EROAD
Annual Report
2023
EROAD 2023 ANNUAL REPORT
We provide end-to-end technology solutions
which connect vehicles, assets and operations to
help businesses make real-time decisions from
real-time data. Helping run safer, greener, more
productive businesses.
OUR PURPOSE
Delivering intelligence you can trust,
for a better world tomorrow
At EROAD, we believe you can’t plan where you are going tomorrow, if you don’t
know where you are today. The businesses we serve are at the heart of their local
economies. They don’t just need data, they need intelligence. Reliable, accurate
and real-time insight enabling them to make decisions which move us all forward
towards a safer and more sustainable future.
OUR GOAL
Empowering transformation
Our goal is to become a system of record for our clients, serving as a catalyst
for change. Through our platform, they can obtain data, analyse it, and take
action to digitally transform their operations. We offer more than just telematics;
we deliver unparalleled insights to enhance fleet and operational performance.
We empower transformation by increasing efficiency, enhancing productivity,
managing safety, compliance and measuring sustainability.
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Contents
PAGE 6
FY23 HIGHLIGHTS
PAGE 8
LETTER FROM THE CHAIR
PAGE 10
LETTER FROM THE CHIEF EXECUTIVE OFFICER
PAGE 14
STRATEGIC DIRECTION
PAGE 18
WHAT WE DO
PAGE 26
OUR MARKETS
PAGE 28
EXPLORING VALUE
PAGE 40
FUTURE GROWTH
PAGE 42
OUR LEADERSHIP
PAGE 48
FINANCIAL STATEMENTS
PAGE 106
CORPORATE GOVERNANCE REPORT
PAGE 124
REMUNERATION REPORT
PAGE 144
REGULATORY DISCLOSURES
EROAD acknowledges the
Indigenous Nations, First Peoples,
Tangata Whenua and Custodians of
the lands and waterways on which
our offices reside in New Zealand,
Australia and the United States of
America. We express gratitude and
appreciation to these peoples for
sharing their culture and traditions
and stewarding these lands. We
recognise and pay respect to their
elders, past, present and emerging.
Non-GAAP Measures
EROAD has used non-GAAP measures when discussing
financial performance in this document. The directors
and management believe that these measures provide
useful information as they are used internally to evaluate
performance of business units, to establish operational
goals and to allocate resources. Non-GAAP measures are
not prepared in accordance with NZ IFRS (New Zealand
International Financial Reporting Standards) and are not
uniformly defined, therefore the non-GAAP measures
reported in this document may not be comparable with
those that other companies report and should not be
viewed in isolation or considered as a substitute for
measures reported by EROAD in accordance with NZ IFRS.
The non-GAAP measures EROAD have used are,
Annualised Monthly Recurring Revenue (AMRR), Costs
to Acquire Customers (CAC), Costs to Service & Support
(CTS), EBITDA, Normalised EBITDA, EBITDA margin,
Normalised EBITDA margin, Normalised Revenue, Free
Cash Flow and Future Contracted Income (FCI).
About this Report
The 2023 Annual Report describes EROAD’s strategy,
financial performance and includes the Corporate
Governance Statement and the Remuneration Report.
EROAD’s FY23 Sustainability Report will be published in
June 2023 which will provide information on EROAD’s
approach and performance in relation to its most material
social and environmental issues.
All numbers relate to the 12 months ended 31 March 2023
(FY23) and comparisons relate to the 12 months ended
31 March 2022 (FY22), unless stated otherwise. All dollar
amounts are in NZD, unless otherwise stated. This report
covers the 12 months ended 31 March 2023 and is dated
24 May 2023.
This report has been approved by the Board and is
signed on behalf of EROAD Limited by Graham Stuart,
Chairman and Susan Paterson, Chair of the Finance Risk
and Audit Committee.
Graham Stuart
Chairman
Susan Paterson
Chair of the Finance, Risk
and Audit Committee
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EROAD 2023 ANNUAL REPORTLETTER FROM THE CHAIR | FY23 Highlights
REPORTED REVENUE
REPORTED EBITDA
$174.9m
normalised for one off contingent
consideration accounting impacts
$165.3
(FY22: $114.9M)
AMRR
$153.7m
reflecting growth of 14.2%, including
a positive FX impact of $8.6m
(FY22: $134.6M)
FREE CASH FLOW
MARGIN
(18)%
$45.2m
FY23: $39.0m normalised for
integration costs and contingent
consideration accounting
(FY22: $21M)
CONTRACTED UNITS
227,149
representing net growth of
18,452 units globally
(FY22: 208,697)
ASSET
RETENTION RATE
94.8%
normalised for Coretex consideration
in FY22 and FY23
(FY22: (39)%)
reflecting high asset retention rates
in all regions
(FY22: 93.4%)
R&D
AS A % OF REVENUE
23%
reflecting the benefit from the
growth in revenue with a full year
of both companies
(FY22: 28%)
MONTHLY
SAAS ARPU
$56.34
reflecting expansion of SaaS
products and ancillary hardware
within our customer base along with
a positive FX impact of $2.11
(FY22: $55.57)
FY23 HIGHLIGHTS |
After a challenging year, EROAD has delivered results in line
with guidance. I believe EROAD is building the right platform
for future growth. Management utilised FY23 to align our
business model with a new strategic direction. This plan, which
is built around turning around our core and improving our
US offering, allows us to right-size the cost base, generate
positive Free Cash Flow, and capitalise on significant growth
opportunities in our key markets.
Mark Heine, CEO
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EROAD 2023 ANNUAL REPORTSTRATEGIC DIRECTION |
Letter from the Chair
EROAD’s results this year reflect the
success of a strategic shift. After going
off the rails in FY22, this past year
needed to be a period of rebuilding
and refocus for EROAD. Last May, we
provided the market with guidance that
FY23 Revenue would be in the range
of $150m to $170m and Normalised
EBIT would end between a break even
result and a loss of $5m. It is pleasing to
report that Normalised Revenue for the
year was $165.3m and Normalised EBIT
was a loss of $4.5m, both key measures
reflecting improvement on FY22 results
and within the guidance ranges we
provided to the market 12 months ago.
Monthly Recurring Revenue (AMRR) reflects growth of
14.2% for the year.
Planning is also well developed, and execution underway,
to manage the implications arising from the planned
shutdown of the 3G cellular network in New Zealand and
Australia from June 2024. This involves replacing the
remaining 60% of our installed 3G devices in operation
across ANZ. It requires significant capital expenditure and
the dedication of staff resources to manage a complex
logistical challenge.
While the Board believes EROAD can undertake this unit
replacement programme and still pursue a North American
growth strategy, there will be trade-offs. For this reason,
we have appointed Goldman Sachs to help identify
partnership opportunities to contribute some combination
of market access, expertise and capital to drive further
growth in the North American market.
We take immense pride in the exceptional performance
of our people, who have persevered through another
challenging year of considerable change and uncertainty.
Their exceptional work ethic, dedication and unwavering
commitment to our shared goals have paved the way for
sustained growth.
A New Purpose for EROAD:
Delivering Intelligence You Can Trust,
For a Better World Tomorrow
Over the last quarter of the year, EROAD undertook
a comprehensive process involving a wide range of
stakeholders to define a new purpose for the company.
We are pleased to announce that we have adopted the
new purpose of “Delivering Intelligence You Can Trust,
For a Better World Tomorrow”. This build on our previous
purpose of “Creating Safer and More Sustainable Roads”.
It also better reflects a unified EROAD, following our
merger with Coretex, and aligns with our public tagline of
“Empowering Transformation”. We are confident that this
bold and aspirational purpose will resonate with our team
and all our stakeholders, and it reinforces our commitment
to deliver innovative solutions for a better future.
Building on last year’s inaugural Sustainability Report, we
are pleased to announce that this year’s Sustainability
Report (to be released in June) will include coverage
of our sustainability performance, including detailed
information on our efforts to reduce our carbon footprint,
help our customers do the same, and promote diversity
and inclusion within our workforce. Looking ahead, we are
committed to preparing for climate-related disclosures
in FY24, and we will continue to actively engage with our
stakeholders and industry to ensure that we are meeting
expectations for sustainability leadership and transparency.
EROAD values transparency and accountability to
our stakeholders, and we are proud to announce that
we continue to voluntarily comply with the Australian
“Say on Pay” regime. In doing so, we have published a
comprehensive remuneration report and will put a vote for
adoption at the same time as our FY23 ASM. This is in line
with our ongoing commitment to best practice governance
and our shareholders’ interests.
Continuous Board Renewal
During FY23, Tony Gibson advised the EROAD Board that
he will not stand for re-election as an Independent Director
at the upcoming 2023 Annual Shareholders’ Meeting, in
line with EROAD’s program of Director rotation. Mr Gibson
has been a valued member of the Board since 2009 and
served in several capacities, including Chair prior to the
company’s NZX listing and Chair of the Remuneration,
Talent, and Nomination Committee as well as being a
member of the Finance, Audit and Risk Committee. Tony’s
experience and insight were instrumental in shaping the
direction of EROAD from its early stages, and we thank him
for his contribution over the years.
By necessity the business has changed profoundly
over this past 12 months, the Board cannot be immune
to these changes, to remain effective we must also be
committed to reviewing our composition to ensure that
we have the right capabilities that can deliver sustainable
long-term value to our shareholders. As part of this, we
have commenced a search for an additional Director to
ideally bring further North American experience and
perspective to the Board, and we expect to make an
appointment within the next six months.
Looking Ahead
The goals for the business over the coming year have
been detailed at our Sydney Investor Day in March, where
we demonstrated how our refreshed strategy provides a
pathway to sustainable, profitable growth. Our focus on
durable growth will drive EROAD to become Free Cash Flow
neutral by FY25, and Free Cash Flow positive by FY26.
Our solutions continue to deliver strong return on
investment for our customers, and with our refreshed
strategy we are confident in our ability to navigate through
any economic uncertainties. We have the technology
and talented people in place to execute against our
strategic priorities and deliver on our purpose of delivering
intelligence you can trust, for a better world tomorrow.
Thank you for your continued support of EROAD and we
look forward to seeing you at the upcoming ASM.
Graham Stuart
Chairman
In June 2022, we appointed Mark Heine as Chief Executive
Officer. Under Mark’s strong leadership EROAD has rebuilt
the foundations for profitable growth. He has also made
significant changes to EROAD‘s senior leadership team
since taking on his role. The pending appointment of a
Chief Technology Officer will be the final addition to the six
new appointments he has made to his direct report team,
contributing to the overall revitalisation of the company‘s
leadership structure under Mark‘s guidance.
During the third quarter we undertook an in-depth
strategic review supported by McKinsey & Company. The
outcome of this review was a programme that focuses on
three key sets of initiatives:
1. Product rationalisation
2. North American growth, and
3. Cost reduction
The targets for each of these initiatives, agreed with
management, provide a pathway to positive Free Cash
Flow by FY26. Our FY23 results are already testament to
the successful implementation of this plan.
Throughout all this change, the underlying business has
continued to grow. Our key revenue measure of Annualised
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EROAD 2023 ANNUAL REPORTLETTER FROM THE CHAIR | Letter from the
Chief Executive Officer
FY23 presented a range of challenges and opportunities for EROAD and
was a pivotal year of transition. Although the fundamentals of EROAD are
strong, over the last few years EROAD had lost its way on its customer
focus and cost base. This has now changed. When I presented last year’s
results, I made a commitment to our shareholders. We would demonstrate
we are credible and capable of delivering what we promise. Our pursuit of
this commitment is evidenced by us meeting our guidance for our FY23
results, coupled with a clear path to growth and Free Cash Flow positive
by FY26. As we commence another financial year, I am proud to say that
we are well on the way to achieving significant and transformative change,
driven by the dedication and talent of our exceptional team at EROAD.
A Clear Strategic Direction
Laser Focused Execution
EROAD ended FY23 with a renewed strategic approach of
being customer-led. We have also developed a new strategy
to capitalise on key opportunities ahead of us and have
begun implementation. In the second half of the financial
year, the management team, with McKinsey & Company,
led a strategic business model review. This process yielded
four key opportunities for optimisation. In the final quarter of
FY23, EROAD commenced executing against this strategy.
1. We are shifting to a segmented customer service
model to reduce our cost to serve and provide better
customer service.
2. We have refined our R&D program to ensure faster speed to
market while ensuring our platform is robust and scalable.
3. We are developing a differentiated product offering in North
America to target enterprise customers.
4. Finally, we are laser focused on removing costs from our
business and improving unit economics.
To effectively reposition EROAD’s business model to
simultaneously drive growth and generate cash, our strategy
has two key limbs. Firstly, we must turn around the core
business. This is to ensure we can accelerate our shift to be
Free Cash Flow positive by FY26 and, to this end, we have
realised over $10m (annualised) in savings in FY23 and are
targeting a further $10m (annualised) in FY24.
Our second limb is to grow in North America. To achieve
this, we are targeting transportation customers, investing
in scalable and competitive product offerings, particularly
productivity and sustainability functionality, and scaling up
our enterprise team.
Strong Leadership Team
Our strategy is complemented by a strong and experienced
leadership team. As well as elevating talent from within our
business to key positions, I have added several talented
individuals with experience in technology and industry. Our
new Chief Transformation Officer Steen Andersen brings 25
years of experience across SaaS businesses. Shelley Prentice,
who recently commenced as Chief People Officer, joins us
from a strong background in transportation. Returning to
EROAD, our Chief Operating Officer Aaron Latimer can
blend his knowledge of our operating model with his history
in the technology sector. Lastly, a new Chief Technology
Officer, joining in Q1, will bring telematic experience.
To help return confidence to our shareholders, the EROAD
team have been laser focused on execution in FY23. I am
proud to report that our financial results have met market
guidance, demonstrating our commitment to delivering
on our promises. Key highlights from our FY23 financial
results include:
• Revenue increased from $114.9m in FY22 to $174.9m for
FY23 (52%). Normalised revenue of $165.3m was above
the company’s guidance ($159m to $164m). This reflects a
full 12-month contribution from Coretex and is normalised
for a one-off acquisition accounting adjustment of $9.6m
relating to the Coretex merger. Growth in revenue was
delivered across all markets.
• EBIT improved from a loss of $7.2m in FY22 to a profit of
$1.7m, reflecting the recognition of one-off acquisition
revenue and integration costs. Normalised for those
one-off items, EBIT is a loss of $4.5m at the midpoint of
guidance (loss between $3m and $6m).
• Annualised Monthly Recurring Revenue increased by
$19.1m (14.2%). From $134.6m in FY22 to $153.7m in
FY23, reflecting growth across all markets and a FX
benefit of $8.6m.
• Free Cash Flow improved from an outflow of $45.1m in
FY22 to an outflow of $29.9m in FY23. This included a
clear improvement throughout the year, with the 1H23 FCF
outflow of $21.7m effectively halving to $8.2m in 2H23.
Available liquidity (debt facility headroom + cash) was
$27.5m at the end of March 2023.
• Growth in contracted units increased by 9% year on year
by adding a net number of 18,452 units in FY23 (total of
227,149 units);
• Asset Retention Rate remaining high at 94.8%; and
• R&D costs reducing from 28% of revenue in FY22 to 23% of
revenue in FY23, with a total spend of $37.2m in FY23.
Reflecting the full year of combined Coretex and EROAD,
our operating expenditure increased from $93.9m in
FY22 to $129.7m in FY23. We have made great strides in
reducing our cash burn from $4.2m/month in H1 FY23
to $1.8m/month in H2 FY23 (normalised for the Coretex
contingent consideration payment), which is a testament
to our efforts to manage costs and improve efficiency.
We have maintained our liquidity position, with $27.5m
available via credit facility headroom and cash enabling us
to execute on our strategy.
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LETTER FROM THE CHIEF EXECUTIVE OFFICER |EROAD 2023 ANNUAL REPORT LETTER FROM THE CHIEF EXECUTIVE OFFICER |
Our Markets
Growth Opportunities
Confident Outlook
As we move forward into FY24, we acknowledge that there
is much work to be done. However, our team is resolute
and well-prepared to tackle the challenges ahead. We have
detailed plans in place, and our teams are already fully
engaged in the implementation process.
It is anticipated Revenue will be between $175m to $180m
reflecting the continued growth across all our markets.
EBIT is expected to be neutral to $5m (normalised for
accelerated depreciation planned as part of our 4G
upgrade program). Additionally, we plan to deliver
another $10m (annualised) in savings through cost-cutting
initiatives in FY24. We believe we are on track to be Free
Cash Flow neutral by FY25 and positive by FY26.
Our focus on operational efficiency and disciplined
execution will continue to be a key driver of success.
I look forward to regularly updating you on EROAD’s
ongoing positive progress in delivering on our strategy of
sustainable, profitable growth.
Mark Heine
Chief Executive Officer
EROAD’s growth potential remains strong, and we are
confident we can deliver. In the short term, we will pursue
growth from targeted opportunities where we have already
demonstrated success. The first being our continued
alignment towards servicing key enterprise customers. In
FY23 we have proven our ability to successfully execute
this strategy by winning Sysco in North America over
larger established telematic vendors. 90% of EROAD’s
enterprise customers already subscribe to two or more
of our product categories. With penetration of telematics
growing by 10% CAGR through to 2030, we are confident
we will see continued multi-product adoption across our
full customer cohort.
The total addressable revenue market for telematics
across EROAD‘s regions is already over $10bn, and
forecast to grow to $21bn by 2030. North America
represents the largest opportunity, responsible for
94%. As we focus on building up product functionality
applicable to whole-of-fleet and capability to service
enterprise customers, our growth in this region over the
longer term will be significant.
In the longer term, our strategic shift to operate at scale
positions us well to translate our momentum into profitable
growth segments. Our current investment in an integrated
platform will enable us to address the market shift towards
demand for bespoke workflow solutions. We are also
focused on providing better insights for our customers,
including total supply chain visibility. To this end, we
have appointed Dean Marris into the role of Chief Data
Science Officer. Furthermore, our developing sustainability
product category, and the appointment of our new Chief
Sustainability Officer Craig Marris, ensures we are ready for
the impending regulatory market changes as customers
shift towards Net Zero goals.
With the merger with Coretex, the expanded EROAD
team has the capability and solutions to deliver increased
benefits to our existing and prospective customers.
In North America we achieved a growth in AMRR of 14%
(in local currency), demonstrating the value that our
solutions bring to the market. In addition, we are proud to
have won contracts with a key enterprise customer, Sysco,
which further cements our position as a leading provider
of telematics solutions in North America. Another major
enterprise customer, ABC, has renewed their contract with
EROAD, demonstrating their confidence in our ability to
provide high-quality and innovative solutions.
In New Zealand, Fonterra signed up to our full
product suite, including telematics, eRUC, dual-facing
dashcams, roll-over alert technology, and satellite
communications, to equip more than 500 milk tankers.
EROAD is also addressing the upcoming closure of One
New Zealand’s (formerly Vodafone New Zealand) 3G
service in August 2024.
To ensure smooth transition, we are accelerating the swap-
out of older model products over a 2-3 year period. As of
8 May 2023, 37% of our ANZ customer base was utilising
4G enabled devices. While there is much work to be done,
the EROAD team is ready and committed to meeting this
challenge head on.
Integration Progress
As part of our strategic direction and realignment of
priorities, we have made the decision to extend the
timeline for some of the Coretex integration streams
beyond the initial 18-month window.
This decision was made with a focus on ensuring that
we prioritise areas of integration that will allow us to seize
opportunities presented by our customers and the market.
Despite the extended timeline, we have made significant
progress towards our integration goals, including the
creation of a comprehensive platform that enables us to
sync data and product features across both EROAD and
Coretex platforms. This approach enables us to advance
toward a single set of products, features and
user experience.
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LETTER FROM THE CHIEF EXECUTIVE OFFICER |EROAD 2023 ANNUAL REPORT Strategic direction
Renewing our focus on customer
EROAD has adopted a customer-led approach as a
fundamental part of its business strategy to prioritise
and meet the evolving needs of its customers.
Recognising the significance of customer satisfaction
and loyalty in driving long-term success, EROAD places
great emphasis on understanding its customers‘ pain
points, challenges, and aspirations.
FY23: Planning a pathway to durable growth
EROAD has utilised FY23 to align its business model with a new strategic
direction, and is entering FY24 with a well-defined plan to establish itself
as a sustainable SaaS provider with consistent revenue growth, bolstered
by stable positive cash flows within the next two years.
After completing the Coretex acquisition at the end of
FY22, it became clear that EROAD‘s business model was
no longer suitable for the merged business or the current
market conditions. Whilst many external factors were
contributing, pre-existing weaknesses became more
pronounced in the larger business, necessitating a clear
plan for sustainable cash generation. EROAD engaged
McKinsey & Company to work with management on a
strategic review, completed in November 2022. This led to
the implementation of two key pillars: improving the core
business for efficiency and expanding in North America,
the largest addressable market. This strategy allows
EROAD to efficiently scale, respond to market drivers, and
meet customer needs with agility.
For the remainder of the fiscal year, the EROAD
management team have been planning, and executing, the
strategic changes necessary for the company to enjoy its
next phase of Free Cash Flow positive and durable growth.
FY23 HIGHLIGHT
$10m
Cost reduction (annualised) achieved
in FY23, with a further annualised $10m
reduction targeted in FY24
The completed cost-out program in FY23 included:
• reduced actual and planned FTE across all regions and
functions (approximately 75)
• 40% reduction in sub-contractor spend
• consolidated property footprint
• optimised data usage contracts
• removal of low priority business systems
Our roadmap
TURN AROUND THE CORE
Decrease
inefficiencies in
personnel and
corporate cost
Streamline R&D
functions and
refocus spend
Tailor service
levels to drive
performance
EROAD TODAY
EROAD TOMORROW
Target
transportation
vertical, whole-
of-fleet solutions
Complete scalable and
competitive product
offering for enterprise
Scale up NA
focused enterprise
sales team
GROWTH IN NORTH AMERICA
Paving the way towards
Free Cash Flow positive
In FY23, management focused on implementing strategies
aimed at stabilising Free Cash Flow by FY25 and achieving
positive Free Cash Flow by FY26.
During the past 18 months, there has been a notable
improvement in EROAD‘s Free Cash Flow, primarily due
to the expansion of operating cash flow and a more
controlled growth in investment.
Continuous enhancements in managing cash burn, along
with the current liquidity position, enable EROAD to
finance its strategic roadmap while staying within a $90m
debt facility.
IMPROVEMENT IN FREE CASH FLOW
1H22
2H22
1H23
2H23
$(8.2)m
$(14.6)m
$(21.7)m
$(30.5)m
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EROAD 2023 ANNUAL REPORTSTRATEGIC DIRECTION | Strategic direction
From broad & disconnected to
unified & scalable
EROAD TODAY:
MULTIPLE PLATFORMS
Range of discrete solutions
Customisations costly as required across
many solutions
Limited ingestion of data from non-EROAD
products
Large R&D spend in maintenance alone
Simultaneously, EROAD is intensifying its focus on scalable
software development, enabling the company to introduce
new products to the market at an accelerated pace. By
investing in scalable software solutions, EROAD aims
to enhance its agility and responsiveness, ensuring that
innovative offerings can be swiftly brought to market to
meet evolving customer demands.
As a result of these efforts, EROAD is determined to provide
its customers with unified platforms that offer faster
customisations and improved value. This strategic shift
allows EROAD to optimise resources, simplify operations,
and enhance its ability to deliver tailored solutions that cater
to the specific needs of its customer base.
In response to the challenges posed by the merger, EROAD
faced the complexity of managing multiple platforms.
However, significant progress has been made in integrating
these platforms, and EROAD is actively transitioning from
offering diverse solutions with differing features towards
unified platforms that are scalable, efficient, and provide
enhanced value to customers. This transition not only
streamlines operations but also reduces the need for R&D
expenditures over time.
EROAD TOMORROW:
SINGLE UNIFYING PLATFORM
Customisations are unconstrained
Scalable solutions achieved faster & cheaper
Integrated platform allows cluster solutions
More accessible data ingestion through
integrated platform
From focusing on trucks,
to focusing on operators
In recent years, it has become evident that EROAD‘s strength
lies in serving large enterprise customers with complex supply
chain operations that require more than just basic telematics
features. The transportation and supply chain industries
in our markets face numerous challenges, and enterprise
customers need capable technology partners to navigate
their evolutionary transitions. EROAD is well-positioned to
collaborate with these customers and capitalise on these
opportunities by serving as their system of record. While
historically more focused on trucks, we are now shifting our
attention to operators.
Currently, EROAD‘s products in North America provide a
strongly differentiated and competitive safety solution. We will
continue to invest in these products to bring increased value
to our customers. The current solution investment focus is
around regulatory, productivity, and sustainability feature sets.
FY23 HIGHLIGHT
Successful at winning new
enterprise customers...
9,000+
units awarded with Sysco contract
signed in North America
... and renewing existing
enterprise contracts
23,472
units renewed for enterprise
customers contracts in FY23
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EROAD 2023 ANNUAL REPORTSTRATEGIC DIRECTION | What we do
EROAD’s unified solution
EROAD provides a connected network across vehicles, assets and operations.
Enabling customers to turn raw data from various sources into actionable insights.
Our software platform integrates data from proprietary hardware, IoT devices,
sensors, and cameras into a single interface, providing customers across all
industries with an essential system of record that improves safety outcomes and
saves time and money. EROAD’s solutions are designed to deliver value across
four distinct outcomes, with many customers benefiting from multiple aspects
of the product suite.
1. Launching 2023.
2. Proprietary and 3rd party hardware
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WHAT WE DO |EROAD 2023 ANNUAL REPORTPOWERED BY2CCOOMMPPLLIIAANNCCEE && AASSSSUURRAANNCCEEPPRROODDUUCCTTIIVVIITTYYHHEEAALLTTHH && SSAAFFEETTYYDDaasshhccaammssIIooTT hhuubbssTTrraacckkeerrss aanndd sseennssoorrssSSUUSSTTAAIINNAABBIILLIITTYY•RRUUCC aanndd ffuueell ttaaxx ccoommpplliiaannccee•Electronic, automated RUC purchasesand claims•Fuel tax reporting and IRP1registration•IInndduussttrryy--ssppeecciiffiicc ssoolluuttiioonnss•CCoolldd cchhaaiinn aassssuurraannccee•CCoonnssttrruuccttiioonn aassssuurraannccee•WWaassttee aanndd rreeccyycclliinngg aassssuurraannccee•GGPPSS ttrraacckkiinngg aanndd ggeeooffeenncciinngg•FFlleeeett mmaaiinntteennaannccee•FFuueell mmaannaaggeemmeenntt aanndd iiddlliinngg rreeppoorrttss•VVeehhiiccllee iinnssppeeccttiioonnss•FFuueell mmaannaaggeemmeenntt aanndd iiddlliinnggrreeppoorrttss•FFlleeeett uuttiilliissaattiioonn•DDeeccaarrbboonniissaattiioonnaasssseessssmmeenntt &&iinnssiigghhttss11•DDrriivveerr bbeehhaavviioouurrmmoonniittoorriinngg aannddffeeeeddbbaacckk•EElleeccttrroonniicc llooggbbooookk•VVeehhiiccllee iinnssppeeccttiioonnss•SSppeeeedd mmoonniittoorriinngg•IInncciiddeenntt ddeetteeccttiioonn,, aalleerrttiinngg aannddrreeppllaayy What we do
Advancing action with data
33.7+ bn
Data points in FY23
205+ m
API Calls in FY23
352+ k
Triggered events
captured on video in FY23
Customers generate vast amounts of data on a daily
basis, and it can be overwhelming to manage and extract
meaningful insights from it. However, not all data is equal.
To be effective, data must meet certain criteria: it must be
high-fidelity, meaning it accurately represents what it is
intended to measure; it must be of high-quality, free from
errors or inaccuracies; it must be consistently and easily
accessible, available when needed and in a user-friendly
format; and it must be enriched, with relevant context or
additional information to give it meaning.
At EROAD, our end-to-end solution is designed to
meet all of these requirements, providing our customers
with a powerful tool to generate useful data as well as
the platform which synthesises it into valuable insights
and actions.
Integrated multi-product suite
Vehicle
Telematics
Asset Monitoring
& Control
Video Based
Safety
Driver
Apps
Whether it is for insurance purposes, speeding alerts, idle times,
route optimisation or staff recognition with the leaderboard.
There is so much you can do. EROAD can save your business so
much on the bottom line, just by having the view of what your
fleet and your drivers are doing. There are many options on the
market, but EROAD is the tried, proven and trusted one.
Damon Bryant, Alexander Group NZ
All Vehicles. All Assets.
One Platform
EROAD’s Cloud Platform
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WHAT WE DO |EROAD 2023 ANNUAL REPORT Trusted intelligence
Transforming operations:
Complex data made simple
EROAD’s customers generate billions of data points every year. But our
customers are not data scientists. They’re operators, and they need simple,
intuitive interfaces to act on this data. We translate their data into ways they
can save money, save time and operate in a safer and more sustainable way.
MyEROAD is the first thing I open every day. I look to see where
my trucks are, what time they arrived at each of the depots and
my geofences, and make a plan for the day on servicing. It’s
actually my dashboard for the day, so it’s a really important tool.
Tristan Bernie, Aramex NZ
At EROAD, we begin by giving our customers access to
the data generated by their physical operations. This data
is brought into our system in real-time and is then enri-
ched and analysed using machine learning techniques.
Our software platform includes recording and alerting
engines that help us identify insights that are most rele-
vant to our customers, which we then surface through our
intuitive applications.
By focusing on creating user-friendly applications, we
empower frontline workers with the tools they need to
improve their job performance. Through customer feed-
back, we have learned that integrating multiple solutions
into a single system is more powerful than using separate,
siloed systems from different vendors. This approach not
only reduces the total cost of ownership but also ensures
that all necessary data is available in a single location,
enabling better decision-making.
Data
Sources
Hardware &
Sensor Data
GPS & Satellite
Location
HD Video
Digital
Documents
Engine
diagnostics
API
Integrations
DATA
INSIGHTS
ACTION
Integration
Platform
Products
Single Pane
of Glass
Functional
Users
Real-time data
aggregation
Indexing &
Storage
Enrichment
Licensing
Machine
Learning
Analytics
Reporting
Alerting
Workflows
Control
Collaboration
Vehicle
Telematics
Video Based
Safety
Asset
Monitoring &
Control
Driver Apps
All Vehicles. All Assets. One Platform.
Drivers
Safety
Compliance
Finance
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WHAT WE DO |EROAD 2023 ANNUAL REPORT
Operating model
Success for EROAD continues due to...
...more diverse
customer mix
Enterprise customers enable us to
scale and develop custom solutions or
platform upgrades, which in turn provide
opportunities for expanding our offerings to
all customers. Meanwhile, the SMB customers
provide a steady and reliable revenue stream
for EROAD.
Units by Customer size
49%
Enterprise
SMB
51%
...multi-national
growth
EROAD’s expanding footprint in North
America helps growth continue whilst
reducing our reliance on the maturing
New Zealand market.
Units by Market
7%
42%
51%
...more diversified
industries
Units by Industry
17%
21%
EROAD serves a diverse range of industries
that reflect the critical infrastructure at the
core of our communities, making it more than
just a transport service provider.
6%
7%
18%
31%
New Zealand
North America
Australia
Construction &
civil engineering
Freight &
road transport
Refrigerated
transport
Services & trade
Agriculture/forestry
Other
...more profitable sales model
EROAD uses a subscription billing model across all the
regions it services. This model provides customers with
access to its integrated platform for a monthly fee over a
contractual term. The minimum term length is usually 36
months, but it can be extended up to twice that length
for larger customers. To enable data generation, EROAD
provides the hardware or sensors required for connecting
vehicles and assets. In many cases, EROAD leases this
hardware, in a bundle with the SaaS, over the same
contract term, which increases the monthly charges to
the customer. However, in some instances, customers can
purchase the hardware outright at the start of the term.
EROAD’s recurring revenue model is driven by unit
economics, and we aim to achieve customer profitability
within the first term. All costs, including the cost to acquire,
the cost of the hardware, and operating costs incurred
during that period, are paid back during the first 36 month
contract term. Profitability is maximised over the second
term and any further terms, provided the customer is
retained. If the customer continues to renew their contract,
EROAD may replace the hardware, and a shorter payback
period on the hardware may commence again. However,
the acquisition costs do not reoccur.
Like all subscription billing models, extending the life of
a customer across multiple terms is key to profitability.
To date, we have had significant success with EROAD
maintaining an asset retention rate above 90% historically
and 94.8% in FY23.
Illustrative unit economics of EROAD’s recurring revenue model:
Leased hardware
Profit
Customer
Acquired
CAC
Payback
Breakeven
(HW payback)
Customer
Acquisition
Cost (CAC)
Hardware
(HW) Cost
Average Useful Life of Hardware: 6 Years
1st Customer Contract Term
2nd Customer Contract Term
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WHAT WE DO |EROAD 2023 ANNUAL REPORT OUR MARKETS |
Where we play
EROAD markets at a glance
Our success in scaling and growing across all three regions is evident by the fact
there are more similarities than differences. In FY23, a total of 1,253 customers
across all regions renewed their plans, which included 36,382 units. Additionally,
2,250 customers added an additional 17,711 subscriptions to their existing plans.
These figures demonstrate the value and satisfaction that our solution brings to
customers across all regions.
