ERD
25/11/2014 09:15
HALFYR
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REL: 0915 HRS EROAD Limited
HALFYR: ERD: EROAD first half-year result on track
EROAD first half-year result on track
EROAD Limited reported a solid half-year result delivering strong growth in
Units on Depot and successfully establishing its business in Oregon, USA.
Highlights
- On track to deliver a full year results in line with Prospectus Prospective
Financial Information (PFI)
- Units on Depot 18,586 up by 79% since 30 September 2013
- Revenue at $7.9m up by 82% on same period last year
- Annualised Recurring Revenue reaches $16.0 million, up by 72% since 30
September 2013
- Customer Retention Rate remains strong at 99.2%
- Net Profit before tax and costs of listing $0.1 million, up compared to a
loss of $0.4 million for the same period last year
- Opened new office in Portland, Oregon
Half-year to September 30, 2014
25 November 2014 EROAD (NZX:ERD) today reports performance in line with
expectations for its first half year as an NZX Listed company, achieving
strong growth in Units on Depot, and increasing market share in New Zealand.
"I am very pleased with what has been achieved during the six months. To
have grown strongly and to be on track to deliver full year PFI, whilst
executing the successful NZX listing is a testament to the depth of the EROAD
team," said EROAD Chairman, Michael Bushby.
Revenue totalled $7.9 million for the six months, up from $4.3 million for
the same period last year. Strong take up of rented Units helped contribute
to the increase in Annualised Recurring Revenue (ARR) to $16.0 million, some
$6.7 million above 30 September 2013. With customers recognising the
benefits of EROAD's services a high customer retention rate of 99.2% also
helped to increase ARR.
The launch of EROAD's Electronic Logbook, which was approved by NZTA in July
2014, as well as the launch of its Data Analytics service, further enriched
the customer offer and helped to support revenue growth.
In New Zealand, EROAD added as customers some of the largest national fleets
during the six months, including Halls, Ritchies and TIL (Transport
Investments Ltd, known for its general freight brands Hooker Pacific, TNL
(Freighting & Distribution), and Roadstar Transport).
In addition EROAD enjoyed considerable success in supplying services to
Councils and Government departments across the country. Around one quarter
of New Zealand's regional councils are now customers, particularly of EROAD's
EhuboLITE and Elocate solutions.
In Oregon EROAD has made good progress since launch in April, 2014, including
opening a new office in Portland. We have grown sales staff to forecast and
have seen a corresponding lift in sales activity in line with expectations.
Outlook for full year to March 2015
EROAD's strategic priorities remain unchanged. The company is enhancing its
product and services offering as well as targeting its sales and marketing
initiatives in response to what it continues to learn from its operations in
New Zealand, Australia and the US.
Overall we expect our full year results to be in line with PFI based on
strong sales in New Zealand balancing lumpy sales in Australia, with Oregon
on track with expectations.
"Our results for the half year are very pleasing and demonstrate continued
strong demand for our products and services in our important New Zealand
market, acceptance of our products and services internationally, and we
continue to build momentum in these markets," said CEO Steven Newman
Consistent with its Dividend Policy, EROAD does not intend to pay an interim
dividend for the year 31 March 2015.
Operational summary
New Zealand's move toward Electronic RUC
We are seeing a continued steady move in the transport sector towards
electronic Road User Charges (eRUC). EROAD has collected $533 million in RUC
since 2009, up from $402 million at March 2014. EROAD now has an annualised
RUC collection rate of nearly $300 million per annum. This represents over
26% of New Zealand's total annualised Heavy Vehicle RUC, up from 19% at
September 2013.
The efficiency benefits that EROAD delivers to its customers has helped drive
the growth in electronic RUC. A growing focus on health and safety and
compliance among heavy transport operators is an increasingly important
driver of demand for EROAD's products and services. New services like
Virtual Speed Camera, EROAD Electronic Logbook, and Driver Vehicle Inspection
Log have been developed and launched in New Zealand to help our customers
improve safety on New Zealand roads. These services have been developed with
a rollout to international markets in mind.
Oregon Market
Since entering the Oregon Weight Mile Tax (WMT) market in April 2014 we have
refined upward our estimate of market size. The experience of our sales
teams is that many fleets with vehicles subject to WMT also operate other
vehicles. This has increased our assessment of EROAD's potential addressable
market in Oregon to beyond the 306,000 heavy vehicles registered for WMT. As
an example EROAD has recently won three new customers that have a total of
142 vehicles registered for WMT and a further 154 vehicles not subject to WMT
but still requiring commercial services. Having selected EROAD for the WMT
vehicles these three customers are now considering equipping all other
vehicles with EROAD's service.
