EROAD better positioned for future growth
TEL +64 9 927 4700 PO Box 305 394
FAX +64 9 927 4701 Triton Plaza, North Shore 0757 Page 1
FREE 0800 4-EROAD Auckland, New Zealand eroad.co.nz
EROAD better positioned for future growth 28 May 2021
Transportation technology services company EROAD (NZX/ASX: ERD) today released its financial
results for the 2021 financial year. All numbers relate to the year ended 31 March 2021 and
comparisons relate to the year ended 31 March 2020.
Key highlights
• Revenue grew to $91.6m, up 13% from FY20 and EBITDA grew by 13% to $30.7m
• EROAD grew contracted units by 9,715, while keeping ARPU and asset retention stable in
challenging macro-economic conditions
• EROAD accelerated its growth strategies – extending the platform further and launching new
products
• EROAD reiterates its FY22 guidance provided in November 2020
“In a year that presented challenging macro-economic conditions we continued to grow across all of
our markets delivering a 13% increase in revenue and Earnings Before Interest, Tax, Depreciation
and Amortisation (EBITDA) year on year. In addition, we accelerated our growth strategies to take
better advantage of opportunities that have emerged from the challenges of the last twelve months.
EROAD is now stronger than ever before, better positioned to capture the increasing growth
opportunities in telematics” said Steven Newman, Chief Executive Officer.
EROAD Chair Graham Stuart commented “EROAD recognised that this was the time to be bold and
to prepare to take best advantage of growth opportunities when macro-economic conditions
improved. For EROAD this meant increasing and accelerating its investment in its platform and
products. The ASX listing and simultaneous $53m
capital raise in September 2020 ensured we had
the upfront funding to be able to begin this acceleration. We achieved what we set out to do.
EROAD is now stronger than ever and ready to grow – and grow quickly.”
Revenue increased year on year by 13% to $91.6m, reflecting growth in contracted units across all
our markets. Average SaaS Monthly Revenue per Unit (ARPU) remained stable at $58.30 per month
from $58.38 in FY20 reflecting customers upgrading their plans and selling additional SaaS products
offset by foreign exchange movements over the year. EBITDA grew by 13% to $30.7m. EROAD’s
Annualised Monthly Recurring Revenue metric (AMRR), which provides a forward view of
sustainable revenue, increased from $84.0m at 31 March 2020 to $88.4m as at 31 March 2021.
Reflecting the quality of EROAD’s service and product offering, in a year that brought with it a
significant amount of uncertainty for our customers, EROAD’s Asset Retention Rate remained stable
at 94.9% (FY20: 95.2%). In addition, 640 customers renewed their plan (13,821 contracted units).
In the year ended 31 March 2021, a total of $21.3m (FY20: $15.6m) was invested in research and
development, representing some 23% of revenue. As previously signalled, EROAD sees substantial
and increased future growth opportunities in the markets it operates in. As such research and
development spend has been accelerated during FY21 and it is anticipated this will grow to some 24-
27% of revenue in FY22 to be able to appropriately capitalise on this growth opportunity.
Page 2 eroad.co.nz
New Zealand
New Zealand revenue increased by $6.4m or 12% year on year to $59.8m. EBITDA was $38.8m, up
11% from $34.9m reflecting both increased contracted units as well as sales of add-on SaaS
products.
The growth of 7,526 contracted units reflects further extension into fleets of existing
customers, as well as new customers in Construction & Civil Engineering, Freight & Road Transport,
Services & Trades. During Q3, EROAD secured a large Enterprise customer, Toll New Zealand. EROAD
will install almost 1,000 units and EROAD SaaS products, across their heavy vehicle, light vehicle and
trailer fleet.
North America
Revenue for North America increased by $4.8m or 19% to $30.6m and EBITDA increased period on
period from $7.5m to $10.0m. North America, has been the most challenging of EROAD’s markets
during COVID-19 due to the impacts of lengthy lockdowns, wildfires, civil unrest and politics. New
sales were significantly challenged with customers working from home and focused on maintaining
their businesses as opposed to looking at making changes. While EROAD gr ew in North America,
adding 1,435 units during the year representing growth of 4%, it was significantly less than the prior
year. It is encouraging to see signs that the North America economy is opening up again, bolstered
by the increase in government support and rollout of vaccination programme with workers
beginning to return to their workplaces across the region. Reflecting this, EROAD currently has two
enterprise customer prospects in pilot for its Ehubo delivered services (approx. 1,500 units) as well
as a solid mix of mid-market pilots either launched or beginning soon. There are also further pilots
for Clarity Dashcam with existing and new customers.
Australia
Revenue for the Australian business was $1.4m, compared to a FY20 figure of $0.7m. EBITDA for the
Australia region was at $(0.9)m, compared to $(1.3)m in the prior year. Despite restrictive lockdowns
in the first half of the year, we added 754 contracted units in the year, with the majority of the units
being added in H2. This growth predominately came from new small-to-medium size customers in
Freight & Road Transport, Construction & Civil Engineering, Services & Trades. During the year, we
were focused on securing some large enterprise opportunities within our Australian pipeline. EROAD
announced at the beginning of April 2021 that we had signed our largest Australian enterprise
customer, Ventia. This contract alone almost doubles the size of EROAD’s Australian presence and it
is still working a short to medium term enterprise sales pipeline of some 15-20,000 connected
vehicles.
Accelerating Growth Strategies to capture significant opportunity for EROAD once market
uncertainty recedes
During the year, EROAD accelerated its growth strategies – extending the platform further and
launching new products. This leaves EROAD very well positioned to capture the significant and
growing opportunity with Enterprise customers in North America and Australia now that uncertainty
is beginning to recede
.
Page 3 eroad.co.nz
Following the launch of Clarity Dashcam in October 2020, EROAD began marketing, selling and
dispatching this product in March 2021. As expected, high demand was seen in North America as
EROAD customers looked for safety solutions to deal with challenges associated with increasing
insurance premiums. For the month of March 2021, EROAD sold a total of 1,054 EROAD Clarity
Dashcams and this run-rate is expected to continue at a Group level, as North America continues to
return to normality after restrictive COVID-19 lock downs and further momentum is built within the
New Zealand and Australian markets. The EROAD Day Logbook product has seen great success with
some 6,407 drivers now using the product, including 515 subscriptions to customers who do not
currently have EROAD hardware installed.
FY22 Outlook
EROAD’s Board and Management reiterate the FY22 guidance provided November last year at the
time of the H1 FY21 financial results release. It is anticipated that the percentage revenue growth in
FY22 will strengthen from that delivered in FY21, but not be at the level experienced in FY20.
In New Zealand, EROAD expect to add a similar number of units to that seen prior to FY21 (~9,000
p.a). New Zealand Ehubo sales will be complemented with Clarity Dashcam sales. In North America,
EROAD expect increased unit growth in FY22, supported by Clarity Dashcam sales, as economy
returns to pre-COVID conditions. 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, we anticipate spending 24-27% of revenue
on R&D during FY22. However, EROAD also anticipate that EBITDA margin will be maintained for
FY22 but will improve at the end of FY22.
The Global Telematics industry poised for significant growth
EROAD operates in the global telematics industry, which is estimated to grow to US$750b by 2030
1
.
As each country around the world look to solve their transportation problems and as companies look
to solve their operational problems - the demand for telematics and EROAD’s products
grows. EROAD customers are going through a digital transformation and therefore they are
increasingly looking for solutions that give visibility, data and insights to manage their fleets
more productively track and manage mobile and remote assets and as well as help with their ESG
reporting requirements.
As governments look to solve transportation problems, regulatory telematics solutions in
particular are forecast to be a significant growth driver forcing telematics adoption over the next 5+
years. Declining transportation revenues (as cars become more fuel efficient and EV uptake
increases) and continued growth in road congestion will accelerate moves to road pricing globally.
EROAD is focused on world leading regulatory telematics solutions and is therefore well
positioned to take advantage of this trend. EROAD’s cash flow, combined with the recent $53m
capital raise and banking facilities puts the company in a strong position to pursue strategic growth
opportunities. EROAD continues to consider inorganic growth opportunities that will provide
customer base and product capabilities to differentiate EROAD further.
1
Source McKinsey & Company (2018). Relates to global telematics plus the monetary value of the global
ecosystem developing around monetizing vehicle data—including consumer vehicles.
Page 4 eroad.co.nz
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 FY21 via a teleconference
commencing at 10.30am NZST.
Register in advance for this webinar:
https://us02web.zoom.us/meeting/register/tZAocuyopj4rH93IwQV4QAJcnJ1dACbiuYci
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
This announcement has been authorised by EROAD’s Board of Directors.
For Investor enquires please contact:
Alex Ball
Chief Financial Officer
alex.ball@eroad.com
For Media enquiries please contact:
Anna Bonney
Merlin Consulting
anna@merlinconsulting.co.nz
Non-GAAP Measures
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 38 of the
investor presentation. All numbers relate to the 12 months ended 31 March 2021 (FY21) and
comparisons relate to the 12 months ended 31 March 2020 (FY20), unless stated otherwise. All
dollar amounts are in NZD.
About EROAD
EROAD Limited (ASX: ERD; NZX: ERD) (“EROAD”) purpose is safer and more sustainable 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.eroad.com/global/investors
.
---
28 May 2021
Results for announcement to the market
Name of issuer EROAD Limited
Reporting Period 12 months to 31 March 2021
Previous Reporting Period 12 months to 31 March 2020
Currency New Zealand Dollars
Amount (000s) Percentage change
Revenue from continuing
operations
$91,638 up 13%
Total Revenue $91,638 up 13%
Net profit/(loss) from
continuing operations
$2,015 up 93%
Total net profit/(loss) $2,015 up 93%
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
$0.72 $0.13
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
For commentary on the result, please refer to the Annual Report
for the year ended 31 March 2021.
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
28 May 2021
Audited financial statements for the year ended 31 March 2021 accompany this announcement.
TEL +64 9 927 4700 PO Box 305 394
FAX +64 9 927 4701 Triton Plaza, North Shore 0757 Page 1
FREE 0800 4 EROAD Auckland, New Zealand eroad.co.nz
---
FINANCIAL RESULTS
FOR THE 12 MONTHS ENDED 31 MARCH 2021 (FY21)
28 MAY 2021
(NZX: ERD ASX: ERD)
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 39 of this
presentation.
02
HIGHLIGHTS
4-5
OPERATING
UPDATE
6-13
FINANCIAL
UPDATE
14-26
GROWTH
OPPORTUNITIES
27-35
FY22
OUTLOOK
36
Agenda
03
Continue to
grow despite
challenging
macro-
economic
conditions
IN REVENUE
reflecting continued growth in
units in all regions
13
%
(FY21: $91.6m • FY20: $81.2m)
PROFIT BEFORE TAX
1.9
$
m
reflecting growth in EBITDA
and increased depreciation and
amortisation
(FY20: $1.4m)
AMRR
88.4
m
$
reflecting unit sales , partly
offset by FX impacts
(H1 FY21: $84.8m FY20: $84.0m)
m
$
3.6
EBITDA
which includes a non-recurring
items ($0.4m) and COVID-19
debtor provision ($1.5m)
(FY21: $30.7m• FY20: $27.1m)
representing 23% of revenue
(FY20: $15.6m)
SPENT ON R&D
21.3
$
m
OPERATING
EXPENDITURE
reflecting accelerated R&D and
spend-to-save initiatives
(FY21: $60.9m • FY20: 54.2m)
6.7
m
$
04
Accelerating
Growth
Strategies
SIGNED
VENTIA
largest Australian
enterprise customer
CONTRACTED
UNITS
in FY21 despite challenging
marco-economic conditions
(FY21: 126,203 FY20: 116,488)
8
%
(FY20: 95.2%)
%
94.9
ASSET RETENTION
RAT E
reflecting quality of service
and product offering
CAPITAL RAISE
to accelerate
growth strategies
53
$
m
EROAD
CLARITY DASHCAMS
sold in March
1,054
MONTHLY SAAS AVERAGE
REVENUE PER UNIT (ARPU)
with customers subscribing to
additional SaaS services and FX impacts
(FY20: $58.38)
58.30
$
05
1
$51m raised (net of $2m transaction costs) via capital raise
1
OPERATIONAL
UPDATE
Steven Newman
Chief Executive Offi cer
06
8% Growth since
FY20, despite
COVID-19
Australia
North America
New Zealand
ANZ
• Contracted units continued to grow
across all regions
• However, slower growth rates across all
markets, refl ecting longer sales lead times
1
North America units for FY19 are restated for data cleansing adjustments identifi ed as part of the new business systems implementation
20142015201620172018201920202021
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
140,000
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
126,203
87,892
2,874
35,437
Q3:
Total 1,284
NZ: 1,071
NA: -39
AU: 252
Q4:
Total 2,726
NZ: 2,295
NA: 182
AU: 249
1
TOTAL CONTRACTED UNITS
07
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
1,284
2,726
182
(39)
252
249
2,2951,071
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
Growth
continued
to be impacted
by COVID-19
• Growth in New Zealand relatively robust
during COVID-19, however slightly
lower than pre-COVID due to economic
uncertainty
• Toll New Zealand won (1,000 units) during
Q2 and deployment halfway complete by
year end
• Growth in North America signifi cantly
impacted by COVID-19, wildfi res, civil
unrest and politics
• Growth in Australia signifi cantly impacted
by COVID-19 in H1, returning to pre
COVID-19 levels in H2
• Largest Australian Enterprise customer
Ventia won (2,500 units in Australia and
1,500 units in New Zealand) to be deployed
throughout FY22
CONTRACTED UNITS ADDED
DURING THE QUARTER
08
Growth through Retention and
Account Upgrades despite
uncertainty for our customers
%94.9
ASSET
RETENTION RATE
640
CUSTOMERS RENEWED
THEIR EROAD PLAN
(13,821 contracted units)
09
Growth through account expansion
EROAD CLARITY
DASHCAM
EROAD GOEROAD DAY
LOGBOOK
MyEROAD FLEET
MAINTENANCE
EROAD INSPECT EROAD WHERE
Dual facing dashcam.
Integration of dashcam
while Ehubo data and other
key driver and vehicle
statistics supports advanced
driver coaching and accident
exoneration in MyEROAD
Replay
A workfl ow application
that connects with
the transport
management system
Simplifi es fatigue
management by enabling
drivers to capture work
and rest hours via a smart
phone or tablet
Simplifi es vehicle
maintenance with automated
service schedule based
on time lapsed, distance
travelled or
engine hours, plus a full
service history archive
Makes vehicle inspections
easy, capturing defects
with your mobile
device, and providing
transparent and traceable
inspection information
Aff ordable
Asset Tracking
1,054
SOLD IN MARCH
(86 WHICH WERE
NEW EROAD CUSTOMERS)
OPENS UP
ADDRESSABLE
MARKET
LONG SALES LEAD-IN TIMES
6,407
DRIVERS SUBSCRIPTIONS
(515 WHICH ARE
STANDALONE)
5,647
IN-CAB SERVICE ALERTS
5,818
PRE-TRIP COMMS
10,490
DRIVERS SUBSCRIPTIONS
OVER
306
CUSTOMERS
5,060
SOLD TO
OVER 164
CUSTOMERS
Increases
addressable market
Improved
ARPU
Retention
Tool
10
CONTINUED EXECUTION OF
STRATEGY
• Renewed 7,507 contracted units. 2,896 of these
were Ehubo1, of which 39% upgraded to Ehubo2
• Increased contracted units by 7,526, of which 31%
were new customers across a range of industries
• Won Toll New Zealand who are adding 1,000 units
across their heavy vehicle, light vehicle and trailer
fleet (over 500 installed by the end of FY21)
• EROAD now collects 49% of Heavy Transport
RUC and 80% of Heavy Transport eRUC
• Launched ‘EROAD Day Logbook’ in Q1 FY21.
Strong take-up with 6,407 subscriptions sold
(515 which were standalone sales)
• Continued progress in broadening range of
customers’ assets traced with 5,060 EROAD
Where tags sold
GROWTH OPPORTUNITY
• In New Zealand, expect growth similar levels to
prior FY21 (added 9,000+ connected vehicles p.a)
New Zealand remains
a significant growth opportunity
GROWTH IN UNITS
NZ MONTHLY
SAAS ARPU
9%
(FY21: 87,892 FY20: 80,366)
(FY20: $55.78)
ASSET
RETENTION RATE
95.8%
(FY20: 96.1%)
56.18
$
EBITDA
(FY20: $34.9m)
38.8m
$
11
CHALLENGING MACRO-
ECONOMIC ENVIRONMENT
• Difficult operating conditions throughout FY21
with by COVID-19 operating restrictions, wild-fires,
civil unrest and politics
• Economy is opening up again, bolstered by the
increase in government support and rollout of
vaccination programme
• Increase in aged debtors leading to increased
doubtful debtor provisioning
CONTINUED EXECUTION
OF STRATEGY
• Added 1,435 contracted units primarily in H1
• Seeing high demand and take up of Clarity
Dashcams – 1,020 sold in March only
• In pilots for ~1,500 units and a range of Pilots for
Clarity Dashcam for existing and new customers
GROWTH OPPORTUNITY
• Targeting ~2.62 million vehicles.
• Launch of our ‘EROAD Go’ and ‘EROAD Clarity
Dashcam’ will increase addressable market
North America increasing
the addressable market
GROWTH IN UNITS
MONTHLY
SAAS ARPU
2
4
%
(FY20: US$41.94)
ASSET
RETENTION RATE
92.8
%
(FY20: 95.2%)
42.95
US$
2
In NZ$ ARPU fell from NZ$65.73 to NZ$65.03 reflecting FX impacts
EBITDA
(FY20: $7.5m)
10.0m
$
(FY21: 35,437 FY20: 34,002)
12
CONTINUED EXECUTION
OF STRATEGY
• COVID-19 restrictions impacted H1 growth, adding
only 253 units
• Growth returned to pre COVID-19 levels in
H2, adding 501 new units to small-to-medium size
fleets
• Won Ventia, our largest enterprise customer,
which will add 2,500 AU units and 1,500 NZ units
over FY22
• Expanded the AU team to support growth. Key
roles include General Manager, Australia, National
Sales Manager, Australia and Marketing Director
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 ADDED
IN FY21
LARGEST ENTEPRISE
CUSTOMER SIGNED
745
EBITDA
(FY20: $(1.3)m)
(FY21: 2,874 FY20: 2,120)
VENTIA
(
0.9
)
$
m
MONTHLY
SAAS ARPU
3
(FY20: AU$35.86)
33.16
AU$
3
In NZ$ ARPU fell from NZ$37.28 to NZ$35.50 reflecting a high proportion of trailer solutions sold in AU
13
FY21
FINANCIAL
RESULTS
Alex Ball
Chief Financial Officer
14
-
(6.0)
(4.0)
(2.0)
2.0
$
(5.9)m
$
(5.1)m
$
1.4m
$
1.9m
20.0
-
40.0
60.0
80.0
100.0
FY18FY19FY20FY21
$
43.8m
$
61.4m
$
81.2m
$
91.6m
FY18FY19FY20FY21
$
10.5m
$
15.6m
$
27.1m
$
30.7m
REVENUE
-
30.0
40.0
20.0
10.0
EBITDA
FY18FY19FY20FY21FY18FY19FY20FY21
$
(18.6)m
$
(13.1)m
$
(12.8)m
FY18FY19FY20FY21
24%
25
%
33
%
34
%
-
30.0
40.0
20.0
10.0
EBITDA MARGINPROFIT/(LOSS) AFTER TAX
-
10.0
5.0
(5.0)
(10.0)
(15.0)
(20.0)
FREE CASH FLOW
$
5.3m
EROAD delivers growth in
challenging macro-economic conditions
+13%+13%
+36%+$18.1m
REVENUEEBITDAEBITDA
MARGIN
PROFIT/
(
LOSS
)
BEFORE TAX
FREE
CASH FLOWS
4,5
Includes one-off non-recurring items as outlined in detail on slide 16
15
YEAR ENDEDFY21FY20
Movement
FY21 vs
FY20H2 FY21H1 FY21
Movement
H1 FY21 vs
H2 FY21
Revenue91.681.210.445.845.8-
Expenses(60.9)(54.1)(6.8)(30.4)(30.5)0.1
Earnings before interest, taxation,
depreciation and amortisation
30.72 7.13.615.415.30.1
Depreciation of Property, Plant &
Equipment
(9.6)(8.6)(1.0)(5.0)(4.6)(0.4)
Amortisation of Intangible Assets(9.9)(7.5)(2.4)(5.1)(4.8)(0.3)
Amortisation of Contract and
Customer Acquisition Assets
(6.8)(6.5)(0.3)(3.3)(3.5)0.2
Earnings before interest and
taxation
4.44.5(0.1)2.02.4(0.4)
Net Financing Costs(2.5)(3.1)0.6(1.3)(1.2)0.1
Profit/(loss) before tax1.91.40.50.71.2(0.5)
Income tax (expense) benefit0.1(0.4)0.50.3(0.2)0.5
Profit/(loss) after tax for the
year attributable to the
shareholders
2.01.01.01.01.0-
Other comprehensive income(0.5)(1.3)0.80.2(0.7)0.9
Total comprehensive income/(loss)
for the year
1.5(0.3)1.81.20.30.9
Statement of Income (NZ$m)
• Revenue increased 13% on FY20 to $91.6m,
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 $1.5m)
• Operating expenditure increased 12% by $6.8
million in line with revenue 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 $1.5 m, relating to the impact of COVID-19, and
a one-off adjustment for superannuation costs in
North America of $1.1m
• Profit before tax was $1.9m (FY20: $1.4m). The
increase in EBITDA was offset by the increase in
depreciation and amortisation charge of $3.7m,
reflecting our growing customer base (and related
assets), the increase in our R&D programme and
significant investment in new generation and
business systems during FY21
16
($m)
FY21FY20
Movement
FY21 vs
FY20H2 FY21H1 FY21
Movement
H1 FY21 vs
H2 FY21
New Zealand38.834.93.920.318.51.8
Australia(0.9)(1.3)0.4(0.5)(0.4)(0.1)
North America10.07. 52.54.15.91.8
Corporate & Development(17.5)(14.0)(3.5)(8.6)(8.9)(0.3)
Elimination of inter-segment
EBITDA
0.30.00.30.3-0.3
EBITDA30.72 7.13.615.415.30.5
EBITDA Margin34%33%8%34%33%-
EBITDA up despite accelerating
growth strategies
NEW ZEALAND
Continued growth into existing customer fleets,
attracting new customers and continued high
asset retention resulted in a 11% increase in EBITDA
$38.8m.
NORTH AMERICA
North American EBITDA result of $10.0m is 33%
ahead of the same time last year as a result of
ongoing market growth and recognition of the
government loan forgiveness as grant income
($1.5m) offset to an extent by a one-off adjustment
for superannuation costs ($1.1m) and an increased
doubtful debt provision ($0.3m). Excluding these
items, EBITDA for the second half of the year grew
54% on H1 FY21 and 32% on FY20
AUSTRALIA
Continuing revenue growth (up 100% from FY20)
and reduced spending as a result of COVID-19 (for
example less marketing investment) has produced
the improved EBITDA result of $(0.9)m.
CORPORATE
The Corporate segment’s EBITDA was $(17.5)m
from $(14.0)m in FY20 reflecting the combination
of continuing accelerated investment in R&D and
growing in the business.
17
100.5
117.4
134.4
-
25.0
50.0
75.0
100.0
125.0
150.0
-
20.0
40.0
60.0
80.0
100.0
66.5
84.0
88.4
FY19FY20FY21FY18FY19FY20
141.9
FY21FY18FY19FY20FY21
19
2222
12
12
1414
10
23
7
9
8
-
10
20
30
R&D Expensed
R&D Capitalised
Total R&D
AMRR increase reflects growth in recurring revenues from
new units and SaaS ARPU, partly offset by an FX impact
of $4.5m in FY21.
FCI increased with new incremental contracted units
added and renewals, partially offset by recognition of
revenues for new and existing contracts.
Exchange rate negative impact for FY21 was $9.3m
R&D as % of Revenue As previously signaled, expect to
spend 24-27% as investment for growth accelerates over
FY22.
Monitoring Performance LEADING GROWTH INDICATORS
ANNUALISED MONTHLY
RECURRING REVENUE
(
$m
)
FUTURE CONTRACTED
INCOME
(
$m
)
RESEARCH AND DEVELOPMENT
AS % OF REVENUE
6
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.
18
Monitoring Performance ENTERPRISE VALUE FROM EXISTING CUSTOMER BASE
Monthly SaaS ARPU has remained stable over past 12 months.
- Plan and hardware upgrades and addition of EROAD Where
- Stronger USD vs NZD reduced ARPU growth ($0.65) from FY20
Asset Retention Rate has remained stable and continues to be a focus
through renewal programmes in key markets.
-
10
20
30
40
50
60
70
FY18FY19FY20FY21
$54.32
$55.08
$58.38
$58.30
-
20
40
60
80
100
FY18FY19FY20FY21
95.8%
94.4
%
95.2
%
94.9
%
ARPU
ASSET RETENTION RATE
19
-
5
10
15
20
25
FY18FY19FY20FY21
20
24
22
18
15
17
6
13
11
4
2
5
CAC Expensed
CAC Capitalised
Total CAC
-
1
2
3
4
5
6
CTS
FY18FY19FY20FY21
4.5
5.0
4.6
4.7
$0
$200
$400
$600
$800
$1,000
$1,400
$1,200
$791
$1,236
FY20
FY21
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.
COST TO ACQUIRE CUSTOMERS
AS % OF REVENUE
COST TO ACQUIRE
PER UNIT
COST TO SERVICE AND SUPPORT
AS % OF REVENUE
20
CTS has remained within 4-5% of revenue range.
CTS will improve over time as scale and leverage increases.
The cost to acquire per unit has increased
year on year reflecting the lower number
of units added.
Operating Expenses
Sales and
Marketing
Other
$20.0m
$10.0m
$30.0m
$50.0m
$40.0m
$70.0m
$60.0m
60.9
-
54.1
0.3
(0.9)
(1.6)
0.9
1.2
3.4
1.61.2
FY20FY21
0.7
SCALECAPABILITYEXPANSION
STRATEGIC
INITIATIVES
LEGAL
COSTS
Increased
Decreased
Total
Sub-Contractors
Other Employment
Other Professional
Fees
Legal
Costs
Software and Systems
SaaS Platform
Costs
Personnel
Expenses
21
PROPERTY PLANT &
EQUIPMENT
• PPE spend is $6.5m lower than FY20 due to a
combination of lower new unit volumes and
tight inventory management
• The decrease in inventory also reflects a lift in our
provision for obsolescence in preparation for the
network changes in North America during FY21
INTANGIBLE ASSETS
• Total R&D spend of $21.3m has increased $5.7m
in line with guidance and is 23% of revenue,
$13.1m of which was capitalised as development
and software assets
• The overall decrease of $3.4m when compared
to the prior year is a result of reduced spend
on software. During FY20, EROAD undertook
a substantial investment in our new generation
business systems
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
ADDITIONS TO INTANGIBLE ASSETS
11.6
5.1
15.00
10.00
5.00
-
Total
PPE Additions*
($m)
10.8
4.4
Hardware
Asset Additions
($m)
10.1
5.3
FY20FY21
FY20
FY21FY20FY21
*Excluding Additions to Right of Use Assets
Hardware Asset
Additions excluding
Inventory Management
($m)
16.5
13.1
9.6
12.2
6.9
0.9
FY20FY21FY20FY21
FY20FY21
Total Intangible
Asset Additions
($m)
Development Asset
Additions
($m)
Software Asset
Additions
($m)
22
8.3
9.6
13.1
5.1
6.0
8.2
13.4
15.6
21.3
-
5.0
10.0
15.0
20.0
25.0
FY19FY21FY20
R&D ExpensedR&D Capitalised
IncreaseDecreaseTotal
42.1
13.1
(9.9)
45.3
-
20.0
40.0
60.0
FY20Additions
AmortisationFY21
Increased investment in R&D
TO SUPPORT NEW PRODUCT DELIVERY IN FY23 AND FY24
RESEARCH AND DEVELOPMENT
(
$m
)
MOVEMENT IN INTANGIBLES
(
$m
)
23
Inflows
Outflows
Total
38.8
10.0
(2.2)
(1.2)
(0.2)
(0.2)
(0.1)
(17.5)
5.3
-
(0.9)
(1.4)
(0.2)
(0.2)
(0.1)
(0.2)
25.0
20.0
15.0
10.0
5.0
-
40.0
35.0
30.0
45.0
CDE EBITDA
Other PPE
Development Assets
Software Assets
Interest Paid
Group Free Cash Flows FY21
(3.1)
(0.1)
(0.5)
(12.2)
(0.9)
(2.5)
38.7
0.2
NEW ZEALAND
$32.3m (FY20: $25.1m)
NORTH AMERICA
$9.3m (FY20: $0.6m)
AUSTRALIA
($1.4m) (FY20: $1.7m)
CORPORATE & DEVELOPMENT
($33.6m) (FY20: $33.8m)
Other Operating Cash Flows
EBITDA
Other PPE
CA Assets
H&A Assets
CF Assets
EBITDA
Other PPE
CA Assets
H&A
CF Assets
EBITDA
Other PPE
CA Assets
H&A
CF Assets
H&A under Construction
Operating Companies FCF FY21
Free Cash Flow Analysis by Segment
7
7
Group Free Cash Flows (FCF) for the purpose of this analysis refers to Operating Cash Flows Less Investing Cash Flows.
8
This FCF by market analysis provides an indicative view of FCF. Note that this does not represent actual FCF by market: Hardware & Accessories under Construction (inventories held) are presented in total and Other Operating Cash Flows (non-cash and working capital movements) are presented in
total and not allocated to specific seg ments. These amounts relate to all operating segments.
H&A Assets - Hardware & Accessory Assets • CA Assets - Customer Acquisition Assets • CF Assets - Contract Fulfilment Assets • CDE EBITDA - Corporate, Development and Elimination EBITDA • H&A under Construction - Hardware & Accessories under Construction
24
Cash flow statement (NZ$m)
• Operating cash flows benefit from a higher
revenue $92m versus $81m and hence increased
customer receipts
• Investing cash out flows fell from $35.9m to
$22.8m reflecting the investment in business
systems and processes in H1 FY20 and the lower
spend on hardware units due to lower growth in
H2 FY21
• Financing cash flows grew as result of $42m
raised via placement and a further $11m was
raised via share purchase plan
Year ended
FY21FY20
Movement
FY21 vs
FY20H2 FY21H1 FY21
Movement
H1 FY21 vs
H2 FY21
Cash flows from operating activities
Other operating cash flows30.625.84.815.315.3-
Interest paid(2.5)(2.7)0.2(1.5)(1.0)(0.5)
Net cash inflow from operating activities28.123.15.013.814.3(0.5)
Cash flows from investing activities
Property, Plant and Equipment
(including hardware assets)
(4.7)(11.6)6.9(3.0)(1.7)(1.3)
Intangible Assets(13.1)(16.5)3.4(7.4)(5.7)(1.7)
Contract Fulfillment and Customer
Acquisition Assets
(5.0)(7.8)2.8(2.7)(2.3)(0.4)
Net cash outflow from investing
activities
(22.8)(35.9)13.1(13.1)(9.7)(3.4)
Cash flows from financing activities
Bank loans(0.8)1.2(2.0)(2.6)1.8(4.4)
Issue of Equity52.9-52.910.942.0(31.1)
Cost of raising capital(2.1)-(2.1)(0.1)(2.0)1.9
Other financings cash flows(1.6)(1.1)(0.5)(0.8)(0.8)-
Net cash inflow/(outflow) from
financing activities
48.40.148.37. 441.0(33.6)
Net increase/(decrease) in cash held53.7(12.7)66.48.145.6(37.5)
Cash at beginning of the financial period3.416.1(12.7)-3.4(3.4)
Closing cash and cash equivalents57.13.453.78.149.0(40.9)
25
AS AT PERIOD ENDFY21FY20Movement
Cash57.13.453.7
Restricted Bank Account10.514.0(3.5)
Costs to Acquire and Contract Fulfilment Costs5.55.9(0.4)
Other8.210.7(2.5)
Total Current Assets81.334.047. 3
Property, Plant and Equipment34.737. 4(2.7)
Intangible Assets45.342.13.2
Costs to Acquire and Contract Fulfilment Costs3.44.8(1.4)
Other7. 37. 5(0.2)
Total Non-Current Assets90.791.8(1.1)
TOTAL ASSETS172.0125.846.2
Payables to Transport Agencies10.513.9(3.4)
Contract Liabilities6.68.2(1.6)
Borrowings35.035.80.8
Other Liabilities15.316.6(1.3)
Total Liabilities67. 474.5(7.1)
NET ASSETS104.651.353.3
Balance sheet (NZ$m)
• Cash has increased by $53.7m as a result of the
capital raise during September and the free cash
positive result for FY21 of $5.3m
• 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 as a result of the combination
of increase in our doubtful debt provision by an
additional ($1.5m) in FY21 reflecting uncertainty
due to the current economic conditions and also
provision of ($1m) for inventory.
• Contract Fulfilment and Customer Acquisition
Assets decreased by $0.4m due to subdued
growth during the 12 months as a result of
COVID-19 lockdowns
• Intangibles increase relates to the
ongoing capitalisation of R&D development .
• Borrowings from long term bank loans have
reduced due to scheduled repayments in
September and March
26
GROWTH
OPPORTUNITY
AND OUTLOOK
Steven Newman
Chief Executive Offi cer
27
28
The Global Telematics industry
poised for signifi cant growth
Digital Transformation
of the Transportation
industry
• Transportation and logistics
companies face signifi cant change
and increasingly require telematics
solutions that give actionable insights
and predictive analytics to manage
their operations, vehicles, assets,
and drivers in a safe, compliant and
effi cient manner.
• As the cost to track reduces,
companies want to track and manage
all their mobile and remote assets,
beyond trucks, trailers and cars.
• Customers’ need their telematics
solutions to be deeply integrated
with other back offi ce systems such,
logistic management, HR, ERPs and
fi nance systems in order to share data
in order to better understand and
operate their businesses.
Acceleration towards
road pricing
• Declining transportation fuel taxes
due to increasing fuel effi cient and
adoption of electric vehicles together
with increased road congestion will
see an acceleration towards road use
based charging.
• New Zealand continues to look at
both congestion pricing and road
usage charging options for all road
vehicles as the current fuel taxes
arrangements for petrol vehicles is
forecasted to become inadequate
and even less fair.
• North America is pressing on with
both State-level RUC-like reforms and
multi-state pilots
• Australia is exploring State-level
distance charges for electric vehicles
and national-level RUC for heavy
vehicles.
Health & Safety focus
continues to increase
• The use of Video telematics improves
Health and Safety outcomes in one
of the most dangerous workplaces,
the cab of the vehicle (truck or car).
Harsh braking and cornering recorded
videos allow drivers to be coached
and additional training put in place.
• In North America, many insurers
required video telematics in all
vehicles in order for operators to get
acceptable premiums.
• Further regulatory change is
expected over next 5 years with
Electronic Logbooks in NZ and AU to
improve driver fatigue management.
Regulatory Telematics
• Government supported/mandated
regulatory telematics solutions (for
road funding, Health & Safety on
the road, Driver Fatigue and Vehicle
maintenance) are forecasted to be
a signifi cant growth driver forcing
telematics adoption over the next fi ve
plus years.
Post COVID-19 Trends
• Need to signifi cantly improve supply
visibility and transparency.
• Increased pressure to go digital and
contactless, removing paper, human
contact and manual processes.
• Governments and corporate
transportation customers are
demanding:
• The transportation industry reduces
its emission footprint and adopt
cleaner technologies such as non
ICE (internal Combustion Engine)
powered vehicles.
• Improved ESG reporting against a
sustainability improvement plan.
THE GLOBAL TELEMATICS
INDUSTRY IS ESTIMATED TO
GROW TO US$750B BY 2030
9
28
9
Source McKinsey & Company (2018). Relates to global telematics plus the monetary value of the global ecosystem developing around monetizing vehicle data—including consumer vehicles.