North America
Australia
New Zealand
95,058
$18.1m
15,636
$2.2m
116,455
$53.7m
UNITS (FY22: 87,682)
EBITDA (FY22: $9.4M)
UNITS (FY22: 14,099)
EBITDA (FY22: $0.1M)
UNITS (FY22: 106,916)
EBITDA (FY22: $45.2M)
110
404
51
290
1,092
1,556
CUSTOMERS RENEWED
PLANS
CUSTOMERS UPGRADED
PLANS
CUSTOMERS RENEWED
PLANS
CUSTOMERS UPGRADED
PLANS
CUSTOMERS RENEWED
PLANS
CUSTOMERS UPGRADED
PLANS
93.2%
RETENTION RATE
(FY22: 84.2%)
$36.65
MONTHLY SAAS ARPU
USD (FY22: $39.02)
97.0%
RETENTION RATE
(FY22: 88.4%)
$42.27
MONTHLY SAAS ARPU
AUD (FY22: $36.69)
95.9%
RETENTION RATE
(FY22: 97.3%)
$55.70
MONTHLY SAAS ARPU
NZD (FY22: $56.45)
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EROAD 2023 ANNUAL REPORT EROAD 2023 ANNUAL REPORT
EXPLORING VALUE |
Empowering customer momentum
Retaining customers is critical for any business model that relies
on recurring revenue. At EROAD, we prioritise a partnership
approach with our customers, resulting in a significant portion
of our customer base remaining with us for an extended period.
63% of all current customers have been with EROAD
for more than 3 years.
This not only benefits our profitability, but we also believe
that establishing long-term partnerships creates a mutually
advantageous relationship for both EROAD and our
customers. By working closely with our customers over
an extended period, we ensure that they receive the best
value from our products. This approach allows us to receive
feedback and make necessary improvements to better
meet our customers’ needs. Additionally, our customers
can benefit from this partnership through multi-product
adoption and customer expansion, driving growth for both
EROAD and our customers.
Customer Relationships
<3 years
3<6 years 6<9 years 9+ years
37%
36%
18% 9%
% of current customers by tenure
Growth powered by customer expansion
At EROAD, we understand that our
success is tightly intertwined with the
success of our customers.
As our customers expand and evolve, we are committed
to growing with them and adapting our products and
services to meet their changing needs.
This allows us to maintain strong, long-lasting relationships
with our customers, and it also provides us with valuable
insights into emerging trends and opportunities. Notably,
fleet and asset expansion among our enterprise customers
has been a significant driver of our recurring revenue
growth at EROAD.
Detailed here are two individual examples where EROAD
has benefited from significant revenue growth powered by
customers‘ fleet expansion.
19%
CAGR Customer Revenue Growth (FY19)
EROAD Customer | Construction Supplier
(USA)
1500+ fleet
28%
CAGR Customer Revenue Growth (FY19)
EROAD Customer | Food services transport
(USA)
1000+ fleet
Exploring value
A better world tomorrow
Despite the need for a strategic shift, EROAD has been able to maintain
growth due to our core value of delivering meaningful outcomes for
customers. EROAD is committed to helping customers achieve their goals
and improve their business operations, which has been a key driver of
our success. By consistently providing value and positive results, EROAD
has gained the trust of customers and is well-positioned to continue to
capture market share and expand into new areas. As market conditions
change, EROAD will continue to focus on delivering exceptional customer
experiences and tangible business outcomes, which will remain at the
forefront of our customer-led business model.
Let’s explore the ways EROAD creates value for customers.
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EROAD 2023 ANNUAL REPORT
Exploring value
Growth powered by
multi-product adoption
By offering a suite of complementary products and services, EROAD has
been able to provide more value to our customers while also generating
more revenue per customer from multi-product adoption. 90% of enterprise
customers utilise products across two or more categories, demonstrating the
value of our integrated suite.
EROAD’s product development rationale continues to
be based on securing customer value and connections
through vehicle telematics initially and expanding across
related categories over the life of the customer. Through
this approach, EROAD has established strong, long-
term relationships with our customers, who appreciate
the convenience and efficiency of working with a single
provider for multiple products and services.
Whilst half of the total customer base subscribe only to
vehicle telematics, this signals excellent opportunity for
EROAD to continue to achieve subscription and ARPU
growth, from existing customers.
Vehicle Telematics
Video Based Safety
Asset Monitoring & Control
Driver Apps
s
e
i
r
o
g
e
t
a
C
t
c
u
d
o
r
P
4
47%+
90%+
EXPLORING VALUE |
Jim Pearson Transport (AU)
Refrigerated transport
600+ fleet
Porter Group Hire (ANZ)
Heavy Equipment suppliers
270+ fleet
Jim Pearson Transport has been using EROAD telematics
(formerly known as SmartTrack, a legacy Coretex brand)
in their prime mover trucks for over two decades. Aron
Robinson, Contracts Manager at Jim Pearson’s, says the
company has chosen to continue with EROAD due to the
product and service provided.
At the time, SmartTrack was the only telematics solution
in Australia that offered live vehicle tracking, giving
Jim Pearson a competitive advantage. “EROAD was
instrumental in helping us attract business partners, in the
early 2000’s most competitors had to ‘ping’ their trucks
for a location. SmartTrack offered live tracking and helped
us secure new business as we moved into the telematics
world.” Since the very start of the relationship, Jim Pearson
Transport have grown significantly in size, expanding their
fleet, and the need for EROAD’s products.
Even though Porter Group were convinced EROAD was
a good product from the outset of the initial partnership,
its strength and potential exceeded their expectations:
Group Asset Manager Ken Reilly states, “The more we
used EROAD, the more we learned, the more excited we
became and the more buy-in grew – from the workshop
management to the haulage and hire management and
now even senior management.”
Over the six years they have been with EROAD, there
have been many areas of growth. “We see the value of
EROAD’s progression and how being part of that journey
will help the Porter Group grow.” From starting with Vehicle
Telematics in 2017, the group has enhanced their solution
with Driver Apps and Asset Monitoring. In 2023, EROAD
expanded its partnership with the Porter Group into their
Australian business.
+ 26% CAGR
Unit Growth
Vehicle
Telematics
Asset
Monitoring &
Control
Vehicle
Telematics
+ 130% CAGR
Revenue Growth
Vehicle
Telematics
Asset
Monitoring
Driver Apps
(NZ)
AU
Expansion
Vehicle
Telematics
Asset
Monitoring
Driver Apps
(NZ)
Vehicle
Telematics
(NZ)
of all customers subscribe
to 2+ product categories
of enterprise customers subscribe
to 2+ product categories
Initial Partnership
2001
Multi-product Adoption
2023
Initial Partnership
2017
Multi-product Adoption
2020
Trans Tasman Growth
2023
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EROAD 2023 ANNUAL REPORT
EROAD 2023 ANNUAL REPORT
EXPLORING VALUE |
Exploring value
CASE STUDY
Delivering whole-of-fleet intelligence
Fonterra, NZ
Fonterra is a co-operative owned and supplied by about 9,000 farming families
in Aotearoa New Zealand. Through the spirit of co-operation and a can-do
attitude, Fonterra’s farmers and employees share the goodness of their milk
through innovative consumer, foodservice and ingredients brands.
EROAD was delighted to partner with iconic NZ company Fonterra in
FY23. The partnership consists of a 5 year contract to install solutions from
all 4 of EROAD’s product categories across their fleet of 500+ milk tankers.
The whole-of-fleet solution was the unique differentiator for Fonterra,
edging out the incumbent fleet management software provider which the
company had used for 13 years.
+100m km
Fonterra vehicles travel
upwards of 100 million
kilometers every year
+16.5b
Fonterra collect 16.5 billion
litres of milk per year
From Cape Reinga to Bluff, and almost everywhere in
between, Fonterra’s milk collection operation spans the
entire country. Through its fleet of 500+ milk collection
tankers and 1600+ tanker operators, Fonterra completes
an average of one farm collection every 15 seconds and
collects around 16.5 billion litres of milk per year.
As well as electronic RUC and in-vehicle driver monitoring
hardware, the safety-focused organisation is also installing
EROAD’s high-definition dual-facing dashcams to gather
vital evidence that can help exonerate innocent drivers in
the event of an incident.
Fonterra will also mitigate the risk of roll-over events in
its liquid tankers with EROAD’s specialised hardware.
EROAD’s Collision and Rollover Alert solution utilises vehicle
roll-over alert technology and satellite communications to
ensure emergency services can be dispatched as quickly as
Fonterra has chosen to partner with
EROAD, due to their innovation across
a number of products (telematics,
eRUC, dashcams etc). Their ability
to harmonise these products into an
overall telematics solution, that meets
our business requirements, will assist
us in maintaining our market-leading
commitment to health and safety. It
is great to be working with another
New Zealand-based team developing
products here in Aotearoa.
Malcolm Bailey, Fonterra NZ
possible, if the worst should happen – including when the
vehicle is outside cellular range.
Paul Phipps, GM National Transport & Logistics at Fonterra
says, “safety doesn’t happen by accident, so with us
picking up milk from our shareholders all over rural New
Zealand we choose to partner with an industry leader who
delivers Emergency and Automated Alerts through a 24/7
Satellite Solution for when we leave areas with cellular
coverage. This becomes a great mechanism in supporting
our strategy of sending our valued employees home the
way they come to work each and every day.”
EROAD’s innovative solutions will help Fonterra to improve
its market-leading commitment to health and safety, and
we look forward to a long partnership.
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WHAT WE DO |EROAD 2023 ANNUAL REPORT EXPLORING VALUE |
The aim of the accreditation is to recognise fleet operators
that demonstrate and continuously improve on-road and
workplace safety practices. Rewarding their real safety
improvements with a reduction in the ACC portion of
licencing fees.
After completion of an ACC audit in June 2022, Downer
obtained the highest accreditation, achieving ACC Fleet
Saver Gold.
Downer have many initiatives and processes which
contribute to their successful health and safety program,
EROAD is one of them. Since 2016, Downer has been able
to utilise EROAD’s data and features to better report on and
improve its health and safety-focused culture.
“We’ve always had a strong culture around health and
safety, but with EROAD on board our improved ability to
track and report means we are much better equipped to
proactively manage, lead, and reward the right behaviours,
and to address any issues faster,” says National Fleet
Manager Josh Hedley.
Since first partnering with EROAD, Downer’s events per
km (EPK) has improved by over 94%. “I think in the health
and safety space, Downer would be a leader in terms of the
improvements we’ve seen in driver behaviour and also the
ability to track who’s driving vehicles and an awareness of
what’s going on. EROAD is integral to our business and how
we manage the fleet and the health and safety of our people,
they’re more than just a telematics provider,” says Josh.
In 2022 Downer New Zealand achieved
the Gold level of the ACC Fleet Saver
Programme. We are very proud to
have achieved this level at our first
audit. Downer’s use of EROAD in all of
our fleet was instrumental in Downer
not only achieving this accreditation,
but also in improving the safety of our
people. EROAD is critical in assisting
us to monitor our fleet, to improve
driver behaviour to reduce risk, and
to inform the development of our
safety programmes. This year we have
extended this to Sustainability and
have used EROAD to drive our Idling
Reduction programme to reduce
emissions and save on fuel.
Barry Bignell,
Executive General Manager, Zero Harm
Exploring value
CASE STUDY
Empowering real improvements
in safety outcomes
Downer, NZ
Downer is one of the biggest civil companies in New Zealand and the largest
provider of services to asset owners across 120 locations. Their fleet of 6,000
vehicles and assets travel in excess of over 120 million kilometers every year.
Downer recognise driving as one of the top critical risks its people face every day.
In recognition of this, in 2022 Downer launched an internal
initiative called Downer Drive, providing a roadmap to
driving safely and sustainably. In support of this initiative
they applied and worked towards achieving ACC (Accident
Compensation Corporation) Fleet Saver accreditation.
+120m km
Downer vehicles travel upwards of
120 million kilometers every year
Speed events per 100km
94%
Reduction in average # of speed
events per 100km travelled since
installation
EROAD Drive Buddy
& Driver ID introduced
EROAD Posted Speed
introduced
15
10
5
0
2017
2018
2019
2020
2021
2022
2023
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EROAD 2023 ANNUAL REPORT Exploring value
Empowering real returns on investment
Each category within EROAD’s product suite offers substantial
opportunities for customers to receive immediate value and achieve
rapid ROI. As inflationary pressures persist, we are witnessing an increase
in customer adoption, as the benefits of installing EROAD’s solutions
across their entire fleet become increasingly valuable.
Real and rapid return on investment
Efficiency improvements saving money
Tax Claims
EROAD’s solutions offer customers the chance to recoup
expenses incurred through tax savings related to road user
charges or excise tax, off-road claims, or fringe benefits,
in all three regions, regardless of regulatory differences.
These savings can be substantial and are made possible by
EROAD’s certification as a recognised tax collection device.
Fuel Savings
EROAD provides its customers with in depth and
actionable intelligence on their fleet usage and idle time,
which presents enormous opportunities to cut fuel costs
by decreasing consumption.
Insurance Claims
By utilising EROAD’s platform, many customers are eligible
for upfront reductions in insurance premiums. Additionally,
EROAD’s real-time Video Based Safety clips have proven
valuable in disproving fraudulent insurance claims and
substantiating legitimate ones.
Resource & Administration Time
EROAD’s products are specifically designed to lessen the
administrative burden of managing the performance of
a customer’s fleet and assets. This includes minimising
reporting time, claim preparation time, fuel reconciliation,
workflow, routing, maintenance, and driver management.
Asset Utilisation
By utilising EROAD’s integrated platform and having
complete visibility of their entire fleet, customers can
optimise their assets in a variety of ways. This includes
decreasing pre-cool time, eliminating idle time for trailers,
improving servicing and maintenance management,
reducing daily stop times, mapping and comparing asset
movements, and identifying instances of under-utilisation.
EXPLORING VALUE |
From a fuel tax credit reporting perspective, EROAD is
completely changing the game for us. The benefit of
EROAD is that we’re now getting accurate off-road usage
and we’re currently able to go back four years
and adjust our fuel tax claim.
Tom Gower, HiWay Group, AUS
$16.9m
10 min
NZD off-road claims NZ EROAD
eRUC customers were eligible
for in FY23
compared to 2 weeks to file
fuel tax reports for Hat Creek
Construction & Materials (USA)
$200,000
7%
USD fuel cost saved p.a. by E.A.
Sween (USA) due to reduction
in idle time
reduction in insurance
premiums saved by Recoil
Oilfield Services (USA)
Data harvested has given us a valuable look at our cold
chain performances during transport. Using the trailer
return air data as part of our new predictive product
temperature monitoring process we were able to save
about USD$50,000 per month by not requiring drivers
to probe product at each stop.
Tim Bates, Golden State Foods, USA
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EROAD 2023 ANNUAL REPORT Exploring value
Exploring value
EXPLORING VALUE |
CASE STUDY
Empowering visibility of total operations
Quality Custom Distribution, USA
In 2012, QCD selected Coretex – which was
acquired by EROAD in 2021 – to replace
the costly and unreliable process of manual
temperature monitoring of its reefer trailers.
QCD has since deployed EROAD’s reefer
fleet management solution in hundreds of
trailers, allowing the automated, continuous
monitoring of air temperature from
warehouse to restaurant.
7,500
restaurants serviced nationally
1.5m
deliveries per year
Quality Custom Distribution (QCD) is a leader in the quick
service restaurant freight industry. Established in 2006 as
a division of Golden State Foods (GSF), QCD completes
more than 30,000 refrigerated transport deliveries a
week from 24 distribution centres strategically located
throughout the United States. QCD leverages more than
five decades of GSF distribution expertise, providing high-
quality, custom distribution services at a competitive price.
Trusted by top industry brands, including Starbucks,
Chipotle and Chick-fil-A, the company services more
than 7,500 restaurants nationally – totaling more than
1.5 million deliveries per year. QCD has a longstanding
commitment to innovation and incorporates state-of-the-
art technology in every aspect of its operations – from
warehouse management systems to its single-platform
fleet monitoring solution.
Throughout this ongoing partnership, EROAD has
advanced its capabilities for remote reefer control,
two-way communication, hours of service compliance,
geofencing and a host of management applications.
QCD was also instrumental in piloting CoreTemp: a
simulated product temperature monitoring system that
uses artificial intelligence and advanced algorithms to
eliminate the need for manual temperature probes.
Together, QCD and EROAD determined the precise
specifications to ensure freshness for a variety of
perishable food categories and variable packing data sets.
“The algorithm works flawlessly,” says Larkin Williams,
General Manager for QCD. “Everyone wants to make sure
they know that the core temperature of their products is
compliant. Being able to build on air temperature reading
by receiving actual product temperature will allow us to
communicate to our customer that they are receiving the
highest quality of product every time.”
CoreTemp provides real-time compliance to QCD and
its customers. Moreover, the elimination of manual
temperature probes has resulted in significant cost savings
for QCD, says Tim Bates, Corporate Quality Systems
Director.
Following the successful pilot program, QCD implemented
the EROAD solution for all of its delivery routes. “I think
CoreTemp has helped elevate our game,” Bates says.
“We’ve got a lot of powerful information that we never had
in years past.”
Empowering a road to sustainability
EROAD recognises we have a duty
to drive forward real sustainability
improvements. For both our business
and our customers. Transport has the
highest reliance on fossil fuels of any
sector and accounted for 37% of CO2
emissions from end-use sectors globally
in 2021.
To adopt a greater pace of change, EROAD has
made two significant commitments to furthering our
internal sustainability initiatives. We have appointed
a Chief Sustainability Officer, Craig Marris. EROAD
has also achieved certification under the Toitū
carbon-reduce programme.
Alongside our internal initiatives, we continue
to expand our product suite to empower
customers to measure and improve their
own sustainability efforts.
To understand more detail regarding EROAD’s
sustainability journey, please read our FY23
Sustainability Report.*
29k tCO2e
Total EROAD emissions for FY23
15%
EROAD reduction target for
electricity emissions by 2025
4%
EROAD reduction target for fuel
emissions by 2025
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* Available June 2023
EROAD 2023 ANNUAL REPORTSTRATEGIC DIRECTION |
Future Growth
Large & fast growing market
As we scale, EROAD is prioritising efficient growth. Our subscription-
based business model, with strong long-term unit economics, is a
solid foundation for future profitability. We have a well-defined plan to
be Free Cash Flow positive by FY26 within a $90m debt facility. This
strategic move puts us in a strong position to capitalise on predicted
growth opportunities.
Across the three regions EROAD operates in, the
conservative estimate of the telematics revenue pool is
valued at $10.9 billion. If the market continues to grow at
the expected compound annual growth rate (CAGR) of
10 per cent, it could be worth as much as $22.8 billion by
the year 2030.
Our customer base is diversified across various end
markets, and we are not solely focused on the trucking
industry. With our current and future product offerings, we
are targeting significant and rapidly growing markets.
2030
$22.8b
2022
$10.9b
Total telematics revenue pool for
geographies EROAD serves (NZD)
As we focus on building up product functionality applicable to
whole-of-fleet and capability to service enterprise customers,
our growth in North America will be significant. In the longer
term, our strategic shift to operate at scale positions us well to
translate our momentum into profitable growth segments.
Mark Heine, CEO, EROAD
FUTURE GROWTH |
Key market drivers producing
future tailwinds
EROAD’s product roadmap is aligned to key market trends for
the telematics and transport industries. By strategically shifting
towards operating at scale, EROAD is well-positioned to leverage
its momentum and achieve sustainable long-term growth.
S
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KEY TRENDS
EROAD FOCUS
1
Demand for advanced
workflow-based solutions
Demand for bespoke/custom
workflow solutions
2 OEM offering built-in telematics
3
Tighter integration across
supply chain
4
Commoditisation of base
offering stack
5 Fleet consolidation
6 Transition to EV fleets
7
8
Focus on sustainability
and ESG (excl. electrification)
Future regulatory
requirements
IOT platform/Data aggregator
Need for cohesive and standardised integration
across multiple data sources
Whole-of-fleet
As base telematics are further commoditised
and fleets consolidated, EROAD will compete
with whole-of-fleet solutions (including APIs,
aggregation and enrichment)
Sustainability focus
Regulatory landscapes across all markets
changing, impacting both reporting
requirements and tax. Provides tailwind for
telematics fleet management.
PAGE 40
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EROAD 2023 ANNUAL REPORT
Our Leadership
The Management Team
OUR LEADERSHIP |
MARK HEINE
MARGARET WARRINGTON
AARON LATIMER
STEEN ANDERSEN
SHELLEY PRENTICE
AKINYEMI KOYI
Chief Executive Officer
Chief Finance Officer
Chief Operating Officer
Chief Transformation Officer
Chief People Officer
Mark began his tenure as CEO in June
2022. With a deep knowledge of
EROAD’s business coupled with his
well established legal expertise, Mark
is best placed to lead EROAD. Mark
joined EROAD in 2015 after establishing
himself as a well regarded lawyer in
NZ and Australia. He has experience
across a range of legal areas including
corporate, commercial, M&A, litigation,
privacy, IP and antitrust. Mark has also
been employed as a barrister in New
Zealand and holds current practicing
certificates for New Zealand and
Australia. He holds an LLB and BA from
the University of Otago.
Margaret joined EROAD in September
2020 and was formally appointed as
CFO in November 2022, having served
as acting CFO since May. With more
than 12 years’ experience in senior
finance and commercial positions
across multiple sectors in New Zealand,
Margaret is a highly experienced
finance professional. Her previous roles
include Head of Finance at Summerset
Group, CFO at Statistics New Zealand
and acting CFO at the Inland Revenue
Department. As CFO, Margaret heads
EROAD’s global corporate division
and she brings a fresh and relatable
approach to corporate finance.
Margaret is a qualified Chartered
Accountant and holds a Bachelor of
Commerce and a Diploma in Teaching
from the University of Wellington.
Aaron recently re-joined EROAD
as Chief Operating Officer after 18
months as VP of Operations at Syft
Technologies. Having previously
served as EROAD’s Global Supply
Chain Manager, Aaron brings extensive
knowledge of the business and
significant supply chain management
expertise. His background in
manufacturing, operations
management, strategy, logistics, and
business process improvements make
Aaron a great addition to the Executive
Team. Aaron is based in New Zealand
and holds a Bachelor of Commerce
from the University of Canterbury.
Steen joined EROAD as Chief
Transformation Officer in February
2023, leading the transformation office.
Steen brings extensive experience
in business development, strategic
planning, product management,
customer operations and enterprise
resource. He has held senior positions
including Chief Customer Service
Officer, Chief Delivery Officer and VP of
Sales and Professional Services. Based
in North America, Steen holds a Master
of Science in Economics and Business
Administration from Aarhus University.
With a wealth of global HR experience,
Shelley heads the People and Capability
function at EROAD. In April 2023,
she joined the team after serving as
a senior executive at Piritahi, where
she led Operational Excellence on
behalf of Kāinga Ora. With over two
decades experience in various senior
and executive roles spanning multiple
sectors, Shelley is deeply committed
to driving transformative change. She
believes in strategically developing
culture, capability and optimisation
of work practices that empower high-
performance and sustainable growth.
Shelley holds a Bachelor of Human
Resource Management and a Bachelor
of Hospitality Management from
Auckland University of Technology.
President North America &
Chief Innovation Officer
Akinyemi Koyi (AK) has more than 20
years of experience as a leader and
innovator in the technology sector.
Working in a variety of industries,
Akinyemi has built, managed and
nurtured highly skilled, successful
teams while overseeing complex
engineering projects. He joined EROAD
in 2021 when EROAD acquired Coretex,
a telematics company where Akinyemi
was Chief Operating Officer and Chief
Technology Officer. Akinyemi brings
to EROAD a dedication to innovation,
a people-focused leadership style and
a commitment to creating technology
solutions that make our customers
safer and more successful.
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EROAD 2023 ANNUAL REPORT Our Leadership
The Management Team
OUR LEADERSHIP |
KONRAD STEMPNIAK
CRAIG MARRIS
DEAN MARRIS
Executive General Manager ANZ
Chief Sustainability Officer &
EVP Mixed Fleets
Chief Data Science Officer &
EVP Construction
JEREMY WILTON
TIM MOLE
Vice President Product and
Engineering
Director of Technology
Konrad joined EROAD as General
Manager - Australia in February 2021,
before his promotion to EGM Australia/
New Zealand in January 2023. He is an
accomplished executive leader with
experience 10+ years experience in
strategic operations, technical sales
and building high performing teams.
Based in Sydney, Konrad holds an MBA
from the Australian Graduate School of
Management at the University of
NSW (with excellence), a Bachelor
of Arts/Bachelor of Education and
recently completed the Australian
Institute of Company Director course
with AICD. Konrad loves to support
community initiatives and is a volunteer
surf life saver.
Craig was the Executive Vice President
Mixed Fleets in North America and is
a one of the Co-founders of Coretex
and launched the North American
Operations in 2006. Craig has been
instrumental in establishing the
distributor network, launching the
compliance solution in 2009, and led
the direct sales growth for Coretex.
This new role allows Craig to capitalise
on his keen interest in climate change
data science and apply this to help
fleets navigate their transitions
effectively to more sustainable
operations. Craig has a double degree
in Marketing and Economics from
Otago University and is a recent
graduate from the Harvard Business
School of Analytics, graduating with
distinction.
As one of the co-founders of Coretex,
Dean joined the EROAD team following
the acquisition in 2021. With a strong
automotive background, Dean brings
a wealth of knowledge in this area.
He was the President and founding
member of International Telematics in
New Zealand before his role as EVP of
Sales and Distribution in North America
for Coretex. Dean holds a Bachelor
of Commerce with a double major in
Marketing and Economics and is recent
graduate from the Harvard Business
School of Analytics and Data Science
graduating with distinction. With
established skills in telematics, coupled
with significant business and analytics
knowledge and experience, Dean
is a key member of EROAD’s North
American leadership team.
Jeremy joined EROAD in October
2020, spearheading product research
and development for hardware
devices. With 20+ years of experience
in crafting and implementing product
strategies for hardware and software
organisations across APAC and North
America, Jeremy brings invaluable
expertise to his role having worked for
several Forbes 2000 Global technology
companies. Holding a BSc in Computer
Science, he combines technical
acumen with a proven track record of
commercial success, driving EROAD’s
innovation in the transportation
industry.
Tim is an experienced senior leader in
data, analytics and engineering with
more than 29 years’ experience. He
joined EROAD in December 2021 as
Director of Analytics and Insight before
moving into the Director of Technology
role. Throughout his career, Tim has
held management roles at Xero, Humm
Group and Intergen. Tim holds a
Bachelor of Science (BSc) in Computer
Science and Operations Research from
University of Canterbury. Alongside
Jeremy Wilton, Tim oversees the
product, development and engineering
team until EROAD appoints a
permanent Chief Technology Officer.
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EROAD 2023 ANNUAL REPORT Our Leadership
The Board
OUR LEADERSHIP |
GRAHAM STUART
BARRY EINSIG
TONY GIBSON
Chairman, Independent Director,
Auckland
Appointed: January 2018,
Chairman from August 2018
Independent Director,
Pennsylvania
Appointed: January 2020
Independent Director,
Auckland
Appointed: October 2009
Board Committees: Finance, Risk and
Audit, Remuneration, Talent
and Nomination
Graham brings extensive leadership
and governance experience. He has
previously served as CEO of Sealord
Group and CFO then Director of
Strategy and Growth at Fonterra.
More than half his executive career
was spent as Chief Financial Officer
or equivalent and he has business
experience across Asia, Europe, the UK
and Latin America. In addition to his
impressive executive resume, Graham
brings significant board experience
in NZ, Europe, Australia, and Latin
America and currently serves on four
listed company boards. Graham holds
a Master’s degree in Science and a
Bachelor of Commerce in Finance.
Board Committees: Remuneration,
Talent and Nomination, Technology
Located in Pennsylvania, Barry brings
considerable knowledge of the North
American transport market as well
as global automated and connected
vehicle expertise. He is currently a
Vice President at Econolite and has
held other senior leadership positions
within the transport industry. Barry
was an advisor to the Singapore
Ministry of Transportation on their
Highly Automated Vehicle Programme.
In addition, he has reviewed work
undertaken by the Transportation
Research Board and has created patent-
approved technology used in Public
Safety Networks. Barry holds a Bachelor
of Science (Environmental Biology).
Board Committees: Remuneration,
Talent and Nomination (Chairman)
and Finance, Risk and Audit
Tony joined the EROAD Board in
October 2009 and brings more than 30
years’ experience in shipping, logistics,
technology and governance. He is one
of New Zealand’s most experienced
transport professionals and is the
current Managing Director and CEO of
VINZ (Vehicle Inspection New Zealand).
Tony previously served as the Chief
Executive of Ports of Auckland and in
2008 he was appointed to the Road
User Review Group by the Minister of
Transport. Tony has worked in various
senior management positions across
Africa, Asia and Europe and is currently
a director for Marsden Maritime
Holdings and North Tugz.
SARA GIFFORD
Independent Director,
Massachusetts
Appointed: April 2022
SUSAN PATERSON
SELWYN PELLETT
Independent Director,
Auckland
Appointed: March 2019
Non-Executive Director,
Auckland
Appointed: December 2021
Board Committees: Remuneration,
Talent and Nomination, Technology
Based in Boston, Sara has extensive
leadership experience in software
companies and is well versed in logistics,
transportation, product implementation,
and sales. She has significant business
experience across North America,
Europe, Southeast Asia, Australia, and
NZ. Sara served as the Chief Solutions
Officer and executive board member
of Quintiq and is a director of North
American company Spiro. Sara is also
the co-founder and director of Activote,
a non-partisan application enabling
voting in North America. Sara holds
a Bachelor of Science in Computer
Engineering and a Master’s of Science in
Software Engineering.
Board Committees: Finance, Risk
and Audit (Chair) and Remuneration,
Talent and Nomination
Susan is a highly sought-after
professional director with more than
25 years Board/Chair experience in
NZX/ASX listed companies, private
companies, government entities and
not-for-profits. With a pharmaceutical
and management background and an
MBA (London Business School), she
has worked in a range of consulting and
management positions throughout New
Zealand and internationally. Susan is an
appointed Officer of New Zealand Order
of Merit (services to governance) and
was awarded Chartered Fellow status by
the Council of the Institute of Directors.
Board Committees: Technology
Selwyn is an acclaimed technology
entrepreneur with more than 40 years’
experience in electronics supply chains,
enterprise level network security
and telematics in Asia, Australia, NZ,
North America and Europe. He has
extensive experience in international
sales, marketing, strategic planning and
supply chain management, spanning
small start-ups to multibillion-dollar
corporations. Selwyn was the founder
and CEO of Coretex Limited before the
merger with EROAD, and the previous
co-founder, CEO and Chairman of
Endace Ltd. Selwyn’s leadership,
vision and significant contribution to
New Zealand’s technology sector was
recognised by the New Zealand Hi
Tech Association who named him as a
‘Flying Kiwi’ in 2009.
PAGE 46
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EROAD 2023 ANNUAL REPORT Financial
Statements
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2023
Revenue
Operating expenses
Earnings before interest, taxation, depreciation and
amortisation
Depreciation of property, plant and equipment
Amortisation of intangible assets
Amortisation of contract and customer acquisition assets
Earnings/(loss) before interest and taxation
Finance expense
Finance income
Net financing costs
Loss before tax
Income tax benefit
Loss after tax for the period attributable to the
shareholders
Other comprehensive income
Items that are or may be reclassified subsequently to profit
or loss
Total comprehensive loss for the period
Loss per share - Basic (cents)
Loss per share - Diluted (cents)
Notes
2
5
10
11
3
14
20
15
15
2023
$M's
174.9
(129.7)
45.2
(17.2)
(17.9)
(8.4)
1.7
(7.1)
0.3
(6.8)
(5.1)
2.1
(3.0)
2.7
(0.3)
(2.69)
(2.68)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the
accompanying notes.
