AoFrio releases audited results for FY2022
www.aofrio.com
WT 9747
P: + 64 9 477 4500 E: info@aofrio.com
® is a registered Trademark of AoFrio Ltd
A: 21 Arrenway Drive, Rosedale, Auckland 0632, New
Zealand PO Box: 302-533 North Harbour, Auckland 0751,
New Zealand
27 February 2023
Market Announcement
For immediate release
AoFrio announces record annual revenue and establishes
foundation for expansion
AoFrio, a leading global refrigeration technology business, is today releasing its audited results for the year
ending 31 December 2022.
FY22 results:
o Revenue up 16% year-on-year to $74.3 million, a record annual revenue
o Gross margin was stable year-on-year at 27.7%, compared to 27.8% in FY21
o EBITDA down 39% year-on-year to $1.6 million in FY21
o NPAT $3.3 million, down $2.2 million from FY21
Gottfried Pausch, Chairman of AoFrio, says after achieving a record annual revenue, AoFrio is trending towards
becoming a $100 million revenue company and expects to achieve an EBITDA of around $3.5 million in 2023.
“In 2022 we made significant progress against our company strategy, and we’re pleased with the results,
particularly in light of the challenging conditions. Supply chain disruptions had a significant effect on FY22,
particularly in the first half of the year.
“Without these challenges revenue would have been higher. As we navigated these challenges, we continually
made decisions to advance our business strategy for long-term growth, including investing in our people,” says
Pausch.
Operating expenses in FY22 were in line with AoFrio’s business plan at $19 million, 27% higher than FY21.
This increase in cost is predominately due to staffing costs to expand headcount to fuel growth, as well as
adjusting some existing salaries to navigate global labour market pressures.
Operating cash flow for the year was a $4.4 million outflow, largely due to inventory build to support the high
revenue in Q4 2022 and agreed customer payment terms. Cash on hand was $2.8 million, compared to $6.0
million at December 2021. Over that period, net cash reduced from $4.0 million to net debt of $1.1 million.
AoFrio’s forecasts for 2023 show the company is sufficiently funded to execute its current business plans and
intends to fund growth internally.
Growth Strategies
Greg Balla, CEO of AoFrio, says in 2022 the business built its new brand platform, established foundations for
new verticals, while consolidating AoFrio as a technology business for the future.
“We started January 2022 as Wellington Drive and ended the year as AoFrio. More than a new visual brand, this
change demonstrates our new outlook.
WT 9747
A: 21 Arrenway Drive, Rosedale, Auckland 0632, New
Zealand PO Box: 302-533 North Harbour, Auckland 0751,
New Zealand
P: + 64 9 477 4500 E: info@aofrio.com
® is a registered Trademark of AoFrio Ltd.
“Our heritage is hardware, and in recent years we have made strides in IoT software in the bottle cooler market,
but we are now diversifying beyond this to underpin our bold growth plans. We are initially focusing on the ice
cream, food service, beer, and medical markets.
“Our business plan focuses on broadening sales of our current product range to new customers, plus selling
recently developed and new products to existing and adjacent markets,” says Balla.
During FY22 AoFrio launched, via a channel partner, its first food services offering and in December received its
first order from a global ice cream company.
“During December we made our first significant sale of the new Network Pro ‘always-on’ connected device and
the Connect Monitor battery-operated device, targeted at the large retrofit market.
“By the end of the year, we also had 12 large retrofit trials underway with customers in North and South America,
as well as Europe and Asia,” says Balla.
To support growth plans, AoFrio plans to increase operating costs by $6m and capital expenditure by $2.5m in
2023.
However, AoFrio remains cautious about its base demand, given the elevated global macroeconomic risks from
rising interest rates that could slow global growth and the team continues to take a measured approach to all
additional investment until customers confirm demand.
“In FY22 we made significant progress against our company strategy and look forward to growing further in 2023.
Thank you to the whole AoFrio team who made this year possible and thank you our shareholders for their
ongoing commitment to the future of the company,” says Balla.
Authorised by:
Board of Directors of AoFrio Limited
Ends
*EBITDA (i.e., Earnings before interest, taxation, depreciation, amortisation, and impairment) is a non-
GAAP earnings figure that equity analysts tend to focus on for comparable company performance
analysis. AoFrio considers it a valuable financial indicator because it avoids the distortions caused by
differences in amortisation and impairment policies. Contacts
Greg Balla Howard Milliner
Chief Executive Officer Chief Financial Officer
Phone + 64 21 938 601 Phone +64 27 587 0455
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Annual Report 2022
AoFrio
Annual Report
2022
Annual Report 2022
2
3
Starting January as Wellington Drive and ending December as AoFrio,
FY22 has been a year of establishing foundations for new verticals, while
consolidating AoFrio as a technology business for the future.
After achieving a record annual revenue, we’re trending towards
becoming a $100 million revenue company in 2023.
While our legacy is unashamedly in motors, we’re now delivering
our vision for IoT to the global bottle cooler market.
From here we’ve mapped out our next frontier across new markets,
taking us into the ice cream, food service, beer,
and medical markets.
We’re delivering cooler intelligence and a connected advantage
to our customers.
Results at a glance
75%
Employee Engagement Score
19
New roles to resource long term growth
AoFrio LtdAnnual Report 2022
Revenue up 15.7% y-o-y to
+40
Customer NPS
beating benchmark of +25
$1.6 million
EBITDA down 39% y-o-y to
$3.3 million
NPAT
down $2.2 million
45
AoFrio LtdAnnual Report 2022
Content
01Chair and CEO letter
06
10
18
25
30
32
38
42
44
48
105
02
03
04
05
06
07
08
09
10
11
Creating value
Our offering to customers
Our people
Growth strategies
Our sustainable future
Our performance
Directors
Executive management
Financial Statements
Contacts
67
AoFrio LtdAnnual Report 2022
During the last year, AoFrio made significant progress against our company
strategy and we are delighted to announce we achieved a record revenue
year in FY22 as a result.
We started 2022 as Wellington Drive, and after a successful rebrand we’re
ending the year as AoFrio. More than a new visual brand, this change
demonstrates our new outlook.
Our Kiwi heritage is a powerful differentiator for customers around the globe.
We’re held in high regard for unearthing powerful customer outcomes through
the quality of both our software and hardware, plus the calibre of our people.
FY22 wasn’t without its challenges, but our new brand and business strategy
are delivering.
Financial performance
Revenue for the year ending 31 December 2022 was NZ$74.3 million, a
15.7% increase on FY21. Given the challenging conditions of FY22, we are
particularly pleased with this result.
Without the supply chain challenges we experienced, revenue would have
been higher.
At year-end, we achieved our largest December ever in terms of revenue,
demonstrating the success of how we managed these challenges.
Although December’s performance was very strong and factory production
was at near capacity, revenue was lower than previously forecast. This
was due to delays in customers signing off product specifications and the
Company’s inability to secure shipping space until early January for
some orders.
EBITDA was $1.6 million. This fell short of initial forecast due to the lower
revenue. NPAT was $3.3 million, compared to $5.4 million in FY21, with both
years affected by tax credits to recognise tax losses.
During the year, our operating expenses increased
Chair and CEO letter
Gottfried Pausch
Chairman
Chief Executive Officer
Greg Balla
to $19 million. This was a 27% increase on FY21,
primarily due to funding additional headcount to fuel
long-term growth and to a reduction in capitalisable
development time.
Gross margin was stable year-on-year, at 27.7%,
compared to 27.8% in FY21.This was a good result in
light of supply chain issues during the year. Due to these
disruptions, we spent an additional $1.2 million buying
components on the spot market. This, along with higher
shipping costs, could not always be passed on and
constrained gross margin.
Operating cash flow for the year was a $4.4 million
outflow, largely due to inventory build to support the high
revenue in Q4 2022 and agreed customer payments
terms. Cash on hand was $2.8 million, compared to $6.0
million at December 2021.
Our forecasts for 2023 show we have sufficient
internally-generated funds to execute our business
plans.
Business update
Supply chain challenges
Supply chain disruptions had a significant impact on
FY22, particularly in the first half of the year.
AoFrio’s engineering team had to move off new product
development projects to redesign our existing products
to allow us to swap to available components.
This was vital work to keep supplying as many
customers as possible. But it reduced our ability to
develop new products, something we are refocusing on
in FY23.
For around six weeks in the middle of the year we could
not manufacture any products, and it took us until the
end of December to largely clear this backlog of orders.
As a result, revenue from motors declined by 3.0%
compared to FY21, with $37.8 million coming from
legacy ECR motors, as well as newer ECR 2 and
ECF 2 motors.
We are still actively managing some supply issues,
but our actions in H1 lessened the impact of these
challenges in H2 and put us in a good position for FY23.
Investing to grow IoT
Our ecosystem of hardware, IoT applications, and Cloud
services put our customers in control of their refrigeration
and freezer fleets, delivering significant cost reductions,
service, and sales efficiencies.
During the year, AoFrio’s sales teams made good
progress selling IoT solutions. In 2022, IoT product sales
grew by 45% to 49% of 2022 revenue, compared to 39%
of revenue in 2021.
In December, we made the first significant sales of our
new Network Pro ‘always-on’ connected device and our
AoFrio Monitor battery-operated device, targeted at the
large retrofit market.
At the end of 2022, we also had 12 large retrofit trials
underway with customers in North and South America,
as well as Europe and Asia.
To enhance the capabilities of our IoT offering for the
long term and spearhead our entry into new markets,
we welcomed Genevieve Dawick as Vice President
of Product and Rami Elbeltagi as Vice President of
Engineering during the year.
Both are heavily involved in developing and delivering
new products and solutions to keep us at the forefront
of rapidly developing markets to grow profitability and
increase recurring revenue.
Refocusing on new product development
For most of the year, the engineering team focused on
existing products due to component shortages. In the
8
AoFrio Ltd
9
Annual Report 2022
Summary
2022 has been a year of establishing foundations for
new verticals, while consolidating AoFrio as a technology
business for the future.
We have navigated considerable supply chain disruptions
which negatively impacted our top and bottom line, but
we have also advanced our business strategy for the
long-term.
Thank you to the whole AoFrio team who made this year
possible and thank you to our shareholders for their
ongoing commitment to the future of the company.
Gottfried Pausch
Chairman
Greg Balla
Chief Executive Officer
fourth quarter, they re-focused on product enhancement
and development. AoFrio’s customer range beyond
bottle coolers is a focus for FY23.
We are initially focusing on the ice cream, food service,
beer, and medical markets. During FY22, we launched,
via a channel partner, our first food services offering and
in December received our first order from a global ice
cream company.
During the year, we also mapped out products for
temperature maintenance in food preparation, service,
and storage.
Our heritage is hardware, and in recent years we have
made strides in IoT software in the bottle cooler market,
but we are now diversifying beyond this market to
underpin our bold growth plans.
Rebrand
In 2022, one of our biggest achievements was delivering
our new brand. Off the back of comprehensive research,
we developed AoFrio.
Since unveiling the new brand in early September, we
have received positive feedback from customers and
internal stakeholders.
The marketing team has updated marketing and sales
assets across eight languages and will finish the website
rebuild by the end of February 2023.
ESG action
By their very nature, our software and hardware actively
supports our customers to reduce energy consumption.
However, our commitment to environmental, social, and
governance (ESG) considerations goes beyond this.
In 2019, we received a silver award from Ecovadis,
putting us in the top 15% of similar organisations for our
ESG systems and processes. However, in late 2022 we
obtained a further independent view and are broadening
our ESG commitment and action, as we see this as core
for our ongoing business success.
This year we began developing our sustainability
strategy and adopted a formal framework for ESG
reporting. This will include setting targets and metrics
with climate change reporting being the near-term
priority.
We engaged EY to support our ESG journey and in 2022
completed a materiality study to determine the top ten
ESG factors across our business.
Outlook
Looking ahead, we are forecasting annual revenue
growth exceeding 30% in FY23, trending AoFrio towards
becoming a NZ$100 million revenue company.
Our longer-term business plan also envisages annual
revenue growth of 20% to 30% and we look forward
to explaining this long-term plan in more detail at an
investor strategy day in 2023.
Our 2023 business plan focuses on broadening sales of
our current product range to new customers, plus selling
recently developed and new products to existing and
adjacent markets.
In the next year, we expect to progress towards
expanding into ice cream, food service, beer, and
medical markets while retaining a leading position in the
new and retrofit bottle cooler markets.
We have hired talented people to add to our skilled team
and continue to invest in our people to ensure we stay at
the forefront of innovation in our markets. We have set
in place lean and agile processes and have defined our
next horizon of growth across new markets.
We remain cautious about our base demand, given
elevated global macroeconomic risks from rising
interest rates that could slow global growth and impact
future revenue.
So, while we plan to increase our operating costs by
$6 million and have capital expenditure of $2.5 million in
2023, we will take a measured approach to all additional
investment until customers confirm demand.
EBITDA for FY23 is expected to be around $3.5 million,
based on US$/NZ$ exchange rate of 0.6445.
1011
AoFrio LtdAnnual Report 2022
Our performance
$74.3 million
$1.6 million
Revenue
EBITDA
$3.3 million
NPAT
Given the challenging operating conditions of FY22, the business achieved solid
financial performance and its highest NZD revenue to date.
Supply chain challenges constrained revenue during the first half of the year. During
this time, we made deliberate decisions to position the business long-term. By
year-end, the business achieved its largest December ever in terms of revenue
and grew year-on-year revenue by 15.7%.
During Q2, we had a six-week period where we could not manufacture products
due to component shortages. This restricted our ability to consistently supply
products to certain customers and negatively impacted revenue.
EBITDA for the year was $1.6 million, falling short of initial forecasts. Although
December’s performance was very strong and factory production was at near
capacity, revenue for the month was lower than expected, partly due to order and
shipping delays.
Operating expenses were up compared to FY21, primarily from growing headcount
to drive our business strategy.
Based on forecast cashflows, we are sufficiently funded to execute our current
business plans and intend to fund growth internally.
1213
AoFrio LtdAnnual Report 2022
Revenue, EBITDA and NPAT
New Zealand
Turkey
Brazil
Mexico
South America
EMEA
APAC
North America
AoFrio offices
Revenue grew to $74.3 million in FY22, up 15.7% on FY21.
EBITDA was $1.6 million, $1.0 million lower than FY21 due
to higher operating expenses. Non-recurring items impacted
EBITDA in FY21. Adjusted EBITDA in that year was $4.0
million, so the FY22 result is $2.4 million lower.
FY22 NPAT was $3.3 million, down $2.2 million. This includes
a non-cash tax credit of $4.5 million to further recognise tax
losses expected to be utilised over the next five years.
We experienced revenue growth across all regions, except
South America due to increased competitive pressure and
tariffs constraining our growth during the year.
However, supply chain challenges hampered growth in
all regions.
IoT revenue grew by 45% year-on-year to $36.5 million
and revenue from motors declined by 3.0% compared to
FY21, to $37.8 million.
This shifting contribution between motors and IoT revenue is
reflective of AoFrio’s strategy to grow IoT revenue, but supply
chain challenges within manufacturing also impacted it.
The business achieved its largest December month in terms
of revenue on record. Revenue was $10.2 million, compared
to $6.8 million the prior year and $5.9 million in January 2022.
Despite the record, December revenue was lower than
previously forecast. As a result, EBITDA for the year fell short of
what we had guided in November 2022, at $1.6 million.
Lower December revenue resulted from delays in customers
signing off product specifications which impacted production for
the month, and not being able to secure shipping space until
early January for some orders. This revenue will be recognised
in Q1 FY23.
$9.5m
16.0%
$7.6m
13.6%
$50.4m
19.4%
$6.8m
36.8%
1415
AoFrio LtdAnnual Report 2022
Cashflow and capital on hand
Operating cash flow in FY22 was an outflow of $4.4
million, compared to an inflow of $4.0 million in FY21.
Cash on hand dropped from $6.0 million in December 21,
to $2.8 million at the end of FY22. Over that period, net
cash reduced from $4.0 million to net debt of $1.1 million.
Based on the cashflows we are forecasting, we are
sufficiently funded to execute our current business plans
and intend to fund growth internally.
$4.4 million
$2.8 million
Operating cash flow outflow
Cash on hand as at 21 December
Operating expenses
105
$1.4
million
Team size grew by 19 to
Capitalisable product development time
Exchange rate
AoFrio has a strong natural hedge position between
revenues and costs.
The Group’s revenue is mainly priced and invoiced in
US$’s, and all product costs are similarly US$ based.
However, NZD reported revenue and gross margin
are sensitive to the US$/NZ$ exchange rate, which
fluctuated significantly over FY22.
Each 1c decrease in the NZD/USD exchange rate has
an estimated $0.4m postive impact on EBITDA, although
we do partially hedge our exposures.
Across the financial year, the weighted average US$/
NZ$ exchange rate was $0.635 compared to $0.708 in
FY21.
Operating expenses were in line with our business plan.
For the 12 months ending 31 December 2022, expenses
were $19 million, 27% higher than FY21.
This increase in cost is predominately due to staffing
as we expanded headcount to fuel growth and adjusted
salaries of some existing roles to navigate global labour
market pressures.