Trends within our markets
NEW ZEALAND
• Health & Safety remain drivers of telematics
adoption
• Many enterprise businesses are requiring
their sub-contractors to use their technology
solutions to manage Health & 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 hardware, following AT&T 3G
network shut down in Feb 2022
• Many insurers requiring video telematics by
transportation operators to get acceptable
premiums
• 2020-2021 multi-state mileage-based user
fee truck pilot to begin October 2021
AUSTRALIA
• Chain of Responsibility obligations were
expanded in Oct 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
29
EROAD today
30
87,892
CONTRACTED UNITS
35,437
CONTRACTED UNITS
2,874
CONTRACTED UNITS
45%
10
ENTERPRISE CUSTOMERS
30%
10
ENTERPRISE CUSTOMERS
32%
10
ENTERPRISE CUSTOMERS
NEW ZEALANDNORTH AMERICA AUSTRALIA
32%
CONSTRUCTION &
CIVIL ENGINEERING
16%
FREIGHT & ROAD
TRANSPORT
10%
AGRICULTURE/
FORESTRY
42%
OTHER
47%
FREIGHT & ROAD
TRANSPORT
24%
CONSTRUCTION &
CIVIL ENGINEERING
8%
SERVICES & TRADE
21%
OTHER
44%
SERVICES & TRADE
16%
FREIGHT & ROAD
TRANSPORT
15%
CONSTRUCTION &
CIVIL ENGINEERING
25%
OTHER
10
Enterprise customers is defined as fleet sizes of over 500 for North America and over 150 for New Zealand and Australia
Strategic priorities across our markets
CONTINUED R&D AND STRATEGIC PARTNERSHIPS TO EXTEND PLATFORM AND FILL ANY PRODUCT GAPS
ENHANCED SALES AND MARKETING DELIVERY
CONSIDER STRATEGIC INORGANIC GROWTH OPPORTUNITIES
STILL SIGNIFICANT
GROWTH OPPORTUNITIES
IN NEW ZEALAND
FOCUSED ON INCREASING
THE ADDRESSABLE MARKET
IN NORTH AMERICA
BUILDING BRAND
IN AUSTRALIA
• Grow connected units to 100,000 over the
next 18 months
• Extend product offering in Civil Engineering,
Government fleets, Health & Safety, Electric
vehicles, carbon footprint reduction
initiatives and ESG reporting
• Increase APRU by selling additional SaaS and
mobile services to existing customers
• Extend the range of telematics solutions
beyond trucks and commercial light vehicles
into off road vehicles and small assets
• Leverage EROAD’s customer ecosystem to
create new value
• Grow connected units to 50,000 over the
next 18 months
• Extend product offering in the freight, road
transportation fleets and the areas of health
& safety
• Extend the range of telematics solutions
beyond trucks into trailers and associated
light duty vehicles and large assets
• Pursue Enterprise opportunities
• Grow monthly run rate business in small to
medium sized fleets
• Support National Road User Charging pilot
for heavy vehicles
• Grow number of connected units to 10,000 over
the next 18 months
• Extend product offering in the Civil Engineering,
Government fleets, areas of driver fatigue, health
& safety and vehicle service & maintenance
• Establish AU based leadership team to support
Enterprise and market development activities
• Pursue Enterprise opportunities
• Grow monthly run rate business in small to
medium sized fleets
• Increase EROAD’s Brand awareness using
targeted digital marketing
• Support National Road User Charging pilots
and transport regulatory development using
telematics technology
31
Focused on
Platform Expansion
• 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
32
KEY VALUE DRIVERS
123
A clear customer retention planYYN
Cost synergiesYNN
Revenue synergies of complimentary techNYY
Strategic leverage of joint offering or in-market teamNYY
STRATEGIC VALUE OF PRODUCT & PEOPLE
SIZE OF CUSTOMER BASE
1
Likely to be a direct competitor. This
should be a profitable business so
that the acquisition can be partially
funded by debt and maximise value
accretion.
2
It is expected most acquisitions will
be a mixture of customer bases and
capabilities for leverage. May be either
a direct competitor or a complimentary
tech platform with a proven subscriber
base.
NO VALUE
TO EROAD
3
Likely to be a complimentary technology
platform which does not yet have a
significant subscriber base. Possibly
early-stage. These acquisitions may
not be value accretive on day one, and
there may be additional R&D investment
required before the growth potential can
be fully realised.
Strategic
Inorganic Growth
Opportunities
• Our growth will not be solely organic
• Inorganic opportunities will increasingly
present themselves in a consolidating
industry
• Focused on transactions that provide
customer base and product capabilities to
differentiate EROAD further
33
R&D Investment
54%
New to EROAD
7%
Quality/Bugs
1%
New to World
76%
3%
Learning/Future
14%
Reliability, Availability,
Serviceability
and Scalability
19%
Planned
Enhancements
2%
Unplanned
Enhancements
CUSTOMER FACING
R&D
INVESTMENT
PROFILE
11
For the twelve months ended 31 March 2021. Analysis excludes internal system development and individual customisation.
• 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. Spent 23% in FY21. For FY22 and
FY23 expect to spend 24-27% as continue
to accelerate investment for growth
• Focused on product development that
opens up the addressable market for
enterprise customers
34
FY22 outlook
• Reiterate the FY22 guidance provided November 2020
• Anticipate that the percentage revenue growth in FY22
will strengthen from that delivered in FY21, but not be
at the level experienced in FY20
• In New Zealand, expect to add a similar number of units
to that seen prior to FY21 (~9,000 p.a). Ehubo sales will
be complemented with Clarity Dashcam sales
• In North America, expect increased unit growth in
FY22, supported by Clarity Dashcam sales, as economy
returns to pre-COVID conditions
• 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, we
anticipate spending 24-27% of revenue on R&D during
FY22
• However, EROAD also anticipate that EBITDA margin
will be maintained for FY22 but will improve at the end
of FY22.
35
QUESTIONS
& ANSWERS
36
YEAR ENDEDFY21FY20
Profit/(Loss) after tax for the year attributable to the shareholders2.01.0
Add/(less) non-cash items
Tax asset recognised(0.1)(0.0)
Depreciation and amortisation26.322.5
Other non-cash expenses/(income)(1.1)(1.0)
Add/(less) movements in other working capital items:
Decrease/(increase) in trade and other receivables2.4(0.2)
Increase/(decrease) in current tax receivables 0.00.0
Increase/(decrease) in contract liabilities(1.6)(1.8)
Increase /(decrease) in trade payables, interest payable and accruals0.22.6
Net Cash from operating activities28.123.1
Reconciliation of Profit to movement in cash
37
NZ$Local$
FY21FY20FY21FY20
New Zealand ARPU NZ$56.18NZ$55.78NZ$56.18NZ$55.78
North America ARPU NZ$65.03 NZ$65.73US$42.95US$41.94
Australian ARPU NZ$35.50NZ$37.28AU$33.16AU$35.86
ARPU reconciliation of local currency to NZ$
38
Glossary
• ANNUALISED MONTHLY RECURRING
REVENUE (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) is a non-GAAP measure of costs to
acquire customers. Total CAC represents
all sales & marketing related costs. CAC
capitalised includes incremental sales
commissions for new sales, upgrades and
renewals which are capitalised and amortised
over the life of the contract. All other CAC
related costs are expensed when incurred and
included within CAC expensed.
• COSTS TO SERVICE & SUPPORT (CTS)
Is a non-GAAP measure of costs to support
and service customers. Total CTS represents all
customer success and product support costs.
These costs are included in Administrative and
other Operating Expenses reported in Note 4
Expenses of the FY21 Financial Statements.
• EBITDA is a non-GAAP measure representing
Earnings before Interest, Taxation, Depreciation
and Amortisation (EBITDA). Refer
Consolidated Statement of Comprehensive
Income in Financial Statements.
• EBITDA MARGIN is a non-GAAP measure
representing EBITDA divided by Revenue.
• EHUBO, EHUBO2 and EHUBO 2.2
EROAD’s first and second generation electronic
distance recorder which replaces mechanical
hubo-dometers. 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.
• ENTERPRISE means a fleet of more than 500
vehicles in North America and more than 150
vehicles in Australia or New Zealand.
• FREE CASH FLOW is a non-GAAP measure
representing operating cash flow and investing
cash flow reported in the Statement of Cash
Flows.
• FUTURE CONTRACTED INCOME (FCI)
A non-GAAP measure which represents
contracted Software as a Service (SaaS)
income to be recognised as revenue in future
periods. Refer Revenue Note 3 of the FY21
Financial Statements.
• FY Financial year ended 31 March.
• H1 For the six months ended 30 September
• H2 For the six months ended 31 March
• INTERNATIONAL FUEL TAX
AGREEMENTS (IFTA) A cooperative
agreement between all states (excluding
Alaska and Hawaii) of the United States, and
the Canadian provinces, designed to make
it simpler for inter-jurisdictional carriers to
report and pay fuel excise taxes, requiring only
one fuel license to operate across multiple
jurisdictions.
• MONTHLY SAAS AVERAGE REVENUE
PER UNIT (ARPU) is a non-GAAP measure
that is calculated by dividing the total SaaS
revenue for the year reported in Note 3 of the
FY21 Financial Statements, by the TCU balance
at the end of each month during the year.
• ROAD USER CHARGES (RUC) In New
Zealand, RUC is applicable to Heavy Vehicles
and all vehicles powered by a fuel not taxed at
source. The charges are paid into a fund called
the National Land Transport Fund, which is
controlled by NZTA, and go towards the cost of
repairing the roads.
• SAAS Software as a Service, a method of
software delivery in which software is accessed
online via a subscription rather than bought
and installed on individual computers.
• SAAS REVENUE 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.
• TOTAL CONTRACTED UNITS represents
total units subject to a customer contract
and includes both Units on Depot and Units
pending instalment.
• UNIT A unit is either an EROAD Ehubo, Tubo
or Etrack wired device.
• WEIGHT-MILE TAX (WMT) A mileage-
based tax imposed on Heavy Vehicles
according to a combination of the number of
axles and/ or combined weight.
39
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 Offi cer
alex.ball@eroad.com • + 64 029 772 5631
---
< P. 1MENUSECTION TITLEEROAD ANNUAL REPORT 2021P. 2 >EROAD ANNUAL REPORT 2021
94.9%
reflecting quality of service
and product offering
FY20: 95.2%
ASSET RETENTION RATE
STABLE AT
13%
reflecting growth
in all regions
REVENUE
FY21: $91.6m • FY20: $81.2m
8%
despite challenging
macro-economic conditions
CONTRACTED UNIT GROWTH
FY21: 126,203 • FY20: 116,488
13%
reflecting growth in units and
ARPU and increased spend on
accelerating growth strategies
EBITDA
FY21: $30.7m • FY20: $27.1m
58.30
MONTHLY SAAS AVERAGE REVENUE
PER UNIT (ARPU) STABLE AT
FY20: $58.38
$
reflecting additional SaaS products
sold offset by FX movements
88.4m
ANNUALISED MONTHLY
RECURRING REVENUE (AMRR)
FY20: $84.0m
$
reflecting additional
contracted unit sales
54%
REDUCTION IN SPEEDING FREQUENCY
BY EROAD CUSTOMERS SINCE 2015
640
CUSTOMERS
RENEWED THEIR EROAD PLAN
(13,821 CONTRACTED UNITS)
>
99.99%
INDUSTRY LEADING
SERVICE UPTIME
83%
EROADER’S RECOMMEND EROAD
AS A GREAT PLACE TO WORK
1,054
‘EROAD CLARITY’ DASHCAMS
SOLD IN MARCH 2021
$
53m
1
CAPITAL RAISE
IN CONJUNCTION WITH ASX LISTING
TO ACCELERATE GROWTH STRATEGIES
1 $51m raised (net of $2m transaction costs) via capital raise
MENU
< P. 3MENUSECTION TITLEEROAD ANNUAL REPORT 2021P. 4 >< P. 3SECTION TITLEEROAD ANNUAL REPORT 2021P. 4 >
Contents
ABOUT EROAD
5
-
8
LEYTTER FROM
CHAIR AND CEO
9-17
OUR STAKEHOLDERS
19-22
SAFER ROADS
23
-
26
SUSTAINABLE ROADS
27
-
40
CUSTOMER
41
-
46
DATA
47
-
48
GLOBAL TRENDS
49-50
OUR MARKETS
51
-
62
THE NUMBERS
FINANCIAL STATEMENTS
GRI INDEX
63-66
79-113
145-156
AUDITORS REPORTREGULATORY DISCLOSURES
114-117139-144
OUR TEAM
CORPORATE GOVERNANCE
GLOSSARY
67-78
119-138
157-158
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 157-158 of this Annual Report. All
numbers relate to the twelve months ended 31 March 2021
(FY21) and comparisons relate to the twelve months ended
31 March 2020 (FY20), unless stated otherwise. All dollar
amounts are in NZD.
This report covers the financial year ended 31 March 2021
and is dated 28 May 2021. The report has been approved
by the Board and is signed on behalf of EROAD Limited by
Graham Stuart, Chairman and Steven Newman, Managing
Director and Chief Executive Officer
NON-GAAP MEASURES
< P. 3CONTENTSEROAD ANNUAL REPORT 2021P. 4 >
Graham Stuart
Chairman
Steven Newman
Chief Executive Officer
EROAD is a hardware enabled
SaaS company that pioneered
Regulatory Telematics
CLARITY DASHCAM
IN-VEHICLE HARDWARESAAS PRODUCTS
‘MyEROAD’
EHUBO2
Purpose is
SAFER AND MORE
SUSTAINABLE ROADS
Provides
REGULATORY
COMPLIANCE
AND TELEMATICS
SOFTWARE
to heavy and light vehicle
fleets in New Zealand,
North America and
Australia
Develops
TECHNOLOGY
SOLUTIONS
to manage vehicle fleets,
support regulatory
compliance, improve
driver safety and reduce
costs of operating a fleet
of vehicles and assets
126,203
CONTRACTED UNITS
94.9%
ASSET RETENTION RATE
$
58.30
MONTHLY SAAS ARPU
< P. 5ABOUT EROADEROAD ANNUAL REPORT 2021P. 6 >MENU
SECTION TITLEP. 8 >< P. 7EROAD ANNUAL REPORT 2021
Growth through providing
our customers additional
products and services
EROAD CLARITY
DASHCAM
EROAD GOEROAD DAY
LOGBOOK
MyEROAD FLEET
MAINTENANCE
EROAD INSPECT EROAD WHERE
Dual facing dashcam.
Integration of dashcam
while Ehubo data and
other key driver and
vehicle statistics supports
advanced driver coaching
and accident exoneration in
MyEROAD Replay
A workflow application
that connects with
the transport
management system
Simplifies fatigue
management by enabling
drivers to capture work
and rest hours via a smart
phone or tablet
Simplifies vehicle
maintenance with
automated service schedule
based on time lapsed,
distance travelled or engine
hours, plus a full service
history archive
Makes vehicle inspections
easy, capturing defects
with your mobile
device, and providing
transparent and traceable
inspection information
Affordable
Asset Tracking
1,054
SOLD IN MARCH
(86 WHICH WERE
NEW EROAD CUSTOMERS)
OPENS UP
ADDRESSABLE
MARKET
LONG SALES LEAD-IN TIMES
6,407
DRIVERS SUBSCRIPTIONS
(515 WHICH ARE
STANDALONE)
5,647
IN-CAB SERVICE ALERTS
5,818
PRE-TRIP COMMS
10,490
DRIVERS SUBSCRIPTIONS
OVER 306
CUSTOMERS
5,060
SOLD TO
OVER 164
CUSTOMERS
Increases
addressable market
Improved
Monthly SaaS Average
Revenue per Unit
Retention
Tool
< P. 7ABOUT EROADEROAD ANNUAL REPORT 2021P. 8 >MENU
< P. 9MENUSECTION TITLEEROAD ANNUAL REPORT 2021P. 10 >< P. 9EROAD ANNUAL REPORT 2021
Letter from
the Chair and CEO
We are pleased to report our financial
results for the year ended 31 March 2021
(FY21). In a year that presented challenging
macro-economic conditions we continued to
grow across all of our markets. In addition,
we accelerated our growth strategies to
take better advantage of opportunities that
have emerged from the challenges of the
last twelve months. EROAD is now stronger
than ever before, better positioned to
capture the increasing growth opportunities
in telematics.
< P. 9MENUEROAD ANNUAL REPORT 2021P. 10 >LETTER FROM THE CHAIR AND CEO
< P. 11EROAD ANNUAL REPORT 2021< P. 11SECTION TITLEEROAD ANNUAL REPORT 2021P. 12 >
Revenue increased year on year by 13% to $91.6m and
Earnings Before Interest, Tax, Depreciation and Amortisation
(EBITDA) grew by 13% to $30.7m. Our Annualised Monthly
Recurring Revenue metric (AMRR), which provides a forward
view of sustainable revenue, increased from $84.0m at 31
March 2020 to $88.4m as at 31 March 2021.
Reflecting the quality of EROAD’s service and product
offering, in a year that brought with it a significant amount
of uncertainty for our customers, EROAD’s Asset Retention
Rate remained stable at 94.9% (FY20: 95.2%). In addition
640 customers renewed their plan (13,821 contracted units).
In New Zealand, we grew by 7,526 contracted units. This
growth reflects further extension into fleets of existing
customers, as well as new customers in Construction & Civil
Engineering, Freight & Road Transport, Services & Trades.
During Q3, we secured a large Enterprise customer, Toll New
Zealand. EROAD is to supply Toll New Zealand with almost
1,000 units and EROAD SaaS products, across their heavy
vehicle, light vehicle and trailer fleet.
North America, has been the most challenging of our markets
during COVID-19 due to the impacts of lengthy lockdowns,
wild fires, civil unrest and politics. New sales were significantly
challenged, with customers working from home and focused
on maintaining their businesses as opposed to looking at
making changes. While we did grow in North America, adding
1,425 units during the year representing growth of 4%, it was
significantly less than the prior year. We are encouraged by
signs that the North America economy has started to open up
again, bolstered by the increase in government support and
rollout of vaccination programme with workers beginning to
return to their workplaces across the region. Reflecting this,
EROAD currently has two enterprise customer prospects in
pilot for its Ehubo delivered services (approx. 1,500 units)
as well as a solid mix of mid-market pilots either launched
or beginning soon. There are also further pilots for Clarity
Dashcam with existing and new customers.
In Australia, despite restrictive lockdown in the first half of
the year, we added 754 contracted units in the year with
the majority of the units being added in H2. This growth
predominately came from new small-to-medium size
customers in Freight & Road Transport, Construction & Civil
Engineering, Services & Trades. During the year, we were
focused on securing some large enterprise opportunities
within our Australian pipeline. We announced at the
beginning of April that we had signed our largest Australian
enterprise customer, Ventia. This contract alone, almost
doubles the size of our Australian presence and we are still
working on a short to medium term enterprise sales pipeline
of some 15-20,000 connected vehicles.
In the year ended 31 March 2021, a total of $21.3m (FY20:
$15.6m) was invested in research and development,
representing some 23% of revenue. As we have previously
signalled, we see substantial and increased future growth
opportunities in the markets we operate in. As such we have
accelerated our research and development spend during
FY21 and it is anticipated this will grow to some 24-27% of
revenue in FY22 to be able to appropriately capitalise on this
growth opportunity.
Continuing to grow
in challenging
macro-economic
conditions
< P. 11EROAD ANNUAL REPORT 2021P. 12 >
20
40
60
80
100
-
FY21FY18FY19FY20
REVENUE
+13%
+13%
5
10
15
20
25
30
35
-
FY21FY18FY19FY20
EBITDA
LETTER FROM THE CHAIR AND CEOMENU
EROAD ANNUAL REPORT 2021< P. 13SECTION TITLEP. 14 >< P. 13
During the year, EROAD accelerated its growth strategies –
extending the platform further and launching new products.
This will enable us to grow contracted units and Average
Revenue Per Unit (ARPU) and retain customers. It also leaves
us very well positioned to capture the significant and growing
opportunity with Enterprise customers in North America and
Australia now that uncertainty is beginning to recede. We are
starting to see results already and we expect this to continue.
Following the launch of Clarity Dashcam in October 2020,
EROAD began marketing, selling and dispatching this product
in March 2021.
As expected, high demand was seen in North America as our
customers looked for safety solutions to deal with challenges
associated with increased insurance premiums. For the month
of March 2021, EROAD sold a total of 1,054 EROAD Clarity
Dashcams and we expect this run-rate to continue for the
Group as North America continues to return to normality after
restrictive COVID-19 lock downs and further momentum is
built within the New Zealand and Australian markets
Our EROAD Day Logbook product has seen great success
with some 6,407 drivers now using the product, including 515
subscriptions to customers who do not currently have EROAD
hardware installed.
1,054
‘EROAD CLARITY DASHCAM’
Subscriptions sold
in March 2021
6,407
‘EROAD DAY LOGBOOK’
Subscriptions sold
since launch in Q1 FY21
P. 14 >LETTER FROM THE CHAIR AND CEO
Accelerating Growth Strategies
MENU
< P. 15MENUSECTION TITLEEROAD ANNUAL REPORT 2021P. 16 >< P. 15EROAD ANNUAL REPORT 2021P. 16 >LETTER FROM THE CHAIR AND CEO
Improving our
sustainability reporting
At EROAD we are committed to sustainable business practices
that recognise the role our business plays in providing
positive outcomes for the communities we operate in and the
environment we share.
Last year we committed to taking this one step further by
moving towards reporting against a recognised sustainability
reporting framework. We are pleased to report that we have
made good progress during the past 12 months, including
completing a materiality assessment which will provide
the foundation for driving future improvements in our
sustainability efforts.
As you will notice, we have aligned our disclosure in this
annual report around what matters most to our stakeholders
as well as reporting against Global Reporting Initiative (GRI)
requirements. Additionally, following our ASX listing EROAD
is committed to moving towards best practice reporting in
Executive Remuneration disclosure over time.
< P. 15MENUEROAD ANNUAL REPORT 2021
Ensuring we have the
right team in place
During the year, EROAD has continued to add capability
and talent to its team to support its growth ambitions in
North America and Australia, alongside the increased focus
on winning Enterprise customers. As part of this, we were
pleased to appoint Casey Ellis to the role of President, of
North America. This has enabled Norm Ellis, who previously
held that role, to move into a newly created role of Executive
General Manager, Enterprise in March 2021. Norm will lead
and buildout EROAD’s global capability in Enterprise sales.
In November, EROAD also appointed Tim Hogan as its Chief
Technology Officer. Tim has held leadership roles of major
global companies including Warner Bros and Tivo. He brings
extensive experience in the technology sector to the team.
Around the Board table, we also need the right skills and
capabilities for EROAD. Following the external review in 2019
as part of our succession plan Michael Bushby and Candace
Kinser stepped down from the Board in 2020. We thank them
for their leadership and guidance given to EROAD, including
our IPO in 2014, and entering into the North America and
Australian markets. Following their retirements, we have
identified a vacancy which we will look to fill during FY22.
When filling this vacancy the missing skill sets from the Board
and the diversity of the Board will both be considered.
Creating shareholder value
Throughout the challenges of FY21, we continued to
focus on creating shareholder value. During a year of an
unprecedented uncertainty, our business model and customer
value proposition ensured that we weathered the storm. Our
Board, management and over 300 EROAD’ers stepped up
and navigated the new reality – working differently and an
increased focus on managing our cost base. We recognised
that this was the time to be bold and prepare to take best
advantage of growth opportunities when conditions improved.
For EROAD this meant increasing and accelerating its
investment in its platform and productivity. The ASX listing
and simultaneous $53m capital raise in September 2020
ensured we had the upfront funding to be able to begin this
acceleration. We achieved what we set out to do. EROAD is
now stronger than ever and ready to grow – and grow quickly.
Our share price increase of over 120% over FY21 is a vote of
confidence that our shareholders also believe we have the
right strategy in place and we are delivering against that.
SECTION TITLEP. 18 >< P. 17EROAD ANNUAL REPORT 2021P. 18 >SECTION TITLESECTION TITLEP. 18 >
Significant and growing
growth opportunities
EROAD operates in the global telematics industry, which
is estimated to grow to US$750b by 2030.
2
As countries
around the world look to solve their transportation problems
and as companies look to solve their operational problems -
the demand for telematics and our products grows.
Our customers are going through a digital transformation
and therefore are looking for solutions that give visibility,
data and insights to manage their fleets more productively,
track and manage mobile and remote assets as well as help
with their ESG reporting requirements.
As governments look to solve transportation problems,
regulatory telematics solutions in particular are forecast to be
a significant growth driver forcing telematics adoption over
the next 5+ years. Declining transportation revenues (as cars
become more fuel efficient and EV uptake increases) and
continued growth in road congestion will accelerate moves
to road pricing globally. EROAD is focused on world leading
regulatory telematics solutions is therefore well positioned to
take advantage of this trend.
EROAD’s cash flow, combined with the recent $53m capital
raise and banking facilities puts the company in a strong
position to pursue strategic growth opportunities. EROAD
continues to consider inorganic growth opportunities that
will provide customer base and product capabilities to
differentiate EROAD further.
FY22 Outlook
We reiterate the FY22 guidance provided November last
year at the time of the H1 FY21 financial results release. It is
anticipated that the percentage revenue growth in FY22 will
strengthen from that delivered in FY21, but not be at the level
experienced in FY20.
In New Zealand, we expect to add a similar number of units
to that seen prior to FY21 (~9,000 p.a). New Zealand Ehubo
sales will be complemented with Clarity Dashcam sales. In
North America, we expect increased unit growth in FY22,
supported by Clarity Dashcam sales, as economy returns to
pre-COVID conditions. 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,we
anticipates spending 24-27% of revenue on R&D during
FY22. However, we anticipate that EBITDA margin will be
maintained for FY22 will improve at the
end of FY22.
Thank you for your continued support of EROAD
and we look forward to seeing you at the ASM.
Graham Stuart
Chairman
Steven Newman
Chief Executive Officer
LETTER FROM THE CHAIR AND CEOEROAD ANNUAL REPORT 2021P. 18 >< P. 17
2 Source McKinsey & Company (2018). Relates to global telematics plus the monetary value of the global ecosystem developing around
monetizing vehicle data—including consumer vehicles.
MENU
< P. 19MENUSECTION TITLEEROAD ANNUAL REPORT 2021P. 20 >EROAD ANNUAL REPORT 2021P. 20 >< P. 19OUR STAKEHOLDERS
Our stakeholders
ENGAGING WITH OUR STAKEHOLDERS IS CRITICAL
TO THE SUCCESS OF EROAD.
Customers
In New Zealand and Australia, we win customers through
a combination of face to face interaction and effective
marketing material. Once a customer is committed to EROAD,
one of our certified technicians arrange installations. For our
enterprise customers, this is project managed and coordinated
through our Enterprise Support Team. To service customer
needs we have a variety of touch points: Customer Success
(help desk, tech support, onboarding), Telephone Account
Management, and Key Account Management personnel
for our larger customers. Key issues for New Zealand and
Australia customers in FY21 was environmental consciousness,
health and safety for their staff, and increased profitability in a
post-COVID market.
Policy Makers, Industry Regulators
and Associations
EROAD works alongside regulators and policy makers to
advance and refine regulatory laws and rules that are practical,
business friendly, met policy and regulatory outcomes and are
future proofed. By providing a bridge between the industry
and the regulations, EROAD enables industry-accepted high-
quality solutions to be delivered to the market that, in turn,
deliver safer and more sustainable roads.
In New Zealand, EROAD engages with the Ministry of
Transport sharing our experiences and providing insights to
support regulatory change. EROAD engages regularly with the
New Zealand Transport Agency/Waka Kotahi to help trouble-
shoot various matters arising, and this supports a collegial and
constructive quarterly RUC performance meeting with them,
and the ability to have free and frank discussions on more
strategic issues. Key industry associations that EROAD works
with is the Bus and Coach Association, Civil Contractors New
Zealand, Intelligent Transport Systems New Zealand, New
Zealand Trucking Association, Road Transport Association,
Road Transport Forum, WasterMINZ. The key policy area
EROAD focused on in FY21 with regulators and associations
was New Zealand’s future revenue system and on how to
make RUC less burdensome for light electric vehicle owners
once the current RUC exemption expires.
In North America, EROAD is deeply involved in research on
future transportation funding, engagement including with
the Federal Highway Administration, the American Trucking
Association, the Mileage Based User Fee Alliance, the Eastern
Transportation Coalition, federal and state governments.
Key industry associations that EROAD works with are
American Trucking Association, Colorado Trucking
Association, Commercial Vehicle Safety Alliance, Florida
Trucking Association, Florida Trucking Association, Georgia
Trucking Association, Indiana Motor Trucking Association,
Louisiana Trucking Association, Mileage Based User Fee
Alliance, National Private Truck Council, New York Trucking
Association, Nevada Trucking Association North American
Transportation Services Association, North Carolina Trucking
Association, Oklahoma Trucking Association , Ohio Trucking
Association, Oregon Trucking Association, Pennsylvania
Trucking Association, South Carolina Trucking Association,
Tennessee Trucking Association, Texas Trucking Association,
Truckload Carriers Association, Utah Trucking Association,
Washington Trucking Association, Wisconsin Motor Carriers
Association, Women in Trucking, Wyoming Trucking
Association. The key policy area EROAD focused on in FY21
was to continue to input to future sustainable transportation
funding research in North America and globally.
In Australia, EROAD attends the Transport Certification
Australia (TCA) online quarterly Telematics Industry Group
meetings. This is supplemented with targeted discussions
with TCA, the Australian Tax Office and the National Heavy
Vehicle Regulator on matters relating to current or proposed
equipment and service standards. Key industry associations
that EROAD works with are Australian Furniture Removers
Association, Australian Trucking Association, Civil Contractors
Federation New South Wales, Civil Contractors Federation
Queensland, Civil Contractors Federation Victoria, Queensland
Trucking Association. The key policy area EROAD focused
on in FY21 with regulators and the industry was to input into
on-road heavy vehicle RUC trials, and the review of the Heavy
Vehicle National Law (HVNL).
EROAD also has deep relationship with the International
Road Federation (Global) and International Bridge Tunnel and
Turnpike Association.
Investors
EROAD has a formal Investor Relations programme which
focuses on providing communication in a balanced, clear
and transparent way. The communication is ongoing through
financial reporting, quarterly financial updates, Annual
Shareholders Meeting (ASM), Management and Governance
roadshows. In April 2020, EROAD was announced as the
finalist for the INFINZ Emerging Leaders Best Investor
Relations award.
Key issues on the minds during the FY21 year included the
impact of COVID-19 on the growth of EROAD.
EROAD Team
EROAD is always looking at how to enhance the employee
experience. We check in with our people monthly through an
employee survey. We also regularly communicate with our
global team through weekly email updates, intranet articles
and the monthly all staff meeting. We meet with senior leaders
across the business each month to enable discussion on key
topics. We have a vibrant social scene that helps our teams
connect on a more personal level. FY21 saw an increase in
digital and virtual communication as we adapted to lockdown
restrictions in all regions and an overall increase in people
working remotely.
Key issues in FY21 were how to look after our people’s physical
and mental wellbeing through the pandemic as well as
attracting and retaining talent to successfully grow our business.
In North America, we win customers through solution based
consultation through team selling and demo deployment.
Once a customer is committed to EROAD we provide step-
by-step instruction for all required installations steps. Our
onboarding team assists with pulse checks during the install
process. Regular outreach to Customers ensures they are
informed on best practice and new products and services
EROAD can provide. For larger fleets, an annual business
review is provided. The key issue for North America customers
in FY21 was the impact of COVID-19.
MENU
< P. 21EROAD ANNUAL REPORT 2021EROAD ANNUAL REPORT 2021< P. 21
What Really Matters
to our stakeholders
MATERIALITY MATRIX
6
6
7
7
8
8
9
9
10
10
Responsible use of
materials
Environmental impact/
Natural resources
Carbon emissions
Contribution to public
policy
Safer communities
Customer Safety
Outcomes
Occupational H&S
Diversity & equality
Talent acquisition &
retention
Ethical business practices
Sustainable financial
returns
Data privacy &
security
Customer relationships
Data integrity/reliability
Training &
development
During FY21 we completed a materiality assessment which will provide the
foundation for driving future improvements in our sustainability efforts. EROAD’s
materiality assessment process has enabled us to identify and prioritise the
Environmental, Social and Governance issues that are of most importance to the
business and its stakeholders so our improvement efforts can be impactful.
Materiality Assessment Process
The process we used to develop our materiality matrix
included several rounds of engagement throughout the
company and with a broad group of external stakeholders.
As a first step, we held a series of internal workshop meetings
to uncover material Environmental, Social and Governance
factors relevant to EROAD’s business. Our discussions were
informed by:
• The internationally recognised Global Reporting Initiative (GRI)
Sustainability Reporting Standards which were developed to
help companies report in a consistent and transparent way;
• The 17 Sustainable Development Goals (SDGs) developed by
the United Nations in 2015 which governments around the
world have signed up to, including in the countries in which we
operate; and
• EROAD’s risk management framework which sets out the
company’s key risk areas and tolerances.
The process was then extended to wider group of internal
stakeholders including Board members and team members
from across the business who were asked to rank the factors
based on what they believed should be most important to
EROAD. The results were used to provide an indication of the
overall relative importance of the material factors.
The next step was to expand the process to include feedback
from EROAD’s key stakeholders, including customers,
investors (institutional and retail), regulators, industry bodies,
branches of local and national government, partners and
suppliers. Stakeholders were asked to assess the importance
of each material factor and also the impact of that factor on
them as a stakeholder in EROAD’s business.
Pleasingly, the material factors we identified through this
process were strongly aligned with EROAD’s purpose and
values.
Next steps
Having developed and validated our materiality matrix, we
have aligned the disclosure in this Annual report to align with
what matters most to our stakeholders.
Going forward, we will look to report against the GRI standards
and as a first step, you will find a reference index based on
the GRI standards on pages xx to xx of this report. EROAD
will now begun to put in place measurement process and
to capture information on our performance. From there we
will be creating meaningful goals to focus our improvement
efforts and bring about meaningful change. We look forward
to sharing our progress with you in future reports.
OUR ENVIRONMENTOUR PEOPLEOUR COMMERCIAL APPROACHOUR COMMUNITIES
OUR STAKEHOLDERSEROAD ANNUAL REPORT 2021P. 22 >MENU
< P. 23EROAD ANNUAL REPORT 2021< P. 23SECTION TITLEEROAD ANNUAL REPORT 2021P. 24 >
-
10%
15%
20%
25%
201620182020
18.14
5.32
No Driver Login
No Posted Speed
Speeding events per 100 km
Driver Login
Posted Speed
HEAVY
LIGHT
33.76
15.27
No Driver Login
No Posted Speed
Driver Login
Posted Speed
Safer Roads
EROAD contributes to safer roads through the delivery of
products and services to transport operators and drivers,
and the road network insights we provide to road controlling
authorities and the wider transportation industry.
SAFE VEHICLES
Vehicles that are fit for
purpose and safe to drive
Through EROAD’s Inspect App
and in-cab inspections, Drivers
have conducted over 1.8 million
inspections. 3.3% of these
inspections identified unsafe-
to-drive trips which enabled the
customer to take the appropriate
action.
SAFE ROAD USE
Drivers are trained and
behave in a safe way
SAFE ROADS AND ROADSIDES
Ensuring the road design is
appropriate for the users
EROAD’s Road Network Insights team
provide insights and analytics to Road
Controlling Authorities and the wider
transportation industry to improve the
understanding of vehicle activity and
driver behaviours on the road network
and as a result influence and improve
decisions around road lifecycle
management.
SAFE SPEEDS
That speed limits are set
appropriate for the road
and conditions
EROAD provides anonymised and
aggregated insights into travel
times and patterns across road
networks.
EROAD’s product highlights
the speed limit to drivers so
they are always aware of their
environment.