2022
$M’s
114.9
(93.9)
21.0
(10.4)
(11.0)
(6.8)
(7.2)
(3.3)
0.1
(3.2)
(10.4)
0.8
(9.6)
(0.3)
(9.9)
(10.07)
(9.98)
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EROAD 2023 ANNUAL REPORTCORPORATE GOVERNANCE REPORT |FINANCIAL STATEMENTS |EROAD 2023 ANNUAL REPORT
Consolidated Statement of Financial Position
As at 31 March 2023
Consolidated Statement of Financial Position (continued)
As at 31 March 2023
Current assets
Cash and cash equivalents
Restricted bank accounts
Trade and other receivables
Contract fulfilment costs
Costs to obtain contracts
Total Current Assets
Non-current assets
Property, plant and equipment
Intangible assets
Derivative financial asset
Contract fulfilment costs
Costs to obtain contracts
Deferred tax assets
Total Non-Current Assets
Total Assets
Notes
7
7
8
3
3
10
11
18
3
3
21
2023
$M's
8.1
11.6
34.4
5.3
2.3
61.7
77.8
242.1
0.2
4.0
1.8
15.2
341.1
402.8
Restated 2022
$M’s
13.9
14.7
27.2
3.6
2.1
61.5
61.7
231.4
-
3.3
1.9
10.3
308.6
370.1
Current liabilities
Borrowings
Trade payables and accruals
Payables to transport agencies
Contract liabilities
Lease liabilities
Employee entitlements
Total Current Liabilities
Non-current liabilities
Borrowings
Contract liabilities
Lease liabilities
Derivative financial liabilities
Deferred tax liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Share Capital
Share capital premium/discount
Other reserves
Accumulated losses
Total Shareholders' Equity
Notes
13
9
7
4
12
13
4
12
21
15
2023
$M's
1.4
23.0
11.9
7.4
1.7
3.7
49.1
69.2
12.0
5.8
-
17.9
104.9
154.0
248.8
305.7
(19.9)
(1.0)
(36.0)
248.8
Restated 2022
$M’s
-
37.3
15.0
5.7
1.4
4.6
64.0
32.1
6.2
4.3
0.2
15.6
58.4
122.4
247.7
293.3
(6.5)
(3.7)
(35.4)
247.7
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Chairman, 24 May 23
Chair of the Finance, Risk and Audit Committee, 24 May 23
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EROAD 2023 ANNUAL REPORTCORPORATE GOVERNANCE REPORT |FINANCIAL STATEMENTS |EROAD 2023 ANNUAL REPORT Consolidated Statement of Changes in Equity
For the year ended 31 March 2023
Consolidated Statement of Cash Flows
For the year ended 31 March 2023
Consolidated
Share
Capital
Share
Premium /
Discount
Accumulated
losses
Translation
Reserve
Hedging
Reserve
Total
Notes
Notes
$M’s
$M’s
$M’s
$M’s
$M’s
$M’s
Cash flows from operating activities
Balance as at 1 April 2021
Loss for the year
Other comprehensive loss
Total comprehensive loss
Transactions with owners
of the Company
Equity settled share-based
payments
Share capital issued
Issue of ordinary shares related to
business combination
16
131.7
-
-
-
1.3
80.4
79.9
-
-
-
-
-
-
(6.5)
(26.2)
(9.6)
-
(9.6)
0.4
-
-
(3.4)
-
(0.1)
(0.1)
-
-
-
-
-
(0.2)
(0.2)
-
-
-
102.1
(9.6)
(0.3)
(9.9)
1.7
80.4
73.4
Balance as at 31 March 2022
293.3
(6.5)
(35.4)
(3.5)
(0.2)
247.7
Balance as at 1 April 2022
293.3
(6.5)
Loss for the year
Other comprehensive income
Total comprehensive income
Transactions with owners
of the Company
Equity settled share-based
payments
Share capital issued relating to
business combination
Contingent shares forfeited
reclassification
16
15
-
-
-
1.4
11.0
-
-
-
-
(9.7)
-
(3.7)
(35.4)
(3.0)
-
(3.0)
(1.3)
-
3.7
(3.5)
(0.2)
-
2.3
2.3
-
-
-
-
0.4
0.4
-
-
-
247.7
(3.0)
2.7
(0.3)
0.1
1.3
-
Cash received from customers
Payments to suppliers and employees
Payments for contract fulfilment assets
3
Interest received
Interest paid
Income taxes paid
Net cash inflow from operating activities
Cash flows from investing activities
Payments for investment in property, plant & equipment
Payments for investment in intangible assets
Payments for investment in cost to obtain contracts
Payments for investment in subsidiary (including contingent
consideration), net of cash acquired
Net cash outflow from investing activities
10
11
3
23
Cash flows from financing activities
Receipts from bank loans
Repayments of bank loans
Payment of lease liability
Receipts from issue of equity
Payments for costs of raising equity
Net cash inflow from financing activities
Balance at 31 March 2023
305.7
(19.9)
(36.0)
(1.2)
0.2
248.8
Net decrease in cash held
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Cash at beginning of the financial period
Closing cash and cash equivalents
2023
$M’s
165.2
(128.9)
(7.6)
0.3
(4.9)
-
24.1
(27.5)
(28.2)
(2.9)
(8.5)
(67.1)
52.7
(14.2)
(1.3)
-
-
37.2
(5.8)
13.9
8.1
Restated 2022
$M’s
109.4
(92.2)
(5.7)
0.1
(2.9)
(0.1)
8.6
(28.4)
(24.9)
(3.2)
(72.4)
(128.9)
32.1
(35.0)
(1.6)
85.0
(3.4)
77.1
(43.2)
57.1
13.9
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
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EROAD 2023 ANNUAL REPORTCORPORATE GOVERNANCE REPORT |FINANCIAL STATEMENTS |EROAD 2023 ANNUAL REPORT Reconciliation of Operating Cash Flows with Reported Profit After Tax
For the year ended 31 March 2023
Notes to the consolidated financial statements
For the year ended 31 March 2023
Notes
2023
$M’s
Restated 2022
$M’s
Reconciliation of operating cash flows with reported profit
after tax
Loss after tax for the year attributable
to the shareholders
Add/(less) non-cash items
Tax asset recognised
Depreciation and amortisation
Other non-cash expenses/(income)
Contingent consideration and revaluation
Unwinding of interest expense for discounted contract liabilities
and contingent consideration
Contract liability discounting gain
Movements in other working capital items
Increase in trade and other receivables
Increase in current tax payables
Increase in contract liabilities
Increase in contract fulfillment cost
Increase in trade payables, interest payable and accruals
Net cash from operating activities
(3.0)
(3.9)
43.5
0.5
(9.6)
1.7
(1.8)
30.4
(6.1)
2.1
7.9
(7.6)
0.4
(3.3)
24.1
(9.6)
(1.1)
28.2
0.8
-
0.6
-
28.5
(10.4)
-
5.3
(5.7)
0.5
(10.3)
8.6
REPORTING ENTITY
The consolidated financial statements for the year ended 31 March 2023 are for EROAD Limited (the “Company”) and
its subsidiaries (collectively referred to as the “Group”). The Group provides electronic on-board units and software as a
service to the transport industry.
EROAD Limited is a company domiciled in New Zealand registered under the Companies Act 1993 and is a FMC reporting
entity for the purposes of the Financial Markets Conduct Act 2013. The Company is listed on the New Zealand Stock
Exchange (NZX) Main Board and the Australian Stock Exchange (ASX).
BASIS OF PREPARATION
The consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Practice
in New Zealand (NZ GAAP). The financial statements comply with New Zealand equivalents to International Financial
Reporting Standards (NZ IFRS) as appropriate for profit-oriented entities and other New Zealand accounting standards,
and authoritative notices that are applicable to entities that apply NZ IFRS. These financial statements also comply with
International Financial Reporting Standards and the requirements of the Financial Markets Conduct Act 2013.
The financial statements are presented in New Zealand dollars ($) which is the Group’s presentation currency, and all values
are rounded to million dollars to one decimal place ($M’s) except where stated. Items included in the financial statements
of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity
operates (the “functional currency”). The functional currency of the Company and its New Zealand subsidiaries is New
Zealand dollars. The functional currency of the Company’s Australian and North American subsidiaries are Australian
dollars and United States dollars respectively.
All amounts are shown exclusive of goods and services tax (GST) except for trade receivables and trade payables, and
except where the amount of GST incurred is not recoverable. When this occurs, GST is recognised as part of the cost of the
asset or as an expense as applicable.
The financial statements are prepared on the historical cost basis, except for certain financial instruments which are carried
at fair value.
BASIS OF CONSOLIDATION
Subsidiaries are fully consolidated at the date on which the Group obtains control, and continue to be consolidated until the
date when such control ceases. The financial statements are prepared for the same reporting period as the Company, using
consistent accounting policies. All intra-group transactions and balances arising within the Group are eliminated in full.
ACCOUNTING POLICIES
Accounting policies that summarise the measurement basis used and that are relevant to the understanding of the financial
statements are provided throughout the accompanying notes.
“
The accounting policies adopted have been applied consistently throughout the periods presented in these consolidated
financial statements, except as mentioned below.
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EROAD 2023 ANNUAL REPORTCORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTNOTES TO FINANCIAL STATEMENTS |
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
In applying the Group’s accounting policies, management continually evaluates judgements, estimates and assumptions
based on experience and other factors, including expectations of future events that may have an impact on the Group. All
judgements, estimates and assumptions made are believed to be reasonable based on the most current set of circumstances
available to the Group. Actual results may differ from the judgements, estimates and assumptions.
The significant judgements, estimates and assumptions made by management in the preparation of these financial
statements are outlined within the financial statement notes to which they relate. These are:
• Taxation - recognition and utilisation of tax losses
• Intangible assets - assumptions used in the impairment tests; capitalisation of development costs
• Property, plant and equipment - determining residual values and useful lives
GOING CONCERN
As at balance the Group’s current assets exceeded its current liabilities by $12.6 million (2022 restated: net current liabilities of
$2.5m). The directors have carefully considered the ability of the Group to continue to operate as a going concern for at least
the next 12 months from the date the financial statements are authorised for issue. It is the conclusion of the directors that the
Group will continue to operate as a going concern and the financial statements have been prepared on that basis.
In reaching their conclusion the directors have considered the following factors:
• Cash reserves as at 31 March 2023 of $8.1M and bank borrowing facility of $90M of which $19.4M was undrawn as at
31 March 2023 after including borrowing costs of $0.5M. Along with cost saving initiatives of the group, this provides
sufficient level of headroom to help support the business for at least the next 12 months from the date of issuance of
these financial statements;
• The Future Contracted Income of $219.6M provides certainty of forecast revenue; and
• The directors have made due enquiry into the appropriateness of the assumptions underlying the budgetary forecasts.
NZ IAS 1 amendment
The Group has early adopted the amendments to NZ IAS 1 with regards to the classification requirement of liabilities as current
or non-current in the current year. The impact of adoption on these consolidated financial statements has been outlined in the
table below.
31 MARCH 2023
Current borrowings
Non-current borrowings
31 MARCH 2022
Current borrowings
Non-current borrowings
31 MARCH 2021
Current borrowings
Non-current borrowings
NZ IAS 1 (OLD)
$M’s
40.6
30.0
2.1
30.0
6.4
28.6
IMPACT
$M’s
(39.2)
39.2
(2.1)
2.1
(1.4)
1.4
NZ IAS 1 (NEW)
$M’s
1.4
69.2
-
32.1
5.0
30.0
The Group adopted all mandatory new and amended NZ IFRS Standards and Interpretations and there has been no material
impact on the Group’s financial statements.
There are no other new standards, amendments or interpretations that have been issued and are not yet effective, that are
expected to have a significant impact on the Group.
COMPARATIVE INFORMATION
The statement of cash flow presentation has been amended to reclassify the contract fulfilment assets from investing activities
to operating activities cash flows. The impact of this reclassification on the comparative period is shown below.
The reclassification better reflects the Group’s operation.
Cash flows from operating activities
Cash flows from investing activities
2022
REPORTED
$M’s
14.3
(134.6)
RECLASS
2022
RECLASSIFIED
$M’s
(5.7)
5.7
$M’s
8.6
(128.9)
The prior year statement of financial position has been restated for the finalisation of provisional values in relation to the
acquisition of Coretex. Refer to note 23 for further details on the change.
Apart from the changes noted above and the change as a result of early adoption of NZ IAS 1 amendments Classification of
Liabilities as Current or Non-current, there have been no other changes to comparative figures.
PAGE 56
PAGE 57
PAGE 57
CORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTNOTES TO FINANCIAL STATEMENTS |
PERFORMANCE
This section focuses on the Group’s financial performance. This section includes the following notes:
NOTE 1 SEGMENT REPORTING
NOTE 2 REVENUE
NOTE 3 CONTRACT FULFILMENT AND COSTS TO OBTAIN CONTRACTS
NOTE 4 CONTRACT LIABILITIES
NOTE 5 EXPENSES
NOTE 6 PERSONNEL EXPENSES
NOTE 1 SEGMENT REPORTING
EROAD operating segments are based on geographic location for operating companies and corporate and development
costs. These operating segments equate to the Group’s strategic divisions and are reported in a manner consistent with
the internal reporting provided to the Chief Executive Officer (“CEO”). The CEO is considered to be the chief operating
decision maker (“CODM”).
The four segments/strategic divisions offer different services and are managed separately because they require different
technology, services and marketing strategies. For each strategic division, the CODM reviews internal management reports.
The following summary describes the operations in each of the Group’s segments.
• Corporate & Development: Corporate head office costs and R&D activities for development of new and existing
products and services
• North America: Operating companies serving customers in North America
• Australia: Operating companies serving customers in Australia
• New Zealand: Operating companies serving customers in New Zealand
Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items comprise income tax, derivative financial instruments, finance income
and expenses.
Inter-segment pricing is determined on an arm’s length basis.
NOTE 1 SEGMENT REPORTING (CONTINUED)
Reportable segment information
Key information related to each reportable segment as provided to the CODM is set out below.
Corporate &
Development
North America
New Zealand
Australia
2023
$M's
2022
$M's
2023
$M's
2022
$M's
2023
$M's
2022
$M's
2023
$M's
2022
$M's
-
0.3
65.3
35.0
75.8
65.3
0.6
-
61.7
62.3
-
-
32.1
32.4
5.4
-
1.9
2.4
-
2.9
0.2
3.7
4.0
-
3.0
1.5
72.6
40.3
83.7
69.8
8.3
0.7
-
0.3
9.3
3.5
0.1
-
0.3
3.9
(28.5)
(33.9)
18.1
9.4
53.7
45.2
2.2
0.1
Revenue
Software as a Service (Saas)
revenue
Hardware revenue
Transaction fee revenue
Other revenue 1
Total revenue
Earnings before interest,
taxation, depreciation &
amortisation
Other segment information
Total assets
277.3
256.9
100.4
80.8
69.5
64.8
15.4
13.3
Depreciation of property, plant &
equipment
(2.1)
(1.5)
(7.8)
(3.8)
(6.9)
(5.2)
(0.6)
(0.3)
Amortisation of intangible assets
(10.2)
(8.8)
(5.1)
Amortisation of contract and
customer acquisition assets
-
-
(2.3)
(1.7)
(1.5)
(0.9)
(0.3)
(1.7)
(0.2)
(5.4)
(5.0)
(0.6)
(0.3)
1 Revenue from Corporate & Development Markets includes R&D Grant Income of $1.6M (31 March 2022: $1.3M) and reassessment of contingent consideration
of $9.6m (31 March 2022: $1.3M).
PAGE 58
PAGE 59
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CORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTNOTES TO FINANCIAL STATEMENTS |
NOTE 1 SEGMENT REPORTING (CONTINUED)
Reconciliation of information on reportable segments
Revenue
Total revenue for reportable segments
Elimination of inter-segment revenue
Consolidated Revenue
EBITDA
Total EBITDA for reportable segments
Elimination of inter-segment EBITDA
Consolidated EBITDA
Depreciation
Total depreciation for reportable segments
Elimination of inter-segment depreciation
Consolidated Depreciation
Amortisation of intangible assets
Total amortisation for reportable segments
Elimination of inter-segment amortisation
Consolidated Amortisation
Total assets
Total assets for reportable segments
Elimination of inter-segment balances
Consolidated Total Assets
2023
$M’s
227.9
(53.0)
174.9
45.5
(0.3)
45.2
(17.4)
0.2
(17.2)
(17.9)
-
(17.9)
462.6
(59.8)
402.8
2022
$M’s
146.4
(31.5)
114.9
20.8
0.2
21.0
(10.8)
0.4
(10.4)
(11.0)
-
(11.0)
415.8
(45.7)
370.1
Allocation of goodwill, property plant and equipment and other intangible assets
Included within Total Assets are Development Assets of $100.4M (31 March 2022: $88.3m) which for the purpose of the
segment note have been allocated to the Corporate & Development Market based on the ownership of intellectual
property. The amortisation for these assets are also presented in the Corporate & Development segment. The Group’s
cash generating units (CGUs) are North America, New Zealand and Australia. For impairment testing purposes
management allocate the Development Assets to the CGU based on the specific CGU that the Development Asset relates
to, or if the Development Asset is developed for use globally across all CGU’s, the asset is allocated to CGU’s based on
the proportionate share of the Group’s Contracted Units. Property plant and equipment and other finite intangible assets
are also included and tested as part of impairment testing of respective CGU’s.
Also included in the total assets is the intangible assets acquired through the acquisition of the Coretex subsidiaries and
resulting goodwill. The allocation of these to cash-generating units has been done based on valuation expert advice as part of
acquisition accounting in the prior year.
NOTE 1 SEGMENT REPORTING (CONTINUED)
The allocation of the Development Assets, goodwill and other intangibles to CGU’s within the following reportable segments for the
purpose of impairment testing was as follows:
Development Assets
Goodwill
$M's
$M's
31 MARCH 2023
North America
New Zealand
Australia
31 MARCH 2022 Restated
North America
New Zealand
Australia
46.3
48.3
5.8
100.4
43.3
39.8
5.2
88.3
88.8
5.7
13.6
108.1
88.8
5.7
13.6
108.1
Brand
$M's
2.4
-
-
2.4
3.1
-
-
3.1
Customer
relationships
$M's
20.7
1.1
3.5
25.3
21.9
1.2
4.9
28.0
Geographic information
The geographic information below analyses the Group’s revenue and non-current assets by the Company’s country of domicile
and other countries. In presenting the following information revenue has been based on the geographic location of customers
and assets were based on the geographic location of the assets. These allocations are not aligned with the Group’s reportable
segments.
Revenue
New Zealand
All foreign countries:
USA
Australia
Total revenue
Non-current assets
New Zealand
All foreign countries:
USA
Australia
Total non-current assets
Non-current assets exclude financial instruments and deferred tax assets.
2023
$M’s
94.0
71.6
9.3
174.9
230.4
84.6
10.7
325.7
Restated 2022
$M’s
72.1
39.0
3.8
114.9
206.5
79.9
11.9
298.3
PAGE 60
PAGE 61
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CORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTNOTES TO FINANCIAL STATEMENTS |
NOTE 1 SEGMENT REPORTING (CONTINUED)
NOTE 2 REVENUE (CONTINUED)
Reconciliation of geographical non-current assets
to total non-current assets
Geographical non-current assets
Deferred tax assets
Derivative financial instruments
Total non-current assets
NOTE 2 REVENUE
Revenue from contracts with customers
Software as a service (Saas) revenue
Hardware revenue (subscription basis)
Other
Transaction fee revenue
Other revenue and income
Grant income
Total Revenues
2023
$M’s
325.7
15.2
0.2
341.1
2023
$M’s
149.4
6.9
3.7
13.3
1.6
174.9
Restated 2022
$M’s
298.3
10.3
-
308.6
2022
$M’s
104.1
2.5
3.0
4.0
1.3
114.9
Set out above is the disaggregation of the Group’s revenue. The disaggregation reflects the nature, amount, timing and
uncertainty of revenue and cash flows are affected by economic factors.
Revenue recognition
Revenue is measured based on the consideration specified in a contract with a customer. The Group recognises revenue when
it transfers control over a good or a service to a customer.
The Group provides electronic on-board units to its customers, which comprise the provision of hardware and the rendering of
services.
For the majority of the Group’s customers the supply of electronic on-board units (leased or purchased outright), installation
of the units and providing services are not distinct and have one single performance obligation (linked to the service contract).
Consequently, the Group does not recognise revenue separately for these goods and services but recognises this revenue
together as the provision of software as a service (SAAS) revenue.
Each of the Group’s main sources of revenue are described in detail below:
Software as a service revenue
Software as a service (SaaS) revenue represents revenue earned from customer contracts for the sale or rental of hardware,
installation services, training and support services and provision of software services.
As noted above, the Group has determined that for the majority of customers the supply and installation of units and the
services are not distinct and treated as one single performance obligation. That is, EROAD’s customers do not have the right
to direct the use of EROAD’s assets (such as the Ehubo, Corehub and TMU units) as EROAD continues to have the right and
ability to change how the asset operates during the customer’s contract period. These contracts are therefore accounted for
as service contracts. The Group generates revenue through the sale of hardware assets, rental of hardware assets, installation
of hardware assets and provision of software services as part of contracts with customers as part of a bundled package. These
hardware units enable customers to access the software platform offered by the Group. The transaction involving hardware
and accessories do not convey a distinct good or service. The sale does not transfer control to the customer as the Group
provides a significant service of integrating the software service to produce a combined output. The sale of the hardware,
accessories and software service are referred to as Software as a Service (SaaS) revenue, which is recognised on a straight
line basis over the contract period to reflect the fulfilment of the performance obligations as they arise. There are no variable
consideration terms within the contracts.
The Group offers installation services as part of a number of promises to transfer goods and services within each contract.
Installation services do not convey a distinct good or service and therefore are not a separate performance obligation as
the installation is a set-up activity that does not provide the customer a direct benefit other than access to the software
services. As a result, the installation service is considered as part of the single performance obligation referred to as software
as a service (SAAS) revenue, which includes the software service and hardware sale or rental for which the customer
simultaneously receives and consumes the benefit of the service.
A contract liability is recognised where consideration is received in advance of the completion of associated performance
obligations. The contract liability is derecognised over time evenly over the period of the contract as the customer derives
the benefit evenly from the services provided over the contract period. The majority of contracts are for 3 years and can be
for a term of up to 5 years. As a result there is a financing component which the Group recognise as a finance cost when
consideration is received in advance.
Hardware revenue (subscription)
Hardware revenue purchased with a subscription is recognized over the first months subscription. Hardware revenue
reflects hardware sales where a subscription must be separately purchased to utilise the hardware and obtain access to
services. The hardware together with the monthly subscription is considered a single performance obligation. A receivable
is recognised by the Group when the right to consideration becomes unconditional, as only the passage of time is required
before payment is due.
The installation revenue associated with uncontracted hardware units is included in the hardware revenue line and recognised
when the installation is completed.
The services revenue associated with the uncontracted hardware units is included in the software as a service revenue line and
is recognised when the performance obligation is completed.
Transaction fees
Transaction fee revenue relates to the collection of Road User Charges (RUC) fees. The Group acts as an agent for transport
authorities in the market that is operates in. Where fees are collected on their behalf, the Group charges a commission. The
revenue recognised is the net amount of the commission fee earned by the Group.
Grant income
Government grants are recognised at fair value in the statement of comprehensive income over the same periods as the costs
for which the grants are intended to compensate. No unfulfilled conditions or contingencies exist related to the government
grants.
Other revenue and income
Included in other income and revenue is $9.6M related to the reassessment of contingent consideration as outlined in Note 23.
Future contracted income
The Group reports the Non-GAAP measure, Future Contracted Income. The definition of Future Contracted Income includes
all future hardware and SaaS cash inflows relating to income under non-cancellable long-term agreements. The disclosure
below aligns with the Future Contracted Income reported by the Group.
PAGE 62
PAGE 63
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CORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTNOTES TO FINANCIAL STATEMENTS |
NOTE 2 REVENUE (CONTINUED)
NOTE 4 CONTRACT LIABILITIES (CONTINUED)
Transaction price allocated to the remaining performance obligations
The below table represents the revenue allocated to performance obligations that are unsatisfied or partially unsatisfied at
the period end. The revenue amounts yet to be recognised under non-cancellable contract agreements at 31 March 2023 are
expected to be recognised by EROAD based on the time bands disclosed below.
Opening balance
Amounts deferred during the period
Amount recognised in the statement of comprehensive income
Software as a Service (SaaS) revenue
No later than one year
Later than one year, no later than five years
Total price allocated to remaining performance obligations
2023
$M’s
88.1
131.5
219.6
2022
$M’s
83.6
106.6
190.2
Current
Non-current
NOTE 5 EXPENSES
NOTE 3 CONTRACT FULFILMENT AND COSTS TO OBTAIN CONTRACTS
Capitalised contract fulfilment costs
The Group capitalises incremental costs of fulfilling customer contracts, typically distribution and installation costs. Contract
fulfilment costs are amortised evenly over the period of the contract. The majority of contracts are for 3 years and can be for a
term of up to 5 years. Customers who do not sign up to a term have contract fulfilment costs expensed up-front.
Capitalised contract acquisition costs
The Group has applied a policy of capitalising only costs that are incremental in obtaining contracts with customers,
typically sales commissions. Contract acquisition costs are amortised evenly over the period of the contract. The majority
of contracts are for 3 years and can be for a term of up to 5 years. Customers who do not sign up to a term have contract
acquisition costs expensed up-front.
The following table provides information about contract fulfilment and costs to obtain contracts with customers:
Contract fulfilment
Costs to obtain contracts
2023
$M’s
6.9
7.8
(5.4)
9.3
5.3
4.0
2022
$M’s
5.4
5.7
(4.2)
6.9
3.6
3.3
2023
$M’s
4.0
3.1
(3.0)
4.1
2.3
1.8
2022
$M’s
3.5
3.1
(2.6)
4.0
2.1
1.9
Opening net book value
Additions
Amortisation
Closing net book value
Current
Non-current
NOTE 4 CONTRACT LIABILITIES
The Group enters into contracts with customers for the provision of software services over a contracted period. As stated in the
accounting policies, this revenue is recognised over time as the customer simultaneously receives and consumes the benefit
of the service. The Group has determined that the benefit of the services provided is consumed evenly over the period of the
contract, and thus the performance obligations are satisfied evenly over the period. Where the Group receives a portion of the
transaction price of a contract in advance, this is recognised as a contract liability and released over the contract period as the
Group satisfies its performance obligations.
2023
$M’s
11.9
16.9
(9.4)
19.4
7.4
12.0
2023
$M’s
57.5
41.1
26.0
0.8
-
3.4
0.5
0.1
0.3
129.7
2022
$M’s
6.6
10.4
(5.1)
11.9
5.7
6.2
2022
$M’s
45.2
24.3
15.3
0.5
3.6
4.0
0.6
0.1
0.3
93.9
Notes
6
Personnel expenses - net of capitalised employee
remuneration
Administrative and other operating expenses
SaaS platform costs
Directors fees
Acquisition-related expenses
Integration-related expenses
Auditor's remuneration - KPMG
Other assurance services - KPMG
Tax compliance and advisory services - KPMG
Total operating expenses
Other assurance services include half year review and procedures over RDTI claim and NZTA reasonable assurance.
During the year the costs expensed for Research and Development (including integration) was $37.2M (31 March 2022:
$8.0M).
The integration related expenses include internal staff time.
NOTE 6 PERSONNEL EXPENSES
Salaries and wages - excluding capitalised commission costs
Annual leave
Performance bonus
Share-based payments
Salaries and wages capitalised to development and software assets
2023
$M’s
74.1
(1.1)
1.4
0.1
(17.0)
57.5
2022
$M’s
53.7
0.8
0.8
2.0
(12.1)
45.2
PAGE 64
PAGE 65
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CORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTNOTES TO FINANCIAL STATEMENTS |
WORKING CAPITAL
NOTE 9 TRADE PAYABLES AND ACCRUALS
This section provides information about the primary elements of the Group’s working capital. This section includes the
following notes:
NOTE 7 CASH AND CASH EQUIVALENTS, RESTRICTED CASH AND PAYABLES TO TRANSPORT AGENCIES
NOTE 8 TRADE AND OTHER RECEIVABLES
NOTE 9 TRADE PAYABLES AND ACCRUALS
NOTE 7 CASH AND CASH EQUIVALENTS, RESTRICTED CASH AND PAYABLES TO TRANSPORT AGENCIES
Trade payables
Tax payable
Sundry accruals
Contingent consideration liability
2023
$M’s
7.6
2.6
12.8
-
23.0
Restated 2022
$M’s
11.6
0.8
6.4
18.5
37.3
Trade payables are carried at amortised cost. Due to their short-term nature, they are not discounted.
The contingent consideration liability payable in relation to the acquisition of Coretex Limited and its subsidiaries was settled
on 23 December 2022. Refer to note 23 for further details.
Cash and cash equivalents
Restricted bank accounts
2023
$M’s
8.1
11.6
19.7
2022
$M’s
13.9
14.7
28.6
Cash and cash equivalents exclude restricted bank accounts. Restricted bank accounts are presented separately from cash
and cash equivalents on the face of the Statement of Financial Position and movements in restricted bank accounts are
excluded from the Statement of Cash Flows. The restricted bank accounts relate to Road Users tax collected from clients due
for payment to the appropriate government agency.
Payables to transport agencies
(11.9)
(15.0)
NOTE 8 TRADE AND OTHER RECEIVABLES
Trade receivables
Allowance for expected credit losses on trade receivables
Prepayments and other receivables
2023
$M’s
22.5
(3.5)
19.0
15.4
34.4
2022
$M’s
19.4
(3.2)
16.2
11.0
27.2
In addition to the movement in the expected credit losses, the Group has written off $1.7M (2022: $0.8M) of bad debts to the
statement of comprehensive income.
Trade receivables are amounts due from customers for products sold and services provided. Trade receivables are recognised
initially at their transaction price and subsequently measured at the amount to be collected. Due to the short term nature of
these debtors, their carrying value is assumed to approximate fair value.
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through
profit or loss. The Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in
credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established
a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the
debtors and the economic environment. That is, to measure the expected credit losses, trade receivables have been grouped
based on customer industry risk characteristics and the days past due. The expected loss rates are based on recent payment
profiles, historical customer behaviour, age of debt and individual customer circumstances.
PAGE 66
PAGE 67
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CORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTNOTES TO FINANCIAL STATEMENTS |
LONG-TERM ASSETS
This section provides information about the investment the Group has made in long-term assets to operate the business.
This section includes the following notes:
NOTE 10 PROPERTY, PLANT AND EQUIPMENT
NOTE 11 INTANGIBLE ASSETS
NOTE 12 LEASES AS LESSEE
NOTE 10 PROPERTY, PLANT AND EQUIPMENT
Right of
use assets
Hardware
assets
Plant and
equipment
Leasehold
improvements
Motor
vehicles
Office
equipment
Computers
Total
$M’s
$M's
$M's
$M's
$M's
$M's
$M's
$M's
YEAR ENDED 31 MARCH 2023
Opening net book
amount
Additions
Disposals
4.5
3.1
-
54.1
31.4
(7.9)
0.1
0.1
-
Depreciation charge
(1.9)
(14.0)
(0.1)
-
-
2.4
2.7
-
-
1.2
0.7
(0.6)
(0.3)
0.3
0.1
(0.5)
(0.1)
0.6
0.4
-
-
0.6
0.2
-
0.9
61.7
0.6
36.2
-
(9.0)
(0.2)
(0.6)
(17.2)
-
-
-
-
3.4
2.7
5.7
68.7
0.1
1.6
0.2
0.6
0.9
77.8
9.8
106.1
0.8
3.1
0.8
(4.1)
(37.4)
(0.7)
(1.5)
(0.6)
2.0
(1.4)
0.6
4.9
127.5
(4.0)
(49.7)
0.9
77.8
Net book amount
5.7
68.7
0.1
1.6
0.2
Depreciation
recovered
Effect of movement
in exchange rates
Closing net book
amount
AT 31 MARCH 2023
Cost
Accumulated
depreciation
NOTE 10 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Right of
use assets
Hardware
assets
Plant and
equipment
Leasehold
improvements
Motor
vehicles
Office
equipment
Computers
Total
$M's
$M’s
$M’s
$M’s
$M’s
$M’s
$M’s
$M’s
YEAR ENDED 31 MARCH 2022
Opening net book
amount
Acquisition
through business
combinations
Additions
Disposals
Depreciation charge
Depreciation
recovered
Effect of movement
in exchange rates
Closing net book
amount
Cost
Accumulated
depreciation
4.1
1.3
0.4
-
(1.3)
-
-
4.5
8.5
28.0
0.2
1.3
0.4
7.5
24.1
-
(8.1)
3.3
(0.7)
54.1
76.3
-
-
-
0.2
-
-
(0.1)
(0.3)
-
-
0.1
0.7
-
-
1.2
2.9
-
-
(0.1)
(0.1)
0.1
-
0.3
1.1
(4.0)
(22.2)
(0.6)
(1.7)
(0.8)
Net book amount
4.5
54.1
0.1
1.2
0.3
0.3
0.1
0.3
-
(0.1)
-
-
0.6
1.8
(1.2)
0.6
0.4
34.7
0.1
9.2
0.8
-
25.6
(0.1)
(0.4)
(10.4)
-
-
3.4
(0.7)
0.9
61.7
4.3
95.6
(3.4)
(33.9)
0.9
61.7
Included in the Hardware Assets is equipment under construction to be leased or sold of $27.8M (2022: $23.8M). Due to the
majority of the equipment under construction being ultimately sold under contract and forming part of hardware assets on the
Group’s fixed asset register it has been accordingly classified under hardware assets.
Items of plant and equipment are stated at cost, less accumulated depreciation and impairment losses. Cost includes the
purchase consideration, and those costs directly attributable to bringing the asset to the location and condition necessary for
its intended use. Where an item of plant and equipment is disposed of, the gain or loss recognised in the statement of compre-
hensive income is calculated as the difference between the net sales price and the carrying amount of the asset.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any
lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to
restore the underlying asset or the site on which it is located, less any lease incentives received.
Subsequent costs
The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such
an item when that cost is incurred if it is probable that the future economic benefits embodied within the item will flow to the
Group and the cost of the item can be measured reliably. All other costs are recognised in the statement of comprehensive
income as an expense in the period they are incurred.
Impairment
Property plant and equipment is tested for impairment when there are indicators of impairment. It is not possible to identify
separately identifiable cash flows for property, plant and equipment as hardware assets are sold together with various SaaS
services as a package. Property plant and equipment is allocated to the Group’s CGU’s as described in note 1 for the purposes
of impairment testing.
PAGE 68
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CORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTNOTES TO FINANCIAL STATEMENTS |
NOTE 10 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
NOTE 11 INTANGIBLE ASSETS (CONTINUED)
Depreciation
Depreciation begins when the asset is in the location and condition necessary for it to be capable of operating in the manner
intended by management.
The following rates have been used on a straight line basis:
Leasehold improvements
Hardware assets
Plant and equipment
Computer/Office equipment
Motor vehicles
Right of use assets
3 to 9 years
3 to 6 years
3 to 11 years
1 to 5 years
3 to 5 years
3 to 9 years
The above rates reflect the estimated useful lives of the respected categories. Consideration was given to how long assets can
be deployed and any expected network changes. Leasehold improvements are depreciated over the contracted lease term.