Most of our engineering time in FY22 was spent on
component swap-out work at the expense of capitalisable
new product development. This position progressively
improved during the second half of the year, but our
engineering team still spent less time on new product
development than usual.
Expenses by type, comparing FY21 and FY22
Staff and contractor costs
Insurances
Travel
Information systems
Capitalised development
FY21
FY22
15,113
800
(2,057)
96
461
Other
2,445
1,078
(1,382)
754
509
3,042
13,307
17
Annual Report 2022
16
AoFrio Ltd
“
Faced with supply chain issues
impacting componentry availability,
shipping and customer orders,
we’re proud to have achieved our
highest annual NZD revenue to
date. Alongside this we’ve set the
business up for long-term growth
and are capable of funding
growth internally.
Chief Financial Officer and
Company Secretary
Howard Milliner
Gross margin of 27.7% was stable year-on-year,
compared to 27.8% in FY21, a good result in light of
supply chain issues.
To navigate the supply chain disruption, we purchased
some component parts on the spot market at a higher
than our usual component cost. This, along with higher
shipping costs, could not always be passed on to
customers.
To manage these additional expenses, we increased
prices on our AoFrio SCS for the first time since
launching it in 2016. We also increased pricing on motors
during 2022.
Gross margin
27.7%
FY22 Gross margin
27.7%
FY22
27.8%
FY21
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PURPOSE
Through innovative technology, we
unearth powerful customer
outcomes.
1819
AoFrio LtdAnnual Report 2022
Creating value
Our business model
AoFrio is a global refrigeration technology business. We
help ensure customers provide food and drinks that are
fresh, safe, and at the right temperature at point of sale.
We supply advanced electronic IoT solutions that
include cloud software to deliver actionable insights and
advanced electronics to capture and communicate data
to the cloud. We help refrigeration original equipment
manufacturers (OEMs) and food, beverage, and retail
companies across the globe reduce their costs, increase
sales, and become more sustainable.
There are more than 500 million commercial refrigeration
units in operation worldwide. Our ongoing success lies
in our ability to unearth powerful business outcomes and
create a better, more sustainable world together with our
customers.
We are growing into a global hardware-enabled,
full-service SaaS provider.
Our business strategy is already delivering, but there
are significant growth opportunities in the future. We
are expanding into new markets and verticals and are
refocusing on R&D to launch new products.
20
AoFrio Ltd
21
“
Our business starts with people,
and we are unified behind a new
strategy and vision. To fuel our
growth, we’re upskilling our people,
investing in new roles, inducting
people efficiently and listening to
them to ensure they are set up for
success in their roles and as a
team overall.
Chief People Officer
Angela Lewis
Annual Report 2022
23
Annual Report 2022
22
AoFrio Ltd
“
At this nexus of our company, it
was only right to create a new
brand that showcases what we’ve
evolved into. Our new brand and
marketing strategy gives us the
platform to have better, more
informed conversations with
our customers.
Chief Customer Officer
David Burden
Rebrand
As we evolve into an innovative hardware-enabled SaaS
company, we identified that the old Wellington Drive
brand didn’t fit our new outlook.
As a result, in 2021 we invested in a comprehensive
programme of research to consult with clients and
shareholders, as well as people within our business.
Through this research we learned our Aotearoa heritage
is a powerful global differentiator. We also learned we’re
held in high regard for unearthing powerful customer
outcomes through both our software and hardware, and
the calibre of our people.
To reflect this evolution, we developed a new brand
that showcases the value we add to companies around
the world. In the final quarter of the year, we rebranded
and named ourselves AoFrio, with ‘Ao’ being Te Reo for
world and ‘Frio’ meaning cold in Spanish.
Since unveiling the new brand in early September, we
have received strong positive feedback from customers
about this change and have experienced more than a
two-fold increase in LinkedIn engagement.
Customer loyalty metric
During the first half of the year, in the midst of supply
chain challenges, we calculated our net promotor score
(NPS) with customers.
NPS is a widely used customer loyalty metric that
registers the likelihood of customers recommending a
company on a scale of -100 to +100. We achieved an
industry-leading +40 score, versus a benchmark of +25
for B2B industrial companies.
This score was particularly pleasing considering the
supply chain challenges the team contended with during
the first half of the year.
Supply chain adaption
Through ongoing supply chain challenges during the
first half of the financial year, our team worked hard to
prioritise protecting customer relationships for the
long term.
We invested in redesigns of existing products, facilitated
variant product builds using alternative components,
and updated firmware and software to support these
alternatives.
Alongside componentry swap outs, we also increased
the volume of components we hold at any one time and
secured enough stock of key components to maximise
manufacturing capability during the second half of
the year.
During the year we purchased $2.0 million in inventory
of long lead time components as well as spot buying, to
protect supply as much as possible.
We are still actively managing supply issues for some
materials, but the action we took in H1 lessened the
impact of these challenges.
Since the first half of the year, freight costs have come
down and freight availability has improved, and we
anticipate these conditions will persist.
Another impact of supply chain disruptions is that some
customers ended the year with higher inventory positions
than usual due to over-ordering as they navigated global
supply constraints. This extra inventory is one of the
causes of lower than expected Q4 2022 revenue, but is
expected to be consumed in Q1 of FY23.
As we head into 2023, our engineering team will move
from component swap outs and refocus on innovation.
25
Annual Report 2022
24
AoFrio Ltd
“
2022 was the year for adaptation.
Our engineering teams validated,
tested and certified a number
of alternative components and
designs to give us more flexibility
to meet customer demand
in a constrained component
environment.
In parallel, we worked with
our manufacturing partners to
increase production throughput
and capacity which allowed us to
significantly clear our customer
order backlog by December.
Executive Vice President,
Operations
Marc Tinsel
Our offering to customers
We are firmly focused on meeting the needs of our
global customers. This translates for our global
customers across six deliverables:
Asset management
Our IoT technology supports leading food and beverage
manufacturers to better manage their refrigeration
assets. Our solutions help improve maintenance
efficiency and servicing, as well as reduce asset losses.
Through the development of our industry-leading AoFrio
IoT ecosystem, we support customers to actively monitor
their field equipment and reduce equipment loss. Our IoT
technology allows ongoing passive data acquisition and
has geolocation capability.
Manufacturers can monitor the performance of
each cooler, meaning they can improve their cooler
replacement cycle and make better use of their capital
budget.
During FY22, our engineering team advanced our
Network Pro offering. In the first quarter of FY23 we plan
to roll out additional functionality that enables Network
Pro to accurately determine its own location. This will
automate customers’ asset audits and dramatically
reduce costs by reducing field staff requirements.
Technical performance
Our technology allows remote diagnostics as well as
simplifying troubleshooting and collecting operational
data. This helps our customers identify, and then
rectify issues quickly, as well as improving preventive
maintenance scheduling.
During the financial year, we continued developing
firmware for our controllers that drive variable-speed
compressors. This is particularly relevant for the
European market. Through the control of both variable
speed fans and compressors, we can dramatically
improve a cooler’s electrical efficiency, saving power
consumption without compromising refrigeration
performance.
Coca-Cola Europacific Partner prepares, sells and
distributes 88 beverage brands serving approximately
100,000 retail customers in Australia.
Together, Coca-Cola Europacific Partners Australia
(CCEP) and AoFrio are creating an advanced ecosystem
for connected commercial refrigeration, capturing
real-time field data from their bottle coolers and
translating this into actionable insights.
The business case for this pioneering technology is
focused on reducing the cost of equipment repairs by
prediagnosing the likely fault with artificial intelligence,
which reduces the number of times a technician visits a
site and generates preventative maintenance alerts to
enable fridges to be repaired before they stop working.
Through the RFP process, CCEP searched for a partner
to supply a fully integrated hardware and analytics
system (one-stop-shop) with excellent customer service.
Delivering refrigeration technology that could endure
Australia’s extreme weather conditions was also an
essential factor.
After completing unit trials, CCEP is now rolling out
AoFrio’s comprehensive ecosystem of hardware, and IoT
solutions, which boasts the most extensive commercial
implementation of Network Pro across CCEP’s many tens
of thousands of branded bottle coolers in Australia.
Coca-Cola Europacific Partner – Australia
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Annual Report 2022
26
AoFrio Ltd
We also made progress in developing the SCS 800,
which will be our first controller with in-built cellular
capability. This will enable the controller to send data
to the cloud in real-time without relying on any
other products.
Commercial performance
Commercial refrigeration and coolers are a significant
capital expense, so it is crucial this investment delivers
the maximum return.
By implementing our AoFrio IoT ecosystem, our
customers collect a wide range of business intelligence.
We maximise equipment ROI by understanding activity
at each point of sale and identifying when coolers are
turning over less than optimal capacity. We identify
assets that aren’t paying for themselves and right-size
them, as well as upsize equipment to capture unmet
demand and increase revenue.
Operation management
Our AoFrio IoT ecosystem provides customers
with critical insights into the field operation of their
commercial refrigeration and cooler units. This helps
them improve sustainability, identify case contamination,
and reduce the risk of undesirable retailer behaviour.
Our AoFrio SCS is a sophisticated smart controller
that allows our customers to understand real energy
usage across its fleet in their customers’ stores. Clients
can be alerted to potential product quality or Hazard
Analysis and Critical Control Point (HACCP) issues and
better ensure their products are sold within the optimal
temperature range.
This is an area of focus for us in FY23 and we have
mapped out several opportunities, including food safety.
We are focused on how technology can automatically
monitor and ensure food sold at restaurants and other
retail establishments maintains the correct temperature
during preparation, service, and storage.
Consumer engagement
Our software solutions enable customers to engage
with consumers in new and innovative ways, increasing
sales and building brand loyalty. Via our ‘always-on’
technology, we help customers control their brand
“
We are the leaders in IoT for
refrigeration, delivering our
customers valuable insights
using sustainable, transformative
technologies.
We already have 1.5 million assets
under management, and know
there are millions more coolers,
new and existing, waiting to be
connected every year.
Vice President, Product
Genevieve Dawick
Andina Argentina’s goals was to reduce the loss of
coolers, deliver improved preventive maintenance, and
get commercial insights across its network.
After trialling AoFrio’s ecosystem of SCS controllers,
Monitors, and IoT ecosystem, including mobile cooler
fleet management software, Andina Argentina is now
rolling out the technology across its network.
Based on the success of the one-year trial, Andina
Argentina can measure a potential 10% decrease of
lost equipment. In addition, they can measure a 25%
decrease in customer centre calls, which reduces
response times for repairs by a full day and means their
coolers can be back selling cold drinks to consumers
more quickly.
Coca-Cola Andina – Argentina
AoFrio Ltd
29
Annual Report 2022
experience, offer personalised promotions, and digitally interact with individualised
consumers to influence purchasing decisions.
Customers can use our interactive ScreenSmarts solution to integrate customised,
interactive digital signage into food and beverage coolers.
Alongside our existing solutions, we have now defined our new planogram product.
A planogram is an optimised map of how products should be laid out in a cooler
or on a shelf to maximise sales. Our new product plans to digitise the planogram,
solving the delivery problem and allowing unique planogram designs for each store.
Customer engagement
Working in partnership with global food and beverage manufacturers, we continue
to develop leading solutions that provide our customers with a competitive edge to
gain retail floor space in an intensely competitive market.
Our AoFrio IoT ecosystem easily integrates with different platforms, meaning we
can place a world of data at the fingertips of sales teams, including detailed product
information and energy efficiency.
Planograms, specials, and new programmes can be easily communicated with
digital, on-demand technology.
Central America Bottling Corporation
Central America Bottling Corporation (CBC), with the largest beverage portfolio
in the region, wanted to improve their cooler asset traceability and stock
management.
CBC tested three connectivity solutions, looking for a system that could track
physical locations of assets, identify equipment failures and improve profits.
After thorough testing, CBC selected AoFrio’s cutting-edge ecosystem of
hardware, IoT applications, and Cloud services to put them in control of their
refrigeration and freezer fleets.
One of the appeals of AoFrio is a low effort required to capture data. The
ecosystem is designed to piggyback off CBC’s staff visiting point of sale.
It collects data via Bluetooth and by the end of the year will capture information
from 120,000 connected coolers across the region.
CBC has achieved 96% of the location and data collection of the AoFrio
Connected fleet. AoFrio’s ecosystem has also improved CBC’s asset traceability
to deliver savings. Prior to working with AoFrio, CBC lost on average 2.5% of its
coolers annually. Now that figure has dropped and has reduced as low as 1% in
some territories.
28
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AoFrio LtdAnnual Report 2022
Our people
To power these values and the business strategy that
sits alongside them, we’re focused on investing in the
right people and ensuring we set them up to succeed.
We added 19 new roles to the team in FY22, which were
evenly split across the business. We have reviewed our
salary bands to ensure we are well-placed to hire and
retain key staff in the current environment.
We also launched a series of initiatives to better support
and engage our people. These include:
• New recognition program to ensure we’re rewarding
people who demonstrate our values.
• New leadership development program to train our
emerging leaders.
• A senior leadership forum to engage leaders in the
business that aren’t executives and ensure we are
consulting and informing them appropriately.
• An employment assistant programme (EAP), so
team members can access confidential well-being
support.
• Developing our diversity and inclusion strategy,
which will roll out in 2023.
Our next area of focus is making sure that, amidst
growth, our onboarding processes provide direction and
bring the best out of new hires across the globe.
Real time engagement survey
In March 2022 we launched a real-time engagement
survey to provide live insights about how engaged the
team is. Engagement correlates to every business’
financial performance, so it’s important we understand if
we have the right culture to fuel growth.
The survey enables us to get feedback from the team
across the globe, as well as incorporate initiatives to
improve culture and set people up for success in
their roles.
We ran the survey again in November 2022 and
achieved an average engagement of 75%, compared
to 68% in March that year. This is a significant
endorsement of AoFrio’s people-focused workstreams.
145
4
Total team size by the end of FY23
Offices around the world
3
Distributors globally
Our core values
A better world together
Everything we do, we do passionately
to create a future we can be proud
of for people and the planet.
Thrive together
We each succeed when we all
succeed.
Explore together
Enthusiastically collaborate to
learn new things, be curious and
push the limits.
Alongside our rebrand, in 2022 we launched our new values as a business.
$58.8m / 2018
Revenue
$61.7m / 2019
Revenue
$36.9m / 2020
Revenue
$64.2m / 2021
Revenue
$74.3m / 2022
Revenue
2023 Strategy
We are forecasting annual revenue growth exceeding
30% in FY23, trending AoFrio towards becoming a
NZ$100 million revenue company.
Our 2023 business plan leverages our current product
range (AoFrio SCS, ECR motors) to new customers, as
well as recently developed products (Network Pro and
AoFrio Monitor) and new products under development for
existing and adjacent markets (bottle coolers, ice cream,
food service, beer, and medical).
To achieve this growth, we’re investing in new product
development and adding specialist skilled people. During
2023 we plan to increase headcount to 145, including five
roles within product and design, nine new roles within the
engineering team, and adding roles to customer teams in
every region.
As a result, operating costs will increase by $6 million,
and the 2023 budget also includes capital expenditure
of $2.5 million. All investments will be funded out of
operating cash flows and we forecast EBITDA for FY23
will be around $3.5 million.
Growth strategies
3233
$100m / 2023
Revenue
Achieving revenue growth
Trending AoFrio towards becoming
a NZ$100 million revenue company
and forecast EBITDA of around $3.5
million in 2023.
AoFrio LtdAnnual Report 2022
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AoFrio LtdAnnual Report 2022
New product development, verticals,
and markets
During FY22, AoFrio’s R&D teams were required
to focus on designing componentry swap outs to
enable manufacturing to continue amidst supply chain
component challenges. Late in H2, we were able to
increase the time allocated to R&D and advance critical
solutions to extend our customer range beyond
bottle coolers.
In December, we processed our first order from a global
ice cream company for a modified AoFrio Monitor suited
to freezers. This is a unique solution that addresses a
critical issue in the frozen products industry, where a
freezer’s inability to maintain its temperature can result in
thousands of dollars in product loss.
The real-time monitoring of product temperature is
critical to maintaining a profitable frozen product
business, and our AoFrio Monitor is the first of its kind.
In addition to this, we are also extending our services to
the draft beer business by developing a solution for beer
‘ice-banks’.
This solution is widely used in venues of all sizes in
LatAm and Europe. It maintains beer at the correct
service temperature while recording served volume,
carbonation, and sales statistics. This helps global
brands to maintain profitable outlets and the first trial
deployment is with a global brand in Mexico.
We also focus on temperature maintenance in food
preparation, service and storage. Food safety is more
important than ever, and in 2022 we mapped our
solution to monitor temperature across both hot and
cold appliances, providing detailed logging for local food
authority compliance monitoring.
During FY22, we also advanced a modern and stylish
web-based interface for key customer applications, with
the first release planned for 2023.
“
In FY22 28% of engineering
time was spent on research and
development. To push us into
new markets and verticals we’re
allocating 70% of engineering
time to R&D during FY23. This
will allow us to continuously work
on new and innovative solutions
throughout the year.
