Welcome to the 2022 Annual Shareholders Meeting of EROAD Ltd. My name is Graham Stuart. I'm the Chair of EROAD, and I'll be chairing your meeting today. Just by way of advice, Sara Gifford is traveling internationally today, so my colleagues on the stage are wearing masks when they're sitting on the stage. But we will be taking them off when we're at the lectern. The notice of the annual meeting has been circulated to all shareholders. This sets the scope of what we're scheduled to discuss today, and it also includes details of the five resolutions that we're due to consider. I'm pleased to confirm that there's a quorum present, and therefore I declare the 2022 Annual Shareholders Meeting of EROAD open, and voting is now also open. As you're aware, this is a hybrid meeting.
We have shareholders in attendance here in Auckland today and also through the Computershare online platform, which I'm sure many of you have become familiar with over the last few years. Please note, while you can now submit questions through the online platform, I will not address them until the relevant time in the meeting. For online attendees, your questions will be collated, and we will address them at the conclusion of the presentations by reading them to the meeting and then providing answers. Where we receive several questions that are similar in nature, we will summarize these into one question. Now, the order for today's meeting is as follows. We will start with me giving my address as Chair. Following my address, I'll introduce Mark Heine to give you the CEO address.
We will then invite questions on any matter relating to EROAD's annual report or to the presentations from Mark and myself. When we've concluded with the questions relating to that, we will move to the formal business. There are five formal resolutions before the meeting today, as set out in the notice of meeting. After voting is complete, we'll have an opportunity for general business, and I will invite you to ask any further questions you may have. We will then conclude the meeting. Those of you here at Eden Park with us today, I encourage you to stay after the meeting and have some light refreshments with us and also take advantage of the live examples of EROAD's products that are in the room next door.
Now, we have some formal meeting to transact at this business today, and as chair, I will oversee the process to do this in a proper and orderly manner. Really today, this is your meeting and the opportunity for you to put to the board and to management any questions that you have and to raise with us any concerns. Please take advantage of this opportunity. The annual shareholders meeting is one of the main vehicles for shareholders to exercise their rights and to express their satisfaction or otherwise with the company's actions. My role as chairman of this meeting is to facilitate that process on your behalf. I will now introduce you to those that are attending the meeting today. I'll introduce you to the board. With us today, Selwyn Pellett at the far end, Sara Gifford, Susan Paterson, and Tony Gibson.
Barry Einsig has traveled to New Zealand to attend board meetings in the last couple of days and was intending to be with us today. Hello, Barry. He is now joining us remotely from his isolation hotel room. This is the world we're living in today. I would also like to welcome EROAD's new CEO, Mark Heine. Sitting in the stand next to Mark today is Margaret Warrington, our acting CFO. Also in attendance are Eoin Walshe, our auditor from KPMG, and Rachel Dunne, our legal advisor from Chapman Tripp. A number of EROAD staff and management, many of whom are also shareholders. It's a privilege for me to deliver the address as chairman of your board.
Your board and management have worked diligently as your agents through this past year, and what an eventful year it has been. EROAD is a purpose-led company that aspires to create safer and more sustainable roads. Sustainability is the core to our business, and we're at the beginning of a journey towards our net zero strategy. We are focusing our efforts not only on reducing our emissions, but also on developing solutions that will support our customers and their efforts to reduce their emissions. I encourage you to read our inaugural sustainability report. This demonstrates the work that we're doing in this space and shows EROAD's commitment to continued improvement and advancement. Over the past year, EROAD's share price has fallen by 60% against the benchmark of technology stocks that have fallen generally around 30%.
Notwithstanding the challenging macro environment, it's very clear that the company has not met shareholder expectations. Your board has a sharp focus on improving the company's performance. While our New Zealand and Australian businesses had a good year, EROAD's performance in North America prior to the merger with Coretex fell well short of our expectations, as did some aspects of our corporate operations. Your board has embarked on a course of positive changes to ensure that EROAD will perform more consistently and deliver on its growth strategies. The appointment of Mark Heine as Chief Executive Officer is a major step in this regard. Mark has a deep understanding of the business, and the board is confident that he's the right person with the right capabilities to lead EROAD through this next phase of growth. More on that shortly.
The board has also commenced the process to appoint a new chief financial officer. The merger with Coretex in the second half of the year triples the size of our American operations. More importantly, from the merger, we were able to fill critical technology gaps with the CoreHub hardware and the Core360 SaaS platform. In addition, we acquired critical capabilities for winning and retaining large enterprises. Despite the challenges of the past year, there have been some notable achievements. Our New Zealand business delivered yet another year of solid growth, not only adding new customers, but also delivering greater value from the customers we have. We never take customer retention for granted, and it was pleasing that several of our key customers in New Zealand renewed their relationships with EROAD over the past year.
In April last year, we announced that essential services supplier Ventia had become a customer to both, to EROAD in both New Zealand and in Australia. During the year, our Australian business passed through the important milestone of breaking even at the EBITDA level. In June, we announced the partnership with Phillips Connect, and in August, we announced the partnership with Seeing Machines. In October, we launched EROAD Clarity Solo Dash Camera, and in March this year, we announced the refinancing of our debt facilities. By far, the most significant activity of the year was the merger with Coretex. The merger was announced in July and followed by a successful equity placement of NZD 64.4 million with our large and institutional shareholders, and a share purchase plan of NZD 16.1 million issued to our retail shareholders.
