EROAD FY22 Financial Results
Market Release 26 March 2022
EROAD delivers financial result laying the foundation for growth
Transportation technology services company EROAD (ASX/NZX: ERD), with its purpose of safer
and more sustainable roads, today released its financial results for the 2022 Financial Year.
All numbers are stated in New Zealand dollars (NZ$) and relate to the twelve months ended
31 March 2022 (FY22). Comparisons relate to the twelve months ended 31 March 2021 (FY21)
unless stated otherwise. The Coretex merger completed on 30 November 2021. All financial
numbers include four months of Coretex contribution.
Key highlights:
• Revenue increased from $91.6m to $114.9m reflecting the merger of Coretex and
organic growth across all markets
• New Zealand continued to deliver strong growth in new and existing customers
reaching over 100,000 connected vehicles and Australia grew significantly delivering
its first year of positive EBITDA
• North America started to regain growth momentum following the Coretex merger
which improved product market fit and capabilities to acquire enterprise customers
• The Coretex merger was a major milestone marking the beginning of EROAD’s
transformation advancing its growth strategy
• Reported EBITDA reduced from $30.7m to $21.0 and Normalised EBITDA
1
fell
$28.8m to $27.3m reflecting increased operating expenditure as investment was
made in capability to build EROAD’s momentum of growth
• FY23 Revenue is anticipated to be $150 - $170m and FY23 EBIT between -$5m and
breakeven
• EROAD is in a period of significant transition to build greater growth momentum
targeting to deliver ongoing strong growth in revenue, increasing to at least $250m
by FY25.
“EROAD has made significant progress accelerating its growth strategies and delivered on its
FY22 financial result despite challenging macro-economic conditions and a number of one-off
impacts. New Zealand had an exceptional year with growth in new and existing customers
and a huge number of customer renewals. In North America the team has been focused on
1
Normalised for Transaction and Integration costs of $7.6m and acquisition revenue of $1.3m
improving our product market fit and enterprise capabilities through R&D and the merger
with Coretex to regain growth momentum” said Mark Heine, Acting Chief Executive Officer.
EROAD Chair Graham Stuart says: “The Coretex merger marks the beginning of a transition
for EROAD by doubling down on our North American growth strategy. Through the integration
we will add resource and sharpen our focus on this market to ensure we deliver on this
strategy while retaining focus and resource on our successful New Zealand business and the
growth option Australia provides in the medium term.”
Financial results reflect investment in capabilities for future growth
Revenue increased from $91.6m to $114.9m reflecting the merger of Coretex and organic
growth in units, dashcams and additional add-on subscriptions sold to customers.
Over the period, contracted units grew by 64% to 208,697 reflecting the merger of Coretex
which added 66,157 units on 30 November 2021 and organic growth across all the markets.
New Zealand has had yet another successful year, achieving good growth despite the
challenges that COVID-19 has brought. Australia delivered its first year of positive EBITDA
reflecting the successful completion of the Venita roll-out and continued growth in small-to-
medium customers. North America growth slowed prior to the merger of Coretex as EROAD
experienced high churn from its small-to-medium size customers through the 3G to 4G
upgrade programme. Growth gained momentum following the merger with Coretex, which
improved EROAD’s product market fit and increased capability to win enterprise customers
EROAD’s stand-alone Asset Retention Rate remained high at 93.4% (FY21: 94.9%). It was
pleasing to see some 1,131 customers renew their plan over the year, representing some
31,597 contracted units reflecting high renewals from New Zealand enterprise accounts and
the North American 3G upgrade programme. Coretex’s Asset Retention Rate was 98.4% since
the completion of the merger, reflecting low enterprise customer churn in North America and
Australia. EROAD’s Annualised Monthly Recurring Revenue metric, which provides a forward
view of sustainable revenue, increased from $88.4m to $134.6m at 31 March 2022 and Future
Contracted Income increased from $141.9m to $190.2m reflecting the considerable number
of renewals that occurred during the period as well as the addition of Coretex contracts.
Operating expenditure increased significantly from $61.2m to $93.9m. This increase includes
transaction and integration costs ($7.6m), four months of Coretex operating expenditure
($13.6m) and increased employee costs ($8.3m) as EROAD invested in its people capability in
a tight labour market to ensure delivery of its future growth strategy.
Accordingly, reported EBITDA reduced from $30.4m to $21.0m, representing an EBITDA
margin of 18%. For FY22, once transaction and integration costs are excluded, normalised
EBITDA is $27.3m, a decrease from normalised EBITDA for FY21 of $28.8m. EROAD’s
normalised EBITDA margin is 24%. EBIT fell from $5.1m in FY21 to a reported loss of $7.2m
and a normalised EBIT of $0.9m reflecting significantly higher non-cash amortisation and
depreciation following the acquisition of Coretex.
As anticipated, research and development spend increased from $21.3m to $31.8m, of which
$1.4m related to integration. As EROAD moves ahead with its growth strategies, research and
development continues to focus on opening up our addressable market for Enterprise
customers. For FY23, R&D is expected to increase to around $38m.
Significant progress accelerating growth strategies
EROAD continued to extend its platform offering with a focus on opening up the addressable
market for Enterprise customers. During the year EROAD has released 10 enhancements and
nine new products to enable growth, including Clarity Solo Dashcam, EROAD Analyst, EROAD
Where Mini Tags, EROAD Geoalerts and EROAD Satellite communications. EROAD has now
built up a video telematics portfolio with the launch of Clarity dashcam in March 2021, Clarity
Solo (with no in-cab requirement for a pre-installed EHUBO unit) in October and the Coretex
Corevision camera launching in FY23 in North America .
In what was a major milestone for EROAD, on 30 November 2021, EROAD completed the
Coretex merger. Significant progress has been made with the integration of the Coretex
business with sales activities already underway with the Coretex 360 platform and Corehub
hardware solutions provided as EROAD’s next generation platform solution. The merger also
provided access to a large pipeline of enterprise customers, and since completion, solid
progress has been achieved towards securing this business, with a number of pilots for
potential large enterprise customers in progress. In the North American market alone, EROAD
currently has eight Enterprise customer pipeline opportunities at the pilot stage relating to
potential opportunities of around 26,000 units.
The merger also accelerates EROAD’s growth by adding new strategic customer verticals,
broadening our product offering and customer base and positions EROAD to become a bigger
player in International telematics.
The integration of the two businesses is targeted to complete over the next year with the
focus in H1 FY23 being on a strategy refresh of the merged businesses to maximise synergies,
integration of the key products and platform by the end of CY2022 and aligning our customer
service models across the markets to set our customer service levels apart from our peers.
Chief Executive Succession
In April this year, it was announced that EROAD’s founder, Steven Newman, would be
stepping down from EROAD’s Board and as Chief Executive Officer. Over his long career as
an entrepreneur, Steven has been an innovative visionary in digitizing the transport sector
with the aim making our roads safer and more sustainable. In EROAD, he has created a great
New Zealand success story and positioned it to become a significant player in the international
telematics market. EROAD thanks Steven again for his inspirational leadership, vision and
enormous work effort without which EROAD would not be where it is today.
As with many companies, particularly in the technology space, it is important that founder
succession is actively planned for, and the Board, including Steven, began a global search
process in late 2021 for a new Chief Executive Officer, to allow Steven to step back from the
day to day responsibility of leading the company. EROAD has transformed significantly over
its 14 year history, including the recent acquisition of Coretex. Accordingly, now is the right
time for a new Chief Executive Officer. The global search process has progressed well and is
now in the final stages of an appointment, with an announcement expected soon.
On Steven’s resignation the EROAD Board had no hesitation in appointing Mark Heine,
EROAD’s General Counsel and Company Secretary as Acting Chief Executive Officer while the
Board concluded the process. EROAD is in the fortunate position of having executives of
Mark’s calibre to play key roles in leading our next phase of growth.
Well positioned to increase momentum in FY23 and beyond
Looking ahead to FY23, growth momentum is expected to further build through the year with
the successful conversion of some of the North American enterprise pipeline opportunities.
The enterprise pipeline remains robust with a total of 18 enterprise customers at the pilot
stage across all the markets, representing some 30,700 units and 10,000 microtags.
Revenue growth for FY23 will reflect the lumpy nature of enterprise sales and the phasing of
the hardware roll-outs. In addition, there are a number of enterprise customers due to renew
their contracts during the year. It is anticipated Revenue will be between $150 million to $170
million, reflecting the contribution of a full year of Coretex and continued growth across all
the markets. FY22 has been a significant year of investment in capability to prepare for growth
and this investment will continue into FY23. As a result, EROAD is targeting normalised EBIT
of between -$5m to breakeven (FY22: -$0.9m). It is expected operating leverage will improve
from FY24 onwards.
Last year EROAD started a significant period of transition despite challenging macro-economic
conditions across all of the markets. EROAD has accelerated its growth strategies and is well
positioned to build greater growth momentum over FY23 and beyond. Longer term, EROAD
is targeting to deliver ongoing strong growth in revenue, of at least $250m by FY25.
EROAD will release its Annual Report and Sustainability Report in June.
Ends
Authorised for release to the NZX and ASX by EROAD’s Board of Directors.
Conference Call details:
EROAD’s Acting Chief Executive Officer, Mark Heine, and Acting Chief Financial Officer,
Margaret Delany, will give a presentation on the company's financial and operational
performance for FY22 via a teleconference commencing on Thursday 26 May 2022 at
11:00am NZT.
Register in advance for this webinar:
When: Thursday 26 May 2022
Time: 11:00am NZT
Topic: EROAD FY22 Results Announcement
https://us02web.zoom.us/webinar/register/WN_V917mfpRTAGZ6JvPmblwdQ
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/
Investor enquires please contact:
Anna Bonney
Investor Relations
+64 21844155
anna@merlinconsulting.co.nz
For Media enquiries please contact:
Hamish Haldane
ANZ Marketing Director
hamish.haldane@eroad.com
Non-GAAP Measures
EROAD has used non-GAAP measures when discussing financial performance in this
document. The directors and management believe that these measures provide useful
information as they are used internally to evaluate performance of business units, to establish
operational goals and to allocate resources. Non-GAAP measures are not prepared in
accordance with NZ IFRS (New Zealand International Financial Reporting Standards) and are
not uniformly defined, therefore the non-GAAP measures reported in this document may not
be comparable with those that other companies report and should not be viewed in isolation
or considered as a substitute for measures reported by EROAD in accordance with NZ IFRS.
The non-GAAP measures EROAD have used are Adjusted EBITDA, Annualised Monthly
Recurring Revenue (AMRR), Costs to Acquire Customers (CAC), Costs to Service & Support
(CTS), EBITDA, Normalised EBITDA, EBITDA margin, Normalised EBITDA margin, Free Cash
Flow and Future Contracted Income (FCI).
The definitions of these can be found on pages 43 of the investor presentation. All numbers
relate to the 12 months ended 31 March 2022 (FY22) and comparisons relate to the 12
months ended 30 March 2021 ( FY21), unless stated otherwise. All dollar amounts are in NZD.
---
1
EROAD (NZX: ERD ASX: ERD)
Financial Results
Safer and more sustainable roads
For The 12 Months Ended 31 March 2022 (FY22)
26 May 2022
IMPORTANT INFORMATION
The information in this presentation is of a general nature and does
not constitute financial product advice, investment advice or any
recommendation. Nothing in this presentation constitutes legal,
financial, 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 differ 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 verified or audited.
CORETEX
The Coretex merger completed on 30 November 2021. All finanicals
include 4 months of Coretex
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 solation 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. Definitions
can be found in the Glossary on page 43 of this presentation.
2
3
4Highlights
8Operational Update
17FY22 Financial Results
27Growth Opportunity and Outlook
AGENDA
3
4
FY22
HIGHLIGHTS
Graham Stuart
Chairman
4
5
WE ARE
EROAD
OUR PURPOSE IS
SAFER AND MORE
SUSTAINABLE ROADS
WE PROVIDE
REGULATORY
AND SPECIALIZED
TELEMATICS SOLUTIONS
OVER 200,000
CONNECTED VEHICLES
across professional transport, refrigeration,
construction and waste & recycling
and over 8,000 customers in New Zealand,
North America and Australia
STABLE ASSET
RETENTION RATE OF
OVER 90%
GROWING ANNUALISED
MONTHLY RECURRING
REVENUE
INCREASING MOMENTUM
OF GROWTH, TARGETING
STRONG GROWTH OF AT
LEAST $250M REVENUE
BY FY25
refl ecting the quality of our service and
product off ering
by winning new customers and growing
existing customers accounts increasing
their ARPU
A TALENTED AND
CAPABLE TEAM
driving the company forward
INVESTED IN CAPABILITY,
INVENTORY AND R&D IN
FY22 TO PREPARE FOR
GROWTH
WELL POSITIONED
TO EMERGE AS A
MAJOR PLAYER IN
INTERNATIONAL
TELEMATICS
5
6
FINANICAL RESULT
REFLECTS INVESTMENT
IN CAPABILITES FOR
FUTURE GROWTH
$114.9m$21.0mOver
200,000
REPORTED REVENUE
REPORTED EBITDA
CONTRACTED UNITS
FY21: $91.6m
reflecting the merger of Coretex and
organic growth across all markets
FY21: $30.4m
reflecting one-off transaction and integration
costs of $7.6m and increased operating
expenditure as EROAD invested in capability
to build momentum of growth
FY22: 208,697 FY21: 126, 203
reflecting both inorganic and organic
growth
SIGNIFICANT PERIOD OF
TRANSITION DESPITE
CHALLENGING MACRO-
ECONOMIC CONDITIONS
$134.6m$55.5793.4%
AMRR
MONTHLY SAAS ARPU
EROAD STAND ALONE ASSET
RETENTION RATE
FY21: $88.4m
reflecting growth in recurring revenues
from the Coretex acquistion, along with
new units
FY21: $58.30
reflecting improvement in selling additional
products, offset by a $1.64 negative FX impact
and Coretex’s historical revenue model of
selling hardware upfront
FY21: 94.9%
Coretex 4 month asset retention rate
was 98.4%
WELL POSITIONED
TO BUILD GREATER
GROWTH MOMENTUM
OVER FY23 AND
BEYOND
$31.7M
CORETEX
MERGER
CEO
APPOINTMENT
PROCESS
SPENT ON R&D
FY21: $21.3m
focused on improving product market
fit and increasing capabilities around
enterprise customers
improving product market fit, enterprise
capabilities and increased scale in North
America
well underway with appointment
expected soon
6
7
TOGETHER WITH
OUR CUSTOMERS
AND PARTNERS,
WE WILL CREATE
SAFER, MORE
SUSTAINABLE
ROADS
INAUGURAL
SUSTAINABILITY REPORT
SUSTAINABILITY POLICY
LAUNCHED
CORETEX PRODUCTS
REDUCE FOOD,
CONSTRUCTION AND
INDUSTRIAL WASTAGE
To be published in June Working towards our customers,
employees and suppliers all operate
sustainability
Adding to the range of products we
off er that have a positive impact on
the environment
PROGRAMME OF
WORK COMPLETE
HEAVY VEHICLE
DECARBONISATION
TOOL
COMING
SOON
SUPPORTING
GOVERNMENTS CARBON
NEUTRAL EFFORTS
Base year EROAD measurement complete
ahead of TCFD reporting. FY23 report will
include Coretex
Utilises EROAD data to generate
actionable insights
As a member of the Ministry of Business
Innovation & Employment’s Fleet Audit
Panel and International Road Federation’s
the ITS for Climate Impact Mitigation
taskforce
7
8
OPERATIONAL
UPDATE
Mark Heine
Acting Chief Executive Offi cer
8
9
GROWN TO
OVER 200,000
CONNECTED
VEHICLES
• Acquisition of Coretex added 66,157 units on 30 November
2022 (North America: 50,628; Australia: 7,892 and New
Zealand: 7,637)
• Organic growth across markets of 16,655units:
• Continued strong organic growth of 11,387 units in New
Zealand reflecting growth across new and existing
customers
• Organic growth of only 1,617 contracted units in North
America reflecting fleet reduction from small-to-medium
size customers and loss of an enterprise customer. Q4
FY22 benefited from good sales of the Coretex products.
• Organic growth in Australia of 3,333 reflecting the roll-out
of Enterprise customer Ventia which added some 2,723
units.