Vice President, Engineering
Rami Elbeltagi
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IoT growth plans
We’re focused on moving all customers from base
customers through to engaged customers. This moves
them from receiving standard reports to leveraging
our consumer engagement, Machine Learning, and AI
solutions as we build a portfolio of third-party solutions
that connect via APIs.
Moving customers up these levels of engagement is
expected to translate into additional recurring software
and professional services fees. IoT product sales grew
by 45% to make up 49% of 2022 revenue, compared to
39% in 2021.
Alongside moving customers up the maturity ladder to
generate more revenue from software sales, we also
focused on capturing the retrofit cooler market and
increasing the number of refrigeration units connected to
our cloud platform.
This is important as it grows our recurring software
revenue, which is our high margin business. At the
end of 2022 we had 12 large retrofit trials underway
with customers in North and South America, as well as
Europe and Asia.
Hardware and initial software fee
Recurring software feed and professional services revenue
Base
•Connected with standard
reports and alerts
Evolve
•Customised applications
•Increased fleet conectedness
•High data acquisition
Advanced
•Advanced analytics
•Business integration
•Notification and alerts
Engaged
•Machine Learning
•Consumer engagement
•Insights drive action
Moving from base to engaged
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AoFrio LtdAnnual Report 2022
Environmental, Social and Governance (ESG) factors
are critical to the long-term sustainability and success
of organisations.
It ranks as one of the highest factors of importance
in our internal engagement survey, showing our team
are committed to AoFrio’s social and environmental
responsibilities.
Whilst our sustainability action is driven by our internal
team, we are also working with industry experts to
ensure we build a leading, sustainable organisation that
our team, customers, and shareholders are proud to be
part of.
In 2022 we engaged an international professional
services firm, EY, to conduct a materiality assessment.
This assessment identified the relative importance of
specific ESG issues. It is part of a broader piece of work
to develop our sustainability strategy and adopt a formal
framework for ESG reporting.
EY’s assessment determined our top ten material factors
for ESG are:
Our sustainable future
“
Utilising our solutions, spanning
IoT and consumer engagement
services to refrigeration fans
and motors; our customers have
already prevented nearly 13 million
CO
2
emissions.
Looking ahead we’re focused on
helping customers unlock further
carbon savings, and expanding
our sustainability efforts beyond
our products to every aspect of
our business.
Program Manager,
Sustainability
Danielle Scott
Pillar Topic Definition
Our product
Product quality, design and
innovation
Providing benefit to customers, society and the
environment by offering high quality products and
services that use innovation and design to generate
positive outcomes.
Waste and circularity
Operating in a circular economy by considering the
full lifecycle of products, including waste generated
throughout the supply chain, packaging, and end-of-life
disposal.
Customer privacy and data security
Maintaining robust data protection systems, policies
and procedures to ensure the privacy and security of
customer data.
Our people
Health and safety
Protecting employees’ physical and psychosocial health
and safety in the workplace, by creating a culture that
prioritises our people and the most significant health and
safety risks, and by maintaining appropriate systems,
policies and procedures.
Diversity and inclusion
Actively seeking diversity of thought, culture, and
background in all parts of the business and taking steps
to ensure these diverse voices are heard and respected
by supporting cultural awareness and appreciation.
Engagement and wellbeing
Fostering a strong, healthy workplace culture where
employees feel respected, supported, and challenged,
including providing learning and development
opportunities.
Board and SLT composition
Creating a Board and Senior Leadership Team with a
diverse range of backgrounds and viewpoints, sufficient
independence and the skillsets to lead AoFrio in the right
direction.
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AoFrio LtdAnnual Report 2022
At the beginning of 2023 we received a draft assessment
of how our existing disclosures and management
practices compare to the NZ CS 1 standard and TCFD
Recommendations and where there may be gaps for
improvement.
Whilst we already have programs of work underway for
many of these topics, the recommendations of this NZ
CS/TCFD gap analysis will inform the action we take and
the ESG targets we set in 2023.
We expect to update investors on these targets at our
FY23 interim results update, if not before.
Pillar Topic Definition
Our supply
chain and
operations
Modern slavery and labour
practices
Working with manufacturers that provide positive and
safe environments for their employees.
Sustainable sourcing of materials
Ensuring the materials used in the supply chain are
obtained responsibly and sustainably, with consideration
of the environment, people and communities.
GHG emissions (Scope 1, 2 and 3)
Minimising greenhouse gas emissions across the
entirety of our value chain, including manufacturing and
shipping of products, to play our part in climate action
and in meeting national and global emissions reduction
targets.
4243
AoFrio LtdAnnual Report 2022
Directors
Independent Chairman
Independent Director
Gottfried Pausch
John McMahon
After almost 10 years on the AoFrio Board, Gottfried’s skills in global
business development and strategy formation have helped underpin AoFrio’s
long-term growth strategy.
Gottfried has had a long-running career in engineering, infrastructure,
and technology previously with Siemens, Actronic Technologies, AuCom
Electronics, Invert Robotics and The Icehouse.
Alongside his role at AoFrio, Gottfried is also the Managing Director of
Blackhawk.io, independent director at McKay and Ward Chandler and is a
member of the Ministry of Business, Innovation and Employment Initiative -
Science for Technological Innovation, National Science Challenge Board.
John has been an AoFrio board member since 2019. His in-depth knowledge
of IoT and global supply chains has seen him play a pivotal role in
recalibrating the business into a hardware-enabled, SaaS company.
Alongside his role on the AoFrio Board, John is the CEO of Invenco Group,
a global provider of self-service payment solutions. John has previously held
positions at Navico, Number 8 Workshop, Brunswick Corporation, Navman
Technology NZ, and Volex.
Keith is also an Independent Director at Rakon Limited, Chairman of
Blackhawk.io, and a director at VWork Limited and Alto Capital.
Keith’s previous roles include Executive Chairman at high tech company
Compac Sorting Ltd and independent Director of the science led Crown
Research Institute ESR.
Greg is the former CEO of AoFrio, a position he held for nine years. He
has worked around the world leading business development, supply chain,
and tech manufacturing for more than 30 years. Greg resides in Vancouver,
Canada and is currently a Partner for Chrysalix Venture Capital, the Board
Chair of HaiLa, a board observer for Liminal, and is a member of the
Economic Advisory Committee for the City of Richmond, British Columbia.
John has more than 30 years’ experience in the Australasian equity markets,
predominantly as an equity analyst covering the telecommunications, media,
gaming, transport, and industrials sectors.
John’s previous roles include Head of Research and Head of Equities for
ABN AMRO NZ and Managing Director of ASB Securities. John is a director
and Chair of Solution Dynamics Ltd (SDL), is director and Chair of Vital Ltd
(VTL) and was a director of NZX Ltd (NZX) until 31 December 2021.
Independent Director
John Scott
Independent Director
Keith Oliver
Director
Greg Allen
4445
AoFrio LtdAnnual Report 2022
Executive management
Chief Executive Officer Chief People Officer
Chief Financial Officer and Company Secretary
Chief Customer Officer
Vice President, Transformation
Executive Vice President, Operations
Greg BallaAngela Lewis
Howard Milliner
David Burden
Laura Bocock
Marc Tinsel
Greg was appointed CEO of AoFrio in May 2021. He brought extensive experience
leading sales and marketing, procurement, supply chain, manufacturing, process
engineering, IT, and HR teams across his multi-decade career.
Prior to AoFrio, he spent eight years at Orion Health, where he started as Executive
Vice President Clinical Workflow and Business Transformation, and spent four years
as Chief Operating Officer.
Greg, along with the whole AoFrio team, is wholly committed to growing AoFrio and
delivering clear customer insights, sustainable transformative technologies, and a
connected advantage for customers around the world.
Angela has led AoFrio’s people-focused initiatives since January 2022. Her focus is on
developing a vibrant company culture with modern thinking and ways of working.
Prior to joining AoFrio, Angela was the Head of HR consulting at Coca-Cola Amatil (NZ)
Ltd. She also has significant people leadership experience from her work with Amazon,
Orion Health, and Walt Disney.
After more than ten years at AoFrio, Howard has been instrumental in driving the
organisation’s strategy to become a hardware-enabled, SaaS company. He is also
responsible for all financial and administrative operations across the business and
brings a wealth of experience from previous roles.
Prior to joining AoFrio, Howard spent 14 years working as the CFO and then CEO
of NZ-listed engineering business, Mercer Group (now MHM Automation).
As Chief Customer Officer, David is responsible for ensuring AoFrio’s future is focused
on unearthing powerful business outcomes to create a better world with customers.
David has more than 30 years’ experience leading start-ups and technology businesses.
Notably, he founded and led what became Australia’s largest and best-recognised
interactive and mobile services company, Legion Interactive.
In 2013, David co-founded IoT company iProximity, with a focus on proximity marketing
and digital information services, which was acquired by AoFrio in 2018.
Since joining in November 2021 as Transformation Lead, Laura has worked on
re-inventing processes at AoFrio through leading her diverse portfolio of activities.
In addition to her role at AoFrio, Laura is a Business Consultant at Bocock Solutions.
Prior to joining AoFrio, Laura was Planning and Intelligence Manager, COVID Response
Unit at Auckland Regional Public Health Service.
Marc started at AoFrio as a Programme Manager for sustaining engineering in 2013.
As Executive Vice President, Operations. Marc is responsible for AoFrio’s day-to-day
leadership, supply chain, and operations, as well as delivery of all hardware, software,
and development programs.
Prior to joining AoFrio, Marc worked as a project manager for Electrix managing multiple
projects, budgets, and multidisciplinary teams.
46
AoFrio Ltd
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Annual Report 2022
Vice President, Engineering
Vice President, Product
Program Manager, Sustainability
Rami Elbeltagi
Genevieve Dawick
Danielle Scott
As the Vice President, Engineering, Rami is responsible for leading the engineering
team. His role focuses on developing products and solutions to keep AoFrio delivering
clear customer insights, sustainable transformative technologies, and a connected
advantage.
Rami joined AoFrio from Fisher & Paykel Appliances, where he most recently held
the role of Group Chief Engineer. Rami’s leadership skills, product design, and agile
innovation experience play a key role in accelerating the development of AoFrio’s
product offering.
With more than 20 years’ experience in developing, implementing, and commercialising
solutions in global complex environments, Genevieve brings with her a broad range of
complementary commercial, product strategy, and process improvement skills.
Genevieve is also a trust board member for Wāhine Connect, a not-for-profit mentoring
service for women working in the health sector. Most recently she held process
improvement and product leadership roles with Te Toka Tumai (Auckland District Health
Board) and Orion Health.
Danielle has been a part of the AoFrio team since April 2022. Her focus has been
on supporting the AoFrio team with executive programs and strategic initiatives. This
includes the sustainability and ESG program for AoFrio.
Prior to starting at AoFrio, Danielle most recently held roles with technology companies
like Tesla and Workday managing multiple projects and implementing new strategic
processes.
4849
AoFrio LtdAnnual Report 2022
Financial Statements
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2022
Note
2022
$000s
2021
$000s
Revenue2.274,32464,218
Cost of sales(53,734)(46,345)
Gross profit20,59017,873
Other income2.369128
Operating expenses2.4(19,114)(15,052)
Gain / (loss) on remeasurement of contingent consideration
6.1b68(323)
Earnings before interest, taxation, depreciation,
amortisation & impairment
1,6132,626
Depreciation3.2(559)(578)
Amortisation3.3(1,887)(2,015)
Impairment3.3-(393)
Loss before interest & taxation(833)(360)
Finance income4.26411
Finance expenses4.2(386)(207)
Loss before income tax(1,155)(556)
Income tax credit2.5a4,4155,981
Profit for the year3,2605,425
Other comprehensive income:
Items that may be reclassified subsequently to the profit or loss:
Exchange differences on translation of
foreign operations
4.5b115117
Other comprehensive income for the year115117
Total comprehensive income for the year3,3755,542
Profit for the year attributable to the Owners of the Company
3,2605,425
Total comprehensive income attributable to the Owners of
the Company
3,3755,542
Basic earnings per share – cents2.60.751.26
Diluted earnings per share – cents2.6 0.731.23
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
Consolidated Statement of Changes in Equity
for the year ended 31 December 2022
2022
Note
Contributed
equity
$000s
Accumulated
losses
$000s
Other
reserves
$000s
Total
equity
$000s
Balance on 1 January 2022135,555(111,467)(3,800)20,288
Comprehensive income
Profit for year-3,260-3,260
Other comprehensive income
Exchange differences on translation of
foreign operations
4.5b--115115
Total comprehensive income-3,2601153,375
Contributions of equity, net of costs4.323--23
Share option compensation expensed4.5a--9595
Balance on 31 December 2022135,578(108,207)(3,590)23,781
2021
Note
Contributed
equity
$000s
Accumulated
losses
$000s
Other
reserves
$000s
Total
equity
$000s
Balance on 1 January 2021135,555(116,892)(3,948)14,715
Comprehensive income
Profit for the year-5,425-5,425
Other comprehensive income
Exchange differences on translation of
foreign operations
4.5b--117117
Total comprehensive income-5,4251175,542
Share option compensation expensed4.5a--3131
Balance on 31 December 2021135,555(111,467)(3,800)20,288
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
5051
AoFrio LtdAnnual Report 2022
Consolidated Statement of Financial Position
as at 31 December 2022
Note
2022
$000s
2021
$000s
Current Assets
Cash and cash equivalents3.1a2,8395,953
Trade and other receivables3.1b26,67617,847
Derivative financial instruments6.4140-
Inventories3.1c8,8774,600
Total current assets38,53228,400
Non-Current Assets
Property, plant and equipment3.21,1561,724
Deferred tax asset2.5b10,5386,051
Intangible assets3.312,90712,619
Total non-current assets24,60120,394
Total assets63,13348,794
Current Liabilities
Trade and other payables3.1d25,09519,167
Contract liability2.22,0081,431
Provisions3.1e177205
Derivative financial instruments6.4-21
Borrowings4.13,452731
Total current liabilities30,73221,555
Non-Current Liabilities
Borrowings4.14661,266
Contract liability2.28,1545,362
Contingent consideration6.1b-323
Total non-current liabilities8,6206,951
Total liabilities39,35228,506
Net assets23,78120,288
Consolidated Statement of Financial Position - continued
as at 31 December 2022
Note
2022
$000s
2021
$000s
Equity
Contributed equity4.3135,578135,555
Accumulated losses4.4(108,207)(111,467)
Other reserves4.5(3,590)(3,800)
Total equity23,78120,288
For and on behalf of the Board
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Director
24 February 2023
Director
24 February 2023
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AoFrio LtdAnnual Report 2022
Consolidated Cash Flow Statement
for the year ended 31 December 2022
Note
2022
$000s
2021
$000s
Cash flows from operating activities
Receipts from customers exclusive of GST/VAT71,58657,993
Payments to suppliers and employees exclusive of GST/VAT(75,874)(54,861)
Other (expenses) / income2.3(80)128
Interest paid(344)(204)
Interest received4.26411
Taxation paid(225)(31)
Net GST/VAT received509911
Net cash (outflow) / inflow from operating activities(4,364)3,947
Cash flows from investing activities
Payments for property, plant, and equipment3.2(415)(134)
Proceeds from disposals of property, plant, and equipment36-
Payments for intangible assets3.3(1,431)(2,089)
Net cash outflow from investing activities(1,810)(2,223)
Cash flows from financing activities
Cash payment to acquire ordinary shares4.3(230)-
New loans and drawdowns4.16,9452,071
Loan repayments4.1(4,027)(1,902)
Principal payments for lease liabilities4.1(232)(217)
Net cash inflow / (outflow) from financing activities2,456(48)
Net (decrease) / increase in cash and cash equivalents(3,718)1,676
Cash and cash equivalents at the beginning of the financial
period
5,9534,610
Effect of exchange rate movements on cash
604(333)
Cash and cash equivalents at end of year3.1a2,8395,953
The above Consolidated Cash Flow Statement should be read in conjunction with the accompanying notes.
Notes to the Financial Statements
1. Basis of preparation
This section sets out the Group’s significant accounting policies that relate to the financial statements as a whole.
Where an accounting policy is specific to a note, that policy is stated in the note to which it relates.
1.1 General Information
AoFrio Limited (the “Company”) and its subsidiaries (together the “Group”) develop Internet of Things (IoT)
solutions and manufacture, market and sell energy saving, electronically commutated (EC) motors, connected
controllers and fans for worldwide use.
The Company is a limited liability company incorporated and domiciled in New Zealand. The address of its
registered office is 21 Arrenway Drive, Rosedale, Auckland 0632 New Zealand. The Company is registered under
the Companies Act 1993 and is an FMC reporting entity under Part 7 of the Financial Markets Conduct Act 2013.
The financial statements have been prepared in accordance with the requirements of Part 7 of the Financial
Markets Conduct Act 2013 and the NZX Main Board Listing Rules.
These consolidated financial statements have been approved for issue by the Board of Directors on 24 February
2023.
1.2 Summary of Significant Accounting Policies
(a). Basis of preparation
These consolidated financial statements of the Group have been prepared in accordance with generally accepted
accounting practice in New Zealand. The Group is a for-profit entity for the purposes of financial reporting. The
consolidated financial statements comply with New Zealand Equivalents to International Financial Reporting
Standards (NZ IFRS), other New Zealand accounting standards and authoritative notices that are applicable
to entities that apply NZ IFRS. The consolidated financial statements also comply with International Financial
Reporting Standards (IFRS).