FREQUENCY OF SPEEDING
BY EROAD CUSTOMERS SINCE 2015
54%
SEVERITY OF SPEEDING
BY EROAD CUSTOMERS SINCE 2019
SPEEDING FREQUENCY BY PRODUCT COMBINATIONS
12%
A safe
Road System
increasingly free
of death and
serious injury
< P. 23SAFER ROADSEROAD ANNUAL REPORT 2021P. 24 >
“The Inspect App is excellent, we use it
for pre and post-trip inspections. Our
drivers love it, they can upload photos
and communicate any issues they can
see coming. We can then act quickly to
isolate a vehicle or adjust maintenance
dates when required.”
Ben Field, General Manager
Busfleet Australia
1 Graphic based on New Zealand’s Safe Systems approach to combatting road deaths and serious injury
MENU
< P. 25MENUSECTION TITLEEROAD ANNUAL REPORT 2021P. 26 >< P. 25EROAD ANNUAL REPORT 2021
Eyes on the road
< P. 25MENUSAFER ROADSEROAD ANNUAL REPORT 2021P. 26 >
Clarity dashcam works alongside EROAD’s Ehubo product and is designed to
help improve safety, enabling driver coaching and incident prevention, and in
cases where an accident has happened, proof of facts.
We expect to see strong demand for this product as our customers look to
improve safety and reduce their insurance premiums from demonstrating their
vehicle safety.
Research has shown that experienced drivers have an established set of habits
while driving and the opportunity to amend some of these habits can lead to
safer driving behavior.
Video provides a visual coaching opportunity for the driver to see, understand,
and improve. Video provides an understanding of root cause, and with
that information companies can make quality operating decisions in a very
efficient manner. Professional drivers are only at fault in catastrophic accidents
~20% of the time. Enabling our customers to exonerate their drivers with video
provides a strong return on investment. The long term benefit is the reduction
of claims dollars for customers using video by 50 – 80%.
54%
of vehicles showed a decline
in speeding frequency after
installing Clarity dashcam
1,054
sold in March 2021
SECTION TITLEP. 28 >< P. 27EROAD ANNUAL REPORT 2021P. 28 >SECTION TITLEP. 28 >SUSTAINABLE ROADS
Leaderboard
Changing the way businesses
and the industry operates
In New Zealand, EROAD’s Leaderboard
has become a well-known benchmark for
drivers, in providing companies visibility
on their performance in managing health
and safety associated with driving.
EROAD Leaderboard allows a customer
to benchmark its drivers against industry
benchmarks, ranking them on key driver
metrics. The customer can use the insights
provided by Leaderboard to support
driver training and reward programmes,
helping it improve driver retention and
meet its duty of care obligations.
This gamification aspect of the product
has driven a safety culture through
customer fleets, with feedback from
customers that friendly competition
has helped change the mindsets of
their drivers, proving that positive
reinforcement often works better
disciplinary action.
Smart Environmental Ltd doubled their 5
star drivers over FY21, due to an initiative
which saw the introduction of a star rating
to driver KPI’s. Cardinal Logistics Limited
began internally displaying monthly
leaderboard results and rewarding those
top drivers. Through this they obtained a
61% drop in speeding events.
“The EROAD Leaderboard allows us to visibly
show drivers how we are accurately tracking
Speeding events of our fleet. Speeding is not
only a safety risk but also negatively impacts
Asset Damages. These reports create awareness
amongst the drivers that we are using data that is
real and live to manage their weekly bonus paid
out if certain criteria’s are met with Speeding
being the most import aspect”
Leonard Griessel, National Transport Manager,
Cardinal Logistics Limited
“ Driver behaviour has improved markedly
since we have been using Eroad in our fleet,
overspeeds and other adverse driving behaviours
have reduced and in general we are seeing
better performance from our trucks and drivers
which has also made a positive impact on our
fleet downtime. The Leaderboard is referenced
to reward good driving behaviour and this has
created a friendly rivalry to improve driver ratings
resulting in safer practices, better operators and
an improvement on the bottom line”
Murray Pharaoh, National Fleet Manager,
Smart Environmental Ltd.
MENU
EROAD ANNUAL REPORT 2021SECTION TITLEP. 30 >< P. 29P. 30 >
Helping our customers run their
businesses more productively
With over 126,000 connected vehicles,
checking in every few seconds, EROAD
can offer a significant amount of insight
on how effectively our customers’
businesses are operating.
This approach automates much of the
work required by customers to derive
intelligence from their data. Customers are
able to customise their own dashboards
based on specific requirements, including
safety and utilisation metrics, detecting
ensuring accurate time keeping by cross-
referencing logbook data with vehicle
use, and informing more profit-focused
business decisions by combining EROAD
data with financials in route and vehicle
level profit & loss reporting.
Through its team of professional data
engineers, visualisation experts and
data scientists, EROAD will continue to
enhance this platform to build on the level
of insights offered to its customers.
EROAD’s new suite of premium data
products, EROAD Analyst, was made
available in March 2021. Representing the
first stage of EROAD’s data strategy, these
products focus on improving customer
access to data, by providing connection
to an always up-to-date data set accessed
through a modern visualisation and
analytics platform.
SUSTAINABLE ROADSMENU
SECTION TITLEP. 32 >EROAD ANNUAL REPORT 2021< P. 31
The Future of
Transportation
Funding
In 2010, EROAD and New Zealand led the world by introducing an electronic
means of managing Road User Charges. By taking advantage of GNSS-based
digital technologies, New Zealand’s original distance-based charging scheme
was able to leap forward with simpler, more accurate, and faster processes.
In the 11 years since EROAD introduced eRUC, EROAD has become responsible
for a third of all RUC transactions and 80% of all Heavy Transport ERUC. At
the same time, the real cost of operating the RUC system is estimated to have
reduced also by a third. The technology EROAD uses to deliver these benefits
has unlocked both additional maintenance, fuel and insurance cost savings for
fleets, and social benefits for the wider public from safer driving and roads,
resulting in avoided harm.
Despite the success of the New Zealand RUC model, the world has been slow
to pick up on the approach. However, momentum has been quietly building.
The world is entering a period where real progress to wider-spread use of
RUC is occurring and will continue to occur. Just in EROAD’s key markets, New
Zealand is continuing to look at both congestion pricing and the future of the
revenue system once fuel taxes become inadequate and even less fair, the
United States is pressing on with both State-level RUC-like reforms and multi-
state trials, and Australia is exploring State-level distance charges for electric
vehicles and national-level RUC for heavy vehicles.
“In economics, things take longer
to happen than you think they will,
and then they happen faster than you
thought they could”
Rudiger Dornbusch
P. 32 >SUSTAINABLE ROADSMENU
< P. 33MENUSECTION TITLEEROAD ANNUAL REPORT 2021P. 34 >SECTION TITLEEROAD ANNUAL REPORT 2021P. 34 >< P. 33
Behind this change is the drive
to reduce the carbon footprint
of land transport
Nations are now approaching the de-carbonisation of land
transport with real urgency. Whereas fuel taxes have long
been the principal source of revenue for road building
and maintenance, they are on a downward trend - at an
increasingly rapid rate and will soon prove inadequate. And
where countries have failed to maintain the real value of their
fuel taxes i.e., the United States, they already are.
New highly efficient internal combustion engines, fully electric
vehicles, and alternatively fueled vehicles all contribute to
less fuel tax revenue from land transport. Regulators and
manufacturers are working together to accelerate their uptake:
• By the end of 2020, more than 20 countries had announced
bans on the sales of conventional cars or mandated all new
sales to be ‘Zero Emission Vehicles’
• Eighteen of the world’s top-20 vehicle manufacturers –
responsible for 90% of new car registrations in 2020 – have
publicly stated plans to electrify their range of vehicles and
ramp-up production
• Truck makers such as Daimler, MAN, Renault, Scania and Volvo
have indicated they see an all-electric future, broadening
range of available zero-emission heavy-duty trucks
• EV’s are not the only option being considered for
decarbonising transport. Hydrogen is well suited to the
heavy duty logistics, road, rail, marine and ultimately aviation
applications, where electricity is a more suitable option for
light duty vehicles. Many governments recognise this and are
working to ensure hydrogen is not over-looked as a possible
alternative, in particular green hydrogen
These declarations are reflected in real change, visible now:
• There were 10 million electric cars on the world’s roads at the
end of 2020, following a decade of rapid growth
• Electric car registrations increased by 41% in 2020, despite the
pandemic-related worldwide downturn in car sales in which
global car sales dropped 16%
• Electric bus and electric heavy-duty truck registrations
increased in 2020 in China, Europe and North America, the
global electric bus stock reaching 600,000 and the electric
HDT stock 31,000.
Electric vehicles pay no fuel taxes. High efficiency vehicles may
pay only 20%-30% the tax of an equivalent petrol or diesel
using vehicle. In this environment, distance-based charging is
a practical way of ensuring roads get paid for fairly.
EVs are not the only option being considered for
decarbonising transport. Hydrogen is well suited to the
heavy-duty logistics, road, rail, marine and ultimately aviation
applications, while electricity is a more suitable option for
light duty vehicles. Many governments recognise this, and are
working to ensure hydrogen is not over-looked as a possible
alternative.
Managing and pricing congestion,
pollution and other indirect costs
A major challenge for road tax reform is that people have
often been allowed to forget that roads need ongoing
investment to keep them running – that there are ongoing
direct costs that must be met. At the same time, there are also
important indirect costs that are getting harder and harder to
ignore – urban congestion from excessive demand, poor urban
amenity due to busy roads and increased fumes, particulates
and noise from heavy traffic.
There is growing interest in going beyond just fair charges to
recover direct costs and pricing roads to better reflect these
‘externalities’ and optimize road use. Whereas, a few short
years ago, traditional tolling systems were seen as a way of
pricing high demand corridors, experts recognise that these
problems need network-wide solutions that tolling cannot
deliver, but eRUC systems can.
There is more to this than just fairly charging and pricing the
right uses at the right places and the right times. A good eRUC
system also provides the data and insights needed to better
manage both the network, the processes of change, and the
setting of appropriate, fair and effective prices.
EROAD is the bridge between
the transport industry and the
regulators
EROAD works alongside regulators and industry experts to
find solutions that are sensible and future proof. By being
the bridge between the industry and the regulations, EROAD
enables industry-accepted high-quality solutions to be
delivered to the market that, in turn, deliver safer and more
sustainable roads.
For example EROAD has been the Technology and Research
Partner to the Eastern Transportation Coalitions commercial
vehicle RUC projects. The 1st Multi State RUC Truck Pilot in
the US (2018/19) and the 1st National RUC Truck Pilot in the
US (2020/21). These projects are being supported by the
American Trucking Association and other industry bodies.
EROAD is widely recognised as a thought leader in this
space with members of its Global Market Development team
appointed to the roles of Chair of RUC Committee and RUC
Academy instructors in the International Road Federation, in
addition to a Member of the Advisory Council for the Mileage
Based User Fee Alliance.
P. 34 >SUSTAINABLE ROADSMENU
< P. 35EROAD ANNUAL REPORT 2021SECTION TITLEP. 36 >< P. 35EROAD ANNUAL REPORT 2021
The Environment
we operate in
EROAD recognises the need to operate sustainability and protect the
environment in which our customers operate. One of the problems
Governments, regulators and our customers alike are trying to solve, is the
impact of transportation on the level of Greenhouse Gas Emissions (GHG).
EROAD’s products look to help customers improve their on-road productivity
and help with fuel efficiency (reduce fuel usage and idling) which can in turn
help customers reduce their GHG emissions.
TIL Freight is a New Zealand provider of transport and
logistics services, including general freight, containerised
goods, and heavy haulage. At the start of 2020, Divisional
CEO of Transport, Dallas Vince was brought in to streamline
operations across its 21 branches and look for efficiency gains.
EROAD’s idle reports which identify instances where fuel
has been wasted through excessive or unnecessary idling
or a poorly tuned vehicle highlighted that most idling was
happening in their container group. TIL’s fleet includes two
types of container vehicles: skeleton trailers, where the
container is lifted on using a forklift or combi-lifter, and
swinglift trailers, which have movable lifting arms that make a
forklift unnecessary. Until the late 2000s, most swinglifts relied
on the vehicle to power them, requiring the driver to leave the
ignition on. Now, nearly all have their own auxiliary motor, but
drivers who had worked for TIL since those days were still in
the habit of leaving their trucks idling, and the EROAD data
showed that. While compliance dictates one-on-one driver
management regarding overspeeds, the topic of idling hadn’t
been discussed with drivers before.
With the help of all the container division managers, EROAD
developed an inclusive consultation process and reviewed
TIL’s standard operating procedures, which contained nothing
specific about idling. From there came the idea of hosting an
informal Toolbox Talk, with a one-pager explaining the cost of
idling to the business. TIL then put the EROAD Leaderboard
up on the breakroom TV. TIL Christchurch saw an across-the-
board improvement: Between July and September 2020, fleet
idling dropped by more than 68 percent and overspeeds by 48
percent. Many of the container division’s double-shifted units
went from 10 to 15 hours of idling per week to fewer than five.
Using EROAD’s advanced analytics, EROAD compiled fuel
efficiency data to establish a benchmark and identify which
trucks were performing poorly and the possible reasons why.
That data told the TIL team to look at three things: “One, is it
driver behaviour that’s leading to poor fuel efficiency? Two, is
it the wrong truck for that job? Or three, is that the truck is old
and needs to go?”
EROAD gives you a broader understanding of the effects of
idling and speeds on different elements of fleet management.
CASE STUDY
HOW REDUCED IDLING HELPED TIL FREIGHT
IMPROVE ITS FUEL EFFICIENCY
68%
FLEET IDLING
48%
OVERSPEEDS
37%
FUEL TRANSACTIONS
P. 36 >SUSTAINABLE ROADSMENU
Working towards increased
Electric Vehicles
EROAD has partnered with FUSO and several early adoptor customers including
Mainfreight, Bidfood, Toll, Owens Transport and Vector OnGas, to provide data,
analytics and insights around heavy EV usage as part of the Round 9 EECA Low
Emissions Contestable Fund. The study involves a one-year e-truck trial with 5
FUSO eCanter trucks and chargers in the proposed Auckland Transport Queen
Street Valley Zero Emissions Area (ZEA). This will give EROAD the opportunity
to gain deeper insights into FUSO’s eCanter truck, deliver value to end customers
through assisting with addressing barriers to EV adoption, and informing future
policy development around low emissions zones for urban freight
In EROAD’s own New Zealand fleet we have 9 Hybrids and 3 Electric Vehicle (2
more waiting on delivery). We will be replacing a further 8 vehicles this year with
at a minimum hybrids but potentially another few EV’s. EROAD’s total fleet is 33.
EROAD’s direct impact on the environment is through the
offices we operate in, the use of data centres to power our
platforms, and the business-related travel we undertake.
EROAD has engaged Green Gorilla for a 360-degree waste
solution in our global headquarters. Green Gorilla has
successfully braved uncharted territory to maximise recovery,
reuse and recycling, to promote a cleaner, greener New
Zealand. We are also diligent in our recycling efforts in both
our Australian and American offices. Going forward, EROAD is
looking to measure key environmental initiatives so that we can
continue to find ways to reduce our impact on the environment.
We know that together, we can make a difference.
EROAD recently conducted a Supplier Sustainability
Questionnaire to assess the sustainability initiatives
undertaken by our key suppliers. The Questionnaire
encompassed 5 main questions under the following headings:
Values, Environment, Social, Governance and Community.
Our suppliers are focussed on ensuring ethical business
practices, and for the most part, can clearly identify their
environmental impacts and respond to these accordingly.
Our suppliers are committed to reducing their environmental
impact by making their operations more efficient, using
low-carbon energy sources, and are either ensuring that
their goals are monitored and measured, or are working
towards achieving this. Supplier Questionnaire responses
included references to Codes of Conduct, Corporate Social
Responsibility Policies, Human Rights Statements/Policies,
Modern Slavery Statements, and Slavery and Human
Trafficking Statements.
Manufacturers of EROAD’s EHUBO device have not wavered
in their commitment to sustainability by continuously aligning
themselves with the UN Sustainability Development Goals. On
the environmental front, ambient air monitoring is conducted
periodically by a 3rd party laboratory to measure mitigation
efforts relating to the use of hazardous chemicals in the
line process. Our EHUBO manufacturers are committed
to principles of good corporate governance and are in full
compliance with the Code of Corporate Governance for
publicly listed Companies set forth by the Securities and
Exchange Commission. Manufacturers are also committed to
upholding human rights and employee safety as specified in
their Code of Conduct. Their community engagement in 2020
included programs to aid and support employees in need of
financial aid amidst the pandemic, fundraising for employees
affected by typhoons, free meals, and various other employee
engagement activities.
Suppliers of EROAD’s location mapping systems are likewise
committed to corporate responsibility. Operating in a
predominantly office-based environment, EROAD’s chosen
mapping supplier does not operate any production plants
of factories. Employees are encouraged to participate in
environmental awareness campaigns and volunteer during
key days of action. Environmental impacts of the business
are tracked, and metrics to reduce the carbon footprint are
identified. Solutions to decrease environmental impact
are constantly sought, including through green building
certifications. As location technologies are now a critical
aspect of our global infrastructure, EROAD’s mapping
suppliers offered significant support during the COVID-19
crisis. They willingly partnered with global businesses to
support the collection of location data whilst ensuring the
protection of individual privacy rights. The company’s Give
Back program lead to the packing of 522,072 meals across 12
cities around the world.
EROAD is proud to be partnering with likeminded
organisations in our pursuit of sustainability across our
business processes. We are looking to use our Supplier
Sustainability Questionnaire to screen new suppliers using
environmental and social criteria. This insight will assist us in
our endeavour to take action against negative environmental
and social impacts.
< P. 37EROAD ANNUAL REPORT 2021P. 38 >SUSTAINABLE ROADS
EROAD and its suppliers
impact on the environment
MENU
< P. 39SECTION TITLEEROAD ANNUAL REPORT 2021P. 40 >
EROAD’s
Supply chain
COVID19 has had a major impact on supply chains globally,
with some key issues in raw material supply, but Eroad has
been able to maintain supply through this time including into
the NZ based Global Service Centre (GSC) and has manged
well in FY21.
Eroad was designated an essential service by the NZ
government during COVID19 and our shipments globally out
of warehouses and the GSC remained running, with strict
COVID H&S protocols, through all NZ lockdown periods and
extended US disruption.
Where possible we refurbish product in our NZ based service
centre to increase lifetime and decrease waste. During FY21
year we have refurbished over 11,000 units (FY20 9,500).
EROAD Where tags can be returned to source for recycling at
end of life.
This year we have expanded our partners to help with more
secure recycling programs of older product now approaching
end of life.
Looking at the coming year, we are forecasting the extended
impact on global supply chains from COVID will continue
through all of FY22 on items such as silicon for memory
devices, and crystals for modems as globally raw material
have been depleted. We have gone into FY22 holding higher
levels of stock of raw material both at supplier and in our
warehouses to help smooth supply.
11,000
REFURBISHED OVER
UNITS
>
10%
< P. 39
LISOCI2 BATTERIES,
PCB BOARDS
AND LEAD ACID BATTERIES
(FY20: 9,500 units)
RECLAIMED
P. 40 >SUSTAINABLE ROADSMENU
Customer
Relationships
%94.9
ASSET
RETENTION RATE
640
CUSTOMERS RENEWED
THEIR EROAD PLAN
(13,821 contracted units)
< P. 41CUSTOMEREROAD ANNUAL REPORT 2021P. 42 >MENU
P. 44 >
Customer Relationships
Our customers are important to us and
EROAD differentiates itself by working
in partnership with them over time. By
investing time into our customers we
ensure that they are making the most of
their EROAD products to maximise their
return on investment and achieve their
business outcomes. It also ensures that
we know how to best meet their needs
going forward. Happy customers that
make a good return on investment will
remain loyal and grow their relationship
with EROAD over time.
North America Customer
Satisfaction Survey July 2020
Ensuring the voices of our
Enterprise customers are heard
In the past year, EROAD has focused on ensure that it’s
products and services meet the needs and volumes of larger
fleet sizes. Alongside this investment, EROAD has invested in
customer service to ensure it too meets the needs of Medium
and Large Enterprise customers.
Customer Success Managers provide a “voice of the customer”
to identify and highlight key customer business needs to all
internal EROAD stakeholders. This ensures that all customer
outcomes, in particular for enterprise customers, are met all
while providing a superior customer experience.
To achieve this, the CSM will have the following engagement
channels:
• Weekly meeting to review all Product Support Cases & track
progress on all open projects & Integrations
• Regular and ongoing reviews of Customer adoption to
ensure Best Practices are employed and that EROAD solutions
are utilized to ensure maximum efficiency and satisfaction
• Annual Business reviews highly customized with specific data
points and benchmarks to document continued ROI provided
by EROAD solutions
• Enterprise Customers work in close partnership with EROAD
Product team, including participation in Product Alphas &
Betas, to ensure Enterprise workflow needs are met
• A twice yearly NPS (Net Promoter Score) that measures
customer loyalty and allows for EROAD Customer Success to
proactively follow up with customers.
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
6
SAVING
FTE WITH
ERUC
$
~
~
~
~
$
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
OVER
80%
of responses
were Satisfied or
Very Satisfied
with EROAD
OVER
70%
of responses
were Satisfied or
Very Satisfied
with EROAD solutions
and the impact
on their businesses
OVER
65%
of responses
were Satisfied or
Very Satisfied
with EROAD’s
responsiveness
to support issues
and support
chat feature
< P. 43CUSTOMEREROAD ANNUAL REPORT 2021MENU
SECTION TITLEP. 46 >
Supporting our customers
during COVID-19
Supporting our customers has been a priority for EROAD throughout the
ongoing COVID-19 global crisis.
During the various restrictive lockdowns across New Zealand, North America
and Australia EROAD continued to operate effectively to service and support
the supply chain and activities of transport and essential service providers
that were fully operational throughout. EROAD’s products and services also
supported organisations protect their staff and customers against the spread of
COVID-19 with products and services that allowed for paperless operations.
A dedicated EROAD COVID-19 response team was formed
in March 2020 and financial support provided in the form of
deferred payment to some of our more adversely impacted
customers as they worked through the uncertain journey.
The aim was to relieve pressure for over 198 of our customers
and provide them with the all-important support with
cash-flow whilst vehicle utilisation was down and their usual
revenue streams were affected on a short term basis. For
instance, in New Zealand some customers opted to defer
25-50% of their monthly payments in April and May 2020
(to be paid back over a period 12 months). We are extremely
proud to see a number of these customers begin to recover;
including Lifesaving Victoria who were offered financial relief
almost a year ago; and are now looking to eventually grow
their fleet and further their relationship with EROAD.
Our Tourism sector customers have been some of the most
severely impacted by COVID-19. To accommodate for the
effect of this, EROAD offered 100% Financial Relief for a period
of 3-6 months for our six Tourism customers.
In North America, EROAD has maintained a strong relationship
with the Oregon Trucking Association since first entering the
market. In April 2020, as the COVID began, EROAD worked
with Oregon Trucking Association to get their “Feed The
Truckers” initiative off the ground. This initiative was joined
by many other trucking and trucking-adjacent businesses
throughout the state and continued until the end of June.
The EROAD marketing team helped coordinate the project in
its early stage and many EROADers manned the first several
events to distribute food to truckers along major highways in
the Portland metro area. At its Annual Safety Conference in
November, Oregon Trucking Association named EROAD its
2020 “Allied Member of the Year”.
chasing better
resolution
< P. 45CUSTOMEREROAD ANNUAL REPORT 2021P. 46 >MENU
SECTION TITLEP. 48 >
Protecting the Data
so our customers can
operate with confidence
The resilience and integrity of the data EROAD collects and uses
in its platform and for reporting is fundamental to our success.
EROAD collects data on the identity of vehicles, assets and
drivers; asset and driver location; driver behavior; compliance
with land transport and health and safety laws including
worktime/fatigue, road safety and road user taxes
and regulations. A breach of confidentiality, loss of data or
technology disruption can lead to significant financial loss
and/or reputational damage for our customers. It is critical that
we maintain resilient and robust platforms and continually invest
in privacy and security.
The key risks around EROAD’s data include unauthorized access, failure to protect personal
or confidential information, Malware, Distributed denial of service and fraud attacks. To
ensure that our data is protected from these risks, EROAD has invested in a number of
activities over time including:
• establishing a cross functional cybersecurity cohort from the operations, IT, engineering and
legal team focused on IT risks including availability and continuity risks, security, change
management, data integrity and outsourcing
• partnering with global leading and resilient technology partners including AWS, Here Maps
and Vodafone
• implementing a 24/7 security operations centre and security incident and events management
service (SOC / SIEM) with a leading New Zealand information security company
• increasing training for staff on the importance of strong IT and cybersecurity and privacy
practices
• annual penetration testing of external and internal servers and applications
• increased insurance limits where remedial assistance may be needed.
Data risks and prevention mechanisms are reviewed monthly by the Board and Management
team, with continuous improvement and best practice as the benchmark. During this
financial year EROAD is focused on:
• implementing the leading global National Institute of Science & Technology (NIST) framework
for cybersecurity and privacy
• updating its business continuity plan, including for cyber security events
• simplifying and strengthening its policies for IT and cybersecurity.
100.oo%
AUSTRALIA AND NEW ZEALAND
FY21 UPTIME
99.99%
NORTH AMERICA
FY21 UPTIME
< P. 47DATAEROAD ANNUAL REPORT 2021P. 48 >MENU
The Global Telematics
industry poised for
significant growth
Digital Transformation of the
Transportation industry
• Transportation and logistics companies face significant
change and increasingly require telematics solutions that give
actionable insights and predictive analytics to manage their
operations, vehicles, assets, and drivers in a safe, compliant
and efficient manner.
• As the cost to track reduces, companies want to track and
manage all their mobile and remote assets, beyond trucks,
trailers and cars.
• Customers’ need their telematics solutions to be
deeply integrated with other back office systems such,
logistic management, HR, ERPs and finance systems in
order to share data in order to better understand and
operate their businesses.
< P. 49MENUEROAD ANNUAL REPORT 2021
Health & Safety focus continues to
increase
• The use of Video telematics improves Health and Safety
outcomes in one of the most dangerous workplaces, the cab
of the vehicle (truck or car). Harsh braking and cornering
recorded videos allow drivers to be coached and additional
training put in place.
• In North America, many insurers required video telematics in
all vehicles in order for operators to get acceptable premiums.
• Further regulatory change is expected over next 5 years with
Electronic Logbooks in NZ and AU to improve driver fatigue
management.
Regulatory Telematics
• Government supported/mandated regulatory telematics
solutions (for road funding, Health & Safety on the road, Driver
Fatigue and Vehicle maintenance) are forecasted to be a
significant growth driver forcing telematics adoption over the
next five plus years.
Acceleration towards road pricing
• Declining transportation fuel taxes due to increasing fuel
efficient and adoption of electric vehicles together with
increased road congestion will see an acceleration towards
road use based charging.
• New Zealand continues to look at both congestion pricing and
road usage charging options for all road vehicles as the current
fuel taxes arrangements for petrol vehicles is forecasted to
become inadequate and even less fair.
• North America is pressing on with both State-level RUC-like
reforms and multi-state pilots
• Australia is exploring State-level distance charges for electric
vehicles and national-level RUC for heavy vehicles.
Post COVID-19 Trends
• Need to significantly improve supply visibility and
transparency.
• Increased pressure to go digital and contactless, removing
paper, human contact and manual processes.
• Governments and corporate transportation customers are
demanding:
• The transportation industry reduces its emission footprint
and adopt cleaner technologies such as non ICE (internal
Combustion Engine) powered vehicles.
• Improved ESG reporting against a sustainability
improvement plan.
GLOBAL TRENDSP. 50 >
THE GLOBAL TELEMATICS INDUSTRY IS
ESTIMATED TO GROW TO US$750B BY 2030
2
2 Source McKinsey & Company (2018). Relates to global telematics plus the monetary value of the global ecosystem developing around
monetizing vehicle data—including consumer vehicles
< P. 51MENUSECTION TITLEEROAD ANNUAL REPORT 2021P. 52 >SECTION TITLEP. 52 >< P. 51EROAD ANNUAL REPORT 2021
The Market Leader
in New Zealand
95. 8%
ANZ ASSET RETENTION RATE
(FY20: 96.1%)
6,407
EROAD LOG DAY SUBSCRIPTIONS
SOLD IN FY21
1,391
CONTRACTED UNITS UPGRADED
FROM EHUBO1 TO EHUBO2
(FY20: $55.78)
56. 18
NZ MONTHLY SAAS ARPU
$
9%
CONTRACTED UNITS
(FY21: 87,892;
FY20: 80,366)
EBITDA
11%
(FY21: $38.8m;
FY20: $34.9m)
< P. 51MENUEROAD ANNUAL REPORT 2021OUR MARKETSP. 52 >
SECTION TITLEP. 54 >< P. 53EROAD ANNUAL REPORT 2021SECTION TITLEP. 54 >
New Zealand
87,892
CONTRACTED UNITS
TO DAY
STRATEGIC PRIORITIES FY22 FOCUS
• Grow connected units to 100,000 over the next 18 months
• Extend product offering in Civil Engineering, Government
fleets, Health & Safety, Electric vehicles, carbon footprint
reduction initiatives and ESG reporting
• Increase APRU by selling additional SaaS and mobile services
to existing customers
• Extend the range of telematics solutions beyond trucks and
commercial light vehicles into off road vehicles and small
assets
• Leverage EROAD’s customer ecosystem to create new value
In December 2020 EROAD secured a large New Zealand Enterprise customer,
Toll New Zealand. The NZ business, which delivers freight forwarding, end-to-
end transport services and comprehensive logistics solutions to customers has
chosen EROAD as their regulatory partner in New Zealand.
EROAD is to supply almost 1,000 units across their heavy vehicle, light
vehicle and trailer fleet. Toll New Zealand are also utilising several EROAD
SaaS (Software as a Service) services, including Inspect, Logbook and the
Maintenance module. For the past three months, EROAD has positioned an
implementation consultant on site at Toll New Zealand to work to ensure
the roll out across 20 different regions around New Zealand is as efficient
and smooth as possible and that Toll New Zealand’s return on investment in
EROAD’s products is maximised.
EROAD is the market leader in New Zealand, however there
are still significant growth opportunities with Health and
Safety remaining the main driver of telematics adoption.
In FY22, EROAD expects to add a similar number of
contracted units to that seen prior to FY21 ~9,000 p.a.
32%
CONSTRUCTION &
CIVIL ENGINEERING
16%
FREIGHT & ROAD
TRANSPORT
10%
AGRICULTURE/
FORESTRY
42%
OTHER
45%
3
ENTERPRISE
CUSTOMERS
P. 54 >OUR MARKETS< P. 53EROAD ANNUAL REPORT 2021
3 Enterprise customers is defined as fleet sizes of over 150 for New Zealand
MENU
< P. 55MENUSECTION TITLEEROAD ANNUAL REPORT 2021P. 56 >SECTION TITLEP. 56 >< P. 55EROAD ANNUAL REPORT 2021
Established in
North America
4 In NZ$ ARPU fell from NZ$65.73 to NZ$65.03 reflecting FX movements
5 ELD ratings supplies ratings of 33 of the top tier ELD solutions out of 313 that supply a solution that is self certified with the FMCSA
92.8%
NA ASSET RETENTION RATE
EBITDA
4%
33%
CONTRACTED UNITS
despite challenging
macro-economic
conditions
(FY21: 35,437;
FY20: 34,002)
(FY21: $10.0m;
FY20: 7.5m)
(FY20: 95.2%)
(FY20: US$41.94) 42. 95m
NA MONTHLY SAAS ARPU4
US$
# 1
ELECTRONIC LOGGING DEVICE (ELD) RATING
IMPROVED FROM #2 TO #1 ON ELD RATINGS5
1,020
‘EROAD CLARITY’ DASHCAMS SOLD IN MARCH
< P. 55MENUEROAD ANNUAL REPORT 2021OUR MARKETSP. 56 >
SECTION TITLEP. 58 >< P. 57EROAD ANNUAL REPORT 2021
North America
35,437
CONTRACTED UNITS
TO DAY
• Grow connected units to 50,000 over the next 18 months
• Extend product offering in the freight, road transportation
fleets and the areas of health & safety
• Extend the range of telematics solutions beyond trucks into
trailers and associated light duty vehicles and large assets
• Pursue Enterprise opportunities
• Grow monthly run rate business in small to medium
sized fleets
• Support National Road User Charging pilot for heavy vehicles
While North America has been servery impacted in FY21 with
COVID-19, wildfires, civil unrest and a challenging year of politics
this market is EROAD’s largest growth opportunity.
Following almost 100% adoption of telematics in interstate
vehicles over 10,000 pounds, following the Federal 2017-19
ELD mandate it is expected many Small to Medium Businesses
will upgrade to more than an ELD only solution when their
36-month contracts are renewed. In addition to this it is expected
a significant number of vehicles to upgrade following AT&T & 3G
network shutdown in Feb 2022. Dash Cams will be a significant
growth driver in this region as many insurers requiring video
telematics operators to get acceptable premiums.
In FY22, EROAD expects increased unit growth, supported by
Clarity Dashcam sales, as the economy starts to open up again
after COVID-19. Currently there are two enterprise customer
prospects in pilot for its Ehubo delivered services (approx. 1,500
units) as well as a solid mix of mid-market pilots either launched
or beginning soon. There are also further pilots for Clarity
dashcam with existing and new customers.
STRATEGIC PRIORITIES FY22 FOCUS
Earning the Top Spot at ELD Ratings
Since 2018, the EROAD ELD has been ranked well on
ELD Ratings, a well-known technology review site in the
United States. Fuelled by positive customer remarks about
dependability, accuracy, and high levels of customer service,
EROAD achieved the #2 rank in 2018. In June 2020, with
the launch of our new “Smart Short Haul” feature, EROAD
garnered new positive feedback from users. The Smart Short
Haul feature helps drivers who are close to exceeding allowed
hours or miles in a shift to operate under the proper ruleset,
so they avoid compliance fines and being placed out-of-
service during roadside inspections. In the office, Smart
Short Haul streamlines processes for time sheets and logs,
reducing back-office work and human errors and yielding
data that helps our customers better understand compliance
trends. In September, following a new review by ELD Ratings
editorial team, EROAD was awarded the #1 ranking. In
March 2021, ELD Ratings was acquired by FreightWaves and
renamed FreightWaves Ratings. The site now offers reviews
of dashcams as well as ELDs.
47%
FREIGHT & ROAD
TRANSPORT
24%
CONSTRUCTION &
CIVIL ENGINEERING
8%
SERVICES & TRADE
21%
OTHER
30%
6
ENTERPRISE
CUSTOMERS
OUR MARKETSP. 58 >< P. 57EROAD ANNUAL REPORT 2021
6 Enterprise customers is defined as fleet sizes of over 500 for North America
MENU
< P. 59MENUSECTION TITLEEROAD ANNUAL REPORT 2021P. 60 >SECTION TITLEP. 60 >< P. 59EROAD ANNUAL REPORT 2021
Building Brand
in Australia
< P. 59MENUEROAD ANNUAL REPORT 2021
EBITDA
(
0.9
)
m
reflecting growth in small to medium customers
offset by investment in building brand
(FY20: $(1.3)m)
36%
CONTRACTED UNITS
in small to medium customer segment
across range of industries
(FY21: 2,874; FY20: 2,120)
Ventia
LARGEST ENTEPRISE CUSTOMER SIGNED
33. 16
MONTHLY SAAS ARPU
7
(FY20: AU$35.86)
7 In NZ$ ARPU fell from $37.28 to $35.50 reflecting FX movements
AU$
OUR MARKETSP. 60 >
EROAD ANNUAL REPORT 2021< P. 61
Australia
2,874
CONTRACTED UNITS
TO DAY
• Grow number connected units to 10,000 over the next 18
months
• Extend product offering in the Civil Engineering, Government
fleets, areas of driver fatigue, health & safety and vehicle
service & maintenance
• Establish AU based leadership team to support Enterprise and
market development activities
• Pursue Enterprise opportunities
• Grow monthly run rate business in small to medium sized
fleets
• Increase EROAD’s Brand awareness using targeted digital
marketing
• Support National Road User Charging pilots and transport
regulatory development using telematics technology
Australia remains a large growth opportunity for EROAD
following the expansion of the Chain of Responsibility
obligations in October 2018. Video telematics is seen as
an important added service to improve Health and Safety
outcomes. We 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.