• Since launch of Clarity Solo in late October added 318 units
across all markets
0
50000
100000
150000
200000
250000
New Zealand
North America
Australia
ANZ
H2 FY22H1 FY22FY21FY20FY19FY18FY17FY16FY15FY14
9,973
9,973
14,332
14,332
19,264
600
19,864
24,041
1,990
26,031
28,140
3,158
31,298
32,452
4,501
36,953
38,129
5,301
43,430
41,939
6,102
48,041
49,802
9,736
59,538
59,843
17,757
77,600
65,285
20,955
86,240
71,446
24,660
96,106
75,674
31,227
1,513
108,4142
80,366
34,002
2,120
116,488
84,526
35,294
2,373
122,193
87,892
35,437
2,874
126,203
93,639106,916
33,992
5,072
132,703
87,682
14,099
208,697
TOTAL CONTRACTED UNITS
10
RECURRING SAAS
REVENUE MODEL
EROAD GENERATES SAAS REVENUE THROUGH:
• sale and rental of hardware
• the licensing of its software on a monthly subscription basis
• the installation of hardware devices
EROAD has a SaaS based revenue model
(91% of FY22 revenue)
In FY22, EROAD generated monthly SaaS
ARPU of $NZ55.57, an asset retention rate
of 93.4% and ended the year with more than
208,000 connected units across the 3 markets
and 4 verticals
EROAD typically bundles the hardware/
software together under a user contract
with a typical length of 36 months
EROAD invested 28% of revenue in R&D
in FY22 to enhance its product offering, grow
ARPU and maintain customer retention and
win Enterprise and small to medium customers
Some customers purchase hardware upfront
and only consume software services on a
rolling month basis
Given EROAD’s transformed operating model contracted units isn’t an effective measure of performance.
EROAD will align with other technology companies and move to half year operating reporting
EROAD DRIVEN
BY RECURRING SAAS REVENUE
SaaS
Revenue
91%
Transaction
Fee Revenue
3%
Other
Revenue
3%
Hardware
Revenue
2%
Grant
Revenue
1%
Software as a
service (SaaS)
revenue represents
revenue earned
from customer
contracts for the
sale or rental
of hardware,
installation
services and
provision of
software services.
Transaction fee
revenue relates to
the collection of
Road User Charges
(RUC) fees and
weight-mile tax in
North America.
FY22
10
11
GROWTH THROUGH ACCOUNT EXPANSION
Increases
addressable market
Improved
ARPU
Retention
tool
EROAD CLARITY
DASHCAM
Dual facing dashcam. Integration of dashcam with Ehubo
data and other key driver and vehicle statistics supports
advanced driver coaching and accident exoneration in
MyEROAD Replay.
5,540
ADDED
FY22: 6,594 FY21: 1,054
PHILLIPS
CONNECT
Advanced trailer and asset monitoring.
1,554
SOLUTIONS SOLD
since entered partnership in June 2021
EROAD DAY
LOGBOOK
Simplifi es fatigue management by enabling drivers to
capture work and rest hours via a smart phone
or tablet.
2,139
DRIVERS SUBSCRIPTIONS ADDED
FY22: 8,546 FY21: 6,407
EROAD
INSPECT
Makes vehicle inspections easy, capturing defects with
mobile device, and providing transparent and traceable
inspection information.
2,819
DRIVERS SUBSCRIPTIONS ADDED
FY22: 13,309 FY21: 10,490
EROAD WHERE
AND MINI TAGS
The EROAD Where tag is a tracking solution for larger
assets which move around such as trailers, construction
machinery and trade equipment. They have a 5-year
battery life and are durable so they can be attached to
assets that are often subjected to tough environments.
3,790
ADDITIONAL TAGS SOLD
FY22: 10,240 FY21: 6,450
The EROAD Where Mini tag is ideal for tracking smaller, high
value assets such as expensive power tools, important items
such as key rings and other assets. They are more discreet,
come with a replaceable 2-year battery, and fi t onto assets of
all sizes .
1,010
MINI TAGS SOLD
Since launch date in October 21
GROWTH THROUGH ADDING NEW CUSTOMERS, EXPANDING UNITS WITHIN
CURRENT CUSTOMER FLEETS AND SELLING ADD-ON PRODUCTS AND SERVICES
12
GROWTH THROUGH ACCOUNT EXPANSION
Increases
addressable market
Improved
ARPU
Retention
tool
EROAD ANALYST –
ENTERPRISE DATA
CONNECTOR
EROAD Analyst Enterprise Data Connector makes it easy
for customers to connect their data systems using pre-
built tools and technologies to pull EROAD data into their
business warehouse environment for data integration, data
science, BI, and security and governance.
6
ENTERPRISE ACCOUNTS
EROAD
ANALYST
Pre-built and confi gured Power BI integration. Enables
customers to pull EROAD data into Power BI quickly and
easily, to create customised dashboards, reports and derive
meaningful insights from their fl eet data.
1,494
SUBSCRIPTIONS
over 13 customers
CORETEX
COREVISION
Entry-level dual dashcam.LAUNCHED IN AUSTRALIA
LAUNCHING IN NORTH AMERICA
DURING FY23
CORETEX
CORETEMP
CoreTemp uses core product temperatures to drive
outcomes like early temperature warnings and alerts,
compartment mismatch detection and automatic route
detection to keep food safety compliance scores high and
customers and consumers happy.
KEY ADD-ON PRODUCT OFFERING
FOR OUR REFRIGERATED TRANSPORT
CUSTOMERS
CORETEX
IOT SENSORS
Drum roll
Door roll
Our sensors support a range of vertical use cases such as
door and drum roll and RFID tags targeted at waste.
2,987
ADDED
since 30 November
Waste
RFID tag
GROWTH THROUGH ADDING NEW CUSTOMERS, EXPANDING UNITS WITHIN
CURRENT CUSTOMER FLEETS AND SELLING ADD-ON PRODUCTS AND SERVICES
1313
HIGH RETENTION AND SIGNIFICANT
NUMBER OF RENEWALS DESPITE
93.4%1,131$190.2m
EROAD STAND ALONE ASSET
RETENTION RATE
CUSTOMERS RENEWED
THEIR PLAN
(31,597 contracted units)*
FUTURE CONTRACTED
INCOME
Coretex’s 4 month Asset Retention
Rate was 98.4%
refl ecting high renewals from
New Zealand Enterprise customers
and North America 3G upgrade
programme
up from $149.1m at H1 FY22
refl ecting high level of renewals
and a proportion of Coretex’s
customers who have purchased
hardware upfront
979961
CUSTOMERS UPGRADED
THEIR PLAN
(9,720 contracted units)**
CUSTOMERS ADDED ADDITIONAL
PRODUCTS AND SERVICES TO
THEIR PLAN
(39,649 contracted units)***
*Defi ned as a customer who re-signed a new contract, contracted unit numbers as at end of old contract
**Upgraded their hardware, or upgraded type of plan (connected, advance, safedriver, starter and premium)
***Existing EROAD customers that added a dashcam, Logbook, Inspect, EROAD Analyst, Geofence Triggered Alerts and Pre-Trip Comms or BookIt to their plan
14
NEW ZEALAND
106,916$45.2m
UNITS
(FY21: 87,892)
EBITDA
(FY21:38.8m)
608
97.3%97.3%
CUSTOMERS RENEWED THEIR PLAN
(22,961 UNITS)
EROAD ASSET RETENTION RATE
(FY21: 95.9%)
CORETEX 4 MONTH ASSET
RETENTION RATE
606$56.45
CUSTOMERS ADDED PRODUCTS AND
SERVICES TO THEIR PLAN
(34,089 SUBSCRIPTIONS)
NZ MONTHLY SAAS ARPU
(FY21: $56.18)
NEW ZEALAND HAD AN EXCEPTIONAL YEAR REACHING OVER
100,000 CONNECTED VEHICLES WITH GROWTH IN NEW AND
EXISTING CUSTOMERS
CONTINUED EXECUTION OF STRATEGY
• Despite COVID-19 lock-down restrictions and some supply chain issues contracted
units increased by 19,024 refl ecting:
• the acquisition of Coretex which added 7,637 units at 30 November 2021
• organic growth of 11,387 units refl ecting growth in both existing (c70%) and new
customers (c30%)
• New customers included Venita (1,398 units) and other Construction & Civil
Engineering, Freight & Road Transport and Agriculture/Forestry customers
• 58 Clarity Solo cameras sold since end of October, in addition to 1,597 Clarity
Dashams (not included in unit numbers)
• 608 customers renewed their plan (22,961 units). Major year of renewals with a
number of enterprise customers re-signing during the year
• New Zealand’s largest Enteprise customer, Downer EDI Limited renewed their
contract for 5,500 units through to December 2025
• 606 customers added products and services to their plan (34,089 subscriptions)
• Sold 4,915 Logbook and 10,254 Inspect subscriptions throughout the year
in New Zealand
CORETEX INTEGRATION
• Focus on aligning Coretex customer service model with EROAD’s
GROWTH OPPORTUNITY
• Continue to expect unit growth similar levels to pre FY21 (added 9,000+ connect
vehicles pa) with focus on increased sales of Clarity Dashcam
• Provide ESG solutions to customers to help them decarbonise and convert
to EV fl eets
• Five pilots currently underway (c2,700 units)
15
NORTH AMERICA
87,682$9.4m
UNITS
(FY21: 35,437)
EBITDA**
(FY21: $10.0m)
50784.2%98.3%
CUSTOMERS RENEWED THEIR PLAN
(8,364 UNITS)
EROAD ASSET RETENTION RATE
(FY21: 92.8%)
CORETEX 4 MONTH ASSET
RETENTION RATE
207
US
$39.02
*
CUSTOMERS ADDED PRODUCTS AND
SERVICES TO THEIR PLAN
(3,815 SUBSCRIPTIONS)
MONTHLY SAAS ARPU*
(FY21: US$42.95)
refl ecting the high proportion of trailers and
purchase of hardware upfront with
Coretex’s customer base
REGAINED GROWTH MOMENTUM FOLLOWING THE CORETEX
MERGER COMPLETION WHICH IMPROVED PRODUCT MARKET FIT
AND ENTERPRISE CAPABILITIES
CONTINUED EXECUTION OF STRATEGY
• Contracted units increased by 52,245 refl ecting:
• the merger with Coretex which added 50,628 units at 30 November 2021
• Good sales of Coretex products to new and existing customers in Q4
• EROAD net sales were below expectations throughout FY22 refl ecting churn that
resulted from the 3G upgrade programme renewals due to challenging macro—
economic conditions impacted small-to-medium customers
• Loss of 1,751 units (as previously disclosed) of an enterprise customer who has
aligned its technology with that of its acquirer
• 211 Clarity Solo cameras sold since end of October, in addition to 3,826 Clarity
Dashams (not included in unit numbers)
• 3G to 4G hardware upgrade programme is nearing completion, with 94% of EROAD
legacy customers and 88% of Coretex legacy customers now
on 4G hardware
• Now providing proven tailored solutions in four verticals (Professional trucking
including less than a truckload (LTL), Refrigerated transport, Construction and
Waste & Recycling)
• 1,554 Philips connect solutions sold into market over FY22
CORETEX INTEGRATION
• EROAD and Coretex sales and marketing teams now integrated and aligned facing
into the market as one organisation
• Sales activities for the Coretex 360 platform and Corehub hardware solutions
underway in North America as EROAD’s next generation product platform
GROWTH OPPORTUNITY
• Quality of Coretex’s North American enterprise sales pipeline better than
anticipated at the time of the merger
• 8 Enterprise customer pipeline opportunities at the pilot stage relating to potential
opportunities (c26,000 units)
*In NZ$ North America ARPU fell from NZ$65.03 in FY21 to NZ$56.38 in FY22
** Includes one-off COVID-19 grant revenue of $1.6m
16
AUSTRALIA
AUSTRALIA DELIVERED ITS FIRST YEAR OF POSITIVE EBITDA
AND STRONG GROWTH IN ARPU REFLECTING THE SUCCESSFUL
ROLL OUT OF VENTIA AU AND CONTINUED GROWTH IN
SMALL-TO-MEDIUM CUSTOMERS
CONTINUED EXECUTION OF STRATEGY
• Contracted units increased by 11,225 refl ecting:
• the merger with Coretex which added 7,892 units at 30 November 2021
• largest Australian Enterprise customer Ventia AU was successfully rolled out
(2,723 AU units)
• organic growth of small-to-medium customers in Australia adding 610 units
in very challenging macro-economic conditions (COVID, fl ooding and supply
chain issues)
• 49 Clarity Solo cameras sold since end of October, in addition to 117 Clarity
Dashams (not included in unit numbers)
• Electronic Work Diary in approval progress
CORETEX INTEGRATION
• Ensuring support frameworks across all enterprise customers
• Rolling out EROAD customer service model to Coretex customers
GROWTH OPPORTUNITY
• Australia remains a substantial growth opportunity in medium term
• Focus on Clarity Solo cameras and EROAD Where tags sales in H1 FY23, with
further growth momentum indicated following the launch of the fully integrated
Coretex and EROAD platform towards the end of 2022
• 5 ongoing Enterprise customer pilots (c2,000 units and c. 10,000 microtags)
*In NZ$ Australian ARPU increased from NZ$35.50 in FY21 to NZ$38.99 in FY22
14,099$0.1m
UNITS
(FY21: 2,874)
EBITDA
(FY21: $(0.9)M)
1688.4%99.4%
CUSTOMERS RENEWED THEIR PLAN
(272 UNITS)
EROAD ASSET RETENTION RATE
(FY21: 93.7%)
CORETEX 4 MONTH ASSET
RETENTION RATE
148
AU
$36.69
CUSTOMERS ADDED PRODUCTS AND
SERVICES TO THEIR PLAN
(1,745 subscriptions)
MONTHLY SAAS ARPU*
(FY21: AU$33.16)
17
FY22
FINANCIAL
RESULTS
Margaret Delany
Acting Chief Financial Offi cer
17
18
FY21FY22
$
(18.6)m
$
(13.1)m
$
(12.8)m
$
(47.9)m
FY18FY19FY20FY21
-
30.0
40.0
20.0
10.0
-
40.0
20.0
80.0
100.0
60.0
120.0
FY18FY19FY20FY22
$
43.8m
$
10.5m
$
15.6m
$
27.1m
$
28.8m
$
21.0m
$
61.4m
$
81.2m
$
114.9m
FY21FY18FY19FY20FY22FY21FY21
-
30.0
40.0
20.0
10.0
$
10.5m
$
15.6m
$
27.1m
$
30.5m
$
27.3m
FY18FY19FY20FY22FY21
$
91.6m
-
25.0
(25.0)
(50.0)
$
5.3m
FINANCIAL PERFORMANCE REFLECTS INVESTMENT
IN CAPABILITIES FOR FUTURE GROWTH
+25%-32%-5%
-$53.2
REVENUE
REPORTED
EXCLUDING MERGER
NORMALISED*
EBITDAFREE CASH FLOWS
Reported Revenue up $23m from FY21
reflecting organic growth and 4 month
contribution from Coretex
Reported EBITDA margin
of 18%
Normalised EBITDA
Normalised for one-off ($1.6m) COVID-19
grant in H1 FY21 and ($7.6m) transaction
and integration costs in FY22. Also
normalised for $1.3m revenue in FY22
Normalised EBITDA margin
of 24%
Free Cash Flow (excluding merger)
down $53.2m reflecting investing in
capability, inventory and R&D preparing
for future growth
* FY21 restated due to IFRIC guidance on implementation costs of third party cloud software
19
EBITDA DOWN REFLECTING INVESTMENT
IN CAPABILITIES FOR FUTURE GROWTH
($m)
FY22
Restated
FY21
Movement
FY22 vs
FY21H2 FY22H1 FY22
Movement
H2 FY22 vs
H1 FY22
New Zealand45.238.86.423.222.01.2
Australia0.1(0.9)1.00.7(0.6)1.3
North America9.410.0(0.6)6.52.93.6
Corporate & Development(33.9)(17.8)(16.1)(22.0)(11.9)(10.1)
Elimination of inter-segment EBITDA0.20.3(0.1)-0.2
EBITDA21.030.4(9.4)8.412.6(0.2)
EBITDA Margin18%33%13%26%(4.2)
Normalised EBITDA
*
2 7. 328.8(1.8)12.714.6
Normalised EBITDA Margin
*
24%32%19%30%(1.9)
NEW ZEALAND
Continued strong growth into existing customer fleets,
along with attracting new customers and continued high
asset retention has resulted in a 16% increase in EBITDA
to $45.2m.