The principal accounting policies adopted in the preparation of the financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
Entities reporting
The financial statements are for the consolidated Group which is the economic entity comprising of AoFrio Limited
and its subsidiaries.
Historical cost convention
These financial statements have been prepared under the historical cost convention except for derivative financial
instruments and contingent consideration which is measured at fair value.
New standards, amendments, and interpretations not yet adopted
The following accounting standards, amendments and interpretations have not had a material impact on the
financial statements.
• IAS37 Onerous Contracts – Cost of Fulfilling a Contract
• IAS16 Property, Plant and Equipment
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AoFrio LtdAnnual Report 2022
The following accounting standards, amendments and interpretations are mandatory for future periods and are
unlikely to have a material impact on the financial statements prepared by the Company.
• NZ IFRS 17 Insurance Contracts – effective from 1 January 2023
• IAS1 Classification of Liabilities as Current and Non-Current – effective from 1 January 2022
Going concern assumption
The Group reported a profit for the year ended 31 December 2022 of $3,260,000 (2021: profit of $5,425,000) and
operating cash outflows of $4,364,000 (2021: inflows of $3,947,000). Cash at 31 December 2022 was $2,839,000
(2021: $5,953,000) and net debt (defined as cash balances net of borrowings) was $1,079,000 (2021: net cash
$3,956,000).
Profitability in the 2022 year was impacted by supply chain disruptions. These disruptions resulted in constrained
revenue due to component availability, increased product and logistics costs, a reduction in new product
development effort and a revenue delay until Q4 FY2022. The Board considers that supply chain constraints
are not an issue as the Group enters the 2023 year. The Board approved budget forecasts revenue growth in
2023 exceeding 30%, a return to new product development, improved gross margins and profitability. If global
macroeconomic conditions were to adversely impact demand or cause other issues for the Group, the Group
can and will manage its planned increases in operating and capital expenditure to ensure the Group maintains
adequate cash reserves.
Therefore, the Board has, at the time of approving the financial statements, assessed it is appropriate to continue
to adopt the going concern basis in preparing the financial statements.
(b). Principles of consolidation
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and can affect these returns
through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are
deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The
cost of an acquisition is measured as the fair value of the assets transferred and equity instruments issued, and
liabilities incurred or assumed at the date of exchange. Identifiable assets acquired, and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair values at the acquisition date,
irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the
Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than
the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the Statement of
Comprehensive Income.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies of
the Group.
(c). Foreign currency translation
(i) Functional and presentation currency
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 Company’s
functional currency is US Dollars because its purchase and sale of product is mainly denominated in US Dollars.
Subsidiaries and operations in the USA, China, Brazil, Turkey, Mexico, Italy, Australia, Spain and Singapore use
their local currency as the functional currency.
The consolidated financial statements are presented in New Zealand dollars, rounded to the nearest thousand,
which is the Group’s presentation currency. The presentation currency remains New Zealand dollars due to the
Company’s shareholder base being concentrated in New Zealand.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the Statement of Comprehensive Income.
(iii) Foreign operations
The results and balance sheets of all foreign operations that have a functional currency different from New
Zealand dollars are translated into the presentation currency as follows:
• assets and liabilities for each balance sheet presented are translated at the closing rate at the date of the
Statement of Financial Position.
• income and expenses for each Statement of Comprehensive Income are translated at the rates prevailing on
the transaction dates, and
• all resulting exchange differences are recognised in other comprehensive income as a separate component
of equity.
(d). Significant accounting estimates and judgements
Estimates and judgments are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will,
by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk
of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
detailed in the following notes to the financial statements:
Areas of estimation
• Going concern – forecasts – note 1.2a
Areas of judgement
• Deferred tax asset – recognition – note 2.5b
• Development costs – capitalisation of expenses and impairment testing – note 3.3
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AoFrio LtdAnnual Report 2022
2. Results for the year
This section focuses on the results and performance for the Group and how those numbers are calculated.
2.1 Segment information
An operating segment is a component of an entity that engages in business activities from which it earns revenues
and incurs expenses, whose operating results are regularly reviewed by the chief operating decision maker and
for which discrete financial information is available.
The chief operating decision maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Chief Executive Officer supported by the management team who
report directly to the CEO.
(a). Reportable segments
The Group is organised on a global basis into two operating divisions – Motors and IoT. These divisions offer
different products and services and are managed separately because they require different technology and
marketing strategies. The Group’s Chief Executive Officer reviews the financial performance of each division at
least monthly. Each division is a reportable segment.
There are varying levels of integration between the segments. There are engineering and sales staff that support
both segments as well as shared logistical and quality management services.
Information related to each reportable segment is set out below:
2022
Motors
$000s
IoT
$000s
Unallocated
$000s
Total
$000s
Revenue37,79836,526-74,324
Cost of goods sold(31,007)(22,727)-(53,734)
Gross profit6,79113,799-20,590
Gross margin %18.0%37.8%27.7%
Other income(93)2214069
Operating expenses(3,903)(7,562)(7,649)(19,114)
Gain on remeasurement of contingent
consideration
-68-68
EBITDA2,7956,327(7,509)1,613
Depreciation(154)(35)(370)(559)
Amortisation(221)(1,001)(665)(1,887)
Impairment----
Loss before interest & taxation2,4205,291(8,544)(833)
Finance income--6464
Finance expense--(386)(386)
(Loss) / profit before income tax2,4205,291(8,866)(1,155)
Income tax credit(1)-4,4164,415
Profit / (loss) for the year2,4195,291(4,450)3,260
2022
Motors
$000s
IoT
$000s
Unallocated
$000s
Total
$000s
Non-current assets
Property, plant & equipment338737451,156
Deferred tax asset--10,53810,538
Goodwill-3,151-3,151
Other intangible assets3,6745,986969,756
Total4,0129,21011,37924,601
2021Motors
$000s
IoT
$000s
Unallocated
$000s
Total
$000s
Revenue38,98525,233-64,218
Cost of goods sold(31,875)(14,470)-(46,345)
Gross profit7,11010,763-17,873
Gross margin %18.2%42.7%27.8%
Other income43688128
Operating expenses(2,539)(4,508)(8,005)(15,052)
Gain on remeasurement of
contingent consideration
-(323)-(323)
EBITDA4,5755,968(7,917)2,626
Depreciation(301)(192)(85)(578)
Amortisation(307)(1,669)(39)(2,015)
Impairment(393)--(393)
Loss before interest & taxation3,5744,107(8,041)(360)
Finance income--1111
Finance expense--(207)(207)
(Loss) / profit before income tax3,5744,107(8,237)(556)
Income tax expense--5,9815,981
Profit / (loss) for the year3,5744,107(2,256)5,425
Non-current assets
Property, plant & equipment5061111,1071,724
Deferred tax asset--6,0516,051
Goodwill-3,127-3,127
Other intangible assets3,5415,4944579,492
Total4,0478,7327,61520,394
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AoFrio LtdAnnual Report 2022
(b). Geographical segments
The Group operates in three main geographical areas, although it is managed on a global basis.
Revenue from external customers by geographic areas
2022
$000s
2021
$000s
Americas58,04251,068
Asia / Pacific (APAC)6,7704,950
Europe / Middle East / Africa (EMEA)9,5128,200
Total74,32464,218
Revenue is allocated above based on the country in which the customer is located.
APAC revenue includes $1,085,000 (2021: $1,493,000) from New Zealand customers.
Major Customers
The Group has three major customers (defined as customers representing 10% or more of revenues) accounting
for invoiced revenues of $30,381,000 (2021: four customers accounting for invoiced revenues of $30,293,000), all
within the Americas geographic segment.
Total non-current assets
2022
$000s
2021
$000s
Americas1,1342,074
Asia / Pacific – mainly in New Zealand23,45518,273
Europe / Middle East / Africa1247
Total24,60120,394
Total non-current assets are allocated based on where the assets are located.
2.2 Revenue
2022
$000s
2021
$000s
Sales of goods revenue – recognised at a point in time72,12862,771
Services revenue – recognised over time2,1961,447
74,32464,218
Revenue is measured at the fair value of the consideration received or receivable for the sale of goods and
services, excluding GST / VAT, rebates and discounts and after eliminating sales within the Group. The Group
disaggregates revenue from contracts with customers by geographical regions, which is detailed in note 2.1(b).
(a). Sale of Goods
The Group manufactures and sells a range of energy efficient motors and IoT hardware to the food and beverage
market. Sales are recognised when control has transferred to the buyer which is usually when delivery of the
goods to the buyer pursuant to the Incoterms that apply is fulfilled, and there is no unfulfilled obligation that could
affect the customer’s acceptance of the products. Delivery occurs when the products have been delivered in
accordance with the pre-agreed Incoterms between the Group and the buyer, the risks of obsolescence and loss
have been transferred to the buyer, and either the buyer has accepted the products in accordance with the sales
arrangement, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for
acceptance and performance obligations under the contract with the customer have been satisfied.
Some of the sales of goods are subject to CIF (Cost, Insurance and Freight) Incoterms. The Group considers
these freight and insurance services to be a distinct service. For these sales, the total sales price is allocated to
the separate performance obligations, being the product and the insurance and freight costs. Further, the Group
considers itself an agent only in the provision of the freight services. Revenue for the CIF element is recognised
only to the extent of the margin for providing the agent services. However, there are limited sales under CIF terms
and the impact on revenue is estimated to be minor.
The Group has in-market distributors in China and Brazil to supply goods to buyers in those markets who require
local delivery. These distributors transact as agents. The Group is the principal in these transactions. Sales of
product are recognised when these distributors deliver the product to buyers at which point control passes to
the buyer.
Products may be sold with retrospective volume rebates based on aggregate sales over a 12-month period.
Revenue from these sales is recognised based on the price specified in the contract, net of the estimated volume
rebates. Accumulated experience and customer knowledge are used to determine the rebate amounts using the
expected value method and revenue is only recognised to the extent that it is highly probable significant reversals
will not occur. The liability to pay volume rebates is recognised (included in trade and other payables) in respect of
sales made up to the end of the reporting period.
No element of financing is deemed present as the sales are made with a credit term of 30 - 120 days which is
consistent with market practice. A receivable is recognised when the goods are delivered as this is the point of
time that the consideration is unconditional because only the passage of time is required before the payment
is due.
(b). Sale of services
Associated with the supply of IoT hardware, the Group supplies a range of data, and reporting services, all
installed on every AoFrio SCS, AoFrio Monitor and AoFrio Click sold and are distinct services from the sale of
goods. Revenue from the provision of such services is recognised when services are rendered to the buyer.
Contracts typically cover a period from hardware supply of anywhere from 1 to 10 years, dependent on customer
requirements. Contracts specify the price for the provision of the services. Revenue from such contracts is
recognised on a straight-line basis over the contract term because the customer receives and uses the benefits
simultaneously. As set out in note 2.2(a), no explicit element of financing is deemed present as the purpose of the
advance payment of revenue is for reasons other than financing.
The Group also provides software development services for customers. Revenue from these services is
recognised when the contracted development is completed according to the agreed scope of work.
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AoFrio LtdAnnual Report 2022
Contract liabilities
2022
$000s
2021
$000s
Carrying amount at start of year6,7934,196
Invoiced in the year5,1373,860
Recognised in revenue(2,196)(1,447)
Exchange adjustment428184
Carrying amount at end of year10,1626,793
Current portion2,0081,431
Non-current portion8,1545,362
10,1626,793
2.3 Other income
2022
$000s
2021
$000s
Net foreign exchange (losses) / gains(133)74
Covid-19 Government support-15
Remeasurement of right-of-use liability149-
Other income5339
69128
2.4 Operating expenses include
2022
$000s
2021
$000s
Wages and salaries and other short-term benefits12,67311,300
Employer contributions to Kiwisaver and 401K plans459385
Employee share options expense9531
Total employee benefits13,22711,716
Payments to contractors1,8861,591
Capitalisation of labour and expenses to intangible assets(1,382)(2,057)
The amount disclosed above for wages and salaries is stated before capitalisation of labour to intangible assets.
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave
expected to be settled within 12 months of the reporting date are recognised in other payables in respect of
employees’ services up to the reporting date and are measured at the amounts expected to be paid when the
liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and
measured at the rates paid or payable.
Wages and salaries in 2021 included $1,109,000 for the reimbursement in the year of 2020 staff salary reductions
which were an important component of the Group’s Covid 19 response.
The Group recognises a liability and an expense for bonuses and creates a provision where contractually obliged
or where there is a past practice that has created a constructive obligation.
2.5 Income tax expense
Current and deferred income tax
The income tax expense or revenue for the year is the tax payable on the current period’s taxable income (based
on the national income tax rate for each jurisdiction) adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in
the financial statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to
apply when the assets are recovered, or liabilities are settled, based on those tax rates which are enacted or
substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of
deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made
for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset
or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a
business combination, that at the time of the transaction did not affect either accounting profit or taxable profit
or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and
tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of
the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Goods and Services Tax (GST) and Value Added Tax (VAT)
The Statement of Comprehensive Income has been prepared so that all components are stated exclusive of GST
and VAT. All items in the Statement of Financial Position are stated net of GST and VAT, except for receivables
and payables, which include GST and VAT invoiced.
(a). Income tax
2022
$000s
2021
$000s
Current year income tax expense(72)(70)
Deferred tax – recognition of deferred tax asset4,4876,051
Income tax credit4,4155,981
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AoFrio LtdAnnual Report 2022
2022
$000s
2021
$000s
Tax losses to carry forward31,94432,766
Total temporary differences and tax losses to carry forward30,97630,827
Deferred tax asset recognised for:
Temporary differences(968)(1,939)
Carry forward tax losses utilised11,5067,990
Total recognised10,5386,051
The benefit of unrecognised tax losses is $20,438,000 (2021: $24,776,000). Of the total consolidated losses
available to carry forward to future years, $2,922,000 (2021: $2,798,000) arises in the USA and is subject to their
continuity requirements. USA Federal tax losses expire after 15 to 20 years, depending on when those losses
were incurred. During the 2022 year no USA Federal tax losses expired (2021: None).
(c). Imputation credits
The Group has no imputation credits available (2021: $nil) and no movements occurred in the Imputation Credit
Account (2021: $nil).
2.6 Earnings per share
Earnings per share (‘EPS’) is the amount of post-tax profit attributable to each share.
Basic EPS of a profit of 0.75 cents (2021: profit of 1.26 cents) is calculated by dividing the profit attributable to
equity holders of the Company of $3,260,000 (2021: profit of $5,425,000) by the weighted average number of
ordinary shares in issue during the year of 432,198,399 (2021: 431,914,620).
Diluted EPS of a profit of 0.73 cents (2021: loss of 0.50 cents) is calculated by dividing the profit attributable to
equity holders of the Company of $3,260,000 (2021: profit of $5,425,000) by the weighted average number of
shares in issue during the year, after adjusting for effects of 12,930,000 dilutive potential ordinary shares.
The income tax credit for the year can be reconciled to the result before tax as follows:
2022
$000s
2021
$000s
Reported loss for the year before tax(1,155)(556)
Tax at 28%(323)(156)
Adjustment of prior periods67
-
Effect of different tax rates of subsidiaries in other
jurisdictions
(14)(5)
Tax effect of non-deductible / non-assessable items(84)(31)
Tax effect of utilisation of losses in current period(1,430)122
Recognition of carried forward tax losses6,1996,051
Income tax credit for the year4,4155,981
(b). Deferred tax
As it is probable that future taxable amounts will be available to utilise temporary differences and losses, a
deferred tax asset is recognised for deductible temporary differences and for that portion of the unused tax losses
that are expected to be utilised in the five years 2023 through to 2027 (2021: 2022 to 2026). The key judgements
within the forecast taxable profit model include revenue growth rates and gross margin. No deferred tax asset has
been recognised in respect of the remaining tax losses to carry forward due to uncertainty as to forecast taxable
income after the five years.
Losses available to be carried forward are subject to the shareholder continuity requirements of the New Zealand
Income Tax Act 1994 and the countries in which the losses have arisen.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset, and they
relate to the same tax authority. The tax rate applicable to each group company has been used to determine the
below recognised and unrecognised deferred tax assets:
2022
$000s
2021
$000s
Doubtful debts1026
Inventory provisions and unrealised profit(118)58
Employee benefits283357
Internally generated development(2,549)(2,394)
Warranty provision5058
Contract liabilities1,281
-
Rebates242164
Fixed assets(11)81
Right of use lease liability(213)(277)
Other timing differences57(12)
Total temporary differences(968)(1,939)
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AoFrio LtdAnnual Report 2022
3. Operating assets and liabilities
This section focuses on the assets used to generate the Group’s trading performance and the liabilities incurred as
a result.
3.1 Working capital
Working capital represents the assets and liabilities the Group generates through its trading activities. The Group
therefore defines working capital as cash, trade and other receivables, inventory, trade and other payables and
provisions.
(a). Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions and other short
term and highly liquid investments with original maturities of three months or less that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value.