NOTE 11 INTANGIBLE ASSETS
YEAR ENDED 31 MARCH 2023
Restated opening net book
amount
Additions
Disposals
Effect of movement in foreign
exchange rate
Amortisation charge
Closing net book amount
AT 31 MARCH 2023
Cost
Accumulated amortisation
Net book amount
Development Software
Goodwill
Brand
Customer
relationships
Patents,
trademarks and
other rights
Total
$M’s
$M’s
$M’s
$M’s
$M’s
$M’s
$M’s
88.3
25.5
-
0.2
(13.6)
100.4
154.6
(54.2)
100.4
3.9
2.6
-
-
(0.7)
5.8
12.1
(6.3)
5.8
108.1
3.1
28.0
-
-
-
-
108.1
-
-
-
(0.7)
2.4
108.1
3.3
-
(0.9)
108.1
2.4
-
-
0.2
(2.9)
25.3
28.8
(3.5)
25.3
-
231.4
0.1
28.2
-
-
-
-
0.4
(17.9)
0.1
242.1
0.1
307.0
-
(64.9)
0.1
242.1
Development Software
Goodwill
Brand
Customer
relationships
Patents,
trademarks and
other rights
Total
$M’s
$M’s
$M’s
$M’s
$M’s
$M’s
$M’s
RESTATED YEAR ENDED 31 MARCH 2022
Opening net book amount
Restated business
combination acquisition
Additions
Disposals
Effect of movement in foreign
exchange rate
36.9
37.2
23.7
-
(0.2)
3.7
-
1.2
(0.1)
-
Amortisation charge
(9.3)
(0.9)
Restated closing net book
amount
Cost
Accumulated amortisation
Restated net book amount
88.3
128.9
(40.6)
88.3
3.9
9.5
(5.6)
3.9
-
-
-
108.1
3.3
28.7
-
-
-
-
108.1
108.1
-
-
-
(0.2)
3.1
3.3
-
(0.2)
108.1
3.1
-
-
(0.1)
(0.6)
28.0
28.6
(0.6)
28.0
-
-
-
-
-
-
-
-
-
-
40.6
177.3
24.9
(0.1)
(0.3)
(11.0)
231.4
278.4
(47.0)
231.4
The useful lives of the Group’s Intangible Assets are assessed to be finite except for goodwill. Assets with finite lives are amor-
tised over their useful lives and tested for impairment whenever there are indications that the assets may be impaired.
Research and Development
Expenditure on research activities, undertaken with the prospect of gaining new technical knowledge and understanding, is
recognised in the statement of comprehensive income when incurred.
Development activities involve a plan or design for the production of new or substantially improved products and
processes. Development expenditure is capitalised only if development costs can be measured reliably, the product or
process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has
sufficient resources to complete development and to use or sell the asset. The expenditure capitalised includes the cost of
materials, direct labour and overhead costs that are directly attributable to preparing the asset for its intended use. Other
development expenditure is recognised in the statement of comprehensive income when incurred. There is judgement
involved in relation to whether a project meets the capitalisation criteria, and whether the expenditure can be directly
attributable to the respective project.
Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated impairment
losses.
Other intangible assets
Other intangible assets, including customer relationships, brand, patents and trademarks, that are acquired by the Group
and have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses.
Subsequent expenditure
Subsequent expenditure is capitalised when it increases the future economic benefits embodied in the specific asset to
which relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in the
statement of comprehensive income when incurred.
PAGE 70
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CORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTNOTES TO FINANCIAL STATEMENTS |
NOTE 11 INTANGIBLE ASSETS (CONTINUED)
Amortisation
Patents
10 to 20 years
Development Hardware & Platform
7 to 15 years
Development Products
Software
Customer relationships
Brand
5 to 10 years
5 to 7 years
15 years
5 years
Impairment
The acquisition of Coretex during the previous financial year, meant goodwill was recognised for the excess between the
fair value consideration paid and the fair value of the net assets acquired. Net assets acquired included finite life
intangibles assets such as customer relationships, brands, software and development assets. The goodwill and finite life
intangibles were then allocated to the cash generating units of the business with the assistance of external specialists.
When goodwill is acquired in a business combination, under the accounting standards, NZ IAS 36 requires an impairment
test to be completed annually (for cash-generating units in which goodwill has been allocated) irrespective of whether
there is any indication of impairment. An impairment test is also required when there is an indicator of impairment
identified each reporting period. Refer to note 1 for the allocation of goodwill, property plant and equipment and other finite
life intangible assets to cash generating units (CGUs). The CGU‘s are considered the lowest level for which there are
separately identifiable cashflows. Corporate costs attributable to the CGUs are allocated to the respective CGUs as part of
impairment testing. Unallocated corporate costs and assets are also tested for impairment using a top down approach.
Impairment testing of CGU’s
To complete the annual impairment testing management assessed the recoverable amount of each of the cash-generating
units (“CGU”) of which goodwill, property plant and equipment (refer note 10) and finite life intangible assets have been
allocated by reference to its value in use (“VIU”) determined using a discounted cash flows model. The recoverable
amounts of the CGU were estimated based on the following significant assumptions:
Amount the VIU
exceeds the
carrying value
Connected unit
CAGR
ARPU
CAGR
$M’s
166.0
34.3
7.7
4.0%
17.11%
25.07%
(0.70)%
(2.50)%
(1.90)%
WACC
12.25%
12.25%
12.25%
New Zealand
North America
Australia
The inputs used for the growth in connected units and ARPU in the CGUs reflect past experience and the forecast
performance of the group.
- Terminal growth rate of 1.5% applied to 2028 and thereafter
Sensitivity analysis was undertaken which concluded that New Zealand results are not particularly sensitive to changes in
the underlying assumptions. Australia and North America are sensitive to the achievement of forecast unit growth, ARPU
and changes in the discount rate.
NOTE 11 INTANGIBLE ASSETS (CONTINUED)
The Group applied judgment in determining reasonably possible changes in the key assumptions in the value in use models.
Results of the sensitivity analysis as follows:
Input required for the VIU to equate to the carrying value
Connected unit
CAGR
ARPU
CAGR
WACC
New Zealand
North America
Australia
Not sensitive
Not sensitive
Not sensitive
15.01%
21.99%
(3.86)%
(3.59)%
13.73%
13.78%
The Group concluded that the recoverable amount of each of the CGU were higher than their respective carrying values
and therefore no impairment was considered necessary at 31 March 2023.
NOTE 12 LEASES AS LESSEE
Maturity analysis - contractual undiscounted cash flows
Less than one year
One to five years
More than five years
Total undiscounted lease liabilities
Current
Non-current
Lease liabilities included in the statement of financial position
Amounts recognised in Statement of Comprehensive Income
Interest expense on lease liabilities
Depreciation on right of use assets
Amounts recognised in Statement of Cash Flows
Total cash outflow for leases
2023
$M’s
2.0
5.5
1.3
8.8
1.7
5.8
7.5
2023
$M’s
0.3
1.9
2023
$M’s
(1.3)
2022
$M’s
2.1
3.8
-
5.9
1.4
4.3
5.7
2022
$M’s
0.3
1.3
2022
$M’s
(1.6)
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental
borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
PAGE 72
PAGE 73
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CORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTNOTES TO FINANCIAL STATEMENTS |
NOTE 12 LEASES AS LESSEE (CONTINUED)
DEBT AND EQUITY
Lease payments included in the measurement of the lease liability comprise the following:
- fixed payments, including in-substance fixed payments;
- variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the
commencement date;
- amounts expected to be payable under a residual guarantee;
- the exercise priced under a purchase option that the Group is reasonably certain to exercise;
- lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option; and
- penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change
in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount
expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a
purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-
use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
This section outlines the Group’s capital structure and the related financing costs. This section includes the following notes:
NOTE 13 BORROWINGS
NOTE 14 FINANCE INCOME AND FINANCE EXPENSES
NOTE 15 EQUITY
NOTE 16 SHARE-BASED PAYMENTS
NOTE 13 BORROWINGS
Current borrowings
Bank overdraft
Non-current borrowings
Term loans
Revolving credit facility
Capex facility
Capitalised borrowings costs
2023
$M’s
1.4
1.4
30.0
39.7
-
(0.5)
69.2
Restated 2022
$M’s
-
-
30.0
0.7
2.0
(0.6)
32.1
Terms and debt repayment schedule
Nominal
Interest
Year of
Maturity
6.02%
6.02%
6.02%
2025
2025
2025
Term Loans
Capex facility/bank overdraft
Revolving credit facility
Capitalised borrowing costs
2023
Face
Value
$M’s
30.0
1.4
39.7
-
71.1
2023
Carrying
amount
$M’s
30.0
1.4
39.7
(0.5)
70.6
2022
Face
Value
$M’s
30.0
2.0
0.7
-
32.7
2022
Carrying
amount
$M’s
30.0
2.0
0.7
(0.6)
32.1
The above nominal interest rate represents the weighted average rate of the entire facility.
The Group has a syndicated debt facility with the Bank of New Zealand (BNZ) and the Australia and New Zealand Banking
Group (ANZ). At 31 March 2023, EROAD had the following facilities in place:
$30.0M (NZD) Term Loan Facility A – to refinance debt from the prior financial year. The Term Loan has a term of 36 months
from the March 2022 refinance date, with the facility having a maturity date in March 2025. The interest rate is variable with
reference to a base rate (BKBM bid rate) for the selected interest period plus a margin of 2.95%. EROAD may select an interest
period of 1,2,3 or 6 months. This is an interest only term facility with full repayment on the termination date.
PAGE 74
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CORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTNOTES TO FINANCIAL STATEMENTS |
NOTE 13 BORROWINGS (CONTINUED)
$55.0M (NZD) Revolving Credit Facility B – for general corporate purposes. The Revolving Credit Facility has a term of 36
months from the March 2022 refinance date with a periodic roll over feature at the end of each interest period (90 days) that
is subject to continued compliance with the terms of the loan agreement, with the facility having a maturity date in March
2025. Funds may be drawn in NZ Dollars, AU Dollars, or US Dollars. The interest rate is variable with reference to the base rate
(BKBM bid rate for NZ Dollar drawings, BBSY bid rate for AU Dollar drawings, and US Federal Open Market Committee short-
term interest rate target for US Dollar drawings) for the selected interest period plus a margin of 1.5%. EROAD may select an
interest period of 1,2,3 or 6 months. In addition, a Commitment Fee of 1.45% per annum is payable on the committed balance
of the facility quarterly in arrears. The full outstanding balance is payable on the termination date.
$5.0M Capex /overdraft facility– In the current year the CAPEX facility has been replaced by an overdraft facility. This is
an on demand facility with the interest rate to be agreed between the lender and borrower at the time of borrowing plus
a margin of 1.5%. In addition, a Commitment Fee of 1.45% per annum is payable on the committed balance of the facility
quarterly in arrears. The full outstanding balance is payable on the termination date.
EROAD’s operating covenants to support the above facilities include Interest Cover Ratio, Leverage Ratio and Obligor
Assets to Group Assets. EROAD was compliant with all covenants during the period and at 31 March 2023.
The security package for the Multi-Option Credit Facility Agreement includes an all obligations cross-guarantee granted by
EROAD Financial Services Limited, EROAD Australia Pty Limited, EROAD Inc, Coretex Limited, Imarda Pty Limited, Coretex
Australia Pty Limited, Coretex NZ Limited, and Coretex USA Inc in favour of the BNZ (in its capacity of Security Trustee for
the banking syndicate). In respect of the obligations of EROAD Limited, and a General Security Agreements granted by
EROAD Limited, EROAD Financial Services Limited, EROAD Inc, EROAD Australia Pty Limited, Coretex Limited, Imarda Pty
Limited, Coretex Australia Pty Limited, Coretex NZ Limited, and Coretex USA Inc in favour of the BNZ (in its capacity of
Security Trustee for the banking syndicate).
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are
capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they
are incurred.
NOTE 14 FINANCE INCOME AND FINANCE EXPENSES
Finance expenses
Interest expense
Interest expense - lease liabilities
Interest expense - contract liabilities
Unwinding of interest for contingent consideration
Foreign exchange losses
Total finance expenses
Finance income
Interest income
2023
$M’s
(4.6)
(0.3)
(0.9)
(0.8)
(0.5)
(7.1)
0.3
2022
$M’s
(2.4)
(0.3)
(0.2)
(0.4)
-
(3.3)
0.1
NOTE 15 EQUITY
Paid up capital
All issued shares are fully paid up and have equal voting rights and share equally in dividends and surplus on winding up.
Number of
ordinary shares
Issue price
$
Issued Capital
$
1 APRIL 2022
Shares issued to employees
Shares issued in December 2022 relating to settlement
of the contingent consideration
31 MARCH 2023
110,338,787
456,625
1,833,000
112,628,412
3.13
6.00
293.3
1.4
11.0
305.7
At 31 March 2023 there was 112,628,412 authorised and issued ordinary shares (31 March 2022: 110,338,787). 386,166 (31
March 2022: 417,306) shares are held in trust for employees in relation to the long-term incentive plan and are accounted
for as treasury stock.
The calculation of both basic and diluted loss/profit per share at 31 March 2023 was based on the loss attributable to
ordinary shareholders of $3.0M (2022: loss of $9.6M). The weighted number of ordinary shares on 31 March 2023 was
110,798,841 (2022: 95,572,631) for basic earnings per share and 111,108,924 for diluted earnings per share (2022: 96,462,064).
Share capital premium/discount
This account is for the difference between the issued share price and the trading share price (or fair value share price) on
date of issue and includes contingent consideration portion classified as equity related to the acquisition of Coretex.
Opening balance - 1 April 2022
Contingent Shares issued
Contingent shares forfeited
Other components of equity include:
2023
$M’s
6.5
9.7
3.7
19.9
• Translation reserve - comprises foreign currency translation differences arising from the translation of financial
statements of the Group’s foreign subsidiaries into New Zealand dollars.
• Hedging reserve - the hedging reserve is used to record gains or losses on instruments used as cash flow hedges. The
amounts are recognised in profit and loss when the hedged transaction affects profit and loss.
• Retained earnings - includes all current and prior period retained profits and losses and share-based employee
remuneration.
PAGE 76
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CORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTNOTES TO FINANCIAL STATEMENTS |
NOTE 16 SHARE-BASED PAYMENTS (CONTINUED)
FY23 Performance Share Rights
Under the FY23 Long Term Incentive (LTI) plan, 70,000 performance share rights (PSRs) were issued (for nil
consideration) to participants which convert to shares (for nil consideration) if targets are met. PSRs do not entitle the
holder to receive dividends or other distributions, or vote in respect of EROAD Limited ordinary shares, although under the
terms of the plan an additional number of shares will be issued on conversion of fully vested PSRs to reflect dividends paid
to EROAD Limited shareholders prior to exercise. On becoming exercisable, each PSR entitles the holder to one fully paid
ordinary EROAD Limited share, subject to adjustment in accordance with the plan rules and the performance hurdles,
ranking equally with all other EROAD Limited ordinary shares.
NOTE 16 SHARE-BASED PAYMENTS
At 31 March 2023, the Group had the following share-based payment arrangements.
FY20 Performance Share Rights
Under the FY20 long term Incentive (LTI), 56,949 performance share rights (PSRs) remain outstanding as at 31 March 2023.
PSRs were issued (for nil consideration) to participants which convert to shares (for nil consideration) if targets are met.
PSRs do not entitle the holder to receive dividends or other distributions, or vote in respect of EROAD Limited ordinary
shares, although under the terms of the plan an additional number of shares will be issued on conversion of fully vested
PSRs to reflect dividends paid to EROAD Limited shares prior to exercise. On becoming exercisable, each PSR entitles the
holder to one fully paid ordinary EROAD Limited share, subject to adjustment in accordance with the plan rules and the
performance hurdles, ranking equally with all other EROAD Limited ordinary shares.
For the FY20 LTI plan, the award is linked to growth in EROAD’s total contracted units (TCUs) between 1 April 2019 and
31 March 2022. Participants bear the tax liability of the LTI plan. The Board retains discretion over the final outcome of
PSR payments, to allow appropriate adjustments where unanticipated circumstances may impact performance over the
measurement period.
FY22 Performance Share Rights
Under the FY22 Long Term Incentive (LTI) plan, 145,671 performance share rights (PSRs) were issued (for nil consideration)
to participants which convert to shares (for nil consideration) if targets are met. PSRs do not entitle the holder to receive
dividends or other distributions, or vote in respect of EROAD Limited ordinary shares, although under the terms of the
plan an additional number of shares will be issued on conversion of fully vested PSRs to reflect dividends paid to EROAD
Limited shares prior to exercise. On becoming exercisable, each PSR entitles the holder to one fully paid ordinary EROAD
Limited share, subject to adjustment in accordance with the plan rules and the performance hurdles, ranking equally with
all other EROAD Limited ordinary shares.
For the FY22 LTI plan, the award is linked to the participant completing remaining employed for two years following the
completion date.
FY23 Performance Share Rights
Under the FY23 Long Term Incentive (LTI) plan, 467,651 performance share rights (PSRs) were issued (for nil
consideration) to participants which convert to shares (for nil consideration) if targets are met. PSRs do not entitle the
holder to receive dividends or other distributions, or vote in respect of EROAD Limited ordinary shares, although under the
terms of the plan an additional number of shares will be issued on conversion of fully vested PSRs to reflect dividends paid
to EROAD Limited shareholders prior to exercise. On becoming exercisable, each PSR entitles the holder to one fully paid
ordinary EROAD Limited share, subject to adjustment in accordance with the plan rules and the performance hurdles,
ranking equally with all other EROAD Limited ordinary shares.
The FY23 LTI Plan had a vesting date of 31 March 2023 and ultimately vested on 06 April 2023. 290,672 PSRs vested
with the remaining balance having lapsed due to performance criteria not being met.
FY23 Performance Share Rights
Under the FY23 Long Term Incentive (LTI) plan, 403,691 performance share rights (PSRs) were issued (for nil
consideration) to participants which convert to shares (for nil consideration) if targets are met. PSRs do not entitle the
holder to receive dividends or other distributions, or vote in respect of EROAD Limited ordinary shares, although under the
terms of the plan an additional number of shares will be issued on conversion of fully vested PSRs to reflect dividends paid
to EROAD Limited shareholders prior to exercise. On becoming exercisable, each PSR entitles the holder to one fully paid
ordinary EROAD Limited share, subject to adjustment in accordance with the plan rules and the performance hurdles,
ranking equally with all other EROAD Limited ordinary shares.
For the FY23 LTI plan, the award is linked to the participant remaining employed by EROAD on the vesting date of
30th May 2024.
PAGE 78
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CORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTNOTES TO FINANCIAL STATEMENTS |
NOTE 16 SHARE-BASED PAYMENTS (CONTINUED)
For the FY23 LTI plan, the award is linked to the participant remaining employed by Eroad on the vesting date of
30th September 2023.
Grant date/employees entitled
Shares granted
Vesting conditions
Shares granted to key management personnel
OCT 21
JUL 22
OCT 22
DEC 22
FY23 Performance Share Rights
-
52,119
88,983
Performance Shares Rights granted to other employees
FY22 Performance Share Rights
145,671
-
FY23 Performance Share Rights
FY23 Performance Share Rights
FY23 Performance Share Rights
-
-
-
326,549
-
-
-
-
70,000
-
-
-
-
• 1 year service from grant date
• The award is linked to remaining employed for 2 years following the completion date
• 1 year service from grant date
• The award is linked to the participant remaining employed by EROAD on the vesting date of 30 September 2023
-
403,691
• Participants bear the tax liability of the PSR plan. The Board retains discretion over the final outcome of PSR payments,
to allow appropriate adjustments where unanticipated circumstances may impact performance over the measurement
period.
• The award is linked to the participant remaining employed by EROAD on the vesting date of 30 May 2024
145,671
378,668
158,983
403,691
The number of shares granted and forfeited during the period were as follows:
EROAD Performance Share Rights
2023
2022
Outstanding at 1 April
Granted during the period
Forfeited during the period
Vested during the period
Outstanding at 31 March
EROAD Performance Share Rights - granted Oct 21
Outstanding at 1 April
Granted during the period
Forfeited during the period
Vested during the period
Outstanding at 31 March
673,488
-
(215,414)
(401,125)
56,949
2023
145,674
-
(18,333)
-
127,338
596,186
150,808
(73,506)
-
673,488
2022
-
145,674
-
-
145,674
PAGE 80
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CORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTNOTES TO FINANCIAL STATEMENTS |
NOTE 16 SHARE-BASED PAYMENTS (CONTINUED)
FINANCIAL RISK MANAGEMENT
EROAD Performance Share Rights - granted Jun 22
2023
2022
This section outlines the key risk management activities undertaken to manage the Group’s exposure to financial risk. This
section includes the following notes:
Outstanding at 1 April
Granted during the period
Forfeited during the period
Vested during the period
Outstanding at 31 March
-
467,651
(176,979)
-
290,672
-
-
-
-
-
NOTE 17 FINANCIAL RISK MANAGEMENT
NOTE 18 HEDGE ACCOUNTING
NOTE 19 FAIR VALUE MEASUREMENT
NOTE 17 FINANCIAL RISK MANAGEMENT
EROAD Performance Share Rights - granted Oct 22
2023
2022
Outstanding at 1 April
Granted during the period
Forfeited during the period
Vested during the period
Outstanding at 31 March
EROAD Performance Share Rights - granted Dec 22
Outstanding at 1 April
Granted during the period
Forfeited during the period
Vested during the period
Outstanding at 31 March
-
70,000
(10,500)
-
59,500
2023
-
403,691
-
-
403,691
-
-
-
-
-
2022
-
-
-
-
-
During the year-ended 31 March 2023 an amount of $0.1M (2022: $2M) was recognised as an expense within the statement
of comprehensive income in relation to share-based payments for all share plans.
As a result of the Group’s operations and sources of finance, it is exposed to credit risk, liquidity risk and market risks which
include foreign currency risk, commodity price risk and interest rate risk. These risks are described below. The principles
under which these risks are managed are set out in policy documents approved by the Board. The policy documents
identify the risks and set out the Group’s objectives, policies and processes to measure, manage and report the risks. The
policies are reviewed periodically to reflect changes in financial markets and the Group’s businesses.
Categories of financial instruments
Financial assets
All financial assets of the Group are classified at amortised cost except for hedging instruments that are recognised at fair value.
Financial liabilities
All financial liabilities of the Group are classified at amortised cost except for hedging instruments that are recognised at fair value.
The Group holds the following financial assets and liabilities, the table below shows their carrying amount and measurement basis.
2023
2022
Amortised
cost
Other
amortised
cost
FVTPL
Fair Value
hedging
instruments
Amortised
cost
Other
amortised
cost
FVTPL
Fair Value
hedging
instruments
$M’s
$M’s
$M’s
$M’s
$M’s
$M’s
$M’s
$M’s
Financial assets
Cash and cash
equivalents
Restricted bank
account
Trade receivables
Derivative financial
assets
Financial liabilities
Borrowings
Employee
Entitlements
Lease liabilities
Trade and other
payables
Payables to transport
agencies
Interest rate swaps -
cash flow hedge
Contingent
consideration liability
8.1
11.6
22.5
-
42.2
-
-
-
-
-
-
-
-
-
-
-
-
-
70.6
3.7
7.5
23.0
11.9
-
-
116.7
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.2
0.2
-
-
-
-
-
-
-
-
13.9
14.7
19.4
-
48.0
-
-
-
-
-
-
-
-
-
-
-
-
-
32.1
4.6
5.7
18.8
15.0
-
-
76.2
-
-
-
-
-
-
-
-
-
-
-
18.5
18.5
-
-
-
-
-
-
-
-
-
-
0.2
-
0.2
PAGE 82
PAGE 83
PAGE 83
CORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTNOTES TO FINANCIAL STATEMENTS |
NOTE 17 FINANCIAL RISK MANAGEMENT (CONTINUED)
NOTE 17 FINANCIAL RISK MANAGEMENT (CONTINUED)
(a) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and it arises principally from the Group’s trade receivables from customers in the normal course of
business and bank balances. The Group manages its exposure to credit risk.
The Group’s cash balances is held with a number of banks with the level of exposure to credit risk considered minimal with
low levels of cash held. Trade receivables balances are monitored on an ongoing basis. The Group’s exposure to credit
risk for trade receivables is influenced mainly by the individual characteristics of each customer. The creditworthiness
of a customer or counterparty is determined by a number of qualitative and quantitative factors. Qualitative factors
include external credit ratings (where available), payment history and strategic importance of customer or counterparty.
Quantitative factors include transaction size, net assets of customer or counterparty, and ratio analysis on liquidity, cash
flow and profitability. It is the Group’s policy that all customers who wish to trade on terms are subject to credit verification
on an ongoing basis with the intention of minimising bad debts. The nature of the Group’s trade receivables is represented
by regular turnover of product and billing of customers based on the Group’s contractual payment terms. In North America,
the Group requires that customers under a certain fleet size to purchase the hardware with an upfront payment regardless
of credit verification.
The carrying amount of the Group’s financial assets represents the maximum credit exposure as summarised below.
The aging of the Group’s trade receivables at the reporting date was as follows:
Not past due
Past due 1-30 days
Past due 31-60 days
Past due over 61 days
Gross
2023
$M’s
7.5
6.3
2.2
6.5
22.5
Allowance for
doubtful debts
Gross
Allowance for
doubtful debts
2023
$M’s
0.2
0.3
0.1
2.9
3.5
2022
$M’s
8.0
5.5
1.0
4.9
19.4
2022
$M’s
0.1
0.1
0.1
2.9
3.2
b) Market risk
Market risk is the risk that changes in market prices, such as commodity prices, foreign exchange rates and interest rates,
will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management
is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in
market interest rates.
Changes in interest rates expose the Group to changes in the fair value of borrowings subject to fixed interest rates (fair
value risk), and changes in future interest payments on borrowings subject to floating interest rates (cash flow risk).
The Group is exposed to movements in interest rates on its interest-bearing borrowings.
The Group enters into interest rate swap agreements in order to provide an effective cash flow hedge against the variability
in floating interest rates. See note 18 for details of interest rate swap agreements.
To comply with the Group’s risk management policy, the hedge ratio is based on the interest rate swap notional amount to
hedge the same notional amount of bank loans. This results in a hedge ratio of 1:1. This is the same as used for actual risk
management purposes, and such a ratio is appropriate for the purposes of hedge accounting as it does not result in an
imbalance that would create hedge ineffectiveness.
In these hedge relationships the main sources of ineffectiveness are:
• a significant change in the credit risk of either party to the hedging relationship;
• where the hedge instrument has been transacted on a date different to the rate set date of the bank loan, interest rates
could differ; and
• differences in repricing dates between the swaps and the borrowings.
• Other than these sources, due to the alignment of the hedged risk in the hedged item and hedged instrument, hedge
ineffectiveness is not expected to arise.
Foreign exchange risk
Foreign exchange risk is the risk that the value of the Group’s assets, liabilities and financial performance will fluctuate due
to changes in foreign currency rates. The Group is exposed to currency risk on sales transactions that are denominated in
a currency other than the respective functional currencies of Group entities, primarily the US Dollar (USD) and Australian
Dollar (AUD). The Group is also exposed to currency risk on expense transactions that are denominated in a currency other
than the respective functional currencies of Group entities, primarily the US Dollar (USD), Australian Dollar and Euro (EUR).
The Group, may on occasion, enter into forward exchange contracts and foreign currency options to hedge the exposure to
foreign currency fluctuations on sales receipts and inventory purchases.
The Group reports in New Zealand dollars. Movements in foreign currency exchange rates affect reported financial
results, financial position and cash flows. Where practical, the Group attempts to reduce this risk by matching revenues
and expenditures, as well as assets and liabilities, by country and by currency. The Group at times will enter into forward
exchange contracts and foreign currency options to manage foreign exchange risk on the forecasted foreign currency
transactions (namely being the forecasted profits of the foreign currency subsidiaries). Refer to Note 18 for details on
foreign currency option agreements.
Foreign exchange rates applied against the New Zealand Dollar, at 31 March are as follows:
AUD 1
USD 1
2023
$M’s
0.94
0.63
2022
$M’s
0.93
0.69
The Group’s exposure to foreign currency risk at the reporting date was as follows (all amounts are denominated in New
Zealand dollars):
Cash and cash equivalents
Trade receivables
Lease liabilities
2023
2022
AUD
$M’s
1.1
3.1
0.2
USD
$M’s
2.7
10.6
3.2
AUD
$M’s
0.7
1.3
-
USD
$M’s
5.8
10.3
0.5
PAGE 84
PAGE 85
PAGE 85
CORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTNOTES TO FINANCIAL STATEMENTS |
NOTE 17 FINANCIAL RISK MANAGEMENT (CONTINUED)
NOTE 17 FINANCIAL RISK MANAGEMENT (CONTINUED)
Summarised sensitivity analysis
The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to interest rate and
foreign currency risk:
2023
Cash and cash equivalents
Trade receivables
Lease liabilities
Total increase/ (decrease)
Foreign Currency Risk
Interest Risk
-10%
10%
-10BPS
+10BPS
Profit
Equity
Profit
Equity
Profit
Equity
Profit
Equity
$M’s
$M’s
$M’s
$M’s
$M’s
$M’s
$M’s
$M’s
(0.3)
(1.0)
(0.2)
(1.5)
(0.3)
(1.0)
(0.2)
(1.5)
0.3
1.0
0.2
1.5
0.3
1.0
0.2
1.5
(0.1)
(0.1)
-
0.1
-
-
0.1
-
0.1
-
(0.1)
-
0.1
-
(0.1)
-
-10%
10%
-10BPS
+10BPS
Profit
Equity
Profit
Equity
Profit
Equity
Profit
Equity
$M’s
$M’s
$M’s
$M’s
$M’s
$M’s
$M’s
$M’s
2022
Cash and cash equivalents
Trade receivables
Lease liabilities
Interest rate swap
(0.5)
(0.8)
-
-
(0.5)
(0.8)
-
-
Total increase/ (decrease)
(1.3)
(1.3)
0.5
0.8
-
-
1.3
0.5
0.8
-
-
1.3
(0.1)
(0.1)
-
0.1
-
-
-
0.1
(0.1)
(0.1)
0.1
-
(0.1)
-
-
0.1
-
0.1
0.3
0.5
(c) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they become due and
payable. The Group’s approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when they become due and payable, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Group’s reputation.
The Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 90 days,
including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot
reasonably be predicted, such as natural disasters.
The following table details the Group’s contractual maturities of financial liabilities, including estimated interest payments
and excluding the impact of netting agreements, as at the reporting date. Refer to Note 13 for the maturity profile of the
Group’s borrowings. Also refer to note 12 for the maturity profile of Group’s Leases.
Notes
13
9
7
Notes
13
9
7
31 March 2023
Non-derivative financial liabilities
Borrowings
Employee Entitlements
Trade and other payables
Payable to transport agencies
Derivative financial liabilities
Interest rate swaps
Total financial liabilities and
derivatives
Restated 31 March 2022
Non-derivative financial liabilities
Borrowings
Employee Entitlements
Trade and other payables
Payable to transport agencies
Derivative financial liabilities
Interest rate swaps
Total financial liabilities and
derivatives
1 year
or less
$M's
1 to 5
years
$M’s
Over
5 years
Total contractual
cash flows
Carrying
amount of
liabilities
$M’s
$M’s
$M’s
1.4
3.7
20.4
11.9
37.4
-
-
69.7
-
-
-
69.7
-
-
-
-
-
-
-
-
-
71.1
3.7
20.4
11.9
107.1
-
-
70.6
3.7
20.4
11.9
106.6
-
-
1 year
or less
$M's
1 to 5
years
$M’s
Over
5 years
Total contractual
cash flows
Carrying
amount of
liabilities
$M’s
$M’s
$M’s
-
4.6
36.5
15.0
56.1
0.2
0.2
32.7
-
-
-
32.7
-
-
-
-
-
-
-
-
-
32.7
4.6
36.5
15.0
88.8
0.2
0.2
32.1
4.6
36.5
15.0
88.2
-
-
PAGE 86
PAGE 87
PAGE 87
CORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTNOTES TO FINANCIAL STATEMENTS |
Cash flow hedges
At 31 March 2023, the Group had no interest rate swaps in place.
2023 Cash flow hedging
The notional principal amounts and the period of expiry of the cash flow hedge interest rate swap contracts are as follows:
NZD:USD foreign currency collar options
1-12
0.6124
9.8
NOTE 18 HEDGE ACCOUNTING (CONTINUED)
The notional principal amounts and the period of expiry of the cash flow hedge foreign currency collar option contracts are
as follows:
Maturity
(months)
Weighted
average rate
Nominal amount
of the hedging
instrument
Derivative
assets
Derivative
liabilities
$M’s USD
$M’s
$M’s
0.2
0.2
-
-
Total
There was no hedge ineffectiveness recognised in profit or loss during the year (31 March 2022: nil).
NOTE 19 FAIR VALUE MEASUREMENT
The carrying amounts of the Groups financial assets and liabilities approximate their fair value due to their short maturity
periods or variable rate nature, with the exception of interest rate and foreign exchange derivatives and the contingent
consideration. All of the Group’s derivatives are in designated hedge relationships and are measured and recognised at
fair value. Refer to the Note 18 Hedge accounting for detail on how fair value is determined for the Group’s derivatives. The
contingent consideration liability is also measured and recognised at fair value. The valuation technique applied for valuing
the contingent consideration liability is described below.
The fair value hierarchy described below is used to provide an indication of the level of estimation or judgment required in
determining fair value.
Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 Inputs that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) other
than quoted prices included within Level 1.
Level 3 Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
NOTE 18 HEDGE ACCOUNTING
Derivatives are measured at fair value.
Interest rate swaps
The Group uses interest rate swaps to manage its risk associated with interest rate fluctuations. Interest rate swaps are
initially recognised at fair value on the date a contract is entered into and are subsequently measured at fair value on each
reporting date. The fair values of the interest rate swaps are determined based on cash flows discounted to present value
using current market interest rates.