Increasingly, enterprise businesses operating across Australia
and New Zealand see it as one market, requiring one solution.
EROAD has 300 NZ Customers that have Trans-Tasman Fleets
for EROAD to target. The short-medium term enterprise
pipeline is approximately 15-20k connected vehicles.
STRATEGIC PRIORITIES FY22 FOCUS
In April 2021 EROAD signed its largest Australian enterprise
customer, Ventia. Ventia, an existing New Zealand customer
for a number of years, has chosen to come on board as
an Australian enterprise customer as well as significantly
increasing the size of its New Zealand fleet utilising EROAD
services.
Ventia is one of the largest essential services providers in
Australia and New Zealand, specialising in the long-term
operation, maintenance, and management of critical public
and private assets and infrastructure for corporate and
government clients across a broad range of sectors.
Ventia has entered into a five-year agreement for a monthly
subscription of EROAD’s SaaS products and intends to install
approximately 2,500 Ehubo 2 devices in their Australian fleet
with a further 1,500 in their New Zealand fleet. It is anticipated
that these Ehubo units will be installed throughout the 2021
calendar year.
EROAD entered the Australian market in 2018 and has been
building its brand on the back of regulatory reform which has
provided a significant low-cost growth option. This agreement
will almost double EROAD’s presence in the Australian market.
Ventia’s Group Chief Executive Officer, Dean Banks said
“Safety and health above all else is our number one priority
at Ventia. We are delighted to enter this strategic partnership
with EROAD, which will enhance our ability to improve safety
for our people, our clients and the communities we operate in.”
44%
SERVICES & TRADE
16%
FREIGHT & ROAD
TRANSPORT
15%
CONSTRUCTION &
CIVIL ENGINEERING
25%
OTHER
32%
8
ENTERPRISE
CUSTOMERS
P. 62 >OUR MARKETS
8 Enterprise customers is defined as fleet sizes of over 150 for Australia
MENU
SECTION TITLEP. 64 >< P. 63EROAD ANNUAL REPORT 2021< P. 63EROAD ANNUAL REPORT 2021
< P. 63EROAD ANNUAL REPORT 2021P. 64 >
FY21FY20FY19FY18
INCOME STATEMENT
Revenue $91.6m$81.2m$61.4m$43.8m
Ebitda $30.7m$27.1m$15.6m$10.5m
Ebitda margin 34%33%25%24%
Profit/(loss) before profit $1.9m $1.4m$(5.1)m$(5.9)m
Total comprehensive profit/(loss) after tax $1.5m$(0.3)m$(6.0)m $(3.7)m
BALANCE SHEET
Total Current Assets $81.3$34.0m$43.9m$46.6m
Total Non-Current Assets $90.7m$91.8m$79.3m$64.5m
Total Liabilities $67.4$74.5m$71.9m$54.4m
CASH FLOW
Net cash inflow from operating activities $28.1m$23.1m$14.3m$5.2m
Net cash outflow from investing activities $(22.8)$(35.9)m$(27.3)m$(23.8)m
Free cash flow $5.3m $(12.8)m$(13.0)m$(18.6)m
FINANCIAL PERFORMANCE METRICS
Annualised Monthly Recurring Revenue $88.4m$84.0m$66.5mn/a
Future contracted income $141.9m$134.4m$117.4m$100.5m
R&D as a % of Revenue 23%19%22%22%
Monthly Saas Average Revenue Per Unit $58.30$58.4$55.1$54.3
Asset retention rate 94.9%95.2%94.4%95.8%
Cost to acquire customers as a % of revenue 13%20%22%24%
OPERATING METRICS
Total contracted units 126,203116,48896,39077,600
MYEROAD CLARITY 1,054n/an/an/a
EROAD Day Logbook (driver subscriptions)6,655n/an/an/a
Inspect 10,4906,9953,5091,909
EROAD Where 6,450 n/a n/an/a
Etrack Wired 2,4741,336n/an/a
The Numbers EROAD’s track record
FINANCIAL PERFORAMNCE TRENDS
Revenue
Group Revenue increased 13% from $81.2m to $91.6m
reflecting growth in New Zealand and North America. New
Zealand Revenue increased by 12% to $58.8m from $53.4m in
the comparable period. The New Zealand business ended the
year with 87,892 contracted units, adding 7,526 contracted
units, to achieve an annual growth rate of 9% through both
expansion into existing customer fleets and new customers.
North America has been the most servery impacted of our
markets from the challenging marco-economic conditions, and
as such we only saw Revenue increase by $4.8m to $30.6m.
During the year, North America only added 1,435 contracted
units. Revenue in H1 FY21 also benefited from the forgiveness
of a COVID19 government support loan in North America of
$USD1.0m (NZD revenue increase of $1.6m). During the year
the Australian business added 754 contracted units, reflecting
growth in the small-to-medium business segment, to deliver
growth of 36%. Australian Revenue increased slightly from
$0.7m to $1.4m.
Operating Expenses
Operating expenditure increased 13% by $6.8 million in
line with revenue 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 $1.5m, relating
to the impact of COVID-19, and a one-off adjustment for
superannuation costs in North America of $1.1m.
EBITDA
EBITDA grew $3.6m or 13% to $30.7m. In New Zealand
continued growth into existing customer fleets, attracting new
customers and continued high asset retention resulted in a 11%
increase in EBITDA $38.8m.
North American EBITDA result of $10.0m is 33% ahead of
the same time last year as a result of ongoing market growth
and Recognition of the government loan forgiveness as grant
income ($1.5m) offset to an extent by a one-off adjustment
for superannuation costs ($1.1m) and an increased doubtful
debt provision. ($0.4m). Excluding these items, EBITDA for
the second half of the year grew 59% on H1 FY21 and 30% on
FY20. Continuing revenue growth (up 100% from FY20) and
reduced spending as a result of COVID-19 (for example less
marketing investment) has produced the improved EBITDA
result of $(0.9)m for Australia.
Depreciation & Amortisation
Total Depreciation & Amortisation of $26.3m increased by
$3.7m on the previous year. This increase reflects the growing
customer base (and related assets), the increase in our R&D
programme and significant investment in new generation and
business systems during FY20.
Profit before tax
Profit before tax increased from $1.4m in the prior year to
$1.9m. This represents the Revenue and EBITDA growth and
partly offset by higher depreciation and amortisation.
Investing in new innovatitive product
development
As signalled, EROAD sees significant growth opportunity
and during FY21 accelerated it investment in research and
development during the year in order to be in a position
to capitalise on these once uncertainty receded across the
markets. In the year to 31 March 2021, a total of $21.3m was
invested in research and development, of which $13.1m was
capitalised and $8.2m of previously capitalised research
and development was expensed/amortised. Inline with our
expectations, the total amount invested in research and
development represented 23% of revenue.
Balance sheet
Cash increased by $53.7m as a result of the placement during
September and the free cash positive result for FY21 of $5.3m.
Property, Plant and Equipment reduced as depreciation of
hardware assets exceeded the value of new hardware assets
capitalised from growth in the period. The decrease in other
assets within current assets category is as a result of the
combination of increase in our doubtful debt provision by an
additional ($1.5m) in FY21 reflecting uncertainty due to the
current economic conditions and also provision of ($1.0m) for
inventory.
Contract Fulfilment and Customer Acquisition Assets decreased
by $1.8m due to subdued growth during the 12 months as a
result of COVID-19 lockdowns. Intangibles increase relates to
the ongoing capitalisation of R&D development. Borrowings
from long term bank loans have reduced due to scheduled
repayments in September and March.
Free Cash Flow
Operating cashflows benefit from a higher revenue $92m versus
$81m and hence increased customer receipts. Investing cash out
flows fell from $35.9 m to $22.8 m reflecting the investment in
business systems and processes in H1 FY20 and the lower spend
on hardware units due to lower growth in H2 FY21. Financing
cash flows grew as result of $42m raised via placement and a
further $11m was raised via share purchase plan.
THE NUMBERSMENU
SECTION TITLEP. 66 >< P. 65EROAD ANNUAL REPORT 2021
The Financial Metrics
we measure ourselves by
66.5
86.0
88.4
-
20.0
40.0
60.0
80.0
100.0
ANNUALISED MONTHLY RECURRING REVENUE ($M)
FY19FY20FY21
LEADING GROWTH INDICATORS
ENTERPRISE VALUE FROM
EXISTING CUSTOMER BASE
AMRR increase reflects growth in recurring revenues
from new units and SaaS ARPU, partly offset by an FX
impact of $4.5m in FY21.
Monthly SaaS ARPU has remained stable over past 12 months.
- Plan and hardware upgrades and addition of EROAD Where
- Stronger USD vs NZD reduced ARPU growth ($0.65) from FY20
Asset Retention Rate has remained stable and continues to
be a focus through renewal programmes in key markets.
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.
The cost to acquire per unit has increased year on year
reflecting the lower number of units added.
FCI increased with new incremental contracted units
added and renewals, partially offset by recognition of
revenues for new and existing contracts.
Exchange rate negative impact for FY21 was $9.3m
R&D as % of Revenue As previously signaled, expect to
spend 24-27% as investment for growth accelerates over
FY22.
RESEARCH AND DEVELOPMENT AS % OF REVENUE
2222
12
1414
23
10
9
19
12
8
-
5
10
15
20
25
30
R&D ExpensedR&D CapitalisedTotal R&D
FY18FY19FY20FY21
7
100.5
117.4
134.4
141.9
-
25.0
50.0
75.0
100.0
125.0
150.0
FY18
FY19
FY20
FUTURE CONTRACTED INCOME ($M)
FY21
54.32
55.08
58.38
-
10
20
30
40
50
60
70
FY18FY19FY20
58.30
FY21
MONTHLY SAAS AVERAGE REVENUE PER UNIT ($)
FY21
95.8
94.4
95.2
94.9
-
20
40
60
80
100
FY18FY19FY20
ASSET RETENTION RATE (%)
CAC ExpensedCAC CapitalisedTotal CAC
-
5
10
15
20
25
COST TO ACQUIRE CUSTOMERS AS % OF REVENUE
17
15
6
5
4
24
18
22
20
11
2
13
FY18FY19FY20FY21
5.0
4.6
4.6
4.7
-
1
2
3
4
5
6
CTS
COST TO SERVICE AND SUPPORT AS % OF REVENUE
FY18FY19FY20FY21
$0
$200
$400
$600
$800
$1,000
$1,400
$1,200
COST TO AQUIRE PER UNIT
$791
$1,236
FY20
FY21
PROFITABILITY
< P. 65EROAD ANNUAL REPORT 2021P. 66 >MENU
< P. 67EROAD ANNUAL REPORT 2021SECTION TITLEP. 68 >SECTION TITLEP. 68 >
Our Team
83%
EROADER’S RECOMMEND EROAD
AS A GREAT PLACE TO WORK
(FY2O: 89%)
83%
EROADERS FEEL THAT EROAD IS AN
INCLUSIVE WORKPLACE WHERE
THEY CAN BE THEMSELVES
(FY2O: 89%)
< P. 67MENUOUR TEAMEROAD ANNUAL REPORT 2021P. 68 >
We lead
with Safety
We always put the safety and
wellbeing of EROADers first, and through our
products we provide the tools for our customers
to create safer workplaces too.
We operate
with Trust
We recognise the impact our behaviours and
actions may have on others. You can rely on us
to do what we say we’ll do.
We act
with Integrity
We get things done the “right” way, with ethics,
integrity, and positive intention that builds
relationships.
We perform
as one Team
We work together to achieve our goals.
We celebrate
Innovation
We learn and adapt quickly. We embrace new ideas
and concepts and we make time to innovate.
EROAD ANNUAL REPORT 2021< P. 69
Looking after people
through a global pandemic
Throughout the COVID-19 pandemic, EROAD’s priority has been
keeping staff safe and supporting its customers. The EROAD
team, like all organisations, were thrown into a new way of
working. EROAD staff adapted quickly and have proved resilient
through the challenges.
During the early days of the pandemic, over 140 EROADers
took up a subsidised work-from-home equipment offer to help
them work comfortably from home. All staff were also provided
a work-from-home guide with tips which included how to work
with kids at home and looking after your mental health.
The North America team have been in lockdown for over a year.
In that time they’ve also endured wild fires, civil unrest and a
challenging year of politics. EROAD worked hard to look after
the team with mental health talks, a Christmas gift delivered to
their homes, virtual social events and Uber Eats vouchers.
After a challenging year EROAD gave every employee an
additional 3 days of paid leave over the end of year break so
that everyone had an opportunity to take a minimum of 8
consecutive days off work.
211
NOMINATIONS FOR EROAD AWARDS
52
EROADERS
24
HOURS
11
IDEAS
29,515
BONUSLY RECOGNITION MESSAGES
$
3,000
DONATED TO THE RED CROSS
THROUGH EROAD AWARDS PROGRAM
$
1,833
DONATIONS TO CHARITIES
THROUGH BONUSLY REWARDS
‘Connect’ Hackathon
EROAD Awards
Recognition is peer-led through the quarterly EROAD Awards
program and online rewards platform, Bonusly.
In FY21 the team introduced a new giving component to the
EROAD Awards. Q1 and Q3 individual award winners got to
donate to a charity of their choice. Q2 and Q4 winners got to
buy gear for the office (or a gift for remote teams) to add to
the EROAD experience.
EROAD’s annual Hackathon is a 24
hour innovation event that brings together
people from across the organisation to develop
prototype solutions for real business and customer
problems. The Connect Hackathon in December
2020 was one of the best yet, with the highest ever
attendance from around the business. The teams had
some great ideas and EROAD’s interns also got to take
part, helping build a number of the solutions. A huge
‘One team’ effort.
A ‘new normal’
EROAD adapted well to remote working during the pandemic
and lockdowns in all regions. As New Zealand returned to a
‘new normal’ the teams came back with a fresh perspective
and working from home has become common for team
members. With North America still mostly working from
home, and the Australian team being remote, EROAD has
adopted a ‘remote first’ approach to meetings, making sure to
create an inclusive and engaging experience for all.
Working From Home Survey results
(June 2020)
81%
of employees wanted to move to a mix of
remote and in-office work.
41%
wanted to have the flexibility to work remotely
when they need to
90%
felt they did their best work when working
remotely
80%
felt that communication across all levels of the
company was more effective
OUR TEAMP. 70 >MENU
< P. 71EROAD ANNUAL REPORT 2021< P. 71EROAD ANNUAL REPORT 2021
Creating energised and
capable teams
EROAD is focused on attracting, retaining and motivating
talent. To achieve their significant growth aspirations, EROAD
is investing heavily in adding capability, as well as providing
further training and development opportunities for its people.
Adding capability
During the second half of the year, leveraging its rising
employment brand, EROAD secured several high-profile,
experienced talent in North America and Australia.
Casey Ellis was appointed to the role of President, North
America. Casey has held significant senior leadership positions
in the Transport and Logistics sector in North America.
Norm Ellis, who previously held the role of President, North
America, was appointed to the newly created role of Executive
General Manager, Enterprise, where he will lead and build out
the company’s global capability in Enterprise sales.
Tim Hogan was appointed as Chief Technology Officer. Tim
has extensive experience in the technology sector and has
held key leadership roles at major global companies.
Konrad Stempniak was appointed as General Manager,
Australia. Konrad is an accomplished senior leader, who has
held significant roles, most recently at Kennards Hire, across
strategic operations, technical sales and new ventures.
To deliver market leading products, EROAD made several
other key in-market hires in North America.
Jim Angel joined from Trimble as VP, Video Telematics
Todd Wazny brings significant market experience in his role as
VP, Strategic Partnerships and Solutions NA.
There has also been significant internal promotions. Andrew
Davies was promoted to General Manager for the New
Zealand business. EROAD’s Global Operations team will play
an increasingly significant role as we grow. To reflect this, Matt
Dalton was promoted from EVP Global Operations to Chief
Operating Officer.
Product development is at the forefront of EROAD’s
growth strategy, and over FY20 the Product and Engineering
Team was reorganised to reflect the increased focus on
Enterprise opportunities, improve accountability and
enhance agile practice. This brought new talent onto the team
and provided development opportunities for over 20 existing
team members, lifting engagement and retention outcomes. In
addition, a Director of Quality role was created to build
out the Quality Assurance practice and lift organisational
quality outcomes.
Attracting and welcoming
new talent
EROAD’s growth plans have led to a significant surge in
hiring across key strategic areas of the business. The focus in
FY21 was to improve how we attract and welcome new talent
to the team.
• Open Day
To build employment brand, EROAD held it’s Inaugural Open
Day in February. Sharing the EROAD story and demonstrating
why it has a highly desirable culture, characterised by inclusivity,
learning and high performance to some 60 attendees.
• Welcome Day
Made ‘welcome to eroad’ session fully virtual. Sessions allow
new starters to meet the executive and now focus on building
connections rather than providing lots of information. The new
approach has received extremely positive feedback on all sides
and particularly from remote team members.
• Onboarding
A new digital approach saw EROAD move their onboarding to
a Learning Management System to guide new starters in their
first weeks. This has simplified and made the onboarding
process easier and more engaging.
• Intern Program
The program attracted over 300 applicants in FY21.
The 8 interns who joined had an incredible experience. EROAD
prides itself on providing a rich experience for interns, giving
them hands on experience of our products.
• Scholarship
$5,000 scholarship awarded to a Software Engineering student
at The University of Auckland in 2020.
Training and Development is key to keeping our team
energised. EROAD is committed to attracting, retaining and
motivating top talent. The team have focused on leadership
development, career development and enhancing digital
training options:
Leadership Development
• New management 101 training program for new managers
• Leadership Boost sessions during lockdown helped
leaders refresh some of the training they’d been through
before
• Continued to roll out the EROAD Leadership Program which
started in 2019, taking leaders on a bespoke journey with
psychometric testing, one-on-one coaching and face-to-face
workshops.
Career development
• Career Pathways launched for Engineering to support people
in developing and growing with the company.
• Career Pathways are being developed for customer facing
teams
Digital training
• Online annual compliance training modules replaced in-person
sessions
OUR TEAMP. 72 >MENU
EROAD ANNUAL REPORT 2021SECTION TITLEP. 74 >< P. 73
Diversity,
inclusion and
belonging
EROAD encourages and values the
unique experiences, skills and background
of its people. It continually strives to
create an inclusive, collaborative and
open space where people feel safe
and empowered to think differently to
create new ideas. Helping bravely solve
customers’ complex problems.
Culture Day is an annual EROAD event. It’s an opportunity to celebrate what makes EROADers unique and
to learn more about one other. Due to lockdown restrictions, the annual celebration went virtual this year.
WISH Committee
The WISH (Wellbeing, Inclusion, Social & Health & Safety)
committee is a group of volunteers from across EROAD. The
committee organise events and activities throughout the year,
providing opportunities for the team to connect, celebrate and
have some fun. Closely tied to EROAD’s values, the committee
brings people together as one team.
At it’s core, the committee is focused on creating a culture of
inclusion and a sense of belonging. EROAD is extremely proud
of it’s diverse team, and the activities organised by the WISH
committee create an opportunity to celebrate that diversity.
Yoga, boxing fitness, walkathon competition, hackathon,
culture day, mental health talks, international women’s day –
these are just some of the events organised by the committee
and reflect the range of passions and backgrounds at EROAD.
In 2020, the committee worked hard to make sure remote
teams, and particularly the North American and Australian
teams, felt included. They made their events virtual, provided
Uber Eats vouchers for remote workers and created online
competitions and prize draws.
EROAD
IT
SECTOR
FEMALE
35%
FEMALE
24%
People Leaders Diversity
Age Split
25-34
33%
35-44
32%
45-54
20%
55-64
11%
18-24
4%
65+
0%
Female Percentage
of our Team
EROAD
FEMALE
38%
EROAD is proud of its diversity. It hires and promotes people
based on talent, not ethnicity or gender. The team and
managers represent a mix of males and females of all ages,
from over 30 countries around the world and this contributes
to the inclusive culture EROAD has built.
EROAD compares favourably to both the transport and
technology sectors for female representation at both
non-manager and manager levels. EROAD is committed
to encouraging and supporting female leaders. Flexible
work arrangements, parental leave and leadership
development opportunities are just some of the ways that
EROAD supports its female employees.
30
EROADers come
from over
DIFFERENT
COUNTRIES
OUR TEAMP. 74 >MENU
SECTION TITLEP. 76 >< P. 75EROAD ANNUAL REPORT 2021< P. 75EROAD ANNUAL REPORT 2021
Senior Leadership Team
STEVEN NEWMAN
Executive Director/CEO
Steven has been the CEO and member of the EROAD Board since 2007. EROAD is Steven’s third
start up. Navman his previous start up, he grew into four business units, operating across 40
countries with global sales in excess of $500m.
ALEX BALL
Chief Financial Officer
Alex’s career has spanned five countries, delivering a broad range of commercial, financial
and governance capabilities gained across corporate management, board directorship and
professional services. Alex joined EROAD in January 2019, with his previous roles including
CFO at Transpower, TelstraClear, and Vector. He also has a background in engineering. His
qualifications include BEng (Hons), ACGI, FCA (ICAEW), CA (CAANZ), SA Fin, MInstD (NZ)
and AF IMNZ.
MATT DALTON
Chief Operating Officer
Matt is responsible for the global operations of EROAD, focusing on execution of strategy. With
a strong technical delivery background, prior roles include CTO and Director of Professional
Services along with a solid engineering foundation. Matt has global delivery experience across
multi region teams and customers; working throughout NZ, Australia, USA and UK. Graduated
from University of Auckland with a BCom.
CASEY ELLIS
President, North America
Casey joined EROAD in March 2021. He brings over 15 years of experience in the transportation
industry, holding multiple senior leadership positions. His previous roles include COO at
UniGroup Inc., a $1.7 billion transportation company, where he designed and implemented
strategic marketing and technology initiatives to transform the company to an agile, customer
focused organization. Most recently, as President and COO at Armstrong Relocation, Casey
modernized and diversified their service offering, in a rapidly evolving marketplace to
successfully capture additional share of a robust growth market.
NORM ELLIS
Executive General Manager, Enterprise
Norm has nearly 40 years experience in both transport and telematics. Norm joined EROAD in
2017, after being the COO at ID Systems, Inc., a producer of wireless asset management systems
for the transport sector. Prior to that he led sales, services and marketing for Qualcomm/
Omnitracs in the US and Canada for nearly 17 years. He is a graduate of the Executive
Leadership programs from both Stanford Business School and University of Virginia Darden
School of Business and he holds a BA in Economics and Business Management.
MARK HEINE
EVP General Counsel and Company Secretary
As General Counsel and Company Secretary, Mark works with the team on all aspects of
company and product legal compliance and data privacy. His legal and risk experience
encompasses IP, technology, privacy, disputes, mergers & acquisitions, corporate governance
as well as competition and consumer law. Mark joined EROAD in 2015 after a legal career
working at Bell Gully, as a Barrister in Auckland and Allens in Sydney. He graduated from Otago
University with an LLB / BA.
MIKE SWEET
Chief People Officer
Mike joined EROAD in January 2019 to develop our people and culture. His global HR work
experience includes NZ, Australia, the UK and the USA. He’s worked in global bluechip
companies and successfully scaled start-ups. Mike’s most recent role was General Manager HR
at Spark. He holds a BA BCA, MHRINZ, GPHR, and PHR-CA.
SARAH THOMPSON
Chief Product Officer
Sarah joined EROAD in March 2019 to oversee our product research and development. She brings
a wealth of experience to this global role that includes creating and executing product strategy
across a range software companies, delivering to health and large insurance organisations
globally. Sarah joined from a similar role at Orion Health. She holds a B(Des) and has attended the
Executive Leadership Development program at Stanford Business School.
TONY WARWOOD
Executive General Manager, ANZ Business
Tony leads our New Zealand and Australian business. Tony joined EROAD with our first
customers back in 2009. A qualified mechanic, he brings first-hand experience of the challenges
our customers face, given his foundational career included being a heavy vehicle mechanic and
fleet manager
TIM HOGAN
Chief Technology Officer
Tim joined EROAD in December 2020 to lead our technology function. He has extensive
experience in the technology sector and has held key leadership roles at major global
companies including Warner Bros. and TiVo. He has previously launched and localised
technology services in 11 markets around the world.
BILLY MILLER
GM, Ventures & Insights
Billy joined EROAD in September 2020 and is leading EROAD’s Ventures & Insights business,
driving the growth of the business through innovation, partnerships and data. Billy has held
a number of senior leadership roles in New Zealand and UK, across Government, Financial
Services and Transport. He was responsible for leading the digital, data & analytics strategy
at Australasia’s leading insurance company. Growing their online platform by over 200% in 18
months to become the leading way that customers interact with the company.
NINA ELTER
SVP, Global Market Development
Nina’s career spans more than 20 years working in the technology, trucking, tolling and fuel card
sectors across Europe, the Americas and Australasia.
At EROAD, Nina leads the team responsible for finding and evaluating new opportunities on
the global landscape that enable safer and sustainable roads for all. Nina is the secretary of the
MBUFA Advisory Committee, member of the Eastern Transportation Coalition’s MBUF steering
committee and an active member of several other transportation associations and committees.
She is a member of the board of the International Road Federation (IRF global) and Chairs the
IRF committee on Road User Charging.
OUR TEAMP. 76 >MENU
< P. 77EROAD ANNUAL REPORT 2021
GRAHAM STUARTBARRY EINSIGTONY GIBSONSUSAN PATERSONSTEVEN NEWMAN
Chairman, Independent Director, Auckland
Appointed: January 2018, Chairman from
August 2018
Board Committees: Finance, Risk and Au-
dit, Remuneration, Talent and Nomination
Graham was previously CEO of Sealord
Group, CFO then Director of Strategy &
Growth at Fonterra and has had extensive
business experience in South East Asia, Eu-
rope, the UK and Latin America.
Independent Director, Pennsylvania
Appointed: January 2020
Board Committees: Remuneration, Talent
and Nomination
Located in Pennsylvania, Barry brings
considerable transport knowledge of the
North American market as well as global
automated and connected vehicle expertise.
He is currently a principal at CAVita, has
held other directorships within the trans-
port industry and has advised Singapore’s
Ministry of Transportation on their Highly
Automated Vehicle Program. In addition, Mr
Einsig has reviewed work undertaken by the
Transportation Research Board and created
patent-approved technology used in Public
Safety Networks.
Independent Director, Auckland
Appointed: October 2009
Board Committees: Remuneration,
Talent and Nomination (Chairman) and
Finance, Risk and Audit Committee
Tony is the Chief Executive of Ports of
Auckland and one of New Zealand’s
most experienced transport profes-
sionals. He has worked in various senior
management roles in Africa, Asia and
Europe. In 2008 the Minister of Trans-
port appointed him to the Road User
Review Group. Tony joined the Board in
October 2009.
Independent Director, Auckland
Appointed: March 2019
Board Committees: Finance, Risk and Audit
(Chair) and Remuneration, Talent and Nom-
ination Committee
Susan is an appointed Officer of New Zealand
Order of Merit (services to governance) and
currently chairs Steel and Tube Holdings and
IT consultancy Theta Systems and is a mem-
ber of the boards of the Electricity Authority,
RBNZ, Arvida Group, Goodman New Zealand
and Les Mills Holdings.
Executive Director / CEO, Auckland
Appointed: October 2007
Board Committees: Nil
Steven has been EROAD’s Chief Executive
and a member of the EROAD Board since
2007. He co-founded Navman where his
COO and CEO roles provided the opportu-
nity for him to establish Navman as a lead-
ing international brand delivering annual
sales in excess of NZ $500m
EROAD Board
To view Board Committee Charters and Corporate Governance Policies please visit https://www.eroadglobal.com/global/investors/
< P. 77EROAD ANNUAL REPORT 2021OUR TEAMP. 78 >MENU
FINANCIAL STATEMENTSEROAD ANNUAL REPORT 2021P. 80 >< P. 79
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2021
2021 2020
Notes$M's$M’s
Revenue3 91.6 81.2
Operating expenses4(60.9)(54.1)
Earnings before interest, taxation, depreciation
and amortisation
30.7 2 7.1
Depreciation of property, plant and equipment14(9.6)(8.6)
Amortisation of intangible assets16(9.9)(7.5)
Amortisation of contract and customer
acquisition assets
7(6.8) (6.5)
Earnings before interest and taxation4.44.5
Finance income0.20.0
Finance expense(2.7)(3.1)
Net financing costs8(2.5)(3.1)
Profit before tax 1.91.4
Income tax benefit/(expense)90.1(0.4)
Profit after tax for the period attributable
to the shareholders
2.01.0
OTHER COMPREHENSIVE INCOME
Foreign currency translation differences for foreign
operations
(0.5)(1.3)
Total comprehensive profit /(loss) for the period1.5(0.3)
Profit per share - basic (cents) 2.711.55
Profit per share - diluted (cents) 2.711.53
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
Financial
Statements
MENU
FINANCIAL STATEMENTSEROAD ANNUAL REPORT 2021P. 82 >< P. 81
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2021
2021 2020
Notes$M's$M’s
CURRENT ASSETS
Cash and cash equivalents12 57.1 3.4
Restricted bank accounts12 10.5 14.0
Trade and other receivables13 8.2 10.7
Contract fulfilment costs7 3.0 3.2
Costs to obtain contracts7 2.5 2.7
Total Current Assets 81.3 34.0
NON-CURRENT ASSETS
Property, plant and equipment14 34.7 37. 4
Intangible assets16 45.3 42.1
Contract fulfilment costs7 2.4 2.7
Costs to obtain contracts7 1.0 2.1
Deferred tax assets107. 3 7. 5
Total Non-Current Assets 90.7 91.8
TOTAL ASSETS 172.0 125.8
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
AS AT 31 MARCH 2021
2021 2020
Notes$M's$M’s
CURRENT LIABILITIES
Borrowings18 6.4 2.2
Trade payables and accruals17 7. 8 8.2
Payables to transport agencies12 10.5 13.9
Contract liabilities19 3.9 3.6
Lease liabilities15 1.0 1.0
Employee entitlements 2.3 1.8
Total Current Liabilities 31.9 30.7
NON-CURRENT LIABILITIES
Borrowings18 28.6 33.6
Contract liabilities19 2.7 4.6
Lease liabilities15 4.2 5.3
Deferred tax liabilities10- 0.3
Total Non-Current Liabilities35.5 43.8
TOTAL LIABILITIES67. 4 74.5
NET ASSETS 104.6 51.3
EQUITY
Share capital11
131.7 80.7
Translation reserve
(3.4) (2.9)
Retained Earnings
(23.7) (26.5)
TOTAL SHAREHOLDERS' EQUITY 104.6 51.3
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Chair of the Finance, Risk and Audit Committee,, 28 May 2021
Chairman, 28 May 2021
MENU
FINANCIAL STATEMENTSEROAD ANNUAL REPORT 2021P. 84 >< P. 83
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2021
2021 2020
Notes$M’s$M’s
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers92.379.2
Payments to suppliers and employees(61.7)(53.4)
Interest paid(2.5)(2.7)
Net cash inflow from operating activities 28.1 23.1
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for investment in property, plant & equipment14(4.7)(11.6)
Payments for investment in intangible assets16(13.1)(16.5)
Payments for investment in contract fulfilment assets7(3.5)(4.4)
Payments for investment in customer acquisition assets7(1.5)(3.4)
Net cash outflow from investing activities (22.8) (35.9)
CASH FLOWS FROM FINANCING ACTIVITIES
Receipts from bank loans181.71 7.7
Repayments of bank loans18(2.5)(16.5)
Payment of lease liability15(1.6)(1.1)
Receipts from issue of equity52.9-
Payments for costs of raising equity(2.1)-
Net cash inflow from financing activities 48.4 0.1
Net increase/(decrease) in cash held 53.7 (12.7)
Cash at beginning of the financial period 3.4 16.1
Closing cash and cash equivalents 1257.1 3.4
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2021
Share
Capital
Retained
Earnings
Translation
Reserve
Total
Notes$M’s$M’s$M’s$M’s
Balance at 31 March 2020 80.7 (26.5) (2.9) 51.3
Profit after tax for the period - 2.0 - 2.0
Other comprehensive income - - (0.5) (0.5)
Total comprehensive income for the
period, net of tax
- 2.0 (0.5)1.5
Equity settled share-based payments - 0.8 - 0.8
Share capital issued11 51.0 - - 51.0
Balance at 31 March 2021 131.7 (23.7) (3.4) 104.6
Balance at 31 March 2019 80.6 (27.7) (1.6) 51.3
Profit after tax for the period - 1.0 - 1.0
Other comprehensive income - - (1.3) (1.3)
Total comprehensive loss for the
period, net of tax
- 1.0 (1.3) (0.3)
Equity settled share-based payments 0.1 0.2 - 0.3
Share capital issued11 - -
Balance at 31 March 2020 80.7 (26.5) (2.9) 51.3
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
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EROAD ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
P. 86 >< P. 85
RECONCILIATION OF OPERATING CASH FLOWS WITH REPORTED
PROFIT AFTER TAX
FOR THE YEAR ENDED 31 MARCH 2021
2021 2020
Notes$M’s$M’s
Profit after tax for the year attributable to the
shareholders
2.01.0
ADD/(LESS) NON-CASH ITEMS
Tax asset recognised
(0.1)-
Depreciation and amortisation26.322.5
Other non-cash expenses/(income)(1.1)(1.0)
25.121.5
Movements in other working capital items
Decrease/(increase) in trade and other receivables2.4(0.2)
Increase/(decrease) in contract liabilities(1.6)(1.8)
Increase/(decrease) in trade payables, interest
payable and accruals
0.2 2.6
1.00.6
Net cash from operating activities28.123.1
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
NOTE 1 REPORTING ENTITY AND STATUTORY BASE
EROAD Limited (the “Company”) is a company domiciled in New Zealand registered under the Companies Act 1993 and listed on
the New Zealand Stock Exchange (NZX) Main Board and Australian Stock Exchange (ASX). The Company is a FMC reporting entity
for the purposes of the Financial Markets Conduct Act 2013 and the financial statements have been prepared in accordance with
the requirements of that Act and the Financial Reporting Act 2013. The consolidated financial statements comprise EROAD Limited
and its subsidiaries (the “Group”). The Group provides electronic on-board units and software as a service to the transport industry.
The financial statements of the Group for the year ended 31 March 2021 were authorised for issue in accordance with resolution of
the directors on 28 May 2021.
The accounting policies below have been applied consistently to all periods presented in these financial statements.
NOTE 2 BASIS OF ACCOUNTING
(a) Basis of preparation
The financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand (NZ
GAAP). The Group is a for-profit entity for the purposes of complying with NZ GAAP. The financial statements comply with New
Zealand equivalents to International Financial Reporting Standards (NZ IFRS) for Tier 1 entities, other New Zealand accounting
standards, and authoritative notices that are applicable to entities that apply NZ IFRS. The financial statements also comply with
International Financial Reporting Standards.
(b) Changes in accounting policies
The accounting policies and disclosures adopted are consistent with those of the previous year. Where applicable, certain
comparatives have been reclassified to comply with the accounting presentation adopted in the current year.
(c) Going concern
The directors have carefully considered the ability of the Group to continue to operate as a going concern for at least the next
12 months from the date the financial statements are authorised for issue. It is the conclusion of the directors that the Group will
continue to operate as a going concern and the financial statements have been prepared on that basis.