2022
$000s
2021
$000s
Cash on hand and at bank2,2542,451
Call deposits2303,427
Short term bank deposit35575
2,8395,953
The carrying amount of the Group’s cash and cash equivalents is denominated in the following currencies:
NZD534485
USD1,7574,579
Other548889
2,8395,953
(b). Trade and other receivables
Trade receivables are recognised initially at the value of the invoice sent to the customer. The Group generally
holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them
subsequently at amortised cost using the effective interest method. Trade receivables are generally due for
settlement no more than 120 days from the date of recognition.
The Group applies the simplified approach permitted by NZ IFRS 9 which requires expected lifetime credit losses
to be recognised from initial recognition of the trade receivable. Trade receivables are written off when there is no
reasonable expectation of recovery.
NZ IFRS 9 requires the Group to calculate expected credit losses on trade receivables using a provision matrix.
The Group has reviewed its credit loss experience over the period from 2014 to 2022 and has determined that the
probability weighted credit loss experience over that period was approximately 0.1% of revenue. Consideration
has been given to market environmental factors to determine whether future conditions will impact. The provision
for expected credit loss at balance date has been calculated at 1.5% for customers assessed as higher risk and
0.1% for all others (2021: 1.5% and 0.1% respectively).
2022
$000s
2021
$000s
Trade receivables25,48916,498
Provision for loss allowance(92)(90)
Net trade receivables25,39716,408
Prepayments620837
VAT/GST refunds due166133
Income tax refund due281214
Other receivables212255
26,67617,847
The carrying amount of the Group’s trade and other receivables is denominated in the following currencies:
NZD660133
USD24,21016,443
EUR853540
MXP2961
Other657730
26,67617,847
Provision for loss allowance
Carrying amount at start of year90157
Decrease in loss allowance(3)(78)
Exchange adjustment511
Carrying amount at end of year9290
The decrease in provision is recognised within ‘Operating expenses’ in the Statement of Comprehensive Income
(c). Inventories
Inventories are stated at the lower of cost and net realisable value. Costs are assigned to individual items of
inventory based on first in first out. Net realisable value is the estimated selling price in the ordinary course of
business less the estimated costs necessary to make the sale.
Management reviews inventory on a line-by-line basis. Judgments are made about expected selling prices and
obsolescence based on forecast sales. A provision is recognised for inventory which is expected to sell for less
than cost.
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AoFrio LtdAnnual Report 2022
2022
$000s
2021
$000s
Finished goods – at cost6,6874,727
Raw materials – at cost2,572320
Less inventory provisions(382)(447)
Total inventories8,8774,600
Cost of inventories recognised as an expense and included in cost of sales $51,245,000 (2021: $44,099,000).
(d). Trade and other payables
Trade payables are recognised at the value of the invoice received from a supplier. These amounts represent
liabilities for goods and services provided to the Group prior to balance date. The amounts are unsecured and are
usually paid within 90 days of recognition.
2022
$000s
2021
$000s
Trade payables21,78714,508
Employee entitlements 1,6681,791
GST / VAT payable394353
Accrued expenses1,2462,515
25,09519,167
The carrying amount of the Group’s trade and other payables is denominated in the following currencies:
NZD2,2932,225
USD21,72016,106
Other1,082836
25,09519,167
(e). Provisions
Provisions are recognised when the Group has a present legal or constructive obligation because of past events,
is more likely than not that an outflow of resources will be required to settle the obligation, and the amount has
been reliably estimated. Provisions are not recognised for future operating losses.
The Group sells goods with warranty periods of up to five years. The terms of the warranty provide that the Group
will repair or replace items that fail to perform satisfactorily. A provision has been recognised based on historical
data and average levels of repairs and warranty claims experienced by the Group. It is expected that the provision
will be utilised within one year as any product failures are typically exhibited within one year of sale.
Warranty provision
2022
$000s
2021
$000s
Carrying amount at start of year205315
Additional provisions recognised2956
Amounts used(74)(178)
Exchange adjustment1712
Carrying amount at end of year177205
3.2 Property, plant and equipment
All property, plant and equipment are stated at historical cost less depreciation and impairments. Historical cost
includes expenditure that is directly attributable to the acquisition of the items and the costs of bringing the asset
to the location and condition for it to be capable of operating in the manner intended.
Costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it
is probable that future economic benefits associated with the item will flow to the Group and the cost of the item
can be measured reliably. All other repairs and maintenance are charged to the Statement of Comprehensive
Income during the financial year in which they are incurred.
Depreciation of owned plant and equipment is calculated using the straight-line method to allocate their cost net of
their residual values, over their estimated useful lives, as follows:
Useful Life
Plant and equipment3 – 15 years
Property12 years
Office equipment, furniture and fittings 3 – 15 years
The assets’ residual values and useful lives are reviewed and adjusted as appropriate at each balance date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount.
Plant and equipment can be analysed as follows:
Plant &
equipment
$000s
Office equipment,
furniture & fittings
$000s
Properties
$000s
Total
$000s
Year ended 31 December 2021
Opening net book amount9142249452,083
Reclassification(9)9--
Additions5975-134
Depreciation(276)(135)(167)(578)
Exchange adjustment31233185
Closing net book amount7191968091,724
6869
AoFrio LtdAnnual Report 2022
Plant &
equipment
$000s
Office equipment,
furniture & fittings
$000s
Properties
$000s
Total
$000s
At 31 December 2021
Cost6,2111,0922,1789,481
Accumulated depreciation and
impairment
(5,443)(849)(1,379)(7,671)
Exchange adjustment(49)(47)10(86)
Net book amount7191968091,724
Year ended 31 December 2022
Opening net book amount7191968091,724
Additions271144-415
Depreciation(256)(112)(191)(559)
Disposals----
Remeasurement of right-of-use
asset
--(517)(517)
Exchange adjustment3954993
Closing net book amount7732331501,156
At 31 December 2022
Cost6,2601,2361,6619,157
Accumulated depreciation and
impairment
(5,477)(961)(1,570)(8,008)
Exchange adjustment(10)(42)597
Net book amount7732331501,156
The above amounts include those relating to right-of-use assets. Refer to note 6.5 for further disclosures.
Capital commitments
Capital commitments contracted for at 31 December 2022 amounted to $229,000 (2021: $244,000).
3.3 Intangible assets
Research, development and patent costs
Expenditure on research activities, undertaken with the prospect of obtaining new scientific or technical knowledge
and understanding, is recognised in the Statement of Comprehensive Income as an expense when it is incurred.
Expenditure on development activities, being the application of research findings or other knowledge to a plan or
design to produce new or substantially improved products or services before the start of commercial production
or use, is capitalised if the product or service is technically and commercially feasible and adequate resources
are available to complete development. This involves the use of judgement. Development costs are capitalised
once it can be demonstrated that the asset is supported by future economic benefits. Management considers
the following criteria when making its judgment as to when it is appropriate to commence capitalisation of
development costs:
• Technical feasibility of completing the development so that it will be available for use or sale.
• Intention to complete the development.
• Ability to use the developed asset or sell it.
• Existence of a market.
• Availability of adequate technical, financial, and other resources to complete and commercialise the
development; and
• Ability to measure reliably the expenditure attributable to the development.
All capitalised development costs met the criteria as outlined above.
The expenditure capitalised comprises all directly attributable costs, including costs of materials, services, direct
labour and an appropriate proportion of overheads.
Development expenditure which does not meet the criteria for capitalisation is recognised in the Statement of
Comprehensive Income as an expense as incurred. Capitalised development expenditure is stated at cost less
accumulated amortisation and any impairment losses.
Amortisation is calculated using the straight-line method to allocate the cost over the period of the expected
benefit, up to a maximum of 10 years for motors and up to a maximum of 5 years for IoT hardware. Judgment
is involved in determining this period of benefit. For motors, the Group considered the earlier versions of motors
and the length of time from completion to continued sales contribution; whereas for IoT hardware, the Group
considered that 5 years is an appropriate life given the inherent risk of rapid technological change.
Patents
Capitalised patent costs are amortised on a straight-line basis over the period of expected benefit no longer than
the life of the patent, up to a maximum of 20 years.
Computer software
Acquired computer software licences are capitalised based on the costs incurred to acquire and bring to use the
specific software. These costs are amortised over their estimated useful lives (3 to 5 years).
Costs associated with maintaining computer software programmes are recognised as an expense as incurred.
Impairment testing of non-financial assets
Intangible assets that have an indefinite useful life or intangible assets not ready for use are not subject to
amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed
for impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and 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).
Goodwill is tested annually for impairment, or immediately if events or changes in circumstances indicate that it
might be impaired and carried at cost less accumulated impairment losses. Impairment losses on goodwill are
not reversed.
7071
AoFrio LtdAnnual Report 2022
Internally
Generated
Development
$000s
Patents
$000s
Goodwill
$000s
Other
$000s
Total
$000s
Year ended 31 December 2021
Opening net book amount8,8542173,13918712,397
Additions2,04239-82,089
Amortisation(1,948)(53)-(14)(2,015)
Impairment(393)---(393)
Exchange adjustment53012(12)11541
Closing net book amount9,0852153,12719212,619
At 31 December 2021
Cost22,6461,6103,21986928,344
Accumulated amortisation &
impairment
(13,872)(1,423)-(659)(15,954)
Exchange adjustment31128(92)(18)229
Net book amount9,0852153,12719212,619
Year ended 31 December 2022
Opening net book amount9,0852153,12719212,619
Additions1,38640-51,431
Amortisation(1,818)(55)-(14)(1,887)
Impairment-----
Exchange adjustment687182415744
Closing net book amount9,3402183,15119812,907
At 31 December 2022
Cost24,0321,6503,21987429,775
Accumulated amortisation &
impairment
(15,690)(1,478)-(673)(17,841)
Exchange adjustment99846(68)(3)973
Net book amount9,3402183,15119812,907
Goodwill relates to the iProximity Pty Limited which is a component of the IoT reportable segment.
Internally generated development costs include $2,969,000 (2021: $3,383,000) for projects underway and not
complete at balance date. This cost is not yet being amortised.
Movement in intemally generated development costs
2022
$000s
2021
$000s
Opening net book amount - projects not completed3,3835,493
Additions1,3862,042
Completed(1,800)(3,891)
Impaired-(393)
Exchange adjustment-132
Closing net book amount - projects not completed2,9693,383
An impairment assessment has been performed at 31 December 2022 considering costs to complete the
developments, costs to set up the manufacturing capability, estimates of market volume and price and estimated
manufacturing unit costs.
Amortisation and impairment
2022
$000s
2021
$000s
Amortisation of intangible assets1,8872,015
Impairment of intangible assets-393
1,8872,408
Goodwill and intangible assets with indefinite lives
Goodwill acquired through business combinations with indefinite lives has been allocated to the IoT Cash
Generating Unit (CGU) which is also an operating and reportable segment for impairment testing. The Group
performed its impairment test at 31 December 2022.
The recoverable amount of the IoT CGU at 31 December 2022 has been determined based on a value in use
calculation using cash flow projections from the annual operating budget approved by senior management for
2023. The pre-tax discount rate applied to cash flow projections is 16% (2021: 14%) and cash flows beyond 2023
using a 9.4% growth rate (2021: 5%).
The calculation of value in use is most sensitive to the following assumptions:
• Gross margins.
• Completion and launch of new IoT products under development and retaining volumes to current customers.
• Growth rates used to extrapolate cash flows beyond the forecast period.
• Operating expense increases.
Gross margins are based on current pricing and product costs. The gross margin in 2022 was 37.8% and is
forecast at 44.2% for 2023. The assumption is that operating expenses comprising mainly employee costs are
maintained at the same ratio to sales. In the 2023 annual operating budget, the ratio of operating expenses to
revenue is 16.3%.
As a result of this analysis, management did not identify an impairment for this CGU.
7273
AoFrio LtdAnnual Report 2022
4. Capital and financing costs
This section sets out the Group’s capital structure and shows how it finances its operations and growth.
To finance the Group’s activities (now and in the future) the Board monitors and determines the appropriate capital
structure for AoFrio to execute strategy and to deliver its business plan.
4.1 Borrowings
2022
$000s
2021
$000s
Current portion
Bank trade finance facility2,65275
Bank loans436228
Liabilities in respect of right-of-use assets83232
Other borrowings281196
Liability at end of year3,452731
Non-Current portion
Liabilities in respect of right-of-use assets-760
Bank loans306284
Other borrowings160222
Liability at end of year4661,266
Borrowings, other than in respect of right-of-use assets, are initially recognised at fair value, net of transaction
costs incurred, and are subsequently measured at amortised cost. Any difference between the proceeds and the
redemption amount is recognised in the Statement of Comprehensive Income over the period of the borrowings
using the effective interest method. Borrowings are classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liability for at least 12 months after balance date. Borrowing costs are
expensed when incurred.
Accounting policies relating to lease liabilities are outlined in note 6.5.
Movements in bank and other loans during the year were:
2022
$000s
2021
$000s
Liability at start of year1,005824
New loans and drawdowns6,9452,071
Repayments(4,027)(1,902)
Exchange adjustment(88)12
Liability at end of year3,8351,005
Bank trade finance facility
The bank trade finance facility increased from $2.5m to $5m on 2 November 2022. The facility has no term, is
repayable on demand and is secured. The Company can finance invoices to certain customers over a maximum
term of 120 days. Interest is payable at a 3% margin above bank base lending rate. The weighted average interest
rate charged in 2022 was 7.92% (2021: 4.28%). The Company has complied with all covenants.
Bank term loans
The Company’s US subsidiary loan is US$198,800 under the Small Business Act. The SBA loan has monthly
repayments over a 30-year term. Interest is payable at 3.75% pa.
The Company’s Mexican subsidiary has a 5 million Mexican Pesos loan ($408,000 at 31 December 2022) from
the Banco del Bajio. The loan is repayable after 180 days and interest is payable at 5% pa above the Tiie Rate.
Movements in liabilities in respect of right-of-use assets during the year were:
2022
$000s
2021
$000s
Liability at start of year9921,209
New Liabilities--
Remeasurement (677)-
Repayments(232)(217)
Liability at end of year83992
4.2 Finance
2022
$000s
2021
$000s
Finance income
Other interest income6411
6411
Finance expenses
Interest expense – Bank loans9027
Other interest expense296180
386207
7475
AoFrio LtdAnnual Report 2022
4.3 Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
2022
Shares
2021
Shares
2022
$000s
2021
$000s
Ordinary shares – fully paid431,853,006431,914,620135,578135,553
Ordinary shares – partly paid---2
Total shares and options on issue431,853,006431,914,620135,578135,555
(a). Ordinary shares – fully paid
Opening balance of ordinary
shares on issue
431,914,620431,914,620135,553135,553
Issue of ordinary shares during
the year:
1,574,196-253-
Ordinary shares acquired and
cancelled
(1,635,810)-(228)-
Ordinary fully paid shares on
issue at year end
431,853,006431,914,620135,578135,553
All ordinary shares are authorised and have no par value. Ordinary shares entitle the holder to participate in
dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on
shares held.
(b). Ordinary shares – partly paid
Partly paid shares outstanding at
start of year
-421,98022
Repayment of part paid shares -(421,980)(2)-
Ordinary part paid shares on issue
at year end
---2
4.4 Accumulated losses
2022
$000s
2021
$000s
Opening balance(111,467)(116,892)
Profit for the year3,2605,425
Accumulated losses at end of year(108,207)(111,467)
4.5 Other reserves
2022
$000s
2021
$000s
Share option compensation reserve448353
Currency translation reserve(4,038)(4,153)
(3,590)(3,800)
(a). Share Option Compensation Reserve
2022
$000s
2021
$000s
Share based compensation recognised at start of year353322
Net compensation expensed9531
448353
(b). Currency Translation Reserve
2022
$000s
2021
$000s
Opening balance(4,153)(4,270)
Exchange gains on translation of foreign operations
115117
(4,038)(4,153)
7677
AoFrio LtdAnnual Report 2022
5. Risk
This section presents information about the Group’s exposure to financial and commercial risks; the Group’s
objectives, policies and processes for managing those risks.
5.1 Key financial risks
The Group’s principal financial instruments comprise receivables, payables, cash and cash equivalents,
borrowings, and derivatives.
The Group manages its exposure to the key financial risks – market risk (including foreign currency risk and
interest rate risk), credit risk, liquidity risk and capital risk. The Group enters into derivative transactions (principally
forward currency contracts) to manage currency risks.
(a). Financial market risk
Foreign currency risk
The Group operates internationally and is exposed to foreign currency risk arising from various currency
exposures. Presently the Group’s revenue is based on USD pricing and invoicing is substantially USD
denominated. The Company’s functional currency is USD. The majority of the Group’s product, manufacturing and
logistics cost is invoiced and settled in USD. This provides a strong natural hedge position between revenues and
costs. USD funds are converted to NZD to meet New Zealand operational costs as required.