Nominal
amount of
the hedging
instrument
Carrying amount
- derivative
assets/
(liabilities)
Change in
value used for
calculating hedge
ineffectiveness
Hedging (gain) or
loss recognised
in other
comprehensive
income
Hedging
(gain) or loss
recognised
in income
statement
$M's
$M’s
$M’s
$M’s
$M’s
2022
Cash flow hedging
Maturity: 12 months
Total
10.0
10.0
(0.2)
(0.2)
-
-
0.2
0.2
-
-
There was no hedge ineffectiveness recognised in profit or loss during the year (31 March 2022: nil).
Foreign currency options
The Group uses forward exchange contracts and foreign currency options to manage its risk associated with exchange
rate fluctuations. These are initially recognised at fair value on the date a contract is entered into and are subsequently
measured at fair value on each reporting date. The fair values of the forward exchange contracts and foreign currency
options is determined using quoted forward exchange rates at the reporting date and present value calculations.
Cash flow hedges
The Group has entered into foreign currency collar options to manage its foreign currency risk in relation to its overseas
subsidiaries profits. These foreign currency collar options qualify for cash flow hedge accounting. When foreign currency
collar options meet the criteria for cash flow hedge accounting, the effective portion of the gain or loss on the hedging
instrument is recognised in other comprehensive income, while the ineffective portion is recognised in the income
statement. Amounts taken to reserves are transferred out of reserves and included in the measurement of the hedged
transaction when the forecast transaction occurs. When foreign currency collar options do not meet the criteria for cash
flow hedge accounting, all movements in fair value of the hedging instrument are recognised in the income statement.
Under the foreign currency collar option agreements that qualify for cash flow hedge accounting, the Group has a right to
buy at a cap and sell at a floor on the same notional amount of USD with the same expiration date.
At 31 March 2023, the Group had foreign currency collar option agreements in place with a total notional principal amount
of $9.8M USD (31 March 2022 nil). The Group applies a hedge ratio of 1:1. These foreign currency collar options limit the
Group’s exposure to foreign currency exposure within a certain range.
The fair value of these agreements at 31 March 2023 is a $0.2M net asset, comprised of $0.3M of swap liabilities and $0.5M
of swap assets (31 March 2022: nil). Of this, a liability of $0.3M is current (31 March 2022: nil). The agreements cover notional
amounts for terms of up to 1 year.
PAGE 88
PAGE 89
PAGE 89
CORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTNOTES TO FINANCIAL STATEMENTS |
NOTE 19 FAIR VALUE MEASUREMENT (CONTINUED)
NOTE 19 FAIR VALUE MEASUREMENT (CONTINUED)
Financial assets
31-MAR-23
Foreign currency options - cash flow hedge
Level 2
31-MAR-22
Foreign currency options - cash flow hedge
Level 2
Financial liabilities
31-MAR-23
Interest rate swaps - cash flow hedge
Level 2
31-MAR-22
Interest rate swaps - cash flow hedge
Contingent consideration liability
Level 2
Level 3
Carrying amount
Fair value
$M’s
$M’s
0.2
0.2
0.2
0.2
Carrying amount
Fair value
$M’s
$M’s
-
-
-
-
-
-
Carrying amount
Fair value
$M’s
$M’s
-
-
-
-
Carrying amount
Fair value
$M’s
-
0.2
18.5
18.7
$M’s
-
0.2
18.5
18.7
Type
Valuation technique
Contingent
consideration
Discounted cash flows:
The valuation model
considers the present
value of the expected
future payments,
discounted using a risk-
adjusted discount rate
for the cash contingent
consideration.
Significant unobservable
inputs
Inter-relationship between
significant unobservable inputs
and fair value measurement
- Expected cash flows
(31 March 2022:$14.2m).
The estimated fair value would
increase (decrease) if:
- Risk-adjusted discount
rate (31 March 2022:
10.3%).
• the expected cash flows were
higher (lower); or
• the risk-adjusted discount rate
were lower (higher).
The estimated fair value would
increase (decrease) if:
• The expected shares payable
were higher (lower); or
• The quoted Company equity
security price was higher
(lower).
Capital management
The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to
sustain future development of the business. The Board monitors the return on capital employed, which the Group defines
as reported EBIT (Earnings Before Interest and Tax) divided by capital employed.
PAGE 90
PAGE 91
PAGE 91
CORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTNOTES TO FINANCIAL STATEMENTS |
OTHER
NOTE 20 INCOME TAX EXPENSE (CONTINUED)
This section contains additional notes and disclosures that aid in understanding the Group’s position and performance but
do not form part of the primary sections. This section includes the following notes:
NOTE 20 INCOME TAX EXPENSE
NOTE 21 DEFERRED TAX ASSETS AND LIABILITIES
NOTE 22 RELATED PARTY TRANSACTIONS
NOTE 23 ACQUISITION OF SUBSIDIARY UPDATE
NOTE 24 CAPITAL COMMITMENTS
NOTE 25 CONTINGENT LIABILITIES
NOTE 26 NET TANGIBLE ASSETS PER SHARE
NOTE 27 EVENTS SUBSEQUENT TO BALANCE DATE
Income tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss except to
the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the period, using tax rates enacted
or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous periods. Current
tax payable also includes any tax liability arising from the declaration of dividends.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that
are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or
substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets,
and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities,
but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised
simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent
that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will
be realised.
NOTE 20 INCOME TAX EXPENSE
NOTE 21 DEFERRED TAX ASSETS AND LIABILITIES
(a) Reconciliation of effective tax rate
Loss before income tax
Income tax using the Company's domestic tax rate of 28%
Non-deductible expense/(non-assessable income)
Adjustment related to prior period
Utilisation of tax losses previously unrecognised
Current-year losses for which no deferred tax asset is recognised
Effect of different tax rates of subsidiaries operating overseas
Change in tax rates
Income tax benefit
(b) Current tax expense
Current year
(b) Deferred tax expense
Current year
Adjustments in respect of prior periods
Income tax benefit
At 31 March 2023 there were no imputation credits available to shareholders (2022: Nil)
2023
$M’s
(5.1)
(1.4)
(2.5)
(0.9)
(0.2)
1.8
(0.1)
1.2
(2.1)
1.8
1.8
(4.2)
0.3
(3.9)
(2.1)
2022
$M’s
(10.4)
(2.9)
2.3
0.5
(1.3)
0.5
-
-
(0.9)
-
-
(1.4)
0.5
(0.9)
(0.9)
Recognised deferred tax assets/(liabilities)
Deferred tax assets are attributable to the following:
Tax loss carry forward
Property, plant and equipment
Intangibles
Provisions, accruals and other liabilities
Equity-settled share-based payments
Trade and other receivables including contract assets
Lease liability
Total deferred tax (liability)/asset
2023
$M’s
18.4
(5.5)
(26.6)
1.3
0.2
7.4
2.1
(2.7)
Restated 2022
$M’s
13.0
(3.9)
(23.9)
1.7
0.7
5.5
1.6
(5.3)
The movement in temporary differences has been recognised in profit or loss. Deferred tax assets have been recognised at a
rates between 26% to 30% to reflect the tax rates applicable for our foreign subsidiaries.
PAGE 92
PAGE 93
PAGE 93
CORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTNOTES TO FINANCIAL STATEMENTS |
NOTE 21 DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)
NOTE 21 DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)
Movement in temporary differences during the year:
Movements - Consolidated
Restated
Balance
2022
Recognised in
Profit or Loss
Under/(Over)
from prior
periods
Currency
Translations
Effective tax
rate change
Balance
2023
Tax loss carry forward
Property, plant and equipment
Intangibles
Provision, accruals and other
liabilities
Equity-settled share-based
payments
Trade and other receivables
including contracts assets
Lease liability
Total
$M's
13.0
(3.9)
(23.9)
1.7
0.7
5.5
1.6
(5.3)
$M's
3.1
(0.9)
2.3
(1.0)
(0.2)
0.6
0.2
4.2
$M's
2.3
(0.3)
(2.2)
0.5
(0.2)
0.8
0.1
0.9
$M’s
-
(0.1)
(1.4)
-
-
0.2
-
(1.3)
$M’s
-
(0.3)
(1.3)
0.1
-
0.3
-
$M's
18.4
(5.5)
(26.6)
1.3
0.2
7.4
2.1
(1.2)
(2.7)
Movements - Consolidated
Restated
Balance
2021
Recognised in
Profit or Loss
Under/(Over)
from prior
periods
Acquired
in Business
combinations
Currency
Translations
Restated
Balance
2022
Tax loss carry forward
Property, plant and equipment
Intangibles
Provision, accruals and other
liabilities
Equity-settled share-based
payments
Trade and other receivables
including contracts assets
Lease liability
Total
$M's
11.5
0.6
(5.9)
1.1
0.4
(0.7)
1.3
8.3
$M's
(2.0)
(0.2)
0.5
1.0
0.3
2.0
(0.2)
1.4
$M's
(0.2)
(4.0)
-
(0.6)
-
4.2
0.1
(0.5)
$M’s
3.7
(0.3)
(18.6)
0.3
-
-
0.3
(14.6)
$M’s
-
-
$M's
13.0
(3.9)
0.1
(23.9)
(0.1)
-
-
0.1
0.1
1.7
0.7
5.5
1.6
(5.3)
During the year an exercise was performed to align prior period adjustments to the correct deferred tax categories, to ensure
consistency with the balance sheet/nature of the deferred tax balances.
The New Zealand EROAD tax group consists of EROAD Limited, EROAD New Zealand Limited and EROAD Financial Services
Limited. Losses incurred within this group are transferred within the group with no compensation being recognised. Deferred
tax assets have been recognised in respect of these items as based on the expected profitability of the New Zealand tax
group as it is considered that future taxable profit will be available for utilisation against the carried forward losses. Coretex
New Zealand Limited are currently not part of the tax group however it will be considered for inclusion in the New Zealand tax
group in the future.
Determining the extent to which losses will be utilised requires judgement. The Group has forecast expected utilisation of tax
losses. Key assumptions included total contracted units, revenue and expense forecasts in line with Group budget and three-
year forecast supported by a robust strategic and business planning process.
The results of the forecasting indicate that there will be sufficient profitability within the New Zealand tax group and Coretex
New Zealand to utilise the existing tax losses. Losses incurred in recent years have been the result of a large investment
creating the North American market. The Group expect to be able to report significant improvements in profitability over the
next three years as the business reaches a sufficiently large subscriber base to self-fund operating and corporate costs. Due to
the cumulative subscription nature of our business model as well as certain operating expenses that do not scale at the same
rate of unit and revenue growth, the business is expected to be able to achieve its forecast growth in profitability.
As at 31 March 2023 the Group has tax losses of $90.2M (2022: $67.5M) that are available indefinitely for offsetting against
future taxable profits of the entity in which they arose, subject to meeting the relevant tax rules. $25.5M (2022:$24.4M) of tax
losses are unrecognised due to lack of certainty of recovery.
NOTE 22 RELATED PARTY TRANSACTIONS
The subsidiaries of the Company are:
Company
Country of Incorporation Principal activity
Ownership interest
EROAD Financial Services Ltd
New Zealand
Financing activities within
group
2023
2022
100%
100%
EROAD LTI Trustee Limited
New Zealand
LTI Scheme Trustee
100%
100%
EROAD (Australia) Pty Limited
Australia
Transport Technology & SaaS
100%
100%
EROAD Inc
United States of America Transport Technology & SaaS
100%
100%
Coretex NZ Limited
New Zealand
Transport Technology & SaaS
100%
100%
Coretex Australia Pty Limited
Australia
Transport Technology & SaaS
100%
100%
Coretex USA Inc
United States of America Transport Technology & SaaS
100%
100%
Coretex Telematics Limited
Canada
Transport Technology & SaaS
100%
100%
Coretex Limited
New Zealand
Transport Technology & SaaS
100%
100%
Imarda Pty Limited
Imarda Asia Pte Limited
Australia
Singapore
Not Trading
Not Trading
100%
100%
100%
100%
Coretex Telematics Limited
British Columbia
Not Trading
100%
100%
International Telematics Corporation
United States of America Not Trading
100%
100%
International Telematics Holdings Limited New Zealand
Not Trading
100%
100%
Other interests of the Company are:
Company
Country of Incorporation Principal activity
Ownership interest
2023
2022
Beyond The Square Ventures Limited
New Zealand
Not Trading
50%
50%
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CORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTNOTES TO FINANCIAL STATEMENTS |
NOTE 22 RELATED PARTY TRANSACTIONS (CONTINUED)
Key management personnel compensation comprised:
Short-term employee benefits
Share-based payments
(a) Loans to key management personnel
There have been no loans to management personnel.
2023
$M’s
2.3
0.8
3.1
2022
$M’s
3.4
1.0
4.4
(b) Other transactions with key management personnel
There were no other transactions with key management personnel during the period. From time to time, key management
personnel of the Group may purchase goods from the Group.
(c) Remuneration of Non-executive Directors
Anthony Gibson
Graham Stuart (Chair)
Susan Paterson
Barry Einsig
Sara Gifford (appointed 31 March 2022)
Selwyn Pellett
2023
$M’s
0.11
0.15
0.11
0.16
0.15
0.10
0.78
No additional fees were paid to any Directors for consultancy work provided to the Company (2022: None paid).
(d) Remuneration of Executive Directors
Salary and bonus
Share-based payments
2023
$M’s
-
-
-
2022
$M’s
0.11
0.15
0.11
0.15
-
-
0.52
2022
$M’s
1.2
0.3
1.5
No additional fees were paid to an executive director for consultancy work provided to the Company (2022: $0.067M paid).
(e) Transactions with related parties
Streamline Business NZ Limited
Admin Army Limited (related party of Streamline Business NZ Limited)
Swaytech Limited
2023
$M’s
0.8
0.1
0.1
1.0
2022
$M’s
0.2
-
-
0.2
EROAD Group contracts with Swaytech Limited for marketing services and Streamline Business NZ Limited and Admin Army
for outsourcing work, the companies have a common director with EROAD.
NOTE 23 ACQUISITION OF SUBSIDIARY UPDATE
As reported in the 31 March 2022 financial statements, on 1 December 2021, the Group acquired 100% of the shares and
voting interests in Coretex Limited, a telematics vertical specialist provider delivering enterprise grade solutions. Refer to
the prior year financial statements for full details on the acquisition and the accounting applied at acquisition date.
On 1 December 2021, the consideration for the acquisition of all of the shares of Coretex Limited, was comprised of cash,
shares in EROAD Limited and a contingent amount of both cash and shares. The acquisition date fair value of the total
consideration transferred was $167.3 million made up of:
Cash
Equity instruments (13,317,000 ordinary shares)
Contingent consideration
Total consideration paid or payable
$M’s
74.4
66.5
26.4
167.3
Identifiable assets acquired and liabilities assumed
The following table summarises the fair values of assets acquired and liabilities assumed at the date of acquisition (using
foreign exchange rates on the acquisition date):
Property, plant and equipment
Intangible assets
Deferred tax assets
Cash and cash equivalents
Trade and other receivables
Trade payables and accruals
Employment liabilities
Lease liability
Deferred tax liabilities
Total identifiable net assets acquired
$M’s
9.2
69.2
4.3
2.0
7.3
(9.6)
(2.7)
(1.3)
(16.2)
62.2
At acquisition date the fair values of both income taxes payable and the deferred tax liability related to North America were
measured on a provisional basis. These provisional values have been finalised in this financial year with the change in the
values and their impact on the acquisition goodwill noted below. There were no measurement period adjustments made or
required to be made to any of the other acquisition fair values noted in the table above.
Provisional fair value
Adjustment made
Revised fair value
Trade payables and accruals
Deferred tax liabilities
Consideration transferred
Fair value of identifiable net assets
Goodwill
(9.6)
(16.2)
167.3
62.2
105.1
$M’s
(0.2)
(2.8)
-
(3.0)
3.0
$M’s
(9.8)
(19.0)
167.3
59.2
108.1
Contingent consideration
As part of the acquisition the Group agreed to pay the selling shareholders in 12 months from transaction completion
additional consideration of $14.5 million in cash and a maximum of 2,683,000 of ordinary shares based on the satisfaction of
customer retention and platform suitability performance criteria. The contingent consideration was included in the transaction
as both an incentive and protection to the respective parties to the transaction.
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NOTE 23 ACQUISITION OF SUBSIDIARY UPDATE (CONTINUED)
Assuming all criteria were met, the maximum contingent consideration payable was $14.5 million in cash and 2,683,000 shares.
Contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration
that meets the definition of a financial instrument is classified as equity, then it is not remeasured and settlement is accounted
for within equity. Otherwise, other contingent consideration is remeasured at fair value at each reporting date and subsequent
changes in the fair value of the contingent consideration are recognised in profit or loss.
The Group included in its accounts, $26.4 million as contingent consideration, which represented its estimated fair value
at the date of acquisition. At 31 March 2022, the contingent consideration estimate had decreased by $0.9 million due to
remeasurement.
On 23 December 2022, the contingent consideration payable amount was agreed and settled with the vendors of Coretex. The
contingent consideration settlement comprised of $8.5 million in cash and the issue of 1,833,000 EROAD shares.
The settlement of the contingent consideration on 23 December 2022 meant the extinguishment of the contingent
consideration financial liability and recognition of $9.6 million of other income in the income statement of the Group. The
settlement of shares in the transaction also meant the transfer of $9.8 million from the share premium reserve to share capital
and a further $3.7 million from the share premium reserve to retained earnings for the shares recognised in equity no longer
payable and not forming part of the final settlement.
NOTE 24 CAPITAL COMMITMENTS
As at 31 March 2023 the Group had confirmed purchase orders open with its third party manufacturer of hardware units
amounting to $18.4M (2022: $20.7M).
NOTE 25 CONTINGENT LIABILITIES
As at 31 March 2023 there were no contingent liabilities (2022:$Nil).
NOTE 26 NET TANGIBLE ASSETS PER SHARE
Net assets (equity)
Less Intangibles
Total net tangible assets
Net tangible assets per share ($)
2023
$M’s
248.8
(242.1)
6.7
0.06
Restated 2022
$M’s
247.7
(231.4)
16.3
0.15
The non-GAAP measure above is disclosed for consistency with the information disclosed in EROAD’s results announced
under the NZX listing rules.
27 EVENTS SUBSEQUENT TO BALANCE DATE
There were no events occurring subsequent to balance date which require adjustment to or disclosure in the
financial statements.
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Independent
Auditor’s Report
Independent Auditor’s Report
To the shareholders of EROAD Limited
Report on the audit of the consolidated financial statements
Opinion
In our opinion, the consolidated financial
statements of EROAD Limited (the ’company’) and
its subsidiaries (the 'group') on pages 49 to 98
present fairly, in all material respects:
i.
the Group’s financial position as at 31 March
2023 and its financial performance and cash
flows for the year ended on that date;
in accordance with New Zealand Equivalents to
International Financial Reporting Standards and
International Financial Reporting Standards issued
by the New Zealand Accounting Standards Board.
Basis for opinion
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated statement of financial position
as at 31 March 2023;
— the consolidated statements of comprehensive
income, changes in equity and cash flows for
the year then ended; and
— notes, including a summary of significant
accounting policies.
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 International Code of
Ethics for Assurance Practitioners (Including International Independence Standards) (New Zealand) issued by
the New Zealand Auditing and Assurance Standards Board and the International Ethics Standards Board for
Accountants’ International Code of Ethics for Professional Accountants (including International Independence
Standards) (‘IESBA Code’), and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the Auditor’s responsibilities for the audit of the
consolidated financial statements section of our report.
Our firm has also provided other services to the Group in relation to tax compliance, tax advisory and other
assurance services. Subject to certain restrictions, partners and employees of our firm may also deal with the
Group on normal terms within the ordinary course of trading activities of the business of the Group. These
matters have not impaired our independence as auditor of the Group. The firm has no other relationship with, or
interest in, the Group.
Materiality
The scope of our audit was influenced by our application of materiality. Materiality helped us to determine the
nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually
and on the consolidated financial statements as a whole. The materiality for the consolidated financial statements
© 2023 KPMG, a New Zealand Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited
by guarantee. All rights reserved.
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EROAD 2023 ANNUAL REPORTCORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTINDEPENDENT REVIEW REPORT |
as a whole was set at $1.6 million determined with reference to a benchmark of Group’s revenue. We chose the
benchmark because, in our view, this is a key measure of the Group’s performance.
The key audit matter
How the matter was addressed in our audit
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the consolidated financial statements in the current period. We summarise below those matters and our key audit
procedures to address those matters in order that the shareholders as a body may better understand the process
by which we arrived at our audit opinion. Our procedures were undertaken in the context of and solely for the
purpose of our statutory audit opinion on the consolidated financial statements as a whole and we do not express
discrete opinions on separate elements of the consolidated financial statements
The key audit matter
How the matter was addressed in our audit
Revenue recognition
Refer to Note 2 of the consolidated financial
statements.
We assessed the judgement in revenue recognition by
performing the following procedures:
The Group’s contracts are accounted for as a
service contract and the associated revenues
are recognised over the contract term.
We focused on this area because the
accounting determination of whether or not the
contract contains a lease is a significant
judgement and the outcome has a significant
impact on the recognition of profit and loss and
the financial position.
— Obtaining Group’s customer contracts and trading terms
and evaluating whether management’s revenue
recognition assessment is appropriate and in accordance
with relevant financial reporting standards;
— Assessing whether the Group’s customer contract terms
and conditions meet the definition of service contracts to
be recognised over time;
— Reviewing any changes or new contractual terms and
conditions entered into with new customers during the
period to identify any potential impact on performance
obligations required to satisfy the contract;
— Testing the operating effectiveness of controls in relation
to customer billings;
— Selecting a sample of customer contracts to compare the
revenue recognised to the contractual terms;
— Checking a sample of customer invoices immediately
prior to and after year end to ensure revenue is
recognised in the correct period; and
— Challenging management’s assumptions used to
determine the recoverability of revenue and associated
debtor balances.
We did not identify any matters that indicated that the reported
revenue is materially misstated.
Capitalisation of Development costs
Refer to Note 11 of the consolidated financial
statements.
We assessed the judgements related to capitalised
expenditure by performing the following procedures:
The Group has reported development assets
of $100.4 million (2022: $88.3 million). The
— Understanding the nature and background of the activities
that are capitalised through inquiry of key management
personnel;
— Selecting a sample of projects ensuring they meet the
capitalisation criteria;
— Challenging whether costs capitalised during the year
were directly attributable to development projects; and
— Selecting a sample of timesheets and recalculating the
amount of internal costs capitalised based on the hours
which staff spent developing the asset.
We did not identify any factors that were materially
inconsistent with management’s overall conclusions.
establishment of the development asset
requires significant judgement as to whether a
project meets the capitalisation criteria, and
which expenditure is directly attributable to the
development of such projects.
In assessing whether a project meets the
capitalisation criteria we consider its technical
and economic feasibility, intention and ability to
develop, use or sell the asset. Roles of
employees and the nature of overhead costs
are considered in assessing whether they are
directly attributable to a qualifying project.
Projects that do not continue to meet the
capitalisation criteria are written off.
We focused on this area due to the quantum of
the development costs capitalised and
judgement involved.
Impairment of non-current assets
Refer to Note 11 of the consolidated financial
statements.
We assessed management’s impairment testing of non-
current assets by performing the following procedures:
The non-current assets are allocated to three
cash generating units (‘CGUs’) representing
the three core markets the Group develops
and markets its products in (New Zealand,
Australia and North America).
Goodwill has been allocated to each of these
CGUs, and as a result the carrying value of
each CGU must be tested for impairment
annually.
The recoverable amounts of the CGUs, which
have been determined based on their value in
use, have been derived from discounted
forecast cash flow models. These models use
several key assumptions, including estimates
of future contracted units and average rate per
unit (‘ARPU’), operating costs, terminal value
growth rates and the weighted-average cost of
capital (discount rate) relevant to each market.
The impairment testing of non-current assets is
considered to be a key audit matter due to the
complexity of the accounting requirements and
the significant judgement required in
determining the assumptions used to estimate
the recoverability of these assets.
In addition to the above, the carrying amount of
the Group’s net assets as at 31 March 2023 of
$248.8 million exceeds its market capitalisation
— Identifying the level at which non-current assets should be
tested for impairment and assessed the appropriateness
of the CGUs determined by the Group;
— Enquiring of the executive management to corroborate an
understanding of the Group’s products, markets and
strategic opportunities;
— Obtaining a value-in-use model for the CGUs and
assessing the methodology, underlying cash flows and
key assumptions made including:
- Using our corporate finance specialists to challenge
the reasonableness of the weighted average cost of
capital and terminal growth rates;
- Challenging management’s future cash flow
forecasts. This included comparing previous
forecasts to actual results and other relevant
supporting documentation to evidence the feasibility
of the forecasts and to assess the reliability of
historical forecasting;
— Challenging management’s forecasts by performing
sensitivity analysis of the forecast unit sales growth,
ARPU, and discount rates; and
— Evaluating the estimate of the recoverable amount of the
Group as a whole, including all corporate costs and
related corporate assets.
We did not identify any factors that were materially
inconsistent with management’s overall conclusions.
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EROAD 2023 ANNUAL REPORTCORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTINDEPENDENT REVIEW REPORT |
The key audit matter
How the matter was addressed in our audit
of $70.0m and is considered an indicator of
impairment.
Other information
The Directors, on behalf of the Group, are responsible for the other information included in the entity’s Annual
Report. Other information includes the Chairman’s and Chief Executive’s report, disclosures relating to corporate
governance and other statutory disclosures. Our opinion on the consolidated financial statements does not cover
any other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audit or otherwise appears materially
misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have noting to report in this regard.
Use of this independent auditor’s report
This independent auditor’s report is made solely to the shareholders as a body. Our audit work has been
undertaken so that we might state to the shareholders those matters we are required to state to them in the
independent auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the shareholders as a body for our audit work, this independent
auditor’s report, or any of the opinions we have formed.
Responsibilities of the Directors for the consolidated
financial statements
The Directors, on behalf of the company, are responsible for:
— the preparation and fair presentation of the consolidated financial statements in accordance with generally
accepted accounting practice in New Zealand (being New Zealand Equivalents to International Financial
Reporting Standards) and International Financial Reporting Standards issued by the New Zealand
Accounting Standards Board;
— implementing necessary internal control to enable the preparation of a consolidated set of financial
statements that is free from material misstatement, whether due to fraud or error; and
— assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless they either intend to liquidate or to
cease operations or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated
financial statements
Our objective is:
— to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error; and
— to issue an independent auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance
with ISAs NZ will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate ,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
A further description of our responsibilities for the audit of these consolidated financial statements is located at
the External Reporting Board (XRB) website at:
http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/
This description forms part of our independent auditor’s report.
The engagement partner on the audit resulting in this independent auditor's report is Aaron Woolsey.
For and on behalf of
KPMG
Auckland
24 May 2023
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EROAD 2023 ANNUAL REPORTCORPORATE GOVERNANCE REPORT |EROAD 2023 ANNUAL REPORTINDEPENDENT REVIEW REPORT |
Corporate
Governance Report
Dear Shareholders,
I am pleased to present the Corporate Governance Statement for the year
ended 31 March 2023. In this Statement we describe how the Board goes
about governing EROAD, key actions and work-streams undertaken during
the year, our approach to the alignment of purpose, values, culture and
strategy, and our engagement with stakeholders.
We have also set goals for FY24, reflecting matters that are a priority to the
Board. These will be reflected in the work programme we undertake during
the new financial year.
EROAD‘s Corporate Governance Statement for FY23 is made in accordance
with the amended NZX Corporate Governance Code, dated 1 April 2023.
Board focus in FY23
FY23 was a transformative year for EROAD. Considering
the challenging economic conditions, the Board conducted
a strategic review early in FY23 to identify where EROAD
could enhance its business operations. Based on this
review, the Board has implemented a number of changes,
and we believe the Company is now well-positioned to
achieve sustainable, profitable growth. With a revised
strategy and refreshed leadership team, we remain
committed to responsible governance to ensure we are
able to deliver on EROAD’s purpose.
Revised company strategy
During FY23 we devoted significant effort to reviewing
and revising EROAD’s strategy to ensure clear alignment
with our purpose. The Board and Executive Team remain
steadfast in their commitment to restoring shareholder
value, and we are confident that our revised strategy
provides a well-defined roadmap for success.
We continue to focus on enhancing our product market
fit and strengthening our enterprise capabilities in North
America. In March 2023, we held an Investor Day where we
disclosed EROAD’s desire to explore strategic partnership
opportunities to drive further growth in North America.
Goldman Sachs have been enlisted to help us identify
partners who can support us in accelerating our North
American growth strategy. We are aiming to identify
partnership opportunities that contribute a combination
of capital, expertise and additional market access to
drive EROAD’s continued expansion. We look forward to
updating you on the outcome of this initiative.
Executive team
Mark Heine (formerly EROAD’s General Counsel and
Company Secretary) was appointed as Acting Chief
Executive Officer, and, following a competitive process,
was later offered the position in a permanent capacity. The
Board is delighted to have Mark leading the EROAD team.
His leadership has inspired confidence throughout the
business and his knowledge and broader skillset will serve
EROAD well as we enter our next phase of growth.
During the year the Board also appointed Margaret
Warrington as permanent Chief Financial Officer following
her service in an acting capacity after the departure
of former CFO, Alex Ball. Having previously served the
Company as Group Financial Controller, Margaret has a
deep understanding of EROAD’s commercial drivers and is
committed to embedding a culture of profitable financial
growth. Margaret has played an active role in driving
EROAD’s revised strategic direction and is well placed to
lead EROAD’s corporate initiatives going forward.
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EROAD 2023 ANNUAL REPORTCORPORATE GOVERNANCE REPORT | FY24 Goals
The goals for the Company in the coming year are clear;
we must implement and deliver on our refreshed strategy
to pave the way for profitable and sustainable growth.
Identifying partnership opportunities to accelerate our
North American growth strategy is a key initiative for
the coming financial year, as is the appointment of an
additional director. We are committed to achieving
successful outcomes and we are confident we have the
right people and technology in place to execute on our
strategic priorities.
The Board believes our governance practices are
robust and meet EROAD’s current requirements. We
have included a set of goals to be achieved in FY24
throughout this Statement and we look forward to
reporting on our progress.
Graham Stuart
Chairman
Board succession plan
During FY23 the Board officially welcomed Sara Gifford
to the EROAD Board. Based in North America, Sara
brings an excellent understanding of the needs of
enterprise customers. Sara also has extensive experience
in technology development, logistics and general insights
into the North American market.
In accordance with EROAD’s program of director
rotation, Tony Gibson advised the Board that he will not
stand for re-election as an Independent Director at the
upcoming FY23 Shareholders’ Meeting. Tony has served
on the Board since October 2009 and has held the role
of Chairman prior to the Company listing on the NZX.
Tony most recently chaired the Remuneration, Talent and
Nomination Committee and was also a member of the
Finance, Audit and Risk Committee. Tony’s dedication and
expertise has been invaluable to EROAD and we thank
him for his significant contribution to the Company.
The Board is consistently reviewing its composition to
ensure we have the right body to deliver sustainable
shareholder value. A search for an additional director has
commenced and we expect an appointment to be made
within the next six months. Board diversity and member
skillsets are our top priorities, and we look forward to
bringing a new director onto the team.
Compliance with the NZX Corporate
Governance Code Recommendations
The Board believes it has complied with the NZX
Corporate Governance Code, other than in respect of
Recommendation 8.5 relating to the timing of the provision
of our FY22 Notice of Meeting. Due to the inclusion of the
non-binding special resolution enabling shareholders to
vote on the adoption of EROAD’s Remuneration Report
in accordance with the Australian Corporations Act 2011,
we were required to have our FY22 Notice of Meeting
reviewed by NZ RegCo. The timing constraints around
this meant that we were unable to issue our Notice of
Meeting at least 20 business days before our FY22 Annual
Shareholders‘ Meeting. The FY22 Notice was instead issued
18 business days prior.
The Board of EROAD Limited (EROAD, the Company) is committed to
fulfilling our corporate governance obligations and responsibilities in
the best interests of EROAD and our stakeholders by ensuring that the
Company adheres to best practice governance principles and maintains
the highest ethical standards. The Board regularly reviews and assesses
EROAD’s governance framework and processes to ensure we are operating
in line with best practice.
This Statement provides an overview of EROAD’s FY23
governance framework and processes. It is structured
to follow the NZX Corporate Governance Code (NZX
Code), dated April 2023, and discloses the Company’s
practices for each of the NZX Code’s eight governance
principles. The Board’s view is that as at 31 March 2023,
EROAD has complied with the Code, except in respect
of Recommendation 8.5 relating to the timing of the
provision of our FY22 Notice of Meeting.
The Company complies with the corporate governance
requirements of the NZX Listing Rules (NZX Listing
Rules) and with our obligations as a foreign-exempt
issuer on the ASX (ASX Listing Rules). EROAD’s corporate
governance policies, practices and procedures can
be found on our website at http://www.eroadglobal.
com/global/investors/. The Investor website page is
updated as necessary and is used in this Statement as a
reference to the public website where the Company’s set
of governance documents are located. This Corporate
Governance Statement was approved by the Board on
23 May 2023.
EROAD’s principal activities
The Company develops and sells end-to-end hardware
enabled software as a service (SaaS) products for the
management of vehicle fleets in New Zealand, Australia
and North America. EROAD’s product offerings are
intended to:
a) support regulatory compliance including transportation
taxes, road user charging, fuel and vehicle registration;
b) improve record keeping of both mobile assets (vehicles)
and drivers (including fatigue related products);
c) help reduce vehicle operating costs and carbon emissions
by improving fleet efficiency;
d) help improve and promote driver safety;
e) monitor refrigerated fleets and provide services to
construction and waste fleets; and
f) track micro assets.
EROAD has undergone a period of significant growth
following the merger with Coretex in 2021. The Company
now offers a wider suite of products following the
Coretex merger and has significantly increased its global
addressable market.
