARPU
5
4%
(H1 FY20: $64.87)
ASSET
RETENTION RATE
94.3%
(H1 FY20: 94.2%)
67.30
$
EBITDA
(H1 FY20: $3.2m)
5.9m
4
ELD Ratings supplies ratings of 33 of the top tier ELD solution providers out of 313 that supply a solution that is self certified with the FMCSA
5
Weaker USD v NZD contributed - $1.61 of the increase from H1 FY20
$
(H1 FY21: 35,294 H2 FY20: 34,002)
11
CHALLENGING
MACRO-ECONOMIC
ENVIRONMENT
• COVID-19 restrictions in place in some states for most
of H1 FY21
• Growth has continued but at low levels that have
not seen significant improvement on FY20 monthly
run-rate
• Growth was further impacted by severe lockdown in
Victoria for Q2 FY21
CONTINUED EXECUTION
OF STRATEGY
• During H1 FY20 only added 253 units
• Had expected some contracts finalised by year-end,
now delayed due to COVID-19
• Will continue to invest in Enterprise marketing and
sales team over the next 12 months
GROWTH OPPORTUNITY
• Expect a significant proportion of our ~300
Trans-Tasman fleets to convert their Australia side
of the fleet
• Short-medium term enterprise pipeline of some
15-20k connected vehicles
BUILDING THE BRAND
IN AUSTRALIA
UNITS SINCE H2 FY20
SHORT-MEDIUM TERM
ENTERPRISE PIPELINE
253
EBITDA
(H1 FY20: $(0.8)m)(H1 FY21: 2,373 H2 FY20: 2,120)
15
-
20
NZ CUSTOMERS HAVE
TRANS-TASMAN
FLEETS FOR EROAD
TO TARGET
300
(
0.4
)
$
m
k
12
FINANCIAL
UPDATE
Alex Ball
Chief Financial Officer
12
13
EROAD DELIVERS GROWTH IN
CHALLENGING MACRO-ECONOMIC CONDITIONS
-
2.0
1.0
(1.0)
H1 FY20
H2 FY20H1 FY21
$
(0.1)m
$
1.5m
$
1.2m
-
40.0
30.0
20.0
10.0
H1 FY20H2 FY20H1 FY21
31%
36
%
33
%
10.0
-
20.0
30.0
40.0
50.0
H1 FY20H2 FY20H1 FY21
$
38.5m
$
42.7m
$
45.8m
REVENUE
-
20.0
15.0
10.0
5.0
EBITDA
EBITDA MARGINPROFIT/(LOSS) AFTER TAX
H1 FY20H2 FY20H1 FY21
$
11.9m
$
15.2m
$
15.3m
-
10.0
5.0
(5.0)
(10.0)
H1 FY20
H2 FY20H1 FY21
$
(8.6)m
$
(4.2)m
$
4.7m
FREE CASH FLOW
+19%+29%+8%+1.3m+13.3m
REVENUEEBITDAEBITDA
MARGIN
PROFIT/
(
LOSS
)
BEFORE TAX
FREE
CASH FLOWS
13
6
Includes one-off non-recurring items as outlined in detail on slide 14
14
YEAR ENDEDH1 FY21H2 FY20H1 FY20
Movement
H1 FY21
vs H1 FY20
Revenue45.842.738.57. 3
Expenses(30.5)(27.5)(26.6)(3.9)
Earnings before interest, taxation,
depreciation and amortisation
15.315.211.93.4
Depreciation of Property, Plant & Equipment(4.6)(4.6)(4.0)(0.6)
Amortisation of Intangible Assets(4..8)(3.9)(3.6)(1.2)
Amortisation of Contract and Customer
Acquisition Assets
(3.5)(3.6)(2.9)(0.6)
Earnings before interest and taxation2.43.11.41.0
Net Financing Costs(1.2)(1.5)(1.6)0.4
Profit/(loss) before tax1.21.5(0.2)1.2
Income tax (expense) benefit(0.2)(0.5)0.1(0.2)
Profit/(loss) after tax for the
year attributable to the shareholders
1.01.1(0.1)1.2
Other comprehensive income(0.7)(1.1)(0.2)(0.5)
Total comprehensive income/(loss) for the year0.3-(0.3)0.6
STATEMENT OF INCOME (NZ$m)
• Revenue increased 19% on H1FY20 to $45.8m,
reflecting growth in contracted units and ARPU.
Revenue in H1 FY21 also benefited from the forgiveness
of a COVID-19 government support loan in North
America of $USD1.0m (NZD revenue increase of $1.6m).
• Operating expenditure increased by $3.9
million reflecting accelerated R&D operating
expenditure and ongoing spend on company-
wide initiatives to deliver further longer-term
improvements in operating leverage.
• Operating expenditure also included a non-recurring
increase in the doubtful debt provision of $0.9m,
relating to the impact of COVID-19, and a one-off
adjustment for superannuation costs in North America
of $0.8m.
• Profit before tax was $1.2m (H1 FY20: $(0.2)m).
The increase in EBITDA was partly offset by an
increase in depreciation and amortisation charge of
$2.4m, reflecting our growing customer base (and
related assets), the increase in our R&D programme
and significant investment in new generation and
business systems during FY20.
15
($m)H1 FY21H2 FY20H1 FY20
Movement
H1 FY21
vs H1 FY20
New Zealand18.518.716.22.3
Australia(0.4)(0.5)(0.8)0.4
North America5.94.33.22.7
Corporate & Development(8.9)(7.3)(6.7)(2.2)
Elimination of inter-segment EBITDA0.2---
EBITDA15.315.211.93.4
EBITDA Margin33%36%31%8%
EBITDA FLAT ON H2 FY20 DESPITE
ACCELERATING GROWTH STRATEGIES
NEW ZEALAND
Continued growth into existing customer fleets,
attracting new customers and high asset retention
resulted in a 14% increase in EBITDA on H1 FY20 for the
NZ business to $18.5m.
NORTH AMERICA
The North American EBITDA result of $5.9m is 84%
ahead of the same time last year (H1 FY20 $3.2m) as a
result of ongoing market growth and recognition of the
government loan forgiveness as grant income. ($1.6m).
Excluding the grant EBITDA grew 34% on H1 FY20.
AUSTRALIA
Continuing revenue growth (up 51% from H1 FY20) and
reduced spending as a result of COVID-19 (for example
less marketing investment) has produced the EBITDA
result of $(0.4)m.
CORPORATE
The Corporate segment’s EBITDA was $(8.9)m from
$(6.7)m in H1 FY20 reflecting the combination of
continuing accelerated investment in R&D activities.
130.9
134.4
140.0
-
25.0
50.0
75.0
100.0
125.0
150.0
H1 FY20H2 FY20H1 FY21
-
20.0
40.0
60.0
80.0
100.0
75.8
84.0
84.8
H1 FY20H2 FY20H1 FY21
17
21
13
11
8
20
11
9
7
-
5
10
15
20
25
R&D Expensed
R&D Capitalised
Total R&D
H1 FY20H2 FY20H1 FY21
AMRR increase reflects growth in recurring revenues
from new units and SaaS ARPU, partly offset by an FX
impact of $2.8m in H1 FY21.
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 has been in the range of 18-22%
in recent years. For the next two years expect to spend
24-27% as investment for growth accelerates.
MONITORING PERFORMANCE LEADING GROWTH INDICATORS
ANNUALISED MONTHLY
RECURRING REVENUE
(
$m
)
FUTURE CONTRACTED
INCOME
(
$m
)
RESEARCH AND DEVELOPMENT
AS % OF REVENUE
16
7
Restated by $2m from $86m due to SaaS revenue washup of $0.17 included in full in March which related in part to earlier periods
17
MONITORING PERFORMANCE ENTERPRISE VALUE FROM EXISTING CUSTOMER BASE
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
- Weaker USD vs NZD contributed 0.46 of the growth from H1 FY20
- Stronger USD vs NZD reduced ARPU growth (0.07) from H2 FY20
Asset Retention Rate has remained stable and continues to be a focus
through renewal programmes in key markets.
$57.60
$58.38
$58.80
-
10
20
30
40
50
60
70
H1 FY20H2 FY20H1 FY21
94.9%
95.2%
95.3%
-
20
40
60
80
100
H1 FY20H2 FY20H1 FY21
ARPUASSET RETENTION RATE
17
18
14
10
5
33
22
17
17
13
-
5
10
15
20
25
H1 FY20H2 FY20H1 FY21
CAC Capitalised
CAC Expensed
Total CAC
4.4
4.7
4.4
-
1
2
3
4
5
6
H1 FY20H2 FY20H1 FY21
CTS
MONITORING PERFORMANCE PROFITABILITY
CAC as a % of revenue would be expected to trend downwards 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.
CTS will improve over time as scale and leverage increases.
COST TO ACQUIRE CUSTOMERS
AS % OF REVENUE
COST TO SERVICE AND SUPPORT
AS % OF REVENUE
18
19
OPERATING EXPENSES
SaaS Platform
Costs
Personnel
Expenses
Sub-Contractors
Other Employment
Sales and
Marketing
Software
and Systems
Legal
Costs
Other Professional
Fees
Other
$10.0m
$5.0m
$15.0m
$25.0m
$35.0m
$20.0m
$30.0m
$40.0m
30.5
-
26.6
0.7
(0.5)
(0.3)
0.3
1.0
2.30.1
(0.1)
H1 FY20H1 FY21
0.4
SCALECAPABILITYEXPANSION
STRATEGIC
INITIATIVES
LEGAL
COSTS
Increased
Decreased
Total
19
20
PROPERTY PLANT & EQUIPMENT
• PPE spend is $4.6m lower than H1 FY20 due to lower
new unit volumes.