The Group is primarily exposed to changes in other currencies against the USD exchange rate. The Group’s
exposure to foreign currency risk at the end of the reporting period for currencies other than USD, expressed in
NZD was:
2022EUR
NZ$
Brazil
Real
Mexican
Peso
Other
Cash-534--548
Trade and other receivables853660498296159
Trade and other payables-(2,293)(299)(593)(190)
Borrowings-(523)-(408)-
2021
Cash-485--889
Trade and other receivables5851333121373
Trade and other payables(43)(2,225)-(172)(621)
Borrowings-(1,410)-(213)-
The sensitivity of profit or loss to changes in the exchange rates arises mainly from changes in other currencies
against the USD exchange rate. The impact on post tax profit holding all other variables constant at 10%
sensitivity movement is as follows:
2022
$000s
2021
$000s
USD exchange rate increase 10% relative to other currencies24122
USD exchange rate decrease 10% relative to other currencies(24)(122)
The impact on other components of equity is not material because of minimal foreign forward exchange contracts
designated as cash flow hedges.Interest Rate Risk
The interest rate on the bank trade finance facility is at variable rates. All other debt is fixed interest.
The Group has cash deposits in various currencies to facilitate trading in the countries in which it has a presence.
Most of the cash deposits are held in either NZD or USD.
The impact of a 1% increase / decrease in interest rates over a one-year period on the closing cash balance is
not significant.
(b). Credit risk
The Group generally trades with customers and banking counterparties who are well established. While there
are individually significant customers, the Group takes out trade credit insurance to provide better security.
Receivables balances are managed by and reported regularly to senior management according to credit
management policies and procedures. The amount outstanding at balance date represents the maximum
exposure to credit risk.
At balance date, the Group had three major debtors (defined as debtors representing 10% or more of trade
receivables) accounting for outstanding debt of $8,257,000 (2021: three debtors accounting for outstanding debt
of $7,929,000).
At balance date, trade receivables of $1,387,000 were past due but not considered impaired (2021: $725,000). Of
this amount $685,000 (2021: $228,000) was 3 months or more overdue.
The Group enters into forward foreign exchange contracts within specified policy limits and only with
counterparties approved by directors.
Cash and cash equivalents are deposited with several financial institutions in New Zealand and overseas.
$794,000 is deposited with a major NZ trading bank with a Standard & Poors rating of AA- (2021: $2,248,000 AA-)
and $336,000 (2021: $2,230,000) with Western Union with a Standard & Poors rating of BBB/A-2. The remaining
balance of $1,679,000 (2021: $1,475,000) is held across several territories and non-performance of obligations by
the relevant banks is not expected due to the credit rating of the counter parties considered.
(c). Liquidity risk
The Group maintains regular forecasts of liquidity based on expected cash flows. The table below analyses the
Group’s financial liabilities into relevant groups based on the remaining period at the reporting date to the end of
the contractual date.
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AoFrio LtdAnnual Report 2022
The amounts disclosed are the contractual undiscounted cash flows.
20222021
$000s
Less than
6 months
7 to 12
months
2 to 5
year
Less than
6 months
7 to 12
months
2 to 5
years
Trade and other payables25,026--19,046--
Borrowings3,232137466394105506
Right-of-use asset liabilities83--114118760
28,34113746619,5542231,266
Trade and other payables above exclude any liabilities for tax (including payroll taxes), statutory liabilities and
contract liabilities.
(d). Capital risk management
The Company closely monitors its cash requirements.
The Group has complied with financial covenants under the bank trade finance facility.
2022
$000s
2021
$000s
Total borrowing3,9181,997
Total equity23,78120,288
Gearing16.5%9.8%
6. Other information
This section includes other information that must be disclosed to comply with accounting standards and other
pronouncements, but that is not immediately related to individual line items in the financial statements.
6.1 Subsidiaries
(a). The consolidated financial statements incorporate the assets, liabilities and results of the following
subsidiaries in accordance with the accounting policy described in Note 1.2b.
Country of
incorporation
Class of
shares
20222021
Wellington Drive Sales LtdNew ZealandOrdinary100%100%
Wellington Drive Technologies US, IncUSAOrdinary100%100%
Wellington Motor Teknolojileri San Tic Ltd StiTurkeyOrdinary100%100%
Wellington Italia SrlItalyOrdinary100%100%
Wellington Drive Technologies Pte LtdSingaporeOrdinary100%100%
Wellington Latin America Services SA de CVMexicoOrdinary100%100%
iProximity Pty LimitedAustraliaOrdinary100%100%
Wellington Iberia S.L.SpainOrdinary100%100%
All subsidiaries have a common balance date of 31 December.
(b). Contingent consideration for acquisition of subsidiary
On 2 July 2018, the Company acquired 100% of the issued share capital of iProximity Pty Limited, an Australian
based innovative proximity marketing solutions and consumer intelligence company. The consideration for the
acquisition comprised up-front payments of AU$1,250,000 and cash and share-based earn out targets as follows:
• A$500,000 based on meeting specified EBIT targets (for iProximity’s existing business) for the 2018 and 2019
financial years; and
• the issue of fully paid ordinary shares in the Company in tranches based on meeting specified EBIT targets for
the period ending 31 December 2020 (9,448,964 shares) and based on AoFrio’s SCS System controller unit
sales (‘SCS Target’) for the same period (9,448,964 shares).
EBIT targets were not achieved so the A$500,000 cash consideration was not payable and the 9,448,964 fully
paid ordinary shares were not required to be issued in respect of those targets. The Company agreed to extend
the period for the SCS Target to be achieved to 31 December 2021 and increased the number of units required
to be sold for the remaining shares to be issued. 1,574,828 shares were issued in April 2022 in respect of the
extended and revised target. No further contingent consideration is payable.
Contingent consideration
2022
$000s
2021
$000s
Fair value at start of year323-
Settlement during the period(255)-
Remeasurement recognised in income statement(68)323
Total-323
8081
AoFrio LtdAnnual Report 2022
6.2 Related party transactions
(a). Directors
The names of persons who are directors of the Company are on pages 42 to 43.
(b). Key management personnel and compensation
Key management personnel compensation is set out below. Key management personnel comprise the Directors
including the Chief Executive Officer (CEO) and all the senior executives who report directly to the CEO.
2022
$000s
2021
$000s
Salaries, fees, and other short-term benefits2,4001,776
Share based remuneration9531
Directors’ remuneration281561
Total2,7762,368
(c). Employee share-based remuneration
In 2021, 12,930,000 options were issued to the Chief Executive Officer. 8,620,000 options (Tranche One) will vest
on 1 October 2024 and 4,310,000 options (Tranche Two) will vest on 1 October 2025, if the CEO remains a
full-time employee on those dates. The exercise price of the Tranche One options is 9.1 cents and of the Tranche
Two options is 11.5 cents.
The fair value of the employee services received in exchange for the grant of part paid shares or options are
recognised as an expense over the vesting period. The proceeds received net of any directly attributable
transaction costs are credited to share capital when the partly paid share proceeds are received, or options
are exercised.
Fair value is assessed at the date that the share options are issued using a binomial option pricing model that
takes into account the exercise price, the term of the options, the exercise criteria, the likelihood of staff turnover,
the non-tradable nature of the option, the share price at the issue date, the volatility of the returns on the
underlying share and the risk-free interest rate for the term of the options.
(d). East West Manufacturing LLC
East West Legacy LLC, a substantial security holder in the Company, is considered a related party under NZX
Listing Rules. The Group does not transact with East West Legacy LLC. East West Manufacturing LLC ceased to
be a shareholder in the Company on 22 December 2021 and is no longer considered to be a related party.
6.3 Contingencies
There are no material contingent liabilities or assets (2021 - $nil).
6.4 Financial instruments by category
2022
$000s
2021
$000s
Assets per Statement of Financial Position
Financial assets measured at amortised cost
Trade and other receivables25,60916,663
Cash and cash equivalents2,8395,953
Derivatives used for hedging (at fair value)
Derivative financial instruments140-
28,58822,616
Liabilities per Statement of Financial Position at amortised
cost
Trade and other payables25,09519,167
Borrowings3,9181,997
Derivatives used for hedging (at fair value)
Derivative financial instruments-21
Contingent consideration-323
29,01321,508
8283
AoFrio LtdAnnual Report 2022
Fair value estimation
The only financial instruments carried at fair value are derivatives comprising forward foreign exchange contracts.
The forward exchange contract has been classified as Level 2.
The different levels have been defined as follows:
• Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
• Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices) (Level 2).
• Inputs for the asset or liability that are not based on observable market data (i.e. unobservable inputs)
(Level 3).
The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance
sheet date, with the resulting value discounted back to present value.
6.5 Leases
Property, plant and equipment in the Statement of Financial Position shows the following amounts related to
leases of right-of-use assets:
Right-of-use assets
2022
$000s
2021
$000s
Properties114765
Plant & equipment321
Office equipment and furniture & fittings25
Total119791
There were no additions to right-of-use assets in the year (2021: Nil).
The Consolidated Statement of Comprehensive Income shows the following amounts related to right-of-use
leases:
Depreciation charge for right-of-use assets
Properties193180
Plant & equipment1818
Office equipment and furniture & fittings33
Total214201
Interest expense on lease liabilities4775
Expense relating to short-term leases (included in operating
expenses)
5042
The Consolidated Cash Flow Statement shows the following amounts related to right-of-use leases:
Total principal payments for right-of-use assets232217
The Group leases property, equipment, and cars. Rental contracts are typically made for fixed periods but may
have extension options as described below. Lease terms for equipment and cars tend to be industry standard.
Other leases are negotiated on an individual basis.
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is
available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance
cost is charged to Statement of Comprehensive Income over the lease period to produce a constant periodic rate
of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the
shorter of the asset’s useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include
the net present value of the following lease payments:
• Fixed payments (including in-substance fixed payments), less any lease incentives receivable.
• Variable lease payments based on an index or rate.
• Amounts expected to be payable by the lessee under residual value guarantees.
• The exercise price of a purchase option if the lessee is reasonably certain to exercise that option.
• Payments or penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the lease, if that rate can be determined, or
the Group’s incremental borrowing rate.
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AoFrio LtdAnnual Report 2022
Right-of-use assets are measured at cost comprising the following:
• The amount of the initial measurement of lease liability.
• Any lease payments made at or before the commencement date less any lease incentives received.
• Any initial direct costs.
• Restoration costs.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line
basis as an expense in the Statement of Comprehensive Income. Short-term leases are leases with a lease term
of 12 months or less. Low-value assets are assets of a value of US$5,000 or less.
Lease renewal options are included in the property lease. In determining the lease term, management considers
all facts and circumstances that create an economic incentive to exercise the renewal option. Renewal options are
only included in the lease term if the lease is reasonably certain to be extended. The assessment is reviewed if a
significant event or a significant change in circumstances occurs which affects this assessment and that is within
the control of the lessee.
6.6 Other disclosures
Auditors’ remuneration
2022
$000s
2021
$000s
Deloitte
- Audit of financial statements of the Group – current year177170
- Non audit services
*1
4849
Audit of subsidiaries by other auditors – Thong & Lim44
229223
*
1
Non audit services relate to tax compliance.
6.7 Cash flow information
(a). Reconciliation of profit / (loss) for the year to net cash inflow from operating activities
2022
$000s
2021
$000s
Profit for the year3,2605,425
Adjustments for:
Income tax credit(4,415)(5,981)
Depreciation, amortisation & impairment2,4462,986
Share based payments9531
Decrease in inventory provision(65)(7)
Increase / (decrease) in loss allowance provision2(67)
Decrease in provision for warranty(28)(110)
Change in fair value of contingent consideration(68)323
Net foreign exchange differences(1,845)(163)
Increase in trade and other receivables(8,831)(9,206)
Increase in contract liabilities3,3692,597
Increase in inventories(4,212)(1,176)
Increase in trade and other payables5,9289,295
Net cash (outflow) / inflow from operating activities(4,364)3,947
(b). Net cash / (debt) reconciliation
2022
$000s
2021
$000s
Cash and cash equivalents2,8395,953
Borrowings – repayable within one year(3,452)(731)
Borrowings – repayable after one year(466)(1,266)
Net cash / (debt)(1,079)3,956
The bank trade finance facility is at variable interest rates. All other borrowings are at fixed interest rates, with
borrowings movements disclosed in note 4.1. The decrease in cash during the year of $3,114,000 (2021: increase
$1,343,000 included a $604,000 increase (2021: $333,000 decrease) caused by exchange rate movement.
6.8 Events after reporting date
There are no events after reporting date requiring disclosure. The recent weather events in New Zealand and
earthquake in Turkey did not materially impact the Group.
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AoFrio LtdAnnual Report 2022
Independent Auditor’s Report
To the Shareholders of AoFrio Limited
We have audited the consolidated financial statements of AoFrio Limited and its subsidiaries
(the ‘Group’), which comprise the consolidated statement of financial position as at 31 December
2022, and the consolidated statement of comprehensive income, statement of changes in equity and
consolidated cash flow statement for the year then ended, and notes to the consolidated financial
statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements, on pages 48 to 85, present
fairly, in all material respects, the consolidated statement of financial position of the Group as at 31
December 2022, and its consolidated comprehensive income and consolidated cash flow statement
for the year then ended in accordance with New Zealand Equivalents to International Financial
Reporting Standards (‘NZ IFRS’) and International Financial Reporting Standards (‘IFRS’).
We conducted our audit in accordance with International Standards on Auditing (‘ISAs’) and
International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements section of our report.
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 Company 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), and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
Our firm carries out other assignments for the Group in the area of taxation advice, including tax
compliance services. These services have not impaired our independence as auditor of the Company
and Group. In addition to this, partners and employees of our firm deal with the Company and its
subsidiaries on normal terms within the ordinary course of trading activities of the business of the
Company and its subsidiaries. The firm has no other relationship with, or interest in, the Company or
any of its subsidiaries.
We consider materiality primarily in terms of the magnitude of misstatement in the financial
statements of the Group that in our judgement would make it probable that the economic decisions
of a reasonably knowledgeable person would be changed or influenced (the
‘quantitative’ materiality). In addition, we also assess whether other matters that come to our
attention during the audit would in our judgement change or influence the decisions of such a person
(the ‘qualitative’ materiality). We use materiality both in planning the scope of our audit work and in
evaluating the results of our work.
We determined materiality for the Group financial statements as a whole to be $1,000,000.
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the consolidated financial statements of the current period. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Opinion
Basis for opinion
Audit materiality
Key audit matters
Revenue recognition
The Group has reported revenue for the sale of goods of $72.1
million, (2021: $62.8 million) as set out in note 2.2 of the
financial statements.
The Group recognises revenue for the sale of goods either
when the goods have been delivered, or when the goods are
shipped depending on the terms agreed with each customer.
As material volumes of sales can occur around year end, there
is a risk that revenue is recognised in the incorrect period. As a
result, revenue recognition is a key audit matter.
Our procedures focused on the recording of revenue around
year end and included:
• Obtaining an understanding of the policies, processes and
controls in place to recognise revenue;
• Testing a sample of revenue transactions recorded in
the period around year end to determine whether
revenue was recognised in the appropriate period with
reference to contracted shipping terms for the order,
and documentation to support the timing of when
the goods are dispatched or shipped (such as shipping
documentation);
• Investigating sales transactions which had unusual time
differences between when revenue is recognised in the
accounting system compared to the dispatching log; and
• Testing manual journal entries, including credit notes, that
impacted on revenue accounts around year end.
Key audit matterHow our audit addressed the key audit matter
Recoverability of deferred tax assets in relation to prior
period tax losses
The Group has recognised a deferred tax asset of $10.5 million
(2021: $6.1 million) as set out in note 2.5 of the financial
statements. The Group also has unrecognised, carry forward
tax losses of $87.3 million (2021: $88.5 million).
Judgement is required to determine the probability that
future taxable amounts will be available to utilise temporary
differences and losses.
We have included the recoverability of deferred tax assets as a
key audit matter due to the judgement involved regarding the
future profitability of the Group, and timing of when the losses
would be utilised in each tax jurisdiction.
Our procedures included, amongst others:
• Obtaining an understanding of the policies, processes
and controls relevant to the Group’s assessment of
the recoverability of deferred tax assets, and cash flow
forecasts used in that assessment.
• Assessing the future profit forecasts by jurisdiction, as
used to support the additional recognition and recovery of
deferred tax assets. This included:
◦comparing taxable profit forecasts to Board approved
budgets and considering the historical accuracy of
previous forecasts;
◦challenging the key assumptions in the cash flow
forecasts, in particular over revenue growth and gross
margin; and
◦assessing the consistency of the forecasts used with
those used elsewhere in the business (such as for
going concern or impairment purposes).
• Working with internal tax specialists to challenge
management’s judgements for each jurisdiction, including
over the timing of future taxable profits, and whether
tax losses will continue to be available when the taxable
profits are expected to arise.
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AoFrio LtdAnnual Report 2022
The directors are responsible on behalf of the Group for the other information. The other information
comprises the information in the Annual Report that accompanies the consolidated financial
statements and the audit report.
Our opinion on the consolidated financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and consider whether it is materially inconsistent
with the consolidated financial statements, or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If so, we are required to report that fact. We have nothing to
report in this regard.
The directors are responsible on behalf of the Group for the preparation and fair presentation of the
consolidated financial statements in accordance with NZ IFRS and IFRS, and for such internal control
as the directors determine is necessary to enable the preparation of consolidated financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors are responsible on behalf of the
Group for assessing the Group’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless the directors
either intend to liquidate the Group or to cease operations, or have no realistic alternative but to
do so.