PRINCIPLE 1: CODE OF ETHICAL BEHAVIOUR
Since the merger with Coretex, EROAD recognised the
need to evolve and adapt, to better cater to the needs of
customers and society as a whole. Consequently, we have
embraced a new purpose that embodies our commitment
to delivering dependable and trustworthy intelligence
that empowers our clients to make informed decisions,
that have a positive impact on the world. EROAD’s new
purpose is to deliver intelligence you can trust, for a better
world tomorrow. Delivering on our purpose will position
EROAD as an industry leader in the realm of data-driven
decision-making and sustainability. We believe that this
approach will differentiate us from competitors and enable
us to better serve our customers and stakeholders.
EROAD’s values are key to achieving our purpose and
remain unchanged in FY23. The Company’s s values are
set out below and reflect our commitment to delivering
the best outcomes for EROAD, our team, customers,
shareholders, and wider stakeholder group.
• We do what’s right;
• We play as a team;
• We learn & grow; and
• We get it done.
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EROAD 2023 ANNUAL REPORTCORPORATE GOVERNANCE REPORT | The Company’s Code of Ethics provides guidance on the
behaviours that enable directors, employees, independent
contractors, and advisers of EROAD and our related
companies (“EROADers”) to align their conduct, actions,
and decisions with EROAD’s purpose and values.
Broadly, the behaviours will lead to all EROADers enjoying
an open, transparent, positive and high-performing
culture with the following attributes: full commitment
across the Company to the success of EROAD’s future;
constructive relationships being developed and maintained
in an open, professional and respectful manner; good
career development opportunities being provided within
EROAD; consultation on matters concerning EROADers
and the business; and everyone incorporating EROAD’s
values into their work to collectively achieve EROAD’s
purpose. The Code of Ethics also addresses, amongst
other things, confidentiality; conflicts of interest and
corporate opportunities; receipt of gifts and personal
benefits; expected conduct; whistleblowing; corruption;
reporting concerns regarding breaches of the Code, other
policies, and the law. Whilst there is no formal assessment
for corruption per se, EROAD has a range of Codes and
Policies that prohibit corrupt behaviours by employees.
As part of our commitment to upholding ethical practices
and maintaining the highest standards of corporate
governance, our company provides comprehensive
training on the Code of Ethics and other policies to all new
employees via our online learning platform. We are also
dedicated to ensuring that refresher training occurs at
least every three years to foster a culture of transparency,
accountability and integrity throughout our organisation.
We continue to enhance our commitment to ethical
business practice through our Code of Ethics refreshers
and mandatory training programmes.
Several other policies and documents are regarded as
being important in ensuring high ethical standards are
maintained. This includes EROAD’s Code of Conduct
which sets out EROAD’s purpose, values, and culture. Our
Code of Conduct sets further standards and expectations
for personal behaviour, workplace stress, responsibilities,
privacy matters and so on.
EROAD’s Market Disclosure Policy sets out the Company’s
commitment to the promotion of investor confidence by
ensuring that the trading of EROAD shares takes place
in an efficient, competitive and informed market. This
is supported by EROAD’s Securities Trading Policy. Our
Securities Trading Policy clearly sets out when Directors
and employees of EROAD may buy or sell the Company’s
shares, and the approvals that are required prior to
trading. The underlying principle of the Policy is that
EROAD is committed to ensuring our directors, officers,
employees and advisers do not trade EROAD shares
while in possession of inside information. An Interests
Register is kept in accordance with the requirements of the
Companies Act 1993 and the Financial Markets Conduct
Act 2013 to ensure all relevant transactions and matters
involving the Directors and Senior Managers are recorded.
EROAD’s Related Party Transactions Policy governs any
proposed or actual related party transactions.
The Company’s Whistle-blower Policy supplements the
Code of Ethics and Code of Conduct provisions regarding
reporting concerns by providing a clear pathway for
resolving any serious issue that may arise. This is in
accordance with the Protected Disclosures (Protection of
Whistleblowers) Act 2022 (New Zealand), Corporations
Act 2001 (Australia) and the Whistleblower Protection
Act of 1989 (United States). EROADers can raise critical
concerns with their manager or with any member of the
Executive Team. Any major concern will be passed up to
the Board where appropriate. In addition, EROAD provides
an independent Whistle-blower service should eligible
whistle-blowers not wish to raise a concern internally. This
service is managed by Deloitte and includes the option
to report a complaint via webform, email and/or toll-free
phone lines in each main area of operations. The webform
reporting option is a new offering for FY23 and is one
which the Board felt was most appropriate given it allows
for truly anonymous reporting to occur. Should any critical
concern be raised, the Board and management will work
with the appropriate parties to swiftly resolve the issue.
EROAD’s Modern Slavery Statement will be published
within our EROAD Sustainability Report and will be
available on our investor website page from the date the
FY23 Sustainability Report is published. Also contained
within our Sustainability Report will be information about
our Company’s Sustainability Policy. Our approach to
sustainability is integral to ensuring we remain ethical
across our business operations. We are fully committed to
our sustainability goals and work hard to advance wider
sustainability initiatives.
Our in-house legal team provides advice and assistance to
the business globally on how to comply with our various
legal obligations. Engagement with external legal counsel
is sought as and when required.
During the FY23 period, EROAD took additional steps to
fortify our ethical practices by implementing a supplier due
diligence process. This process ensures that our suppliers
are aware of our ethical and wider sustainability values, and
it also enables us to monitor their approach to conducting
business with integrity.
In FY24 our goals are to continue to strengthen our
supplier policies and procedures. We are delighted to
have appointed a new Chief Operations Officer to lead
this journey.
PRINCIPLE 2: BOARD COMPOSITION AND
PERFORMANCE
Responsibilities of the Board and executive
management
The business and affairs of EROAD are managed under the
direction of the Board of Directors. The role of the Board is
to approve the purpose, values and strategic direction of
the Company, to guide and monitor EROAD’s management
in accordance with the purpose, values and strategic plans,
and to oversee good governance practice. The Board
Charter sets out internal Board procedures and protocols,
including, amongst other things:
• appointment of a Chair;
•
in consultation with the Chief Executive Officer (CEO),
providing strategic direction and approving EROAD’s
strategies and objectives;
• advancing major strategies for achieving EROAD’s
objectives;
• setting a risk appetite for the management of risks;
• determining the overall policy framework within which the
business of EROAD is conducted; and
• monitoring management’s performance with respect to
these matters.
The Board has a statutory obligation to reserve
responsibility for certain matters and these are set out in
the Charter.
The Board also deals with issues relating to the
appointment or removal of the CEO, ensuring adequate
resources are available to management to run the business,
overseeing director appointments and reappointments,
approving financial and business plans, and considering
matters that are outside delegated authority levels. The
Board uses Committees to address certain issues that
require detailed consideration by members of the Board
who have specialist knowledge and experience.
The Board regularly reviews and assesses our governance
structures, policies, and procedures to ensure these are in
line with best practice and legal requirements. The Board
Charter was last updated in March 2023 to include Board
protocols. The inclusion of Board protocols provides clear
guidance on the role of the Board, how the Board should
conduct its meetings, the Chair’s role in leading the Board,
and the role of individual directors.
Management of the day-to-day operations and
responsibilities of EROAD together with delivery of the
strategic direction and goals is delegated to the Executive
Team under the leadership of the CEO. The Board holds
management accountable for the performance of our
delegated functions. In doing so the Board constructively
challenges management’s proposals and decisions and
seeks to instill a culture of accountability throughout the
Group. This is achieved by monitoring management’s
performance by receiving reports and plans, maintaining an
active programme of engagement with senior management
and through the Board’s annual work programme.
The Board is conscious of its ethical obligations and in
situations where there is a possibility of a perceived or
actual conflict of interest, any interested director must
abstain from participating in any related discussions,
unless otherwise permitted by the Board. EROAD’s Related
Parties Transactions Policy provides further guidance on
the Company’s approach to Board conflicts.
If circumstances arise where a director needs to obtain
independent advice, that director is, as a matter of practice,
able to seek such advice at the expense of EROAD.
In FY23 the Board Charter was updated to encompass the
Board protocols and acknowledge the establishment of
EROAD‘s Technology Committee.
The focus for FY24 will be on strengthening the
relationship between the Board and management to meet
or exceed our strategic targets.
Board composition
EROAD is committed to ensuring that the composition
of the Board includes directors who collectively bring an
appropriate mix of skills, commitment, experience, expertise,
and diversity to Board decision-making. At 31 March 2023
EROAD had six directors, all of whom were non-executive
directors. Selwyn Pellett is the only non-independent
director, whose expertise, experience and knowledge of
EROAD (and formerly Coretex) are critical to the Board’s
effective decision making and strategic planning.
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EROAD 2023 ANNUAL REPORTCORPORATE GOVERNANCE REPORT | A brief biography of each Board member, including
experience, length of service, expertise, role, and the
term of office is set out in the “The Board” section of this
report. Disclosure on director shareholdings and other
directorships is included on pages 144-145 of this report.
EROAD announced in FY23 that we were intending to
appoint an additional director during the past financial
year. We did not progress this goal in FY23 as the Board
was focused on defining EROAD’s strategy. Following this
strategic work, it became important to reassess the skillset
required on the Board to effectively execute on our strategy.
In FY24 the Board will be focused on the appointment of
a new director to help further our North American growth
strategy. As the Board has initiated the search process,
diversity of knowledge, skills, and thought is our key
consideration.
Director nomination, appointment, retirement
and re-election
The Board takes an active role in appointing new directors
and seeks advice from the Remuneration, Talent and
Nominations Committee (“RTNC”) that assists in the
selection, appointment, and reappointment of Directors
to the Board. The Committee is also responsible for
overseeing EROAD’s overall human resources strategy.
The Committee’s specific responsibilities are set out in
our Charter, which is available on our Investor website
page. The Appointment and Selection of New Directors
Policy sets out the criteria and process that the Committee
follows when selecting and appointing new directors and
considering whether to recommend the reappointment of
existing directors. The Appointment and Selection of New
Directors Policy can be viewed at https://www.eroadglobal.
com/global/investors/.
Where a candidate is recommended by the RTNC,
the Board assesses that candidate against a range of
criteria including background, experience, professional
qualifications, personal qualities and expertise, the
potential for the candidate’s skills to augment the existing
Board (board skills matrix) and the candidate’s availability
to commit to the Board’s activities.
EROAD is also particularly committed to ensuring that we
have a diverse organisation. Levels of both gender and
cultural diversity across EROAD’s workforce are higher
than the IT industry average. We continually review the
skills and experience we consider we require to provide
the appropriate governance for the Company as it moves
through its next phase of growth. Diversity is a key
consideration in the appointment process.
As part of the skills assessment process, we recognised
the need for an additional director. Our commitment to
identifying suitable female candidates with this skillset
through a rigorous, comprehensive search process led
to the appointment of Sara Gifford to the Board in April
2022. At last year’s annual meeting, Selwyn Pellett
and Sara Gifford stood for election and Susan Paterson
retired by rotation and being eligible, offered herself
for re-election and was re-elected to the Board. At this
year’s annual meeting, Tony Gibson is retiring, and Barry
Einsig will stand for re-election. In line with the NZX Code
Recommendations, checks are made for any material
adverse information before a candidate is recommended
to the Board for election or re-election. Where appropriate,
external consultants are engaged to assist in searching for
candidates. The Board includes in the Notice of Meeting for
annual meetings all material information that is considered
relevant to a decision on whether to elect or re-elect a
director.
All new and reappointed directors enter into a written
agreement with EROAD, which sets out the terms
of their appointment. New directors also complete a
comprehensive induction programme that enables
them to meet with the Chairman, the Finance, Audit
and Risk Committee (“FRAC”) Chairwoman and senior
management to gain insight into EROAD’s values and
culture, our business operations, key risks and regulatory
and legal framework. The program also includes site visits.
Each director’s induction program is tailored based on the
director’s existing skills, knowledge, and experience.
All directors are expected to maintain the skills required
to discharge their obligations to the Company. On an
ongoing basis, directors are provided with papers,
presentations and briefings on matters which may affect
EROAD’s business or operations to assist the directors
regarding understanding key developments in the industry
in which EROAD operates. Directors are also encouraged
to undertake continuing education and training relevant
to the discharge of their obligations as directors of
the Company. We are always working to broaden the
expertise, skillset, and knowledge of the Board with a view
to increasing diversity and broadening the geographic
location of directors.
Board skills
At the Board level, diversity of thought allows EROAD
to benefit from a range of different perspectives that
collectively lead to healthier debates and better decision-
making. The Board considers that Barry Einsig, Tony
Gibson, and Selwyn Pellett all have transport industry
specific experience. Graham Stuart and Susan Paterson
bring listed company and finance / risk experience. Sara
Gifford, Barry Einsig and Selwyn Pellett have extensive
experience in technology solutions. Overall, the Board’s skill
set is as set out in the following table.
BUSINESS CONTEXT
CAPABILITY
KEY ELEMENT
CURRENT BOARD
A depth of industry
experience and awareness
of sector trends
Executive industry
experience
Modern executive telematic hardware experience
Hardware R&D
Product software
Fleet management or adjacent software development
Data-driven innovation and growth
Deep software development experience
Transport and supply
chain
Strong insight into transport – systems, trends
Fleet management
Supply Chain Regulation Sustainability
Customer perspective
Driving long-term value
creation through serving
customer needs
Modern technologist
SaaS businesses
Data analytics / AI
Strong scale tech networks
Modern cloud expertise
Cybersecurity
Key trends in tech sector
Tech go-to-market
strategy and sales
Sales channel leadership experience – digital and
enterprise selling
Customer-centric strategies identifying new growth
opportunities
Building world-class sales capability
Go-to-market strategy
Driving revenue growth – beyond $1bn
Digital product
marketing
Key customer
segment insight
Tech sector marketing
Building customer insight
Brand development
New Zealand
North America
Australia
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EROAD 2023 ANNUAL REPORTCORPORATE GOVERNANCE REPORT | BUSINESS CONTEXT
CAPABILITY
KEY ELEMENT
CURRENT BOARD
Scaling experience to guide
EROAD growth towards a
$1b company
Scale software
Company
Investment
Scaling a technology or SaaS organisation
– beyond $1b
Growth strategy development and execution
Capital market leadership
Direct exposure to investments in technology
companies that have successfully scaled
M&A / takeovers
Long-term value creation
Finance / investment community insight
Technology
infrastructure
Scale IT infrastructure
Technology trends
Technology risk
Supporting financial and
culture growth as scale and
complexity builds
Finance
People and
compensation
Driving best practice in
governance and strategic
leadership
Listed governance
Former CFO / CA / ARC Chair expertise Financial
strategy (tech)
Financial reporting and regulations
Risk management
Corporate culture and diversity & inclusion
Executive compensation experience
Employee engagement
Performance and talent
H&S
Scale public company governance experience - NZX,
ASX, NASDAQ ESG
Shareholder engagement and partnering
Chair succession potential
Demographic
diversity
Gender, ethnicity, age
Key
High capability
Moderate capability
The Board also believes that the tenure of each of its
members is important as it seeks to balance independent,
institutional knowledge gained through length of service
and the importance of fresh perspectives in decision-
making. The Board does not have a tenure policy, but it
is of the view that the profile, represented by the length
of service of each of our directors and as set out in the
following table, is appropriately balanced such that Board
succession and renewal planning is managed over the
medium to longer term.
With the appointment of Sara Gifford on 1 April 2022 and
Steven Newman’s resignation on 8 April 2022 the Board’s
tenure changed from what it was at 31 March 2022. The
current Board tenure information is set out in the following
table.
Director period of
appointment as at
31 March 2023
0-3 years
3-9 years
9 years +
Number of directors
3
2
1
On 21 March 2023, Tony Gibson announced he would not
be seeking shareholder approval for re-election at the next
Annual Shareholders’ Meeting. This decision was made in
accordance with EROAD’s director rotation guidelines and
our goal for FY24 is to appoint an additional director.
Independence of Directors
The factors that are considered by the Board when
assessing the independence of our directors are set out in
the Board Charter read together with the NZX Code. The
guidance provided in the NZX Code is also considered
alongside the ASX Corporate Governance Principles and
Recommendations. As set out in the Board Charter, read
together with the NZX Code, factors that may impact a
director’s independence include:
1. Is currently, or was within the last three years, employed in
an executive role by the issuer, or any of its subsidiaries;
2. Is currently deriving, or within the last 12 months derived a
substantial portion of his, her or their annual revenue from
the issuer;
3. Is currently or was within the last 12 months, in a senior role
in a provider of material professional services (other than
an external auditor) to the issuer or any of its subsidiaries;
4. Is currently, or was within the last three years, employed by
the external auditor to the issuer, or any of its subsidiaries;
5. Currently has, or did have within the last three years,
a material business relationship (e.g. as a supplier or
customer) with the issuer or any of its subsidiaries;
6. Is a substantial product holder of the issuer, or a senior
manger of, or person otherwise associated with, a
substantial product holder of the issuer;
7. Is currently, or was within the last three years, in a material
contractual relationship with the issuer or any of its
subsidiaries, other than as a director;
8. Has close family ties or personal relationships (including
close social or business connections) with anyone in the
categories listed above;
9. Has been a director of the entity for a period of 12 years
or more.
In each case, the materiality of the interest, position,
association or relationship needs to be assessed to
determine whether it might interfere, or might reasonably
be seen to interfere, with the director’s capacity to bring an
independent judgment to bear on issues before the Board,
to act in the best interests of EROAD, and to represent
the interests of our financial product holders generally.
The Board reviews the independence of each Director
considering interests that each director is required to
disclose in relation to the factors set out above.
Based on these factors, as well as the guidance provided
in the relevant Codes, EROAD considers that, as at
31 March 2023, Graham Stuart, Tony Gibson, Susan
Paterson, Barry Einsig and Sara Gifford were Independent
Directors. In FY23, Tony Gibson announced his retirement
in accordance with the Board guidelines on director
rotation. The Board does not have a specific tenure policy
in place, but it believes that the length of service of each
of its Directors has created a balanced profile that allows
for effective Board succession and renewal planning over
the medium to longer term. Despite his long tenure,
Tony Gibson remained independent and objective in
his decision-making and his contributions to the Board
have been invaluable. With this retirement, the Board will
continue to prioritise its ongoing efforts to ensure that its
membership remains diverse, well-informed, and equipped
to guide the Company towards achieving its strategic
goals. To that end, the Board has commenced a search for
a new director.
While the Board considers Selwyn Pellett to be non-
independent director, primarily given his former position
as CEO of Coretex (and associated relationships with
Coretex-related subsidiaries), EROAD believes Selwyn’s
position on the Board is essential for execution on our
technology strategy. There is a comprehensive conflict
management framework in place to ensure that the
director’s actions do not compromise the interests of the
Company or its shareholders. The framework includes
measures such as disclosure requirements, recusal from
decision-making processes and regular evaluations.
The Board considers that the CEO is sufficiently
independent of the Chair.
Board Performance
Performance evaluations for the Board, the Board’s
committees, individual directors, and executives are
undertaken regularly. Where necessary, the Company
provides resources to help develop and maintain directors’
skills and knowledge.
The Board Charter requires the Board to undertake a
regular performance evaluation of itself that:
• compares the performance of the Board with the
requirements of our Charter;
• reviews the performance of the Board’s committees and
individual directors; and
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EROAD 2023 ANNUAL REPORTCORPORATE GOVERNANCE REPORT | • makes improvements to the Board Charter where
Diversity and Inclusion
considered appropriate.
As part of the Board review process, an independent
third party is appointed to review the Board performance
periodically. The FY22 review included, for the first
time, an ESG component. Key areas of focus from the
report include supporting the onboarding of a new
CEO, execution of EROAD’s strategic plan, including
integration of Coretex, resetting the Board composition
with a particular focus on increasing the number of North
American appointments and ensuring Board materials are
focused at the right strategic level. Self-assessments are
undertaken by the Board biennially as an alternative to
the independent evaluation.
In FY23, the Board was focused on conducting a strategic
review and transforming the Company. As a result, a
review of the Board’s function by an external consultant
was not completed during this period. However, The Board
recognises the importance of conducting regular reviews
of its performance and effectiveness and, therefore, a
Board review by an external consultant will occur in FY24.
Company Secretary
During FY23, Mark Heine ceased his role as EROAD‘s
Company Secretary following his appointment as Chief
Executive Officer. Ksenija Chobanovich is EROAD‘s
current Company Secretary. She was accountable to the
Board, through the Chairman, on all matters to do with
the proper functioning of the Board from early FY23. Ms.
Chobanovich had regular discussions with the Chairman
to manage the flow of information between EROAD’s
Board, our committees, and senior executives. She was
responsible for all aspects of legal compliance at EROAD
together with the Company’s relationship with regulators.
Ms. Chobanovich‘s remuneration was tied to the same STI
and LTI plan as EROAD’s wider Executive and key Senior
Leadership Team. These plans are further explained in our
Remuneration Report.
EROAD has been a party to one employment related
legal action in FY23. Ms. Chobanovich is not aware of any
pending actions regarding anti-competitive behaviour and
violations of anti-trust and monopoly legislation. EROAD
has not identified any non-compliance with any laws and/
or regulations, nor has the Company been subject to any
significant fines or non-monetary sanctions for non-
compliance with any laws and/or regulations in the social
and economic area.
EROAD and our Board are committed to a workplace
culture that promotes and values diversity and inclusion.
The Company pursues a broad programme of diversity
by recognising, valuing, and considering our employees’
different backgrounds, knowledge, skills, needs and
experiences.
The Board recognises that diversity and inclusion lead
to a better experience at work for EROAD’s employees,
makes teams more robust, leads to greater creativity and
performance, contributes to more meaningful relationships
with a broader range of customers and stakeholders, and,
ultimately, increases value to shareholders. When there
is a variety of thinking styles, backgrounds, experiences,
perspectives and abilities, employees are more able to
understand customers’ needs and to respond effectively to
them, thus best equipping EROAD for future growth.
EROAD encourages diversity and inclusion by:
• having a robust recruitment process in place to attract
capable, motivated, engaged, creative and diverse
candidates; and
•
fostering a culture and environment of inclusion through
various initiatives, policies, and development opportunities.
To deliver on our strategy, EROAD has designed a scalable
and diverse organisation with the right skillset to grow and
mature the Company’s operations in new markets and
geographies. This will be explained in more detail in the
People section of the FY23 Sustainability Report. The Board
has adopted a Diversity and Inclusion Policy in accordance
with the NZX Code and the ASX Corporate Governance
Principles and Recommendations. The policy is available
at the Investor website page. To ensure continued focus
and prioritisation, the policy requires the Board to set,
review and report on measurable objectives for achieving
and promoting diversity across EROAD’s business.
Implementation of actions to achieve the objectives is
the responsibility of the CEO. Progress has been made in
FY23 in achieving the objectives. One of the achievements
is that the percentage of female employees exceeds the
percentage of female employees in the technology sector
generally. EROAD employees also cover a broad age range
(currently 19 through to 73 years) and come from over 29
different countries. EROAD has migrated our employee
data to Workday. This platform will empower us with
further capability to capture and report on D&I information
from a demographic-profile perspective. We are currently
continuing to build out our objectives in this space.
Further, EROAD has maintained the following key goals
regarding Diversity & Inclusion:
• Culture & Values
To deliver appropriate internal policies and programs
supporting and promoting diversity and inclusion that are
adopted at each level of EROAD’s business..
EROAD delivers a diverse range of cultural celebrations
and social events, with a broad range of people on relevant
committees. This includes events such as: Cultural Day,
Matariki Day, 4th of July, Diwali, and International Women’s
Day. Diversity and Inclusion also plays a role in talent planning
designed to enable all employees the opportunity for career
advancement. Further, EROAD undertakes regular review of
employee remuneration and their approach to this, ensuring
pay equity.
•
Inclusion
To ensure a culture which promotes and values inclusion
throughout EROAD.
Our flexible work arrangements, and parental leave policies
all support inclusivity in the workplace. We operate across
three main jurisdictions and successfully run hybrid company
meetings and events to promote and foster inclusiveness and
transparency throughout.
Inclusion also means ensuring key discussions are not limited
to small groups and involve a wide selection of people to
promote diversity of thought.
EROAD creates a safe environment which actively
encourages EROADers to share their opinions. Leadership
role modelling, regular cultural awareness and celebration
opportunities, and wellness programmes are some of the
mechanisms EROAD supports staff participation. Everyone
has the freedom and opportunity to voice their opinions.
Diverse groups contribute to business strategy and planning
activity, and inter-departmental social and work project
interactions connect people. Frameworks and managerial
education are provided to promote inclusion such as flexible
workplace practices.
• Leadership and People Development
Significant emphasis is given to developing our leaders and
people across EROAD over the years. A new Leadership
Program, which is designed specifically for our people
leaders, was launched in early2023 to ensure a consistent
leadership approach is applied across all teams, as well as
giving a wide range of employees new opportunities to
develop as leaders. This means there is a great pipeline of
future leaders.
• Recruitment
Our goal is to ensure that our recruitment campaigns
generate a diverse pool of talent with value on experiential
and cognitive diversity and that all hiring decisions are based
on merit.
To achieve this EROAD continues to advertise and promote
on a broad range of recruitment advertising channels
and we apply a diversity and inclusion lens to recruitment
to maximise the appeal to a diverse candidate pool. We
have a scholarship that gives priority to Māori and Pasifika
candidates.
• Communication
EROAD’s expectations around diversity and inclusion are
communicated often and clearly, with a top-down approach.
Diversity initiatives such as cultural events and flexible
working are widely promoted. EROAD’s careers site supports
recruitment diversity. Inclusiveness is promoted at all levels.
• Gender balance
The table below shows the respective number of men and
women on the Board, in executive management positions
(as “Officers”) and across the whole organisation, including
both full time and part time employees, as at 31 March
2022 and 31 March 2023. Our Board currently has 33%
female representation, which is above the minimum level
of 30% recommended in the NZX Code. While we remain
committed to maintaining and improving this level of
female representation, we recognise that changes in board
composition may occur over time due to a variety of factors.
However, the Board is committed to actively promoting and
supporting gender diversity at all levels of our organisation.
35% of EROAD staff are female, which is above average in
our industry, and 32% of EROAD female employees are in
leadership roles.
2022
Board
Officers
Women
Men
1 (20%)
3 (20%)
4 (80%)
12 (80%)
Other employees
178 (35%)
337 (65%)
2023
Board
Officers
Women
Men
2 (33%)
3 (33%)
4 (66%)
6 (66%)
Gender
diverse
-
-
-
Gender
diverse
-
-
Other employees
170 (35%)
307 (63%)
7 (1%)
“Officers” are the CEO and senior executives reporting
directly to the CEO.
PAGE 116
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EROAD 2023 ANNUAL REPORTCORPORATE GOVERNANCE REPORT | PRINCIPLE 3: BOARD COMMITTEES
The Board Committees include the Finance, Risk and Audit
Committee, the Remuneration, Talent and Nomination
Committee and, from FY23, the Technology Committee.
These Board Committees support the Board by working
with management and advisers on relevant issues at a
suitably detailed level. Recommendations are reported
to the Board. The Committees’ Charters set out their
objectives, procedures, composition, and responsibilities.
Copies of these Charters are available at the Investor
website page.
All Directors have a standing invitation to attend
committee meetings where there is no conflict of interest.
Finance, Risk and Audit Committee (FRAC)
The Finance, Risk and Audit Committee assists the
Board in fulfilling our oversight responsibilities relating to
EROAD’s risk management and internal control framework,
the integrity of our financial reporting and the auditing
processes and activities. Four meetings of the Finance, Risk
and Audit Committee were held during the year ended
31 March 2023.
Under the Finance, Risk and Audit Committee Charter, the
Committee must be comprised of Non-executive Directors,
all of whom must be independent. Further, the Chair of the
Committee must be an Independent Director and cannot be
the Chairman of the Board.
Employees only attend the Finance, Risk and Audit
Committee meetings at the invitation of the Committee. In
the year ended 31 March 2023, the CEO, the Chief Financial
Officer (CFO) and General Counsel were invited to attend
each of the four meetings of the Finance, Risk and Audit
Committee.
The current members of the Finance, Risk and Audit
Committee are Susan Paterson (Chair), Anthony Gibson and
Graham Stuart. All members of the Finance, Risk and Audit
Committee are Independent, Non-executive Directors.
Qualifications and experience of committee members
Susan Paterson: Susan has held a number of roles where
she was accountable for the financial performance of
entities. She has spent the last 25 years either chairing or
contributing to Audit Committees within both government
and private company arenas. Susan regularly attends
training courses on financial matters and best practice in
Audit and Assurance. Susan holds an MBA from London
Business School (focused on finance and strategy) and is a
Chartered Fellow of the Institute of Directors. In 2015 Susan
was appointed as an Officer of the New Zealand Order of
Merit in recognition of her service to corporate governance.
Anthony Gibson: Tony has extensive governance and
international executive experience and is the current
CEO/Managing Director of VINZ (Vehicle Inspection New
Zealand). Tony was the CEO of Ports of Auckland Limited
for 11 years and prior to this role was Managing Director
of Maersk Line New Zealand, Director of Maersk Logistics
and Managing Director of P&O Nedlloyd for New Zealand
and the Pacific Islands and held senior management roles
in Europe, Asia and Africa. Tony has also been the chair of
North Tugz, Nexus Logistics and Conlixx. In addition, Tony
brings extensive transportation and logistic expertise to the
Board, including being appointed by the Government in
2009 as a member on the Independent Review of the NZ
Road User Charging System.
Graham Stuart: Graham has over 30 years of governance
experience. In addition to his extensive service on company
boards, Graham has had a highly successful executive
career split between CEO and CFO roles. Graham has held
roles that were highly strategic in nature, within dynamic
environments and in high growth businesses. Graham has a
strong professional background in accounting and finance
as well as experience in technology and leadership. Graham
is a qualified Chartered Accountant and holds a Master of
Science (Management) and a Bachelor of Commerce (First
Class Honours).
The Chairperson of the Committee reported to the Board on
the Committee’s proceedings following each meeting.
Remuneration, Talent and Nomination Committee (RTNC)
The Remuneration, Talent and Nomination Committee
oversees, amongst other things, the remuneration and
benefits policies; the CEO’s performance review and
performance objectives; remuneration of EROAD’s
executives; succession planning and associated
management development for the CEO and the executive
team; and the effectiveness of the Diversity and Inclusion
Policy. It also oversees the Director Appointment Process
when a vacancy arises and the reappointment of sitting
Directors.
The current members of the Remuneration, Talent and
Nomination Committee are Tony Gibson (Chair), Graham
Stuart, Susan Paterson, Sara Gifford, and Barry Einsig.
Barry Einsig Barry is currently a principal at CAVita, where
he provides consulting services to cities, governments and
companies on Smart Cities, transport mobility and connected/
automated vehicle systems. His extensive global experience
in the transport industry, coupled with his network of industry
colleagues, is of real value to the Board in their recruitment
and succession planning. With an executive level background
in large publicly traded companies, Barry supports the RTNC’s
focus on remuneration and organisational matters.
Sara Gifford: Sara is based in Boston and brings extensive
experience in fast-growing software companies, logistics,
transportation, large scale product implementation, and
sales. She has business experience in North America, Europe,
Southeast Asia, Australia, and NZ. Sara served as the Chief
Solutions Officer and executive board member of Quintiq and
is a Director of North American company Spiro, a customer
relationship management and sales enablement company,
and is the co-founder and Director of Activote, a non-partisan
application enabling voting in North America.
The Chairperson of the Committee reported to the Board on
the Committee’s proceedings following each meeting.
Technology Committee (TC)
The Technology Committee assists the Board in its obligations
to oversee EROAD‘s digital transformation. The Technology
Committee assists with product management, technology
and innovation strategies, technology execution plans,
and necessary workforce development. The Technology
Committee also oversees operations relating to hardware,
product and platform innovation, as well as information
security, cyber security, data privacy and third party
technology risk management. Key product and ecosystem
partners also form part of the Technology Committee‘s
workstream. The members of EROAD‘s Technology
Committee are Barry Einsig (Chair), Sara Gifford and Selwyn
Pellett.
Selwyn Pellett: As an acclaimed technology entrepreneur
with more than 40 years’ experience in electronics supply
chains, enterprise level network security and telematics,
Selwyn is a valuable member of EROAD’s Technology
Committee. Selwyn has extensive experience in international
sales, marketing, strategic planning and supply chain
management, spanning small start-ups to multibillion-dollar
corporations. Selwyn was the founder and CEO of Coretex
Limited and is well positioned to assist the Committee
in overseeing and managing the company’s digital
transformation strategy.
In FY23, EROAD carefully considered the roles, responsibilities
and scope of activity for each of our Board Committees.
Although the Board has overall responsibility for EROAD’s
strategic direction and risk management, the Board delegates
authority to each Committee for a closer inspection of these
as applicable. In FY23 EROAD created the Technology
Committee to assist the Board in overseeing the company’s
digital transformation initiatives.
In FY24 the Board Committees will focus on key driving
performance outcomes whilst balancing compliance
objectives from a risk and safety perspective.
Board processes
the Board held 6 meetings during the year ended
31 March 2023. In addition to the below scheduled Board
meetings, the Board also had 9 calls during the year.
Board
FRAC
RTNC
TC
Eligible to
attend
Attended
Eligible to
attend
Attended
Eligible to
attend
Attended
Eligible to
attend
Attended
7
7
7
7
7
7
7
6
7
7
7
7
4
4
0
4
0
0
4
4
0
4
0
0
3
3
3
3
3
3*
3
3
3
3
3
3*
1**
1**
0
1
0
1
1
0
1
0
1
1
Graham Stuart
Anthony Gibson
Barry Einsig
Susan Paterson
Sara Gifford
Selwyn Pellett
*Selwyn Pellett was invited to attend each of the 3 RTNC meetings during FY23. The Board determined no conflict of interest existed that would have
precluded Selwyn from attending.