In reaching their conclusion the directors have considered the following factors:
-Cash reserves as at 31 March 2021 of $57.1M and bank borrowing facility of $57.5M of which $21.9M was undrawn as at 31 March
2021 after including borrowing costs of $0.6M. This provides sufficient level of liquidity to help support the business for at least
the next 12 months;
-The Future Contracted Income of $141.9M provides a degree of certainty of forecast revenue; and
-The directors have made due enquiry into the appropriateness of the assumptions underlying the budgetary forecasts.
(d) Basis of measurement
The financial statements are prepared on the historical cost basis, except for certain financial instruments carried at fair value.
(e) Presentation currency
The financial statements are presented in New Zealand dollars ($) which is the Group’s presentation currency, and all values are
rounded to million dollars to one decimal place ($M’s) except where stated. Items included in the financial statements of each
of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the
“functional currency”). The functional currency of EROAD Limited is New Zealand dollars, EROAD Inc is US dollars and EROAD Pty
Limited is Australian dollars.
(f) Standards or interpretations issued but not yet effective and relevant to the Group
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning on or after
1 April 2021. The Group does not expect any of these to have a significant impact on the Group’s consolidated financial statements.
The Group has not adopted, and currently does not anticipate adopting, any standards prior to their effective dates.
(g) Critical accounting estimates and judgements
In applying the Group’s accounting policies, management continually evaluates judgements, estimates and assumptions based
on experience and other factors, including expectations of future events that may have an impact on the Group. All judgements,
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EROAD ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
P. 88 >< P. 87
NOTE 3 REVENUE
20212020
$M’s$M’s
Revenue from contracts with customers
Software as a Service (SaaS) revenue 85.0 76.3
Other
Transaction fee revenue 2.6 2.4
Grant revenue2.6 0.9
Other revenue1.4 1.6
Total Revenues91.6 81.2
Set out above is the disaggregation of the Group’s revenue from contracts with customers. The disaggregation reflects the nature,
amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Specifically, software as a service
(SaaS) revenue represents revenue earned from customer contracts for the sale or rental of hardware, installation services and
provision of software services. Transaction fee revenue relates to the collection of Road User Charges (RUC) fees.
Transaction price allocated to the remaining performance obligations
The below table represents the revenue allocated to performance obligations that are unsatisfied or partially unsatisfied at the
period end. The revenue amounts yet to be recognised under non-cancellable contract agreements at 31 March are expected to be
recognised by EROAD based on the time bands disclosed below.
20212020
$M’s$M’s
Software as a Service (SaaS) revenue
No later than one year 72.3 64.1
Later than one year, no later than five years 69.6 70.4
Total price allocated to remaining performance obligations 141.9 134.5
The Group reports the Non-GAAP measure, Future Contracted Income. The definition of Future Contracted Income includes all future
hardware and SaaS cash inflows relating to income under non-cancellable long-term agreements. The disclosure above aligns with the
Future Contracted Income reported by the Group.
Software as a service revenue
The Group has determined EROAD’s customers do not have the right to direct the use of EROAD’s asset (Ehubo) as EROAD
continues to have the right and ability to change how the asset operates during the customer’s contract period. These contracts
are therefore accounted for as service contracts. The Group generates revenue through the sale of hardware assets, rental
of hardware assets, installation of hardware assets and provision of software services as part of contracts with customers as
part of a bundled package. These hardware units enable customers to access the software platform offered by the Group. The
transaction involving hardware and accessories do not convey a distinct good or service. The sale does not transfer control to
the customer as the Group provides a significant service of integrating the software service to produce a combined output.
The sale of the hardware, accessories and software service are referred to as Software as a Service (SaaS) revenue, which is
recognised on a straight line basis over the contract period to reflect the fulfilment of the performance obligations as they arise.
There are no variable consideration terms within the contracts.
A contract liability is recognised where consideration is received in advance of the completion of associated performance
obligations. The contract liability is derecognised over time. As a result there is a financing component which the Group
recognises as a finance cost when consideration is received in advance.
The Group offers installation services as part of a number of promises to transfer goods and services within each contract.
Installation services do not convey a distinct good or service and therefore are not a separate performance obligation as the
installation is a set-up activity that does not provide the customer a direct benefit other than access to the software services.
NOTE 2 BASIS OF ACCOUNTING (CONTINUED)
estimates and assumptions made are believed to be reasonable based on the most current set of circumstances available to the
Group. Actual results may differ from the judgements, estimates and assumptions.
The significant judgements, estimates and assumptions made by management in the preparation of these financial statements are
outlined within the financial statement notes to which they relate. These are :
-Recognition of deferred tax assets (refer to Note 10)
-Impairment testing – key assumptions underlying recoverable amounts, including recoverability of development costs
(refer to Note 16)
-The estimated useful life of hardware assets (refer Note 14)
-Assessment of recoverability of trade receivables (refer Note 13)
-Defining the point at which development activity meets capitalised criteria (refer Note 16)
Impact of COVID-19
On 11 March 2020 the World Health Organisation declared a global pandemic as a result of the outbreak and spread of COVID-19.
Following this, in each of EROAD’s markets of New Zealand, the United States and Australia, lockdowns of varying severity were
introduced. These lockdowns continued in these markets from late March and while some lockdown restrictions have eased in each
of the markets, a range of preventive measures still remain such that each of the markets has yet to return to the level of economic
trading conditions prevalent prior to the COVID-19 crisis.
Following the lockdowns being initiated EROAD was designated an essential service in each of its three markets and remained
operational under its business continuity plan. Despite this designation, EROAD still experienced a reduction 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.
An assessment of the impact of COVID-19 on the EROAD statement of financial position is set out below, based on information
available at the time of preparing these financial statements:
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 is based on:
-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 expected credit loss in the 31 March 2021 financial results which includes consideration of the
impact of COVID-19:
AreaRecognition in Statement of Comprehensive IncomeAmount ($M)
Doubtful DebtsOperating Expenses1.5
Government Grants - COVID-19
On 25 March 2020, the US Government approved Coronavirus 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 31 March 2021, EROAD has
recognised government grant revenue of $1.6m.
MENU
EROAD ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
P. 90 >< P. 89
As a result, the installation service is considered as part of the single performance obligation; referred to as Software as a Service
(SaaS) revenue, which includes the software service and hardware sale or rental for which the customer simultaneously receives
and consumes the benefit of the service. Where installation revenue is received in advance of satisfying the performance
obligation a contract liability is recognised. The contract liability is derecognised over time evenly over the period of the contract
as the customer derives the benefit evenly from the services provided over the contract period. The majority of contracts are
for 3 years and can be for a term of up to 5 years. As a result there is a financing component which the group recognises as a
finance cost when consideration is received in advance.
Transaction fees
The Group acts as an agent for transport authorities in the market that it operates in. Where fees are collected on their behalf,
the Group charges a commission. The revenue recognised is the net amount of the commission fee earned by the Group.
Grant income
Government grants are recognised at fair value in the statement of comprehensive income over the same periods as the costs
for which the grants are intended to compensate. No unfulfilled conditions or contingencies exist related to the government
grants.
NOTE 4 EXPENSES
20212020
Notes$M’s$M’s
Personnel expenses - net of capitalised employee
remuneration6 29.7 26.3
Administrative and other operating expenses 20.5 18.3
SaaS platform costs 9.8 8.6
Directors fees 0.4 0.4
Auditor's remuneration - KPMG 0.3 0.2
Other assurance services - KPMG 0.1 0.1
Tax compliance and advisory services - KPMG 0.2 0.2
Total operating expenses60.954.1
Other assurance services includes half year review, NZTA reasonable assurance and Callaghan grant review.
During the year the costs expensed for Research and Development was $8.2M (2020: $6.0M).
NOTE 5 SEGMENTAL NOTE
Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items comprise income tax .
The Group has four segments as described below, which are the Group’s strategic divisions. The strategic divisions offer different
services and are managed separately because they require different technology, services and marketing strategies. For each
strategic division, the Group’s CEO (the chief operating decision maker) reviews internal management reports. The following
summary describes the operations in each of the Group’s segments.
EROAD reports selected financial information segmented by geographic location for operating companies and corporate and
development costs.
• Corporate & Development: Corporate head office costs and R&D activities for development of new and existing products
and services
• North America: Operating companies serving customers in North America
• Australia: Operating companies serving customers in Australia
• New Zealand: Operating companies serving customers in New Zealand
Inter-segment pricing is determined on an arm’s length basis.
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 &
DevelopmentNorth America New ZealandAustralia
20212020202120202021202020212020
$M’s$M’s$M’s$M’s$M’s$M’s$M’s$M’s
Revenue
Software as a Service
(SaaS) revenue
0.3 - 27. 2 24.8 56.5 50.8 1.1 0.7
Transaction fee revenue - - - - 2.6 2.4 - -
Other revenue ₁ 24.8 1 7.7 3.4 1.0 0.7 0.2 0.3 0.0
25.1 1 7.7 30.6 25.8 59.8 53.4 1.4 0.7
Earnings before interest,
taxation, depreciation &
amortisation
(17.5) (14.0) 10.0 7. 5 38.8 34.9 (0.9) (1.3)
Total assets 103.9 79.3 27.1 23.1 39.7 42.3 3.0 2.7
Depreciation of
property, plant &
equipment
(1.1) (1.1) (4.7) (4.2) (4.8) (4.7) (0.1) (0.1)
Amortisation of
intangible assets
(9.9) (7.5) - - - - - -
Amortisation of contract
and customer acquisition
assets
- - (1.8) (1.8) (4.9) (4.6) (0.1) (0.1)
₁ Revenue from Corporate & Development Markets includes R&D and Covid Grant Income of $2.6M (2020: $1.4M).
NOTE 3 REVENUE (CONTINUED)NOTE 5 SEGMENTAL NOTE (CONTINUED)
MENU
EROAD ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
P. 92 >< P. 91
Reconciliation of information on reportable segments
20212020
$M’s$M’s
REVENUE
Total revenue for reportable segments 116.9 97. 6
Elimination of inter-segment revenue (25.3) (16.4)
Consolidated Revenue 91.6 81.2
EBITDA
Total EBITDA for reportable segments 30.4 27.0
Elimination of inter-segment EBITDA 0.3 -
Consolidated EBITDA 30.7 2 7.0
DEPRECIATION
Total depreciation for reportable segments (10.7) (10.0)
Elimination of inter-segment depreciation 1.1 1.5
Consolidated Depreciation (9.6) (8.5)
TOTAL ASSETS
Total assets for reportable segments 173.7 147.4
Elimination of inter-segment balances (1.7) (21.9)
Consolidated Total Assets 172.0 125.5
Allocation of Development Assets
Included within Total Assets are Development Assets of $36.9M (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 31 March 2021 there was $28.5M (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:
20212020
$M’s$M’s
North America 13.9 14.0
New Zealand 21.6 17.2
Australia 1.4 1.5
36.9 32.7
Geographic information
The geographic information below analyses the Group’s revenue and non-current assets 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 and segment assets were based on the geographic location of the assets.
20212020
$M’s$M’s
REVENUE
New Zealand 61.2 54.7
All foreign countries:
USA 29.3 25.8
Australia 1.1 0.7
Total revenue 91.6 81.2
NON-CURRENT ASSETS
New Zealand 70.970.9
All foreign countries:
USA 12.5 17.2
Australia 1.0 0.9
Total non-current assets 83.4 89.0
Non-current assets exclude financial instruments and deferred tax assets.
NOTE 6 PERSONNEL EXPENSES
20212020
$M’s$M’s
Salaries and wages - excluding capitalised commission costs 34.8 30.7
Annual leave 0.6 0.4
Performance bonus 1.1 0.7
Share-based payments 0.9 0.3
Salaries and wages capitalised to development and software assets (7.7) (5.8)
29.7 26.3
NOTE 5 SEGMENTAL NOTE (CONTINUED)NOTE 5 SEGMENTAL NOTE (CONTINUED)
MENUMENU
EROAD ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
P. 94 >< P. 93
NOTE 7 CONTRACT FULFILMENT AND COSTS TO OBTAIN CONTRACTS
Capitalised contract fulfilment costs
The Group capitalises incremental costs of fulfilling customer contracts, typically distribution and installation costs. Contract
fulfilment costs are amortised evenly over the period of the contract. The majority of contracts are for 3 years and can be for a term
of up to 5 years.
Capitalised contract acquisition costs
The Group has applied a policy of capitalising only costs that are incremental in obtaining contracts with customers, typically sales
commissions. Contract acquisition costs are amortised evenly over the period of the contract. The majority of contracts are for 3
years and can be for a term of up to 5 years.
The following table provides information about contract fulfilment and costs to obtain contracts with customers:
CONTRACT FULFILMENTCOSTS TO OBTAIN CONTRACTS
2021202020212020
$M’s$M’s$M’s$M’s
Opening net book value 5.9 5.1 4.8 4.3
Additions 3.4 4.4 1.6 3.4
Amortisation (3.9) (3.6) (2.9) (2.9)
Closing Net Book Value 5.4 5.9 3.5 4.8
Current 3.0 3.2 2.5 2.7
Non-current 2.4 2.7 1.0 2.1
NOTE 8 FINANCE INCOME & FINANCE EXPENSES
20212020
$M’s$M’s
FINANCE INCOME
Foreign exchange gains 0.2 -
0.2 0.0
FINANCE EXPENSES
Interest expense(2.2) (2.0)
Interest expense - lease liabilities (0.3) (0.4)
Interest expense - contract liabilities (0.2) (0.4)
Foreign exchange losses - (0.3)
(2.7) (3.1)
Net financing costs (2.5) (3.1)
NOTE 9 INCOME TAX EXPENSE
20212020
$M’s$M’s
(a) Reconciliation of effective tax rate
Profit before income tax1.91.4
Income tax using the Company's domestic tax rate of 28% (0.5)(0.4)
Non-deductible expense--
Utilisation of tax losses previously unrecognised0.5-
Effect of different tax rates0.1-
Income tax benefit/(expense) 0.1 (0.4)
(b) Current tax expense
Current year - -
- -
(c) Deferred tax expense
Current year0.1 (0.4)
Total 0.1 (0.4)
At 31 March 2021 there were no imputation credits available to shareholders (2020: 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.
MENU
EROAD ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
P. 96 >< P. 95
NOTE 10 DEFERRED TAX ASSETS
20212020
$M’s$M’s
RECOGNISED DEFERRED TAX ASSETS
Deferred tax assets are attributable to the following:
Tax loss carry forward 10.5 9.2
Property, plant and equipment 0.60.2
Intangibles (5.9) (4.0)
Provisions, accruals and other liabilities1.1 1.0
Equity-settled share-based payments 0.4 0.3
Trade and other receivables, including contract assets(0.7) (1.0)
Lease liability1.31.5
Total deferred tax asset7. 3 7. 2
The movement in temporary differences has been recognised in profit or loss. Deferred tax assets have been recognised at a rates
between 21% to 30% at which they are expected to be realised.
Movement in temporary differences during the year:
BALANCE
2020
Recognised
in profit
or loss
Currency
Translation
BALANCE
2021
$M's$M's$M's$M's
Tax loss carry forward 9.2 1.3 - 10.5
Property, plant and equipment0.2 0.1 0.3 0.6
Intangibles (4.0) (1.9) - (5.9)
Provisions, accruals and other liabilities1.0 0.1 - 1.1
Equity-settled share-based payments 0.3 0.1 - 0.4
Trade and other receivables, including contract assets (1.0)0.3 - (0.7)
Lease liability1.5(0.2)-1.3
Total 7. 2 (0.2) 0.3 7. 3
The New Zealand tax group consists of EROAD Limited, EROAD New Zealand Limited and EROAD Financial Services Limited.
Losses incurred within this group are transferred within the group with no compensation being recognised. Deferred tax assets
have been recognised in respect of these items as based on the expected profitability of the New Zealand Tax group as it is
considered that future taxable profit will be available for utilisation against the carried forward losses.
Determining the extent to which losses will be utilised requires judgement. The group has forecast expected utilisation of tax losses.
Key assumptions included total contracted units, revenue and expense forecasts in line with group budget and three-year forecast
supported by a robust strategic and business planning process.
The result of the forecasting indicate that there will be sufficient profitability within the New Zealand tax group to utilise the existing
tax losses. Losses incurred in recent years have primarily been the result of a large investment creating the North American market.
Whilst the business is growing in Australia, the group considers this can be achieved at a lower cost than the entry into North
America, by leveraging our New Zealand expertise and cost and customer base. The group expect to be able to report
significant improvements in profitability over the next three years as the business reaches a sufficiently large subscriber base
to self-fund operating and corporate costs. Due to the cumulative subscription nature of our business model as well as certain
operating expenses that do not scale at the same rate of unit and revenue growth, the business is expected to be able to achieve its
forecast growth in profitability.
As at 31 March 2021 the Group has tax losses of $48.7m (2020: $46.5m) that are available indefinitely for offsetting against future
taxable profits of the entity in which they arose, subject to meeting relevant tax rules. $11.2m (2020: $13.5m) of tax losses in North
America are unrecognised due to lack of certainty of recovery.
NOTE 11 PAID UP CAPITAL
All issued shares are fully paid up and have equal voting rights and share equally in dividends and surplus on winding up.
Number of
ordinary shares
Issue price
$
Issued Capital
$
202068,278,77280.7
Shares issued to employees 22,848 $3.73 0.1
5,000 $5.02 -
Shares issued in September 2020 equity placement 10,769,231 $3.90 42.0
Shares issued in October 2020 equity placement 2,820,489 $3.90 11.0
Costs of raising capital-- (2.1)
202181,896,340 131.7
On 22 September 2020 EROAD issued additional 10,769,231 shares at a price of $3.90 each. A further 2,820,489 shares were
issued on 9 October 2020 also at a price of $3.90 each.
At 31 March 2021 there was 81,896,340 authorised and issued ordinary shares (2020: 68,278,772). 732,741 (2020: 874,557) shares are held
in trust for employees in relation to the long-term incentive plan and are accounted for as treasury stock.
The calculation of both basic and diluted loss per share at 31 March 2021 was based on the profit attributable to ordinary shareholders of
$2.0M (2020: $1.0M). The weighted number of ordinary shares on 31 March 2021 was 74,366,384 (2020: 67,318,877) for basic earnings per
share and also 74,366,384 for diluted earnings per share (2020: 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.
• Retained earnings - includes all current and prior period retained profits and share-based employee remuneration.
NOTE 12 CASH AND CASH EQUIVALENTS, RESTRICTED CASH AND PAYABLES TO TRANSPORT AGENCIES
20212020
$M’s$M’s
Cash and cash equivalents 57.1 3.4
Restricted bank accounts 10.5 14.0
67. 6 17.4
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 relevant government agency.
Payables to transport agencies (10.5) (13.9)
NOTE 10 DEFERRED TAX ASSETS (CONTINUED)
MENU
EROAD ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
P. 98 >< P. 97
NOTE 13 TRADE AND OTHER RECEIVABLES
20212020
$M’s$M’s
Trade receivables 8.0 8.6
Expected credit losses (2.6) (1.1)
5.4 7. 5
Prepayments and other receivables 2.8 3.2
8.2 10.7
In addition to the movement in the expected credit losses, the Group has written off $0.9M (2020: $0.5M) of bad debts to the statement
of comprehensive income.
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or
loss. The Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead
recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on
its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. Due to the
short term nature of these debtors, their carrying value is assumed to approximate fair value.
(a) Credit risk
In relation to trade receivables, it is the Group’s policy that all customers who wish to trade on terms are subject to credit verification on an
ongoing basis with the intention of minimising bad debts. The nature of the Group’s trade receivables is represented by regular turnover of
product and billing of customers based on the Group’s contractual payment terms. In North America, the Group requires that customers
under a certain fleet size to purchase the hardware with an upfront payment regardless of credit verification. To measure the expected
credit losses, trade receivables have been grouped based on customer industry risk characteristics and the days past due. The expected
loss rates are based on recent payment profiles, historical customer behaviour, age of debt and individual customer circumstances.
The aging of the Group’s Trade receivables at the reporting date was as follows:
GrossAllowance for
doubtful debts
GrossAllowance for
doubtful debts
2021202120202020
$M’s$M’s$M’s$M’s
Not past due 3.1 ( 0.2) 3.8 -
Past due 1-30 days 2.3 (0.4) 3.0 -
Past due 31-60 days 0.5 (0.2) 0.6 (0.1)
Past due over 61 days 2.1 (1.8 ) 1.2 (1.0)
8.0 (2.6) 8.6 (1.1)
NOTE 14 PROPERTY, PLANT AND EQUIPMENT
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
2021
Opening net book
amount
5.1 29.5 0.2 1.7 0.3 0.3 0.3 37.4
Additions-4.4--0.20.20.35.1
Depreciation charge(0.9)(7.8)-(0.4)(0.1)(0.2)(0.2)(9.6)
Depreciation
recovered
-2.1-----2.1
Effect of movement
in exchange rates
(0.1)(0.2)----- (0.3)
Closing net book
amount
4.1 28.0 0.2 1.3 0.4 0.3 0.4 34.7
Cost6.851.30.72.91.31.43.467. 8
Accumulated
depreciation
(2.7)(23.3)(0.5)(1.6)(0.9)(1.1)(3.0)(33.1)
Net book amount 4.1 28.0 0.2 1.3 0.4 0.3 0.4 34.7
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
2020
Opening net book
amount
6.0 25.0 0.2 1.7 0.4 0.3 0.3 33.9
Additions - 10.8 0.1 0.3 0.1 0.1 0.2 11.6
Depreciation charge (1.0) (6.7) (0.1) (0.3) (0.2) (0.1) (0.2) (8.6)
Depreciation
recovered
- 0.7 - - - - - 0.7
Effect of movement
in exchange rates
0.1 (0.3) - - - 0.0 0.0 (0.2)
Closing net book
amount
5.1 29.5 0.2 1.7 0.3 0.3 0.3 37.4
Cost 7.1 51.2 0.7 2.9 1.1 1.2 3.1 67.3
Accumulated
depreciation
(2.0) (21.7) (0.5) (1.2) (0.8) (0.9) (2.8) (29.9)
Net book amount 5.1 29.5 0.2 1.7 0.3 0.3 0.3 37. 4
Included in the Hardware Assets is equipment under construction to be leased of $6.8M (2020: $7.7M).
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.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments
made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to restore the underlying asset
or the site on which it is located, less any lease incentives received.
MENU
EROAD ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
P. 100 >< P. 99
Subsequent costs
The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when
that cost is incurred if it is probable that the future economic benefits embodied within the item will flow to the Group and the cost of the
item can be measured reliably. All other costs are recognised in the statement of comprehensive income as an expense in the period they
are incurred.
Depreciation
Depreciation begins when the asset is in the location and condition necessary for it to be capable of operating in the manner intended by
management. The following rates have been used on a straight line basis:
Leasehold improvements 3 to 9 years
Hardware assets 3 to 6 years
Plant and equipment 3 to 11 years
Computer/Office equipment 1 to 3 years
Motor vehicles 3 to 5 years
Right of use assets 3 to 9 years
The above rates reflect the estimated useful lives of the respected categories. Consideration was given to how long assets can be
deployed and any expected network changes. Leasehold improvements are depreciated over the contracted lease term.
Impairment
Each reporting period, an assessment is performed in order to determine if there are any indicators of impairment. Refer to intangibles
(Note 16) for further details.
NOTE 15 LEASES AS A LESSEE
Lease Liabilities
20212020
$M’s$M’s
Maturity analysis - contractual undiscounted cash flows
Less than one year 1.3 1.4
One to five years 4.2 4.9
More than five years 0.8 1.6
Total undiscounted lease liabilities 6.3 7. 9
Lease liabilities included in the statement of financial position 5.2 6.3
Current 1.0 1.0
Non-current 4.2 5.3
Amounts recognised in Statement of Comprehensive Income
20212020
$M’s$M’s
Interest expense on lease liabilities 0.3 0.4
Depreciation of right of use assets0.91.0
Amounts recognised in Statement of Cash Flows
20212020
$M’s$M’s
Total cash outflow for leases (1.6) (1.1)
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental
borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease liability comprise the following:
-fixed payments, including in-substance fixed payments;
-variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement
date;
-amounts expected to be payable under a residual guarantee;
-the exercise priced under a purchase option that the Group is reasonably certain to exercise;
-lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option; and
-penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest rate method. It is remeasured when there is a change
in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount
expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a
purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-
use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
NOTE 16 INTANGIBLE ASSETS
DevelopmentSoftwareTotal
$M's$M's$M's
2021
Opening net book amount 32.7 9.4 42.1
Additions 12.2 0.9 13.1
Disposals - - -
Amortisation charge (8.0) (1.9) (9.9)
Closing net book amount 36.9 8.4 45.3
Cost 68.2 14.7 82.9
Accumulated amortisation (31.3) (6.3) (37.6)
Net book amount 36.9 8.4 45.3
DevelopmentSoftwareTotal
$M's$M's$M's
2020
Opening net book amount 29.8 3.3 33.1
Additions 9.6 6.9 16.5
Disposals - - -
Amortisation charge (6.7) (0.9) (7.5)
Closing net book amount 32.7 9.3 42.1
Cost 55.9 13.9 69.8
Accumulated amortisation (23.2) (4.5) (27.7)
Net book amount 32.7 9.4 42.1
NOTE 15 LEASES AS A LESSEE (CONTINUED)
NOTE 14 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
MENU
EROAD ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
P. 102 >< P. 101
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 dispose of the assets and its value in use. For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash flows (cash-generating units).
Recoverability of development costs
As a result of COVID-19 and the ongoing lock downs in North America and the recent unstable political environment, this
segment has been trading behind forecast. Management consider these factors to be an indicator of impairment and therefore
formal assessment of impairment was performed for the North American cash generating unit (CGU).
For impairment testing purposes the corporate Development & Software Assets are allocated to the CGUs based on the specific
CGU that the asset relates to, or if the asset is developed for use globally across all CGU’s, the asset is allocated to CGU’s based
on the proportionate share of the Group’s Contracted Units. The recoverable amount of the CGU that these corporate assets
relate to was estimated based on the present value of future cash flows expected to be derived from the CGU (value in use).
Discount and terminal growth rate assumptions are outlined below. Other key assumptions for the impairment review included
contracted unit growth and related revenue and expense forecasts in line with Group’s budget and three-year forecast.
Sensitivity analysis was performed by increasing the discount rate to 18% and lowering the terminal growth rate to 1% at base
case forecast cash flows. The results of both sensitivity scenarios still resulted in headroom between the recoverable amount
of the CGU and its carrying value. The Group concluded that the recoverable amount of the CGU to be higher than its carrying
value and therefore no impairment was considered necessary.
Discount RateTerminal Growth RateAllocated Corporate
Development & Software Assets
$M’s
North America12%1.5% 16.3
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 research and development
expenditure is recognised in the statement of comprehensive income when incurred.
Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated impairment losses.
Other intangible assets
Other intangibles assets that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated
amortisation and accumulated impairment losses.
Subsequent expenditure
Subsequent expenditure is only capitalised when it increases the future economic benefits embodied in the specific asset to
which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in the
statement of comprehensive income when incurred.
Amortisation
Amortisation is recognised in the statement of comprehensive income on a straight line basis over the estimated useful life of
intangible asset. The estimated useful lives for the current and comparative periods are as follows:
Development Hardware & Platform 7 to 15 years
Development Products 5 to 10 years
Software 5 to 7 years
NOTE 17 TRADE PAYABLES AND ACCRUALS
20212020
$M’s$M’s
Trade creditors 4.2 4.1
Sundry accruals 3.6 4.1
7. 88.2
NOTE 18 BORROWINGS
20212020
$M’s$M’s
Current borrowings
Term loans – current portion 5.0 2.5
Capital Expenditure facility 2.0 -
Capitalised borrowing costs (0.6) (0.3)
6.42.2
Non-current borrowings
Term loans 28.6 33.6
28.633.6
Terms and debt repayment schedule
2021202120202020
Nominal
Interest
Year of
Maturity
Face
Value
$M’s
Carrying
amount
$M’s
Face
Value
$M’s
Carrying
amount
$M’s
Term loans3.90%2023 33.6 33.6 36.1 36.1
Capital Expenditure facility3.90%2023 2.0 2.0 - -
Capitalised borrowing costs - 2023 - (0.6) - (0.3)
35.6 35.0 36.1 35.8
Current financial year
The Group has a syndicated debt facility with the Bank of New Zealand (BNZ) and China Construction Bank (CCB). At 31 March 2021,
EROAD had the following facilities in place:
$15.5M (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.
NOTE 16 INTANGIBLE ASSETS (CONTINUED)
MENU
EROAD ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
P. 104 >< P. 103
$25m 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 loan is a current liability as it has a roll over feature at the end of each interest period. 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.
$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 31 March 2021.
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).
NOTE 19 CONTRACT LIABILITIES
The Group enters into contracts with customers for the provision of software services over a contracted period. As stated in the
accounting policies, this revenue is recognised over time as the customer simultaneously receives and consumes the benefit of the
service. The Group has determined that the benefit of the services provided is consumed evenly over the period of the contract,
and thus the performance obligations are satisfied evenly over the period. Where the Group receives a portion of the transaction
price of a contract in advance, this is recognised as a contract liability and released over the contract period as the Group satisfies its
performance obligations.
20212020
$M’s$M’s
Opening balance 8.2 10.0
Amounts deferred during the period 4.1 4.4
Amount recognised in the statement of comprehensive income (5.7) (6.2)
6.6 8.2
Current 3.9 3.6
Non-current 2.7 4.6
NOTE 20 FINANCIAL RISK MANAGEMENT
As a result of the Group’s operations and sources of finance, it is exposed to credit risk, liquidity risk and market risks which include
foreign currency risk, commodity price risk and interest rate risk. These risks are described below. The principles under which these
risks are managed are set out in policy documents approved by the Board. The policy documents identify the risks and set out the
Group’s objectives, policies and processes to measure, manage and report the risks. The policies are reviewed periodically to reflect
changes in financial markets and the Group’s business.
Recognition and initial measurement
Trade receivables are initially recognised when they are originated. All other financial assets and financial liabilities are initially
recognised when the Group becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade
receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at
fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a
significant financing component is initially measured at the transaction price.
During the year, the Group entered into interest rate swaps. These swaps were entered into in order for the Group to manage its risk
associated with interest rate fluctuations. The interest rate swaps qualify for cash flow hedge accounting.
Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as measured at amortised cost.
Financial assets - subsequent measurement and gains and losses
Financial assets at amortised cost. These assets are subsequently measured at amortised cost using the effective interest method. The
amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in
profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
Financial liabilities
Under the interest rate swap agreements the Group has a right to receive interest at variable rates and to pay interest at fixed rates for
its New Zealand dollar denominated loans. Interest rate swaps are initially recognised at fair value on the date a contract is entered into
and are subsequently measured at fair value on each reporting date. The fair values of the interest rate swaps are determined based on
cash flows discounted to present value using current market interest rates.
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of liabilities the effective part of any
gain or loss is recognised directly in the cash flow hedge reserve within equity and the ineffective part is recognised immediately in
the income statement. The effective portion is reclassified to the income statement when the underlying cash flows affect the income
statement.
The Group determines the existence of an economic relationship between the hedging instrument and hedged item based on the
reference interest rates, tenors, repricing dates and maturities and the notional amounts.
In these hedging relationships, the main sources of ineffectiveness are:
-changes in counterparty credit risk and cross currency basis spreads which are not reflected in the change in the fair value of the
hedged item; and
-differences in repricing dates between the cross currency interest rate swaps and the borrowings.
Derecognition
Financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it
transfers the right to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of
ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks
and rewards of ownership and it does not retain control of the financial asset.
The Group enters into transactions whereby it transfers assets recognised in its statement of financial position, but retains
either all or substantially all of the risks and rewards of the transferred asset. In theses cases, the transferred assets are not
derecognised.
Financial liabilities
The Group derecognises a financial liability when the contractual obligations are discharged or cancelled, or expire. The Group
also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially
different, in which case a new financial liability based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid
(including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.
NOTE 18 BORROWINGS (CONTINUED)NOTE 20 FINANCIAL RISK MANAGEMENT (CONTINUED)
MENU
EROAD ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
P. 106 >< P. 105
The Group holds the following financial assets and liabilities at amortised cost:
20212020
Amortised
Cost
$M’s
Other
amortised
cost
$M’s
Amortised
Cost
$M’s
Other
amortised
cost
$M’s
FINANCIAL ASSETS
Cash and cash equivalents 57.1 - 3.4 -
Restricted bank account 10.5 - 14.0 -
Trade receivables 8.0 - 8.6 -
75.6 - 26.0 -
FINANCIAL LIABILITIES
Borrowings- 35.0- 35.8
Employee Entitlements- 2.3 - 1.8
Lease liabilities- 5.2 - 6.3
Trade and other payables- 7. 8 - 8.2
Payables to transport agencies- 10.5 - 13.9
- 60.8 - 66.0
The Group’s financial assets and liabilities are disclosed in sections (b), (c) and (e) below.
(a) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and it arises principally from the Group’s trade receivables from customers in the normal course of business.
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The creditworthiness of
a customer or counterparty is determined by a number of qualitative and quantitative factors. Qualitative factors include external
credit ratings (where available), payment history and strategic importance of customer or counterparty. Quantitative factors include
transaction size, net assets of customer or counterparty, and ratio analysis on liquidity, cash flow and profitability.
The carrying amount of the Group’s financial assets represents the maximum credit exposure as summarised above.
Refer to Note 13 for an aging profile for the Group’s trade receivables at reporting date.
(b) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they become due and payable.
The Group’s approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when they become due and payable, under both normal and stressed conditions, without incurring unacceptable losses or
risking damage to the Group’s reputation.
The Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 90 days, including the
servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted,
such as natural disasters.
NOTE 20 FINANCIAL RISK MANAGEMENT (CONTINUED)NOTE 20 FINANCIAL RISK MANAGEMENT (CONTINUED)
Maturities of financial liabilities
The following table details the Group’s contractual maturities of financial liabilities, including estimated interest payments and
excluding the impact of netting agreements, as at the reporting date. Refer to Note 18 for the maturity profiles of the Group’s
borrowings.
1 year or less1 to 5 yearsOver 5 yearsTotal
contractual
cash flows
Carrying
amount of
liabilities
$M's$M's$M's$M’s$M’s
2021
NON-DERIVATIVE FINANCIAL LIABILITIES
Borrowings 8.8 30.4- 39.2 35.6
Employee Entitlements 2.3 -- 2.3 2.3
Trade and other payables 7. 8 -- 7. 8 7. 8
Payable to transport agencies 10.5 -- 10.5 10.5
29.4 30.4 - 59.856.2
The Group entered into an interest rate swap agreement as at 31 March 2021. Due to the inception date being the same as year end
date the carrying amount of the derivative is nil. The swap has a maturity date of March 2023 to align with the Group’s borrowing
facility. The contractual cash flows under this agreement is $0.0m therefore not included in the above table.
1 year or less1 to 5 yearsOver 5 yearsTotal
contractual
cash flows
Carrying
amount of
liabilities
$M's$M's$M's$M’s$M’s
2020
NON-DERIVATIVE FINANCIAL LIABILITIES
Borrowings 2.5 33.3 - 35.8 35.8
Employee Entitlements 1.8 - - 1.8 1.8
Trade and other payables 8.2 - - 8.2 8.2
Payable to transport agencies 13.9 - - 13.9 13.9
26.4 33.3 - 59.759.7
(c) Market risk
Market risk is the risk that changes in market prices, such as commodity prices, foreign exchange rates and interest rates, will affect the
Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimising the return on risk.
Foreign currency risk
The Group is exposed to currency risk on sales transactions that are denominated in a currency other than the respective
functional currencies of Group entities, primarily the US Dollar (USD) and Australian Dollar (AUD). The Group is also exposed
to currency risk on expense transactions that are denominated in a currency other than the respective functional currencies of
Group entities, primarily the US Dollar (USD), Australian Dollar (AUD) and Euro (EUR). The Group, may on occasion, enter into
forward exchange contracts to hedge the exposure to foreign currency fluctuations on sales receipts.