Our objectives are 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 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 and ISAs (NZ) will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and 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 the consolidated financial statements is
located on the External Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-
report-1
This description forms part of our auditor’s report.
This report is made solely to the Company’s shareholders, as a body. Our audit has been undertaken
so that we might state to the Company’s shareholders those matters we are required to state to them
in an 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 Company’s shareholders as a body, for our
audit work, for this report, or for the opinions we have formed.
This report is made solely to the Company’s shareholders, as a body. Our audit has been undertaken
so that we might state to the Company’s shareholders those matters we are required to state to them
in an 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 Company’s shareholders as a body, for our
audit work, for this report, or for the opinions we have formed.
Other information
Restriction on use
Restriction on use
Auditor’s
responsibilities for
the audit of the
consolidated financial
statements
Directors’
responsibilities for the
consolidated financial
statements
Paul Seller, Partner
for Deloitte Limited
Auckland, New Zealand
24 February 2023
This audit report relates to the consolidated financial statements of AoFrio Limited (the ‘Company’) for the year ended 31 December 2022
included on the Company’s website. The Directors are responsible for the maintenance and integrity of the Company’s website. We have
not been engaged to report on the integrity of the Company’s website. We accept no responsibility for any changes that may have occurred
to the consolidated financial statements since they were initially presented on the website. The audit report refers only to the consolidated
financial statements named above. It does not provide an opinion on any other information which may have been hyperlinked to/from these
consolidated financial statements. If readers of this report are concerned with the inherent risks arising from electronic data communication,
they should refer to the published hard copy of the audited consolidated financial statements and related audit report dated 24 February 2023
to confirm the information included in the audited consolidated financial statements presented on this website.
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AoFrio LtdAnnual Report 2022
How our audit addressed the key audit matter
Statutory information
Introduction
Directors have resolved that no dividend be declared.
The Company does not have a credit rating.
Remuneration of Directors
During the year the following remuneration was paid or payable to directors:
20222021
Mr J. McMahon
1
$52,917$50,000
Mr G. Pausch
2
$85,167$193,000
Mr K Oliver
3
$50,833$50,000
Mr J. Scott $50,833$45,000
Mr G Allen
4
$50,833109,008
Note.
1. Fees for Mr J McMahon are paid to Meta Capital Ltd.
2. Fees for Mr G Pausch are paid to Board Advisory Services Ltd.
3. Fees for Mr K Oliver are paid to Alto Capital Ltd.
4. Mr G Allen was appointed a director on 30 October 2020. His fees are paid to RJ-Alpha Advisory Services Ltd.
Interested transactions
The directors have disclosed the following transactions with the Company:
• Interested transactions: There have been no transactions during the year with interested or related parties of the
directors.
• Directors’ remuneration: Remuneration details of directors are provided above.
• Indemnification and insurance of officers and directors: The Company indemnifies directors and executive officers
of the Group against all liabilities which arise out of the performance of their normal duties as director or executive
officer, unless the liability relates to conduct involving lack of good faith. To manage this risk, the Group has
indemnity insurance. The total cost of this insurance expensed during the year ended 31 December 2022 was
$128,795 (2021: $115,315).
• Directors’ share transactions: Details of numbers of shares held by directors are shown below.
• Directors’ loans: There were no loans by the Company to directors.
• The Board received no notices during the year from directors requesting to use Company information received in
their capacity as directors which would not otherwise have been available to them.
Directors’ shareholding
31 December 2022 31 December 2021
Ordinary shares DirectTotal Relevant
Interest
DirectTotal Relevant
Interest
Mr J. McMahon19,178,253-19,178,253-
Mr J Scott-850,000-850,000
Mr G Allen-7,493,382-7,493,382
Mr G Pausch-2,416,6402,416,640
Employees
The number of employees, other than directors, within the Group receiving remuneration and benefits above
$100,000, as is required to be disclosed in accordance with section 211(1) (g) of the Companies Act 1993, is indicated
in the following table.
GroupGroup
2022202120222021
$100,000 - $109,999 64$240,000 - $249,999-1
$110,000 - $119,999 97$250,000 - $259,999-3
$120,000 - $129,999 94$260,000 - $269,9992-
$130,000 - $139,999 34$270,000 - $279,999-2
$140,000 - $149,999 31$290,000 - $299,99921
$150,000 - $159,99952$300,000 - $309,999-2
$160,000 - $169,99923$310,000 - $319,9991-
$170,000 - $179,999 21$320,000 - $329,999-1
$180,000 - $189,999 44$340,000 - $349,999-1
$190,000 - $199,999 32$390,000 - $399,999--
$200,000 - $210,00052$440,000 - $449,999-1
$210,000 - $219,999 12$450,000 – $459,0001-
$220,000 - $229,0002-$490,000 - $499,0001-
Donations
No donations have been made by the Company during the year ended 31 December 2022 (2021: Nil).
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AoFrio LtdAnnual Report 2022
How our audit addressed the key audit matter
Shareholder information
Shareholders
As at 31 December 2022 there were 1,387 shareholders holding 431,853,006 fully paid ordinary shares.
Share issues
The only issue of shares in 2022 was the issue of 1,574,196 ordinary shares in settlement of the deferred purchase
price under the iProximity Pty Limited Sale and Purchase agreement dated February 2018.
Shareholder details
The ordinary shares of AoFrio Limited are listed on the New Zealand Stock Exchange. The information in the
disclosures below has been taken from the Company’s share register on 10 February 2023:
20 largest shareholdersOrdinary shares
1. East West Legacy LLC.55,149,807
2. Wairahi Investments Limited25,800,000
3. Ballynagarrick Investments Ltd21,185,103
4. Tea Custodians Ltd20,387,749
5. ASB Nominees Ltd (Meta Capital Ltd)19,178,253
6. HSBC Nominees (New Zealand) Ltd18,531,744
7. Graham Trustees Ltd16,592,744
8. Hobson Wealth Custodians Ltd15,869,839
9. FNZ Custodians Ltd12,506,855
10. New Zealand Depository Nominee Ltd9,006,627
11. Accident Compensation Corporation 7,508,353
12. Flynn No 2 Trustees Ltd7,054,758
13. Greg Allen6,488,049
14. BNP Paribas Nominees (NZ) Ltd6,040,189
15. JP Morgan Chase Bank NA New Zealand Branch4,901,165
16. Forsyth Barr Custodians Ltd4,152,117
17. Lean Holdings Pty Ltd4,125,123
18. FNZ Custodians Ltd3,740,858
19. Howard Duncan Milliner3,536,561
20. Sujin Boonchuay3,291,073
Distribution of equity securities
Size of holdings at 15 February 2023.
ShareholdersFully paid Ordinary Shares
Number%Number%
1-999473.3818,8090.00
1,000-1,999292.0936,6030.01
2,000-4,999382.74113,8890.03
5,000-9,99922115.911,586,5170.37
10,000-49,99956740.8212,961,7593.00
50,000-99,99917812.8112,023,2902.78
100,000-499,99921215.2644,288,54510.26
500,000
-
999,999382.7426,178,7056.06
over 1,000,000594.25334,644,88977.49
1,389100.00431,853,006100.00
59 (or 4.25%) shareholders, holding 73,716,421 shares (or 17.07%) reside outside of New Zealand.
Substantial product holders
Pursuant to section 26 of the Securities Markets Act 1988, details of substantial product holders and their total relevant
interests as per their most recent notices are:
NameNumber of shares
2
Date of notice
Jarden Securities Ltd & Harbour Asset Management Ltd48,823,48620 July 2021
Wairahi Investments Ltd26,120,2864 August 2021
East West Legacy, LLC55,149,80724 December 2021
2
Number of shares is taken from notices received. No adjustments have been made for changes that may have subsequently occurred from the
dates of notices stated. The definition of “relevant interest” in the Securities Markets Act 1988 provides that more than one relevant interest can
exist in respect of the same securities.
Shareholder enquiries
Shareholders should send changes of address to Computershare Investor Services Limited at the address noted
in the directory on page 105. Notification must be in writing. Questions relating to shareholdings should also be
addressed to Computershare Investor Services Limited. For information about the Group please contact the Company
at the registered office by sending an email to info@aofrio.com or visit our website www.aofrio.com.
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AoFrio LtdAnnual Report 2022
Announcements to shareholders
The Company has established an email list of shareholders that wish to receive announcements made by the
Company to the New Zealand Stock Exchange. Announcements are emailed to shareholders who wish to receive
them shortly after they are released to the NZX. This will include the annual meeting addresses. If you wish to be
added to this listing, please email info@aofrio.com and advise us of your email address. Your email details will be kept
confidential.
Announcements are also posted on our website www.aofrio.com
Corporate governance
The Board and Management of AoFrio Limited are committed to acting with integrity and expect high standards of
behaviour and accountability from all the Company’s officers and staff.
Role of the Board
The Board’s primary objective is the enhancement of shareholder value by following a set of core principles,
appropriate governance and ethical strategies and ensuring effective and innovative use of Company resources. The
Board is responsible for the management oversight, supervision and direction of the Group. Day-to-day management
of the Group is delegated to the Chief Executive Officer.
Compliance
The governance principles adopted by the Board are designed to meet best practice recommendations for listed
companies to the extent that they are appropriate to the size and nature of AoFrio’s operations. The Board endorses
the overall principles embodied in the NZX Corporate Governance Code 2020 (the NZX Code) and believes the
Company’s corporate governance principles, policies and practices are appropriately aligned with the NZX Code.
The Company is reporting against the recommendations in the NZX Code, by describing below the corporate
governance policies and practices AoFrio has in place and highlighting the small number of areas of the NZX Code
where we have not fully followed the Code’s recommendations.
This statement is current to 24 February 2023 and has been approved by the AoFrio Board of Directors.
Board and committee charters, codes and policies referred to in this section are available to view at https://aofrio.com/
investors/governance/
NZX Code
Principle 1 – Code of ethical behaviour
The Company is committed to transparency and fairness in dealing with
all its stakeholders and to ensuring adherence to all applicable laws and
regulations. The Company expects its directors, officers, and employees
to maintain high standards of ethical conduct and expects employees
to act legally, ethically and with integrity in a manner consistent with
the policies and guiding principles that are in place. These include the
following:
• Code of Business Conduct and Ethics for AoFrio team members
and directors: AoFrio team members are committed to being ethically and socially responsible and our business
decisions should reflect our values, acting within the laws of the countries in which it operates. The code provides
a guide to these general principles of conduct and ethics. It brings together all our policy principles and provides
a working guide for directors and employees to do the right thing when making decisions in our daily activities,
and to:
√ Act safely, ethically and responsibly
√ Act in AoFrio’s best interests always
√ Protect the confidentiality of AoFrio’s business information
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AoFrio LtdAnnual Report 2022
√ Always comply with the principles in the Code, the legal and regulatory obligations in their country and the spirit of
the law
√ Hold their colleagues accountable for behaving ethically and following the Code
√ Not engage in any activity whether within or outside of the workplace that is likely to bring AoFrio into disrepute
√ Deal honestly with AoFrio’s people, customers, shareholders, suppliers and other stakeholders
√ Ensure that they do not knowingly enter into transactions or make commitments on behalf of AoFrio that the
Company cannot or does not intend to fully honour
√ Undertake their duties with care and diligence
√ Ensure that any personal opinions AoFrio people express are clearly identified as their own and are not
represented to be the views of the Company
√ Value individuals’ differences and treat people with respect
√ To the best of their ability, ensure that AoFrio’s records and documents, including financial reports, are true,
correct and conform to AoFrio’s reporting standards and internal controls
√ Not accept or offer bribes or improper inducements
√ Speak up about unsafe or unethical behaviours
The Code includes a policy regarding a respectful workplace and diversity, requiring equal opportunity for all.
AoFrio is committed to attracting, developing and advancing the best person for the role. Selection processes for
recruitment and employee development are unbiased and based on merit. AoFiro values diversity and has a workforce
consisting of individuals with diverse skills, values, backgrounds, gender, ethnicity and experience. Any form of
discrimination, bullying or harassment is not tolerated.
AoFrio takes the Code seriously. It is the responsibility of all AoFrio people globally to promptly bring suspected
violations to the attention of the Company, for the benefit of all.
• Rules for Trading in AoFrio Securities: The Rules for Trading in AoFrio Securities require all staff and directors
to seek approval in accordance with the rules before buying or selling any AoFrio securities. The policy details
“blackout periods” when trading is forbidden, as well as a process for authorisation at all other times.
The Company has an ongoing programme to maintain employee awareness and understanding of these ethical
standards and policies.
Principle 2 – Board composition and performance
The AoFrio Board comprises directors with an appropriate range and
mix of skills and experience; who have a proper understanding of, and
competence to deal with, current and emerging issues of the business;
and who can effectively review and challenge the performance of
management and exercise judgment independent of management.
The Board’s structure and governance arrangements are set out in the
AoFrio Board Charter.
The AoFrio Constitution requires the Company to comply with the
minimum Board composition requirements of the NZ Stock Exchange which are that there must be at least three
directors, and at least two directors must be independent directors and two ordinarily resident in New Zealand. We
assess director independence against the “disqualifying relationship” criteria in the NZX Listing Rules. The Board
currently has five directors, four of whom are considered independent.
Profiles of all directors and their dates of appointment are set out in the Directors section of this Annual Report on
pages 42 to 43 and are available on the Company’s website.
Attendance at meetings held during 2022 was:
Directors’ meetings
John
McMahon
Gottfried
Pausch
Keith OliverJohn ScottGreg Allen
Meetings held whilst a director1111111111
Attendance1111111111
Audit Committee meetings
John
McMahon
Keith OliverGottfried
Pausch
Meetings held whilst a committee
member
333
Attendance323
Executive Appointment &
Remuneration Committee meetings
Keith OliverGottfried
Pausch
Meetings held whilst a committee
member
22
Attendance22
Risk Committee meetings
Greg AllenTechnology & Innovation
Committee meetings
John Scott
Meetings held whilst a committee
member
2
Meetings held whilst a committee
member
1
Attendance2Attendance1
As the Board is small, the Company has not established a separate nomination committee as recommended under
the NZX Corporate Governance Code, believing these matters are best dealt with by the full Board of Directors.
Periodically the Board evaluates its performance, composition, size, diversity and mix of skills and considers director
succession planing. The method of review is determined by the chairperson annually and may include interviews,
questionnaires and/or external review. The Board is satisfied that it is operating well and that the performance
processes we have used are both effective and suited to the Company.
When a decision is made to recruit a new director, the Board identifies candidates with a mix of capabilities and
perspectives considered necessary for the Board to carry out its responsibilities effectively. The Board also considers
the skills of the existing directors to ensure that the skills of the new director will complement and add to the
effectiveness of decision making. Appropriate pre-appointment checks are made on the background and suitability
of all directors. New Board members enter into a written agreement establishing the terms of their appointment.
A director appointed by the Board must stand for election at the next annual meeting. Listing Rule 2.7.1 requires
directors to stand for re-election on the later of three years and the third annual shareholders’ meeting after their
appointment. Retiring directors are eligible for re-election.
Directors undertake to attend appropriate education to remain current in how to best perform their duties as directors.
Directors are encouraged to attend courses and maintain membership of relevant bodies, such as the Institute
of Directors.
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AoFrio LtdAnnual Report 2022
Directors receive information independently from management in relation to specific issues relevant to AoFrio,
the markets in which the Company operates and to NZX listed companies generally. All directors have access to
management for any additional information they consider necessary for informed decision making.
The Company recognises our people are critical to our business. AoFrio has a very small number of employees,
a significant number of whom are based outside of New Zealand, which makes it challenging for the Company to
adopt any formal targets in relation to diversity as is recommended by the NZX Code. While we do not have any such
formal targets, AoFrio values and respects the contributions, ideas and experiences of people from all backgrounds
and is proud to have a diverse company with staff from around the world and from many cultures. As stated, the
Company has a diversity policy included in its Code of Business Conduct and Ethics, and is committed to attracting,
developing and advancing the best person for the role. Recognising the small size of the Company, the Company’s
diversity policy does not include measurable objectives to be met, as recommended by the NZX Code. Attracting
the best person for a role may involve a global search for a suitable candidate and that selection may add to our
diversity. AoFrio recognises diversity brings a range of ideas, skills and innovation to the Company, which is important
to the achievement of our objectives. The Board is generally satisfied with the Company’s performance in relation to
diversity, but considers that the Company could improve its diversity at the senior management and board level and is
conscious of the benefits a diverse leadership team can provide to the business.
The Company will continue to strive to ensure the best person for the role is identified in the recruitment process
for all positions becoming available and will strive to ensure it continues to improve diversity in its workforce. It will
ensure gender, race, sexual orientation, disability, age, religious or other bias are not present in hiring decisions. The
Company aims to encourage development of its existing staff through global re-deployment and training.