** Graham Stuart is not a member of the Technology Committee but did attend the first meeting on invitation.
PAGE 118
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EROAD 2023 ANNUAL REPORTCORPORATE GOVERNANCE REPORT | Takeover protocol
The Board has a formal written protocol that sets out the
procedure to be followed in the event that a takeover
offer is received by EROAD. The Protocol summarises key
aspects of takeover preparation, and sets out governance,
conflict and communications protocols for takeover
response. This Protocol provides that in the event of a
takeover offer, the Board Takeover Committee would
manage EROAD‘s response obligations and make a
recommendation to the full board.
PRINCIPLE 4: REPORTING & DISCLOSURE
Making timely and balanced disclosure
EROAD is committed to promoting shareholder confidence
through open, timely and accurate market communication.
The Company has procedures in place to ensure
compliance with our disclosure obligations under the NZX
Listing Rules and the ASX Listing Rules. The Board has a
Disclosure Committee that comprises the CEO, CFO (“the
Disclosure Officers”) and one Independent Director. The
Disclosure Committee is responsible for administering
EROAD’s compliance with our Market Disclosure Policy
which includes our NZX and ASX continuous disclosure
obligations. The Disclosure Officers will recommend to
the Disclosure Committee whether a market disclosure
should be made. The Disclosure Officers are ultimately
responsible for all communications with NZX and ASX
market regulators.
EROAD’s Finance, Risk and Audit Committee Charter
directs the oversight of the quality and integrity of external
financial reporting including the accuracy, completeness,
balance and timeliness of financial statements. The FRAC
reviews interim and annual financial statements and makes
recommendations to the Board concerning accounting
policies, areas of judgement, compliance with financial
reporting standards, NZX, ASX and legal requirements, and
the results of the external audit. All matters required to be
addressed and for which the Committee has responsibility
were addressed during the period under review.
All interim and full-year financial statements are prepared
in accordance with relevant financial standards.
Non-financial reporting
Our people, community engagement and the environment
are at the heart of EROAD’s culture. Our philosophy is set
out in our Sustainability Policy and our achievements in
the sustainability space are further outlined in our FY23
Sustainability Report which will be published next month.
EROAD is committed to an awareness of environmental,
economic, and social sustainability factors. EROAD’s
General Counsel and CFO have an informal responsibility
for economic, environmental, and social topics. The
General Counsel and CFO inform the Board of any
material factors that come to light and keep the Board
up to date with current market trends and processes in
this space. The Directors are committed to progressing
ESG matters and consider these at every board meeting.
Members of the Executive Team report directly to the
Board on sustainability matters as and when they see fit.
The Board also takes advice from the FRAC Committee,
General Counsel, Net Zero Steering Group (now titled‚
'Sustainability Committee‘), and EROAD‘s Engineering
Teams. The Board has delegated responsibility for the
oversight of ESG matters and the management of
climate-related risks and opportunities to FRAC and
the Board receives reports on a series of performance.
Recommendations based on the performance measures
are incorporated into agreed actions to mitigate any
identified risks. The Board delegates to management who
follow EROAD’s Health and Safety Policy, Delegation of
Authority Roles, Roles & Responsibility Matrix, Treasury
Policy, Risk Appetite Statement, Code of Ethics, Code
of Conduct and Sustainability Policy. EROAD reports
on our sustainability efforts on an annual basis in our
Sustainability Report and from FY24, our report will
include climate-related disclosures under the Financial
Sector (Climate-related Disclosures and Other Matters)
Amendment Act 2021. Our Sustainability Report also
includes our company emissions profile which is measured
and managed by EROAD and is audited by Toitu
Envirocare under the carbonreduce programme.
Further information on EROAD’s non-financial reporting is
available in the Risk section of this Statement.
As noted in the Remuneration Report, up to 60% of
Executive Short-term Incentive targets are based on the
achievement of strategic (non-financial) program targets
from the annual company plan.
EROAD is pleased to provide further reporting on
sustainability factors in our FY23 Sustainability Report.
EROAD’s commitment to health and safety, diversity and
community benefits are outlined in our FY23 Sustainability
Report. Our Sustainability Report also contains GRI
referenced claims and the Company’s annual Modern
Slavery Statement which is made in accordance with
Australian law.
In FY23 the Board and Management implemented our short-
term internal emissions reduction targets and began to
consider EROAD’s climate-related risks and opportunities.
In FY24 the Board will enhance its oversight of climate-
related risks and opportunities by implementing a
comprehensive climate risk management framework
PRINCIPLE 5: REMUNERATION
See the Remuneration Report on page 124 of this Annual
Report which outlines our compliance with Principle 5.
PRINCIPLE 6: RISK MANAGEMENT
Risk management framework
EROAD is committed to the identification, monitoring
and management of material financial and non-financial
risks associated with our business activities. The Board
ultimately has responsibility for internal compliance and
control. It recognises that a sound culture is fundamental to
an effective risk management framework. The Company’s
purpose, values and Code of Ethics are important
contributors to instilling effective risk management and
awareness, and to support appropriate behaviours and
judgements about risk taking within the parameters.
EROAD’s risk management framework provides for the
oversight and management of financial and non- financial
material business risks, as well as related internal systems.
The framework is designed to:
• optimise the return to, and protect the interests of,
stakeholders;
• safeguard EROAD’s assets and maintain our reputation;
•
improve EROAD’s operating performance; and
• support EROAD’s strategic objectives. EROAD’s Risk
Management Policy is available at the Investor website page.
EROAD’s risk management strategy enhances strategic
planning and prioritisation, as well as assists in the
achievement of key objectives.
The strategy also strengthens EROAD’s ability to be agile
when responding to challenges that may be faced. The
risk management framework requires senior executives
and the wider leadership team to review risks against the
risk limits and triggers in the risk appetite statement (Risk
Appetite) and to update Risk Registers on a periodic basis.
The registers identify all known risks, including those that
are key to EROAD’s strategy and business priorities. At each
Board meeting, members of the Board are presented with a
risk report, outlining key risks, whether these exceed the risk
triggers, and mitigants to address the risks. Risk mitigation
for high-risk projects must be addressed from inception
and be supervised by the appropriate executive team
members. The executive team reviews the Risk Register in
setting EROAD’s strategy and budgets. The Finance, Risk
and Audit Committee periodically reviews EROAD’s Risk
Appetite, the top enterprise risks and other relevant aspects
of the risk management framework. In addition, a review is
undertaken, with the external auditors and management, of
the policies and procedures in relation to material business
risks. The Finance, Risk and Audit Committee, in conjunction
with management, reports to the Board on the effectiveness
of EROAD’s management of our material business risks
and whether the risk management framework is operating
effectively in all material respects.
Risk appetite
During FY23 the EROAD Board and Executive continued
to rely on the Risk Appetite to provide guidance to, and
monitoring of employees, contractors, and suppliers.
EROAD’s Risk Appetite sets out the amount and type
of risk that EROAD is willing to accept to meet our
strategic objectives and create value for our customers
and stakeholders. EROAD is strategically focused and
risk aware but is not a risk-averse organisation. Risks
are taken in alignment with EROAD’s strategy, purpose
and in accordance with EROAD’s values. EROAD has no
appetite for risks that do not align with these. In managing
the Company’s business risks, the Board approves and
monitors policy and procedures in areas such as treasury
management, financial performance, taxation and
delegated authorities.
• Growth & Strategy
• Financial
• Customer Expectations
• People
• Regulatory & Governance
The Company regularly reports to the Board on any risks that
exceed EROAD’s Risk Appetite with mitigation plans and
updates on how exceeded risks are managed and resolved.
During FY23, in conjunction with the renewed company
strategy, EROAD reviewed and revised the Risk Appetite,
giving particular attention to generating positive free cash
flow, maintaining a strong sense of direction as a company
and managing risk while remaining agile for sustainable
growth. The Company’s new Risk Appetite was introduced
from April 2023 and the revised risk appetite categories
and levels are as follows:
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EROAD 2023 ANNUAL REPORTCORPORATE GOVERNANCE REPORT | Risk Appetite categories: Strategy Execution, Financial, Customer Expectations, People, Regulatory and ESG.
Rick Appetite Levels:
Risk Appetite
Level
Very high
Strategy Execution
Financial
Customer
Expectations
People
Regulatory and ESG
High
• Partnerships
• Innovation
Medium
Low
Very low
• Strategic
execution
• Strategic risk
• Free cash flow
• Funding model
• Working capital
• Supply chain and
inventory
No appetite
• Covenants
In FY24 EROAD has begun to implement the updated Risk
Appetite throughout the Company and our goal is to ensure
that it is comprehensively understood by all EROADers.
Insurance
EROAD has insurance policies in place covering areas
where risk to our assets and business can be insured at a
reasonable cost.
Health and safety risk management
The Board considers ensuring safety and wellbeing
at EROAD to be one of our core roles. Our specific
responsibilities are set out in the Board Charter. The Board
is committed to ensuring that safety and wellbeing is a top
priority for EROAD and is embedded into every aspect of
EROAD’s business. In line with this, EROAD has appointed
a new Health and Safety Manager in FY23. EROAD’s Safety
and Wellbeing Policy is a management policy that provides
for the oversight and management of health and safety
risks on behalf of the Board.
EROAD’s Safety and Wellbeing Management Framework
outlines safety and wellbeing activities at EROAD and
articulates safety and wellbeing responsibilities for the
Board, the Executive Team and the people performing work
for EROAD. The framework requires objectives and key
• Learning /
knowledge
• Capability
• Key roles, single
point of failure
• Regulatory
environment
• Governance
• Environmental
and Social
• Health and Safety
• Legal &
regulatory
• Customer
interactions
• Quality and
resilience
• Product delivery
• Information and
cyber security
• Privacy
• Product
compliance
results to be established and incorporated into business
planning processes to enable the Safety and Wellbeing
Policy’s intent and related strategies and procedures to
be achieved. The framework also requires the safety and
wellbeing strategy to be reviewed every three years to
ensure alignment with EROAD’s values, the overall business
strategy and the safety and wellbeing vision. EROAD‘s
Health and Safety Manager has created a roadmap for FY24
outlining how EROAD will achieve our Health and Safety
Goals and how our frameworks will be implemented.
At each Board meeting, members of the Board are provided
with a safety and wellbeing report summarising EROAD’s
risk profile and management actions, the current safety and
wellbeing focus, lead and lag indicators and updates from
the Safety and Wellbeing staff committee.
In the year ended 31 March 2023, there have been no
notifiable events to report to WorkSafe NZ. There has been
one notifiable event reported to Worksafe Australia but
there was no further follow up action. Following this notable
event, EROAD made a number of improvements to its heath
and safety processes and procedures.
In FY24 we will strive to enhance our health and safety
performance by introducing robust processes and
procedures that prioritise the well-being of our employees,
contractors and wider stakeholders.
PRINCIPLE 7: AUDITORS
Oversight of the Company’s external audit arrangements
to safeguard the integrity of financial reporting is the
responsibility of the Finance, Risk and Audit Committee.
The External Auditor Independence Policy ensures that
audit independence is maintained, both in fact and
appearance. It covers:
• the selection and appointment process for the external
auditor;
• rotation of external audit partners;
• policy to ensure external auditors’ independence;
• provision of non-audit services; and
• reporting to the Finance, Risk and Audit Committee.
The policy is available at the Investor website page.
The role of the external auditor is to audit the financial
statements of the Company in accordance with applicable
auditing standards in New Zealand and to report on their
findings to the Board and shareholders of the Company.
EROAD’s external auditor is Aaron Woolsey from KPMG.
Aaron became the engagement partner in 2020 following
the completion of the audit for the 2020 financial year. Mr
Woolsey has provided an independence attestation to the
Board. He will attend the annual shareholder’s meeting to
answer questions from shareholders in relation to audits.
EROAD does not have an internal audit function. The
Finance, Risk & Audit Committee pays particular attention
to matters raised by the Company’s auditor. It also
requires the Executive Team to report periodically on
areas identified as most sensitive to risk together with
recommendations for improvements and changes to
internal controls. Through the steps outlined under the
Risk Management section, the Board ensures EROAD
is reviewing, evaluating and continually improving the
effectiveness of our risk management framework.
The Chief Financial Officer has a direct line of
communication with the Chair of the Finance, Audit and
Risk Committee and the external auditor.
PRINCIPLE 8: SHAREHOLDER RIGHTS AND INTERESTS
EROAD recognises the importance of providing our
shareholders and the broader investment community
with access to up to date, high-quality information to
enable them to: monitor the Company’s performance;
participate in decisions required to be put to owners; and
provide avenues for two-way communication between the
Company, the Board and shareholders. The Shareholder
Communication Policy sets out how EROAD engages with
shareholders and other stakeholders to provide them with
written communications, electronic communications and
access to the Board, management and auditors. It is one of
the corporate governance policies included at the Investor
website page.
EROAD’s website is an important information portal and
is kept up to date with relevant information, including
copies of shareholder reports, presentations and market
announcements. Releases and reports are published to
the website once they have been provided to and publicly
released to both the NZX and ASX. The website also
contains Board and management profiles together with
information on EROAD’s history, awards and a library of
product information.
Shareholders can easily communicate with EROAD,
including by way of email to the address investors@eroad.
com. EROAD’s major communications with shareholders
during the financial year include our annual and half-year
results, Annual Report, Sustainability Report and the
annual meeting of shareholders. The Annual Report is
available in electronic and hard-copy formats. Shareholders
have the option to receive communications from EROAD
electronically.
Shareholders have the right to vote on major decisions as
required by the NZX Listing Rules. The Notice of Meeting
is sent to shareholders and published on EROAD’s website
at least 20 working days prior to the annual shareholders’
meeting each year (apart from last year, as explained at the
start of this report). EROAD offers this meeting in a hybrid
format and so also includes a Virtual Meeting Guide which
sets out information to help investors understand and
participate in hybrid meetings. Physical meetings will not
take place if there exists a risk to public health and safety
(such as with COVID-19 restrictions). In any instance where
health and safety is a concern, EROAD may determine that
virtual only meetings are most appropriate.
In FY23 the Company was focused on building
support among our Australian investors. We engaged
Citadel-MAGNUS to promote greater awareness and
understanding of EROAD’s strategic plan among Australian
institutional and retail investors.
In FY24 the Company aims to build on existing relations
to strengthen our engagement with shareholders. We
hope that by increasing our transparency, disclosures and
communication, we will inspire trust and confidence in
our approach.
PAGE 122
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EROAD 2023 ANNUAL REPORTCORPORATE GOVERNANCE REPORT | Remuneration
Report
Dear Shareholders,
Financial year 2023 marked a pivotal transformation for EROAD. We
appointed a new CEO and executive team, implemented cost-cutting
measures, integrated with Coretex, and undertook a strategic review
focused on turning around the core of the business to target profitability and
efficiency, growth in North America and becoming Free Cash Flow positive.
Since taking the helm as CEO earlier in FY23, Mark Heine
has made difficult decisions that helped to refocus our
efforts and position EROAD for sustainable growth.
Mark’s leadership has been instrumental in bringing about
these changes, and EROAD has already started to see
the positive effects of his vision and direction. Margaret
Warrington was appointed Chief Financial Officer effective
December 2022, having held the role in an acting capacity
for several months prior. Margaret’s passion and focus on
company cash flow has played a significant role in uniting
EROAD towards its financial objectives, prioritising positive
Free Cash Flow as a key driver for achieving sustainable
and profitable growth across all its regions. FY23 also saw
several other appointments to the executive team, with
Steen Anderson appointed as Chief Transformation Officer,
Aaron Latimer as Chief Operations Officer and Shelley
Prentice as EROAD’s new Chief People Officer who have
already been instrumental in implementing the company’s
new strategy.
We also recognise the importance of maintaining a lean
and efficient organisational structure to achieve EROAD’s
goals, which is why we implemented a restructuring effort
during FY23 to streamline our operation and reduce costs
while retaining the right people and expertise. While these
measures were challenging, we believe they were crucial
to our long-term success and sustainability. To ensure that
the company did not lose valuable employees during this
period, the Board approved a Share Retention Plan for
FY23 under which the company issued performance share
rights to key senior employees. As we look towards FY24,
we will continue to explore avenues for cost reduction
while retaining our competitive edge. We will ensure that
any cost-cutting measures implemented are done with due
consideration and sensitivity to our employees’ welfare and
our long-term strategic objectives.
Integrating the EROAD and Coretex teams was another
top priority in FY23, and we are proud to announce that
we have successfully completed our people integration
project. This marks a significant milestone in our journey
towards building a unique and engaged culture. As more
staff return to our regional offices, we are excited to
continue building on this strong foundation and confident
that our efforts will drive success in the years ahead.
Summary of Remuneration Outcomes
Fixed Remuneration Outcomes
Fixed remuneration underwent its annual review in May
2022, increasing by an average of 7.5% (compared to 7.3%
in FY22), although not all employees received an increase.
Senior executive remuneration increased by an average of
3.2% (compared to 3.3% in FY22).
For FY24, management implemented a freeze on all fixed
remuneration for employees earning $200,000 or more
in local currencies. The decision to freeze remuneration
for high-earning employees was taken in light of our
ongoing commitment to prudent financial management
and responsible corporate behaviour. The freeze will enable
us to achieve greater cost savings and allocate resources
more effectively, while also ensuring that our remuneration
policies remain fair, transparent and aligned with our
business objectives.
Importantly, this freeze will not impact our commitment to
providing competitive, performance-based remuneration
for our employees recognising the continued skill
shortages in the industry and increases in the cost of
living impacting our employees. Therefore, EROAD’s
remuneration packages will be based at the appropriate
level reflecting its international operations. Further, as
an equal opportunity employer, EROAD is committed to
closing the pay differential between male and female staff,
which currently stands at 12.3%.
PAGE 124
PAGE 125
EROAD 2023 ANNUAL REPORTREMUNERATION REPORT | executives, and directors in alignment with our vision and
strategic objectives. As we present the FY23 Remuneration
Report, we are pleased to reaffirm our commitment to
transparency in remuneration. A resolution will again be
put to shareholders at this year’s Annual Shareholders’
Meeting to adopt the FY23 Remuneration Report. The
outcome of the vote will be non-binding.
Personal note
2023 marks my final year as a Director and the Chair of
EROAD’s Remuneration, Talent and Nomination Committee
(RTNC). I am honoured to have held the Chair position
since 2014 and want to thank my fellow directors, EROAD’s
leadership team and the shareholders for their support
during my tenure. I look forward to continuing to watch
EROAD’s future achievements following my retirement
from the Board.
We are committed to upholding the highest
standards of corporate governance that help ensure
our remuneration practices are transparent and align
with the interests of all our stakeholders. We welcome
your feedback on this report.
Tony Gibson
Chair, RTNC
Variable Remuneration Outcomes
EROAD’s FY23 STI Plan allowed for the award of cash
payments to executives in November 2022 and May 2023
based on performance and outcomes. As highlighted
above, EROAD’s key focus this year has been on improving
our cash flow and reducing costs overall within the
business. As a result, for the first half of FY23 the Board
determined that there would be no pay-out of the STI. For
the STI outcomes in the second half of FY23, please refer
to page 137 of this Remuneration Report.
In our FY22 Remuneration Report, we noted that the FY20
LTI Plan vested on 26 May 2022 with the vesting of 401,125
shares following the business achieving and exceeding its
total contracted units (TCUs) targets between 1 April 2019
and 31 March 2022. EROAD’s performance for this period
saw it achieve growth in TCUs above the scheme’s targets.
The Board’s top priority during FY23 was to retain
key talent during the ongoing period of change and
transformation. In pursuit of this goal, EROAD issued
performance share rights (PSRs) to selected senior
leadership members to retain key individuals who had
proven themselves as valuable assets to EROAD, and we
are confident it will serve as a powerful tool for retaining
top-quality talent within our organisation. Under this Plan
the CEO was issued 88,983 PSRs and the CFO was issued
22,034 PSRs which vested on 6 April 2023.
During FY23, the Board offered Mark Heine an individual
STI Plan in order to further incentivise and align the CEO’s
interests with the company’s strategic objectives. The plan
allowed for a one-time cash payment based on the CEO’s
and company’s performance in FY23 against selected
strategic and financial performance indicators established
by the Board. The target for these strategic and financial
performance indicators was successfully met reaching a
total STI achievement rate of 67.7%.
Review of EROAD’s FY24 Remuneration Strategy
While our top priority for FY23 was to retain key
talent during the period of transformation, the Board’s
Remuneration, Talent and Nomination Committee (RTNC)
has relentlessly focused on aligning our remuneration
packages with the new strategic direction. We engaged
Haigh & Company, an international remuneration
consulting firm, to review our current framework, evaluate
market trends and advise on a future-proof remuneration
structure. We also sought input from multiple stakeholders
throughout this review and would like to thank those who
provided valuable input.
As a result of this review, RTNC is in the final stages of
designing the company’s remuneration strategy, which is
aimed at attracting and retaining top talent globally, with a
specific focus on North America as our growth market. This
remuneration strategy aligns employee and shareholder
interests and maintains a prudent approach to cash
management. Two significant changes expected in the new
remuneration strategy are:
a) the revised terms for the grant of performance share rights
(PSRs) under the LTI Plan. The PSRs will be issued as part
of a 3-year incentive programme that incorporates a third
of the award based on relative total shareholder return
(rTSR), a third on absolute performance, and a third based
on 3-year tenure. The Haigh & Company review confirmed
that rTSR is a common measure used by our peers and
recommended adopting the technology-focused S&P ASX
All Technologies Index (XTX). Also, aligning incentives
with key financial metrics (i.e. revenue, free cash flow and
EBIT) and tenure will be critical. The tenure component is
common among our North American peers and is crucial
in attracting and retaining top talent in the long term. The
revised terms under the LTI Plan reflect these findings and
ensure alignment with the market; and
b) transitioning from a 6-monthly to an annual cycle for STI
Plan payments, which may be paid in shares instead of
cash. This change is intended to better align employee
interests with those of our shareholders, and we believe
it will enhance overall performance and drive long-term
value creation.
As the final details of the new remuneration structure
are still being developed, shareholders can expect more
information to be provided in due course.
Director Remuneration
The annual non-executive director remuneration pool was
fixed at $850,000 following approval by shareholders
at the 2021 Annual Shareholder Meeting. No further
increase is proposed to be sought at the 2023 Annual
Shareholders Meeting.
Say On Pay Vote
Last year, EROAD adopted the Australian Say on Pay
regime required under the Australian Corporations
Act (Cth) 2001 for ASX listed companies. Our FY22
Remuneration Report was approved with only 3.46%
of shareholders voting against it. Moving forward, we
remain dedicated to maintaining a fair and merit-based
approach to incentivising and rewarding our employees,
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EROAD 2023 ANNUAL REPORTREMUNERATION REPORT | STRUCTURE OF THIS REMUNERATION REPORT
This Report provides:
• a broad overview of EROAD’s remuneration framework,
including remuneration governance and strategy;
• key remuneration components for the CEO and CFO;
• the FY23 remuneration outcomes for EROAD’s directors,
CEO and CFO, as well as disclosures related to the former
CEO and CFO whose employment with EROAD ceased in
FY23, as detailed in the table below; and
• disclosure of the number of current and former employees
whose Fixed Remuneration for FY23 was above
NZ$100,000 in value.
Position
Country of residence
Period position was held
during FY23
Executive
Mark Heine
CEO
New Zealand
Margaret Warrington
CFO
New Zealand
Appointed 21 June 2022
(Interim CEO from 8 April 2022
to 20 June 2022)
Appointed 25 November 2022
(effective 1 December 2022)
(Interim CFO from 13 May 2022
to 30 November 2022
Former Executive
Steven Newman
Alex Ball
Non-executive directors
Graham Stuart
Barry Einsig
CEO
CFO
New Zealand
New Zealand
Ceased on 8 April 2022
Ceased on 13 May 2022
Chairman, Independent Director New Zealand
Independent Director
United States
Full year
Full year
Full year
(Resignation announced on 21
March 2023. Tony is not up for
re-election at the 2023 Annual
Shareholders’ Meeting.)
Tony Gibson
Independent Director
New Zealand
Susan Paterson
Sara Gifford
Selwyn Pellett
Independent Director
New Zealand
Independent Director
United States
Full year
Full year
Non-Executive Director
(Directorship status updated
from Executive Director to
Non-Executive Director on
24 November 2024)
New Zealand
Full year
REMUNERATION FRAMEWORK
EROAD’s remuneration framework is an essential aspect
of the company’s strategy to attract, retain and motivate
its employees. It is a critical tool for aligning the interests
of employees with the company’s goals and objectives. It
consists of two key components: governance and strategy.
Governance
EROAD’s remuneration framework is overseen by the Re-
muneration, Talent and Nominations Committee (RTNC)
on behalf of the Board.
Role of RTNC
RTNC provides recommendations to the Board with res-
pect to companywide remuneration, benefits and policies,
as well as overseeing the performance objectives, remun-
eration packages, succession planning and development
programmes for the senior management team. The RTNC
has a set of objectives that are outlined in its Charter.
These objectives include overseeing and assisting with:
• director appointments, reappointments and Board
composition;
• remuneration and benefits; and
• performance, development and succession planning.
The RTNC oversees the development and implementation
of the overall human resources strategy, remuneration
policies and practices, and financial and other reporting
as it relates to remuneration. It also oversees director
selection, appointment, reappointment and succession, as
well as training, upskilling and induction of new directors
and senior management. This involves determining
the competencies required, the skills, experience and
capabilities currently represented on the Board and those
that would benefit the Board by being introduced.
The RTNC is responsible for the CEO appointment, terms
of employment, performance monitoring, and termination
if necessary.
The Committee periodically reviews its objectives and
activities. Any changes in the duties and responsibilities
of the Committee or the terms of its Charter are made as
a recommendation to the Board. No changes were made
during the year.
The RTNC has no decision-making powers except where
expressly provided by the Board.
RTNC Membership and Independence
The members of the RTNC in FY23 were Tony Gibson
(Committee Chair), Graham Stuart (Board Chair), Susan
Paterson (FRAC Chair), Barry Einsig and Sara Gifford.
The RTNC composition is consistent with the Charter
requirements which are that there shall be: at least three
members; the Chair shall be an Independent Director; and
a majority of members shall be Independent Directors.
The secretary to the RTNC is EROAD’s Chief People Officer.
In FY23 this was Bridget O’Shannessey and for FY24 this
will be Shelley Prentice.
External and Independent Advice
During the year the RTNC sought external and
independent advice from Haigh & Company to review and
make recommendations on EROAD’s existing remuneration
framework for both staff and executive employees for
FY24 and beyond. In addition, EROAD obtained guidance
on employee remuneration from Strategic Pay for Australia
and New Zealand based employees and Insperity for those
based in North America.
No Dealing or Protection Arrangements
All directors, employees, contractors and advisers of
EROAD are subject to the company’s Securities Trading
Policy. In addition to this policy, these parties are expressly
prohibited from entering into any arrangements designed
to hedge or otherwise mitigate the economic risk of
EROAD securities. It is important to note that all securities
become subject to the Securities Trading Policy rules once
they have vested and that prior to vesting those securities
cannot be transferred or encumbered by the holders.
Minimum Shareholding Requirements
The EROAD Board encourages but does not require
senior leadership team members or directors to hold
shares in EROAD.
Variation of Terms
The Board may from time to time vary any terms of a
Participant’s participation in the STI Plan or LTI Plan,
with the agreement of the participant.
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EROAD 2023 ANNUAL REPORTREMUNERATION REPORT | Remuneration Strategy
At EROAD, we believe that our employees are our
most important asset. We have, therefore, developed
a remuneration strategy that is designed to align with
our purpose and values. We have also developed a set
of principles that guide our strategy, in order to ensure
that our remuneration practices are consistent with our
company culture, values, and business strategy.
EROAD’s Purpose and Values
Over the years, EROAD has strived to create safer and
more sustainable roads, which was our legacy purpose.
However, in FY24 we recognised the need to evolve and
adapt to better serve the needs of our customers and
society as a whole. This evolution was also prompted
by our merger with Coretex, which opened up new
possibilities and opportunities for us to expand our
offerings and broaden our impact. As such, we have
embraced a new purpose that reflects our commitment
to deliver intelligence you can trust, for a better world
tomorrow. This purpose underscores our dedication to
providing reliable and trustworthy intelligence to help our
clients make informed decisions that positively impact
the world. By adopting this purpose, we are positioning
ourselves as a leader in the field of data-driven decision-
making and sustainability. We believe that this approach
will help us differentiate ourselves from competitors and
better serve our customers and stakeholders.
Our purpose is underpinned by four values that reflect
our commitment to delivering the best outcomes for
EROAD, our team, our customers, shareholders and wider
stakeholders:
With respect to EROAD’s senior leaders, where the Board
deems that the achievement of objectives has not aligned
with EROAD’s purpose and values, or an executive is not
leading their teams as required by EROAD, their values
multiplier under the applicable STI Plan will be less than
100%. STI Plan payments are always at the discretion of the
Board and receipt of an STI Plan payment is not guaranteed,
even where performance criteria have been met.
Remuneration Key Principles and Risk Adjustment
EROAD seeks to attract and retain high-performing people
who deliver EROAD’s vision and strategies in accordance
with its values. The remuneration framework and structure
are designed to attract, motivate and retain top tier talent,
which is achieved through an approach that embodies the
following principles:
Incentivising appropriate risk-taking and risk management
also underpins our remuneration principles and framework.
This approach is demonstrated in several ways:
• The RTNC has discretion to adjust Variable Remuneration
for STI Plan awards based on EROAD’s financial
performance and individual behaviour, including
adherence to the Code of Conduct and risk appetite;
• The RTNC can also increase or decrease vesting outcomes,
including by reducing vesting to zero, based on a
principles-based approach to non-financial risk. RTNC
receives advice from the Chair of the Finance, Risk and
Audit Committee, the Chief People Officer and the General
Counsel and Company Secretary when deciding whether
to exercise discretion to adjust any year end remuneration
outcomes;
• The Board retains sole discretion to issue shares relating to
the performance share rights granted to employees upon
cessation of employment.
Principle
Description
We do what’s right
(Our people/customers)
We put customers at the heart of what we do.
We look after our people and put their safety & wellbeing first.
We focus on delivering quality outcomes.
Alignment
EROAD aims to ensure that a significant portion of the senior leadership’s team remuneration is
contingent on EROAD meeting its financial and strategic objectives, and the individual acting in
accordance with EROAD’s values
We play as a team
(Teamwork/belonging)
We all play for the same team and that includes our customers and partners.
We value & respect diverse opinions and we work together to overcome challenges.
We embrace our differences and celebrate what makes us unique.
We learn & grow
(Mindset/innovation)
We listen to learn.
We own & learn from mistakes, choosing to hold a growth mindset.
We believe that curiosity fuels successful innovation.
We get it done
(Delivery/accountability)
We do what we say we will.
We prioritise to deliver the most important outcomes.
We take ownership and work together to get to a solution.
Balance
Market competitive fixed remuneration is balanced with affordability
Flexibility
EROAD’s STI Plan and LTI Plan performance measures provide flexibility for EROAD to recognise
and reward individuals for outstanding contribution
Fairness
EROAD’s remuneration structure ensures there is a direct link between performance and pay
Transparency
There are no complicated performance measures that require extensive explanation. The remuner-
ation structure is clear, transparent, consistent, easy to understand and simple to administer
Competitiveness
EROAD’s remuneration structure helps attract, motivate and retain directors and executives who
contribute to EROAD’s business outcomes
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EROAD 2023 ANNUAL REPORTREMUNERATION REPORT | CEO AND CFO REMUNERATION STRUCTURE AND OUTCOMES
Remuneration mix
The CEO and CFO’s target remuneration* mix for FY23 is as follows:
CEO Remuneration Summary
The CEO remuneration outcomes for the last 5 years are
as follows:
CEO
4.4%
39.3%
56.2%
CFO
2.5%
19.4%
Name
Fixed Remunera-
tion Outcomes
Variable Remuneration Outcomes
Total Remuneration
Outcomes
Gross Fixed
Remuneration1
Cash STI paid
Value of LTI
shares vested2
Total Value of
Variable Rem
FY19
Steven Newman
$567,120
-
77.9%
FY20
Steven Newman
$603,796
$213,048
FY21
Steven Newman
$603,044
$133,902
-
-
-
-
$567,120
$213,048
$816,844
$133,902
$736,946
The graph below represents the realised remuneration**
outcomes for EROAD’s CEO and CFO for FY23:
Gross Fixed Rem
LTI Shares
$883,430
$391,036
Fixed Remuneration is based on the total value of remuneration paid to Mark
Heine and Margaret Warrington in FY23 while they were in both the acting
and permanent CEO and CFO roles.
LTI Shares indicate the value of the shares vested to the CEO and CFO under
the FY20 LTI Plan.
* Target remuneration is the achievable remuneration provided the performance criteria are met.
** Realised remuneration is the actual amount received
FY22
Steven Newman
$677,618
$115,819
$394,658
$510,477
$1,188,095
FY23
Steven Newman3
$435,843
FY23
FY23
Mark Heine
(as Acting CEO)4
$147,369
Mark Heine
(as permanent CEO)5
$575,215
-
-
-
$351,480
$351,480
$787,323
$160,846
$160,846
$308,215
-
-
$575,215
1 Gross Fixed Remuneration includes base salary payments and other benefits such as Kiwisaver contribution paid at 3%, annual leave entitlements, backpay
due to pay increases and additional allowances e.g. ‘higher duties allowance’.