INTANGIBLE ASSETS
• R&D spend of $9.3m is within the signalled range of
18-22% of revenues, $5.1m of which was capitalised
as Development Assets, an increase of $0.1m on H1
FY20
• Software additions are $2.8m lower given the
investment in new generation business systems and
processes during the prior period.
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
ADDITIONS TO INTANGIBLE ASSETS
6.3
1.7
-
2.0
4.0
6.0
8.0
10.0
Total
PPE Additions*
($m)
5.7
1.5
Hardware
Asset Additions
($m)
5.0
1.8
H1 FY20H1 FY21
H1 FY20
H1 FY21H1 FY20H1 FY21
*Excluding Additions to Right of Use Assets
Hardware Asset
Additions excluding
Inventory Management
($m)
8.3
5.6
-
2.0
4.0
6.0
8.0
10.0
5.0
5.1
3.3
0.5
H1 FY20H1 FY21H1 FY20H1 FY21H1 FY20
Total Intangible
Asset Additions
($m)
Development Asset
Additions
($m)
Software Asset
Additions
($m)
21
5.0
4.6
5.1
3.2
2.8
4.2
8.2
7.4
9.3
-
2.0
4.0
6.0
8.0
10.0
H1 FY20H1 FY21H2 FY20
R&D ExpensedR&D Capitalised
IncreaseDecreaseTotal
32.7
5.1
(3.8)
34.0
-
10.0
20.0
30.0
40.0
FY20Additions
AmortisationH1 FY21
CONTINUED INVESTMENT IN R&D
CRITICAL TO DELIVERING RELIABILITY, SCALABILITY, QUALITY AND GROWTH
RESEARCH AND DEVELOPMENT
(
$m
)
MOVEMENT IN DEVELOPMENT ASSETS
(
$m
)
21
22
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
-
CORP/ELIM EBITDA
Group Free Cash Flows HY21
Hardware & Accessories +/_
Increase
Decrease
Total
18.5
(1.0)
(0.6)
20.1
(8.9)
4.7
5.9
(0.7)
(0.1)(0.1)
(0.1)
(0.1)
(0.4)
0.3
(1.5)
-
---
(0.2)
(5.1)
(0.5)
(1.0)
0.3
$5.6m investing
for future growth
and scalability
CDE EBITDA
Other PPE
Development Assets
Software Assets
Interest Paid
NEW ZEALAND
$15.4m (H1 FY20: $11.2m)
NORTH AMERICA
$5.0m (H1 FY20: $1.5m)
AUSTRALIA
($0.3m) (H1 FY20: $(0.9)m)
CORPORATE & DEVELOPMENT
($15.4m) (H1 FY20: $(17.4)m)
Other Operating Cash Flows
EBITDA
Other PPE
CA Assets
H&A Assets
CF Assets
EBITDA
Other PPE
CA Assets
H&AH&A
CF Assets
EBITDA
Other PPE
CA Assets
CF Assets
FREE CASH FLOW ANALYSIS BY SEGMENT
8
8
Group Free Cash Flows (FCF) for the purpose of this analysis refers to Operating Cash Flows Less Investing Cash Flows.
9
This FCF by market analysis provides an indicative view of FCF. Note that this does not represent actual FCF by market: Hardware & Accessories under Construction (inventories held) are presented in total and Other Operating Cash Flows (non-cash and working capital movements) are presented in
total and not allocated to specific seg ments. These amounts relate to all operating segments.
H&A Assets - Hardware & Accessory Assets • CA Assets - Customer Acquisition Assets • CF Assets - Contract Fulfilment Assets • CDE EBITDA - Corporate, Development and Elimination EBITDA • H&A under Construction - Hardware & Accessories under Construction
22
23
YEAR ENDEDH1 FY21H2 FY20H1 FY20
Movement
H1 FY21
vs H1 FY20
Cash flows from operating activities
Other operating cash flows15.314.511.34.0
Interest paid(1.0)(1.3)(1.4)0.4
Net cash inflow from operating activities14.313.29.94.4
Cash flows from investing activities
Property, Plant and Equipment (including hardware assets)(1.7)(5.3)(6.3)4.6
Intangible Assets(5.7)(8.2)(8.3)2.6
Contract Fulfillment and Customer Acquisition Assets(2..3)(3.9)(3.9)1.6
Net cash outflow from investing activities(9.7)(17.4)(18.5)8.8
Cash flows from financing activities
Bank loans1.8(17.1)18.3(16.5)
Issue of Equity42.0--42.0
Cost of raising capital(2.0)--(2.0)
Other financings cash flows(0.8)14.5(15.6)14.8
Net cash inflow/(outflow) from financing activities41.0(2.6)2.738.3
Net increase/(decrease) in cash held45.6(6.8)(5.9)51.5
Cash at beginning of the financial period3.410.216.1(12.7)
Closing cash and cash equivalents49.03.410.238.8
CASH FLOW STATEMENT (NZ$m)
• For H1 FY21, EROAD was Free Cash Flow positive
• Investing cash flows fell from $18.5m to $9.7m
reflecting the investment in business systems and
processes in H1 FY20 and the lower spend on
hardware units due to lower growth in H1 FY21
• Financing cash flows grew as result of $42m
raised via placement. A further $11m was raised
via share purchase plan which completed after
period end.
24
AS AT PERIOD ENDH1 FY21FY20Movement
Cash49.03.445.6
Restricted Bank Account9.214.0(4.8)
Costs to Acquire and Contract Fulfilment Costs5.55.9(0.4)
Other9.110.7(1.6)
Total Current Assets72.834.038.8
Property, Plant and Equipment34.837. 4(2.6)
Intangible Assets42.942.10.8
Costs to Acquire and Contract Fulfilment Costs4.14.8(0.7)
Other7. 57. 5-
Total Non-Current Assets89.391.8(2.5)
TOTAL ASSETS162.1125.837. 3
Payables to Transport Agencies9.213.9(4.7)
Contract Liabilities7. 28.2(1.0)
Borrowings37. 635.81.8
Other Liabilities16.316.6(0.3)
Total Liabilities70.374.5(4.2)
NET ASSETS91.851.340.5
BALANCE SHEET (NZ$m)
• Cash has increased by $45.6m as a result of the
placement during September and the free cash
positive result for H1 FY21 of $4.7m
• PPE has reduced as depreciation of hardware assets
has exceeded the value of new hardware assets
capitalised from growth in the period
• The decrease in other assets within current assets
category is primarily as a result of the increase in
our doubtful debt provision ($0.9m) reflecting
uncertainty due to the current economic conditions
• Contract Fulfilment and Customer Acquisition Assets
decreased by $0.4m due to subdued growth during
the 6 months as a result of COVID-19 lockdowns
• Intangibles increase relates to the ongoing
capitalisation of R&D development
25
GROWTH
OPPORTUNITY
AND OUTLOOK
Steven Newman
Chief Executive Offi cer
25
26
GLOBAL TREND
FOR TELEMATICS
• Transportation and logistics companies face
significant change and increasingly require telematics
solutions that give visibility, data and insights to
manage vehicles
• As the cost to track reduces, companies want to
track and manage all their mobile and remote assets,
beyond trucks, trailers and cars
• During recessions, adoption of telematics continues
to increase as businesses look to reduce fleet related
costs and improve supply chain
• Government supported/mandated regulatory
telematics solutions are forecasted to be a significant
growth driver forcing telematics adoption over the
next five+ years
• Many global enterprise businesses want a global
solution but which also addresses their localised needs
• Continued growth in customers ESG reporting
requirements will drive demand for low-cost
telematics solutions
• Declining transportation revenues due to a changing
vehicle fleet (increasing fuel efficient and electric
vehicles) and continued growth in road congestion will
accelerate moves to road pricing globally
26
27
TRENDS WITHIN
OUR MARKETS
NEW ZEALAND
• Health and Safety remain driver of telematics
adoption
• Many enterprise businesses are requiring sub-
contractors to use their technology solutions
to manage Health and Safety obligations
• Video telematics is seen as an important
added service to improve Health and Safety
outcomes
NORTH AMERICA
• Almost 100% adoption of telematics in
interstate vehicles over 10,000 pounds,
following the Federal 2017-19 ELD mandate
• Expect many Small to Medium Businesses to
upgrade to more than an ELD only solution
when their 36-month contracts are renewed
• Expect a significant number of vehicles
to upgrade, following AT&T & 3G network
shutdown in Feb 2022
• Many insurers requiring video telematics
operators to get acceptable premiums
• 2020-2021 National mileage-based user fee
truck pilot of the Eastern Transportation
Coalition went live on October 1st 2020
AUSTRALIA
• Chain of Responsibility obligations were
expanded in October 2018.