Although we've got off to a late start, the merger occurred at a time when we experienced unprecedented supply chain and labor market disruptions. The integration with the Coretex is now back on track and is progressing well. The Coretex merger is a game changer for EROAD. It represents a doubling down on our North American growth strategy, and it's critical that we follow this up by sharpening our focus on this market and by capitalizing on the value that we have acquired. Your board is coming to the end of a three-year phase of renewal. In December, Selwyn Pellett joined the board as an executive director to support EROAD for 12 months through its integration with Coretex.
Selwyn makes a valuable contribution to the board, and with Steven Newman's resignation from the board, and subject to Selwyn being elected by shareholders today, we will seek to extend this term beyond that original 12 months. At the end of March this year, the board spent a week visiting EROAD's North American operations. During that visit, we were able to welcome Sara Gifford to the board. Sara is our second North American resident director, and she is well-versed in logistics, transportation, product implementation, and sales. The board is conscious of a need to balance institutional knowledge and continuity with fresh ideas and new perspectives, and we will continue to ensure that we have the right mix of skills and experience around the table to govern this business and to serve shareholders' interests.
It's often said that the appointment of the CEO is the most consequential decision that a board can make. As such, this has been a key focus for your board during this past year. The board worked hard to ensure that the process was rigorous and robust. We commenced the formal search process in late 2021 with the appointment of international recruitment firm, [Corvus] Partners. The search was well progressed by the time Steven Newman's earlier than expected resignation in April. When Steven announced his resignation, the board had no hesitation in appointing Mark Heine as the acting chief executive officer. It's fair to say with Steven resigning from both CEO and the board positions, the board felt the need to reexamine the skill set required of an incoming CEO.
At the same time, the board had been seeing firsthand the impact that Mark's leadership was having on the business. We were impressed by Mark's leadership and commercial skills. He has breathed fresh air into EROAD. In late May, the board made the decision to invite Mark to join the CEO search process. Mark took time to consider this invitation, and then after accepting, he completed a formal assessment and interview process in the same manner as external candidates had been subjected to. Following that process, the board selected Mark ahead of the other candidates for this role. I'd like to take this opportunity to acknowledge Steven and the very significant contribution that he has made to EROAD.
Looking ahead to financial year 2023, we expect growth momentum to build through the year with the successful conversion of our North American enterprise pipeline opportunities and continuing growth in New Zealand and Australia. The enterprise pipeline remains robust with a total of 18 enterprise clients in the pilot stage across all of our markets. These represent almost 30,700 in-cab trailer units. The board has provided revenue guidance for financial year 2023 in the range of NZD 150 -NZD 170 million. The width of this range reflects the uncertain timing of achieving larger enterprise sales. We have forecast group revenue of at least NZD 250 million by the 2025 fiscal year, and that we believe with the expanded product range, we have the capabilities to achieve this. Quite simply, financial year 2023 is a year of delivery.
The goals for this year are straightforward, and the board has six priorities. First, we must complete the integration with Coretex business and maximize the synergies from this merger. On the back of this integration, we must build momentum in our North American market without taking a backward step in New Zealand and Australia. Naturally, the customers that we already have are the most valuable. Retaining them is not something we can afford to be complacent about. We have several large customers who will be renewing their contracts with EROAD this year, and retaining their business is a key priority. We're conscious that EROAD is undergoing significant changes on many fronts, and it's vitally important that we retain the engagement and the passion of our talented staff.
EROAD 2.0 is an initiative that reviews every aspect of our employee value proposition to ensure that we capitalize on the best parts of EROAD and the best parts of Coretex, and we build a business that is fit for purpose for what's in front of us. The board and management are acutely conscious that top-line growth without returning improved profits is not sustainable or conducive to building shareholder value. In fiscal year 2023, we will complete building the platform and the business model that will deliver improved EBIT margins and we will also sharpen our focus on the management of costs. While the focus is strongly on delivery of our short and medium term priorities, we also need to have an eye on what lies beyond this. As the year progresses, we'll be working with Mark and his team to refresh EROAD's longer-term strategy.
Now, let me hand you across to Mark for his presentation.
Thank you, Graham. Excuse me. Good afternoon, everyone. I've met many of you before at previous shareholder meetings. I'm honored to be here, speaking and standing here today as EROAD's Chief Executive Officer. My three months as acting CEO has reinforced my view that EROAD is extremely well-positioned with the merger of Coretex providing an excellent platform for our growth. I'm delighted to have accepted the role as CEO and to lead EROAD at a pivotal point in its history. Let me start by first thanking Steven and the EROAD team for their support for me transitioning into this role. I know the EROAD team and the strategy well, which has made my transition into this role a seamless one. Our people are crucial to EROAD's success, so I'm excited to be working with such a talented and motivated bunch of people.
Together, I firmly believe that we can deliver on our strategy and drive this business forward. Before I discuss the year that was and the priorities of FY 2023, it's worth pausing for a moment to reflect on why EROAD remains a compelling investment proposition. We are passionate about and dedicated to creating safer and more sustainable roads. We provide regulatory and specialized telematics services together in a bundle, typically with hardware. We describe ourselves as a hardware-enabled SaaS business. We have over 8,000 customers in New Zealand, Australia, and North America, who between them have over 200,000 connected vehicles. We have an attractive business model. We are growing recurring revenue. We're growing from both new customers and of course, increasing revenue as a result of products and services being sold to our existing customers.