EROAD has opened a new, bigger office in Portland, Oregon, and has introduced
a new offer to customers for rental Units in response to customer demand.
This means operators in Oregon now have an option of purchasing Units at the
start of their service or renting Units as part of their service plan.
Depending on market response, and uptake of this new rental offer, some
revenue will be deferred with a corresponding increase in Annualised
Recurring Revenue (ARR). However, at this time it is too early to project
any clear trend in customer preference.
Research and Development
Investment in our technology platform and suite of services remains a key
focus for development. Development of products relating to USA International
Fuel Tax Agreement (IFTA), International Registration Plan (IRP), Hours of
Service (HOS) as well as Electronic Logging Device (ELD) is progressing well.
In addition, the development of services to meet Health and Safety
requirements, including driver behaviour, analytics and camera capability are
all progressing according to plan. These services are on track to be
completed in early 2015 and we will be well placed to roll out for New
Zealand, Australia and Oregon for FY2016.
EROAD is experiencing the challenges faced by New Zealand's technology sector
in attracting talent in a tight global market. However, we are having some
success as we increasingly look overseas to attract the talent we need.
Key Appointments
Creating a deeper profile to our senior management team for the business and
adding additional capability to support growth was top priority for the first
six months of the financial year.
Jeff Honey, Insights & Analytics Manager: Jeff's appointment enables EROAD
to build capability in data analytics. Jeff's background in insights and
analytics includes senior roles at BNZ and Vodafone.
Andy Thackwray, Senior Manager, Strategy & Market Development: As a member
of the strategy and market development team, Andy's focus is on EROAD's
global expansion. He is relocating to Melbourne to grow our Australian
business by applying his expertise in managing regulatory and stakeholder
environments and identifying business opportunities in the Australian
transport sector.
Reg Williams, Customer Experience and Acquisition Manager: Reg manages
EROAD's customer contact operations including retention, upsell and in-house
sales, and helpdesk. He has also developed and implemented an in-house
training programme for all customer-facing staff including in-field sales.
His appointment enables EROAD to deliver a seamless, high-quality experience
across the full customer lifecycle, in all markets.
Tony McNaught, Corporate Affairs Manager: After working as an advisor to
EROAD since 2007, and advising the company through the IPO process, Tony has
joined EROAD to support further growth through mergers and acquisitions,
investor relations and strategy support.
Michael Swarbrick, Vice President of Sales - North America: Formerly EROAD's
Commercial Manager - NZ, Michael Swarbrick has relocated to grow our North
American sales. He now leads our Portland-based commercial team which is
responsible for sales in Oregon and neighbouring states.
Summary financial statements
Attached to this release are unaudited summary financial statements. The
summary financial statements for the six months ended 30 September 2014 and
the comparative financial information for the six months ended 30 September
2013 have been prepared under the New Zealand equivalents to International
Financial Reporting Standards (NZ IFRS).
About EROAD
EROAD is a fully integrated technology, tolling and services provider. Our
advanced technology provides road charging, compliance and commercial
services with the same platform to lower overall client and delivery costs.
The EROAD system consists of a secure electronic distance recorder (Ehubo),
combined with a bank-grade payment gateway and services portal. We undertake
design and manufacture of our Ehubos, as well as software development, from
our headquarters in Auckland.
EROAD's successful New Zealand reference site provided it with the
opportunity to enter the international market. In 2014 we commercially
launched in Oregon, becoming the first approved electronic Weight-Mile Tax
(WMT) service provider in North America. We also entered the Australian
market with a commercial services offering. For more information please
visit www.eroad.com.
For a detailed description of EROAD's business, and terms including Units on
Depot, Annualised Recurring Revenue and Retention Rate, which are non GAAP
measures used by EROAD to manage the business, please refer to our Prospectus
dated 18 July 2014 on our website.
http://www.eroad.co.nz/nz/about-us/investors/
ENDS
Contact:
Steven Newman
CEO
EROAD
Tel: +64 9 9274713.
End CA:00258039 For:ERD Type:HALFYR Time:2014-11-25 09:15:38