• Expect further significant regulatory change
over next 5 years with Electronic Work Diary
(EWD), National ERUC pilot and from the
review of the Heavy Vehicle National Law
• Video telematics is seen as an important
added service to improve Health and Safety
outcomes
• Increasingly, enterprise businesses operating
across Australia and New Zealand see it as
one market, requiring one solution
27
28
NOW IS THE TIME
TO BE BOLD
• Extending the platform to focus on winning
medium and enterprise customers in North
America and Australia
• Increasing scalability of the platform to enable
EROAD to target larger enterprise fleets
• Developing Integration & Data Analytics
capability to provide customers innovative
solutions enabling greater insights,
benchmarking and targeted action
• Increased, focused and effective sales and
marketing is critical to maximise the return on
investment from investing in these products
and capability
28
29
R&D INVESTMENT
55%
New to EROAD
8%
Quality/Bugs
2%
New to World
74%
4%
Learning/Future
14%
Reliability, Availability,
Serviceability
and Scalability
16%
Planned
Enhancements
1%
Unplanned
Enhancements
CUSTOMER FACING
R&D
INVESTMENT
PROFILE
10
For the six months ended 30 September 2020.
• R&D is critical in developing new products and services to
retain customers, open up the addressable market, grow
connected vehicles and grow average SaaS monthly revenue
per unit
• Target ~60% of R&D spend on customer facing elements
• Executed fi ve key launches in H1 FY21 as a result of previous
R&D investment
• In recent years spent 18-22% of revenue on R&D.
For the next two years EROAD expects to spend 24-27%
of revenue as it accelerates its investment for growth
• Focused on product development that opens up the
addressable market for enterprise customers
29
30
EROAD
DAY LOGBOOK
WHAT IS THE PRODUCT
• Simplifies fatigue management by enabling drivers to capture
work and rest hours via a smart phone or tablet
LAUNCH
• Q1 FY21 in New Zealand
BENEFIT TO CUSTOMERS
• Reduce the administrative burden of managing driver
compliance. ‘EROAD Day Logbook’ removes paper from the
cab, simplifies record keeping and provides investigative tools
to examine the driver’s workday. Establishing compliance
confidence with an efficient workflow to manage driver
violations and keeps record of actions to resolve them.
BENEFIT TO EROAD
• It provides a further opportunity to grow ARPU
and aids in customer retention.
UPTAKE
• Sold 1,373 ‘EROAD Day Logbook’ subscriptions from launch to
30 September
EROAD DAY LOGBOOK VIDEO:
https://vimeo.com/431610724
31
EROAD GO
WHAT IS THE PRODUCT
• A workflow application that connects with the transport
management system
LAUNCH
• Q2 FY21 in North America
BENEFIT TO CUSTOMERS
• Improve communications between dispatch and the driver,
tracking proof of delivery and integrate into customer
transportation management systems (generally required for fleet
sizes over 100 trucks)
BENEFIT TO EROAD
• Opens up addressable market
EROAD GO VIDEO:
https://vimeo.com/460661683
32
EROAD CLARITY
DASHCAM
WHAT IS THE PRODUCT
• Dual facing dashcam. Integration of dashcam, and the Ehubo
data into myEROAD web platform means the driver statistics,
vehicle maintenance, and now video footage can all be found in
MyEROAD Replay.
LAUNCH
• Held interactive technology launch event in October with almost
200 attendees. Limited customer trial in Q3, with full ramp up in
Q4 across all three markets
BENEFIT TO CUSTOMERS
• Lower insurance premiums in North America and further helps
meet Health & Safety obligations in NZ and AU
BENEFIT TO EROAD
• Further opens up addressable market in North America across
all segments, opportunity to grow ARPU and retention tool in
all markets
EROAD CLARITY DASHCAM VIDEO:
https://vimeo.com/479033131
33
MYEROAD FLEET
MAINTENANCE
WHAT IS THE PRODUCT
• Simplifies vehicle maintenance with automated service
scheduling based on time lapsed, distance travelled or engine
hours, plus a full service-history archive.
LAUNCH
• Q2/Q3 and Q4 in FY21 in New Zealand and Australia
BENEFIT TO CUSTOMERS
• Intends to allow fleets to be proactive about maintenance and
optimise costs. Brings together the whole ecosystem around
vehicle servicing.
BENEFIT TO EROAD
• Mainly retention tool
MYEROAD FLEET MAINTENANCE VIDEO:
https://vimeo.com/412941612
H2 FY21 AND
FY22 OUTLOOK
H2 FY21
• EROAD anticipates a small increase in revenue compared to the first half
• EBITDA is anticipated to be similar to the first half’s figure (adjusted for
one-off items) reflecting the acceleration of product development and
increased sales and marketing costs associated with the launches of key
products in the second half of FY21.
FOR FY22
• EROAD remains confident and ambitious about the company’s future
growth prospects.
• EROAD anticipates that the percentage revenue growth in FY22 will
strengthen, but not be at the level experienced in FY20.
• In New Zealand, EROAD expects similar growth to the last 4 years
• In North America, EROAD is targeting an increased addressable
market through improved product market fit, to deliver increased
unit growth
• In Australia, growth during the next 2 years will come predominantly
from an enterprise pipeline of 15-20k vehicles
• As EROAD continues to accelerate new product delivery for future
growth in FY23 and FY24, it anticipates spending 24-27% of revenue
on R&D during FY22
• However, the company anticipates EBITDA margin to be maintained
but improving at the end of FY22, to provide further increased
EBITDA margin.
34
35
QUESTIONS
& ANSWERS
35
36
YEAR ENDEDH1 FY21H1 FY20
Profit/(Loss) after tax for the year attributable to the shareholders1.0(0.1)
Add/(less) non-cash items
Tax asset recognised(0.3)(0.1)
Depreciation and amortisation12.910.5
Other non-cash expenses/(income)(0.5)(1.4)
Add/(less) movements in other working capital items:
Decrease/(increase) in trade and other receivables1.6(0.9)
Increase/(decrease) in current tax receivables 0.4-
Increase/(decrease) in contract liabilities(1.0)0.1
Increase /(decrease) in trade payables, interest payable and accruals0.21.8
Net Cash from operating activities14.39.9
RECONCILIATION OF PROFIT TO MOVEMENT IN CASH (NZ$m)
36
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 3 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 2 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 2 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
WHO IS EROAD?
38
39
EROAD’S PURPOSE IS
SAFER, MORE
PRODUCTIVE ROADS
SAFER
• EROAD solutions have had a direct
impact on reducing speed by
customers, a significant contributor
to accidents and serious injuries
• Vehicle service and maintenance
monitoring helps our
customers ensure their vehicles are
safe
• Our driver management services
improve driving behaviour
IMPROVED
PRODUCTIVITY
• Provide tools to help our customers
achieve greater fuel efficiency and
therefore reduce emissions
• EROAD solutions reduce compliance
costs and improve fleet productivity
• Road network usage analytics
informs infrastructure planning
The above graph shows the reduction in over speed events over time as
product enhancements have been added.
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
-
EROAD CUSTOMERS REDUCED FREQUENCY
OF SPEEDING BY 56% SINCE 2015
(8.3B KILOMETERS TRAVELLED)
39
40
REGULATORY
TELEMATICS
EVERY COUNTRY
IS LOOKING TO
SOLVE THE SAME
TRANSPORTATION ISSUES
40
HOW DO WE
ENSURE
VEHICLES ARE
FIT FOR USE?
HOW DO WE PAY FOR
AND MAINTAIN
ROADING
INFRASTRUCTURE?
40
HOW DO WE
BEST MANAGE
DRIVER FATIGUE?
HOW DO WE
IMPROVE
HEALTH AND SAFETY
ON ROADS?
40
41
TO DO GREAT
REGULATORY
TELEMATICS YOU
NEED A GREAT
PLATFORM
SECURE, RELIABLE,
ACCURATE
Highly reliable network, paired with
advanced ping rates – ensuring
visibility for every trip
INDUSTRY-LEADING
SERVICE UPTIME
Platform available therefore reducing
business delays for customers
DASHCAM
IN-VEHICLE HARDWARE
DRIVER’S
LOGBOOK
MyEROAD
EHUBO2
SIMPLIFIED
COMPLIANCE
Easy to adopt and use
PROACTIVE
CUSTOMER SERVICE
Responsive, knowledgeable and
friendly customer service team
99.99%
11
IN-VEHICLE HARDWAREIN-VEHICLE HARDWAREIN-VEHICLE HARDWAREIN-VEHICLE HARDWAREIN-VEHICLE HARDWAREIN-VEHICLE HARDWARE
(Launch Q4 FY21)
11
12 months ended 13 November 2020
41
42
PLATFORM OVERVIEW
MyEROAD
MyEROAD provides customers with a range
of real time reports and analytical reports for
managing their fl eets and drivers effi ciently
and safely.
MyEROAD integrates into back
offi ce – logistics and business insights.
MyEROAD platform provides fl eet operators
with the following tools and services:
REGULATORY COMPLIANCE
Software varies across jurisdicitions in line
with diff ering legislative requirements for
compliance
DRIVER MANAGEMENT
& ROAD SAFETY
Monitor driver fatigue and behaviour
FLEET MANAGEMENT
Maps, tracking and utilisation analytics.
USED BY DISPATCH OPERATORS, FLEET MANAGERS,
SAFETY OFFICERS AND OPERATIONS
42
43
PLATFORM OVERVIEW
• EROAD’s main hardware product is a dashboard
mounted device (Ehubo) connected to a cloud
based data and analytics platform (MyEROAD)
• Ehubo is a regulatory approved device that uses
GPS and other onboard sensors to measure time,
distance, location, and other vehicle operational
data
• The Ehubo continually transmits data via secure
cellular networks to MyEROAD
IN CAB DRIVER INTERFACE
LOGBOOKEHUBO
INSPECT
• A unifi ed in-Cab Driver
Experience
• Compliance as easy as
cruise control
• Ongoing driver coaching
& gamifi cation
Allows drivers to carry out
pre and post trip vehicle
inspections – and record
any defects to be fi xed,
or maintenance to be
completed.