NORTH AMERICA
North America EBITDA fell $0.6m reflecting the one-off
COVID-19 grant received in FY21, impacts of the global
supply chain and investing in sales and marketing to
prepare for future growth.
AUSTRALIA
FY22 is the first year Australia has had a positive EBITDA
following the acquisition of Coretex, roll-out of Ventia
and steady growth in small-to-medium customers.
CORPORATE
Corporate EBITDA loss grew $16.1m which
included integration and transaction costs ($7.6m) and
4 months of Coretex costs ($2.9m). Our R&D and global
supply chain teams grew to address pressure points.
Border closures impacted labour markets, creating
inflationary pressure and increased annual leave costs were
incurred (with less leave taken during NZ lock downs).
*Normalised for due diligence costs ($3.6m), Integration costs ($4.0m) and acquisition accounting recenue ($1.3m)
20
MONITORING PERFORMANCE LEADING GROWTH INDICATORS
-
25.0
50.0
75.0
100.0
125.0
150.0
66.5
84.0
88.4
FY19FY20FY21
134.6
FY22
-
5.0
10.0
15.0
20.0
25.0
30.0
35.0
8.3
5.1
13.4
FY19
13.1
8.2
21.3
FY21
23.7
8.0
31.7
FY22
9.6
6.0
15.6
FY20
R&D Expensed
R&D Capitalised
50
100
150
200
FY18FY19FY20FY21FY21
100.5
117.4
134.4
141.9
190.2
-
AMRR increase reflects growth in recurring revenues from
the Coretex acquisition, along with new units, supported by
a positive FX impact of $0.2m in FY22.
FCI increased with acquisition of Coretex and a considerable
number of large enterprise renewals in NZ along with the
continuing 3G to 4G roll-out in North America.
Total R&D spend of $31.7m, of which $1.4m was spent on
integration. For FY23 Total R&D is expected to increase to
around $38m.
ANNUALISED MONTHLY
RECURRING REVENUE
(
$m
)
FUTURE CONTRACTED
INCOME
(
$m
)
RESEARCH AND
DEVELOPMENT
21
Monthly SaaS ARPU down from FY21 reflecting improvement in selling additional
products, offset by Coretex’s lower ARPU (due to historical revenue model of selling
hardware upfront) and a $1.64 negative FX impact.
EROAD’s Asset Retention Rate has remained relatively stable over time.
Significant renewal programmes, in particular North America with the 3G upgrade
programme saw significant fleet reduction due to lagging COVID-19 impacts.
Coretex’s 4 month Asset Retention Rate was 98.4%.
-
10
20
30
40
50
60
70
FY18FY19FY20FY21
$54.32
$55.08
$58.38
$58.30
FY22
$55.57
-
20
40
60
80
100
FY18FY19FY20FY21
95.8%
94.4
%
95.2
%
94.9
%
FY22
93.4%
ARPU
EROAD STAND ALONE
ASSET RETENTION RATE
MONITORING PERFORMANCE ENTERPRISE VALUE FROM EXISTING CUSTOMER BASE
22
MONITORING PERFORMANCE PROFITABILITY
COST TO ACQUIRE CUSTOMERS
AS % OF REVENUE
COST TO ACQUIRE
PER UNIT*
COST TO SERVICE AND SUPPORT
AS % OF REVENUE
-
5
10
15
20
25
FY18FY19FY20FY21
20
24
22
18
15
17
6
13
11
4
2
FY22
14
11
3
5
CAC Expensed
CAC Capitalised
Total CAC
-
1
2
3
4
5
6
7
CTS
4.5
5.0
4.6
4.6
6.4
FY18FY19FY20FY21FY22
-
$400
$300
$200
$100
$500
$600
$451
FY21FY22
$587
CAC would be expected to trend downwards over time as revenue grows,
reductions will be partly offset by investment in development markets
ahead of revenues.
CTS has increased reflecting Coretex costs and ongoing billing
improvements and automated customer support. CTS has increased
reflecting Coretex costs and staff costs in relation to ongoing billing
improvements and automated customer support.
Cost to Acquire has increased due marketing
spend returning to pre-COVID levels and staff
investment.
* The cost to acquire per unit methodology has changed and is now based on gross unit growth (FY21 restated).
23
OPERATING EXPENSES
Sales and
Marketing
Other
$20.0m
$10.0m
$30.0m
$50.0m
$40.0m
$70.0m
$80.0m
$90.0m
$100.0m
$60.0m
13.6
7.6
93.9
-
61.2
1.5
0.5
1.5
(8.7)
8.3
0.3
1.8
Restated FY21FY22
0.2
SCALECAPABILITYEXPANSION
STRATEGIC
INITIATIVES
LEGAL
COSTS
Increased
Decreased
Total
Sub-Contractors
Other Employment
Other Professional
Fees
Legal Costs
Coretex
Software and Systems
Acquisition and
Integration
SaaS Platform
Costs
Personnel
Expenses
(0.1)
(2.6)
OPEX COSTS HAVE GROWN $32.7M:
• $13.6m is Coretex costs for the four-month period and $7.6m
related to acquisition and integration expenses
• Personnel costs have increased $8.3m due to remuneration
growth, staff to support ongoing customer growth (primarily
in NZ) and increasing capacity in our engineering and supply
chain teams during FY22
• SaaS platform cost increase is driven by the growth in
our unit base and ancillary products such as dashcams
• Sub-contractors grew reflecting back filling roles, turnover
and improvements to billing and customer support,
outsourced R&D
• Started to build marketing activity in North America as
EROAD merged with Coretex
• Software and systems increased $1.5m reflecting
$0.8m related to cloud accounting and negotiations for
a software contract across EROAD and Coretex being
attributed to EROAD
• Other dropped $2.6m largely reflecting the provisioning for
bad debts in FY21 given the expected COVID impacts
23
24
ADDITIONS
TO PROPERTY,
PLANT AND
EQUIPMENT
ADDITIONS TO
INTANGIBLE
ASSETS
0
40
80
120
160
200
FY21FY22FY21FY22
24.9
174.3
13.112.2
60.9
FY21FY22
0.91.2
199.2
23.7
37.2
TOTAL INTANGIBLE
ASSET ADDITIONS ($M)
DEVELOPMENT ASSET
ADDITIONS ($M)
SOFTWARE ASSET
ADDITIONS ($M)
PROPERTY PLANT & EQUIPMENT
PPE increased to $34.8m reflecting:
• PPE (including inventory) of $9.2m relating to Coretex
• investment in inventory to respond to global supply chain
pressures and pipeline demands of $11.7m
INTANGIBLE ASSETS
• Intangible additions primarily reflects the acquisition of
Coretex ($174.3m) related to development, brand, customer
contracts and goodwill
• Of the $31.7m spent on R&D in FY22, $23.7m has been
capitalized as more development assets. The $10.6m
increase reflects more use of outsourced support, the
growth in the size of the development team and integration
work following the Coretex acquisition
0
5
10
15
20
25
30
35
FY21
5.1
FY22
25.6
9.2
34.8
FY21
4.4
FY22
24.1
7.5
31.6
FY21
5.3
FY22
12.4
2.5
14.9
TOTAL PPE
ADDITIONS*($M)
HARDWARE ASSET
ADDITIONS ($M)
HARDWARE ASSET ADDITIONS
EXCLUDING INVENTORY
MANAGEMENT ($M)
Additions
Acquisition
Additions
Acquisition
24
25
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
30.0
35.0
FY19FY21
23.7
8.0
31.7
FY22FY20
R&D ExpensedR&D Capitalised
IncreaseDecreaseTotal
40.6
24.9
174.3
(11.4)
228.4
-
100.0
50.0
150.0
250.0
200.0
FY21Additions
AmortisationAcquisitionsFY22
INCREASED INVESTMENT IN R&D
TO SUPPORT NEW PRODUCT DELIVERY IN FY23 AND FY24
RESEARCH AND DEVELOPMENT
(
$m
)
MOVEMENT IN INTANGIBLES
(
$m
)
26
FREE CASH FLOWS
Inflows
Outflows
Total
45.2
9.4
(5.9)
(1.7)
(8.1)
(1.3)
(0.2)
(33.9)
0.1
(11.8)
(0.5)
(1.4)(0.1)
(1.0)
(0.1)
20.0
(20.0)
(40.0)
(60.0)
(80.0)
40.0
-
60.0
CDE EBITDA
Other PPE
Development Assets
Software Assets
Acquisition of subsidiary
Interest Paid
Group Free Cash Flows FY22
(4.2)
(0.2)
(0.8)
(26.5)
1.6
(2.9)
(72.4)
18.2
(120.3)
(3.6)
NEW ZEALAND
$33.2m (FY21: $32.3m)
NORTH AMERICA
$(0.7)m (FY21: $9.3m)
AUSTRALIA
$(2.5)m (FY21: $(1.4)m)
CORPORATE& DEVELOPMENT
$(140.2)m (FY20: $(33.6)m)
Other Operating Cash Flows
EBITDA
Other PPE
CA Assets
H&A Assets
CF Assets
EBITDA
Other PPE
CA Assets
H&A Assets
CF Assets
EBITDA
Other PPE
CA Assets
H&A Assets
CF Assets
H&A under Construction
Operating Companies FCF FY21
H&A Assets - Hardware & Accessory Assets • CA Assets - Customer Acquisition Assets • CF Assets - Contract Fulfi lment Assets • CDE EBITDA - Corporate, Development and Elimination EBITDA • H&A under Construction - Hardware & Accessories under Construction
27
GROWTH
OPPORTUNITY
AND OUTLOOK
Graham Stuart
Chairman
Mark Heine
Acting CEO
27
28
BROADER AND IMPROVED PRODUCT OFFERING
TO ENTERPRISE CUSTOMERS AND CUSTOMERS
FROM DIFFERENT INDUSTRIES
Solving Customers Problems
Productivity
Regulatory Compliance
Road Safety
Food Safety
Proof of Service
Certifi cation of quality
Industries
Professional Transport
Refrigerated Transport
Construction & Civils
Waste & Recycling
Hardware SolutionsAdd on Products and Services
EROADCORETEXEROADCORETEX
Ehubo
TMU1500
Clarity Dashcam
Philips Connect
IOT sensors and tag
Clarity Solo
Dashcam
CoreHub
Next Generation
Logbook
Inspect
Coretemp
EROAD Where
Minitags
Corevision camera
MyEROAD / 360 Hub
All Vehicles. All Assets. One Platform
Hardware enabling delivery of SaaS subscriptions to solve customers problems
* EROAD’s Ehubo1, Coretex’s V301 , TMU750 and Gen-x are all included in unit numbers however come to the end of supply during FY23
28
29
OUR NEXT GENERATION OFFERING
ALL VEHICLES. ALL ASSETS. ONE PLATFORM
A complete, connected network that works with customers’ systems
Hardware and software alike, design of products focused on ease of use,
safety, fl exibility and quality - to deliver accurate insights for customers
AA ccoommpplleettee,, ccoonnnneecctteedd nneettwwoorrkk tthhaatt wwoorrkkss wwiitthh yyoouur r ssyysstteemmss
Hardware and software alike, design of products focused on ease of use, safety,
flexibility and quality - to deliver accurate insights for customers
OOuurr nneexxtt ggeenneerraattiioonn ooffffeerriinngg
All vehicles. All assets. One platform.
DRIVER DEVICE
ELD & DVIR
Hours of Service
Messaging
Navigation
Job Workfl ow
Supports 3rd Party Apps
(Routeforme)
COREHUB
Wi-Fi Hub
Idle Time
Accelerometer
Engine Fault Codes
MyEROAD / 360 ENTERPRISE
SOLUTION
Analytics
Dashboards
Reporting
Alerting
Mapping
Replay
Action Engine
IFTA
Full Suite of APIs
Qualifi ed Integration Team
Penske Integration
HOS APIs for JJ Keller
IoT TAGS & SENSORS
CAMERAS
HD Video streaming
Incident resolution
Driver Behavior
API
30
BROADER AND IMPROVED SERVICE OFFERING TO ENTERPRISE CUSTOMERS
AND CUSTOMERS FROM DIFFERENT INDUSTRIES
Road safety
ELD Fatigue
Management
Driver
Behaviour
*
Video
Telematics
*
Inspect
App
*
CaRa
Alerts
*
Re-Torque
Alerts
*
Service
alerts
*
Pre-trip
comms
*
Regulatory
Compliance
NZAUUSA
Electronic
RUC
Driver
Logbook
*
EWD Certification
underway*
FBT and
FTC
*
ELD*
WMT
Report
RUAF/IFTA
Report
Fuel tax
Report
CA ELD Certification
underway
Productivity
Real-time Location
& Geofencing*
Geofence
Alerts
Tracking &
Tracing
Engine and Fuel
Report
*
Analysis
Dashboards
*
Job
Management
*
Satellite
Communications
*
Analyst and Data
Connector
*
EROAD
Share
APIs and
Integrations
*
Two-way
Messaging
BookIt
App
*
ECM
Diagnostics
*
Asset
Tracking
*
Trailer Tractor
Linking
Trailer Tracking &
Monitoring
Route Optimisation
+ Scheduling
*
Work Orders
Push-to-cab
*
Food safety
Real time
Alerts
Core Temperature
Monitoring
*
Core
Temp
*
Proof of Service
Trace, Track &
Service verification
Quality Assurance
Core
Temp
*
Concrete
Assurance
Reduce
Time-to-pour
Proof
of Service
Missed Stop
Identification
Exception
Recording
Residential &
Commercial Waste App
PROFESSIONAL TRANSPORTREFRIGERATED TRANSPORTCONSTRUCTION WASTE
* Provides additional ARPU over and above normal subscriptions
* Helps customers with their sustainability efforts
31
THE NEXT GENERATION SOLUTION MEETS THE NEEDS
OF PROFESSIONAL TRANSPORT, REFRIGERATED
TRANSPORT, CONSTRUCTION AND WASTE INDUSTRIES
IN CAB PROFESSIONAL
TRANSPORT
REFRIGERATED
TRANSPORT
CONSTRUCTION WASTE AND
RECYCLING
CoreHub can easily connect and integrate with AI
Cameras, combining with driver data and behaviour
to give an indepth look into the drivers performance.
CoreHub also meets ELD certifi cation and has a
rule set engine built in, ensuring drivers’ safety and
compliance.
Combine door, temperature and humidity sensors
with geofences and custom alerting to create
a comprehensive view of reefer units, ensuring
compliance and safety across all loads.
Using the drum rotation sensor and water add meter,
collect detailed job data. Easily integrate this data to
dispatch systems and automated job workfl ows to
streamline complex supply chain processes.
By installing bin sensors on the arms of the truck,
receive specifi c and detailed data on exactly the
customers the drivers have visited. By combining
this information with specifi c routes, easily see in real
time route compliance and optimization.
NORTH AMERICAN ADDRESSABLE MARKET*
3,050,000 units
NORTH AMERICAN TOTAL ADDRESSABLE MARKET*
650,000 units
NORTH AMERICAN TOTAL ADDRESSABLE MARKET*
130,000 units
NORTH AMERICAN ADDRESSABLE MARKET***
150,000 units
NORTH AMERICAN SERVICEABLE MARKET**
760,000 units
NORTH AMERICAN SERVICEABLE MARKET**
65,000 units
NORTH AMERICAN SERVICEABLE MARKET**
30,000 units
*Total Available Market is the total number of vehicles or trailers within each vertical. These numbers were best-estimates drawing on a variety of inconsistent sources.
** Serviceable Available Market is the segment of the TAM which is expected to be coming out of contract with any incumbent telematics providers and so could potentially be won. These numbers were a best-estimate based on industry knowledge of the telematics penetration and average contract period in each vertical.