2 All LTI awards are paid out as ordinary shares. The values set out are the total value of the shares vested according to the share price on the date the shares
vested.
3 Mr Newman resigned as CEO on 8 April 2022. Disclosures are made for his remuneration from 1 to 8 April 2022. Gross Fixed Remuneration includes holiday
pay.
4 Mr Heine stepped into the acting CEO role effective 8 April 2022 to 20 June 2022. Disclosures are made for his remuneration in the acting role between 8
April 2022 to 20 June 2022.
5 Mr Heine was appointed permanent CEO on 21 June 2022. Disclosures are made for his remuneration from 21 June 2022 to 31 March 2023. This table does not
include the Share Retention Plan PSRs that vested on 6 April 2023. These are outlined on page 139 of this report.
PAGE 132
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EROAD 2023 ANNUAL REPORTREMUNERATION REPORT |Gross Fixed RemLTI SharesCEOCFO0$200,000$400,000$600,000$800,000$1,000,000Total RemTotal RemFixed RemSTI CashPSRsSTI CashFixed RemPSRs In FY23, the CEO was under his own separate STI Plan.
Since the CEO was newly appointed to the role, the Board
wanted to ensure that his performance was evaluated
separately from the rest of the executive team. This was
done to align his incentives with the specific financial
goals he was tasked with achieving. While the CEO was
under a separate plan, it was still designed to promote
alignment between shareholder value creation and
employee rewards, with incentives linked to specific annual
performance targets.
The CEO STI and FY23 STI Plans are described in detail in
the following tables:
CFO Remuneration Summary
The CFO remuneration outcomes for the last 5 years are
as follows:
Name
Fixed
Remuneration
Outcomes
Variable Remuneration Outcomes
Total Remuneration
Outcomes
Gross Fixed Remu-
neration1
Cash STI paid
Value of LTI
shares vested2
Total Value of
Variable Rem
FY19
Alex Ball
$89,610
-
FY20
Alex Ball
$405,105
$49,725
FY21
Alex Ball
$412,822
$78,598
FY22
Alex Ball
$424,931
$66,880
-
-
-
-
-
$89,610
$49,725
$454,830
$78,598
$491,420
$66,880
$491,811
FY23
Alex Ball3
$125,4564
$199,769
$290,421
$490,190
$615,646
FY23
FY23
Margaret Warrington
(as Acting CFO)5
$216,300
Margaret Warrington
(as permanent CFO)6
$144,675
-
-
$30,061
$30,061
$246,361
-
-
$144,675
1 Gross Fixed Remuneration includes base salary payments and other benefits such as Kiwisaver contribution paid at 3%, annual leave entitlements, backpay
due to pay increases and additional allowances eg. “higher duties allowance”.
2 All LTI awards are paid out as ordinary shares. The values set out are the total value of the shares vested according to the share price on the date the shares
vested.
3 Following Mr Ball’s resignation announcement on 17 February 2022, he remained as CFO until May 2022. Disclosures are made for his remuneration between
1 April to 13 May 2022.
4 Includdes holiday pay
5 Ms Warrington stepped into the Acting CFO role following Mr Ball’s departure. Disclosures are made for her remuneration in the acting role between 1
3 May 2022 to 30 November 2022. This table does not include the Share Retention Plan PSRs that vested on 6 April 2023. These are outlined on page 139 of
this report.
6 Ms Warrington was appointed permanent CFO, effective from 1 December 2022. Disclosures are made for her remuneration from 1 December 2022 to
31 March 2023.
Total Fixed Remuneration
Total Fixed Remuneration is the combination of base
salary and benefits. This is benchmarked against a group
of comparable companies, with the median level of
pay being used as the basis. For executive and senior
leadership team roles, pay ranges are established based on
a peer group of companies with similar sales revenue and
market capitalisation in the same location as the role. This
approach allows us to implement a non-discriminatory pay
structure that offers equal pay for equal work value across
all employees at EROAD. Contractual and discretionary
benefits vary between regions. Executives and the
CEO must participate in periodic performance reviews
measuring their achievement against operational and
strategic objectives. The results of the performance review
forms the basis of any remuneration review.
The outcome of the FY23 remuneration benchmarking
review highlighted that fixed remuneration for the CEO and
CFO was slightly lower than the median of our peer group.
As a result of the review, the following changes were made,
bringing both the CEO’s and CFO’s fixed remuneration
closer to the median of the peer group:
• The new CEO’s base salary was set at $700,000
(compared to $677,618 of the previous CEO), effective 21
June 2022.
• The new CFO’s base salary was set at $420,000
(compared to $410,606 of the previous CFO), effective 1
December 2022.
Short Term Incentive
STI is a variable component of remuneration designed to
motivate, encourage and reward right behaviours near-
term. In FY23, EROAD’s STI Plan was structured to link cash
incentives to achievement of specific annual performance
targets, with the amount based on a percentage of
the participant’s fixed base salary. The RTNC reviews
and approves executive and key senior role objectives,
promoting alignment between shareholder value
creation and employee rewards. STI Plan entitlements
for FY23 were based on 6-month performance periods
(commencing 1 April and 1 October each year), aligned to
investor cycles and outcomes. STI Plan entitlements are
determined by group performance against shared team
goals. The annual review of STI Plan objectives takes into
account group, business unit and individual executive
performance. All STI payment is at the discretion of
the Board. Entitlement is not guaranteed even where
performance criteria have been met.
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EROAD 2023 ANNUAL REPORTREMUNERATION REPORT | Element
Details
Element
Details
CEO STI
FY23 STI Plan
Purpose
Reward and retain the CEO for FY23 in order
to deliver on FY23 goals. Drive longer-term
performance, align incentives of the CEO with the
interests of EROAD’s shareholders and encourage
longer term decision-making by CEO.
Rewards achievement of Board-set annual
performance targets creating alignment between
shareholder value creation and employee reward.
Target opportunity
Cash payment of up to 70% of base salary.
Cash payment of up to 25% of base salary.
Performance and pay out leverage
Financial:
• Reported Revenue: Minimum opportunity of
20% for Reported Revenue above $150,000,000.
Maximum opportunity of 100% for Revenue
greater than $170,000,000.
• Normalised EBIT: Minimum opportunity of
20% for EBIT above ($5,000,000). Maximum
opportunity 100% for any positive EBIT.
Strategic:
Completion of the Strategic Review: Minimum
opportunity of 100% pay out upon Board’s
approval of the new Strategy.
Performance period
Full financial year 1 April 2022 to 31 March 2023
Performance
Level
Performance
as % Target
Award
as % Target
Threshold
75%
50%
Ratable Straight Line Basis
Target
100%
100%
Ratable Straight Line Basis
Overachieve-
ment
150%
150%
< Award capped at 150% even if performance
exceeds 150%
6-month periods commencing 1 April and 1 Octo-
ber each year.
Objectives
Financial: 60% based on EROAD’s performance
against the metrics of Reported Revenue (30%)
and Normalised EBIT (30%).
Financial: 40% based on EROAD’s performance
against the metrics of Normalised EBITDA,
Customer Lifetime Value and Free Cash Flow.
Non-Financial: 40% based on achievement of
selected strategic objectives, namely completion
of the company Strategic Review approved by
the Board.
Each objective has a specific target and stretch
level of performance, as described under the
“Performance and pay out leverage” section above.
Non-Financial: 60% based on achievement of
strategic initiatives such as customer retention
and customer NPS, future-focused development
and operational excellence performance
measures in accordance with EROAD’s annual
business plan.
Each objective has a specific target and stretch
level of performance, as described under the
“Performance and pay out leverage” section above.
Objectives set
Following completion of financial year budgets.
Performance evaluation
The RTNC reviews the CEO’s performance and
makes a recommendation to the Board.
The CEO reviews executive performance and
makes a payment recommendation to the RTNC.
The Board will, in its sole discretion, assess wheth-
er the performance targets have been met within
90 days of the end of FY23.
H1 FY23 performance was reviewed and outcomes
determined in November 2023. H2 FY23 outcomes
were determined in May 2023.
STI payment
The Board will, in its sole discretion, determine
whether to pay a STI payment and, if so, what
amount to pay, within 90 days of the end of FY23.
The FY23 STI Plan stipulates that payments,
if any, are made on a six-monthly basis upon
determination of the STI Plan payment by the
RTNC for the CEO and by the CEO for the CFO
and senior executives. However, such payments
are subject to the Board‘s approval and at its
sole discretion.
CEO STI Plan and FY23 STI Plan outcomes for FY23 are as follows:
CEO STI PLAN OUTCOMES
Metric
Weighting
Total achievement
Pay out
Financial*
FY23
Non financial – general**
Total STI Plan pay-out H1
FY23
60%
40%
27.6%
40%
67.6%
Target opportunity 70% of CEO base salary
67.6% of the total STI target opportunity
*Financial metric includes Normalised EBIT and Reported Revenue
**Non-financial metric includes completion of the company Strategic Review approved by the Board
FY23 STI PLAN OUTCOMES
Metric
Weighting
Total achievement
Pay out
Financial*
H1
FY23
H2
FY23
Non financial – general**
Total STI Plan pay-out H1
FY23
Financial*
Non-financial- general**
Total STI Plan pay-out H2
FY23
40%
60%
40%
60%
0%
0%
38%
41%
79%
0%
0%
0%
75% achievement = 50% pay-out plus linear %
movement up to 100%
57%
*Financial metric includes EBITDA, Customer Lifetime Value and Free Cashflow performance measures
**Non-financial metric includes strategic initiatives, future-focused development and operational excellence performance measures
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EROAD 2023 ANNUAL REPORTREMUNERATION REPORT |
Long Term Incentive
Share Retention Plan
FY23 Share Retention Plan
EROAD’s LTI Plan is designed to motivate and retain key
executive and senior employees who can influence the
company’s performance by offering performance-based
incentives that align with EROAD’s strategic objectives and
long-term value creation. The Board retains discretion over
the terms of a participant’s participation in the plan (with
the agreement of the participant) or to amend the plan
rules or grant if it considers the interests of the participants
are not materially affected.
As reported in last year’s Remuneration Report, the FY20
LTI Plan performance metrics were exceeded as with the
growth of total contracted units surpassing the 100%
threshold target of 206,563 units by an additional 574
units. 101% of the performance share rights granted to
the participants vested on 26 May 2022 with the issue of
401,125 shares.
EROAD recognised that the retention of valuable
employees was more critical than ever as we underwent
a period of significant change within the company. As
such, during FY23, EROAD operated a Share Retention
Plan under which invited participants were granted
performance share rights which entitled them to receive
EROAD ordinary shares should they remain employed by
EROAD on a particular date. The Plan’s primary purpose
was to incentivise key employees to stay on board and
contribute to EROAD’s success during the transformation
phase. Grants under this Plan were exclusive to FY23, no
further grants are intended under the Plan in FY24.
Following the end of FY23 and upon participants having
met the retention metrics under the Plan, a total of
290,672 performance share rights vested in favour of the
participants on 6 April 2023.
CEO
CFO
The FY23 Share Retention Plan details for the CEO and
CFO are outlined in the following table:
Shares vested in FY23
for FY20 LTI plan
55,464
10,263
EROAD did not operate a LTI Plan in FY23 and is intending
to implement a new LTI Plan commencing FY24.
Element
Details
Purpose
Reward and retain key EROAD executives and senior leadership members for FY23 in order to deliver
on FY23 goals, drive longer-term performance, align incentives of the Plan participants with the inter-
ests of EROAD’s shareholders and encourage longer term decision-making by Plan participants.
Issue Date
13 October 2022 for the CEO and 28 July 2022 for the CFO
Vesting date
31 March 2023
CEO: 88,983 PSRs*
CFO: 22,034 PSRs*
Opportunity
Mechanism
The total number of share rights issued was calculated at a value of 30% of the CEO base salary and
20% of the CFO base salary, using the five day Volume Weighted Average Price (VWAP) of EROAD
shares prior to the Issue Date (NZ$2.36 per share).
Share rights are issued for nil consideration to Plan participants. Share rights convert to shares for nil
consideration if the employee remains employed by EROAD on the Vesting Date. Share rights do not
attract dividends or other distributions and cannot vote. On exercise by the Board, each share right
converts to one fully paid ordinary EROAD Limited share ranking equally with all other EROAD Limited
ordinary shares.
Retention Period
28 July 2022 to 31 March 2023 for the CFO
13 October 2022 to 31 March 2023 for the CEO
Retention Metric
Participant remains an employee of EROAD until the Vesting Date and has not been subject to any
disciplinary action or performance management process during the Performance Period.
Cessation of employment
Participant loses their entitlement to the shares and share rights will lapse. The Board retains discre-
tion to issue some or all shares following cessation of employment, subject to such conditions as the
Board sees fit.
Rights issue, bonus issue,
reconstruction, takeover
Entitlements will be adjusted so as not to prejudice participants’ entitlements. The Board has broad
discretion to determine the appropriate treatment of vested and unvested share rights on a change of
control.
* Vested on 6 April 2023
PAGE 138
PAGE 139
EROAD 2023 ANNUAL REPORTREMUNERATION REPORT | CEO and CFO Shareholdings
Ordinary Shares
Balance at 1 April 2022
FY20 LTI shares vested
(after tax)
Balance at 31 March 2023
Mark Heine
Margaret Warrington
67,252
1,291
33,833
6,323
101,085
7,614
CEO and CFO employment conditions
Item
Details
Basis of contract
Ongoing (no fixed term)
Notice period
CEO: 6 months by either party
CFO: 3 months by either party
Termination payment entitlements
CFO: Standard legal entitlements apply including payment of holiday pay. For no fault termination,
the CEO will receive a severance payment equivalent to 6 months base salary and STI entitlements
may be paid out at the Board discretion.
CFO: Standard legal entitlements only.
Base salary
Subject to annual review (but no adjustments to base salary are guaranteed)
DIRECTOR REMUNERATION
The RTNC is responsible for establishing and monitoring
remuneration policies and guidelines for directors which
enable EROAD to attract, motivate and retain a high calibre
of directors who will contribute to the successful governing
of EROAD and create value for shareholders.
When determining the fees for non-executive directors
and Chairs of the Board and our committees, the Board
considers the need to maintain appropriately experienced
and qualified directors in accordance the fee levels for
comparable listed companies in New Zealand, Australia
and United States.
In 2021, the total non-executive director remuneration
pool was fixed at $850,000, this has not changed in
FY23. Under the company Remuneration Policy, non-
executive directors do not receive any performance-based
remuneration and no retirement payments are made to
directors or executive employees for their service.
Annual fees payable for FY23 to non-executive directors
are as follows:
Country of residence
Chair
Director*
Finance, Risk and
Audit Committee
Chair**
Remuneration, Talent and
Nomination Committee
Chair**
Technology Committee
Chair**
New Zealand ($NZD)
150,000
95,000
15,000
12,000
Australia ($AUD)
United States ($USD)
95,000
96,000
12,000
*EROAD’s Remuneration Policy allows for additional payments to be made to directors for specific projects they are involved in, including chairing committees.
**EROAD does not pay committee members additional fees for their roles on such committees.
PAGE 140
PAGE 141
EROAD 2023 ANNUAL REPORTREMUNERATION REPORT | EROAD does not intend to increase the base fees for
directors over the next year without shareholder approval.
A special annual pool is reserved to provide flexibility for
the remuneration of non-executive directors who assume
additional responsibilities throughout the year, such
as attending ad hoc Board committees or performing
additional services for EROAD. This pool is capped at
10% of the total remuneration pool available for use for
directors’ fees. As the current total remuneration pool is
$850,000, no more than $85,000 will be reserved for the
special annual fee pool. No special fees were paid in FY23.
Non-executive directors received the following directors’
fees from EROAD in the year ended 31 March 2023. All fees
are in NZD unless otherwise indicated:
Non-executive directors do not take a portion of
their remuneration under a share plan. Ownership of
EROAD shares by Directors is encouraged rather than a
requirement. When Directors are acquiring shares they are
encouraged to buy on-market. Their ownership interests
are disclosed in the “Directors’ Shareholdings” section of
this report.
Non-executive directors are entitled to be reimbursed
for reasonable costs directly associated with attending
the Board meetings. Executive directors do not receive
remuneration for their role as a director of EROAD. EROAD
does not currently have any executive directors.
No EROAD director or employee receives or retains any
remuneration or other benefits in their capacity as a
director of that subsidiary.
EMPLOYEE REMUNERATION
The following table sets out the number of current and
former employees whose Base Salary for FY23 were above
NZ$100,000 in value.
EROAD has employees in New Zealand, the United States
and Australia with remuneration market levels which differ
between the three countries. Of EROAD’s 344 employees
noted in the table below who received remuneration and
other benefits that exceed NZ $100,000 in value, 90 (26%)
are employed by EROAD in the United States of America,
16 (5%) in Australia and 238 (69%) in New Zealand.
The overseas remuneration amounts in US dollars and
Australian dollars are converted into New Zealand dollars.
Base fee
Fee for Finance,
Risk and Audit
Committee Chair
Fee for Remuneration,
Nomination Talent and
Committee Chair
Fee for
Technology
Committee Chair
Total
remuneration
received for FY23
-
-
-
Graham Stuart
$150,000
(Board Chairman
USD$96,000
$95,000
Barry Einsig
Anthony Gibson *
Susan Paterson
Selwyn Pellett**
Sara Gifford
$95,000
$15,000
$95,000
USD$96,000
-
-
-
-
$12,000
-
-
-
$150,000
USD $7,000***
USD$103,000
-
-
-
-
$107,000
$110,000
$95,000**
USD$96,000
* Tony Gibson is not up for re-election at the 2023 Annual Shareholders’ Meeting.
** Selwyn Pellett was classified as a non-executive director from 24 November 2022.
*** The Technology Committee was established September 2022 therefore Barry Einsig’s fees were prorated.
NZ$
100,000 - 110,000
110,000 - 120,000
120,000 - 130,000
130,000 - 140,000
140,000 - 150,000
150,000 - 160,000
160,000 - 170,000
170,000 - 180,000
180,000 - 190,000
190,000 - 200,000
200,000 - 210,000
210,000 - 220,000
220,000 - 230,000
230,000 - 240,000
240,000 - 250,000
250,000 - 260,000
260,000 - 270,000
270,000 - 280,000
280,000 - 290,000
320,000 - 330,000
350,000 - 360,000
360,000 - 370,000
370,000 - 380,000
380,000 - 390,000
390,000 - 400,000
400,000 - 410,000
410,000 - 420,000
640,000 – 650,000
690,000 – 700,000
Total
Total
44
41
48
39
37
18
21
15
6
11
9
7
4
3
10
5
1
3
3
2
2
1
2
3
3
1
2
2
1
344
PAGE 142
PAGE 143
EROAD 2023 ANNUAL REPORTREMUNERATION REPORT | Regulatory disclosures
DIRECTORS
Graham Stuart
The persons who held office as directors of EROAD Limited
at any time during the year ended 31 March 2023, are as
follows:
Director
Tower Insurance Limited
Director and
Shareholder
Leroy Holdings Limited
Graham Stuart
Chairman, Non-Executive, Independent
Director
VinPro Limited
Anthony Gibson
Non-Executive, Independent
Director
Northwest Healthcare Properties
Management Limited (Northwest
manages the Vital Healthcare Property
Trust)
Susan Paterson
Non-Executive, Independent
Director
Metro Performance Glass Limited
Barry Einsig
Non-Executive, Independent
Consultant
FTP Solutions Pty Limited
Selwyn Pellett
Non-Executive Director
Director
H4G Limited
Sara Gifford
Non-Executive, Independent
Anthony Gibson
SUBSIDIARY COMPANY DIRECTORS
The persons who held office as directors of EROAD
Limited’s subsidiaries at any time during the year ended 31
March 2023.
EROAD Financial
Services Limited
(New Zealand)
Anthony Gibson
EROAD Australia Pty
Limited (Australia)
Konrad Stempniak,
Margaret Warrington
EROAD Inc. (USA)
Mark Heine, Margaret Warrington,
Akinyemi Koyi, Tracey Herman
EROAD LTI Trustee
Limited
Anthony Gibson
INTERESTS REGISTER
In accordance with Section 140(2) of the Companies Act,
the directors named below have made a general disclosure
of interest by a general notice disclosed to the Board and
entered in the Company’s interests register. General notices
given by directors which remain current as at 31 March
2023 are as follows:
Director
Inspicere Limited
Director and Share-
holder
AMG Consulting Limited
Director
Marsden Maritime Holdings Limited
Managing Director/
CEO
Vehicle Inspection New Zealand
Susan Paterson
Director
Director
Arvida Group Limited
Les Mills Holdings Limited
Director (Chair)
Steel & Tube Holdings Limited
Director and
Shareholder
Theta Systems Limited
Board Member
Lodestone Energy
Leadership Group
Member
The Aotearoa Circle, Low Carbon
Aotearoa Workstream
Director
Reserve Bank of New Zealand
Director (Chair)
Evolution Healthcare
Barry Einsig
Senior Manager/
Consultant and
Shareholder
Principal
Founder
Sara Gifford
Director and
Shareholder
Econolite
CAVita LLC
Barry C. Einsig Advisory Services LLC
Selwyn Pellett
1. Acquired a total of 236,710 ordinary shares at $2.45
per share. The transactions took place on 31/05/2022,
03/06/2022 and 07/06/2022.
2. Was issued a total of 252,687 ordinary shares at $6.00 per
share in partial satisfaction of the contingent consideration
for the acquisition of Coretex. The issue took place on
38/12/2022.
Graham Stuart
3. Acquired 35,000 ordinary shares at $1.50 per share on
Spiro
30/06/2022.
Co-Founder, Director
and Shareholder
Activote
Selwyn Pellett
Director and
Shareholder
Director and
Shareholder
Director and
Shareholder
PACE Limited
Storm Distribution Limited
Swaytech Limited
Shareholder
Contex Engineers Limited
Streamline Business NZ Limited
Streamline Business Group Limited
KTX Limited
AIGA Limited
USE OF COMPANY INFORMATION
There were no notices from directors of the Company
requesting to use Company information received in their
capacity as directors that would not otherwise have been
available to them.
DIRECTORS’ AND OFFICERS’ INSURANCE
AND INDEMNITY
EROAD has arranged, as provided for under the Compa-
ny’s constitution, policies of directors’ and officers’ liability
insurance which, with a Deed of Indemnity entered into
with all directors, ensures that generally directors will incur
no monetary loss as a result of actions undertaken by them
as directors. Certain actions are specifically excluded, for
example, the incurring of penalties and fines that may be
imposed in respect of breaches of the law.
DIRECTORS’ RELEVANT INTERESTS
The following directors held relevant interests in the follo-
wing ordinary shares in the Company as at 31 March 2023:
Swayevents Limited
Name
Ordinary shares
Acume Limited
Ripple 4 Charities Limited
Admin Army Limited
Reyburn Investments Limited
Graham Stuart
Anthony Gibson
Susan Paterson
Selwyn Pellett
105,000
616,662
16,561
2,325,203
Director and
Shareholder
Director and
Shareholder
Director and
Shareholder
Director and
Shareholder
Director and
Shareholder
Director
Director
Director
Director and
Shareholder
SHARE DEALINGS BY DIRECTORS
ANNUAL SHAREHOLDERS’ MEETING
In accordance with Section 148(2) of the Companies Act,
the Board has received disclosures from the directors
named below of acquisitions or dispositions of relevant
interests in the Company between 1 April 2022 and 31
March 2023, and details of those dealings were entered in
the Company’s interests register. The particulars of such
disclosures are:
Once the date, time, and location of the ASM are
determined, the company will inform shareholders
accordingly.
PAGE 144
PAGE 145
EROAD 2023 ANNUAL REPORTREGULATORY DISCLOSURES | Shareholder
information
DISTRIBUTION OF SHAREHOLDERS AND HOLDINGS
PRINCIPAL SHAREHOLDERS
Holding Range
Number of holders
1 to 999
1,000 to 4,999
5,000 to 9,999
10,000 to 49,999
50,000 to 99,999
100,000 and over
Total
1,548
1,475
472
543
71
88
4,197
%
37
35
11
13
2
2
100
Number of
ordinary shares
610,206
3,375,109
3,157,305
11,133,464
4,672,277
89,624,551
112,572,912
%
0.55
3.00
2.80
9.89
4.15
78.61
100.00
The details set out above were as at 31 March 2023. The Company only
has one class of shares on issue, ordinary shares, and these shares are
quoted on the NZX and ASX Main Boards.
SUBSTANTIAL PRODUCT HOLDERS
According to notices given under the Financial Markets Conduct Act 2013,
the substantial product holders in ordinary shares (being the only class
of quoted voting products) of the Company and their relevant interests
according to the substantial product holder file as at 31 March 2023, were
as follows:
Substantial product holder
Date of Notice Number of shares % of shares on issue at
31 March 2023
Steven Newman (includes NMC Trustees Limited’s relevant interest)*
05/08/2021
13,689,970
National Nominees Ltd ACF Australian Ethical Investment Limited
23/05/2022
9,257,841
Commonwealth Bank of Australia
09/01/2023
7,544,469
Mitsubishi UFJ Financial Group, Inc., First Sentier Investors (Australia)
IM Ltd, First Sentier Investors Realindex Pty Ltd
13/04/2022
7,359,597
Colonial First State Investments Limited
28/07/2022
7,334,835
12.15%
8.22%
6.70%
6.53%
6.51%
* Number of shares held reflects ongoing disclosure notice provided by Steven Newman on 27 May 2022 following the issue of ordinary shares pursuant to
EROAD’s Long Term Incentive Plan.
The total number of ordinary shares (being the only class of quoted voting
products) on issue in the Company as at 31 March 2023 was 112,628,412.
The names and holdings of the 20 largest registered shareholders in the Company as at 31 March 2023 were:
Holder Name
NMC Trustees Limited
National Nominees Limited - NZCSD
Citicorp Nominees Pty Limited
FNZ Custodians Limited
HSBC Custody Nominees (Australia) Limited
Accident Compensation Corporation - NZCSD
National Nominees Limited
New Zealand Central Depository Nominee Limited
BNP Paribas Nominees (NZ) Limited
Public Trust - NZCSD
John Grant Sinclair
J E & A L Marris Trustees Limited
Custodial Services Limited
BNP Paribas Noms Pty Ltd
HSBC Nominees (New Zealand) Limited - NZCSD
Selwyn Pellett & Tracey Herman
Movac Fund 4 Custodial Limited
JBWERE (NZ) Nominees Limited
JP Morgan Nominees Australia Limited
Jarden Securities Limited - NZCSD
Shares
13,512,942
7,995,819
7,544,015
6,333,375
5,801,308
5,217,291
3,029,482
2,420,597
1,834,038
1,800,000
1,582,861
1,535,751
1,482,562
1,380,000
1,361,431
1,354,163
1,257,679
1,171,119
881,597
800,000
%
12.59
7.45
7.03
5.90
5.40
4.86
2.82
2.25
1.71
1.67
1.47
1.43
1.38
1.28
1.26
1.26
1.17
1.09
0.82
0.74
PAGE 146
PAGE 147
EROAD 2023 ANNUAL REPORTREGULATORY DISCLOSURES | Other
information
NZX WAIVERS
No waivers were granted in FY23.
DISCIPLINARY ACTION TAKEN BY THE NZX
The NZX has not taken any disciplinary action against the
Company during the year ended 31 March 2023.
AUDITOR’S FEES
KPMG has continued to act as auditor of EROAD and our
subsidiaries. The amount payable by EROAD and our
subsidiaries to KPMG as audit fees during the year ended
31 March 2023 was $0.5m The amount of fees payable to
KPMG for non-audit work during the year ended 31 March
2023 was $0.4m. Note 5 in the Financial Statements
section of this Annual Report includes a detailed
breakdown of auditor’s fees for audit and non-audit work.
DONATIONS
EROAD does not make any political donations.
We did make donations to organisations including the
Red Cross, HUHA, SPCA, Brake and St Johns Ambulance
through our subsidiaries totalling $5,000 during the year
ended 31 March 2023..
CREDIT RATING
EROAD does not currently have a credit rating.
Directory
Registered Office
in New Zealand
Registered Office
in North America
Registered Office
in Australia
Level 3, 260 Oteha Valley Road,
Albany, Auckland, New Zealand
15110 Avenue of Science,
Suite 100, San Diego,
United States of America 92128
Level 36, Tower 2 Collins Square
727 Collins Street, Docklands,
VIC 3008, Australia
Investor Relations
and Sustainability
Enquires
Address: EROAD Limited,
PO Box 305 394 Triton Plaza,
North Shore,
Auckland
Email: investors@eroad.com
Telephone: 0800 437 623
Managing your
Shareholding Online
Share Register -
New Zealand
Changes in address and investment
portfolios can be viewed and
updated online:
www.computershare.co.nz/
investorcentre.
You will need your CSN and FIN
numbers to access this service.
Computershare Investments Services
Limited
Private Bag 92119, Victoria Street,
West Auckland 1142, New Zealand
Email: enquiry@computershare.co.nz
Telephone: +64 9 488 8777
Website: www.computershare.co.nz/
investorcentre
Legal Advisors
Bankers
Chapman Tripp
Level 34 Commercial Bay
Auckland 1010
PO Box 2206, Auckland 1140
Telephone: +64 9 357 9000
ANZ
ASB
Bank of New Zealand
HSBC
Wells Fargo
PAGE 148
PAGE 149
EROAD 2023 ANNUAL REPORTREGULATORY DISCLOSURES | Glossary
ANNUALISED MONTHLY RECURRING
REVENUE (AMRR)
A non-GAAP measure representing monthly Recurring
Revenue for the last month of the period, multiplied by 12.
It provides a 12 month forward view of revenue, assuming
unit numbers, pricing and foreign exchange remain
unchanged during the year.
ASSET RETENTION RATE
The number of Total Contracted Units at the beginning of
the 12 month period and retained as Total Contracted Units
at the end of the 12 month period, as a percentage of Total
Contracted Units at the beginning of the 12 month period.
COREHUB
EROAD’s next generation telematics hardware that collects
rich data, meets electronic logging device certification.
COSTS TO ACQUIRE CUSTOMERS (CAC)
A non-GAAP measure of costs to acquire customers. Total
CAC represents all sales & marketing related costs. CAC
capitalised includes incremental sales commissions for
new sales, upgrades and renewals which are capitalised
and amortised over the life of the contract. All other CAC
related costs are expensed when incurred and included
within CAC expensed.
COSTS TO SERVICE & SUPPORT (CTS)
A non-GAAP measure of costs to support and service
customers. Total CTS represents all customer success
and product support costs. These costs are included in
Administrative and other Operating Expenses.
CALENDAR YEAR (CY)
12 months ended 31 December.
EBITDA
A non-GAAP measure representing Earnings before
Interest, Taxation, Depreciation and Amortisation (EBITDA).
Refer Consolidated Statement of Comprehensive Income in
Financial Statements.
EBITDA MARGIN
A non-GAAP measure representing EBITDA divided
by Revenue.
EHUBO, EHUBO2 and EHUBO 2.2
EROAD’s first and second generation electronic distance
recorder which replaces mechanical hubo-dometers.
Ehubo is a trade mark registered in New Zealand, Australia
and the United States.
ELECTRONIC LOGGING DEVICE (ELD)
An electronic solution that synchronises with a vehicle
engine to automatically record driving time and hours of
service records.
ENTERPRISE
A fleet of more than 500 vehicles in North America and
more than 150 vehicles in Australia or New Zealand.
FREE CASH FLOW
A non-GAAP measure representing operating cash flow
and investing cash flow reported in the Statement of Cash
Flows.
FUTURE CONTRACTED INCOME (FCI)
A non-GAAP measure which represents contracted
Software as a Service (SaaS) income to be recognised as
revenue in future periods. Refer Revenue Note 2 of the
FY23 Financial Statements.
SAAS
Software as a Service, a method of software delivery in
which software is accessed online via a subscription rather
than bought and installed on individual computers.
SAAS REVENUE
Software as a service (SaaS) revenue represents revenue
earned from customer contracts for the sale or rental of
hardware, installation services and provision of software
services.
TOTAL CONTRACTED UNITS
Represents EROAD and Coretex branded units subject to a
customer contract both on Depot and pending instalment
and Coretex branded units currently billed.
UNIT
A communication device fitted in-cab or on a trailer. Where
there is more than one unit fitted in-cab or on a trailer, it is
counted as one unit (excluding Philips Connect).
360
A web-based platform that allows customers to access
data collected by CoreHub and the associated reports.
FINANCIAL YEAR (FY)
Financial year ended 31 March.
HALF ONE (H1)
For the six months ended 30 September.
HALF TWO (H2)
For the six months ended 31 March.
MONTHLY SAAS AVERAGE REVENUE
PER UNIT (ARPU)
A non-GAAP measure that is calculated by dividing the
total SaaS revenue for the year reported in Note 2 of the
FY23 Financial Statements, by the TCU balance at the end
of each month during the year.
NORMALISED EBITDA
Excludes one-off items including acquisition accounting
adjustments ($9.6m) and integration costs ($3.4m). FY22
normalisations include acquisition accounting revenue
($1.3m) , due diligence costs ($2.0m), transaction costs
($1.6m), and integration costs ($4.0m).
NORMALISED EBITDA MARGIN
Excludes one-off items, consistent with the definition
provided for Normalised EBITDA
NORMALISED REVENUE
Excludes the one-off acquisition accounting revenue in
FY23 ($9.6m).
ROAD USER CHARGES (RUC)
In New Zealand, RUC is applicable to Heavy Vehicles and
all vehicles powered by a fuel not taxed at source. The
charges are paid into a fund called the National Land
Transport Fund, which is controlled by NZTA, and go
towards the cost of repairing the roads.
PAGE 150
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EROAD 2023 ANNUAL REPORTREGULATORY DISCLOSURES |