43
44
WHY OUR
CUSTOMERS
CHOOSE US
PROACTIVE
CUSTOMER SERVICE
RELIABLE
AND ACCURATE
44
EASY
TO USE
DIFFERENTIATED
SOLUTIONS
ASSET RETENTION RATE
95
%
~
99.99
12
%
UPTIME
12
For the 12 months ended 13 November 2020
13
ELD Ratings supplies ratings of 33 of the top tier ELD solution providers out
of 313 that supply a solution that is self certifi ed with the FMCSA
44
“EROAD is one of the most dependable, durable, and accurate systems in the business.
It’s easy to use, aff ordably priced, and has been independently tested for ELD mandate
compliance by the PIT Group research fi rm.”
ON ELD RATINGS
1/33
13
#
45
A COMPELLING ROI CASE
EXAMPLE OF A LARGE
CUSTOMER’S EROAD JOURNEY
FUEL SAVINGS OF APPROX.
24.67
20132017NOW2014 – 20162018 – 2020
114,000
RUC SAVINGS OF
92%
REDUCTION IN OVERSPEED EVENTS
PER 100KM SINCE
EROAD INSTALLATION
OF EHUBO2
PER MONTH
PER HEAVY
VEHICLE
PER
ANNUUM
6
SAVING
FTE
WITH
ERUC
$
~
~
~
~
$
BUILDING OUR CUSTOMERS’
TELEMATICS JOURNEY,
TOGETHER
Customer saw
value in eRUC and
off-road solutions
Selected as
preferred supplier
Connected ~200
Ehubo1 units and
TUBOs (trailer
tracking solution)
across one regional
division
Expanded across
regional divisions,
increasing the number of
Ehubo1 units connected
Introduced Driver ID,
Fuel Card integration and
reporting Elocate onto
construction assets
Won RFP on providing full
solution nationwide
Heavy Vehicles upgraded
Driver ID, Safe Driver and
Posted Speed
Light Vehicles started to be
connected following launch
of Ehubo2 on Driver ID, Safe
Driver and Posted Speed
Assets upgraded to Driver ID,
Fuel on box and Idle alert.
Sub-contractors of
customers were mandated
to have EROAD fitted for
transparency
Upgraded majority Ehubo1
units to Ehubo2
Etrack wired replacing
Elocate where waterproof
unit required
~4k connected units
‘EROAD Where’
and ‘Logbook’
trial underway
45
46
EROAD CUSTOMERS
New Zealand
69%
North America
29%
Australia
2%
Construction &
Civil Engineering
30%
Services & Trade
8%
Other
18%
Agriculture/Forestry
9%
Government
4%
Utlities
2%
Wholesale distribution
4%
Freight &
Road Transport
25%
Small to
Medium
57%
Enterprise
43%
CONTRACTED
UNITS
by region
CONTRACTED
UNITS
by business size
CONTRACTED
UNITS
by industry
14
14
As at 2 September 2020
15
Enterprise is defined as fleet sizes > 150 for New Zealand and Australia > 500 for North America
• Customer base is diverse across region, business size and industry
• EROAD markets and sells its products in New Zealand, North America
and Australia
• Market leader in New Zealand, with a broad customer base of both
heavy and light vehicle fleets across most industries
• Established presence in North America, concentrated in heavy
transport across targeted industries and regions
• Growing presence in Australia as EROAD builds its brand and
leverages Trans Tasman opportunities
• Our strategy is focused on increasing enterprise customers in
North America and Australia
46
47
RECURRING SAAS
REVENUE MODEL
EROAD DRIVEN BY RECURRING SAAS REVENUE
SaaS Revenue92%
Grant revenue4%
Other revenue1%
Transaction fee revenue3%
REVENUE
COMPOSITION
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
and weight-mile tax in North America
16
For the six months ended 20 September 2020 (H1 FY21)
• EROAD generates SaaS revenue through:
• sale and rental of hardware
• the licensing of its software on a monthly subscription basis; and
• the installation of its Ehubo hardware device.
• EROAD has a SaaS based revenue model (94% of FY20 revenue).
• EROAD typically bundles the hardware/software together under a user contract
with a typical length of 36 months.
• For H1 FY21, EROAD generated monthly SaaS ARPU of $59, an asset retention
rate of 95% and ended the period with 122k connected units
• EROAD invested 19% of revenue in R&D in FY20 to enhance its product
off ering, grow ARPU and maintain customer retention and win new small to
medium business and enterprise customers.
47
48
GRAHAM
STUART
17,18
Chairman,
Independent Director
BARRY
EINSIG
18
Independent Director
TONY
GIBSON
17,18
Independent Director,
Chairman of
Remuneration, Talent and
Nomination Committee
SUSAN
PATERSON
17,18
Independent Director,
Chair of the Finance, Risk
and Audit Committee
STEVEN
NEWMAN
Executive Director / CEO
OUR BOARD
17
Member of Finance, Risk and Audit Committee.
18
Member of Remuneration, Talent and Nomination Committee.
Note: Recruiting is underway for a Chief Technology Officer, to replace Jarred Clayton
THE RIGHT
TEAM FOR
GROWTH
Over the last 2 years:
• Board has been going through
a period of renewal with Susan
Paterson and Barry Einsig
appointed.
• Strengthened Executive Team
in place: Key hires in Finance,
Marketing, Operations, People &
Culture and Product.
• Deep capability building in key
areas, including R&D, M&A, Sales
and Customer Success.
• Continued focus on strengthening
capability and culture
STEVEN
NEWMAN
Executive Director / CEO
MIKE SWEET
Chief People Officer
ALEX BALL
Chief Financial Officer
GENEVIEVE
TEARLE
Chief Marketing Officer
and General Manager
EROAD Where
MATT DALTON
EVP Operations
SARAH
THOMPSON
Chief Product Officer
NORM ELLIS
President – North America
TONY
WARWOOD
Executive General
Manager
Australia & New Zealand
MARK HEINE
EVP General Counsel
and Company Secretary
EXECUTIVE TEAM
For full bios, refer to EROAD’s FY20 Annual Report on pages 63-64 for the Board and pages 61-62 for the ExecutiveTeam
49
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
ASX & NZX: ERD • investors@eroad.com • eroadglobal.com/investors
For further information please contact:
Alex Ball, Chief Financial Officer
alex.ball@eroad.com • + 64 029 772 5631
---
EROAD
2021 INTERIM
REPORT
32
LETTER FROM THE CHAIRMAN AND CEO 2021 INTERIM REPORT EROADEROAD 2021 INTERIM REPORT LETTER FROM THE CHAIRMAN AND CEO
LETTER FROM
THE CHAIRMAN
AND CEO
DEAR SHAREHOLDER
We are pleased to report our financial results
for the six months ended 30 September 2020
(H1 FY21). During the period, we both grew
and operated effectively despite COVID-19
restrictions, and we also accelerated our
growth strategies.
We believe that the time to be bold is now.
Accordingly, we are increasing investment
in our platform and products to capture the
significant growth opportunity for EROAD
once market uncertainty recedes.
Our customers are looking for innovative
telematic solutions to reduce cost and
improve efficiency within their businesses
and we plan to deliver these.
54
LETTER FROM THE CHAIRMAN AND CEO 2021 INTERIM REPORT EROADEROAD 2021 INTERIM REPORT LETTER FROM THE CHAIRMAN AND CEO
$24.2
$28.5
$32.9
$38.5
$42.7
$45.8
-
10
20
30
40
50
H2 FY18H1 FY19
H2 FY19H1 FY20
H2 FY20
H1 FY21
REVENUE
+19%
Revenue increased period on period by 19%
from $38.5m to $45.8m, reflecting both the
growth in contracted units from 108,414 to
122,193 as well as an increase in Average
Monthly Revenue per Unit (ARPU) from
$57.60 to $58.80. In the same period our asset
retention rate remained steady at 95%. Our
Annualised Monthly Recurring Revenue metric
(AMRR) provides a forward view of revenue.
This increased from $84.0m at 31 March 2020
to $84.8m as at 30 September 2020, reflecting
the growth in both new units and SaaS
Average Revenue per Unit, partly offset by
foreign exchange translation impacts.
Operating expenditure increased from
$26.6 million to $30.5 million period on
period reflecting increased research and
development operating expenditure and
further ongoing spend on initiatives to deliver
longer-term improvements in operating
leverage. As a result, EBITDA increased by
29% to $15.3m.
We continue to see substantial and increased
future growth opportunities and, for that
reason, we accelerated our investment in
research and development in this period.
In the half year to 30 September 2020, a
total of $9.3m was invested in research and
development, representing 20% of revenue.
Of this amount, $5.1m was capitalised and
$4.2m of previously capitalised research and
development was expensed and amortised.
$3.4
-
5
10
15
20
$7.1
$6.2
$9.4
$11.9
$15.2
H2 FY20
$15.3
H1 FY21H2 FY18H1 FY18H1 FY19H2 FY19H1 FY20
EBITDA
+29%
New Zealand was the least impacted of our
markets by COVID-19 restrictions, and we
saw growth rates in this market return to
pre COVID-19 levels relatively quickly once
restrictions were lifted. New Zealand revenue
increased by 13% period on period to $28.9m
and EBITDA increased period on period by
14% to $18.5m. Since 31 March 2020 EROAD
has added 4,160 units in New Zealand. This
growth was driven predominantly from
new customers across a range of industries
with medium sized fleets, as well as further
extension into the fleets of several larger
existing customers.