***Obtained from independent market research by an external consultant.
32
INCREASED SCALE AND BROADER CUSTOMER BASE
GIVING US BETTER REFERENCES TO WIN NEW BUSINESS
UNITS BY INDUSTRY
Frieght & Road TransportConstruction & Civil EngineeringOther
Refrigerated TransportAgriculture/Forestry Services & Trade
Waste
38%
21%
21%
7%
7%
6%
38%
UNITS BY INDUSTRY
Construction & Civil Engineering
Frieght & Road Transport
Agriculture/Forestry
Services & Trade Other
28%
30%
24%
9%
9%
UNITS BY MARKET
New ZealandNorth AmericaAustralia
70%
28%
2%
FY21
North American
Revenue
$30.6m
UNITS BY MARKET
New ZealandNorth AmericaAustralia
51%42%
7%
FY22
North American
Revenue
$40.3m
UNITS BY CUSTOMER SIZE
EntepriseSMB
60%40%
FY21
Largest
Enterprise Customer
(New Zealand based)
5,200
UNITS BY CUSTOMER SIZE
EntepriseSMB
53%47%
FY22
Largest
Enterprise Customer
(North America based)
10,500
Increased Scale
in North America
and Australia
Increase in
Enterprise
Customers
Entry into key
strategic verticals
New Zealand
North America
Australia
SMB
Enteprise
Construction & Civil Engineering
Freight & Road Transport
Agriculture/Forestry
Services & Trade
Refrigerated Transport
Other
FY21
FY22
3333
CORETEX INTEGRATION ON TRACK
WITH SIGNIFICANT PROGRESS
MADE TO DATE
EROAD remains confident in the revenue synergies identified
through the due diligence progress.
Expect to deliver key product and platform integration
by the end of CY2022.
GOOD PROGRESS SINCE 1 DECEMBER 2021
Sales activities underway for Coretex 360
platform and Corehub hardware solutions as
EROAD’s next generation product platform
Engineering teams now integrated with
focus on integration of key platform and
products by end of 2022
Supply chain integration complete Integrated Sales Teams and aligned
go-to-market strategy
3G to 4G upgrade programme in North
America largely complete
Integration of EROAD and Coretex
teams complete with on-going change
management to build an inclusive, diverse
and collaborative culture
3434
OUR FY23 PRIORITIES
Following the acquisition of Coretex, a strategy refresh will be
conducted over H1 FY23 to maximize EROAD’s growth potential.
Revenue growth momentum in New Zealand and North America
• focused on Enterprise accounts in professional transport, refrigeration, construction and
Waste & Recycling
• providing ESG solutions to customers to help them decarbonise and convert to EV fl eets
Maintain an engaged culture aligned to the vision of the merged company
• position EROAD as an employer of choice
• continue to increase capability of leaders
Deliver key product and platform integration by the end of CY2022 to enable
delivery of enhanced SaaS products to build growth momentum further and
support retention
34
35
FY23 OUTLOOK
Growth momentum is expected to further build through the year with the successful conversion
of some of the North American enterprise pipeline opportunities.
Revenue growth for FY23 will refl ect the lumpy nature of enterprise sales and the phasing of the
hardware roll-outs. In addition, there are a number of enterprise customers due to renew their
contracts during the year.
Across all markets has a total of 18 pilots with enterprise customers, representing some 30,700
units and 10,000 microtags.
Anticipated Revenue will be between $150 million to $170 million refl ecting the contribution of a
full year of Coretex and continued growth across all the markets.
FY22 has been a year of signifi cant year of investment in capability to prepare for growth and this
investment will continue into FY23 . As a result, EROAD is targeting normalized EBIT of between
-$5m to breakeven (FY22: -$0.9). EROAD expects operating leverage to improve from FY24 onwards.
Longer term, EROAD is targeting to deliver ongoing strong growth in revenue, of at least $250m
by FY25.
35
36
QUESTIONS
& ANSWERS
36
37
APPENDIX
37
38
Year endedFY22
FY21
(restated)
Movement
FY22 vs
FY21H2 FY22H1 FY22
Movement
H2 FY22 vs
H1 FY22
Revenue114.991.623.366.948.018.9
Operating expenses(93.9)(61.2)(32.7)(58.5)(35.4)(23.1)
Earnings before interest, taxation, depreciation
and amortisation
21.030.4(9.4)8.412.6(4.2)
Depreciation of property, plant & equipment(10.4)(9.6)(0.8)(5.4)(5.0)(0.4)
Amortisation of intangible assets(11.0)(8.9)(2.1)(6.2)(4.8)(1.4)
Amortisation of contract and customer acquisition assets(6.8)(6.8)-(3.5)(3.3)(0.2)
Earnings before interest and taxation(7.2)5.1(12.3)(6.7)(0.5)(6.2)
Net financing costs(3.2)(2.5)(0.7)(2.1)(1.1)(1.0)
Profit/(loss) before tax(10.4)2.6(13.0)(8.8)(1.6)(7.2)
Income tax (expense) benefit0.8(0.1)0.92.1(1.3)3.4
(Loss)/profit after tax for the year attributable
to shareholders
(9.6)2.5(12.1)(6.7)(2.9)(3.8)
Other comprehensive income(0.3)(0.5)0.2(0.7)0.4(1.1)
Total comprehensive (loss)/income for the year(9.9)2.0(11.9)(7.4)(2.5)(4.9)
STATEMENT OF INCOME (NZ$M)
• Revenue increased 25% to $114.9m, with underlying
SaaS revenue growing 22%. Following the acquisition
of Coretex, revenue included outright hardware sales
that do not have ongoing contractual conditions. This
is $2.5m for the 4 month period and is expected to
reduce over time as customers shift to rental models.
• Non-recurring revenue relates to a variety of areas.
One-off acquisition accounting revenue ($1.3)
and early termination fees related to the large
enterprise customer in North America have increased
other revenue. A similar one-off item is also
in FY21 (forgiveness of the North American COVID-19
government support $1.6m).
• Operating cost growth relates to both the inclusion
of Coretex ($13.6), acquisition and integration costs
($7.6m) and growth in various operating expenses.
Growth in personnel costs to deliver increased R&D
and to manage global supply chain pressures were
two areas of investment during FY22, along with
inflationary pressures in competitive labour markets
impacted by COVID restrictions.
• Amortisation increases with the merger of Coretex
intangibles and growth in R&D activity.
• EBIT reduced from $5.1m (restated) to a loss of
$7.2m, nomalised for transaction and integration
costs, EBIT grows to $0.4m.
39
BALANCE SHEET (NZ$M)
• Cash has decreased $43.2m following the
purchase of Coretex and growth in property, plant
and equipment (PPE) as increased inventory is held
to ensure continuity of supply given global supply
chain pressures.
• The increase in other assets is as a result of the
combination of an increase in our receivables
balance following the Coretex merger, growth
in prepayments to secure component parts and
the reclassification of some intangible costs to
prepayments following the new IFRS guidance in
relation to treatment of Cloud.
• Contract Fulfilment and Customer Acquisition
Assets increased by $2.0m (across both current
and non-current portions) reflecting growth and
a strong period of renewals.
• Intangibles growth primarily relates to the purchase
of Coretex and includes R&D, brand value, customer
contracts and goodwill. These were independently
valued to reflect fair market values. There has also
been $23.7m R&D development capitalised during
the year.
• Borrowings from long term bank loans have reduced
due to scheduled repayments.
• Other liabilities includes an estimate for the
contingent payable related to the Coretex acquisition.
As at period endFY22Restated FY21Movement
Cash13.957.1(43.2)
Restricted bank account14.710.54.2
Costs to acquire and contract fulfilment costs5.75.50.2
Other27. 29.51 7.7
Total current assets61.582.6(21.1)
Property, plant and equipment61.734.727.0
Intangible assets228.440.6187.8
Costs to acquire and contract fulfilment costs5.23.41.8
Other10.38.32.0
Total non-current assets305.68 7.0218.6
Total assets3 67.1169.6197.5
Payables to transport agencies15.010.54.5
Contract liabilities11.96.65.3
Borrowings32.135.0(2.9)
Other liabilities60.415.445.0
Total liabilities119.467. 551.9
Net assets247.7102.1145.6
40
Year ended
FY22
Restated
FY21
Movement
FY22 vs
FY21H2 FY22H1 FY22
Movement
H2 FY22 vs
H1 FY22
Cash flows from operating activities
Other operating cash flows17.230.6(13.4)6.111.1(5.0)
Net interest paid(2.9)(2.5)(0.4)(1.6)(1.3)(0.3)
Net cash inflow from operating activities14.328.1(13.8)4.59.8(5.3)
Cash flows from investing activities
Property, plant and equipment (including hardware assets)(28.4)(4.7)(23.7)(18.9)(9.5)(9.4)
Intangible assets(24.9)(13.1)(11.8)(13.1)(11.8)(1.3)
Contract fulfillment and customer acquisition assets(8.9)(5.0)(3.9)(4.6)(4.3)(0.3)
Payments for investment in subsidiary (72.4)-(72.4)(72.4)-(72.4)
Net cash outflow from investing activities(134.6)(22.8)(111.8)(109.0)(25.6)(83.4)
Cash flows from financing activities
Bank loans(2.9)(0.8)(2.1)(0.5)(2.4)1.9
Issue of equity85.052.932.1(0.3)84.7(84.4)
Cost of raising capital(3.4)(2.1)(1.3)(0.1)(3.5)3.6
Other financings cash flows(1.6)(1.6)-(0.8)(0.8)0.6
Net cash inflow/(outflow) from financing activities7 7.148.428.7(0.9)78.0(78.9)
Net increase/(decrease) in cash held(43.2)53.7(96.9)(105.4)62.2(167.6)
Cash at beginning of the financial period57.13.453.7119.357.162.2
Closing cash and cash equivalents13.957.1(43.2)13.9119.3(105.4)
CASH FLOW STATEMENT (NZ$M)
• Operating cash flows have reduced by $13.8m
reflecting the increased spending related to
the Coretex merger along with an increase in
receivables and prepayments.
• Investing cash are $134.6m and predominantly reflect
the purchase of Coretex.
• Property plant and equipment growth reflects both
unit growth but also the investment in inventory to
help ensure continuity of supply as global supply
pressures occur.
• Intangible asset cashflow reflects increased R&D
investment, including outsourcing development to
support flexibility to scale up and down in the future.
• Financing cash flows were $77.1m for the period
as a result of the issue of equity of $85.0m in July
(placement and share purchase plan).
* FY21 has been restated (cloud related adjustments)
41
YEAR ENDEDFY22Restated FY21
Profit/(Loss) after tax for the year attributable to the shareholders(9.6)2.5
Add/(less) non-cash items
Tax asset recognised(1.1)0.1
Depreciation and amortisation28.225.3
Other non-cash expenses/(income)1.4(1.1)
Add/(less) movements in other working capital items:
Decrease/(increase) in trade and other receivables(10.4)2.7
Increase/(decrease) in contract liabilities5.3(1.6)
Increase /(decrease) in trade payables, interest payable and accruals0.50.2
Net cash from operating activities14.328.1
RECONCILIATION OF PROFIT
TO MOVEMENT IN CASH
42
RECONCILIATION OF PROFIT
TO MOVEMENT IN CASH
NZ$Local$
FY22FY21FY22FY21
New Zealand ARPU NZ$56.45NZ$56.18NZ$56.45NZ$56.18
North America ARPU NZ$56.38NZ$65.03US$39.02US$42.95
Australian ARPU NZ$38.99NZ$35.50AU$36.69AU$33.16
43
R&D INVESTMENT
• 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 19 key launches or enhancements over FY22 as a result
of previous R&D investment
• In FY22 spend 28% and 26% (excluding integration of Coretex)
of revenue on R&D. For FY23 targeting spend of 20% (excluding
integration) on R&D
• Focused on product development that opens up the addressable
market for enterprise customers
R&D Profile
FY22
77%
Customer facing
52%
14%
13%
8%
6%
4%
3%
52%14%13%8%
New to
EROAD
Planned
enhancements
Quality
/bugs
New to world
6%4%3%
Reliability,
availability,
serviceability
and scalability
Learning
/future
Unplanned
enhancements
44
GLOSSARY
ANNUALISED MONTHLY RECURRING
REVENUE (AMRR)
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)
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)
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 FY22 Financial Statements.
CY
12 months ended 31 December
EBITDA
A non-GAAP measure representing Earnings before
Interest, Taxation, Depreciation and Amortisation
(EBITDA). Refer Consolidated Statement of
Comprehensive Income in Financial Statements.
EBITDA MARGIN
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
A fleet of more than 500 vehicles in
North America and more than 150 vehicles
in Australia or New Zealand.
FREE CASH FLOW
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 FY22 Financial Statements.
FY
Financial year ended 31 March.
H1
For the six months ended 30 September.
H2
For the six months ended 31 March.
MONTHLY SAAS AVERAGE REVENUE
PER UNIT (ARPU)
A non-GAAP measure that is calculated by dividing
the total SaaS revenue for the year reported in Note 2
of the FY22 Financial Statements, by the TCU balance
at the end of each month during the year.
NORMALISED EBITDA
Excludes one-off items including transaction and
integration costs ($7.6m), COVID-19 grant in H1 FY21
($1.6m) and acquisition revenue ($1.3m).
NORMALISED EBITDA MARGIN
Excludes one-off items including transaction and
integration costs ($7.6m), COVID-19 grant in H1 FY21
($1.6m) and acquisition revenue ($1.3m).
NORMALISED REVENUE
excludes the one-off COVID-19 grant in H1 FY21.
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 EROAD branded units subject to a
customer contract both on Depot and pending
instalment and Coretex branded units currently billed
UNIT
A communication device fitted in-cab or on a trailer.
Where there is more than one unit fitted in-cab or
on a trailer, it is counted as one unit (excluding
Philips Connect).
45
ASX & NZX: ERD
investors@eroad.com
eroadglobal.com/investors
---
EROAD
Financial Statements
20
22
26 May 2022
EROAD Financial Statement 2022 | FY22 HIGHLIGHT2
CONTENTS
4Consolidated Statement of Comprehensive Income
5Consolidated Statement of Financial Position
7Consolidated Statement of Changes in Equity
8Consolidated Statement of Cash Flows
9Reconciliation of Operating Cash Flows with
Reported Profit After Tax
10Notes to the Financial Statements
42Auditor’s Report
EROAD Financial Statement 2022 | FY22 HIGHLIGHT3
4EROAD Financial Statements 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2022
2022
Restated
2021
Notes
$M's$M’s
Revenue3 114.9 91.6
Operating expenses4(93.9)(61.2)
Earnings before interest, taxation, depreciation and amortisation
21.0
30.4
Depreciation of property, plant and equipment14(10.4)(9.6)
Amortisation of intangible assets16(11.0)(8.9)
Amortisation of contract and customer acquisition assets7(6.8)(6.8)
Earnings before interest and taxation
(7.2)
5.1
Finance income0.10.2
Finance expense(3.3)(2.7)
Net financing costs8
(3.2)
(2.5)
(Loss)/profit before tax (10.4)2.6
Income tax benefit90.8(0.1)
(Loss)/Profit after tax for the period attributable to the
shareholders
(9.6)2.5
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss(0.3)(0.5)
Total comprehensive (loss)/profit for the period(9.9)2.0
(Loss)/Earnings per share - basic (cents)
11
(10.07)3.33
(Loss)/Earnings per share - diluted (cents)
11
(9.98)3.33
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
*Refer to Note 2(h) for details on 2021 restatement.