The Group reports in New Zealand dollars. Movements in foreign currency exchange rates affect reported financial results,
financial position and cash flows. Where practical, the Group attempts to reduce this risk by matching revenues and
expenditures, as well as assets and liabilities, by country and by currency.
MENU
EROAD ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
P. 108 >< P. 107
Foreign exchange rates applied against the New Zealand Dollar, at 31 March are as follows:
20212020
$M’s$M’s
AUD 10.920.97
USD 10.700.60
The Group’s exposure to foreign currency risk at the reporting date was as follows (all amounts are denominated in New Zealand
dollars):
AUDUSD
$M’s$M’s
2021
Cash and cash equivalents 0.1 12.1
Trade receivables 0.2 2.2
Lease liabilities - 0.4
AUDUSD
$M’s$M’s
2020
Cash and cash equivalents 0.1 1.2
Trade receivables 0.1 3.0
Lease liabilities 0.1 3.0
Interest rate risk
At 31 March 2021, the Group had interest rate swap agreements in place with a total notional principal amount of $10.0M. The
Group applies a hedge ratio of 1:1. These agreements effectively change the Group’s interest exposure on the principal covered
by the interest rate swaps from a floating rate to fixed rates. The maturity of the interest rate swap is 36 months and has a
weighted average interest rate of 0.5%.
There was no hedge ineffectiveness recognised in profit or loss during the year.
There are no comparatives as the Group did not engage in interest rate swaps in 2020.
NOTE 20 FINANCIAL RISK MANAGEMENT (CONTINUED)NOTE 20 FINANCIAL RISK MANAGEMENT (CONTINUED)
Summarised sensitivity analysis
The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to foreign currency risk.
-10%+10%-100bps+100bps
ProfitEquityProfitEquityProfitEquityProfitEquity
$M's$M's$M's$M’s$M’s$M’s$M's$M’s
2021
Cash and cash equivalents (0.9) (0.9) 0.9 0.9 (0.6) (0.6) 0.6 0.6
Trade receivables (0.2) (0.2) 0.2 0.2 ----
Lease liabilities - - - - 0.10.1(0.1)(0.1)
Total increase/ (decrease) (1.1) (1.1) 1.1 1.1 (0.5) (0.5) 0.5 0.5
-10%+10%-100bps+100bps
ProfitEquityProfitEquityProfitEquityProfitEquity
$M's$M's$M's$M’s$M’s$M’s$M's$M’s
2020
Cash and cash equivalents (0.1) (0.1) 0.1 0.1 (0.0) (0.0) 0.0 0.0
Trade receivables (0.2) (0.2) 0.2 0.2 - - - -
Lease liabilities - - - - 0.4 0.4 (0.4) (0.4)
Total increase/ (decrease) (0.3) (0.3) 0.3 0.3 0.4 0.4 (0.4) (0.4)
(d) Capital management
The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain
future development of the business. The Board monitors the return on capital employed, which the Group defines as reported
EBIT (Earnings Before Interest and Tax) divided by capital employed.
(e) Fair value measurement
The carrying amounts of the Groups financial assets and liabilities approximate their fair value due to their short maturity periods
or fixed rate nature, with the exception of interest rate swap derivatives. All of the Group’s derivatives are in designated hedge
relationships and are measured and recognised at fair value. All derivatives are level 2 valuations based on accepted valuation
methodologies. Interest rate derivatives are calculated by discounting the future principal and interest cash flows at current
market interest rates that are available for similar financial instruments.
Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 Inputs that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices)
other than quoted prices included within level 1.
Level 3 Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The estimated fair value measurements for the derivative instruments compared to their carrying values in the balance sheet are nil
as the inception date was 31 March 2021. There are no comparatives as the Group did not engage in interest rate swaps in 2020.
NOTE 21 SHARE BASED PAYMENTS
At 31 March 2021, the Group had the following share-based payment arrangements.
FY20 Performance Share Rights
Under the FY20 Long Term Incentive (LTI) plan, 770,474 performance share rights (PSRs) were issued (for nil consideration) to
participants which convert to shares (for nil consideration) if targets are met. PSRs do not entitle the holder to receive dividends
or other distributions, or vote in respect of EROAD Limited ordinary shares, although under the terms of the plan an additional
number of shares will be issued on conversion of fully vested PSRs to reflect dividends paid to EROAD Limited shares prior
to exercise. On becoming exercisable, each PSR entitles the holder to one fully paid ordinary EROAD Limited share, subject
to adjustment in accordance with the plan rules and the performance hurdles, ranking equally with all other EROAD Limited
ordinary shares.
MENU
EROAD ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
P. 110 >< P. 109
For the FY20 LTI plan, the award is linked to growth in EROAD’s total contracted units (TCUs) between 1 April 2019 and 31 March
2022. Participants bear the tax liability of the LTI plan. The Board retains discretion over the final outcome of PSR payments, to
allow appropriate adjustments where unanticipated circumstances may impact performance over the measurement period.
EROAD LTI Plan (equity-settled)
Eligible employees were invited to purchase EROAD shares under the EROAD LTI plan. Under the terms of the scheme the
purchase of the shares is funded by a loan granted to the eligible employees by EROAD Limited. At the end of the vesting period
the employee will be paid a net bonus in relation to the shares that vest to the employee, equal to the amount of their loan
outstanding to the Company, enabling the loan to be repaid.
Shares issued under the scheme are held in trust for the employees during a 3 year restrictive period. If the employee ceases to
be an employee during the restrictive period the Trustees will repurchase the employees shares at the original issue price.
The eligible employees must meet certain performance conditions during each year of the restrictive period, as determined by
the remuneration committee and approved by the board. 50% of the scheme shares initially granted will be forfeited for each
year the participant fails to achieve their performance conditions. Additionally the employee’s shares will also be forfeited if the
enterprise value of the Company has not doubled by the end of the restrictive period.
Employee’s shares that are forfeited due to failure to meet market and non-market performance conditions will be repurchased
by the Trustee at the original grant date price.
The EROAD LTI Plan has been accounted for as grant of shares to employees in accordance with NZ IFRS 2. The key terms and
conditions relating to the grants under this Scheme are disclosed in the table below.
EROAD US President Incentive Scheme
The US President was invited to purchase EROAD shares under the EROAD US President Incentive Scheme. Under the terms of
the scheme the purchase of the shares is funded by a loan granted to the employee by EROAD Limited. At the end of the vesting
period the employee will be paid a net bonus in relation to the shares that vest to the employee, equal to the amount of their
loan outstanding to the Company, enabling the loan to be repaid.
Shares issued under the scheme are held in trust for the employee during a 3 year restrictive period. If the employee ceases to
be an employee during the restrictive period the Trustees will repurchase the employees shares at the original issue price.
Key operational measures and targets for the North American business are outlined in the employees grant letter, these include
Total Contract Units, Average Revenue Per Unit, Customer Acquisition Cost Payback Period, and Renewal Rate targets. Each
operational measure has a percentage weighting for each of the three-year periods, with the performance for each year being
calculated based on the percentage of target achieved multiplied by the percentage weighting for each operational measures.
The total percentage of shares to vest at the end of the restrictive period is calculated based on the average percentage
performance over the three years. If the total average performance is less than 60% then all shares granted under the scheme
will be forfeited.
Employee’s shares that are forfeited due to failure to meet the non-market performance conditions will be repurchased by the
Trustee at the original grant date price.
The EROAD US President Incentive Scheme has been accounted for as grant of shares to employees in accordance with NZ IFRS 2.
The key terms and conditions relating to the grants under this Scheme are disclosed in the table below.
EROAD’s LTI Plan II (equity-settled)
Eligible employees were invited to purchase EROAD shares under the EROAD LTI plan. Under the terms of the scheme the
purchase of the shares is funded by a loan granted to the eligible employees by EROAD Limited. At the end of the vesting period
the employee will be paid a net bonus in relation to the shares that vest to the employee, equal to the amount of their loan
outstanding to the Company, enabling the loan to be repaid.
Shares issued under the scheme are held in trust for the employees during a 3 year restrictive period. If the employee ceases to
be an employee during the restrictive period the Trustees will repurchase the employees shares at the original issue price. For
the shares to vest the Company’s Total Shareholder Return (TSR) must exceed the median TSR of the NZX50 Group over the
Relevant Assessment Period, with a progressive vesting scale for performance between 50th and 75th percentiles, and 100%
vesting if company performance is equal to or above the 75th percentile of the NZX50 Group.
Employee’s shares that are forfeited due to failure to meet market and non-market performance conditions will be repurchased
by the Trustee at the original grant date price.
The EROAD LTI Plan has been accounted for as grant of shares to employees in accordance with NZ IFRS 2. The key terms and
conditions relating to the grants under this Scheme are disclosed in the table below.
EROAD LTI Plans
Grant date/employees
entitled
Shares granted Vesting conditionsVesting
period
APR-17SEP-18
Shares granted to key
management personnel
EROAD LTI Plan II (FY18) - 197,890
• 3 years service from grant date
• Company’s Total Shareholder Return (TSR) must exceed the
median TSR of the NZX50 Group over
the Relevant Assessment Period (1 April 2017 to 1 April 2021).
• progressive vesting scale for performance between 50th and
75th percentiles, and 100% vesting if company performance is
equal to or above the 75th percentile of the NZX50 Group.
2.5 years
EROAD LTI Plan II (FY19) - 85,276
• 3 years service from grant date
• Company’s Total Shareholder Return (TSR) must exceed the
median TSR of the NZX50 Group over the Relevant Assessment
Period (1 April 2018 to 1 April 2021).
• progressive vesting scale for performance between 50th and
75th percentiles, and 100% vesting if company performance is
equal to or above the 75th percentile of the NZX50 Group.
2.5 years
EROAD US President
Incentive Scheme
490,000 -
• 3 years service from grant date
• Meet minimum targets for key operational metrics: Total
Contracted Units, Average Revenue per Unit, Cost of Customer
Acquisition Payback and Renewal Rates.
• Each years performance is measured on a weighted calculation
of percentage achieved vs. target for operational metrics.
• The percentage of shares to vest is calculated based on the
average of each years weighted percentage achieved. If the
vested amount is less than 60% all shares will be forfeited.
• This scheme is not presented as vested as it requires Board
approval.
3 years
Shares granted to other
employees
EROAD LTI Plan II (FY18) - 87,995
• 3 years service from grant date
• Company’s Total Shareholder Return (TSR) must exceed the
median TSR of the NZX50 Group over the Relevant Assessment
Period (1 April 2017 to 1 April 2021).
• progressive vesting scale for performance between 50th and
75th percentiles, and 100% vesting if company performance is
equal to or above the 75th percentile of the NZX50 Group.
2.5 years
EROAD LTI Plan II (FY19) - 25,977
• 3 years service from grant date
• Company’s Total Shareholder Return (TSR) must exceed the
median TSR of the NZX50 Group over the Relevant Assessment
Period (1 April 2018 to 1 April 2021).
• progressive vesting scale for performance between 50th and
75th percentiles, and 100% vesting if company performance is
equal to or above the 75th percentile of the NZX50 Group.
2.5 years
490,000 397,138
NOTE 21 SHARE BASED PAYMENTS (CONTINUED)NOTE 21 SHARE BASED PAYMENTS (CONTINUED)
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
P. 112 >< P. 111
EROAD Performance Share Rights
Grant date/employees
entitled
Shares granted Vesting conditionsVesting
period
APR-17SEP-18OCT-19
Performance Shares
Rights granted to key
management personnel
FY20 Performance
Share Rights
- - 374,238
• 2.4 years service from grant date
• The award is linked to growth in EROAD’s total
contracted units (TCUs) between 1 April 2019
and 31 March 2022. Participants bear the tax
liability of the PSR plan. The Board retains
discretion over the final outcome of PSR
payments, to allow appropriate adjustments
where unanticipated circumstances may
impact performance over the measurement
period.
2.4 years
Performance Shares
Rights granted to other
employees
FY20 Performance
Share Rights
- - 396,236
• 2.4 years service from grant date
• The award is linked to growth in EROAD’s total
contracted units (TCUs) between 1 April 2019
and 31 March 2022. Participants bear the tax
liability of the PSR plan. The Board retains
discretion over the final outcome of PSR
payments, to allow appropriate adjustments
where unanticipated circumstances may
impact performance over the measurement
period.
2.4 years
-- 770,474
Measurement of fair value
The fair value of the shares issued under the EROAD LTI plans during the year ended 31 March 2021 was determined with
reference to the Company’s share price on the NZX at grant date. A discount was applied to the fair value of the shares issued
under the EROAD LTI scheme to reflect the non-vesting market conditions.
The number of shares granted and forfeited during the period were as follows:
EROAD LTI Plans
20212020
Outstanding at 1 April 874,557972,487
Granted during the period--
Forfeited during the period(141,816)(24,903)
Vested during the period-(73,027)
Outstanding at 31 March 732,741874,557
NOTE 21 SHARE BASED PAYMENTS (CONTINUED)NOTE 21 SHARE BASED PAYMENTS (CONTINUED)
EROAD Performance Share Rights
20212020
Outstanding at 1 April 770,474-
Granted during the period-770,474
Forfeited during the period(174,288)-
Vested during the period--
Outstanding at 31 March 596,186770,474
During the year-ended 31 March 2021 an amount of $0.9M (2020: $0.3M) was recognised as an expense within the statement of
comprehensive income in relation to share-based payments for all share plans.
NOTE 22 RELATED PARTY TRANSACTIONS
The subsidiaries of the Company are:
Company Country of Incorporation Interest % Principal activity
EROAD Financial Services Ltd New Zealand 100 Financing activities within group
EROAD LTI Trustee Limited New Zealand 100 LTI Scheme Trustee
EROAD (Australia) Pty Limited Australia 100 Transport Technology & SaaS
EROAD Inc United States of America 100 Transport Technology & SaaS
Key management personnel compensation comprised:
20212020
$M’s$M’s
Short-term employee benefits 3.0 2.8
Share-based payments 0.8 0.2
3.8 3.0
(a) Loans to key management personnel
There have been no loans to management personnel.
(b) Other transactions with key management personnel
There were no other transactions with key management personnel during the period. From time to time, key management
personnel of the Group may purchase goods from the Group.
(c) Remuneration of Non-executive Directors
20212020
$M’s$M’s
Michael Bushby (Resigned 1 July 2020)0.010.06
Anthony Gibson0.060.06
Candace Kinser (resigned 24 July 2020)0.020.06
Graham Stuart (Chair)0.120.11
Susan Paterson0.080.09
Barry Einsig0.130.04
0.420.42
No additional fees were paid to any Directors for consultancy work provided to the Company (2020: None paid).
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EROAD ANNUAL REPORT 2021P. 114 >< P. 113
AUDITORS REPORT
NOTE 21 SHARE BASED PAYMENTS (CONTINUED)
(d) Remuneration of Executive director
20212020
$M’s$M’s
Salary and bonus 0.9 0.8
Share-based payments 0.1 0.1
1.0 0.9
NOTE 23 CAPITAL COMMITMENTS
As at 31 March 2021 the Group had confirmed purchase orders open with its third party manufacturer of hardware units
amounting to $5.1M (2020: $1.2M).
NOTE 24 CONTINGENT LIABILITIES
At 31 March 2021 there were no contingent liabilities (2020: nil)
NOTE 25 NET TANGIBLE ASSETS PER SHARE
20212020
$M’s$M’s
Net assets (equity) 104.651.3
Less intangibles(45.3)(42.1)
Total net tangible assets 59.3 9.2
20212020
$$
Net tangible assets per share ($) 0.72 0.13
The non-GAAP measure above is disclosed for consistency with the information disclosed in EROAD’s results announced under
the NZX listing rules.
NOTE 26 EVENTS SUBSEQUENT TO BALANCE DATE
There are no other events subsequent to balance date which have not already been taken up in the accounts (2020: Nil).
© 2021 KPMG, a New Zealand Partnership and a member firm of the KPMG global organisation of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
Independent Auditor’s Report
To the shareholders of EROAD Limited
Report on the audit of the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated
financial statements of EROAD Limited
(the ’Company’) and its subsidiaries (the 'Group') on
pages 80 to 113:
i. present fairly in all material respects the Group’s
financial position as at 31 March 2021 and its
financial performance and cash flows for the
year ended on that date; and
ii. comply with New Zealand Equivalents to
International Financial Reporting Standards and
International Financial Reporting Standards.
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated statement of financial position
as at 31 March 2021;
— the consolidated statements of comprehensive
income, changes in equity and cash flows for
the year then ended; and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 International Code of
Ethics for Assurance Practitioners (Including International Independence Standards) (New Zealand) issued by the
New Zealand Auditing and Assurance Standards Board and the International Ethics Standards Board for
Accountants’ International Code of Ethics for Professional Accountants (including International Independence
Standards) (‘IESBA Code’), and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the
consolidated financial statements section of our report.
Our firm has also provided other services to the Group in relation to other assurance services and non-audit
services relating to tax compliance and tax advisory. Subject to certain restrictions, partners and employees of
our firm may also deal with the Group on normal terms within the ordinary course of trading activities of the
business of the Group. These matters have not impaired our independence as auditor of the Group. The firm has
no other relationship with, or interest in, the Group.
Materiality
The scope of our audit was influenced by our application of materiality. Materiality helped us to determine the
nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually
and on the consolidated financial statements as a whole. The materiality for the consolidated financial
statements as a whole was set at $0.9m determined with reference to a benchmark of Group revenue. We
chose the benchmark because, in our view, this is a key measure of the Group’s performance.
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EROAD ANNUAL REPORT 2021P. 116 >< P. 115
The key audit matter How the matter was addressed in our audit
Roles of employees and the nature of
overhead costs are considered in assessing
whether they are directly attributable to a
qualifying project. Projects that do not
continue to meet the capitalisation criteria
are written off.
Additionally, the development asset is
assessed for impairment where indicators
exist. Development assets are allocated to
three cash generating units (‘CGU’s’)
representing the three core markets the
Company develops its products for (New
Zealand, Australia and North America). The
Directors have assessed whether any
impairment indicators exist for the
development asset that has been allocated
to each of these CGU’s by considering
actual and forecast performance, economic
and technological factors, and market
capitalisation among other factors.
Based on this assessment, management
determined the development asset
allocated to the North American CGU
demonstrated indicators of impairment, and
as a result performed an impairment test
using a Discounted Cash Flow (‘DCF’) value-
in-use model. In performing this
assessment, assumptions are made in
respect of future economic and market
conditions, such as forecast unit sales
growth, forecast average revenue per unit
(‘ARPU’), and the impact of projects in
development on forecast cashflows,
including considering the ongoing
uncertainty relating to the impacts of
COVID-19. Additionally, management
determined a terminal growth rate and
discount rate which reflect an assessment
of the time value of money and the risks
specific to the North American business.
We focused on these areas due to the
quantum of the development costs
capitalised and judgement involved.
We assessed management’s impairment testing of the
development asset by performing the following procedures:
— Challenging management’s assessment of the
impairment indicators by CGU including consideration
of the Group’s market capitalisation;
— For the North American CGU that had indicators of
impairment, we obtained supporting value in use
model and assessed the methodology and key
assumptions made including:
- Comparing the market strategy inherent in the
impairment test with management discussions
and minutes of Board meetings;
- Using our corporate finance specialists to
challenge the reasonableness of the weighted
average cost of capital and long-term growth r
ates;
- Challenging management’s future cash flow
forecasts. This included comparing previous
forecasts to actual results and other relevant
supporting documentation to evidence the
feasibility of the forecasts and to assess the
reliability of historical forecasting; and
- Challenging management’s forecasts by
performing sensitivity analysis over the forecast
unit sales growth, ARPU, discount rate, and
expenses considering also the ongoing threat of
COVID-19 impacts.
We did not identify any factors that were materially
inconsistent with management’s overall conclusions.
Other information
The Directors, on behalf of the Group, are responsible for the other information included in the entity’s Annual
Report. Other information includes the Chairman’s and Chief Executive’s report, disclosures relating to corporate
governance and other statutory disclosures. Our opinion on the consolidated financial statements does not cover
any other information and we do not express any form of assurance conclusion thereon.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the consolidated financial statements in the current period. We summarise below those matters and our key
audit procedures to address those matters in order that the shareholders as a body may better understand the
process by which we arrived at our audit opinion. Our procedures were undertaken in the context of and solely
for the purpose of our statutory audit opinion on the consolidated financial statements as a whole and we do not
express discrete opinions on separate elements of the consolidated financial statements.
The key audit matter How the matter was addressed in our audit
Revenue recognition
Refer to Note 3 of the consolidated financial
statements.
The Group’s contracts are accounted for as
a service contract and the associated
revenues recognised over the contract
term.
We focused on this area because the
accounting determination of whether or not
the contract contains a lease is a significant
judgement and the outcome has a
significant impact on the recognition of
profit and loss and the financial position.
Furthermore, judgement is also required
when assessing the recoverability of this
revenue and associated debtor balances in
light of the economic conditions from
COVID-19.
We assessed the judgement in revenue recognition by
performing the following procedures:
— Assessing whether the Group’s customer contract
terms and conditions meet the definition of service
contracts to be recognised over time;
— Reviewing any changes or new contractual terms and
conditions entered into with new customers during
the period to identify any potential impact on
performance obligations required to satisfy the
contract;
— Selecting a sample of customer contracts to compare
the revenue recognised to the contractual period;
— Checking a sample of customer invoices immediately
prior to and after year end to ensure revenue is
recognised in the correct period; and
— Challenging management’s assumptions used to
determine the recoverability of revenue and
associated debtor balances particularly in context of
ongoing uncertainty relating to COVID-19.
We did not identify any matters that indicated that the
reported revenue is materially misstated.
Development asset capitalisation and impairment
Refer to Note 16 to the consolidated
financial statements.
The Group has reported a development
asset of $36.9m (2020: $32.7m). The
establishment of the development asset
requires significant judgement as to
whether a project meets the capitalisation
criteria, and which expenditure is directly
attributable to the development of such
projects.
In assessing whether a project meets the
capitalisation criteria we consider its
technical and economic feasibility, intention
and ability to develop, use or sell the asset.
We assessed the judgements related to capitalised
expenditure by performing the following procedures:
— Understanding the nature and background of the
activities that are capitalised through inquiry of key
personnel;
— Selecting a sample of projects ensuring they meet the
capitalisation criteria;
— Challenging whether costs capitalised during the year
were directly attributable to development projects
; and
— Selecting a sample of timesheets and recalculating the
amount of internal costs capitalised based on the
hours which staff spent developing the asset.
AUDITORS REPORT
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In connection with our audit of the consolidated financial statements our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audit or otherwise appears materially
misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Use of this independent auditor’s report
This independent auditor’s report is made solely to the shareholders as a body. Our audit work has been
undertaken so that we might state to the shareholders those matters we are required to state to them in the
independent auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the shareholders as a body for our audit work, this independent
auditor’s report, or any of the opinions we have formed.
Responsibilities of the Directors for the consolidated financial statements
The Directors, on behalf of the Company, are responsible for:
— the preparation and fair presentation of the consolidated financial statements in accordance with generally
accepted accounting practice in New Zealand (being New Zealand Equivalents to International Financial
Reporting Standards) and International Financial Reporting Standards;
— implementing necessary internal control to enable the preparation of a consolidated set of financial
statements that is fairly presented and free from material misstatement, whether due to fraud or error; and
— assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless they either intend to liquidate or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objective is:
— to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error; and
— to issue an independent auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs NZ will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
A further description of our responsibilities for the audit of these consolidated financial statements is located at
the External Reporting Board (XRB) website at:
http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/
This description forms part of our independent auditor’s report.
The engagement partner on the audit resulting in this independent auditor's report is Aaron Woolsey.
For and on behalf of
KPMG
Auckland
28 May 2021
P. 118 >MENU
EROAD ANNUAL REPORT 2021CORPORATE GOVERNANCEP. 120 >
The Board of EROAD Limited (EROAD, the Company) is committed to fulfilling
our corporate governance obligations and responsibilities in the best interests
of the company and our stakeholders by ensuring that the Company adheres
to best practice governance principles and maintains the highest ethical
standards. The Board regularly reviews and assesses EROAD’s governance
framework and processes to ensure that they are consistent with best practice.
This statement provides an overview of the EROAD’s governance framework and processes. It is structured to follow
the NZX Corporate Governance Code (NZX Code) and discloses the Company’s practices for each of the NZX Code’s
eight governance principles.
The Board’s view is that, as at 31 March 2021, EROAD’s governance practices were in compliance with the NZX Code’s
recommendations. The Company also complies with the corporate governance requirements of the NZX Main Board
Listing Rules (NZX Listing Rules) and with our obligations as a foreign-exempt issuer on the ASX (ASX Listing Rules).
EROAD’s corporate governance policies, practices and procedures can be found on our website at
http://www.eroadglobal.com/global/investors/. The Investor website page is used in this statement as a reference to
the website page where the Company’s set of governance documents are located.
This Corporate Governance Statement was approved by the Board on 27 May 2021.
EROAD’S PRINCIPAL ACTIVITIES
The Company creates and delivers end to end road user charges and compliance products, telematics and asset
tracking devices, dashcam devices, and supplies Software as a Service end-to-end products for:
(a) transportation taxes, including road user charging, fuel and vehicle registration;
(b) record keeping and compliance for fleets, mobile assets (vehicles) and drivers (including fatigue);
(c) commercial services used to improve fleet efficiency and operational and safety outcomes;
(d) micro asset tracking.
There were no significant changes to EROAD’s principal activities during the financial year.
PRINCIPLE 1: CODE OF ETHICAL BEHAVIOUR
EROAD’s purpose is safer and more sustainable roads. EROAD’s values are key to achieving this purpose. The values
are:
• Lead with SAFETY;
• Operate with TRUST;
• Act with INTEGRITY;
• Perform as one TEAM;
• Celebrate INNOVATION.
EROAD’s values reflect our commitment to delivering the best outcomes for EROAD, our team, our customers,
shareholders and wider stakeholders.
The Company’s Code of Ethics provides guidance on the behaviours that will enable the directors, employees,
independent contractors and advisers of EROAD and our related companies (“EROADers”) to align their conduct,
actions and decisions with EROAD’s purpose and values.
Corporate
Governance
Report
< P. 119MENUEROAD ANNUAL REPORT 2021
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Broadly, the behaviours will lead to all EROADers enjoying an open, transparent, positive and high-performing culture
with the following attributes: full commitment across the Company to the success of EROAD’s future; constructive
relationships being developed and maintained in an open, professional and respectful manner; good career
development and opportunities being provided within EROAD; consultation on matters concerning EROADers and the
business; and everyone incorporating EROAD’s values into their work to collectively achieve EROAD’s purpose. The
Code of Ethics also addresses, amongst other things, confidentiality; conflicts of interest and corporate opportunities;
receipt of gifts and personal benefits; expected conduct; whistleblowing; corruption; reporting concerns regarding
breaches of the code, other policies and the law. All EROADers are made aware of EROAD’s key policies and receive
training on these via our online training platform. Whilst there is no formal assessment for corruption per se, EROAD
has a range of Codes and Policies that discourage corrupt behaviours by employees.
Several other policies and documents are regarded as being important in ensuring high ethical standards are
maintained. The Market Disclosure Policy sets out the Company’s commitment to the promotion of investor
confidence by ensuring that the trading of EROAD shares takes place in an efficient, competitive and informed
market. The Securities Trading Policy clearly sets out for directors and employees of EROAD when they may buy or
sell the Company’s shares, and the approvals that are required prior to trading. The underlying principle of the Policy
is that EROAD is committed to ensuring our directors, officers, employees and advisers do not trade EROAD shares
while in possession of inside information. An Interests Register is kept, in accordance with the requirements of the
Companies Act 1993 and the Financial Markets Conduct Act 2013, to ensure all relevant transactions and matters
involving the directors are recorded. The Related Party Transactions Policy governs any related party proposed or
actual related party transactions. The Whistleblower supplements the Code of Ethics’ provisions regarding reporting
concerns by providing a clear pathway for resolving issues that may have arisen. EROADers can raise any critical
concerns with their manager or with any member of the executive team and any major concerns will be passed up
to the board where appropriate. Additionally, EROAD has an independent whistleblower email for EROADers to use.
This is managed by EY Australia. The Board and management will review any critical concerns and will work with the
appropriate EROADers to swiftly resolve any critical concerns.
EROAD’s Code of Ethics, Market Disclosure, Securities Trading and Whistleblower policies can be found at the Investor
website page.
PRINCIPLE 2: BOARD COMPOSITION AND PERFORMANCE
Responsibilities of the Board and Executive Management
The business and affairs of EROAD are managed under the direction of the Board of Directors. GRI 102-18aThe role
of the Board is to approve the purpose, values and strategic direction of the Group, to guide and monitor EROAD’s
management in accordance with the purpose, values and strategic plans, and to oversee good governance practice.
The Board Charter sets out internal Board procedures and defines the Board’s specific roles and responsibilities that
include, amongst other things:
• appointment of a Chair;
• in consultation with the Chief Executive Officer (CEO), providing strategic direction and approving EROAD’s strategies
and objectives;
• advancing major strategies for achieving EROAD’s objectives;
• setting a risk appetite for the management of risks;
• determining the overall policy framework within which the business of EROAD is conducted; and
• monitoring management’s performance with respect to these matters.
The Board has a statutory obligation to reserve responsibility for certain matters and these are set out in the Charter.
The Board also deals with issues relating to the appointment or removal of the CEO, ensuring adequate resources
are available to management to run the business, overseeing director appointments and reappointments, approving
financial and business plans, and considering matters that are outside delegated authority levels. The Board uses
Committees to address certain issues that require detailed consideration by members of the Board who have specialist
knowledge and experience.
Management of the day-to-day operations and responsibilities of EROAD together with delivery of the strategic
direction and goals is delegated to the executive management team under the leadership of the CEO. The Board
holds management accountable for the performance of our delegated functions. In doing so the Board constructively
challenges management’s proposals and decisions and seeks to instil a culture of accountability throughout the
Group. This is achieved by monitoring management’s performance by receiving reports and plans, maintaining an
active programme of engagement with senior management and through the Board’s annual work programme.
If circumstances arise where a director needs to obtain independent advice, that director is, as a matter of practice,
able to seek such advice at the expense of EROAD.
Board Composition
EROAD is committed to ensuring that the composition of the Board includes directors who collectively bring an
appropriate mix of skills, commitment, experience, expertise and diversity (including gender diversity) to Board
decision-making. As at 31 March 2021 EROAD had five directors, four of whom are non-executive directors. Steven
Newman, the CEO, is the only executive director.
A brief biography of each Board member, including experience, length of service, expertise, role and the term of
office is set out in the “Board of Directors” section of this report. Disclosure on director shareholdings and other
directorships is included on page 141 of this report.
The Board does not have a tenure policy, but it is of the view that the profile, represented by the length of service of
each of our directors, is appropriately balanced such that Board succession and renewal planning is managed over
the medium to longer term.
Director nomination, appointment, retirement and re-election
The Board is responsible for appointing Directors and has established a Remuneration, Talent and Nominations
Committee (“RTNC”) to assist it with the selection, appointment, and reappointment of Directors to the Board. The
Committee also has oversight of EROAD’s overall human resources strategy. The Committee’s specific responsibilities
are set out in our Charter, which is available at the Investor website page.
The Appointment and Selection of New Directors Policy sets out the criteria and process that the Committee will
follow during the process of selecting and appointing new directors as and when a vacancy arises and in considering
whether to recommend the reappointment of existing directors. The Appointment and Selection of New Directors
Policy can be viewed at https://www.eroadglobal.com/global/investors/ Where a candidate is recommended by the
RTNC, the Board will assess that candidate against a range of criteria including background, experience, professional
qualifications, personal qualities, the potential for the candidate’s skills to augment the existing Board (board skill
matrix) and the candidate’s availability to commit to the Board’s activities.
EROAD is also particularly committed to ensuring that gender and cultural diversity is represented in the company.
Levels of gender diversity across EROAD’s workforce are higher than the IT industry average. That said, we
are conscious of the under representation of women in our current board composition. We are in the process
of completing a board refresh for the skills and experience we consider we require to provide the appropriate
governance for the company as it moves through its next phase of growth. As part of this process we are considering
the need for an additional director with a certain skillset, and are committed to identifying suitable female candidates
with this skillset through a rigorous, comprehensive search process. In line with the NZX Code recommendations,
checks are made for any material adverse information before a candidate is recommended to the Board. Where
appropriate, external consultants are engaged to assist in searching for candidates.
Director period of appointment as at 31 March0-3 years3-9 years9 years +
Number of directors212
Last year, Barry Einsig stood for election following his appointment to the Board. This year, Graham Stuart will stand
for re-election. The Board includes in the Notice of Meeting for annual meetings all material information that is
considered relevant to a decision on whether to elect or re-elect a director.
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All new and reappointed directors enter into a written agreement with EROAD, which sets out the terms of their
appointment. New directors also complete a comprehensive induction programme that enables them to meet with the
Chairman, the Finance, Audit and Risk Committee (“FRAC”) Chairwoman and senior management to gain insight into
EROAD’s values and culture, our business operations, key risks and regulatory and legal framework. The program also
includes site visits. Each director’s induction program is tailored based on the director’s existing skills, knowledge, and
experience.
All directors are expected to maintain the skills required to discharge their obligations to the company. On an
ongoing basis, directors are provided with papers, presentations and briefings on matters which may affect EROAD’s
business or operations to assist the directors regarding understanding key developments in the industry in which
EROAD operates. The board considers that Barry Einsig, Steven Newman and Tony Gibson all have industry specific
experience. Directors are also encouraged to undertake continuing education and training relevant to the discharge of
their obligations as directors of the company. We are always working to broaden the expertise, skillset, and knowledge
of the board with a view to increase gender representation and broaden the geographic location of directors.
Independence of Directors
The factors that are considered by the Board when assessing the independence of our directors are set out in the
Board Charter. The guidance provided in the NZX Code is also considered alongside the ASX Corporate Governance
Principles and Recommendations. As set out in the Board Charter, factors that may impact a director’s independence
include:
1. Being currently, or within the last three years, employed in an executive role by EROAD, any of our subsidiaries, and there
has not been a period of at least three years between ceasing such employment and serving on the Board;
2. Currently, or within the last twelve months, holding a senior role in a provider of material professional services to EROAD or
any of our subsidiaries;
3. Having a current, or within the last three years, material business relationship (e.g. as a supplier or customer) with EROAD or
any of our subsidiaries;
4. Being a substantial product holder of EROAD, or a senior manager of, or person otherwise associated with, a substantial
product holder of EROAD;
5. Having a current, or within the last three years, material contractual relationship with EROAD or any of our subsidiaries, other
than as a director;
6. Having close family ties with anyone in the categories listed above; or
7. Having been a director of EROAD for a length of time that may compromise independence.
In each case, the materiality of the interest, position, association or relationship needs to be assessed to determine
whether it might interfere, or might reasonably be seen to interfere, with the director’s capacity to bring an
independent judgment to bear on issues before the Board, to act in the best interests of EROAD, and to represent the
interests of our financial product holders generally. The Board reviews the independence of each Director considering
interests that each director is required to disclose in relation to the factors set out above.
Based on these factors, EROAD considers that, as at 31 March 2021, Graham Stuart, Anthony Gibson, Susan Paterson
and Barry Einsig were independent directors.
Board Performance
Performance evaluations for the Board, the Board’s committees, individual directors, and executives are undertaken
regularly.
The Board Charter requires the Board to undertake a regular performance evaluation of itself that:
• compares the performance of the Board with the requirements of our Charter;
• reviews the performance of the Board’s committees and individual directors; and
• makes improvements to the Board Charter where considered appropriate.
The Board is currently in the process of appointing an external consultant to assist with a review of the Boards’s
performance and composition.
Company Secretary
Mark Heine maintains his role as the Company Secretary. He is accountable to the Board, through the Chairman, on
all matters to do with the proper functioning of the Board. Mr Heine has regular discussions with the Chairman to
manage the flow of information between EROAD’s Board, our committees, and senior executives. He is responsible
for all aspects of legal compliance at EROAD together with the Company’s relationship with regulators and
evaluating new regulatory opportunities in New Zealand.