Revenue for North America increased by
$4.5m to $16.4m and EBITDA increased
period on period from $3.2m to $5.9m.
North America’s growth slowed, with EROAD
adding only 1,292 units since 31 March 2020,
reflecting the challenging macro-economic
conditions. The launch of ‘EROAD Go’ and
‘EROAD Clarity Dashcam’ are considered
critical steps in further expanding the North
America addressable market and being
able to win more medium and enterprise
customers.
Growth in Australia was also heavily impacted
by COVID-19 restrictions, particularly in
Melbourne. 253 units were added by EROAD
since 31 March 2020. Revenue for the
Australian business was $0.8m, compared
to H1 FY20 of $0.3m. EBITDA was $(0.4)m,
as EROAD continued to invest into this new
market to support future growth.
76
EROAD believes that further growth in
contracted unit numbers and ARPU, as well
as retaining customers, will be achieved by
continuing to launch innovative products into
our markets.
During the period we launched our new
‘EROAD Day Logbook’ for New Zealand.
This simplifies fatigue management by
enabling drivers to capture work and rest
hours via a smart phone or tablet. EROAD
customers can then use the investigative
tools on the web portal to examine the
driver’s workday, enabling easier compliance
and reporting. Since the launch in Q1 FY21,
EROAD has sold 1,373 ‘EROAD Day Logbook’
subscriptions by 30 September 2020.
EROAD LOGBOOK VIDEO
LAUNCHING
INNOVATIVE
PRODUCTS TO SOLVE
OUR CUSTOMERS’
PROBLEMS
EROAD 2021 INTERIM REPORT LETTER FROM THE CHAIRMAN AND CEOLETTER FROM THE CHAIRMAN AND CEO 2021 INTERIM REPORT EROAD
In September 2020, ‘EROAD Go’, a mobile
workflow application that connects with
customers’ transport management systems,
was launched in North America. This product
allows critical data to flow between the driver,
dispatch, safety, compliance, accounts and back
office, which allows real-time management
of logistics, routing between deliverables and
monitoring driver safety and compliance. This
improves compliance, safety and accountability
outcomes for the customer, in addition to
improving cash-flow.
The launch of ‘EROAD Go’, together with the
Q3 release of ‘EROAD Clarity Dashcam’, are
considered critical steps in further expanding
the North America addressable market and
increasing EROAD’s ability to win more medium
and enterprise customers
EROAD GO VIDEO
EROAD held virtual launch events for its
‘EROAD Clarity Dashcam’ during October
2020 in New Zealand and Australia. Attendees
responsible for fleet management, road safety
and asset management logged on to EROAD’s
interactive technology event and product
launch. The ‘EROAD Clarity Dashcam’, which is
fully integrated into EROAD’s Ehubo product, is
designed to help improve safety, enabling driver
coaching and incident prevention and, in cases
where an accident has happened, provides
proof of facts. We anticipate strong demand for
this product as our customers look to improve
safety and reduce their insurance premiums by
demonstrating their vehicle safety.
The introduction of the ‘EROAD Clarity
Dashcam’ into EROAD’s product offering from
Q3 FY21 will allow EROAD to grow ARPU and
retain customers across all markets.
EROAD CLARITY DASHCAM VIDEO
1
ELD ratings supplies ratings of 33 of the top tier ELD solution providers out of 313 that supply a solution that is self
certified with the FMCSA
EROAD’s Electronic
Logging Device (ELD)
rating improved from
#2 to #1 on ELD Ratings.
1
1
#
98
EROAD 2021 INTERIM REPORT LETTER FROM THE CHAIRMAN AND CEO
BOARD UPDATE
Both Michael Bushby and Candace Kinser
retired from the EROAD Board in July this
year. We would like to take this opportunity
to thank them both for their contribution.
As part of our succession planning, we have
been fortunate to have Barry Einsig and
Susan Paterson join the Board over the last
two years. The Board continues to review its
composition and skills and will update you all
on any changes in due course.
IMPROVING CAPITAL
STRUCTURE AND
INVESTING FOR GROWTH
In a significant milestone for the company,
EROAD was admitted onto the Australian
Stock Exchange (ASX) on 16 September
as a Foreign Exempt Listing. The Board
determined that it was also the appropriate
time to raise capital to accelerate the
execution of our growth strategies, increase
liquidity and to broaden our investor base. We
thank EROAD shareholders for their strong
support in successfully raising $53 million
via the private placement ($42 million) and
an oversubscribed share purchase plan ($11
million). These funds will be used to extend
and increase the scalability of the platform
to focus on winning medium and enterprise
customers in North America and Australia,
developing integration and data analytics
capability further and increase sales and
marketing activity.
H2 FY21 AND
FY22 OUTLOOK
Looking ahead to the second half of the
financial year, EROAD is anticipating a small
increase in revenue compared to the first
half. EBITDA is anticipated to be similar to
the first half’s figure (adjusted for one-off
items) reflecting the acceleration of product
development and increased sales and
marketing costs associated with the launches
of key products.
For FY22, EROAD anticipates that the
percentage revenue growth in FY22 will
strengthen, but not be at the level experienced
in FY20. In New Zealand, EROAD expects
similar growth to the last four years. In North
America, EROAD is targeting an increased
addressable market through improved
product market fit, to deliver increased unit
growth. In Australia, growth during the next
2 years will come predominantly from an
Enterprise pipeline of 15-20,000 vehicles. As
EROAD continues to accelerate new product
delivery for future growth in FY23 and FY24,
it anticipates spending 24-27% of revenue
on R&D during FY22. However, the company
anticipates EBITDA margin to be maintained
but improving at the end of FY22, to provide
further increased EBITDA margin.
LETTER FROM THE CHAIRMAN AND CEO 2021 INTERIM REPORT EROAD
Thank you for your continued support of EROAD
and we look forward to updating you on our progress
in May with the release of our FY21 financial results.
Busfleet
EROAD Customer, Australia
Graham Stuart
Chairman
Steven Newman
Chief Executive Officer
NON-GAAP MEASURES
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 Adjusted EBITDA, 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 37 of
the H1 FY21 investor presentation.
All numbers relate to the six months ended 30 September 2020 (H1 FY21) and comparisons relate to the six
months ended 30 September 2019 (H1 FY20), unless stated otherwise. All dollar amounts are in NZD.
1110
SECTION 2021 INTERIM REPORT EROAD
11
FINANCIAL STATEMENTS • CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 2021 INTERIM REPORT EROAD
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2020
GROUP30 SEPTEMBER 202030 SEPTEMBER 2019
Notes
Unaudited
$M's
Unaudited
$M’s
Revenue245.838.5
Operating Expenses3(30.5)(26.6)
Earnings before interest, taxation, depreciation
and amortisation
15.311.9
Depreciation of Property, Plant and Equipment8(4.6)(4.0)
Amortisation of Intangible Assets9(4.8)(3.6)
Amortisation of Contract and Customer Acquisition Assets(3.5)(2.9)
Earnings/(loss) before interest and taxation2.41.4
Finance income0.2 -
Finance expense(1.4) (1.6)
Net financing costs(1.2)(1.6)
Profit/(Loss) before tax 1.2(0.2)
Income tax (expense)/benefit11(0.2)0.1
Profit/(Loss) from continuing operations1.0(0.1)
Profit/(Loss) after tax for the period attributable
to the shareholders
1.0(0.1)
Items that are or may be reclassified subsequently to profit
or loss
Other comprehensive income(0.7)(0.2)
Total comprehensive profit/(loss) for the period0.3(0.3)
Earnings/(Loss) per share - Basic (cents) 1.49(0.16)
Earnings/(Loss) per share - Diluted (cents) 1.49(0.16)
The above Condensed Consolidated Statement of Comprehensive Income should be read in conjunction with the
accompanying notes.