5EROAD Financial Statemenst 2022
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2022
2022
Restated
2021
Notes$M's$M’s
Current assets
Cash and cash equivalents12 13.9 57.1
Restricted bank accounts12 14.7 10.5
Trade and other receivables13 27. 2 9.5
Contract fulfilment costs7 3.6 3.0
Costs to obtain contracts7 2.1 2.5
Total current assets 61.5 82.6
Non-current assets
Property, plant and equipment14 61.7 34.7
Intangible assets16 228.4 40.6
Contract fulfilment costs7 3.3 2.4
Costs to obtain contracts7 1.9 1.0
Deferred tax assets10 10.3 8.3
Total non-current assets 305.6 8 7.0
Total assets 3 67.1 169.6
6EROAD Financial Statements 2022
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
AS AT 31 MARCH 2022
2022
Restated
2021
Notes$M's$M’s
Current liabilities
Borrowings18 2.1 6.4
Trade payables and accruals17 37.1 7. 8
Payables to transport agencies12 15.0 10.5
Contract liabilities19 5.7 3.9
Lease liabilities15 1.4 1.0
Employee entitlements 4.6 2.4
Total current liabilities 65.9 32.0
Non-current liabilities
Borrowings18 30.0 28.6
Contract liabilities19 6.2 2.7
Lease liabilities15 4.3 4.2
Derivative financial liabilities20 0.2 -
Deferred tax liabilities10 12.8 -
Total non-current liabilities 53.5 35.5
Total liabilities 119.4 67. 4
Net assets 247.7 102.1
Equity
Share capital11 293.3 131.7
Share capital premium/discount (6.5)-
Reserves (3.7)(3.4)
Accumulated loss (35.4)(26.2)
Total shareholders' equity247.7102.1
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Chair of the Finance, Risk and Audit Committee, 26 May 2022
Chairman, 26 May 2022
7EROAD Financial Statemenst 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2022
Share
Capital
Share
Premium/
Discount
Accumulated
loss
Translation
Reserve
Hedging
Reserve
Total
Notes$M’s$M’s$M’s$M’s$M’s
Balance as at 1 April 2020,
as previously reported
80.7 - (26.5) (2.9)- 51.3
IFRS change in accounting policy,
net of tax
2(h) - - (3.0) - - (3.0)
Restated balance as at 1 April 2020 80.7 - (29.5) (2.9) - 48.3
Restated profit after tax for the period - - 2.5 - - 2.5
Other comprehensive income - - - (0.5)- (0.5)
Total comprehensive income for the
period, net of tax
- - 2.5 (0.5) - 2.0
Transactions with owners
of the Company
Equity settled share-based payments - - 0.8 - - 0.8
Share capital issued
11
51.0 - - - - 51.0
Restated balance at 31 March 2021 131.7 - (26.2) (3.4) - 102.1
Balance at 1 April 2021 131.7 - (26.2) (3.4) - 102.1
Loss after tax for the period - - (9.6) - - (9.6)
Other comprehensive income - - - (0.1) (0.2) (0.3)
Total comprehensive loss for the
period, net of tax
- - (9.6) (0.1) (0.2) (9.9)
Transactions with owners
of the Company
Equity settled share-based payments 1.3 - 0.4 - - 1.7
Share capital issued
11
80.4 - - - - 80.4
Share capital issued relating to
business combination
11
79.9 (6.5) - - - 73.4
Balance at 31 March 2022 293.3 (6.5) (35.4) (3.5) (0.2) 247.7
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
8EROAD Financial Statements 2022
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2022
2022
Restated
2021
Notes$M’s$M’s
Cash flows from operating activities
Cash received from customers109.492.3
Payments to suppliers and employees(92.2)(61.7)
Interest received0.1-
Interest paid(2.9)(2.5)
Tax (paid)/received(0.1)-
Net cash inflow from operating activities 14.3 28.1
Cash flows from investing activities
Payments for investment in property, plant & equipment14(28.4)(4.7)
Payments for investment in intangible assets16(24.9)(13.1)
Payments for investment in contract fulfilment assets7(5.7)(3.5)
Payments for investment in customer acquisition assets7(3.2)(1.5)
Payments for investment in subsidiary, net of cash acquired2(i)(72.4)-
Net cash outflow from investing activities (134.6) (22.8)
Cash flows from financing activities
Receipts from bank loans1832.11.7
Repayments of bank loans18(35.0)(2.5)
Payment of lease liability15(1.6)(1.6)
Receipts from issue of equity85.052.9
Payments for costs of raising equity(3.4)(2.1)
Net cash inflow from financing activities 7 7.1 48.4
Net (decrease)/increase in cash held (43.2) 53.7
Cash and cash equivalents 57.1 3.4
Closing cash and cash equivalents 13.9 57.1
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
9EROAD Financial Statemenst 2022
RECONCILIATION OF OPERATING CASH FLOWS WITH REPORTED PROFIT AFTER TAX
FOR THE YEAR ENDED 31 MARCH 2022
2022
Restated
2021
Notes$M’s$M’s
Reconciliation of operating cash flows with reported profit after
tax
Profit after tax for the year attributable to the shareholders(9.6)2.5
Add/(less) non-cash items
Tax asset recognised(1.1)0.1
Depreciation and amortisation28.225.3
Other non-cash expenses/(income)1.4(1.1)
28.524.3
Movements in other working capital items
Decrease/(increase) in trade and other receivables(10.4)2.7
Increase/(decrease) in contract liabilities5.3(1.6)
Increase/(decrease) in trade payables, interest payable and
accruals
0.5 0.2
(4.6)1.3
Net cash from operating activities14.328.1
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
10
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
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. 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.
Other than as described in note 2(h), 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
During the year, the Group revised its accounting policy in relation to upfront configuration and customisation costs incurred in
implementing SaaS arrangements in response to the IFRIC agenda decision clarifying its interpretation of how current accounting
standards apply to these types of arrangements. The new accounting policy is presented below. Comparative financial information has
been restated to account for the impact of the change – refer note 2(h).
Software-as-a-Service (SaaS) arrangements
SaaS arrangements are service contracts providing the Group with the right to access the cloud provider’s application software over
the contract period. Costs incurred to configure or customise, and the ongoing fees to obtain access to the cloud provider’s application
software, are recognised as operating expenses when the services are received.
Some of these costs incurred are for the development of software code that enhances or modifies, or creates additional capability to,
existing on-premise systems and meets the definition of and recognition criteria for an intangible asset. These costs are recognised as
intangible software assets and amortised over the useful life of the software on a straight-line basis. The useful lives of these assets are
reviewed at least at the end of each financial year, and any change accounted for prospectively as a change in accounting estimate.
(c) Going concern
As at balance the Group’s current liabilities exceeded its current assets by $4.4 million, however adjusting for contract assets and liabilities
and non-cash contingent consideration the Group had net current assets of $1.0 million. 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 2022 of $13.9M and bank borrowing facility of $90M of which $57.3M was undrawn as at 31 March 2022
after including borrowing costs of $0.6M. This provides sufficient level of headroom to help support the business for at least the next 12
months from the date of issuance of these financial statements;
-The Future Contracted Income of $190.2M provides certainty of forecast revenue;
-The directors have made due enquiry into the appropriateness of the assumptions underlying the budgetary forecasts;
(d) Basis of measurement
The financial statements are prepared on the historical cost basis, except for certain financial instruments carried at fair value.
(e) Presentation currency
The financial statements are presented in New Zealand dollars ($) 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 Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
11
(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 a 1 April
2022.
The Group has not adopted, and currently does not anticipate adopting, any standards prior to their effective dates.
(g) Critical accounting estimates and judgements
In applying the Group’s accounting policies, management continually evaluates judgements, estimates and assumptions based on
experience and other factors, including expectations of future events that may have an impact on the Group. All judgements, estimates
and assumptions made are believed to be reasonable based on the most current set of circumstances available to the Group. Actual
results may differ from the judgements, estimates and assumptions.
The significant judgements, estimates and assumptions made by management in the preparation of these financial statements are
outlined within the financial statement notes to which they relate. These are :
-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)
-Fair values of assets and liabilities acquired (refer to Note 2(i))
-Capitalisation of development costs (refer to Note 16)
Impact of COVID-19
On 11 March 2020 the World Health Organisation declared a global pandemic as a result of the outbreak and spread of COVID-19.
Following this, in each of EROAD’s markets of New Zealand, the United States and Australia, lockdowns of varying severity were
introduced. Lockdowns continued in these markets during the year, and while some restrictions have eased in each of the markets
they have yet to return to the level of economic trading conditions prevalent prior to the COVID-19 crisis. Following the lockdowns
being initiated in 2020, EROAD was designated an essential service in each of its three markets and remained operational under its
communicable illness business continuity plan. EROAD continues to be considered an essential service in the current period. Despite this
designation, EROAD still experienced a loss in customer demand for new or replacement units and services, aside from those customers
who themselves were designated as essential services. Accordingly, each of EROAD’s markets were impacted differently due to the
differences in lockdown conditions, as well as the differing proportion of essential services customers in its total customer base. Like most
businesses we are unsure about the flow on implications of the pandemic in future periods.
Doubtful debts - COVID-19 Provisions
To ensure EROAD has recorded sufficient credit loss provisions to account for the estimated financial impact of any future defaults
EROAD has performed an assessment of estimated credit losses not yet identified but driven by the increase in credit default risk for its
customers. The assessment considered the following aspects:
• the risk level associated with the industry the customer is operating in, including whether this is an essential service;
• historical loss rates for each risk category; and
• macro economic conditions in the relevant market including COVID-19 responses and lock-down activity.
NOTE 2 BASIS OF ACCOUNTING (CONTINUED)
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
12
(h) Retrospective restatement
As disclosed in note (b), the Group revised its accounting policy in relation to SaaS arrangements during the year resulting from the
implementation of agenda decisions issued by the IFRIC. Comparative financial information has been restated to account for the impact
of the change in accounting policy, as follows:
The flow on impact on these transactions to the March 21 financials plus further movements is as follows:
31 March
2020
previously
reported
AdjustmentsRestated
31 March
2021
previously
reported
AdjustmentsRestated
$M’s$M’s$M’s$M’s$M’s$M’s
Statement of financial position
Trade and other receivables - Prepayments10.7 1.7 12.4 8.2 1.3 9.5
Total current assets34.0 1.7 35.7 81.3 1.3 82.6
Intangible assets42.1 (5.8)36.3 45.3 (4.7)40.6
Deferred tax asset7. 5 1.1 8.6 7. 3 1.0 8.3
Total non-current assets91.8 (4.7)8 7.1 90.7 (3.7)8 7.0
Total assets125.8 (3.0)122.8 172.0 (2.4)169.6
Net assets51.3 (3.0)48.3 104.6 (2.5)102.1
Retained earnings(26.5)(3.0)(29.5)(23.7)(2.5)(26.2)
Total equity51.3 (3.0)48.3 104.6 (2.5)102.1
202120212021
$M’s$M’s$M’s
Statement of comprehensive income
Operating expenses(60.9)(0.3)(61.2)
Amortisation of intangible assets(9.9)1.0 (8.9)
Profit before tax1.9 0.7 2.6
Income tax benefit0.1 (0.2)(0.1)
Profit after tax for the period attributable
to the shareholders
2.0 0.5 2.5
No impact on statement of cash flows as relates to asset changes in the 1 April 2020 opening balance sheet.
(i) Acquisition of subsidiary
The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The Group
controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial
statements from the date on which control commences until the date on which control ceases.
On 1 December 2021, the Group acquired 100% of the shares and voting interests in Coretex Limited, a telematics vertical specialist
provider delivering enterprise grade solutions.
The acquisition is expected to accelerate EROAD’s key growth metrics enabling it to access the significant growth opportunity in North
America and Australia (particularly with respect to Coretex’s focus on the Enterprise customer base). It also accelerates growth by adding
new strategic vertical markets, broadening product market fit and customer base and positions EROAD to become a bigger player in the
global telematics market.
For the four months ended 31 March 2022, Coretex contributed revenue of $13.9 million and loss before tax of $2.7 million to the Group’s
results. If the acquisition had occurred on 1 April 2021, management estimates that Coretex’s consolidated revenue would have been
$41.7 million and consolidated loss before tax for the year would have been $8.1 million. In determining these amounts management has
assumed that the fair value adjustments that arose on date of acquisition would have been the same if the acquisition had occurred on 1
April 2021.
NOTE 2 BASIS OF ACCOUNTING
(CONTINUED)
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
13
Consideration transferred
The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any
goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately.
Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that
meets the definition of a financial instrument is classified as equity, then it is not remeasured and settlement is accounted for within
equity. Otherwise, other contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair
value of the contingent consideration are recognised in profit or loss.
The consideration for the acquisition of all of the shares of Coretex Limited, was comprised of cash, shares in EROAD Limited and a
contingent amount of both cash and shares. The acquisition date fair value of the total consideration transferred was $167.3 million made
up of:
Cash$74.4 million
Equity instruments (13,317,000 ordinary shares)$66.5 million
Contingent consideration$26.4 million
Total consideration paid or payable$167.3 million
i. Equity instruments issued
The fair value of the ordinary shares issued was based on the listed share price of the Company at 30 November 2021 of $4.99 per share.
ii. Contingent consideration
The Group has agreed to pay the selling shareholders in 12 months from transaction completion additional consideration of $14.5
million in cash and a maximum of 2,683,000 of ordinary shares based on the satisfaction of customer retention and platform suitability
performance criteria.
Assuming all criteria are met, the maximum contingent consideration payable is $14.5 million in cash and 2,683,000 shares.
The Group has included $26.4 million as contingent consideration, which represents its fair value at the date of acquisition. At 31 March
2022, the contingent consideration had decreased by $0.9 million due to remeasurement. The fair value of contingent consideration at
the balance date includes $12.4 million that will be settled in shares, of which $7.0 million has been recognised as equity within Share
Premium/Discount reserve as the number of shares that will be issued is fixed depending on the achievement of certain platform
suitability targets, and $5.4 million has been recognised as a liability within Trade Payables and accruals as the number of shares that will
be issued is variable based on the outcome of customer retention performance targets.
Acquisition related costs
The Group incurred acquisition-related costs of $3.6 million on legal fees and due diligence costs. These costs have been included in
‘operating expenses’.
Identifiable assets acquired and liabilities assumed
The following table summarises the fair values of assets acquired and liabilities assumed at the date of acquisition (using foreign
exchange rates on the acquisition date):
$M’s
Property, plant and equipment9.2
Intangible assets69.2
Deferred tax assets4.3
Cash and cash equivalents2.0
Trade and other receivables7. 3
Trade payables and accruals(9.6)
Employment liabilities(2.7)
Lease liability(1.3)
Deferred tax liabilities(16.2)
Total identifiable net assets acquired62.2
NOTE 2 BASIS OF ACCOUNTING (CONTINUED)
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
14
i. Measurement of fair values
The valuation techniques used for measuring the fair value of material assets acquired were as follows:
Assets acquiredValuation technique
Intangible assetsCustomer relationships: The multi-period excess earnings method
The multi-period excess earnings method considers the present value of net cash flows expected to be generated
by the customer relationships, by excluding any cash flows related to contributory assets.
Brand: Relief from royalty method
The basic principle of the relief from royalty method is that without ownership of the subject intangible asset, the
user of that intangible asset would have to make a stream of payments to the owner of the asset in return for the
rights to use that asset. By acquiring the intangible asset, the user avoids these payments.
Technology: The cost approach
The cost approach is based on the premise that a prudent investor would pay no more for an intangible asset than
its replacement or reproduction cost. The cost to replace the intangible asset would include the cost of constructing
a similar intangible asset of equivalent utility at prices applicable at the time of the valuation analysis. This estimate
may then be adjusted by losses in value attributable to obsolescence (physical, functional and/or economic).
Trade receivablesTrade receivables comprise gross contractual amounts due of $7.4 million of which $2.3 million was expected to be
uncollectible at the date of acquisition.
Fair values measured on a provisional basis
The following amounts have been measured on a provisional basis:
• Income tax payable related to North America pending completion of independent advisor’s review of the tax rate to be applied as well
as the required adjustments for differences between accounting and tax.
• Deferred tax liability related to North America intangible assets pending completion of independent advisor’s review of the tax rate to
be applied.
A rate of 21%, which is equal to the Federal tax rate in the US has been applied in determining provisional tax values in North America.
An adjustment may be required to account for the various State taxes. The determination of a State tax rate is complex as each State in
the US has its own rates and various components to which it calculates its tax base. The State tax rates vary from 0% to 12%. Given the
Coretex business operations cross many States, the percentage to apply will depend on how much business operations is taxable in each
State. We will continue to work with our advisers to determine what the appropriate adjustment to the percentage is to account for these
State taxes at acquisition date. The likely impact is a decrease to the net assets on acquisition and an increase to the resulting goodwill
for North America. There will likely be a flow on impact into the deferred tax balances of the Group when this adjustment is made.
If new information obtained within one year of the date of acquisition about facts and circumstances that existed at the date of
acquisition identifies adjustments to the above amounts, or any additional provisions that existed at the date of acquisition, then the
accounting for the acquisition will be revised.
Goodwill
Goodwill arising from the acquisition has been recognised as follows:
$M’s
Consideration transferred167.3
Fair value of identifiable net assets62.2
Goodwill105.1
The goodwill is mainly attributable to growth from new customers, the skills and experience of Coretex’s workforce and the synergies
expected to be achieved from integrating the company into the Group’s business. None of the goodwill recognised is expected to be
deductible for tax purposes.