Mr Heine’s remuneration includes the same STI and LTI plan explained on page 132. EROAD has not been party to
any legal actions for FY21 and Mr Heine is not aware of any pending actions regarding anti-competitive behaviour
and violations of anti-trust and monopoly legislation. EROAD has not identified any non-compliance with any laws
and/or regulations, nor has the Company been subject to any significant fines or non-monetary sanctions for non-
compliance with any laws and/or regulations in the social and economic area.
Diversity and Inclusion
EROAD and our Board are committed to a workplace culture that promotes and values diversity and inclusion.
The Company pursues a broad programme of diversity by recognising, valuing, and considering our employees’
different backgrounds, knowledge, skills, needs and experiences.
The Board recognises that diversity and inclusion lead to a better experience at work for EROAD’s employees,
makes teams stronger, leads to greater creativity and performance, contributes to a more meaningful relationship
with customers and stakeholders, and, ultimately, increases value to shareholders. When there is a variety of
thinking styles, backgrounds, experiences, perspectives and abilities, employees are more able to understand
customers’ needs and to respond effectively to them, thus best equipping EROAD for future growth.
EROAD encourages diversity and inclusion by:
• having a robust recruitment process in place to attract capable, motivated, engaged, creative and diverse candidates;
and
• fostering a culture and environment of inclusion through various initiatives, policies, and development opportunities.
To deliver on our strategy, EROAD has designed a scalable and diverse organisation with the right skillset to grow
and mature the Company’s operations in new markets and geographies. We explain this in more detail in the “Our
Team” section of this report.
The Board has adopted a Diversity and Inclusion Policy in accordance with the NZX Code and the ASX Corporate
Governance Principles and Recommendations. The policy is available at the Investor website page. To ensure
continued focus and prioritisation, the policy requires the Board to set, review and report on measurable
objectives for achieving and promoting diversity across EROAD’s business. Implementation of actions to achieve
the objectives is the responsibility of the CEO. Progress has been made in FY21 in achieving the objectives. One of
the achievements is that the percentage of female employees exceeds the percentage of female employees in the
technology sector generally. EROAD employees also cover a broad age range (currently 18 through to 64 years)
and come from over 28 different countries.
Further, EROAD has maintained the following key goals regarding Diversity & Inclusion:
• Culture & Values
To deliver appropriate internal policies and programs supporting and promoting diversity and inclusion that are
adopted at each level of EROAD’s business.
EROAD delivers a diverse range of cultural celebrations and social events, with a broad range of people on relevant
committees. This includes events such as: Cultural Day, Matariki Day, 4th July, Diwali, and International Women’s Day.
Diversity and Inclusion also plays a role in talent planning designed to enable all employees the opportunity for career
advancement. Further, EROAD undertakes regular review of employee remuneration and their approach to this,
ensuring pay equity.
• Inclusion
To ensure a culture which promotes values and inclusion. This means key discussions are not limited to small groups
and involve a wide selection of people to promote diversity of thought.
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EROAD creates a safe environment which actively encourages EROADers to share their opinions. Leadership role
modelling, regular cultural awareness and celebration opportunities, toastmasters and wellness programmes are some
of the mechanisms EROAD supports for staff participation. Everyone has the freedom and opportunity to voice their
opinions. Diverse groups contribute to business strategy and planning activity, and inter-departmental social and work
project interactions connect people. Frameworks and managerial education are provided to promote inclusion such as
flexible workplace practices.
• Leadership and People Development
A significant emphasis is given to developing our leaders and people across EROAD. A Leadership Program was
launched in 2019 to ensure a consistent leadership approach is applied across all teams, as well as giving a wide range
of employees, new opportunities to develop as leaders.
Our commitment to improving leadership gender balance is evidenced by the higher proportion of female
participation in the leadership program than the proportion of females at EROAD. This means there is a great pipeline
of future leaders. EROAD’s “Lean-In Circle” provides a safe environment for employees to help each other develop.
EROAD is moving to an annual review of diversity of all promotions to further strengthen our equal opportunities
philosophy.
• Recruitment
Our goal is to ensure that our recruitment campaigns generate a diverse pool of talent with value on experiential
and cognitive diversity and that all hiring decisions are based on merit.
To achieve this EROAD: continues to advertise and promote on a broad range of recruitment advertising channels;;
applies a diversity and inclusion lens to recruitment to maximise the appeal to a diverse candidate pool; and we
have a scholarship which has a preference for Maori or Pasifika candidates.
• Communication
EROAD’s expectations around diversity and inclusion are communicated often and clearly, with a top down
approach. Training for leaders and education for all employees on holding effective meetings is a core programme.
Diversity initiatives such as cultural events and flexible working are widely promoted. EROAD’s careers site supports
recruitment diversity. Inclusiveness is promoted at all levels. The value of diversity in EROAD’s labour sourcing is
communicated to the talent acquisition team and external agencies.
Gender balance
The table below shows the respective number of men and women on the Board, in executive management positions
(as “Officers”) and across the whole organisation, including both full time and part time employees, as at 31 March
2020 and 31 March 2021. Almost 39% of EROAD staff are female, which is above average in our industry, and almost
one third of EROAD female employees are in leadership roles.
20202021
WomenMenWomenMen
Board2 (29%)5 (71%)1 (20%)4 (80%)
Officers2 (20%)8 (80)2 (22.2%)7 (77.7%)
Other employees111 (38%)178 (62%)137 (38%)226 (62%)
“Officers” are the CEO and senior executives reporting directly to the CEO.
PRINCIPLE 3: BOARD COMMITTEES
The Board has established a Finance, Risk and Audit Committee and a Remuneration, Talent and Nomination Committee.
These Board committees support the Board by working with management and advisers on relevant issues at a
suitably detailed level. Recommendations are reported to the Board. The committees’ charters set out their objectives,
procedures, composition, and responsibilities. Copies of these charters are available at the Investor website page.
All directors have a standing invitation to attend committee meetings where there is no conflict of interest.
Finance, Risk and Audit Committee (FRAC)
The Finance, Risk and Audit Committee assists the Board in fulfilling our oversight responsibilities relating to EROAD’s
risk management and internal control framework, the integrity of our financial reporting and the auditing processes and
activities. Four meetings of the Finance, Risk and Audit Committee were held during the year ended 31 March 2021.
Under the Finance, Risk and Audit Committee Charter, the Committee must be comprised of non-executive directors,
all of whom must be independent. Further, the Chair of the Committee must be an independent director and cannot be
the Chairman of the Board.
Employees only attend the Finance, Risk and Audit Committee meetings at the invitation of the Committee. In the year
ended 31 March 2021, the CEO, the Chief Financial Officer (CFO) and General Counsel were invited to attend each of the
four meetings of the Finance, Risk and Audit Committee.
The current members of the Finance, Risk and Audit Committee are Susan Paterson (Chair), Anthony Gibson and
Graham Stuart. All members of the Finance, Risk and Audit Committee are independent non-executive directors.
Qualifications and Experience of Committee members
Susan Paterson: Susan has held a number of roles where she was accountable for the financial performance of entities.
She has spent the last 25 years either chairing or contributing to Audit Committees within both government and private
company arenas. Susan regularly attends training courses on financial matters and best practice in Audit and Assurance.
Susan holds an MBA from London Business School (focused on finance and strategy) and is a Chartered Fellow of the
Institute of Directors. In 2015 Susan was appointed as an Officer of the New Zealand Order of Merit in recognition of her
service to corporate governance.
Tony Gibson: Tony has extensive governance and international executive experience. Tony has been the CEO of Ports
of Auckland Limited for 11 years and prior to this role was Managing Director of Maersk Line New Zealand, Director
of Maersk Logistics and Managing Director of P&O Nedlloyd for New Zealand and the Pacific Islands and held senior
management roles in Europe, Asia and Africa. Tony has also been the chair of North Tugz, Nexus Logistics and Conlixx.
In addition, Tony brings extensive transportation and logistic expertise to the Board, including being appointed by the
Government in 2009 as a member on the Independent Review of the NZ Road User Charging System.
Graham Stuart: Graham has over 30 years of governance experience. In addition to his extensive service on company
boards, Graham has had a highly successful executive career split between CEO and CFO roles. Graham has held roles
that were highly strategic in nature, within dynamic environments and in high growth businesses. Graham has a strong
professional background in accounting and finance as well as experience in technology and leadership. Graham is a
qualified Chartered Accountant and holds a Master of Science (Management) and a Bachelor of Commerce (First Class
Honours).
The Chairperson of the Committee reported to the Board on the Committee’s proceedings following each meeting.
The Committee undertook a review of our objectives and activities and invited comments from all members of the
Board. Recommendations were made to the Board regarding changes to the Committee’s duties, responsibilities and
scope of activities.
Remuneration, Talent and Nomination Committee (RTNC)
The Remuneration, Talent and Nomination Committee oversees, amongst other things, the remuneration and benefits
policies; the CEO’s performance review and performance objectives; remuneration of EROAD’s executives; succession
planning and associated management development for the CEO and the executive team; and the effectiveness of
the Diversity and Inclusion Policy. It also oversees the director appointment process when a vacancy arises and the
reappointment of sitting directors.
The current members of the Remuneration, Talent and Nomination Committee are Anthony Gibson (Chair), Graham
Stuart, Susan Paterson, and Barry Einsig.
Barry Einsig is currently a principal at CAVita, where he provides consulting services to cities, governments and
companies on Smart Cities, transport mobility and connected/automated vehicle systems. His extensive global
experience in the transport industry, coupled with his network of industry colleagues, is of real value to the Board in
their recruitment and succession planning. With an executive level background in large publicly traded companies, Barry
supports the RTNC’s focus on remuneration and organisational matters.
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Candance Kinser and Michael Bushby were members of the Committee until their resignation on 24 July 2020 and 1 July
2020 respectively.
All current members of the Remuneration, Talent and Nomination Committee are independent directors. Steven Newman
attended the two Remuneration, Talent and Nomination Committee meetings at the invitation of the Committee.
The Chairperson of the Committee reported to the Board on the Committee’s proceedings following each meeting.
The Committee undertook a review of our objectives and activities and invited comments from all members of the Board.
Recommendations were made to the Board regarding changes to the Committee’s duties, responsibilities and scope of
activities.
Board Processes
The Board held eight meetings during the year ended 31 March 2021. In addition to the eight scheduled Board
meetings, the Board had eight additional meetings concerning COVID-19 and the capital raise.
Board
Finance, Risk and
Audit Committee
Remuneration,
Talent and
Nomination Committee
Eligible to
attend
Attended
Eligible to
attend
Attended
Eligible to
attend
Attended
Graham Stuart884222
Anthony Gibson884422
Susan Paterson 884422
Steven Newman 884422
Barry Einsig880122
Michael Bushby*332211
Candace Kinser **322110
* Michael Bushby left the Board on 1 July 2020 and attended 3 Board meetings.
** Candace Kinser left the Board on 24 July 2020 and attended 2 Board meetings.
All Board members are entitled to attend any committee meeting where there is no conflict of interest.
Takeover protocol
The Board has a formal written protocol that sets out the procedure to be followed in the event that a takeover offer is
received by EROAD.
PRINCIPLE 4 – REPORTING & DISCLOSURE
Making timely and balanced disclosure
EROAD is committed to promoting shareholder confidence through open, timely and accurate market communication.
The Company has procedures in place to ensure compliance with our disclosure obligations under the NZX Listing
Rules and the ASX Listing Rules. The Board has a Disclosure Committee that comprises the CEO, CFO and one
Independent Director. This Committee is responsible for administering EROAD’s compliance with our Market
Disclosure Policy, including our NZX and ASX continuous disclosure obligations, and can approve the release of
documents to both the NZX and ASX Market Announcements Platform.
EROAD’s Finance, Risk and Audit Committee Charter oversees the quality and integrity of external financial reporting
including the accuracy, completeness, balance and timeliness of financial statements. It reviews interim and annual
financial statements and makes recommendations to the Board concerning accounting policies, areas of judgement,
compliance with financial reporting standards, NZX, ASX and legal requirements, and the results of the external audit.
All matters required to be addressed and for which the Committee has responsibility were addressed during the
period under review.
All interim and full-year financial statements are prepared in accordance with relevant financial standards.
Non-financial reporting
Safety, communities and environment are at the heart of EROAD’s culture. Our philosophy and achievements are
outlined in the pages 23-28 and 35-38 this report.
EROAD is committed to an awareness of environmental, economic, and social sustainability factors. EROAD’s
General Counsel and CFO have responsibility for economic, environmental, and social topics. The General Counsel
and CFO inform the Board of any material factors that come to light and keep the board up to date with current
market trends and processes in this space. The Directors are committed to progressing ESG matters and consider
these at every board meeting. Members of the Executive Team report directly to the Board on these as and when
they see fit. The Board also takes advice from the FRAC Committee, General Counsel, Risk & Compliance Manager,
the Global Market Development Team and the Road Network Insights Team. GRI The Board receives reports on a
series of performance measures that are considered key indicators of EROAD’s performance in areas across all the
business units. Recommendations based on the performance measures are incorporated into agreed actions to
mitigate the identified risks. The Board delegates to management who follow EROAD’s Health and Safety Policy,
Delegation of Authority, Roles & Responsibility Matrix, Treasury Policy, Risk Appetite Statement, Code of Ethics
and Code of Conduct. As part of the board review process, an independent third party is appointed to review the
board performance every two years. Self-assessments are undertaken by the board biennially alternatively to the
independent evaluation. EROAD reports on our sustainability efforts on an annual basis in our Annual Report. Further
information is available in the Risk section of this statement.
As noted in the Remuneration section, up to 60% of the Short-Term Incentive scheme targets are based on the
achievement of strategic (non-financial) program targets from the annual plan.
EROAD is looking forward to providing further reporting on sustainability factors in our FY22 Annual Report.
EROAD’s commitment to health and safety, diversity and community benefits are outlined in further detail in the
Economic and Social Responsibility section of this report.
PRINCIPLE 5 – REMUNERATION
Directors’ Remuneration
The Remuneration, Talent and Nomination Committee is responsible for establishing and monitoring remuneration
policies and guidelines for directors which enable EROAD to attract, motivate and retain the high calibre of
directors who will contribute to the successful governing of EROAD and create value for shareholders. External
independent remuneration consultants at PWC are involved in determining remuneration for EROAD’s directors.
Further, EROAD has committed to introducing theAustralian Say On Pay Vote for its remuneration report in FY22.
When determining the fees for directors and Chairs of the Board and our committees, the Board considers
the median director fee levels for comparable listed companies in New Zealand. In FY21, the total of fees paid
to directors was less than the aggregate fee pool of $500,000 per annum approved at EROAD’s 2018 annual
meeting. Under the company Remuneration Policy, no retirement payments are made to directors or executive
employees for their service.
Current non-executive directors’ remuneration is as follows:
• NZ$110,000 for the Chair of the Board,
• NZ$55,000 for non-executive directors,
• NZ$25,000 for the Chair of the Finance, Risk and Audit Committee, and
• NZ$8,000 for the Chair of the Remuneration, Nomination and Talent Committee.
Non-executive directors received the following directors’ fees from EROAD in the year ended 31 March 2021. All
fees are in NZD unless otherwise indicated:
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Base fee Fee for Finance,
Risk and Audit
Committee
Fee for Remuneration,
Nomination and Talent
Committee
Total remuneration
received for FY21
Graham Stuart$110,000
(Chairman)
$118,574.92 (includes $8,575 for
additional work undertaken as
part of our ASX Listing and Capital
Raise in September 2020)*
Michael Bushby**$18,425$0$0$18,425
Barry Einsig$96,000 (USD)$0$0$96,000(USD)
Anthony Gibson$55,000$0$7,880 (Chair)$62,880
Susan Paterson$54,996$24,999.96 (Chair)$0$88,570.96 (includes $8,575 for
additional work undertaken as
part of our ASX Listing and Capital
Raise in September 2020)*
Candace Kinser***$16,894.72$0$16,894.72
*EROAD’s Remuneration Policy allows for additional payments to be made to directors for specific projects they are involved in.
**Michael Bushby received remuneration until his retirement on 1 July 2020.
***Candace Kinser received remuneration until her retirement on 24 July 2020.
Directors do not take a portion of their remuneration under a share plan. Ownership of EROAD shares by Directors
is encouraged rather than being a requirement. When Directors are acquiring shares they are encouraged to buy on-
market. Their ownership interests are disclosed in the “Directors’ Shareholdings” section of this report.
Non-executive directors are entitled to be reimbursed for reasonable costs directly associated with attending the
Board meetings.
Steven Newman, in his capacity as an executive director, does not receive remuneration as a director of EROAD.
No director of any EROAD subsidiary receives or retains any remuneration or other benefits in their capacity as a
director of that subsidiary.
EROAD’s policies prohibit any equity hedging of shares under LTI plans.
Executive Remuneration
The Remuneration, Talent and Nomination Committee is responsible for reviewing the remuneration of EROAD’s senior
employees in consultation with EROAD’s CEO. The Board is responsible for approving remuneration of the senior employees
on the recommendation of the Committee.
EROAD has committed to introducing the Australian Say On Pay Vote in FY22.
EROAD’s remuneration policy for members of the executive team and other senior staff, including the CEO, provides the
opportunity for them to receive, where performance merits, a total remuneration package made up of three components:
Fixed RemunerationShort-term Incentives (STIs)Long-term Incentives (LTIs)
Market pay based on role and effectiveness6 monthly plan.
To drive key outcomes linked
to annual strategy.
Encourages and rewards right
behaviours near-term.
3 year plan.
Ensuring company grown
strategy is set and delivered.
Encouraging long-term value
adding actions and retention.
Fixed Remuneration
Fixed remuneration consists of base salary and benefits. EROAD’s policy is to set fixed remuneration in line with external
market trends, the intrinsic value of a job and internal relativities. Fixed remuneration is reviewed, but not necessarily
increased, annually. Any remuneration increases for the executive team must be approved by the Board. In conducting
reviews, EROAD considers individual performance of each executive.
Short-term Incentives
Short-term incentives (STIs) are at-risk payments designed to motivate and reward for performance, typically in that
financial year. The target value of an STI payment is set annually, usually as a percentage of the executive’s base salary.
It creates alignment between shareholder value creation and employee reward. Participation in EROAD’s STI plan is by
invitation only, subject to CEO approval. Invitations to participate will generally be extended to executives and other senior
leaders in key roles each year. Employees who are invited to participate during an STI period will be eligible to receive a pro-
rated amount of the STI bonus, provided that they are part of the program for at least 3 months. To be eligible for payment,
an employee must be employed by EROAD as of the last day of the STI period and not be subject to any disciplinary
proceedings.
For the year ended 31 March 2021, the STI amount payable is based on group performance against shared team goals.
• 40% = performance against financial metrics;
• 60% = achievement of strategic program targets from the annual plan.
Team target achievement Pay-out
<75%No pay out
75%50%
75% - 100%
Linear up to 100% (E.g. 80% = 60% pay-out, 90% =
80% pay-out etc)
100%100%
≥ 100%
Achievement rate capped at 150% pay-out (E.g. 120%
= 120% pay-out, 200% = 150% pay-out)
An essential component of the STI is strong leadership, led with behaviour that aligns with EROAD’s values. This includes
behaviour and leadership which is ethical, and not to the detriment of customers, other employees or EROAD. In a situation
where it is deemed that the achievement of objectives has not been aligned with the culture and values of EROAD, or an
executive is not leading their teams as required by EROAD, their leadership and values multiplier will be less than 100%. The
STI payment is at the discretion of the Board. Entitlement is not guaranteed even where performance criteria has been met.
Long-term Incentives
The purpose of the long-term incentive (LTI) plan is to attract, motivate, retain and reward executive employees who
can influence the performance and strategic direction of EROAD.
• FY20 LTI plan
Under the FY20 LTI plan, performance share rights (PSR’s) have been issued (for nil consideration) to participants which
convert to shares (for nil consideration) if targets are met. For FY20, the award is linked to growth in EROAD’s total
contracted units (TCUs) between 1 April 2019 and 31 March 2022. Participants bear the tax liability of the LTI scheme. As
with the STI payments, the Board retains discretion over the final outcome of LTI payments, to allow appropriate
adjustments where unanticipated circumstances may impact performance over the measurement period.
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CEO Remuneration
The CEO’s remuneration is made up of three components: fixed remuneration, STI and LTI as follows:
Fixed
Remuneration
Performance Based
Remuneration
Total
Chief ExecutiveSalarySTI*
Total Cash
Remuneration
LTI**
LTI Plan
Status
Total
Remuneration
Total
Remuneration
Paid
Steven Newman
FY17
$551,499 $89,525 $641,024 - Plan ended $619,403 $619,403
Steven Newman
FY18
$555,859 $116,760 $672,619 $150,000**
Vesting
determined
end of
May 2021
$822,619 $672,619
Steven Newman
FY19
$567,120 - $567,120 $181,478.40
Vesting
determined
end of
May 2021
$748,598.40 $567,120
Steven Newman
FY20
$590,000 $96,288 $686,288
$354,000
Under the FY20 LTI
plan, PSRs to the
value of $354,000
were granted to Mr.
Newman under a
three-year plan. This
plan does not vest
until 1 April 2022
and the amount of
PSRs granted was in
a three-year block.
Previous LTI plans
had shares granted
in one-year blocks
to be earned over a
three year period. This
is why the FY20 LTI
PSR granted amount
is higher that for the
previous years. The
amount to be vested
may be lower than
this amount.
In progress
$0 vested
$1,040,288 $686,288
Steven Newman
FY21
$603,043.77 $133,901.60 $736,945.37 -
In progress
$0 vested
$736,945.37 $736,945.37
*Performance under the STI plan is assessed following the end of each financial year and payment is based on the performance achieved. E.g. the FY19 STI
payment was based on performance in FY19 and was paid out in FY20.
**The LTI shares were granted during FY19 under both the FY18 LTI plan to the value of $150,000 and the FY19 LTI Plan to the value of $181,478.40. The
amount to be vested may be lower than these amounts.
***Effective 1 June 2019, salary was increased to $590,000.
****Under the FY20 LTI plan, performance share rights to the value of $354,000 were granted to Mr Newman under a three-year plan. This plan does not vest
until 1 April 2022. The amount to be vested may be lower than this amount.
DescriptionPerformance measuresPerformance hurdles and shares vested
STISet at 32% of at-risk pay. Based
on a combination of financial
and non-financial performance
measures.
40% = performance against financial metrics.EROAD weighting considers EROAD’s
performance against the metrics of EBITDA, the
ratio of gross margin to sales and the ratio of
working capital to sales.
60% = achievement of strategic program
targets from the annual plan.
Individual performance considers performance
under the CEO’s objectives and key results for
the year. Each objective has a specific target and
stretch level of performance, as described under
the “Short-term Incentives” section above.
LT IConditional awards of shares
under the long term incentive
scheme.
For the FY20 LTI plan, which vests on 1
April 2022, the award is linked to growth
in EROAD’s total contracted units (TCUs)
between 1 April 2019 and 31 March 2022.
For the FY20 LTI plan, performance share
rights (PSRs) have been issued (for nil
consideration) to participants which convert to
shares (for nil consideration) if targets are met.
The graphs on page 133 shows the CEO’s remuneration for the last five years compared against EROAD’s revenue,
EBITDA and Total Contracted Unit Growth.
CFO Remuneration
The CEO’s remuneration is made up of three components: fixed remuneration, STI and LTI as follows:
Fixed
Remuneration
Performance Based
Remuneration
Total
CFOSalarySTI*
Total Cash
Remuneration
LTI**
LTI Plan
Status
Total
Remuneration
Total
Remuneration
Paid
Alex Ball FY20 $391,875.50 $49,725.00 $441.600.50 $292,000**
In progress
$0 vested
$734,100.50 $441,800.50
Alex Ball FY21 $398,508.87 $78,617.88 $477,126.75 -
In progress
$0 vested
$477,126.75 $477,126.75
*Performance under the STI plan is assessed following the end of each financial year and payment is based on the performance
achieved. E.g. the FY20 STI payment was based on performance in FY20 and was paid out in FY21.
** As with the CEO, the CFO’s LTI is a 3 year plan which does not vest until April 2022.
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Employee Remuneration
EROAD and our subsidiaries have employees in New Zealand, the United States and Australia. Our pay levels reflect
the different market rates in each country and region. The overseas remuneration amounts are converted into
New Zealand dollars. Of the 147 employees, not being directors of EROAD and our subsidiaries, noted in the
table below who received remuneration and other benefits that exceed NZ$100,000 in value, 28 (19%) are employed
by EROAD in the United States of America, 6 (4%) in Australia and 113 (76%) in New Zealand.
NZ$Total
100,001 – 110,000 23
110,001 – 120,000 23
120,001 – 130,000 25
130,001 – 140,000 17
140,001 – 150,000 7
150,001 – 160,000 10
160,001 – 170,000 9
170,001 – 180,000 6
180,001 – 190,000 1
190,001 – 200,000 3
200,001 – 210,000 2
210,001 – 220,000 1
220,001 – 230,000 2
240,001 – 250,000 1
250,001 – 260,000 2
260,001 - 270,000 1
270,001 - 280,000 1
280,001 -290,000 3
290,001 - 300,00 4
300,001 - 310,000 1
390,001 -400,000 2
470,001 - 480,000 1
550,001 - 560,000 1
580,001 - 590,000 1
TOTAL 147
Revenue % change
Revenue $m
% change
% change
% change
% change
$m
$m
$(000)
$(000)
Revenue ($m)
EBITDA % change
EBITDA $m
EBITDA ($m)
CEO Salary % change
CEO Salary $k
CEO Salary (‘000)
Total Remuneration
Earned % change
Total Remuneration
Earned $k
Total Remuneration
Earned (‘000)
-
20
40
60
80
100
-
20%
40%
60%
80%
100%
20172018201920202021
-
5
10
15
20
25
30
35
-
20%
40%
60%
80%
100%
20172018201920202021
1%
2%
3%
4%
5%
6%
520
530
540
550
560
570
580
590
600
610
-
20172018201920202021
20%
40%
60%
80%
100%
0
400
300
200
100
500
600
700
800
20172018201920202021
-20%
0%
CEO Remuneration graphs
CORPORATE GOVERNANCEP. 134 >MENU
EROAD ANNUAL REPORT 2021< P. 135
PRINCIPLE 6 - RISK MANAGEMENT
Risk Management Framework
EROAD is committed to the identification, monitoring and management of material financial and non-
financial risks associated with our business activities. The Board ultimately has responsibility for internal
compliance and control. It recognises that a sound culture is fundamental to an effective risk management
framework. The Company’s purpose, values and Code of Ethics are important contributors to instilling effective risk
management and awareness, and to support appropriate behaviours and judgements about risk taking within the
parameters. EROAD’s risk management framework provides for the oversight and management of financial and non-
financial material business risks, as well as related internal systems. The framework is designed to:
• optimise the return to, and protect the interests of, stakeholders;
• safeguard EROAD’s assets and maintain our reputation;
• improve EROAD’s operating performance; and
• support EROAD’s strategic objectives.
EROAD’s Risk Management Policy is available at the Investor website page.
EROAD’s risk management strategy enhances strategic planning and prioritization, as well as assisting in the achievement
of key objectives. The strategy also strengthens EROAD’s ability to be agile when responding to challenges that may
be faced. The risk management framework requires senior executives and the wider leadership team to review risks
against the risk limits and triggers in the risk appetite statement (Risk Appetite) and to update the Risk Register on a
periodic basis. The register identifies all known risks, including those that are key to EROAD’s strategy and business
priorities. The Risk Register records risks by impact, probability, and trending, and records the controls for those risks. Risk
mitigation for high-risk projects must be addressed from inception and be
supervised by the appropriate executive team members. The executive team reviews the Risk Register in
setting EROAD’s strategy and budgets.
The Finance, Risk and Audit Committee undertakes quarterly reviews of the Risk Appetite, the Risk Register and other
relevant aspects of the risk management framework. In addition, a review is undertaken, with the external auditors and
management, of the policies and procedures in relation to material business risks.
The Finance, Risk and Audit Committee, in conjunction with management, reports to the Board on
the effectiveness of EROAD’s management of our material business risks and whether the risk
management framework is operating effectively in all material respects.
Risk Appetite
In FY21, EROAD appointed Ross Liston as the company Risk and Compliance Manager. Mr Liston has begun a
review of our risk management framework against our Risk Appetite. EROAD’s risk appetite has been set by the
Board alongside the executive team to provide guidance to EROADers, contractors, and suppliers. EROAD’s risk
appetite sets out the amount and type of risk that EROAD is willing to accept to meet our strategic objectives
and create value for our customers and stakeholders. EROAD is a strategically focused and risk aware, but not
risk-averse organisation. Risks are taken in alignment with EROAD’s purpose and in accordance with EROAD’s
values. EROAD has no appetite for risks that do not align with these.
EROAD has five key risk categories and adopts a different risk appetite for each identifiable risk within these
categories. The five risk categories are:
• Growth & Strategy
• Financial
• Expectations
• People
• Regulatory & Governance
EROAD remains committed to innovation and has a high-risk appetite for this, alongside learning and knowledge,
growth and partnerships, and acquisitions.
A summary of EROAD’s risk appetite is set out below.
RISK APPETITE
LEVEL
GROWTH AND
STRATEGY
FINANCIAL
CUSTOMER
EXPECTATIONS
PEOPLE
REGULATORY AND
GOVERNANCE
Very high
High• Strategic risk
• Partnerships
and acquisitions
• Growth
constraints
• Innovation• Capability
• Learning /
knowledge
Medium• Regulatory
environment
Low• Strategic
execution
• Working capital
• Cost of Capital
• Shareholder
liquidity
• Supply chain
and inventory
• Customer
interactions
• Product
delivery
• Key roles, single
point of failure
Very low• IT and cyber
security
• Quality and
resilience
• Privacy
• Governance risk
No appetite• Banking
covenants
• Product
compliance
• Health and
Safety
• Purpose and
values
• Illegal & Unethical
Behaviour
In managing the Company’s business risks, the Board approves and monitors policy and procedures in areas such as
treasury management, financial performance, taxation and delegated authorities.
Insurance
EROAD has insurance policies in place covering areas where risk to our assets and business can be insured at a
reasonable cost.
Health, Safety and Wellbeing Risk Management
The Board considers ensuring safety and wellbeing at EROAD to be one of our core roles. Our specific responsibilities are set
out in the Board Charter. The Board is committed to ensuring that safety and wellbeing is a top priority for EROAD and is
embedded into every aspect of EROAD’s business. EROAD’s Safety and Wellbeing Policy is a management policy that
providesfor the oversight and management of health and safety risks on behalf of the Board.
EROAD’s Safety and Wellbeing Management System Framework outlines safety and wellbeing activities
at EROAD and articulates safety and wellbeing responsibilities for the Board, the executive team and the
people performing work for EROAD. The framework requires objectives and key results to be established
and incorporated into business planning processes to enable the Safety and Wellbeing Policy’s intent and related
strategies and procedures to be achieved. The framework also requires the safety and wellbeing strategy to
be reviewed regularly to ensure alignment with EROAD’s values, the overall business strategy and
the safety and wellbeing vision.
Members of the Board are regularly provided with a safety and wellbeing report summarising EROAD’s risk profile and
management actions, the current safety and wellbeing focus, lead and lag indicators and updates
from the Safety and Wellbeing staff committee. In the year ended 31 March 2021, there have been no notifiable events to
report to WorkSafe NZ.
CORPORATE GOVERNANCEP. 136 >MENU
SECTION TITLEP. 138 >< P. 137EROAD ANNUAL REPORT 2021P. 138 >SECTION TITLEEROAD ANNUAL REPORT 2021< P. 137
PRINCIPLE 7 – AUDITORS
Oversight of the Company’s external audit arrangements to safeguard the integrity of financial reporting is the
responsibility of the Finance, Risk and Audit Committee. The External Auditor Independence Policy ensure that audit
independence is maintained, both in fact and appearance. It covers:
• The selection and appointment process for the external auditor;
• Rotation of external audit partners;
• Policy to ensure external auditors’ independence;
• Provision of non-audit services; and
• Reporting to the Finance, Risk and Audit Committee.
The policy is available at the Investor website page.
The role of the external auditor is to audit the financial statements of the Company in accordance with applicable
auditing standards in New Zealand and to report on their findings to the Board and shareholders of the Company.
EROAD’s external auditors attend the annual shareholder’s meeting to answer questions from shareholders in relation
to audits.
KPMG is EROAD’s external auditor and has audited the company accounts since 2009. The company rotates the lead
audit partner at least once every five years. The most recent rotation occurred during FY21.
EROAD does not have an internal audit function. The Finance, Risk & Audit Committee pays particular attention
to matters raised by the company’s auditor. It also requires the Executive Team to report periodically on areas
identified as most sensitive to risk together with recommendations for improvements and changes to internal
controls. Through the steps outlined under the Risk Management section, the Board ensures EROAD is reviewing,
evaluating and continually improving the effectiveness of our risk management framework.
PRINCIPLE 8 – SHAREHOLDER RIGHTS AND INTERESTS
EROAD recognises the importance of providing our shareholders and the broader investment community with
access to up-to-date high-quality information to enable them to: monitor the Company’s performance; participate
in decisions required to be put to owners; and provide avenues for two-way communication between
the company, the Board and shareholders. The Shareholder Communication Policy sets out how EROAD
engages with shareholders and other stakeholders to provide them with written communications, electronic
communications and access to the Board, management and auditors. It is one of the corporate governance policies
included at the Investor website page.
EROAD’s website is an important information portal and is kept up to date
with relevant information, including copies of shareholder reports, presentations and market
announcements. Releases and reports are published to the website once they have been provided to and publicly
released by NZX. The website also contains Board and management profiles together with information on EROAD’s
history, awards and a rich library of product information.
Shareholders can easily communicate with EROAD, including by way of email to the address investors@eroad.com.
EROAD’s major communications with shareholders during the financial year include our annual and half-year results,
annual report and the annual meeting of shareholders. The annual report is available in electronic and hard-copy
formats. Shareholders have the option to receive communications from EROAD electronically.
Shareholders have the right to vote on major decisions as required by the NZX Listing Rules.
The Notice of Meeting is sent to shareholders and published on EROAD’s website at least 20
working days prior to the annual shareholders’ meeting each year.
Capital Raise September 2020
In respect of the capital raise in September 2020, EROAD undertook a placement with a share purchase plan for
a maximum of $50,000 of new shares per shareholder. EROAD proceeded with a placement and SPP instead of
a pro-rata raise in order to increase liquidity, broaden our investor base and allow EROAD to accelerate its growth
strategies as it heads towards 250,000 connected vehicles. Since announcing the placement and SPP, EROAD’s share
price has increased from $4.29 to mid $5 – a 25% increase.