We maintain over 90% of our customers on contract renewals, and with this model, we expect to grow to at least NZD 250 million by the end of March 2025. EROAD employs talented and capable teams in New Zealand, Australia, and North America. Last year, we invested significantly in building capability through research and development and, in the case of inventory, to ensure the continuity of service in light of the global supply chain disruption we're seeing. We also merged with Coretex in FY 2022, and this leaves us well-positioned to be a leading player in Australia, New Zealand, and North American telematics markets. With our hardware and software solutions, EROAD always has been and continues to solve our customer problems. Our customers have a range of problems that they seek to solve.
Productivity is getting more difficult to improve, and our customers are struggling to find drivers and vehicles. This means they need to utilize their assets more and more effectively and efficiently for longer periods of time. EROAD can provide customers with deep insight on how to maximize the use of their assets. We still help our customers meet their regulatory compliance obligations. As our customers are driving more and they need to use their assets further, it is really important they operate safely within the work time rules and comply with the road user charging obligations. With more vehicles on the road safety gets greater attention. That has led us to develop camera solutions and other products which enable our customers to get insight on their drivers' activity.
These insights help our customers monitor driver behavior and can be used to train drivers in order to improve the safety outcomes on the road. With the merger of Coretex, we've also unlocked the ability to solve customer problems around food safety. Refrigerated products, as well as other products which need cooling, such as vaccines, require constant temperature monitoring. Our products enable customers to monitor and record how these products are being transported and their core temperatures to ensure there's assurance around the safety of those products when they reach their destinations. Proof of service has become of utmost importance for our customers as well. Our customers in the civil maintenance and construction and their customers want to have a verifiable record of service, proven delivery of service, and the timing of the delivery.
Our customers want to certify the quality of products that they're delivering with our solutions. Our technology is helping solve customer problems across the four verticals that we operate in. We continue to invest in these verticals because we believe these are key areas of growth going forward to enable us to reach our growth targets. As we continue to grow, we'll continue to invest in these verticals providing solutions for them. If you look more deeply into our verticals, there are four main ones that we are targeting. EROAD has historically been strong in the in-cab professional transportation vertical. EROAD's regulatory telematics complements the more advanced technology stack that Coretex brings to the table. We're quite excited about getting deeper and broader into professional trucking. In terms of refrigeration transportation, we see a real opportunity for growth in North America, and we're investing more here.
The CoreHub solution unlocks and enables that market, as well as the CoreTemp monitoring product that we have launched. EROAD has historically been strong in construction, particularly in New Zealand. Teaming up with Coretex has helped us get stronger in the North American market with a range of products we now offer up there, including the introduction of the waste and recycling product suite that we have too. With the merger of Coretex, we obtained access to the CoreHub next generation telematics product. This is a graphic that shows how CoreHub interacts with the various solutions that we have. It acts as the heart of the cab. The CoreHub is a next generation IoT device with edge computing power, which enables more to be done in the vehicle and quicker visualization and realization of information to the driver.
A driver uses the driver device screen to manage their regulatory obligation, whether it's around work time with electronic login solution or by ensuring that the vehicle is fit for purpose with a driver vehicle inspection report. The device also helps drivers understand routing and navigation to ensure that they are efficient and effective during their workday. That IoT hub can then be connected to camera solutions, whether it's our entry-level CoreVision or the more advanced Clarity Dashcam, which help our customers better understand the risks to the drivers on the road. We've also added IoT tags and sensors to the product set, and that enables us to reach into different verticals with the CoreHub. For example, in the civil construction vertical, we can help customers understand the quality of concrete that's being poured by helping them understand the rotations that are happening in the vehicle.
In the refrigeration vertical, our sensors can monitor core temperatures in vehicles to ensure the maintenance of appropriate temperatures for goods. All of that can be visualized at the home base via the Core360 software platform. The Coretex merger unlocks a huge range of solutions for our customers, which deal with the customer problems that we've talked about earlier. Now let's look at the financial performance last year in FY 2022 across a range of markets we operate in. New Zealand had an exceptional year. Contracted units grew by 22%. EROAD alone grew organically to be over 100,000 units. 70% of this growth was generated from our current customer segments, adding additional products and services such as Clarity Dashcam, the Logbook, or the BookIt products. 30% of that growth was from new customers.
This demonstrates the continued opportunities we see in New Zealand as we evolve with our customers. When it comes to asset retention, we're still maintaining strong asset retention rates. Indeed, we increased them over the course of the year. That includes our continued partnership with Downer in New Zealand, which we're particularly happy about, as well as other enterprise opportunities that we realized during the year. Customers are also adding on additional subscriptions such as our Logbook and our inspection products. Turning to North America. It's fair to say that North America was challenging, and that was driven by COVID-19 and the uncertainty it caused to our small and medium customers. When it came to renewals, some of our small and medium customers reduced their fleet sizes, which had a consequential impact on our churn.
These renewal discussions were driven by a 3G to 4G upgrade program, which we're coming to the end of. With Coretex as part of the team now and their greater focus on enterprise accounts, we're actually seeing higher asset retention rates. This is helping us regain momentum, not only by the fact that Coretex was more established in the enterprise space, but the products and market fit has also helped us grow and execute on our sales strategy. Going forward, we are talking to customers about the next generation offering that's opened up new opportunities for us. We currently have eight enterprise customer pipeline opportunities in the pilot stage in North America relating to potential opportunities of circa 26,000 units in that market. Australia. With Australia, we're satisfied with performance during the course of the year.