NOTE 2 BASIS OF ACCOUNTING
(CONTINUED)
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
15
NOTE 3 REVENUE
2022 2021
$M’s$M’s
Revenue from contracts with customers
Software as a Service (SaaS) revenue 104.1 85.0
Hardware revenue 2.5 -
Other
Transaction fee revenue 3.0 2.6
Grant income1.3 2.6
Other income4.0 1.4
Total Revenues114.9 91.6
Set out above is the disaggregation of the Group’s revenue. 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, training and support services and provision of software
services. Hardware Revenue represents revenue earned from sale of hardware with no software as a service term. Transaction fee revenue
relates to the collection of Road User Charges (RUC) fees.
Hardware only revenue is recognised when control of the goods has transferred, being when the goods have been shipped to the
specified location. A receivable is recognised by the Group when the goods are delivered as this represents point in time at which the
right to consideration becomes unconditional, as only the passage of time is required before payment is due.
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.
2022 2021
$M’s$M’s
Software as a Service (SaaS) revenue
No later than one year 83.6 72.3
Later than one year no later than five years 106.6 69.6
Total price allocated to remaining performance obligations 190.2 141.9
The Group reports the Non-GAAP measure, Future Contracted Income. The definition of Future Contracted Income includes all future
hardware and SaaS cash inflows relating to income under non-cancellable long-term agreements. The disclosure above aligns with the
Future Contracted Income reported by the Group.
Software as a service revenue
The Group has determined EROAD’s customers do not have the right to direct the use of EROAD’s asset (Ehubo, Corehub/THU1500) 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 recognise as a finance cost when
consideration is received in advance.
Hardware revenue with no contractual term for Saas is recognised when control of the goods has transferred, being when the goods have
been shipped to the specified location. A receivable is recognised by the Group when the goods are delivered as this represents point in
time at which the right to consideration becomes unconditional, as only the passage of time is required before payment is due.
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
16
The Group offers installation services as part of a number of promises to transfer goods and services within each contract. Installation
services do not convey a distinct good or service and therefore are not a separate performance obligation as the installation is a set-up
activity that does not provide the customer a direct benefit other than access to the software services. As a result, the installation service
is considered as part of the single performance obligation; referred to as Software as a Service (SaaS) revenue, which includes the
software service and hardware sale or rental for which the customer simultaneously receives and consumes the benefit of the service.
Where installation revenue is received in advance of satisfying the performance obligation a contract liability is recognised. The contract
liability is derecognised over time evenly over the period of the contract as the customer derives the benefit evenly from the services
provided over the contract period. The majority of contracts are for 3 years and can be for a term of up to 5 years. As a result there is a
financing component which the group recognises as a finance cost when consideration is received in advance.
Transaction fees
The Group acts as an agent for transport authorities in the market that is operates in. Where fees are collected on their behalf, the Group
charges a commission. The revenue recognised is the net amount of the commission fee earned by the Group.
Grant income
Government grants are recognised at fair value in the statement of comprehensive income over the same periods as the costs for which
the grants are intended to compensate. No unfulfilled conditions or contingencies exist related to the government grants. As at 31 March
2022 no Covid-19 related grants were received (31 March 2021 $1.6million).
NOTE 4 EXPENSES
2022
Restated
2021
Notes$M’s$M’s
Personnel expenses - net of capitalised employee remuneration6 45.2 29.7
Administrative and other operating expenses 24.3 20.7
SaaS platform costs 15.3 9.8
Directors fees 0.5 0.4
Acquisition-related expenses 3.6 -
Integration-related expenses 4.0 -
Auditor's remuneration - KPMG 0.6 0.3
Other assurance services - KPMG 0.1 0.1
Tax compliance and advisory services - KPMG 0.3 0.2
Total operating expenses93.961.2
Other assurance services include half year and Callaghan Grant reviews and NZTA reasonable assurance.
During the year the costs expensed for Research and Development (including integration) was $8.0M (2021: $8.2M).
The integration related expenses include internal staff time.
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
These segments remain the same following the acquisition of the Coretex Group.
Inter-segment pricing is determined on an arm’s length basis.
NOTE 3 REVENUE
(CONTINUED)
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
17
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
2022
Restated
2021202220212022202120222021
$M’s$M’s$M’s$M’s$M’s$M’s$M’s$M’s
Revenue
Software as a Service (SaaS)
revenue
0.3 0.3 35.0 27. 2 65.3 56.5 3.5 1.1
Hardware Revenue - - 2.4 - - - 0.1 -
Transaction fee revenue - - - - 3.0 2.6 - -
Other revenue ₁ 32.1 24.8 2.9 3.4 1.5 0.7 0.3 0.3
32.4 25.1 40.3 30.6 69.8 59.8 3.9 1.4
Earnings before interest,
taxation, depreciation &
amortisation
(33.9) (17.8) 9.4 10.0 45.2 38.8 0.1 (0.9)
Total assets 256.9 101.5 80.8 27.1 64.8 39.7 13.3 3.0
Depreciation of property,
plant & equipment
(1.5) (1.1) (3.8) (4.7) (5.2) (4.8) (0.3) (0.1)
Amortisation of intangible
assets
(8.8) (8.9) (1.7) - (0.3) - (0.2) -
Amortisation of contract and
customer acquisition assets
- - (1.5) (1.8) (5.0) (4.9) (0.3) (0.1)
₁ Revenue from Corporate & Development Markets includes R&D Grant Income of $1.3M (2021: $2.6M).
Reconciliation of information on reportable segments
2022
Restated
2021
$M’s$M’s
Revenue
Total revenue for reportable segments 146.4 116.9
Elimination of inter-segment revenue (31.5) (25.3)
Consolidated revenue 114.9 91.6
EBITDA
Total EBITDA for reportable segments 20.8 30.1
Elimination of inter-segment EBITDA 0.2 0.3
Consolidated EBITDA 21.0 30.4
Depreciation
Total depreciation for reportable segments (10.8) (10.7)
Elimination of inter-segment depreciation 0.4 1.1
Consolidated depreciation (10.4) (9.6)
Total assets
Total assets for reportable segments 415.8 171.3
Elimination of inter-segment balances (48.7) (1.7)
Consolidated total assets3 67.1 169.6
NOTE 5 SEGMENTAL NOTE (CONTINUED)
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
18
Allocation of goodwill and other intangible assets
Included within Total Assets are Development Assets of $88.3M (2021: $36.9m) 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. The Group’s cash generating units (CGUs) are North America,
New Zealand and Australia. For impairment testing purposes management allocate the Development Assets to the CGU 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.
Also included in the total assets is the intangible assets acquired through the acquisition of the Coretex subsidiaries and resulting
goodwill. The allocation of these to cash-generating units has been done based on valuation expert advice.
The allocation of the Development Assets, goodwill and other intangibles to CGU’s within the following reportable segments for the
purpose of impairment testing was as follows:
2022
Development AssetsGoodwillBrandCustomer relationships
$M’s$M’s
North America
43.3 85.8 3.1 21.9
New Zealand 39.8 5.7 - 4.9
Australia 5.2 13.6 - 1.2
88.3 105.1 3.1 28.0
2021
Development AssetsGoodwillBrandCustomer relationships
$M’s$M’s
North America
13.9 - - -
New Zealand 21.6 - - -
Australia 1.4 - - -
36.9 - - -
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.
2022
Restated
2021
$M’s$M’s
Revenue
New Zealand 72.1 61.2
All foreign countries:
USA 39.0 29.3
Australia
3.8 1.1
Total revenue 114.9 91.6
Non-current assets
New Zealand 206.5 65.2
All foreign countries:
USA 76.9 12.5
Australia 11.9 1.0
Total non-current assets 295.3 78.7
Non-current assets exclude financial instruments and deferred tax assets.
NOTE 5 SEGMENTAL NOTE
(CONTINUED)
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
19
NOTE 6 PERSONNEL EXPENSES
20222021
$M’s$M’s
Salaries and wages - excluding capitalised commission costs 53.7 34.8
Annual leave 0.8 0.6
Performance bonus 0.8 1.1
Share-based payments 2.0 0.9
Salaries and wages capitalised to development and software assets (12.1) (7.7)
45.2 29.7
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.
Customers who do not sign up to a term have contract fulfilment costs expensed up-front.
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. Customers who do not sign up to a term have contract acquisition costs expensed up-front.
The following table provides information about contract fulfilment and costs to obtain contracts with customers:
CONTRACT FULFILMENTCOSTS TO OBTAIN CONTRACTS
2022202120222021
$M’s$M’s$M’s$M’s
Opening net book value 5.4 5.9 3.5 4.8
Additions 5.7 3.4 3.1 1.6
Amortisation (4.2) (3.9) (2.6) (2.9)
Closing Net book value 6.9 5.4 4.0 3.5
Current 3.6 3.0 2.1 2.5
Non-current 3.3 2.4 1.9 1.0
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
20
NOTE 8 FINANCE INCOME & FINANCE EXPENSES
20222021
$M’s$M’s
Finance income
Interest income 0.1 -
Foreign exchange gains - 0.2
0.1 0.2
Finance expenses
Interest expense (2.4) (2.2)
Interest expense - lease liabilities (0.3) (0.3)
Interest expense - contract liabilities (0.2) (0.2)
Change of fair value of contingent consideration (0.4) -
(3.3) (2.7)
Net financing costs (3.2) (2.5)
NOTE 9 INCOME TAX EXPENSE
2022
Restated
2021
$M’s$M’s
(a) Reconciliation of effective tax rate
(Loss)/ Profit before income tax(10.4)2.6
Income tax using the Company’s domestic tax rate of 28% 2.9(0.3)
Non-deductible expense(2.3)-
Adjustment related to prior period(0.5)0.3
Utilisation of tax losses previously unrecognised1.3-
Current-year losses for which no deferred tax asset is recognised(0.5)-
Effect of different tax rates of subssidiaries operating overseas -(0.1)
Income tax expense 0.9 (0.1)
(b) Current tax expense
Current year- -
--
(c) Deferred tax expense
Current year 1.4 0.1
Adjustments related to prior period (0.5) -
0.9 0.1
At 31 March 2022 there were no imputation credits available to shareholders (2021: 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.
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
21
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate
to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current
tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable
that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and
are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
NOTE 10 DEFERRED TAX ASSETS/(LIABILITIES)
2022
Restated
2021
$M’s$M’s
Recognised deferred tax assets/(liabilities)
Deferred tax assets are attributable to the following:
Tax loss carry forward 13.0 11.5
Property, plant and equipment (3.9) 0.6
Intangibles (21.1) (5.9)
Provisions, accruals and other liabilities 1.7 1.1
Equity-settled share-based payments 0.7 0.4
Trade and other receivables, including contract assets 5.5 (0.7)
Lease liability 1.6 1.3
Total deferred tax (liability)/asset (2.5) 8.3
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
2022
Recognised
in Profit
or Loss
Under/
(Over)
from Prior
Periods
Acquired in
Business
combinations
Currency
Translation
Restated
Balance
2021
$M's$M's$M's$M's$M's$M's
Tax loss carry forward 13.0 (2.0) (0.2) 3.7 - 11.5
Property, plant and equipment (3.9) (0.2) (4.0) (0.3) - 0.6
Intangibles (21.1) 0.5 - (15.8) 0.1 (5.9)
Provisions, accruals and other liabilities 1.7 1.0 (0.6) 0.3 (0.1) 1.1
Equity-settled share-based payments 0.7 0.3 - - - 0.4
Trade and other receivables including
contract assets
5.5 2.0 4.2 - - (0.7)
Lease liability 1.6 (0.2) 0.1 0.3 0.1 1.3
Total
(2.5) 1.4 (0.5) (11.8) 0.1 8.3
During the year an exercise was performed to align prior period adjustments to the correct deferred tax categories, to ensure consistency
with the balance sheet/nature of the deferred tax balances.
The New Zealand EROAD 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. Coretex New Zealand Limited are currently not part of the
tax group however it will be considered for inclusion in the New Zealand tax group in the future.
NOTE 9 INCOME TAX EXPENSE
(CONTINUED)
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
22
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 results of the forecasting indicate that there will be sufficient profitability within the New Zealand tax group and Coretex New Zealand
to utilise the existing tax losses. Losses incurred in recent years have been the result of a large investment creating the North American
market. 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 2022 the Group has tax losses of $67.5M (2021: $48.7M) that are available indefinitely for offsetting against future taxable
profits of the entity in which they arose, subject to meeting the relevant tax rules. $24.3M (2021:11.2M) of tax losses 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.
Notes
Number of
Ordinary Shares
Issue Price
$
Issued Capital
$
AT 31 MARCH 202181,896,340-131.7
Shares issued to employees-- 1.3
Shares issued in August 2021 equity placement 15,125,447 $5.54 83.8
Costs of raising capital-- (3.4)
Shares issued in November 2021 relating to
business combination
2(i)13,317,000$6.0079.9
At 31 March 2022110,338,787 293.3
On 4 August 2021 EROAD issued addtional 15,125,447 shares at a price of $5.54 each. On 30 November EROAD issued additional
13,317,000 shares at a price of $6.00 each.
At 31 March 2022 there was 110,338,787 authorised and issued ordinary shares (31 March 2021: 81,896,340). 417,306 (31 March 2021:
732,741) 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 2022 was based on the loss attributable to ordinary shareholders
of $9.6M (2021: profit of $2.5M). The weighted number of ordinary shares on 31 March 2022 was 95,572,631 (2021: 74,366,384) for basic
earnings per share and 96,462,064 for diluted earnings per share (2021: 74,366,384).
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.
• Hedging reserve - the hedging reserve is used to record gains or losses on instruments used as cash flow hedges. The amounts are
recognised in profit and loss when the hedged transaction affects profit and loss.
• Retained earnings - includes all current and prior period retained profits and share-based employee remuneration.
• Share Premium/Discount - this account is for the difference between the issued par share price and the trading share price (or fair value
share price) on date of issue and includes contigent consideration portion classified as equity related to the acquisition of Coretex.
NOTE 10 DEFERRED TAX ASSETS/(LIABILITIES) (CONTINUED)
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
23
NOTE 12 CASH AND CASH EQUIVALENTS, RESTRICTED CASH AND PAYABLES TO TRANSPORT AGENCIES
20222021
$M’s$M’s
Cash and cash equivalents 13.9 57.1
Restricted bank accounts 14.7 10.5
28.6 67. 6
Cash and cash equivalents exclude restricted bank accounts. Restricted bank accounts are presented separately from cash and cash
equivalents on the face of the Statement of Financial Position and movements in restricted bank accounts are excluded from the
Statement of Cash Flows. The restricted bank accounts relate to Road Users tax collected from clients due for payment to the appropriate
government agency.
Payables to transport agencies (15.0) (10.5)
NOTE 13 TRADE AND OTHER RECEIVABLES
2022
Restated
2021
$M’s$M’s
Trade receivables 19.4 8.0
Expected credit losses (3.2) (2.6)
16.2 5.4
Prepayments and other receivables 11.0 4.1
2 7. 2 9.5
In addition to the movement in the expected credit losses, the Group has written off $0.8M (2021: $0.9M) 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
2022202220212021
$M’s$M’s$M’s$M’s
Not past due 8.0 0.1 3.1 0.2
Past due 1-30 days 5.5 0.1 2.3 0.4
Past due 31-60 days 1.0 0.1 0.5 0.2
Past due over 61 days 4.9 2.9 2.1 1.8
19.4 3.2 8.0 2.6
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
24
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
YEAR ENDED 31 MARCH 2022
Opening net book
amount
4.1 28.0 0.2 1.3 0.4 0.3 0.4 34.7
Acquisition through
business combinations
- Note 2(i)
1.37. 5-0.2-0.10.1 9.2
Additions0.424.1---0.30.8 25.6
Disposals----(0.1)-- (0.1)
Depreciation charge(1.3)(8.1)(0.1)(0.3)(0.1)(0.1)(0.4) (10.4)
Depreciation recovered-3.3--0.1-- 3.4
Effect of movement in
exchange rates
-(0.7)----- (0.7)
Closing net book amount 4.5 54.1 0.1 1.2 0.3 0.6 0.9 61.7
Cost8.576.30.72.91.11.84.395.6
Accumulated
depreciation
(4.0)(22.2)(0.6)(1.7)(0.8)(1.2)(3.4)(33.9)
Net book amount 4.5 54.1 0.1 1.2 0.3 0.6 0.9 61.7
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
YEAR ENDED 31 MARCH 2021
Opening net book
amount
5.1 29.5 0.2 1.7 0.3 0.3 0.3 37. 4
Additions - 4.4 - - 0.2 0.2 0.3 5.1
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
Cost 6.8 51.3 0.7 2.9 1.3 1.4 3.4 67. 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
Included in the Hardware Assets is equipment under construction to be leased of $15.1M (2021: $6.8M).