CORPORATE GOVERNANCEP. 138 >MENU
P. 140 >
DIRECTORS
The persons who held office as directors of EROAD Limited at any time during the year ended 31 March 2021,
are as follows:
Graham Stuart Chairman, Non-Executive, Independent
Steven Newman Chief Executive Officer
Anthony Gibson Non-Executive, Independent
Susan Paterson Non-Executive, Independent
Barry Einsig Non-Executive, Independent
Michael Bushby* Non-Executive, Independent
Candace Kinser** Non-Executive, Independent
*Michael Bushby left the board on 1 July 2020
**Candace Kinser left the board on 24 July 2020
SUBSIDIARY COMPANY DIRECTORS
The persons who held office as directors of subsidiary companies at 31 March 2021 are as follows:
EROAD Financial Services Limited (New Zealand)
Anthony Gibson
EROAD (Australia) Pty Limited (Australia)
David Worth, Steven Newman
EROAD Inc. (USA)
Mark Heine, Alex Ball
EROAD LTI Trustee Limited (New Zealand)
Anthony Gibson
INTERESTS REGISTER
In accordance with Section 140(2) of the Companies Act, the directors named below have made a general disclosure
of interest by a general notice disclosed to the Board and entered in the Company’s interests register. General notices
given by directors which remain current as at 31 March 2021 are as follows:
Graham Stuart
• Director, Tower Limited
• Director and Shareholder, Leroy Holdings Limited
• Director, Vinpro Limited
• Director, Northwest Healthcare Properties Management
Limited
• Director, Metro Performance Glass Limited
Anthony Gibson
• Chief Executive Officer, Ports of Auckland Limited
• Chair, North Tugz Limited
• Director, AMG Consulting Limited
• Director, Seafuels Limited
• Director, Waikato Freight Hub Limited
• Director, Marsden Maritime Holdings Limited
• Chair, Nexus Logistics Limited
• Chair, Conlixx Limited
Steven Newman
• Director, NMC Trustees Limited
Susan Paterson
• Director, Goodman (NZ) Limited and associated
companies
• Director, Arvida Group Limited
• Director, Les Mills Holdings Limited
• Director (Chair), Steel & Tube Holdings Limited
• Director and shareholder , Theta Systems Limited
• Board member, Electricity Authority
• Director, Reserve Bank of New Zealand
Barry Einsig
• Senior Manager, Econolite
• Principal, CAVita LLC
Regulatory
disclosures
< P. 139MENUEROAD ANNUAL REPORT 2021REGULATORY DISCLOSURES
The following details included in the Company’s interests register as at 31 March 2020 have been removed as at 31 March 2021:
• Graham Stuart is no longer a Director of Tower Insurance Limited and Tower Financial Services Group Limited.
• Susan Paterson is no longer a Director of Sky Network Television Limited.
EROAD ANNUAL REPORT 2021< P. 141
DISTRIBUTION OF SHAREHOLDERS AND HOLDINGS
Holding Range
Number
of holders
%
Number of
ordinary shares
%
1 to 999 558 24.46 231,891 0.28
1,000 to 4,999 980 42.96 2,267544 2.77
5,000 to 9,999 346 15.17 2,316,564 2.83
10,000 to 49,999 313 13.72 6,354869 7. 76
50,000 to 99,999 38 1.67 2,616.677 3.2
100,000 and over 46 2.02 68,108,795 83.16
Total 2,281 100 81,896,340 100
The details set out above were as at 31 March 2021.
The Company only has one class of shares on issue, ordinary shares, and these shares are quoted on the NZX Main
Board.
SUBSTANTIAL PRODUCT HOLDERS
According to notices given under the Financial Markets Conduct Act 2013, the substantial product holders in ordinary
shares (being the only class of quoted voting products) of the Company and their relevant interests according to the
substantial product holder file as at 31 March 2021, were as follows:
Substantial product holderDate of NoticeNumber of shares
National Nominees Ltd
ACF Australian Ethical Investment
11/08/2020 5,420,710
Steven Newman (includes NMC Trustees Limited’s relevant interest)23/09/2020 13,067,936
Colonial First State Investment Limited 25/09/20205,350,209
Allianz SE 28/09/20204,008,293
Mitsubishi UFJ Financial Group Inc.29/09/2020 5,400,060
On 23 September 2020 Steven Newman, who has a relevant interest in the shares held by NMC Trustees Limited, gave
ongoing disclosure of the sale of 1,437,945 ordinary shares at a share price of $3.90 per share.
The total number of ordinary shares (being the only class of quoted voting products) on issue in the Company as at 31
March 2021 was 81,896,340.
Shareholder Information
SHARE DEALINGS BY DIRECTORS
In accordance with Section 148(2) of the Companies Act, the Board has received disclosures from the directors
named below of acquisitions or dispositions of relevant interests in the company between 1 April 2020 and 31
March 2021, and details of those dealings were entered in the company’s interests register. The particulars of such
disclosures are:
Steven Newman and NMC Trustees Limited
• 1) Steven Newman sold 1,437,945 ordinary shares at $3.90 per share on 23 September 2020.
Susan Paterson
• 1) Acquired 12,820 ordinary shares at $3.90 per share on 25 September 2020.
Graham Stuart
• 1) Acquired 12,820 ordinary shares at $3.90 per share on 12 October 2020.
Anthony Gibson
• 1) Acquired 12,820 ordinary shares at $3.90 per share on 13 October 2020.
USE OF COMPANY INFORMATION
There were no notices from directors of the Company requesting to use Company information received in their
capacity as directors that would not otherwise have been available to them.
DIRECTORS’ AND OFFICERS’ INSURANCE AND INDEMNITY
EROAD has arranged, as provided for under the Company’s constitution, policies of directors’ and officers’ liability
insurance which, with a Deed of Indemnity entered into with all directors, ensures that generally directors will incur
no monetary loss as a result of actions undertaken by them as directors. Certain actions are specifically excluded, for
example, the incurring of penalties and fines that may be imposed in respect of breaches of the law.
DIRECTORS’ RELEVANT INTERESTS
The following directors held relevant interests in the following ordinary shares in the Company as at 31 March 2021:
NameOrdinary shares
Steven Newman12,941,513*
Graham Stuart52,820
Anthony Gibson580,819
Susan Paterson 12,820
Barry Einsig -
*Steven Newman also has 120,000 performance share rights granted under the FY20 LTI Plan which vest on achievement of sales
thresholds based on increase in total contracted units for the period 1 April 2020 to 31 March 2022.
P. 142 >REGULATORY DISCLOSURESMENU
EROAD ANNUAL REPORT 2021< P. 143
PRINCIPAL SHAREHOLDERS
The names and holdings of the twenty largest registered shareholders in the Company as at 31 March 2021 were:
Holder NameShares%
NMC Trustees12,941,51315.8
National Nominees Limited – NZCSD8,074,2719.85
FNZ Custodians Limited6,605,4318.06
Citicorp Nominees Pty Limited5,455,9096.66
HSBC Custody Nominees (Australia) Limited5,374,3206.56
JP Morgan Nominees Australia Limited4,845,4905.91
National Nominees Limited3,394,2174.14
BNP Paribas Nominees (NZ) Limited – NZCSD2,561,1343.12
HSBC Nominees (New Zealand) Limited – NZCSD1,670,9442.04
BNP Baribas Noms Pty Ltd1,397,3481.7
BNP Paribas Nominees (NZ) Limited – NZCSD1,-092,1131.33
John Grant Sinclair947,8611.15
Accident Compensation Corporation – NZCSD910,5021.11
BNP Parisbas Nominees (NZ) Limited798,4700.97
David Murray Jarrett & Julie Patricia Jarrett & DHT (2017) 7 Limited782,8340.95
Bruce Alan Lister755,516 0.92
Anthony Gibson580,8190.7
MMC Limited – NZCSD565,5020.69
Andrew Bowker 560,0060.68
Paul Geoffrey Hewlett & Catherine Patricia Carter & Hoffman Trustees Limited5 57, 0 6 90.68
Other Information
NZX WAIVERS
EROAD’s placement and share purchase plan announced to the market on 17 September 2020 were made pursuant to
NZX Listing Rule 4.5.1 (as modified by a class waiver granted by NZX Regulation on 19 March 2020).
DISCIPLINARY ACTION TAKEN BY THE NZX
The NZX has not taken any disciplinary action against the company during the year ended 31 March 2021.
AUDITOR’S FEES
KPMG has continued to act as auditor of EROAD and our subsidiaries. The amount payable by EROAD and our
subsidiaries to KPMG as audit fees during the year ended 31 March 2021 was $0.4m. The amount of fees payable to
KPMG for non-audit work during the year ended 31 March 2021 was $0.2m. Note 4 in the Financial Statements section
of this Annual Report includes a detailed breakdown of auditor’s fees for audit and non-audit work.
DONATIONS
EROAD and our subsidiaries made donations totaling $11,031 during the year ended 31 March 2021.
EROAD does not make donations to any political party.
CREDIT RATING
EROAD does not currently have a credit rating.
P. 144 >REGULATORY DISCLOSURESMENU
EROAD ANNUAL REPORT 2021< P. 145P. 146 >GRI INDEX
Global Reporting Initiative (GRI) Index
GRI Dis-
closure
Reference
GRI DescriptionPage
Reference
Notes / information where data not supplied in main
body
GENERAL DISCLOSURES
102-1Name of Organiza-
tion
4EROAD Limited.
102-2 Activities, Brands,
products and ser-
vices
5 - 8Disclosed in ‘EROAD is a hardware enabled SaaS company that pi-
oneered Regulatory Telematics’ and ‘Growth through providing our
customers additional products and services’ Section.
102-3Location of Head-
quarters
162Albany, Auckland, New Zealand. Disclosed in ‘Directory’ Section.
102-4Location of opera-
tions
162New Zealand, Australia, North America. Disclosed in ‘Directory’
Section.
102-5Ownership and legal
form
86Limited company incorporated under the NZ Companies Act.
Owned by shareholders trading on the NZX and the ASX.
102-6Markets served11, 51 - 62New Zealand, Australia, North America.
102-7Scale of the organi-
zation
-363.
102-8Information on em-
ployees and other
workers
67 – 76, 124 –
125, 134
Disclosed in ‘Our Team’ Section.
102-9Supply chain39Disclosed in ‘EROAD’s Supply Chain’ Section.
102-10Significant changes
to the organization
and its supply chain
39Disclosed in ‘EROAD’s Supply Chain’ Section.
102-11Precautionary princi-
ple or approach
135, 136The level of risk EROAD is willing to take on is captured in its Risk
Appetite Statements (RAS). Key business risks, and associated
limits (included in the RAS) are identified, reviewed and agreed
by the Executive and the Board on an annual basis. Performance
against these risk limits is monitored continuously and reported to
the Executive and Board on a monthly basis.
EROAD adapts its risk universe to factor in emerging risks such
climate change, geo-politics, etc.
102-12External initiatives-None.
102-13Membership of
associations
-New Zealand
Bus and Coach Association
Civil Contractors New Zealand
Intelligent Transport Systems New Zealand
New Zealand Trucking Association
Road Transport Association
Road Transport Forum
WasterMINZ
Australia
Australian Furniture Removers Association
Australian Trucking Association
Civil Contractors Federation New South Wales
Civil Contractors Federation Queensland
Civil Contractors Federation Victoria
Queensland Trucking Association
Roads Australia (in progress)
United States of America
American Trucking Association
Colorado Trucking Association
Commercial Vehicle Safety Association
Florida Trucking Association
Georgia Trucking Association
Indiana Motor Trucking Association
Louisiana Trucking Association
Mileage Based User Fee Alliance
National Private Truck Council
New York Trucking Association
North American Transportation Services Association
North Carolina Trucking Association
Oklahoma Trucking Association
Ohio Trucking Association
Oregon Trucking Association
Pennsylvania Trucking Association
South Carolina Trucking Association
Tennessee Trucking Association
Texas Trucking Association
Truckload Carriers Association
Utah Trucking Association
Washington Trucking Association
Wisconsin Motor Carriers Association
Women in Trucking
Wyoming Trucking Association
Global
International Bridge Tunnel and Turnpike Association
International Road Federation (Global)
STRATEGY
102-14Statement from se-
nior decision maker
9 - 17Disclosed in ‘Chair and CEO Letter’.
102-15Key impacts, risks
and opportunities
9 - 17Disclosed in ‘Chair and CEO Letter’ and ‘Protecting the Data so our
customers can operate with confidence’ Section.
MENU
EROAD ANNUAL REPORT 2021< P. 147
ETHICS AND INTEGRITY
102-16Values, principles,
standards, and
norms of behaviour
73, 120EROAD is a values lead organization. Our values are: We Lead with
Safety, We Celebrate Innovation, We Perform as One Team, We Act
with Integrity and We Operate with Trust.
102-17Mechanisms for
advice and concerns
about ethics
121EROAD’s Code of Ethics sets our ethical expectations for ERAODers
and our suppliers. EROAD’s Whistleblowing Policy is available on
our intranet site for all employees to access. In the first instance, em-
ployees should raise concerns with their line manager. If that is not
appropriate, then they can report it to the Chief People Officer or
the EVP General Counsel. Concerns may also be escalated directly
to the Chair of FRAC or to the external EY Whistleblower email.
GOVERNANCE
102-18Governance struc-
ture
128Disclosed in ‘Corporate Governance’ Section – The Board on advice
from FRAC, General Counsel, Risk and Compliance Manager, Global
Market Development Team, Road Network Insights Team.
102-19Delegating authority 128Disclosed in ‘Corporate Governance’ Section – Board delegates to
management teams.
102-20Executive-level
responsibility for
economic, environ-
mental, and social
topics
128Disclosed in ‘Corporate Governance Section’ – the General Counsel
and CFO are responsible for ESG.
102-21Consulting stake-
holders on econom-
ic, environmental
and social topics
21 - 22EROAD recently conducted a Materiality Matrix to engage with
stakeholders on material ESG factors.
102-22Composition of the
highest governance
body and its com-
mittees
77 – 78, 121 - 127Disclosed in ‘Corporate Governance’ Section.
102-23Chair of the highest
governance body
77Disclosed in’ Corporate Governance’ Section.
102-24Nominating and
selecting the highest
governance body
122 - 123Disclosed in ‘Corporate Governance’ Section – Director Nomination
Policy.
102-25Conflicts of interest125, 127Disclosed in ‘Corporate Governance’ Section – Board Charter, Code
of Ethics, Related party Transaction Policy.
102-26Role of the highest
governance body
in setting purpose,
values and strategy
121Disclosed in ‘Corporate Governance’ Section – Board and manage-
ment regularly review EROAD’s purpose and update this where
applicable.
102-27Collective knowl-
edge of the highest
governance body
128Disclosed in ‘Corporate Governance’ Section – Board kept up to date
on current market trends and processes.
102-28Evaluating the
highest governance
body’s performance
128Disclosed in ‘Corporate Governance’ Section – independent third
party reviews the Board’s performance biennially.
102-29Identifying and
managing economic,
environmental, and
social impacts
128Disclosed in ‘Corporate Governance’ Section – EROAD’s Board is
proactive in progressing ESG matters.
102-30Effectiveness of
risk management
process
135Disclosed in ‘Corporate Governance’ Section – Board reviews the risk
management processes and considers advice from FRAC.
102-31Review of economic,
environmental, and
social topics
128Disclosed in ‘Corporate Governance’ Section – at every Board meet-
ing.
102-32Highest governance
body’s role in sus-
tainability reporting
128Disclosed in ‘Corporate Governance’ Section – annual reporting in
the Annual Report.
102-33Communicating
critical concerns
121Disclosed in ‘Corporate Governance’ Section – report at every Board
meeting.
102-34Nature and total
number of critical
concerns
121Disclosed in ‘Corporate Governance’ Section
102-35Remuneration
policies
128 - 134Disclosed in ‘Corporate Governance’ Section – Remuneration Policy.
102-36Process for deter-
mining remuneration
128 - 134Disclosed in ‘Corporate Governance’ Section.
102-37Stakeholders’’
involvement in
remuneration
128 - 134Disclosed in ‘Corporate Governance’ Section.
STAKEHOLDER ENGAGEMENT
102-40List of stakeholder
groups
19 - 20Disclosed in ‘Our Stakeholders’ Section.
102-41Collective bargaining
agreements
-None
102-42Identifying and se-
lecting stakeholders
19 – 20, 38Disclosed in ‘Our Stakeholders’ Section.
102-43Approach to stake-
holder engagement
21 - 22Disclosed in ‘What Really Matters to our Stakeholders’ Section.
102-44Key topics and con-
cerns raised
21 - 22Disclosed in ‘What Really Matters to our Stakeholders’ Section.
REPORTING PRACTICE
102-45Entities included in
the consolidated
financial statements
86, 112EROAD Limited and the associated group entities.
102-48Restatements of
information
-None.
102-49Changes in reporting-None.
102-50Reporting period80FY21
01/04/2020 – 31/03/2021.
102-51Date of most recent
report
931 March 2021
102-52Reporting cycle901/04/2020 – 31/03/2021.
102-53Contact point for
questions regarding
the report
-CFO – Alex Ball.
102-54Claims of reporting
in accordance with
the GRI Standards
-Annually.
This index shows EROAD’s commitment to reporting against the GRI
Reporting Standards.
102-55GRI content index145 - 155Yes.
102-56External assurance-External assurance has not been sought for EROAD’s GRI Reporting
in FY21.
P. 148 >GRI INDEXMENU
EROAD ANNUAL REPORT 2021< P. 149
MANAGEMENT APPROACH
103-1Explanation of the
material topic and its
Boundary
21 - 22Disclosed in ‘Materiality Matrix’ Section.
103-2The management
approach and its
components
21 - 22Disclosed in ‘Materiality Matrix’ Section
103-3Evaluation of the
management ap-
proach
-Addressed throughout.
ECONOMIC PERFORMANCE
201-1Direct economic
value generated and
distributed
79 - 113Refer to financial statements.
201-2Financial implica-
tions and other
risks and opportu-
nities due to climate
change
-EROAD is currently piloting our telematic solution in electric heavy
vehicles. EROAD sees opportunities presented by climate change as
positive for our financial position
201-3Defined benefit plan
obligations and oth-
er retirement plans
-Disclosed in ‘Corporate Governance’ Section. Remuneration for US
based employees, EROAD has a 401k Plan in place which staff may
opt in to.
201-4Financial assistance
received from gov-
ernment
63In FY21, EROAD received grants for COVID relief NZD$1.5m (from
the US Government) and from Callaghan R&D grant of NZD$1.0m
MARKET PRESENCE
202-2Proportion of senior
management hired
from the local com-
munity
-The percentages below show the percentage of senior management
at significant locations of operation that were hired from the local
community
US: 100%
NZ:75%
AU:100%
Senior management includes all executive team members, as well
as those managers who report directly to an executive member.
EROAD’s definition of ‘local’ is within the country. EROAD’s defi-
nition for ‘significant locations of operation’ are the three markets
we operate in - New Zealand, Australia and the United States of
America
ANTI-CORRUPTION
205-1Operations assessed
for risks relating to
corruption
121No formal assessment per se, but EROAD has a range of Codes
and Policies to discourage corrupt behaviours such as the Code of
Ethics.
205-2Communication and
training about an-
ti-corruption policies
and procedures
121Disclosed in ‘Corporate Governance’ Section.
205-3Confirmed incidents
of corruption and
actions taken
-None.
ANTI-COMPETITIVE BEHAVIOUR
206-1Legal actions for
anti-competitive
behaviour, anti-trust,
and monopoly
practices
-None.
TAX
207-1Approach to tax-EROAD takes a conservative position in regard to tax to ensure we
meet all our obligations in each of the jurisdictions we operate in.
207-2Tax governance,
control, and risk
management
-EROAD has external advisors to support us with our tax governance
and risk management. Any changes in our approach to tax would
require sign off by the Board of Directors. The taxation calculations
included in the financial statements are subject to audit review.
207-3Stakeholder engage-
ment and manage-
ment of concerns
related to tax
-As noted above, EROAD has external advisors globally who prepare
our tax returns and transfer pricing documentation, they act as our
agent with Inland Revenue and would manage any concerns arising.
207-4Country-by-country
reporting
-Tax is reported at a group level. Individual tax returns are prepared
for each tax jurisdiction within which we operate.
MATERIALS
302-2Recycled input ma-
terials used
-We do not use recycled electronic components in our products due
to the potential for early life failure.
302-3Reclaimed products
and their packaging
materials
-When EROAD refurbishes its main product, approximately 70% of
the product by value is reused, with the remaining 30% replaced
with new components.
ENERGY
302-1Energy consumption
within the organi-
zation
-14,737 kWh for NZ HQ, Penrose and Chch.
BIODIVERSITY
304-1Operational sites
owned, leased, man-
aged in, or adjacent
to, protected areas
and areas of high
biodiversity value
outside protected
areas.
-None.
304-2Significant impacts
of activities, prod-
ucts, and services on
biodiversity
-None.
304-3Habitats protected
or restored
-None.
304-4IUCN Red List
species and national
conversation list
species with habitats
in areas affected by
operations
-None.
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ENVIRONMENTAL COMPLIANCE
307-1Non-compliance
with environmental
laws and regulations
None.
SUPPLIER ENVIRONMENTAL ASSESSMENT
308-1New suppliers that
were screened
using environmental
criteria
Any significant new suppliers we audit and this includes their envi-
ronmental practices.
308-2Negative environ-
mental impacts in
the supply chain and
actions taken
38No negative impacts identified. If major breach to EROAD policies,
we would cease the arrangement. Our policy is to work with suppli-
ers where possible to remedy any negative environmental impacts.
EMPLOYMENT
401-1New employee
hires and employee
turnover
-Total employees hired was 86, which is a hiring rate of 25.7%. Turn-
over was 49 people, which was 14.6% of the employee population.
401-2Benefits provided to
full-time employees
that are not provid-
ed to temporary or
part-time employees
-
Benefit / Eligi-
bility
US
Em-
ploy-
ees
Aus-
tralia
Em-
ploy-
ees
New Zealand
Employees
Health insurance Yes N/A N/A
Health insurance
discount
N/A N/A Yes
Life insurance Yes N/A N/A
Dental insurance Yes N/A N/A
Parental leave Yes Yes Yes (except Fixed
Term)
Employee Assis-
tance Program
Yes Yes Yes
Bonusly reward &
recognition
Yes Yes Yes
EROAD Awards Yes Yes Yes
Gym membership Yes Yes Yes
Volunteer Day Yes Yes Yes
Flexible Working Yes Yes Yes
Annual Leave/
PTO
Yes Yes Yes
Retailer discounts N/A N/A Yes
401-3Parental leave-Yes (except fixed term employees in NZ).
LABOR/MANAGEMENT RELATIONS
402-1Minimum notice
periods regarding
operational changes
-No collective agreements.
OCCUPATIONAL HEALTH AND SAFETY
403-1Occupational health
and safety manage-
ment system
136EROAD maintains and implements a corporate Health, Safety and
Wellness (HSW) Management System which fulfils the key require-
ments of the current ISO 45001 standard. We have a common HSW
Policy for the company and corporate standards and procedures in
areas where EROAD wants to set standards. Local EROAD offices
implement supplementary HSW system requirements as determined
by local regulatory and legal requirements.
EROAD regularly assesses hazards and analyses risks across its
operations, and implements and maintains the controls necessary to
prevent, monitor and mitigate the risk to be within the organisation’s
risk appetite. Risk management practices are reviewed when new in-
formation becomes available; e.g., new legal requirements, changes
to processes, and incident investigations.
It is the responsibility of all employees to ensure that all incidents
are reported in order to ensure timely investigation and corrective
action. Incidents are investigated using root cause analysis, and
lessons learned communicated as required.
403-2Hazard identifica-
tion, risk assess-
ment, and incident
investigation
-Addressed above under 403-1.
403-3Occupational health
services
136EROADers are encouraged to take reasonable care of their well-
being. Accordingly, as deemed appropriate they can engage their
manager, a People & Capability team member and/or the Employee
Assistance Programme (EAP) for assistance with work-related ill
health.
403-4Worker participa-
tion, consultation,
and communication
on occupational
health and safety
136In accordance with regulatory requirements, EROAD encourages
worker engagement, participation and representation in occupation-
al health and safety management. Managers across the organisa-
tion address health, safety and wellness matters specific to their
respective areas as well as pan-organisational issues (such as risks
associated with working from home).
In addition, the HSW Committee meet regularly to address pertinent
HSW matters. This committee has representatives from all EROAD
locations across the globe, from Executive level to remote sales
personnel.
EROAD provides training and self-service resources to support man-
agers’ and employees’ awareness levels about HSW and its applica-
tion in the various locations work is conducted.
403-5Worker training on
occupational health
and safety
-HSW training is provided as part of the induction for all employees.
Furthermore, topical, function-specific and location-based HSW is-
sues are addressed through other training initiatives and awareness
campaigns. Our training includes ‘classroom’ and online training
in-house, external service-providers and self-learning resources.
403-6Promotion of worker
health
73Employee wellness is promoted and overseen by EROAD’s Wellness,
Inclusion, Social and Health & Safety (WISH) Committee. WISH
caters for global and local needs, addressing a wide range of issues
such as fitness, nutrition, and mental health.
EROAD has processes in place to record and investigate occupa-
tional illnesses to determine the root causes and develop prevention
strategies.
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403-7Prevention and
mitigation of oc-
cupational health
and safety impacts
directly linked by
business relation-
ships
-The scope of the HSW Management systems includes situations
where EROAD is in control of product installation. This includes
working with risk identification and mitigation in order to prevent
any incidents of work-related injuries or occupational illnesses.
Accordingly, EROAD’s installer network receive comprehensive
instruction on HSW requirements relating to the work they perform.
All incidents that arise are investigated to determine how work prac-
tices can be improved to remove/reduce HSW risks.
403-8Workers covered
by an occupational
health and safety
management system
-Addressed under 403-1.
403-9Work-related injuries-Work-related injuries and illness data is regularly reported to the
EROAD Board. There have been no high severity incidents and
illnesses over the past year.
We are working with our employees to encourage reporting of low
severity incidents.
TRAINING AND EDUCATION
404-2Programs for up-
grading employee
skills and transition
assistance programs
Support provided as needed.
404-3Percentage of
employees receiving
regular performance
and career develop-
ment reviews
100%.
DIVERSITY AND EQUAL OPPORTUNITY
405-1Diversity of gover-
nance bodies and
employees
124 125Disclosed in ‘Corporate Governance’ Section.
NON-DISCRIMINATION
406-1Incidents of discrim-
ination and correc-
tive actions taken
-None.
FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING
407-1Operations and
suppliers in which
the right to freedom
of association and
collective bargaining
may be at risk
-EROAD audits suppliers and ensures that operations and suppliers
have the right to freedom of association and collective bargaining.
This information is requested as part of the audit process.
RIGHTS OF INDIGENOUS PEOPLES
411-1Incidents of vio-
lations involved
rights of indigenous
peoples
None.
HUMAN RIGHTS ASSESSMENT
412-1Operations that
have been subject
to human rights
reviews or impact
assessments
-None.
412-2Employee training
on human rights pol-
icies or procedures
-EROAD’s employment contract stipulates adherence to EROAD’s
Code of Conduct. The Code makes employees aware that EROAD
will not tolerate any form of discrimination, harassment or bullying
in the workplace. This includes direct and indirect discrimination in
relation to sex, marital status, religious belief, ethical belief, colour,
race, ethnic or national origins, disability, age, political opinion, em-
ployment status, family status and/or sexual orientation.
LOCAL COMMUNITIES
413-2Operations with sig-
nificant actual and
potential negative
impacts on local
communities
-No negative impacts identified on local communities.
SUPPLIER SOCIAL ASSESSMENT
414-1New suppliers that
were screened using
social criteria
38Any significant new suppliers we audit and this includes their social
practices.
414-2Negative social im-
pacts in the supply
chain and actions
taken
38No negative impacts identified. If major breach to EROAD policies,
we would cease the arrangement. Our policy is to work with suppli-
ers where possible to remedy any negative social impacts.
PUBLIC POLICY
415-1Political Contribu-
tions
144None.
CUSTOMER HEALTH AND SAFETY
416-1Assessment of the
health and safety
impacts of product
and service cate-
gories
-All EROAD products are risk assessed for potential health and
safety impacts to customers; spanning distribution, installation, use,
maintenance and removal. This risk assessment process begins at
concept stage and is reassessed through subsequent product devel-
opment phases up to a post launch retrospective.
Where relevant our product guides highlight HSW requirements our
customers should be aware of.
416-2Incidents of
non-compliance
concerning the
health and safety
impacts of products
and services
-None.
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MARKETING AND LABELING
417-3Incidents of
non-compliance
concerning market-
ing communications
EROAD has identified one incident of non-compliance concerning
marketing communications. This incident was in relation to an image
published on EROAD’s New Zealand website that was taken by a
drone flying close to the Auckland Harbour Bridge. EROAD was
contacted by the Civil Aviation Authority of New Zealand (CAA) to
advise and following immediate investigation it was identified that
the drone operator had breached the following Civil Aviation Rules:
• 101.205 (Aerodromes): operated a remotely piloted aircraft (RPA)
within 4km of an uncontrolled aerodrome (Mechanic Bay, Auckland
Harbour and Auckland Hospital)
• 101.207 (Airspace): operated an RPA without seeking permission to
launch the drone above the highway.
No further action was taken by the CCA and EROAD promptly re-
moved the image from the website and educated the employees in-
volved to ensure that a similar incident does not occur in the future.
SOCIOECONOMIC COMPLIANCE
419-1Non-compliance
with laws and regu-
lations in the social
and economic area
None.
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< P. 157EROAD ANNUAL REPORT 2021
Glossary
ANNUALISED MONTHLY RECURRING
REVENUE (AMRR)
Annualised monthly recurring revenues (AMRR) is a non-GAAP
measure representing monthly Recurring Revenue for the last
month of the period, multiplied by 12. It provides a 12 month
forward view of revenue, assuming unit numbers, pricing and
foreign exchange remain unchanged during the year.
AUDITOR
KPMG
ASSET RETENTION RATE
The number of Total Contracted Units at the beginning of the
12 month period and retained as Total Contracted Units at the
end of the 12 month period, as a percentage of Total Contracted
Units at the beginning of the 12 month period.
COMPANIES ACT
Companies Act 1993
COMPANY
EROAD Limited
COSTS TO ACQUIRE CUSTOMERS (CAC)
Costs to Acquire Customers (CAC) is non-GAAP measure of
costs to acquire customers. Total CAC represents all costs sales
& marketing related costs. CAC capitalised includes incremental
sales commissions for new sales, upgrades and renewals which
are capitalised and amortised over the life of the contract.
All other CAC related costs are expensed when incurred and
included within CAC expensed.
COSTS TO SERVICE & SUPPORT (CTS)
Is a non-GAAP measure of costs to support and service
customers. Total CTS represents all customer success
and product support costs. These costs are included in
Administrative and other Operating Expenses reported in Note
4 Expenses of the Financial Statements.
CUSTOMER RETENTION RATE
Asset Retention Rate excluding contraction in existing customer
Total Contracted Units when customer remained with EROAD.
EBITDA
Is a non-GAAP measure representing Earnings before Interest,
Taxation, Depreciation and Amortisation (EBITDA). Refer
Condensed Consolidated Statement of Comprehensive Income
in Financial Statements.
EBITDA MARGIN
Is a non-GAAP measure representing EBITDA divided by
Revenue.
EHUBO1 AND EHUBO2 (GEN1 AND GEN2)
EROAD’s first and second generation electronic distance
recorder which replaces mechanical hubodometers. Ehubo is a
trade mark registered in New Zealand, Australia and the United
States.
ELECTRONIC LOGGING DEVICE (ELD)
An electronic solution that synchronises with a vehicle engine to
automatically record driving time and hours of service records.
FREE CASH FLOW
Is a non-GAAP measure representing operating cash flow and
investing cash flow reported in the Statement of Cash Flows.
FUTURE CONTRACTED INCOME (FCI)
A non-GAAP measure which represents contracted Software as
a Service (SaaS) income to be recognised as revenue in future
periods. Refer Revenue Note 3 of Financial Statements.
FY
Financial year ended 31 March
GROUP
EROAD Limited and its subsidiaries
HARDWARE ASSETS
Any physical asset required to be fitted into or onto a
customer’s vehicle or asset in order to facilitate the provision of
EROAD’s SaaS services. These include Ehubo units, accessories
and hardware assets under construction.
HEAVY VEHICLE
A truck, or a truck and trailer, weighing over:3.5 tonnes in New
Zealand (required to pay RUC); 12 tonnes in Oregon (required to
pay for WMT), for non WMT purposes means Class 3+, 10,000
pounds or greater; or 4.5 tonnes in Australia.
INTERNATIONAL FUEL TAX AGREEMENT
(IFTA)
A cooperative agreement between all states (excluding Alaska
and Hawaii) of the United States, and the Canadian provinces,
designed to make it simpler for inter-jurisdictional carriers to
report and pay fuel excise taxes, requiring only one fuel licence to
operate across multiple jurisdictions.
INTERNATIONAL REGISTRATION PLAN (IRP)
An agreement between all states (excluding Alaska, Hawaii
and Washington D.C.) of the United States, and the Canadian
provinces, for the registration of inter-jurisdictional vehicles.
Registration fees are paid to a fleet’s base jurisdiction, which
then distributes them to other jurisdictions based on the miles
travelled in each member jurisdiction. Refer Revenue Note 3 in
the Financial Statements.
LISTING RULES
The listing rules applying to the NZX Main Board as amended
from time to time.
MONTHLY SAAS AVERAGE REVENUE PER
UNIT (ARPU)
Is a non-GAAP measure that is calculated by dividing the
total SaaS revenue for the year reported in Note 3 of the FY21
Financial Statements, by the TCU balance at the end of each
month during the year.
RECURRING REVENUE
The Software as a Service (SaaS) revenues EROAD recognises
on a recurring monthly basis in accordance with the groups
revenue recognition policy.
ROAD USER CHARGES (RUC)
Charges payable under the New Zealand Road User Charges Act
2012 in respect of the distance travelled by a RUC vehicle on a
road. In New Zealand, RUC is payable for heavy vehicles and all
vehicles powered by a fuel not taxed at source. The charges go
towards the cost of repairing roads.
NZ GAAP OR GAAP
New Zealand Generally Accepted Accounting Practice.
NZ IAS
NZ equivalent of International Accounting Standards that
prescribe the basis for presentation of general purpose financial
statements.
NZ IFRS
New Zealand equivalents to International Financial Reporting
Standards.
NZX
NZX Limited.
NZX MAIN BOARD
The main board equity security market, operated by NZX.
SAAS
Software as a Service, a method of software delivery in which
software is accessed online via a subscription rather than bought
and installed on individual computers.
TOTAL CONTRACTED UNITS
Represents total units subject to a customer contract and
includes both Units on Depot and Units pending instalment.
UNIT
A unit is either an EROAD Ehubo, Tubo or Etrack wired device.
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< P. 159EROAD ANNUAL REPORT 2021
REGISTERED OFFICE
IN NEW ZEALAND
Level 3
260 Oteha Valley Road,
Albany, Auckland
New Zealand
INVESTOR RELATIONS
AND SUSTAINABILITY
ENQUIRES
Address: EROAD Limited,
PO Box 305 394
Triton Plaza
North Shore, Auckland
Email: investors@eroad.com
Telephone: 0800 437 623
LEGAL ADVISORS
Chapman Tripp
Level 34
Commercial Bay
Auckland 1010
PO Box 2206, Auckland 1140
Telephone: +64 9 357 9000
Information
for shareholders
Managing your shareholding online
Changes in address and investment portfolios can be viewed and updated online:
www.computershare.co.nz/investorcentre.
You will need your CSN and FIN numbers to access this service.
Alternatively, enquiries may be addressed to the Share register.
Computershare Investments Services Limited
Private Bag 92119,
Victoria Street West Auckland 1142,
New Zealand
Investor Information
Our investor centre www.eroadglobal.com/global/investors is a good source
of information about what’s happening at EROAD. Here you will find investor
communications, information about our latest operating and financial results and news.
REGISTERED OFFICE
IN NORTH AMERICA
7618 SW Mohawk Street
Tualatin, OR 97062
USA
MANAGING YOUR
SHAREHOLDING ONLINE
Changes in address and
investment portfolios can be
viewed and updated online:
www.computershare.co.nz/
investorcentre.
You will need your CSN and FIN
numbers to access this service.
BANKERS
Bank of New Zealand
China Construction Bank
National Australian Bank
Wells Fargo
REGISTERED OFFICE
IN AUSTRALIA
Level 36, Tower 2
Collins Square
727 Collins Street
Docklands, VIC 3008
Australia
SHARE REGISTER -
NEW ZEALAND
Computershare Investments
Services Limited
Private Bag 92119,
Victoria Street
West Auckland 1142,
New Zealand
Email:
enquiry@computershare.co.nz
Telephone: +64 9 488 8777
Website:
www.computershare.co.nz/
investorcentre
Directory
< P. 159EROAD ANNUAL REPORT 2021P. 160 >MENU
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.