Signing up Ventia was a highlight. We have completed the rollout with them now. Also, with the merger of Coretex, we brought on further enterprise fleets. This has enabled us to start establishing credibility with customers in the enterprise side of the business. As we continue to develop and integrate our product solution between EROAD and Coretex during the course of the year, we'll start seeing those solutions flow down from North America into our Australian market. This will open up further opportunities particularly in the construction vertical. In the meantime, we are focused very much on continuing to talk to our customers around our Clarity Dashcam products and health and safety benefits that provides, as well as the asset tracking solutions, being our EROAD Where and our EROAD Where Mini tag products. Looking at our financial performance, revenue grew during the year.
This is due to Coretex has been there for four months and EROAD for the 12, but is also underpinned by the strong year that New Zealand had. As I said before, New Zealand did have a stellar year. The revenue for that segment grew by NZD 10 million. Our reported EBITDA is down 32%. In part, that's to do with the one-off transaction and integration costs and some one-off acquisition revenue. When we normalize for both those elements, the drop in EBITDA was around 5%, and that drop was due to our growth in operating costs, some of which relates to Coretex and some of the increased spending we have in our areas of investment. We've looked at our key teams and lifted our marketing in preparation for our growth. Our annualized monthly recurring revenue, or AMRR, casts forward our 12-month view of where our recurring revenue sits.
For the end of FY 2022, that metric was over NZD 134 million. This is a significant step-up. It reflects Coretex and EROAD's recurring customer base for the full year. As to our free cash flows in FY 2022, this was impacted by a combination of the merger of Coretex, EROAD's investment and growth in inventory as global supply chain challenges were addressed by the company. EROAD has recently renegotiated a new syndicated debt facility of NZD 90 million to provide further capacity to grow. Our available liquidity of NZD 72 million, which includes our bank facilities and cash on hand, will support R&D and integration investment plan for FY 2023 and fund hardware to enable EROAD to pursue enterprise opportunities. As to our KPIs, we reached over 200,000 connected vehicles in FY 2022 as we focus on building scale in our markets.
Our growth was made up by two components. The merger with Coretex added on over 66,000 units in growth, predominantly in North America, more than doubling the size of our presence in that market. When it comes to organic growth, that was, in terms of constant growth, over 16,000 units, predominantly in New Zealand. We're really impressed by how our New Zealand business continues to grow organically and how it grew over 1,000 units in the course of the financial year. Looking at ARPU. ARPU has dropped slightly, reflecting Coretex's historic selling model of outright hardware sales. We've also seen the mix of in-cab and trailers change with the acquisition of Coretex. Ultimately, our underlying ARPU will grow with the introduction of our complementary products, being our Solar and Clarity Dash Cam products, our Phillips Connect trailer tracking solution, and other add-on products that we are selling.
Our asset retention rate remains over 90%. Looking at integration, we are making significant progress on our integration with the Coretex team. As mentioned before, a critical area we're working on is our supply chain. As we're seeing globally, many companies, including EROAD, are impacted by supply chain challenges. When it comes to increasing different types of product sets that we have, that does increase our exposure and our supply chain risk. We've invested in the team to make sure we're on top of these risks, and we're satisfied with the progress we've made. As to our sales activities, we are well integrated across the markets too. There's been cross-training of our sales team, and they're very much focused on the various verticals they're working on.
We aim to have our key products and platforms fully integrated by the end of the year, and we're seeing good progress on that front. Our 3G to 4G upgrade program is almost complete. The underlying churn we're seeing from this should reduce as we finish our swap-out program. For FY23, EROAD has three priorities. The first is to build growth momentum in both North America and New Zealand. The merger with Coretex accelerated our growth strategy, and in particular in North America. As mentioned earlier, the strategy in North America is based around the four verticals that we operate in, being professional trucking, refrigeration, construction, and waste and recycling. We recently launched our Core Hub Extreme product in North America, which will support our customers in the refrigeration vertical.
This product utilizes edge computing 4G technology, as I spoke about earlier, and we're confident it can take on the incumbents in these spaces. We're also investing in our marketing engine in North America to capitalize on the opportunities that we have. Over the first quarter of FY 2023, EROAD's share of voice in the North American telematics market was 24%, far larger than the market share of our competitors. We're also leveraging the greater enterprise sales capability we've brought on through the merger. This has strengthened our pipeline in North America and provided a greater span of industries and customer size to serve as reference accounts in this market. In New Zealand, we continue to see opportunities to capitalize on as we continue to target growth for 10% year-on-year.
Our market-leading sales and customer support teams consistently unlock sales opportunities as we go about growing our market share. It was great seeing almost 600 current and potential customers at EROAD's Fleet Day last week in Hamilton, an event where we focused on helping our customers have safer and more sustainable fleets. This event is now the same size as, if not larger, than the other enterprise industry events that are held in New Zealand. This reflects the scale and support that EROAD has in our New Zealand markets. The second priority is to build and maintain an engaged culture that's aligned to the vision of the merged company. We refer to this as EROAD 2.0. We're doing this at a time when competition for talent is as competitive as ever. However, I believe we largely have the team in place to deliver.