During the year the Group undertook a review of fully depreciated fixed assets, resulting in a reduction of cost and accumulated
depreciation by $6.6m.
Items of plant and equipment are stated at cost, less accumulated depreciation and impairment losses. Cost includes the purchase
consideration, and those costs directly attributable to bringing the asset to the location and condition necessary for its intended use.
Where an item of plant and equipment is disposed of, the gain or loss recognised in the statement of comprehensive income is calculated
as the difference between the net sales price and the carrying amount of the asset.
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.
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.
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
25
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 5 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.
NOTE 15 LEASES AS A LESSEE
Lease Liabilities
20222021
$M’s$M’s
Maturity analysis - contractual undiscounted cash flows
Less than one year 2.1 1.3
One to five years 3.8 4.2
More than five years - 0.8
Total undiscounted lease liabilities 5.9 6.3
Lease liabilities included in the statement of financial position 5.7 5.2
Current 1.4 1.0
Non-current 4.3 4.2
Amounts recognised in Statement of Comprehensive Income
20222021
$M’s$M’s
Interest expense on lease liabilities 0.3 0.3
Depreciation on right of use assets 1.1 0.9
Amounts recognised in Statement of Cash Flows
20222021
$M’s$M’s
Total cash outflow for leases
(1.6) (1.6)
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 method. It is remeasured when there is a change in future
NOTE 14 PROPERTY, PLANT AND EQUIPMENT
(CONTINUED)
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
26
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
DevelopmentSoftwareGoodwillBrand
Customer
RelationshipsTotal
Notes$M's$M's$M’s$M’s$M’s$M's
YEAR ENDED 31 MARCH 2022
Opening net book amount 36.9 3.7 - - - 40.6
Business combination acquisition2(i) 37. 2 - 105.1 3.3 28.7 174.3
Additions 23.7 1.2 - - - 24.9
Disposals - (0.1) - - - (0.1)
Effect of movement in foreign
exchange rate
(0.2) - - - (0.1) (0.3)
Amortisation charge (9.3) (0.9) - (0.2) (0.6) (11.0)
Closing net book amount 88.3 3.9 105.1 3.1 28.0 228.4
Cost 128.9 9.5 105.1 3.3 28.6 275.4
Accumulated amortisation (40.6) (5.6) - (0.2) (0.6) (47.0)
Net book amount 88.3 3.9 105.1 3.1 28.0 228.4
DevelopmentSoftwareGoodwillBrand
Customer
relationshipsTotal
$M's$M's$M’s$M’s$M’s$M's
YEAR ENDED 31 MARCH 2021
Opening net book amount 32.7 9.4 - - - 42.1
Cloud adjustments-(5.7) - - - (5.7)
Restated opening net
book amount
32.7 3.7 - - - 36.4
Additions 12.2 0.9 - - - 13.1
Disposals - - - - - -
Restated amortisation charge (8.0) (0.9) - - - (8.9)
Restated closing net book amount 36.9 3.7 - - - 40.6
Cost 68.2 8.5 - - - 76.7
Accumulated amortisation (31.3) (4.8) - - - (36.1)
Restated net book amount 36.9 3.7 - - - 40.6
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).
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
NOTE 15 LEASES AS A LESSEE
(CONTINUED)
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
27
development and to use or sell the asset. The expenditure capitalised includes the cost of materials, direct labour and overhead costs
that are directly attributable to preparing the asset for its intended use. Other development expenditure is recognised in the statement of
comprehensive income when incurred. There is judgement involved in relation to whether a project meets the capitalisation criteria, and
whether the expenditure can be directly attributable to the respective project.
Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated impairment losses.
Other intangible assets
Other intangible assets, including customer relationships, brand, patents and trademarks, that are acquired by the Group and have finite
useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses.
Subsequent expenditure
Subsequent expenditure is 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:
Patents 10 to 20 years
Development Hardware & Platform 7 to 15 years
Development Products 5 to 10 years
Software 5 to 7 years
Customer relationships 15 years
Brand 5 years
Impairment testing of goodwill
The acquisition of Coretex during the financial year, meant goodwill was recognised for the excess between the fair value consideration
paid and the fair value of the net assets acquired. This goodwill was then allocated to the cash generating units of the business with
the assistance of external specialists. When goodwill is acquired in a business combination, under the accounting standards, NZ IAS 36
requires an impairment test to be completed annually (for cash-generating units in which goodwill has been allocated) irrespective of
whether there is any indication of impairment. Refer to note 5 for the allocation of goodwill to cash generating units (CGUs).
To complete the annual impairment testing management assessed the recoverable amount of each of the cash-generating units (‘CGU’)
of which goodwill has been allocated by reference to its value in use determined using a discounted cash flows model. The recoverable
amounts of the CGU’s were estimated based on the following significant assumptions:
-Compound annual growth rate in connected units between 2023 and 2025 of 5% to 20% and 1.5% to 12.8% in 2026 to 2027 reflecting
past experience and forecast performance of the Group following the acquisition of Coretex
-Compound annual growth rate in Average Revenue per Unit (ARPU) between 2023 and 2025 of 1.3% to 8.3% and no growth in 2026 to
2027
-Post-tax discount rate of 11.0%
-Terminal growth rate of 1.5% applied to 2027 and thereafter
A sensitivity analysis was undertaken which concluded that the results are not particularly sensitive to changes in the underlying
assumptions. The Group concluded that the recoverable amount of each of the CGU’s were higher than their respective carrying values
and therefore no impairment was considered necessary at 31 March 2022.
NOTE 17 TRADE PAYABLES AND ACCRUALS
20222021
$M’s$M’s
Trade creditors 11.6 4.2
Sundry accruals 7.0 3.6
Contingent consideration liability 18.5 -
37.17. 8
NOTE 16 INTANGIBLE ASSETS (CONTINUED)
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
28
NOTE 18 BORROWINGS
20222021
$M’s$M’s
Current borrowings
Term loans - 5.0
Revolving Credit Facility 0.7 -
Capex facility 2.0 2.0
Capitalised borrowing costs (0.6) (0.6)
2.16.4
Non-current borrowings
Term loans 30.0 28.6
30.028.6
Terms and debt repayment schedule
2022202220212021
Nominal
Interest
Year of
Maturity
Face
Value
$M’s
Carrying
Amount
$M’s
Face
Value
$M’s
Carrying
Amount
$M’s
Term loans4.12%2025 30.0 30.0 33.6 33.6
Capex facility4.12%2025 2.0 2.0 2.0 2.0
Revolving credit facility4.12%2025 0.7 0.7 - -
Capitalised borrowing costs - 2025 - (0.6) - (0.6)
32.7 32.1 35.6 35.0
Current financial year
The Group has a syndicated debt facility with the Bank of New Zealand (BNZ) and the Australia and New Zealand Banking Group (ANZ).
At 31 March 2022, EROAD had the following facilities in place:
$30.0M (NZD) Term Loan Facility A – to refinance existing debt. The Term Loan has a term of 36 months from the March 2022 refinance
date, with the facility having a maturity date in March 2025. The interest rate is variable with reference to a base rate (BKBM bid rate) for
the selected interest period plus a margin of 2.95%. EROAD may select an interest period of 1,2,3 or 6 months. This is an interest only term
facility with full repayment on the termination date.
$55.0M (NZD) Revolving Credit Facility B – used to refinance existing debt and general corporate purposes. The Revolving Credit Facility
has a term of 36 months from the March 2022 refinance date with a periodic roll over feature at the end of each interest period (90 days)
that is subject to continued compliance with the terms of the loan agreement, with the facility having a maturity date in March 2025.
Funds may be drawn in NZ Dollars, AU Dollars, or US Dollars. The interest rate is variable with reference to the base rate (BKBM bid rate
for NZ Dollar drawings, BBSY bid rate for AU Dollar drawings, and US Federal Open Market Committee short-term interest rate target
for US Dollar drawings) for the selected interest period plus a margin of 1.5%. EROAD may select an interest period of 1,2,3 or 6 months.
In addition, a Commitment Fee of 1.45% per annum is payable on the committed balance of the facility quarterly in arrears. The full
outstanding balance is payable on the termination date.
$5.0M Capex Facility– for general working capital purposes. This is an on demand facility with the interest rate to be agreed between the
lender and borrower at the time of borrowing plus a margin of 1.5%. In addition, a Commitment Fee of 1.45% per annum is payable on the
committed balance of the facility quarterly in arrears. The full outstanding balance is payable on the termination date.
EROAD’s operating covenants to support the above facilities include Interest Cover Ratio, Leverage Ratio and Obligor Assets to Group
Assets. EROAD was compliant with all covenants during the period and at 31 March 2022.
The security package for the Multi-Option Credit Facility Agreement includes an all obligations cross-guarantee granted by EROAD
Financial Services Limited, EROAD Australia Pty Limited, EROAD Inc, Coretex Limited, Imarda Pty Limited, Coretex Australia Pty Limited,
Coretex NZ Limited, and Coretex USA 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 Financial Services Limited,
EROAD Inc, EROAD Australia Pty Limited, Coretex Limited, Imarda Pty Limited, Coretex Australia Pty Limited, Coretex NZ Limited, and
Coretex USA Inc in favour of the BNZ (in its capacity of Security Trustee for the banking syndicate).
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of
the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
29
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.
20222021
$M’s$M’s
Opening balance 6.6 8.2
Amounts deferred during the period 10.4 4.1
Amount recognised in the statement of comprehensive income (5.1) (5.7)
11.9 6.6
Current 5.7 3.9
Non-current 6.2 2.7
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 businesses.
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.
Last 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.
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
30
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.
The Group holds the following financial assets and liabilities, the table below shows their carrying amount and measurement basis.
20222021
Amortised
Cost
$M’s
Other
amortised
cost
$M’s
FVTPLFair Value
-hedging
instruments
Amortised
Cost
$M’s
Other
amortised
cost
$M’s
FVTPLFair Value
-hedging
instruments
Financial assets
Cash and cash equivalents 13.9 --- 57.1 ---
Restricted bank account 14.7 --- 10.5 ---
Trade receivables 19.4 --- 8.0 ---
48.0 - - - 75.6 ---
Financial liabilities
Borrowings- 32.1 - - - 35.0 - -
Employee entitlements-4.6 - - - 2.3 - -
Lease liabilities- 5.7 - - - 5.2 - -
Trade and other payables-18.6 - - - 7. 8 - -
Payables to transport
agencies
- 15.0 - -- 10.5 - -
Interest rate swaps - cash
flow hedge
- - -0.2- - - -
Contingent consideration
liability
-- 18.5 - - - - -
-76.018.5 0.2 - 60.8 --
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.
NOTE 20 FINANCIAL RISK MANAGEMENT
(CONTINUED)
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
31
NOTE 20 FINANCIAL RISK MANAGEMENT (CONTINUED)
(b) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they become due and payable. The
Group’s approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities
when they become due and payable, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group’s reputation.
The Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 90 days, including the
servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such
as natural disasters.
Maturities of financial liabilities
The following table details the Group’s contractual maturities of financial liabilities, including estimated interest payments and excluding
the impact of netting agreements, as at the reporting date. Refer to Note 18 for the maturity profile of the Group’s borrowings.
1 year or
less
1 to 5
years
Over 5
years
Total contractual
cash flows
Carrying amount of
liabilities
$M's$M's$M's$M’s$M’s
2022
Non-derivative financial liabilities
Borrowings 2.7 30.0- 32.7 32.7
Employee entitlements 4.6 -- 4.6 4.6
Trade and other payables37.1--37.137.1
Payable to transport agencies 15.0 -- 15.0 15.0
59.4 30.0 - 89.489.4
1 year or
less
1 to 5
years
Over 5
years
Total contractual
cash flows
Carrying amount of
liabilities
$M's$M's$M's$M’s$M’s
2022
Derivative financial liabilities
Interest rate swaps 0.2 - - - -
0.2 - - - -
1 year or
less
1 to 5
years
Over 5
years
Total contractual
cash flows
Carrying amount of
liabilities
$M's$M's$M's$M’s$M’s
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 - 59.8 56.2
1 year or
less
1 to 5
years
Over 5
years
Total contractual cash
flows
Carrying amount of
liabilities
$M's$M's$M's$M’s$M’s
2021
Derivative financial liabilities
Interest rate swaps-----
-----
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
32
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 in
the prior period the carrying amount of the derivative was nil at 31 March 2021. The swap has a maturity date of March 2023 to align with
the Group’s borrowing facility.
(c) Market risk
Market risk is the risk that changes in market prices, such as commodity prices, foreign exchange rates and interest rates, will affect the
Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimising the return on risk.
Foreign currency risk
The Group is exposed to currency risk on sales transactions that are denominated in a currency other than the respective functional
currencies of Group entities, primarily the US Dollar (USD) and Australian Dollar (AUD). The Group is also exposed to currency risk on
expense transactions that are denominated in a currency other than the respective functional currencies of Group entities, primarily the
US Dollar (USD), Australian Dollar and Euro (EUR). The Group, may on occasion, enter into forward exchange contracts to hedge the
exposure to foreign currency fluctuations on sales receipts.
The Group reports in New Zealand dollars. Movements in foreign currency exchange rates affect reported financial results, financial
position and cash flows. Where practical, the Group attempts to reduce this risk by matching revenues and expenditures, as well as assets
and liabilities, by country and by currency.
Foreign exchange rates applied against the New Zealand Dollar, at 31 March are as follows:
20222021
$M’s$M’s
AUD 1
0.930.92
USD 10.690.70
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
2022
Cash and cash equivalents 0.7 5.8
Trade receivables 1.3 10.3
Lease liabilities - 0.5
AUDUSD
$M’s$M’s
2021
Cash and cash equivalents 0.1 12.1
Trade receivables 0.2 2.2
Lease liabilities - 0.4
NOTE 20 FINANCIAL RISK MANAGEMENT (CONTINUED)
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
33
Interest rate risk
At 31 March 2022, 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 12 months and has a weighted average interest rate of 0.55%.
Nominal amount
of the hedging
instrument
Carrying amount -
derivative assets/
(liabilities)
Change in
value used for
calculating hedge
ineffectiveness
Hedging (gain) or
loss recognised in
other comprehensive
income
Hedging (gain) or
loss recognised in
income statement
$M's$M's$M's$M’s$M’s
Cash flow hedging
Interest rate swap - NZD borrowings
Maturity: 12 months 10.0 (0.2) - 0.2 -
Fixed interest rate: 0.55%
10.0 (0.2) - 0.2 -
There was no hedge ineffectiveness recognised in profit or loss during the year.
Summarised sensitivity analysis
The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to interest rate and foreign currency
risk.
Foreign currency riskInterest rate risk
-10%+10%-100bps+100bps
ProfitEquityProfitEquityProfitEquityProfitEquity
$M's$M's$M's$M’s$M’s$M’s$M's$M’s
2022
Cash and cash equivalents (0.5) (0.5) 0.5 0.5 (0.1) (0.1) 0.1 0.1
Trade receivables (0.8) (0.8) 0.8 0.8 ----
Lease liabilities - - - - 0.10.1(0.1)0.1
Interest rate swap - - - - -(0.1)-0.3
Total increase/(decrease) (1.3) (1.3) 1.3 1.3 - (0.1) - 0.5
-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 - - - - 0.1 0.1 (0.1) 0.1
Interest rate swap - - - - - - - -
Total increase/(decrease) (1.1) (1.1) 1.1 1.1 (0.5) (0.5) 0.5 0.6
(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 and the contingent consideration liability. All of the Group’s interest rate
derivatives are in designated hedge relationships and are measured and recognised at fair value. 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.
NOTE 20 FINANCIAL RISK MANAGEMENT
(CONTINUED)
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
34
NOTE 20 FINANCIAL RISK MANAGEMENT (CONTINUED)
The contingent consideration liability is also measured and recognised at fair value. The valuation technique applied for valuing the
contingent consideration liability is described below.
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 ($0.2M)
as at 31 March 2022 (2021:nil).
Financial liabilities
20222021
Carrying
Value
$M’s
Fair
Value
$M’s
Carrying
Value
$M’s
Fair
Value
$M’s
Interest rate swaps - cash flow hedgeLevel 2 0.2 0.2 - -
Contingent consideration liabilityLevel 3 18.5 18.5 - -
18.7 18.7 - -
TypeValuation technique
Significant
unobservable inputs
Inter-relationship between
significant unobservable inputs
and fair value measurement
Contingent
consideration
Discounted cash flows: The
valuation model considers the
present value of the expected
future payments, discounted using
a risk-adjusted discount rate for
the cash contingent consideration.