FINANCIAL
STATEMENTS
1312
SECTION 2021 INTERIM REPORT EROADEROAD 2021 INTERIM REPORT SECTION
13
12
EROAD 2021 INTERIM REPORT FINANCIAL STATEMENTS • CONSOLIDATED STATEMENT OF FINANCIAL POSITIONFINANCIAL STATEMENTS • CONSOLIDATED STATEMENT OF FINANCIAL POSITION 2021 INTERIM REPORT EROAD
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2020
GROUP30 SEPTEMBER 202031 MARCH 2020
Notes
Unaudited
$M's
Audited
$M’s
CURRENT ASSETS
Cash and cash equivalents749.03.4
Restricted bank accounts79.214.0
Trade and other receivables9.110.7
Contract fulfilment costs3.13.2
Costs to obtain contracts2.42.7
Total Current Assets72.834.0
NON-CURRENT ASSETS
Property, plant and equipment834.837. 4
Intangible assets942.942.1
Contract fulfilment costs2.42.7
Costs to obtain contracts1.72.1
Deferred tax assets7. 57. 5
Total Non-Current Assets89.391.8
TOTAL ASSETS162.1125.8
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
AS AT 30 SEPTEMBER 2020
GROUP30 SEPTEMBER 202031 MARCH 2020
Notes
Unaudited
$M's
Audited
$M’s
CURRENT LIABILITIES
Borrowings126.52.2
Trade payables and accruals7. 88.2
Payables to transport agencies79.213.9
Current tax payable0.4-
Contract liabilities104.43.6
Lease liabilities1.01.0
Employee entitlements2.31.8
Total Current Liabilities31.630.7
NON-CURRENT LIABILITIES
Borrowings
1231.133.6
Contract liabilities
102.84.6
Lease liabilities4.85.3
Deferred tax liabilities-0.3
Total Non-Current Liabilities38.743.8
TOTAL LIABILITIES70.374.5
NET ASSETS91.851.3
EQUITY
Share capital6120.780.7
Translation reserve(3.6)(2.9)
Accumulated losses(25.3)(26.5)
TOTAL SHAREHOLDERS' EQUITY91.851.3
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Chair of the Finance, Risk and Audit Committee, 26 November 2020
Chairman, 26 November 2020
1514
SECTION 2021 INTERIM REPORT EROADEROAD 2021 INTERIM REPORT SECTION
15
14
EROAD 2021 INTERIM REPORT FINANCIAL STATEMENTS • CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFINANCIAL STATEMENTS • CONSOLIDATED STATEMENT OF CASH FLOWS 2021 INTERIM REPORT EROAD
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2020
GROUP30 SEPTEMBER 202030 SEPTEMBER 2019
Notes
Unaudited
$M’s
Unaudited
$M’s
Cash flows from operating activities
Cash received from customers 46.3 37. 6
Payments to suppliers and employees (31.0) (26.3)
Interest paid (1.0) (1.4)
Tax (paid)/received - -
Net cash inflow from operating activities 14.3 9.9
Cash flows from investing activities
Payments for investment in property, plant & equipment (1.7) (6.3)
Payments for investment in intangible assets (5.7) (8.3)
Payments for investment in contract fulfilment assets (1.6) (1.8)
Payments for investment in customer acquisition assets (0.7) (2.1)
Net cash outflow from investing activities (9.7) (18.5)
Cash flows from financing activities
Receipts from bank loans 1.8 18.3
Repayments of bank loans - (15.4)
Cash (outflow)/inflow from lease liability (0.8) (0.2)
Receipts from issue of equity 42.0 -
Payments for costs of raising equity (2.0) -
Net cash inflow from financing activities 41.0 2.7
Net increase/(decrease) in cash held 45.6 (5.9)
Cash at beginning of the financial period 3.4 16.1
Closing cash and cash equivalents 49.0 10.2
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2020
GROUP
Share
Capital
Retained
Earnings
Translation
Reserve
Total
Notes
Unaudited
$M’s
Unaudited
$M’s
Unaudited
$M’s
Unaudited
$M’s
BALANCE AS AT 1 APRIL 2019 (AUDITED) 80.6 (27.7) (1.7) 51.2
Proft/(Loss) after tax for the period - (0.1) - (0.1)
Other comprehensive loss - - (0.2) (0.2)
Total comprehensive loss for the period,
net of tax
- (0.1) (0.2) (0.3)
Equity settled share-based payments 0.1 0.2 - 0.3
Share capital issued6 - - - -
Balance at 30 September 2019 (Unaudited) 80.7 (27.6) (1.9) 51.2
BALANCE AS AT 1 APRIL 2020 (AUDITED) 80.7 (26.5) (2.9) 51.3
Proft/(Loss) after tax for the period
-
1.0
-
1.0
Other comprehensive income - - (0.7) (0.7)
Total comprehensive Income/(Loss)
for the period, net of tax
- 1.0 (0.7) 0.3
Equity settled share-based payments - 0.2 - 0.2
Share capital issued6 40.0 - - 40.0
Balance at 30 September 2020 (Unaudited) 120.7 (25.3) (3.6) 91.8
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
1716
SECTION 2021 INTERIM REPORT EROADEROAD 2021 INTERIM REPORT SECTION
17
16
NOTES TO FINANCIAL STATEMENTS 2021 INTERIM REPORT EROADEROAD 2021 INTERIM REPORT FINANCIAL STATEMENTS • RECONCILIATION OF OPERATING CASH FLOWS WITH REPORTED LOSS AFTER TAX
RECONCILIATION OF OPERATING CASH FLOWS WITH REPORTED LOSS AFTER TAX
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2020
GROUP30 SEPTEMBER 202030 SEPTEMBER 2019
Notes
Unaudited
$M’s
Unaudited
$M’s
Proft/(Loss) after tax for the six month period attributable
to the shareholders
1.0(0.1)
Add/(less) non-cash items
Tax asset recognised(0.3)(0.1)
Depreciation and amortisation12.910.5
Other non-cash expenses/(income)(0.5)(1.4)
12.19.0
Add/(less) movements in other working capital items:
Decrease/(increase) in trade and other receivables1.6(0.9)
Decrease/(increase) in current tax payables0.4-
Decrease/(increase) in contract liabilities(1.0)0.1
Increase /(decrease) in trade payables, interest payable
and accruals
0.21.8
1.21.0
Net cash from operating activities14.39.9
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2020
NOTE 1 SUMMARY OF SIGNIFICANT GROUP ACCOUNTING POLICIES
The condensed consolidated financial statements of EROAD Limited (EROAD), together with its subsidiaries (the “Group”), as
at and for the six months ended 30 September 2020, have been prepared in accordance with the New Zealand equivalent to
International Accounting Standard 34: “Interim Financial Reporting” (NZ IAS 34), and Generally Accepted Accounting Practice in
New Zealand (NZ GAAP) and should be read in conjunction with the financial statements as at and for the year ended 31 March
2020. The Group is a profit oriented entity.
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 an 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 condensed 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 condensed consolidated financial statements for the Group are for the period ended 30 September 2020.
The financial statements were authorised for issue by the directors on 25 November 2020 and are unaudited.
The accounting policies below have been applied consistently to all periods presented in these financial statements.
Basis of preparation
Statement of compliance with NZ IFRS
The condensed consolidated financial statements comprise the following: condensed consolidated statement of comprehensive
income, condensed consolidated statement of financial position, condensed consolidated statement of changes in equity,
condensed consolidated statement of cash flows, and accounting policies and notes to the condensed consolidated financial
statements contained on pages 11 to 30.
These condensed consolidated financial statements have been prepared in accordance with NZ IAS 34 Interim Financial Reporting,
and should be read in conjunction with the Group’s last annual consolidated financial statements as at and for the year ended 31
March 2020 (‘last annual financial statements’). These do not include all of the information required for a complete set of NZ IFRS
financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an
understanding of changes in the Group’s financial position and performance since the last financial statement.
Basis of measurement
The financial statements are prepared on the historical cost basis, except for certain financial instruments carried at fair value.
Going concern
The directors have 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 at 30 September 2020 of $49.0 million and bank borrowing facility of $66.0 million of which $27.7m was undrawn
after including borrowing cost of $0.7 million. This provides sufficient headroom to help support the business for at least the next
12 months.
-The future contracted income of $140.0 million provides certainty of future revenue; and
-The directors have made due enquiry into the appropriateness of the assumptions underlying the budgetary forecasts.
Presentation currency
The financial statements are presented in New Zealand dollars and all values are rounded to the nearest million dollars ($M’s).The
functional currency of EROAD Limited is New Zealand Dollars (NZD).
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.
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NOTE 2 REVENUE FROM CONTRACTS WITH CUSTOMERS
GROUP30 SEPTEMBER 202030 SEPTEMBER 2019
Unaudited
$M’s
Unaudited
$M’s
Revenue from contracts with customers
Software as a Service (SaaS) revenue42.135.8
Transaction fee revenue 1.31.2
Other revenue0.31.1
Other
Grant revenue2.10.4
Total Revenues45.838.5
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 30 September are
expected to be recognised by EROAD based on the time bands disclosed below.
GROUP30 SEPTEMBER 202030 SEPTEMBER 2019
Unaudited
$M’s
Unaudited
$M’s
Software as a Service (SaaS) revenue
Not later than one year67. 962.5
Later than one year not later than five years
72.168.4
Total price allocated to remaining performance obligations
140.0130.9
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, 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.
Refer note 10 for contract liabilities.
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
NOTE 1 SUMMARY OF SIGNIFICANT GROUP ACCOUNTING POLICIES (CONTINUED)
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.
A detailed assessment of the impact of COVID-19 on the EROAD statement of financial position was set out in the annual report
dated 31 March 2020 (financial statements note 2). EROAD has not identified any material changes in this assessment, except for
the following:
Doubtful debts - COVID-19 Provisions
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; and
• EROAD’s understanding and experience with the customer.
EROAD has recorded additional estimated credit loss provisions to account for the estimated financial impact of any future
defaults.
• Which industry the customer belongs to, and the impact of COVID-19 on that industry (using both payment analysis and
the vehicular movement data that has been analysed to gain a view on the impact of COVID-19 on the customers’ revenue
generating activity);
• EROAD’s understanding and experience with the customer; and
• Ensuring EROAD has recorded sufficient credit loss provisions to account for the estimated financial impact of any future
defaults.