The team is passionate about EROAD, its purpose, and our strategy. As CEO, I've been focused on empowering this team to ensure that they can deliver for our customers. This has been by removing silos in the business and realigning teams so resources can be better targeted to get new products out the doors or convert sales quicker. We found in the dynamics of telematics market, it was moving quicker than EROAD. We've therefore taken steps to speed up by devolving decision-making and empowering our product managers and engineers by introducing more scalable customer-facing agile development teams and reshaping our hardware team to deliver products to the market quicker. We've also been focused on stopping things that do not directly deliver on our growth and our business plan. We have been deliberately focused on our delivery, and we are shaping EROAD to this end.
The third priority is to deliver on the key products and platform integration by the end of the calendar year. Capitalizing on the merger with Coretex, we expect to deliver key products and platform integration that will enable further growth. This is an important priority for the business. By having a web platform that can visualize data and insight from both EROAD and Coretex hardware, as well as third parties, enables a more seamless customer experience. It also allows cross-selling and upselling opportunities to customers, including for our SaaS products. Finally, our FY 2023 outlook. We expect the growth momentum will further build through the year with the successful conversion of our North American and our New Zealand pipeline opportunities. Underpinning this expectation, across all of our markets, we currently have 18 pilots for enterprise customers, which represent over 30,000 units and 10,000 micro tags.
However, as you'd expect, revenue growth for FY 2023 will reflect the lumpy nature of enterprise sales and the phasing of them in the hardware and software rollouts. In addition to growing revenue, there are a number of enterprise customers that will renew their contracts during the year. As Graham mentioned earlier, we expect our revenue will be between NZD 150 million and NZD 170 million for this financial year. This reflects the full year of Coretex contribution, growth across all of the markets, and the realization of the investment that we've made last year and will continue to make through the course of this year. The last year has been a year of significant investment in our capability. This is in preparation for growth, and this investment will continue into FY 2023.
As a result, we're targeting a normalized EBIT of a loss between NZD 5 million and breakeven in the coming year. We expect in the following year, we'll start to see the benefit of operating leverage and that the bottom-line results will improve. As mentioned earlier, in the longer term, we're targeting to deliver strong growth in revenue to at least NZD 250 million by March of 2025. We have set these goals knowing that in FY 2023, we can do better than what we did in FY 2022, but also being aware that we're operating in a more challenging market condition. The competition for talent, for talented staff has never been fiercer. The tide has quickly turned in our capital markets. Inflation is at the highest level of the century. In each of the markets, COVID-19 and its aftereffects continue to disrupt our supply chain and suppress economic activity.
EROAD's solution delivers benchmark returns on investment for our customers at a modest level of capital expenditure for them. This factor alone should ensure that we can navigate through the economic downturn without losing too much momentum. As fuel prices increase and the demand for data and managing assets becomes greater, the case for installing EROAD becomes more compelling. The sound investment made over the recent years and those that we completed during FY 2023 will ensure that we have the people and the technology to provide winning solutions to our customers and to deliver on our purpose of providing safer and more sustainable roads. We've made significant investment in our capability, and now is the time to deliver on this investment.
We will sharpen our focus to ensure delivery on our North American strategy while retaining focus on a successful New Zealand business and the growth that Australia provides in the medium term. We know we must execute on what's in front of us and rebuild the credibility with our shareholders. We are confident we can deliver for you. I'll now hand back to Graham for the questions on the annual report.
Thank you, Mark, and well done on your first presentation in front of shareholders as the CEO. The annual report and financial statements for the year ending 31st March 2022 have been circulated to all shareholders and are now formally tabled at this meeting. Now, if there are any questions relating to EROAD or Mark and my presentations, this is the opportunity to ask them. Normally, we'd only have shareholders and proxy holders permitted to ask questions. Today, we have two members of the press present. Unless shareholders in the room, you know, think strongly otherwise, it's my intention to allow them to ask questions as well. That said, I'll throw the floor open for questions. There's a microphone coming to you now.
Thanks. I'm Bruce Parkes. I'm a shareholder and proxy for the shareholder association. I've got a stream of questions to me. Sorry. First of all, do you use contracted engineers to boost your engineering resources? If so, how do you imbue them with the company culture?
Bruce, I'll pass that question to Mark to answer.
Thank you, Bruce. It's a good question. Yes, we do. Where we have the capability needed, not in the business, and we need to sort of outsource it, we certainly do use contract engineers. They've been helping us as part of the integration work that we're working on now, as that's a piece of work that's happening right now, and we don't necessarily need them for the long term. They are part of the EROAD team. They are invested in the team. They are made part of the group in engineering, so very much part of the EROAD family that we have, and they're brought on, and that lends.
Thanks. The second question, you've devolved your decision-making. How do you keep control of those decision-makers?
Yep. We have a really talented senior leadership team in that business. We meet regularly around talking about concerns that they have and making sure that everyone's working towards the business plan. We also have strong oversight around the financials and performance of each of the areas, so we use that as a check-in to see how people are going as well. It's very much making sure that everyone's aligned to the business plan and they understand what role they have to play as part of it, and they keep on track that way.
Thanks. Third question. You spoke about investing in your, marketing engine i n North America. It's obviously misfired in the past. What does that entail now?
We brought an incredibly talented individual from Lytx, his name is James Neal, who's joined the team to lead up our marketing operation in that space. He's been working on the opportunities up there for marketing land and building out that marketing team. It's fair to say now with the better product market fit we have with the CoreHub solution and the Coretex team that they've brought along, we said we've got the right sort of marketing team being built up with the right product fit to be there, so we can actually successfully convert on those with our potential and new customers.