Diversity by gender statistics
In accordance with NZX Listing Rule 3.8.1 the Company makes the following diversity disclosures as at 31 December
2022:
MaleFemaleTotal
31 December 2022#%#%
Board5100%--5
Senior management team* 556%444%9
Other staff 7376%2324%96
Total Company 8375%2725%110
MaleFemaleTotal
31 December 2021#%#%
Board5100%--5
Senior management team*675% 2 25%8
Other staff 6479% 1721% 81
Total Company 7580% 1920% 94
* The senior management team comprises of the Chief Executive Officer (CEO) and all the senior executives who report directly to the CEO. The
senior management team are “officers” for the purpose of the NZX Listing Rules.
Principle 3 – Board committees
The Board has established several committees to guide and assist
them with overseeing certain aspects of corporate governance.
These committees are the Audit and Risk Committee, the Technology
and Innovation Committee and the Executive Appointment and
Remuneration Committee. Each committee is empowered to seek
any information it requires from employees in pursuing its duties and
to obtain independent legal or other professional advice.
Audit and Risk Committee
The Audit Committee operates under a charter approved by the Board and assists the Board in; overseeing the
quality and integrity of external financial reporting including the accuracy, completeness and timeliness of financial
statements; the appropriateness of accounting policies, areas of judgement, compliance with accounting standards,
stock exchange and legal requirements; and the business’s relationship with, and the independence of, the
external auditor.
The committee also approves any non-audit work carried out by the Company’s auditor and ensures that the lead
partner in the audit firm is rotated every five years.
The committee currently comprises three non-executive directors, all of whom independent and one of whom has
a financial or accounting background. The Chairman of the Committee is not also the Chairman of the Board.
Employees only attend meetings of the Audit and Risk Committee at the invitation of the Committee.
The current members are John McMahon (Committee Chairman), Keith Oliver and Gottfried Pausch.
Executive Appointment and Remuneration Committee
The Executive Appointment and Remuneration Committee operates under a charter approved by the Board and
assists the Board in; the remuneration and appointment of the senior executive team; management succession
planning; reviewing and approving compensation arrangements; establishing employee incentive schemes and the
remuneration of the Board. The committee also advises on proposals for significant company-wide remuneration
policies and programmes. In carrying out this role, the sub-committee operates independently of senior management
of the Company and, where appropriate, obtains independent advice on remuneration policy and packages.
The Committee must be comprised of at least a majority of independent directors. Employees only attend meetings of
the Executive Appointment and Remuneration Committee at the invitation of the Committee.
The current members are independent directors Keith Oliver (Committee Chairman) and Gottfried Pausch (Past
Committee Chairman).
Technology and Innovation Committee
The Technology & Innovation Committee operates for the primary purpose of overseeing and providing counsel on
matters of innovation and technology. It is chaired by John Scott.
Risk Committee
The Risk Committee operates for the primary purpose of taking reasonable steps to acquire and maintain up-to-date
knowledge of enterprise risk management. It is chaired by Greg Allan.
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Other committees
From time-to-time the Board may establish a committee to assist in the management of a matter or project.
The Company has established protocols for dealing with a takeover should an offer be received.
Health and safety
Whilst not a committee of Board members, AoFrio has a Health and Safety Committee that meets monthly and reports
to the Board. The Company is strongly committed to maintaining a safe and healthy workplace and believes all
accidents are preventable. The committee is made up of a mix of senior management and staff from key operational
areas. The committee strives to; maintain and continually improve our health and safety systems; proactively identify
hazards and take all steps to eliminate or mitigate these; consult and actively promote participation in health and
safety matters throughout the Company.
The health and safety policy can be found at http://www.aofrio.com/governance
Principle 4 – Reporting and disclosure
The Company is committed to ensuring integrity and timeliness of
its financial reporting and in providing information to the market and
shareholders.
Financial reporting
The Board has overall responsibility for ensuring the integrity of the
Company’s reporting to shareholders, including for financial statements
that comply with generally accepted accounting practice. The Audit
Committee assists the Board to fulfil its responsibilities in this area. The committee makes enquiries of management
and the external auditors (including requiring management representations) so that the Company can be satisfied as
to the validity and accuracy of all aspects of AoFrio’s financial reporting.
The CEO and CFO certify to the Board that: the annual report is true, and the statements therein are not materially
misleading; and no matters in the annual report would make any of the statements untrue or materially misleading.
AoFrio strives to improve the clarity and readability of its financial statements, while continuing to comply with all the
requirements of the financial reporting standards including the Companies Act 1993, the Financial Markets Conduct
Act 2013, and the Listing Rules.
Continuous disclosure
The Company has a formal Group Market Disclosure Policy. The policy seeks to promote investor confidence by
ensuring that dealing in its securities takes place in an efficient, competitive and informed market. The Company
strives to ensure that all investors have equal and timely access to market sensitive information. The Company
considers that evenly balanced disclosure (during good times and bad) is fundamental to building shareholder value
and earning the trust of staff, customers, suppliers, communities and shareholders.
The Board promptly reviews and approves material announcements and specifically considers with management
at each Board meeting whether there are any issues which might require disclosure to the market under the NZX
continuous disclosure requirements.
Trading in shares
AoFrio is committed to transparency and fairness in dealing with all its stakeholders and to ensuring adherence to all
applicable laws and regulations.
AoFrio has a detailed share trading policy, the Rules for Trading in AoFrio Securities which applies to all directors and
employees. No director or employee may use confidential non-public price sensitive information in his or her position
to engage in securities trading for personal benefit or to provide benefit to any third party. Short-term trading in AoFrio
shares and buying or selling (while in possession of non-public price-sensitive information) is strictly prohibited.
Given the small size of the Company, all directors and employees must obtain consent to trade in securities prior to
trading. All members of the Board need to consent to the application. Once these consents have been received the
Chair of the AoFrio Board or (where the Chair is unavailable) the Chair of the Board’s Audit Committee, will approve or
decline the application. The Company monitors trading and reports share movements to the Board at every meeting.
Information for investors
AoFrio’s investor website https://aofrio.com/investors/financial-results-and-reports/ includes the Company’s reports,
investor communications, audio and video releases and the Policies and Charters referred to in this section. The
Annual and Interim Reports are available in electronic and hard copy format.
Principle 5 – Remuneration
The Executive Appointment and Remuneration Committee is
responsible for ensuring directors and executives receive the
appropriate rewards to support AoFrio in achieving its commercial and
stakeholder goals. The Executive Appointment and Remuneration
Committee has a formal charter. Its membership and role are set out
under Principle 3 above.
Director remuneration
Directors’ fees are intended to be aligned with other organisations of similar scale and complexity. Directors’ fees
are currently set at a maximum aggregate cap of $400,000 per annum. This was approved by shareholders at the
2019 Annual Meeting. Directors’ fees paid in the 2022 financial year amounted to $290,583 due to the small size of
the Board. Full disclosure of director remuneration is set out on page 90. Other than as disclosed here, no director
is entitled to any other remuneration or retirement benefits from AoFrio. Directors are entitled to be reimbursed for
reasonable travel, accommodation and other expenses incurred by them in connection with their attendance at Board
or shareholder meetings or otherwise in connection with AoFrio business.
The Executive Appointment and Remuneration Committee conducts a regular review of directors’ fees, to determine
whether the level of fees paid to the Company’s chairperson and other non-executive directors is aligned with other
organisations of similar scale, scope and complexity. At the 2022 Annual Meeting, shareholders approved increases
to fees paid to directors but within the $400,000 aggregate cap. The next review is scheduled for early 2025. Any
increases in fees paid to directors must be authorised by the Board and be within the above aggregate cap approved
by shareholders.
Executive Remuneration Policy
AoFrio’s approach is to pay a base salary and a performance-based bonus that includes a short-term and a long-term
incentive component. This ensures executive motivation is aligned with the goals of the Company in the short and
long term.
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Base salary
As stated above, the Company recognises our people are critical to our business and its growth strategies. AoFrio’s
remuneration strategy is to pay executives a remuneration that is fair and reasonable in a competitive market for
the skills, knowledge and experience required by the Company. Salaries are determined for their current position
in the market using relevant and up to date market benchmark data and an individual’s performance and are
reviewed annually. Many of our employees are based outside of New Zealand and remuneration varies by location in
accordance with the local market.
Short-Term Incentive
Our Short-Term Incentive (STI) model is focused on delivering financial and business improvement performance
goals, predicated on measurable outcomes, differentiating high performance, and rewarding delivery. The STI
programme applies only to key management and other selected staff members. STI values are calculated as a
percentage of base salary, ranging between 10% to 40% for eligible employees. Executive team STI payments are
determined following a Board level review of the Company’s and the individual’s performance and may be paid out at
between zero to 100% of an individual’s STI target. It is possible for an executive to achieve 200% on financial metrics
if targets are substantially overachieved.
Employee share purchase plans
AoFrio has two Long Term Incentive (LTI) share purchase plans, a partly paid share scheme which has been operating
since 2008 and the United States employee share option plan which has operated since 2010. There are no partly
paid share issues or options currently outstanding.
The Company intends to review its long-term incentive plans to ensure that the Company continues to have plans that
are fit for the purpose of retaining and attracting the right talent for the business.
CEO remuneration
The following tables sets out the payments made to the CEO during FY2022.
Greg Balla – CEO
Fixed remuneration$485,437
Employer contributions to KiwiSaver$10,922
Total remuneration$496,359
Greg Balla does not participate in the Company’s STI programme. He has been issued 12,930,000 share options
representing 2.99% of the Company’s ordinary shares at the time of issue. Provided he is a full-time employee at that
date, 8.62 million options shall vest on 1 October 2024 and may be exercised within 18 months following 1 October
2024 at an exercise price of 9.1 cents per share. Provided he is a full-time employee on 1 October 2025, a further 4.31
million options shall vest on 1 October 2025 and may be exercised within 18 months of that date at an exercise price
of 11.5 cents per share.
Principle 6 – Risk management
The identification and effective management of the Company’s risks are
a priority of the Board.
As discussed above, the Board has established an Audit Committee
and a separate Risk Committee to assist the Board with its oversight,
monitoring and review of risk. Bi-annually there is a review of the entire
risk landscape to establish a forward-looking perspective on business
risks, both financial and non-financial, in both the internal and external
environment. The committees provide a forum for discussion of risk, including the Board’s appetite for risk, with the
CEO and management. The CEO and senior management team are required to regularly identify the major risks
affecting the business and to develop strategies to mitigate these risks. Significant risks are discussed at each Board
meeting, or as required.
The Company maintains insurance policies that it considers adequate to meet the insurable risks of the Group.
Exposure to any foreign exchange risk is managed in accordance with policies laid down by the Board.
The Health and Safety Committee meets monthly and reports to the Board on health, safety and wellbeing matters.
Minutes of the Health and Safety Committee are a priority agenda item at all Board meetings and specific reviews
are sought as required. The committee continuously reviews health and safety risks and systems used to identify
and manage those risks, ensuring they are fit for purpose, are being effectively implemented, regularly reviewed and
improved. The frequency of incidents has been low and no Accident Compensation claims involving the Company
have been recorded for several years. The Board undertakes ongoing health and safety education and visits key
operational sites on a regular schedule.
Principle 7 – Auditors
Oversight of AoFrio’s external audit arrangements is the responsibility of
the Audit and Risk Committee.
The Company has adopted a policy to ensure that audit independence
is maintained, both in fact and appearance, such that AoFrio’s external
financial reporting is viewed as being reliable and credible. The policy
covers the following areas:
• The external auditor must always remain independent of the Company and comply with the New Zealand Institute
of Chartered Accountants’ (NZICA) Code of Ethics.
• The external auditor must monitor its independence and report to the Board that it has remained independent.
• Guidelines in relation to the provision of non-audit services by the external auditor in order that the provision of
such services does not impair the external auditor’s independence or objectivity.
• The audit firm may be permitted to provide non-audit services that are not considered to conflict with the
preservation of the independence of the auditor subject to the approval of the Audit and Risk Committee.
• The Audit and Risk Committee must approve significant permissible non-audit work assignments that are awarded
to an external auditor.
Deloitte is the existing auditor of the Company and was automatically re-appointed by virtue of section 207T of the
New Zealand Companies Act 1993.
During 2022 other services provided by Deloitte amounted to $48,000 relating to tax compliance services.
To ensure full and frank dialogue between the Audit and Risk Committee and the auditors, the auditor’s senior
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AoFrio LtdAnnual Report 2022
representatives meet separately with the committee (without management present) at least twice a year, including
immediately before finalisation and release of the Company’s half-year and full-year financial results to the market.
Due to its small size, the Company does not have an internal audit function as is recommended by the NZX Code. As
discussed above, the CEO is accountable for all operational and compliance risks across the Company’s operations
and businesses. The CFO has management accountability for the effective control, implementation and improvement
of internal systems and controls.
Representatives of the Company’s external auditor, Deloitte are invited to attend the annual shareholders meeting
where they are available to answer shareholders’ questions relevant to the audit.
Principle 8 – Shareholder rights and relations
The Board’s policy is to ensure, in an open and transparent manner,
that shareholders are informed of all major and strategic developments
affecting the Company.
We provide information about who we are, including our governance
policies, on our website for investors to access at any time.
The Company releases all material information via the NZX in
accordance with its continuous disclosure requirements. All major
disclosures are also posted on the Company’s website on a timely basis.
Shareholders can directly communicate with the Company via https://aofrio.com/investors/financial-results-and-
reports/. Our CEO and CFO also respond directly to shareholder phone calls and emails.
Shareholders are encouraged to receive all shareholder communications by email. The Company provides a printed
copy of its Interim and annual reports to shareholders who have elected to receive printed copies. Interim and annual
reports are available on the Company’s website in accordance with the requirements of the NZ Companies Act 1993.
The Company’s share register is managed and maintained by Computershare. Shareholders can access their
shareholding details or make enquiries about their current shareholding interests electronically.
Notices of annual meetings are made available as soon as possible and posted on the website of the Company
usually more than one month prior to the meeting.
The annual meeting for the 2023 year is planned to be held on 24 May 2023. All shareholders are welcome to
attend and ask questions, whether or not the meeting is held virtually or in person or appoint a proxy on their behalf,
or submit a postal vote, if they are unable to attend. The external auditor, Deloitte will be in attendance to answer
questions about the audit and their audit report.
Shareholders are encouraged to attend, participate and vote at meetings. Results of proxies and postal votes are
summarised and disclosed at the meeting. Results of meetings are announced on the NZX as soon as possible
following the closure of the shareholder meeting.
Contacts
AoFrio offices
New Zealand (Head office)
AoFrio Ltd
21 Arrenway Drive
Rosedale, Auckland 0632
New Zealand
Postal Address
P.O. Box 302 – 533
North Harbour
Auckland 0751, New Zealand
Ph: 64-9-477 4500
Mexico
Wellington Latin America Services SA de CV
San Serafin No. 4
Residencial San Gil
San Juan del Rio, Qro,
Mexico 76815
PO Box 57
San Juan del Rio
Querétaro
Mexico 76800
Ph: +52 427 167 3857
Brazil
Wellington Drive Technologies (Brazil)
Rua Xamim, 370 - Iririu
Joinville, SC
Brazil 89227917-315
Ph: +55 47 3028 3858
Turkey
Wellington Motor Teknolojileri San Tic Ltd. Sti.
Fatih Sultan Mehmet Mah.
Poligon Cad. No: 8C
Buyaka Kule 3 Kat:11 Daire:70
Tepeüstü 34771 Umraniye – Istanbul
Ph: +90 0 (216) 420 12 02
Fax: +90 0 (216) 420 12 05
Phone/fax
Ph: 64-9-477 4500
Fax: 64-9-479 5540
Internet and social media
Website: www.aofrio.com
Email: info@aofrio.com
LinkedIn
Twitter
Address and registered office
21 Arrenway Drive
Rosedale, Auckland 0632, New Zealand
PO Box 302-533, North Harbour,
Auckland 0751, New Zealand
Auditor
Deloitte Limited
80 Queen Street, Auckland CBD, Auckland 1010
Banker
Bank of New Zealand
Share registry
Computershare Investor Services Ltd,
Private Bag 92119, Auckland 1142,
New Zealand
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Annual Report 2022
www.aofrio.com
WT9745
AoFrio
Annual Report
2022
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Template
Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Updated as at 17 October 2019
Results for announcement to the market
Name of issuer AoFrio Limited
Reporting Period 12 months to 31 December 2022
Previous Reporting Period 12 months to 31 December 2021
Currency New Zealand Dollar
Amount (000s) Percentage change
Revenue from continuing
operations
$74,324 +15.7%
Total Revenue $74,324 +15.7%
Net profit/(loss) from
continuing operations
$3,260 - 39.9%
Total net profit/(loss) $3,260 -39.9%
Interim/Final Dividend
Amount per Quoted Equity
Security
No dividend will be paid
Imputed amount per Quoted
Equity Security
n/a
Record Date n/a
Dividend Payment Date n/a
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$0.025 $0.018
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
NTA is calculated to exclude Intangible Assets but include
Deferred Tax – as has been the practice in prior years.
Authority for this announcement
Name of person
authorised
to make this announcement
Howard Milliner
Contact person for this
announcement
Howard Milliner
Contact phone number 0275870455
Contact email address Howard.milliner@wdtl.com
Date of release through MAP
27/02/2023
Audited financial statements accompany this announcement.
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.