The Group has recorded the following increase in expected credit loss to account for the impacts of the COVID-19 pandemic on the
30 September 2020 financial results:
AreaRecognition in Statement of Comprehensive IncomeAmount ($M)
Doubtful DebtsOperating Expenses0.9
Government Grants - COVID-19
On 25 March 2020, the US Government approved Coronavairus Aid, Relief, and Economic Security Act (CARES) to provide
assistance to individuals, families and businesses affected by COVID-19. This included provision of loans under the Paycheck
Protection Programme which can qualify for forgiveness subject to fulfilment of certain conditions. EROAD received funding under
this programme during the reported period and has met the conditions for forgiveness. As a result, as at 30 September 2020,
EROAD has recognised government grant revenue of $1.6m
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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 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. As a result there is a financing component which the group recognise 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 it 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.
Capitalised contract fulfillment costs
The Group capitalises incremental costs of fulfilling customer contracts, typically distribution and installation costs. Contract
fulfillment 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.
NOTE 3 EXPENSES
GROUP30 SEPTEMBER 202030 SEPTEMBER 2019
Notes
Unaudited
$M’s
Unaudited
$M’s
Personnel expenses - net of capitalised employee
remuneration515.313.0
Administrative and other operating expenses9.89.4
SaaS platform costs5.04.0
Directors fees0.20.2
Assurance services - KPMG0.1-
Tax compliance and advisory services - KPMG0.1-
Total operating expenses30.526.6
During the six months the costs expensed for Research and Development was $4.2m (30 September 2019: $3.2m).
NOTE 4 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.
Corporate &
Development
North America New ZealandAustralia
30 SEPT
2020
30 SEPT
2019
30 SEPT
2020
30 SEPT
2019
30 SEPT
2020
30 SEPT
2019
30 SEPT
2020
30 SEPT
2019
Unaudited
$M’s
Unaudited
$M’s
Unaudited
$M’s
Unaudited
$M’s
Unaudited
$M’s
Unaudited
$M’s
Unaudited
$M’s
Unaudited
$M’s
Revenue
Software as a Service
(SaaS) revenue
0.3 - 13.9 11.3 27. 4 24.2 0.5 0.3
Transaction fee revenue - - - - 1.3 1.2 - -
Other revenue ₁ 11.1 8.8 2.5 0.6 0.2 0.2 0.3 -
11.4 8.8 16.4 11.9 28.9 25.6 0.8 0.3
Earnings Before Interest,
Taxation, Depreciation &
Amortisation
(8.9)(6.7) 5.9 3.2 18.5 16.2 (0.4)(0.8)
Depreciation of
Property, Plant &
Equipment
(0.6)(0.5) (2.2)(1.9) (2.4)(2.3) - -
Amortisation of
Intangible Assets
(4.8)(3.6) - - - - - -
Amortisation of
Contract and Customer
Acquisition Assets
- - (1.0)(0.8) (2.4)(2.1) (0.1)-
₁ Revenue from Corporate & Development Markets includes R&D Grant Income of $0.5m (30 September 2019: $0.4m).
NOTE 2 REVENUE FROM CONTRACTS WITH CUSTOMERS (CONTINUED)
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Reconciliation of information on reportable segments
GROUP30 SEPTEMBER 202030 SEPTEMBER 2019
Unaudited
$M’s
Unaudited
$M’s
Revenue
Total revenue for reportable segments57. 546.6
Elimination of inter-segment revenue(11.7)(8.1)
Consolidated Revenue45.838.5
EBITDA
Total EBITDA for reportable segments15.111.9
Elimination of inter-segment EBITDA0.2-
Consolidated EBITDA15.311.9
Depreciation
Total depreciation for reportable segments(5.2)(4.7)
Elimination of inter-segment profit0.60.7
Consolidated Depreciation(4.6)(4.0)
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
30 SEPTEMBER 202030 SEPTEMBER 2019
Unaudited
$M’s
Unaudited
$M’s
Revenue
New Zealand29.526.3
All foreign countries:
USA15.811.9
Australia0.50.3
Total revenue45.838.5
Corporate &
Development
North America New ZealandAustralia
30 SEPT
2020
31 MARCH
2020
30 SEPT
2020
31 MARCH
2020
30 SEPT
2020
31 MARCH
2020
30 SEPT
2020
31 MARCH
2020
Unaudited
$M’s
Unaudited
$M’s
Unaudited
$M’s
Unaudited
$M’s
Unaudited
$M’s
Unaudited
$M’s
Unaudited
$M’s
Unaudited
$M’s
Total assets100.579.226.123.537. 242.32.72.7
Reconciliation of information on reportable segments
GROUP30 SEPTEMBER 202031 MARCH 2020
Unaudited
$M’s
Audited
$M’s
Total assets
Total assets for reportable segments166.51 47.7
Elimination of inter-segment balances(4.4)(21.9)
Consolidated Total Assets162.1125.8
Allocation of Development Assets
Included within Total Assets are Development Assets of $34.0m as at 30 September 2020 (31 March 2020: $32.7m) 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 30 September 2020
there was $24.4m (31 March 2020: $22.4m) of global Development Assets that have been allocated across CGU’s based on the
Contracted Units. The allocation of the Development Asset to CGU’s within the following reportable segments for the purpose of
impairment testing was as follows:
30 SEPTEMBER 202031 MARCH 2020
Unaudited
$M’s
Audited
$M’s
North America13.714.0
New Zealand 18.617.2
Australia1.61.5
33.932.7
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.
30 SEPTEMBER 202031 MARCH 2020
Unaudited
$M’s
Audited
$M’s
Non-current assets
New Zealand68.066.3
All foreign countries:
USA13.317.2
Australia0.70.9
Total non-current assets82.084.4
Non-current assets exclude financial instruments and deferred tax assets.
NOTE 4 SEGMENTAL NOTE (CONTINUED)NOTE 4 SEGMENTAL NOTE (CONTINUED)
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NOTE 5 PERSONNEL EXPENSES
GROUP30 SEPTEMBER 202030 SEPTEMBER 2019
Unaudited
$M’s
Unaudited
$M’s
Salaries and wages - excluding capitalised commission costs16.614.7
Annual leave 0.60.3
Performance bonus0.50.4
Share-based payments0.20.3
Salaries and wages capitalised to Development and Software Assets(2.6)(2.7)
15.313.0
NOTE 6 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.
GROUP
Number of
ordinary shares
Issue price
$
Issued Capital
$
AT 31 MARCH 2020 (AUDITED)68,278,77280.7
Shares issued to employees 22,848 3.73 0.1
Shares issued in September 2020 equity placement 10,769,231 3.90 42.0
Costs of raising capital - (2.1)
AT 30 SEPTEMBER 2020 (UNAUDITED)79,070,851120.7
On 22 September 2020 EROAD issued an additional 10,769,231 shares at a price of $3.90 each.
At 30 September 2020 there was 79,070,851 authorised and issued ordinary shares (31 March 2020: 68,278,772). 900,690 (31 March 2019:
906,783) 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 30 September 2020 was based on the profit/(loss) attributable to ordinary
shareholders of $1.0m (30 September 2019: ($106)). The weighted number of ordinary shares on 30 September 2020 was 67,888,360
(30 September 2019: 67,318,877) for basic earnings per share and 68,158,834 for diluted earnings per share (30 Septemner 2019:
68,069,248).
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 7 CASH AND CASH EQUIVALENTS, RESTRICTED CASH AND PAYABLES TO TRANSPORT AGENCIES
GROUP30 SEPTEMBER 202031 MARCH 2020
Unaudited
$M’s
Audited
$M’s
Cash and cash equivalents49.03.4
Restricted bank accounts9.214.0
58.217.4
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 30 September 2020 the amount payable to transport agencies was $9.2m (31 March 2020: $13.9m).
NOTE 8 PROPERTY, PLANT AND EQUIPMENT
GROUP
Right of
Use Assets
Hardware
Assets
Plant and
equipment
Leasehold
improvements
Motor
vehicles
Office
equipmentComputersTotal
$M's$M's$M's$M's$M's$M's$M's$M's
YEAR ENDED 31 MARCH 2020 (AUDITED)
Opening net book
amount
6.025.00.21.70.40.30.333.9
Additions-10.80.10.30.10.10.211.6
Disposals--------
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
amount
5.129.50.21.70.30.30.337. 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
GROUP
Right of
Use Assets
Hardware
Assets
Plant and
equipment
Leasehold
improvements
Motor
vehicles
Office
equipmentComputersTotal
$M's$M's$M's$M's$M's$M's$M's$M's
SIX MONTHS ENDED 30 SEPTEMBER 2020 (UNAUDITED)
Opening net book
amount
5.129.50.21.70.30.30.337. 4
Additions-1.50.1---0.11.7
Disposals--------
Depreciation charge(0.5)(3.7)-(0.2)-(0.1)(0.1)(4.6)
Depreciation
recovered
-1.1-----1.1
Effect of movement
in exchange rates
-(0.7)-(0.1)---(0.8)
Closing net book
amount
4.62 7.70.31.40.30.20.334.8
Cost6.952.10.82.71.11.23.167. 9
Accumulated
depreciation
(2.3)(24.4)(0.5)(1.3)(0.8)(1.0)(2.8)(33.1)
Net book amount4.62 7.70.31.40.30.20.334.8
Included in the Hardware Assets is equipment under construction of $8.3m (31 March 2020: $8.6m).
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.
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EROAD 2021 INTERIM REPORT NOTES TO FINANCIAL STATEMENTSNOTES TO FINANCIAL STATEMENTS 2021 INTERIM REPORT EROAD
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:
Leasehold improvements 3 to 9 years Straight line
Hardware assets 3 to 6 years Straight line
Plant and equipment 3 to 11 years Straight line
Computer/Office equipment 1 to 3 years Straight line
Motor vehicles 3 to 5 years Straight line
The above rates reflect the estimated useful lives of the respected categories. Leasehold improvements are depreciated over the
contracted lease term.