Thanks. You have a new debt facility. How is that hedged, or is it hedged at all?
Might pass that one on to Margaret. There's been a bit of work on that front.
Partially hedged. Yes, we have an interest rate swap in place of NZD 10 million, and the remainder isn't hedged at the moment. We do have an external advisory group that help us with our treasury policy and give us recommendations about how to address the market risk.
Thanks. One final question off to the chair. It's regarding the silence around the time of Mr. Newman's resignation. Silence doesn't work, as the All Blacks found out last weekend. You have to say something. Do you have a disaster plan? Does it have a communication section, and have you addressed that since that time?
There's a number of questions in there, Bruce.
Yeah.
Look, at Eden Park, it may be appropriate to use an analogy of the All Blacks, though they haven't lost there since 1986. I don't think that those two situations are comparable. The board became aware of Steven's resignation early in the morning of Friday the 7th or thereabouts. We had a plan in place in as much as by 8:30 A.M. we had appointed Mark to be the acting CEO. We regularly revisit our disaster recovery plan as part of our management of risk in the business. We, like, haven't, in that regular process, revisited it since 7th of April. Don't think it would be appropriate to do so because I think that the way we handled that at the time.
Now, yeah, we had no greater insight than we gave to the market as to the reasons behind Steven's resignation, so we couldn't. You know, it wasn't appropriate for us to opine on what they might be. We just dealt with the facts as we had them in front of us. In a factual way, we announced that Steven had resigned from both of his roles. Steven's here today, by the way. You may wanna take that up with him after the meeting. We, you know, we indicated that Mark was acting in the role straight away, and we met with staff and went through that process in the proper way. There was no dropping of the baton in that window.
We also talked to market that we were in a CEO succession process and you know we were down to a shortlist of candidates. I think we dealt from a communications point of view as well with that as we could, bearing in mind you know we had limited information. Our major concern at that time, of course, was that the staff you know had leadership and were able to continue to the extent possible business as usual.
Thanks. I take the answer. I doubt the market didn't agree with you.
Yeah. There's a lot of things happening at that time. You know, I think we'd lost the CFO in February. We announced that. It's surprising. I think, you know, it may not have been a singular event. You know, to the extent it occurred, I don't know that we could have glossed over it with words. I don't think there's anything we could do to placate the uncertainty that was in shareholders' minds. You know, we'll always be telling you we're trying hard and we're hoping for better. You know, this is one of those situations where actions matter, I think. We worked, you know, as robustly and as in a timely way as we could to make a permanent appointment. You know, we had the luxury of having Mark in the role, so we didn't have to panic on that.
I think we went through that process in a proper way, and we've got a good outcome. You know, and you've seen him today, Mark's.
Yeah.
You can make your own judgments on that, and you no doubt will over the coming 12 months.
Thank you.
Hi. My name is Ellen. I'm from BusinessDesk. I had a few questions. Firstly, did the board try to do anything to convince Steven to stay on to make the transition of a new chief exec smoother?
Mark Heine was acting general counsel at the time that happened, and Mark reached out to Steven to confirm that that was in fact his intention. He did confirm that, and that. We dealt with what we had in front of us.
Was it a surprise to EROAD how the market responded after EROAD announced Newman's exit?
Well, we knew that the market wouldn't like that, right? Yeah, bear in mind, the share price had been weak in the lead-up to that as well. We know we'd raised capital in July at NZD 5.58. Going into that, we were sort of bouncing around between NZD 3 and NZD 3.50 mark. Subsequent to the announcement, there was a small movement down, maybe into the high 2s. I'm working off memory now. In more recent times, it sort of dropped all the way as low as NZD 1.40, NZD 1.50. I know where it is now. It's sitting around NZD 2.10. Yeah, the market does what the market does, and the board doesn't try to second-guess it.
What we do know is we can influence the share price by demonstrating performance and delivering on what we say we're gonna deliver on. That's our role. It's not our role to sort of speculate around what the share price should or shouldn't do.
Perfect. You said in your speech, at the time of Newman's early and expected exit in April, and the search for a new CEO was already well underway. Had the board already decided that they, you wanted to ask Mark to fill that position?
No.
Once Steven left?
No. Steven's not Newman, by the way. In the process at that stage, we'd gone from a short list to a preferred candidate. The process with the preferred candidate was, for a number of reasons, not all of our doing, drawn out, so it gave us time. During that time, you know, we reconsidered the requirements of the role 'cause, you know, we had been planning on the basis of CEO coming in and Steven being on the board. Without Steven being on the board, then the dynamic changed. We thought about that. There are three factors there that one was the change in circumstance and not having the continuity of Steven being on the board.
The second was, you know, during the passage of that time, markets become a bit more bullish, and the external outlook required, I think, a wee bit more risk awareness on the part of the board. The third element was during the passage of that time, we got to see Mark in the role and how he was performing. In late May, we invited Mark to the process. I had that conversation with Mark, and his jaw dropped. He hadn't been contemplating that. That was a surprise to him. He went away, and he made consultation with the people that he felt he had to, and he came back to me three or four days later and said, "You know, I'll enter the process." He entered the process.