Expected cash flows
(31 March 2022:$14.2m).
The estimated fair value would
increase (decrease) if:
• the expected cash flows were
higher (lower); or
• the risk-adjusted discount rate
were lower (higher).
Risk-adjusted discount rate
(31 March 2022: 10.3%).
Market comparison technique:
The fair value is estimated using
the Company’s quoted equity
securities price on reporting date
and expected future number of
shares payable for the shares
contingent consideration.
Expected share issue
(31 March 2022: 1.2 million shares)
The estimated fair value would
increase (decrease) if:
• The expected shares payable
were higher (lower); or
• The quoted Company equity
security price was higher
(lower).
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, 921,282 performance share rights (PSRs) were issued (for nil consideration) to
participants which convert to shares (for nil consideration) if targets are met. PSRs do not entitle the holder to receive dividends or other
distributions, or vote in respect of EROAD Limited ordinary shares, although under the terms of the plan an additional number of shares
will be issued on conversion of fully vested PSRs to reflect dividends paid to EROAD Limited shares prior to exercise. On becoming
exercisable, each PSR entitles the holder to one fully paid ordinary EROAD Limited share, subject to adjustment in accordance with the
plan rules and the performance hurdles, ranking equally with all other EROAD Limited ordinary shares.
For the FY20 LTI plan, the award is linked to growth in EROAD’s total contracted units (TCUs) between 1 April 2019 and 31 March
2022. Participants bear the tax liability of the LTI plan. The Board retains discretion over the final outcome of PSR payments, to allow
appropriate adjustments where unanticipated circumstances may impact performance over the measurement period.
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
35
NOTE 21 SHARE BASED PAYMENTS (CONTINUED)
FY22 Performance Share Rights
Under the FY22 Long Term Incentive (LTI) plan, 145,671 performance share rights (PSRs) were issued (for nil consideration) to participants
which convert to shares (for nil consideration) if targets are met. PSRs do not entitle the holder to receive dividends or other distributions,
or vote in respect of EROAD Limited ordinary shares, although under the terms of the plan an additional number of shares will be issued
on conversion of fully vested PSRs to reflect dividends paid to EROAD Limited shares prior to exercise. On becoming exercisable, each
PSR entitles the holder to one fully paid ordinary EROAD Limited share, subject to adjustment in accordance with the plan rules and the
performance hurdles, ranking equally with all other EROAD Limited ordinary shares.
For the FY22 LTI plan, the award is linked to the participant completing remaining employed for two years following the completion date.
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 Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
36
EROAD LTI Plans
Grant date/employees
entitledShares granted Vesting conditions
Vesting
period
Apr-17Sep-18
Shares granted to key
management personnel
EROAD LTI Plan II (FY18) - 197,890
• 3 years service from grant date
• Company’s Total Shareholder Return (TSR) must exceed the median TSR of the
NZX50 Group over the Relevant Assessment Period (1 April 2017 to 1 April 2021).
• progressive vesting scale for performance between 50th and 75th percentiles, and
100% vesting if company performance is equal to or above the 75th percentile of the
NZX50 Group.
2.5 years
EROAD LTI Plan II (FY19) - 85,276
• 3 years service from grant date
• Company’s Total Shareholder Return (TSR) must exceed the median TSR of the
NZX50 Group over the Relevant Assessment Period (1 April 2018 to 1 April 2021).
• progressive vesting scale for performance between 50th and 75th percentiles, and
100% vesting if company performance is equal to or above the 75th percentile of the
NZX50 Group.
2.5 years
EROAD US President
Incentive Scheme
490,000 -
• 3 years service from grant date
• Meet minimum targets for key operational metrics: Total Contracted Units, Average
Revenue per Unit, Cost of Customer Acquisition Payback and Renewal Rates.
• Each years performance is measured on a weighted calculation of percentage
achieved vs. target for operational metrics.
• The percentage of shares to vest is calculated based on the average of each years
weighted percentage achieved. If the vested amount is less than 60% all shares will be
forfeited.
3 years
Shares granted to other
employees
EROAD LTI Plan II (FY18) - 87,995
• 3 years service from grant date
• Company’s Total Shareholder Return (TSR) must exceed the median TSR of the
NZX50 Group over the Relevant Assessment Period (1 April 2017 to 1 April 2021).
• progressive vesting scale for performance between 50th and 75th percentiles, and
100% vesting if company performance is equal to or above the 75th percentile of the
NZX50 Group.
2.5 years
EROAD LTI Plan II (FY19) - 25,977
• 3 years service from grant date
• Company’s Total Shareholder Return (TSR) must exceed the median TSR of the
NZX50 Group over the Relevant Assessment Period (1 April 2018 to 1 April 2021).
• progressive vesting scale for performance between 50th and 75th percentiles, and
100% vesting if company performance is equal to or above the 75th percentile of the
NZX50 Group.
2.5 years
490,000 397,138
NOTE 21 SHARE BASED PAYMENTS (CONTINUED)
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
37
EROAD Performance Share Rights
Grant date/employees
entitledShares granted Vesting conditions
Vesting
period
Oct-19Jul-21Oct-21Dec-21
Performance Shares
Rights granted to key
management personnel
FY20 Performance
Share Rights
374,238 72,043 - -
• 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 - - 78,765
• 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
FY22 Performance Share
Rights
- -
145,671
-
• 2 years service from grant date2 years
770,474 72,043 145,671 78,765
Measurement of fair value
The fair value of the shares issued under the EROAD LTI plans during the year ended 31 March 2022 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
20222021
Outstanding at 1 April 732,741874,557
Granted during the period--
Forfeited during the period(275,590)(141,816)
Vested during the period(457,151)-
Outstanding at 31 March -732,741
NOTE 21 SHARE BASED PAYMENTS (CONTINUED)
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
38
EROAD Performance Share Rights
20222021
Outstanding at 1 April 596,186770,474
Granted during the period150,808-
Forfeited during the period(73,506)(174,288)
Vested during the period--
Outstanding at 31 March 673,488596,186
EROAD Performance Share Rights
20222021
Outstanding at 1 April --
Granted during the period145,671-
Forfeited during the period--
Vested during the period--
Outstanding at 31 March 145,671-
During the year-ended 31 March 2022 an amount of $2M (2021: $0.9M) 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
Coretex NZ Limited New Zealand 100 Transport Technology & SaaS
Coretex Australia Pty Limited Australia 100 Transport Technology & SaaS
Coretex USA Inc United States of America 100 Transport Technology & SaaS
Coretex Telematics Limited Canada 100 Transport Technology & SaaS
Coretex Limited New Zealand 100 Transport Technology & SaaS
Imarda Pty Limited Australia 100 Not Trading
Imarda Asia Pte Limited Singapore 100 Not Trading
Coretex Telematics Limited British Columbia 100 Not Trading
International Telematics Corporation United States of America 100 Not Trading
International Telematics Holdings Limited New Zealand 100 Not Trading
Key management personnel compensation comprised:
20222021
$M’s$M’s
Short-term employee benefits 3.4 3.0
Share-based payments 1.0 0.8
4.4 3.8
NOTE 21 SHARE BASED PAYMENTS (CONTINUED)
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
39
(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
20222021
$M’s$M’s
Michael Bushby (Resigned 1 July 2020)-0.01
Anthony Gibson0.110.06
Candace Kinser (resigned 24 July 2020)-0.02
Graham Stuart (Chair)0.150.12
Susan Paterson0.110.08
Barry Einsig0.150.13
Sara Gifford (appointed 31 March 2022)--
0.520.42
No additional fees were paid to any Directors for consultancy work provided to the Company (2021: None paid).
(d) Remuneration of Executive directors
20222021
$M’s$M’s
Salary and bonus 1.2 0.9
Share-based payments 0.3 0.1
1.5 1.0
Additional fees were paid to an executive director for consultancy work provided to the Company of $0.067M (2021: None paid).
(e) Transactions with related parties
20222021
$M’s$M’s
Streamline Business NZ Limited 0.2 -
0.2 -
EROAD Group contracts with Streamline Business NZ Limited for outsourcing work, the company has a common director with EROAD. All
transactions with these related parties are priced on an arm’s length basis.
NOTE 23 CAPITAL COMMITMENTS
As at 31 March 2022 the Group had confirmed purchase orders open with its third party manufacturer of hardware units amounting to
$20.7M (2021: $5.1M).
The large increase in capital commitments is mainly a result of the inclusion of Coretex’s capital commitments ($12.1M) and to due an
increase of inventory lead time.
NOTE 22 RELATED PARTY TRANSACTIONS
(CONTINUED)
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
40
NOTE 24 CONTINGENT LIABILITIES
At 31 March 2022 there were no contingent liabilities (2021: nil)
NOTE 25 NET TANGIBLE ASSETS PER SHARE
2022
Restated
2021
$M’s$M’s
Net assets (equity) 247.7 102.1
Less intangibles(228.4)(40.6)
Total net tangible assets 19.3 61.5
2022
Restated
2021
$$
Net tangible assets per share ($) 0.17 0.75
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 (2021: Nil).
EROAD Financial Statements 2022 | NOTES TO THE FINANCIAL STATEMENTS
41
42EROAD Financial Statement 2022 | AUDITOR’S REPORT
© 2022 KPMG, a New Zealand Partnership and a member firm of the KPMG global organization 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 consolidated financial
statements of EROAD Limited
(the ’Company’) and its subsidiaries (the
'Group') on pages 4 to 40 present fairly in all
material respects the Group’s financial
position as at 31 March 2022 and its financial
performance and cash flows for the year
ended on that date in accordance 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 2022;
— 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.
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 tax compliance, tax due diligence and tax advisory
and other assurance services. Subject to certain restrictions, partners and employees of our firm may also deal with the
Group on normal terms within the ordinary course of trading activities of the business of the Group. These matters
have not impaired our independence as 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 $1.2 million determined with reference to a benchmark of Group’s revenue. We chose the benchmark because,
in our view, this is a key measure of the Group’s performance.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
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.
43EROAD Financial Statement 2022 | AUDITOR’S REPORT
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 are
recognised over the contract term.
During the year the Group acquired Coretex Limited
(‘Coretex’) which increased the volume and types of
contractual arrangements through the newly
acquired business.
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:
— Obtaining Coretex’s customer contracts and trading
terms and evaluating whether management’s revenue
recognition assessment is appropriate and in accordance
with relevant financial reporting standards;
— 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.
Capitalisation of Development costs
Refer to Note 16 of the consolidated financial
statements.
The Group has reported a development asset of
$88.3 million (2021: $36.9 million). 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. 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.
We focused on this area due to the quantum of the
development costs capitalised and judgement
involved.
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
management 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.
We did not identify any factors that were materially
inconsistent with management’s overall conclusions.
44EROAD Financial Statement 2022 | AUDITOR’S REPORT
The key audit matter How the matter was addressed in our audit
Impairment of non-current assets
Refer to Note 16 of the consolidated financial
statements.
During the year the Group recognised goodwill,
brand and customer relationships of $105.1 million,
$3.3 million and $28.7 million respectively arising
from the Coretex acquisition. At the balance date
the Group’s non-current assets additionally include
property, plant and equipment of $61.7 million
(2021: $34.7 million), and capitalised development
costs with a carrying value of $88.3 million (2021:
$36.9 million). Capitalised development costs
include a technology asset of $37.2 million that was
recognised on the acquisition of Coretex.
The non-current assets are allocated to three cash
generating units (‘CGUs’) representing the three
core markets the Group develops and markets its
products (New Zealand, Australia and North
America).
Goodwill has been allocated to each of these CGUs,
and as a result the carrying value of each CGU must
be tested for impairment annually.
The recoverable amounts of the CGUs, which have
been determined based on their value in use, have
been derived from discounted forecast cash flow
models. These models use several key
assumptions, including estimates of future
contracted units and average rate per unit (‘ARPU’),
operating costs, terminal value growth rates and the
weighted-average cost of capital (discount rate)
relevant to each market.
In addition, a specific impairment review of Group’s
capitalised development costs by project was
performed to assess whether following the
acquisition of Coretex these projects would
continue to provide economic value to the business.
The impairment testing of non-current assets is
considered to be a key audit matter due to the
complexity of the accounting requirements and the
significant judgement required in determining the
assumptions used to estimate the recoverability of
these assets.
We assessed management’s impairment testing of non-
current assets by performing the following procedures:
— Enquiring of the executive management to corroborate
an understanding of the Group’s products, markets and
strategic opportunities following the acquisition of
Coretex. Taking this into account we considered whether
the existing products and capitalised development costs
require specific impairment.
— Obtaining a value-in-use model for each CGU and
assessing the methodology, underlying cash flows and
key assumptions made including:
- Using our corporate finance specialists to challenge
the reasonableness of the weighted average cost of
capital and terminal growth rates;
- 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, and discount rates.
We did not identify any factors that were materially
inconsistent with management’s overall conclusions.
Acquisition of Coretex
Refer to Note 2(i) of the consolidated financial
statements.
The Group acquired 100% of Coretex with effect
from 1 December 2021.
Our audit procedures in this area included:
— Assessing whether the business combination has been
appropriately accounted for in accordance with applicable
financial reporting standards and reflects terms and
conditions of the sale and purchase agreement;
45EROAD Financial Statement 2022 | AUDITOR’S REPORT
The key audit matter How the matter was addressed in our audit
As a result of the acquisition, the Group recognised
definite life intangible assets of $69.2 million and
goodwill of $105.1 million.
The accounting for this transaction is complex due
to the significant judgements and estimates that are
required to determine the values of the
consideration transferred and the identification and
measurement of the fair value of the assets
acquired and liabilities assumed.
Due to the size and complexity of the acquisition,
we considered this to be a key audit matter.
— Involving our own valuation specialists to assist with
assessing the Group’s identification of acquired assets
and assumed liabilities, challenging the methodologies
applied and valuations produced, in particular the key
assumptions used to determine fair values of:
- The customer relationships intangible asset, which
included reconciling key inputs such as customer
retention rates, number of connected units and
ARPU to underlying reports, and challenging the
discount rate;
- The technology intangible asset, which included
agreeing the historical costs to the past R&D grant
claims and audited pre-acquisition financial
statements;
- The brand intangible asset, which included
challenging the royalty rate applied and assessing
the sensitivity of the brand valuation to changes in
the royalty rate assumption.
— Verifying the cash consideration paid to date;
— Challenging the fair value of the contingent
consideration, which included assessing the likelihood of
achieving performance targets by agreeing amounts to
actual performance and approved forecasts; and
— Evaluating the adequacy of the financial statement
disclosures.
We did not identify any factors that were materially
inconsistent with management’s overall conclusions, while
noting the tax payable and deferred tax liability have been
recognised on a provisional basis.
Other information
The Directors, on behalf of the Group, are responsible for the other information included in the entity’s Annual Report.
Other information may include the Chairman’s and Acting 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.
The Annual Report is expected to be made available to us after the date of this Independent Auditor's Report. Our
responsibility is to read the Annual Report when it becomes available and consider whether the other information it
contains is materially inconsistent with the consolidated financial statements, or our knowledge obtained in the audit,
or otherwise appear misstated. If so, we are required to report such matters to the Directors.
46EROAD Financial Statement 2022 | AUDITOR’S REPORT
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
26 May 2 022
47EROAD Financial Statement 2022 | AUDITOR’S REPORT
EROAD Annual Report 2022 | REGULATORY DISCLOSURES48
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26 May 2022
Results for announcement to the market
Name of issuer EROAD Limited
Reporting Period 12 months to 31 March 2022
Previous Reporting Period 12 months to 31 March 2021
Amount (000s) Percentage change
Revenue from continuing
operations
$113,555 24%
Total Revenue $114,875 25%
Net profit/(loss) from
continuing operations
$(10,948) -528%
Total net profit/(loss) $(9,628) -477%
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Refer investor presentation and financial statements
Authority for this announcement
Name of person authorised
to make this announcement
Margaret Delany
Contact person for this
announcement
Margaret Delany
Contact phone number 021 558 262
Contact email address Margaret.delany@eroad.com
Date of release through MAP 26/05/2022
Audit
ed financial statements for the year ended 31 March 2022 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
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.