Despite record sales growth in New Zealand, due to supporting its fledgling U.S operations, corporate costs, and R&D to the tune of $0.25 million per month for the half-year, EROAD reported a net loss of $408,452, down from a $611,000 profit in the previous corresponding period.Revenue rose 27% to $15.5 million, while earnings before interest, tax, depreciation and amortisation grew 72% to $4.7 million.
Depreciation cost Eroad $3.6 million in the first half, double the same period in 2016, while the cost of amortisation was $1.4 million, from $789,149 a year earlier.
Board chair Michael Bushby says the high sales and revenue performance of the New Zealand business, combined with a return to the outsourcing of funding for customer finance, previously funded from working capital, meant the Board was comfortable the company could support the significant current North American opportunity.
Bushby says EROAD’s New Zealand/Australia business generated sufficient cash flows from operations to support all of it’s US operating losses, all corporate costs and the majority of R&D.
Cash utilised in the six months to fund these activities totalled $0.25 million per month.
EROAD’s New Zealand business enjoyed three record sales months during the six months and continues to grow strongly.
Chief executive Steven Newman says that alongside continued growth driven by electronic Road User Charges (eRUC) services, the company was excited by opportunities in the health and safety space as fleet owners and managers recognised their responsibilities to drivers and road users in ensuring the safety of their supply chains.
Heavy transport fleets continue to move from paper-based RUC to eRUC and EROAD is winning a dominant share of this move from paper and mechanical systems to electronic systems.
EROAD has collected $1.2 billion in RUC since 2009 and is now receiving 36% of New Zealand’s total annualised Heavy Vehicle RUC, up from 31% at September 2015.
In addition to further growth in eRUC, the New Zealand market opportunity has expanded considerably with changes to Health and Safety regulations, requiring companies to better supervise dangerous workplaces, including driving. Alongside the growth in the heavy vehicle sector, EROAD’s record sales reflected higher sales to light vehicles and other fleets to support customers’ health and safety compliance obligations.
Newman say growth in enterprise sales for the six months included an agreement with Downer New Zealand, one of New Zealand’s largest fleet operators, which has a strong focus on health and safety.
“Our New Zealand business is a well-established part of the transport ecosystem and is enabling continued innovation in eRUC and compliance services, as well as fleet management, insurance and driver behaviour,” says Newman.
“Earlier this month, the Safe Driving Rewards Programme, a collaboration between EROAD and NZI/Lumley won the ‘Innovation of the Year’ category at the New Zealand Insurance Industry awards,” he says.
“The cash-generating performance of our New Zealand business provides the platform for our investment in North America. That investment is one that we believe will generate significant returns in the future. At the same time, we remain very focused on future growth in New Zealand and on protecting and nurturing what is already a strong and profitable business in its own right,”says Newman.