The process involved psychometric testing, and it involved interviews by people external to the company and involved an interview and a presentation with the board. That was the same set of hoops that we'd asked external candidates. At that point in the process, we had two candidates, our previously preferred candidate and Mark. Then, you know, the board had a meeting, and we settled on Mark and made that announcement accordingly. That's the blow-by-blow chapter and verse version of what happened.
Perfect. I just had one last question, and it was for Mark. Mark, what has the scrutiny been like since you kind of stepped up into this role, and what has the last kind of three months been like for you?
You expect as a CEO that you have a lot of scrutiny. We've got a lot of our shareholders here today that we want to do well for and perform strongly. I've been acutely conscious of responsibility for me to do so. For me, it's been very much focusing on the plan that we have. We have a strategy in place that we want to execute on. We are focusing on delivering on doing that, and I'm just working the team really hard, and we are driving ourselves really hard to make sure we can do so for our shareholders. I've enjoyed it. I've really enjoyed the chance to step up and have this opportunity, and I've incredibly enjoyed working with a talented bunch of individuals we have in the business to actually deliver on it. It's been a real joy.
Do we have a question? Sorry. Just read the cues wrong. Sorry. Oh, yes. Eleanor. Thank you, Susan.
First question is from Gerard Malcolm. He would like an explanation, please, of why Steven Newman has left his CEO and board positions.
Yeah. I'm not gonna do that. It's not for me to speak on Steven's behalf. You know, I've already explained, Steven made that decision, and we respect his right to do that. You know, he's made a tremendous contribution to the business, and it's not for us to opine why he may have made that or otherwise. As a board, you know, I've been, I think, quite transparent and when that decision was taken, how we responded. That's about as much as I'm prepared to say about that matter.
The next question is from Gregory James. He asks, for a business going through a transition period and following the Coretex transaction, do you think no longer providing quarterly metrics or an update sends a good signal, or may it leave a void? Second part to the question is, who on the board has experience dealing with financial markets and advising how the company should be communicating with the market?
Right. Let's take those questions. First up, yes, we do think it's the right. This is quite obvious because we have stopped giving quarterly market updates of the number of units being sold. The reason for that is quite simple, you know, the number of units being sold is no longer a good approximation for the revenue and the profitability of the business. We've gone from, you know, largely selling one NCAV unit to selling a myriad now of hardware units, some of which have very small revenue consequences and some of which have quite significant consequences. Yeah, we are very aware and alert to our continuous disclosure requirements. We've put guidance into the market, and I think, you know, it's very important that shareholders know that we've put guidance out there.
We have an obligation, of course, if we believe that we're not gonna fulfill that guidance, to amend that guidance. We have an ongoing disclosure requirement related to guidance, and we have ongoing re-disclosure requirements related to NZX Listing Rules. We'll comply with those. The reporting of the laundry list of different hardware devices and the quarterly sales of those, you know, wasn't any longer a good proxy for what our revenue or our bottom line performance might be. Eleanor will just remind me of the second leg of that question. Who on the board has competence to deal with financial markets? Is that the question?
Well, in our annual report, we have a skills matrix around the skills that we look for around board representation and capital markets is one of the key skills that we take into consideration when we're looking at the composition of the board. Yeah, I would point to the chairman of our Finance, Risk and Audit Committee who's been involved in capital markets in a lot of different capacities for a very long time. She's up for re-election today, so you'll hear from her soon. I've been involved in capital markets in New Zealand for over 30 years, and internationally, I've been directors of listed companies for over a decade now. I feel we're adequately represented in terms of capital market exposure on the board.
Of course, we have strong advisors that serve us well in those respects as well.
There's no more questions online at this time.
That's it, Eleanor?
Yeah.
That's it. Good. Well, there being no further questions on Mark or my presentations or the annual financial statements, there's a microphone coming. My apologies.
That's all right. That's all right. Do I need to stand or? I'm Grant Clark. I've been involved never in business, as Susan knows. I've taught two of her children. I've been involved in education and I've listened to tons of dumb questions, but not from her kids, and so I'm about to ask one dumb one myself. I just look at you look like a pretty good bunch of people. I've only been involved in the share market in the last year, and I had no idea that EROAD was doing so poorly compared to. I've only bought, as I was saying, in the last 12 months, I've bought about 30 domestic shares.
While you were doing your presentation, I looked at your percentage and it's the worst performer. It's dropped 65%, 'cause I came in at the peak, which was a bit of a shame. This guy, Steven Newman, I don't know that story, so I'll look up about that. From what I understand, Graham, he left around about, what,
7th of April.
7th of April. You had no idea this person was gonna leave. Is that correct?
Yeah. Now, Steven's in the room with us today.
Oh.
We don't have to talk about him in the third person. No, we didn't.
Oh, yeah, okay.
It was a surprise to us when he resigned.
It was a surprise. He was totally being supported and all that sort of stuff? He had your total support?
Yes, we believe so.
Cool. Okay. Yet despite that, even though we know about Ukraine and all those other issues, that has influenced all the shares, to be fair. Yet, just looking at the chart of the last 12 months, the EROAD's share value was dropping. It hit the peak around about mid 2021, and going through to about March 2022, it was most certainly coming down quite a steep downward gradient. What was the explanation for that?
Yeah. As someone who's been invested on the share market for sort of 30 years and trying to second-guess why things go up and down is a frustrating process. First up, you know, we think stocks like ours in general over the last 12 months have gone down about 30%. You know, the reasons for that are reasonably well documented. I think largely it's, of course, interest rates have gone up, cost of capital has gone up. Stocks like ours that offer cash returns at a long time in the future, the interest rate goes up, that value is worth less now. That's. We are what I'd call a long-dated revenue stock. That's that explains 30% of it.