NOTE 9 INTANGIBLE ASSETS
GROUPDevelopmentSoftwareTotal
$M's$M's$M's
YEAR ENDED 31 MARCH 2020 (AUDITED)
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
GROUPDevelopmentSoftwareTotal
$M's$M's$M's
SIX MONTHS ENDED 30 SEPTEMBER 2020 (UNAUDITED)
Opening net book amount32.79.442.1
Additions5.10.55.6
Disposals---
Amortisation charge(3.8)(1.0)(4.8)
Closing net book amount34.08.942.9
Cost61.114.375.4
Accumulated amortisation(27.1)(5.4)(32.5)
Net book amount34.08.942.9
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).
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 only 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:
Patents 10-20 years
Development Hardware & Platform 7-15 years
Development Products 5-10 years
Software 5-7 years
NOTE 10 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.
GROUP30 SEPTEMBER 202031 MARCH 2020
Unaudited
$M’s
Audited
$M’s
Opening balance 8.210.0
Amounts deferred/(repaid) during the period2.04.5
Amount recognised in the statement of comprehensive income(3.0)(6.3)
7. 28.2
Current 4.43.6
Non-current2.84.6
NOTE 8 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)NOTE 9 INTANGIBLE ASSETS (CONTINUED)
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NOTE 11 INCOME TAX EXPENSE
GROUP30 SEPTEMBER 202030 SEPTEMBER 2019
Unaudited
$M’s
Unaudited
$M’s
(a) Reconciliation of effective tax rate
Profit/(Loss) before income tax1.2(0.2)
Income tax using the Company's domestic tax rate of 28% 0.3(0.1)
Reduction in tax rate--
Non-deductible expense(0.1)-
Temporary differences
Losses and timing differences not recognised--
Effect of different tax rates--
Income tax expense/(benefit)0.2(0.1)
(b) Current tax expense/(benefit)
Current year0.4-
0.4-
(c) Deferred tax expense/(benefit)
Current year(0.2)(0.1)
(0.2)(0.1)
At 30 September 2020 there were no imputation credits available to shareholders (30 September 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 12 BORROWINGS
GROUP30 SEPTEMBER 202031 MARCH 2020
Unaudited
$M’s
Audited
$M’s
Current borrowings
Term Loans 5.22.5
Capex Facilities 2.0-
Capitalised borrowing costs(0.7)(0.3)
6.52.2
Non-current borrowings
Term Loans 31.133.6
Capex Facilities --
31.133.6
Terms and debt repayment schedule
GROUP
30 SEPT
2020
30 SEPT
2020
31 MARCH
2020
31 MARCH
2020
Nominal
Interest
Year of
Maturity
Unaudited
Face Value
$M’s
Unaudited
Carrying
amount
$M’s
Audited
Face Value
$M’s
Audited
Carrying
amount
$M’s
Term Loans 3.86%202336.336.336.136.1
Capex Facilities 3.84%20202.02.0--
Capitalised borrowing costs0.00%2020-(0.7)-(0.3)
38.337. 636.135.8
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). On 2 September 2020, to provide further diversity Kiwibank joined the syndicate
increasing the total available facility. At 30 September 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.
$25.0M 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.
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EROAD 2021 INTERIM REPORT NOTES TO FINANCIAL STATEMENTSFINANCIAL STATEMENTS • INDEPENDENT REVIEW REPORT 2021 INTERIM REPORT EROAD
$5.0M 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 30 September 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 of 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 of 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.
NOTE 13 RELATED PARTY TRANSACTIONS
Related party transactions are consistent in nature with those reported at 31 March 2020.
NOTE 14 CAPITAL COMMITMENTS
As at 30 September 2020 the Group had confirmed purchase orders open with its third party manufacturer of hardware units
amounting to $0.6m (31 March 2020: $1.2m).
NOTE 15 CONTINGENT LIABILITIES
At 30 September 2020, EROAD has no contingent liabilities. At 31 March 2020 EROAD had applied to a tax department before balance
date to retroactively amend rules applied to potential liabilities. EROAD has subsequently received a decision and recognised
an accrual for the estimated cost.
NOTE 16 NET TANGIBLE ASSETS PER SHARE
GROUP30 SEPTEMBER 202030 SEPTEMBER 201931 MARCH 2020
Unaudited
$000’s
Unaudited
$000’s
Audited
$000’s
Net assets (equity)91.851.351.3
Less intangibles(42.9)37. 8(42.1)
Total net tangible assets48.913.59.2
Net tangible assets per share ($)0.620.200.13
The non-GAAP measure above is disclosed to comply with NZX Debt Market Listing Rule 2.3(f).
NOTE 17 EVENTS SUBSEQUENT TO BALANCE DATE
On the 9th of October 2020 EROAD issued 2,820,489 shares under a share purchase plan announced on NZX on 17th September
2020 with an issue price of $3.90 (31 March 2020: Nil except as disclosed in note 2 (g) of the annual report related to impacts of
Covid-19).
NOTE 12 BORROWINGS (CONTINUED)
© 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 Review
Report
To the shareholders of EROAD Limited
Report on the condensed consolidated financial statements
Conclusion
Based on our review, nothing has come to our attention
that causes us to believe that the condensed
consolidated financial statements on pages 11 to 30 do
not:
i. present fairly in all material respects the
Group’s financial position as at 30 September
2020 and its financial performance and cash
flows for the 6 month period ended on that
date; and
ii. comply with NZ IAS 34 Interim Financial
Reporting.
We have completed a review of the accompanying
condensed consolidated financial statements which
comprise:
— the condensed consolidated statement of financial
position as at 30 September 2020;
— the condensed consolidated statements of
comprehensive income, changes in equity and cash
flows for the 6 month period then ended; and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Basis for conclusion
A review of condensed consolidated financial statements in accordance with NZ SRE 2410 Review of Financial Statements
Performed by the Independent Auditor of the Entity (“NZ SRE 2410”) is a limited assurance engagement. The auditor
performs procedures, consisting of making enquiries, primarily of persons responsible for financial and accounting matters,
and applying analytical and other review procedures.
As the auditor of EROAD Limited, NZ SRE 2410 requires that we comply with the ethical requirements relevant to the audit
of the annual financial statements.
Our firm has also provided other services to the group in relation to tax compliance, tax advisory and other assurance
services. 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 reviewer of the group. The firm has no other relationship with, or interest in, the group.
Use of this Independent Review Report
This report is made solely to the shareholders as a body. Our review work has been undertaken so that we might state to
the shareholders those matters we are required to state to them in the Independent Review 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 review work, this report, or any of the opinions we have formed.
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EROAD 2021 INTERIM REPORT SECTION
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2021 INTERIM REPORT EROADEROAD 2021 INTERIM REPORT FINANCIAL STATEMENTS • INDEPENDENT REVIEW REPORT
Draft Review Report (003) 2
Responsibilities of the Directors for the condensed consolidated
financial statements
The Directors, on behalf of the group, are responsible for:
— the preparation and fair presentation of the condensed consolidated financial statements in accordance with NZ IAS
34 Interim Financial Reporting;
— implementing necessary internal control to enable the preparation of a condensed consolidated 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 review of the condensed consolidated
financial statements
Our responsibility is to express a conclusion on the condensed financial statements based on our review. We conducted
our review in accordance with NZ SRE 2410. NZ SRE 2410 requires us to conclude whether anything has come to our
attention that causes us to believe that the condensed financial statements are not prepared, in all material respects, in
accordance with NZ IAS 34 Interim Financial Reporting.
The procedures performed in a review are substantially less than those performed in an audit conducted in accordance
with International Standards on Auditing (New Zealand). Accordingly, we do not express an audit opinion on these
condensed consolidated financial statements.
This description forms part of our Independent Review Report.
KPMG
Auckland
26 November 2020
353435
34
2021 INTERIM REPORT EROADEROAD 2021 INTERIM REPORT
REGISTERED OFFICE
IN NEW ZEALAND
Level 3
260 Oteha Valley Road,
Albany, Auckland
New Zealand
REGISTERED OFFICE
IN NORTH AMERICA
7618 SW Mohawk Street
Tualatin, OR 97062
USA
REGISTERED OFFICE
IN AUSTRALIA
Level 36, Tower 2
Collins Square
727 Collins Street
Docklands, VIC 3008
Australia
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
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.
SHARE REGISTRAR -
NEW ZEALAND
Computershare Investor
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
LEGAL ADVISORS
Chapman Tripp
Level 35
23 Albert Street
Auckland 1010
PO Box 2206, Auckland 1140
Telephone: +64 9 357 9000
BANKERS
Bank of New Zealand
China Construction Bank
National Australian Bank
Wells Fargo
SHARE REGISTRAR -
AUSTRALIA
Computershare Investor
Services Pty Limited
Yarra Falls, 452 Johnstone Street
Abbotsford, VIC 3067
GPO Box 3329
Melbourne, VIC 3001, Australia
Email:
enquiry@computershare.co.nz
Telephone: 1 800 501 366
(within Australia)
Telephone: +61 3 9415 4083
(outside Australia)
DIRECTORY
WWW.EROADGLOBAL.COM/INVESTORS
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.