The other 30 %, I mean, there's only one answer, and that is we haven't met market expectations. That's. The question then becomes to what extent do we set market expectations? Clearly, you know, we haven't done a good job, and this was the earlier question, I think, around who on the board's got experience in capital markets and investor relations. You know, we've got to take the learning out. We've got to front up and say, "Well, we can do better at this, right?" We've got to make sure we're setting expectations right, and most importantly, we've got to make sure once we've set them.
Yeah, that's great. That's all I wanna hear.
Yeah.
Thank you.
Thank you. Right. There being no further questions, I would now like to move to the formal business of the meeting. Shareholders have five resolutions to vote on today. The vote will be conducted by a poll comprising proxies lodged in advance of the meeting and votes lodged via the Computershare platform. Details of the proxies received in advance of the meeting on these resolutions are now on screen. If I'm being appointed as a proxy to vote, and I'm not directed on how to vote, I will vote in favor of these resolutions. Those attending online can now vote via the Computershare. Please click for, against, or abstain. Those voting in person can now vote by marking their voting forms, and staff from Computershare are on hand to collect these after the resolutions have been put to the meeting.
The first resolution is the election of director. The resolution is that Selwyn Pellett, having been appointed by the board and only holding office until this annual shareholders' meeting, be elected as an executive director of EROAD. Before we move to voting, I would just like to clarify one point from the 2022 annual report. As an executive director, Selwyn is not a member of our Remuneration, Talent and Nomination Committee. He was invited to participate in one Remuneration, Talent and Nomination Committee meeting during FY 2022. If there's been a miscommunication on that, we'd like to correct that now. The board unanimously supports Selwyn's election, and I'll now ask Selwyn to come to the lectern and speak to the meeting.
Hello, everyone. My name's Selwyn, and I'm pleased to be here, and I'm very proud to be put forward as a potential director of EROAD. Here's five things you need to know about me. Three decades. I've been a CEO for three decades. Now, I've led product teams to deliver high-tech products, take them around the world, and in that time, generated around three-quarters of a billion dollars worth of high-tech exports. That's one reason. Two, I've had experience in publicly listed companies. I was the CEO, chair, and founder not in that order, of Endace that listed on the AIM market, and therefore I've got publicly listed experience. My beliefs align with EROAD's journey. My personal mission is to build a safer, greener, and more productive society, and that dovetails very nicely into EROAD's safer and more sustainable roads.
I have an entrepreneurial spirit. I bring that entrepreneurial can-do flavor to the board. My fellow directors would probably say I'm a challenger, and perhaps even a provocateur. I have institutional knowledge, which is possibly the most important reason I'm on the board. I bring all of the Coretex knowledge of people, customers, products, markets to the board, which otherwise would take a long time to acquire. I will be serving on the new, newly formed technology committee within the board with Sara and Barry, providing technical governance in a similar way to FRAC. The Finance, Risk and Audit Committee does in terms of finance. We will be doing that in terms of technology. Finally, I believe in the EROAD story, and will do everything I can to materialize the value creation that flows from being successful in delivering that story. Thank you.
Thank you, Selwyn. Is there any discussion on this resolution? There appears to be no discussion. All right, we'll move to resolution two. The second resolution also relates to the election of a director. This resolution is that Sara Gifford, having been appointed by the board and only holding office until this annual shareholders' meeting, be re-elected as a director of EROAD. The board unanimously supports Sara's election, and I'll now ask Sara to address the meeting.
Hey. Good afternoon, everybody. My name is Sara Gifford, and I'm pleased to be with you today, and more importantly, very excited to be part of the EROAD journey. My education and experience, more importantly, my passion is in technology and the ways it can make the world safer and more efficient. That goes from the company to the courier or the driver, down to the consumer. I've spent a large part of my career, optimizing the world's supply chain with a very specific focus on transportation in the U.S. and abroad. I bring hands-on experience in setting up a growing U.S. operation within an international business, and all of the challenges that come with that, on both sides of the pond.
Specifically growing a sales team, a high growth-focused sales team, bringing a product to market in the U.S., and the changes that are needed, operating within a slightly different business environment, and all the HR and cultural challenges that come with that type of international growth. While I am American, born and bred, I've been to New Zealand nearly 2,000x , mostly during Boston frigid winters. That makes me feel quite at home inside a New Zealand company. Thank you.
Thank you, Sara. Is there any discussion on this resolution? There appears to be no further discussion. The third resolution. This resolution relates to the reelection of a director. The resolution reads as follows, "That Susan Paterson, having retired in accordance with the NZX Listing Rule 2.7.1, be reelected as a director of EROAD." Susan chairs EROAD's Finance, Risk, and Audit board subcommittee, and the board unanimously supports Susan's reelection. I'll now ask Susan to address the meeting.
Thank you, Graham, and kia ora. My background, I actually originally started as a pharmacist, but very quickly ended up in management and then did an MBA at London and moved into consulting in the strategic use of information technology before a number of management roles in New Zealand. I've always had a really strong interest in logistics, and that really started as we were consulting in the leading up to the formation of the European Union. You went from 12 countries, where you had a country manager as king in every single one, to actually running that 300 million people as one market and working out how the logistics and supply chains worked through that.
We were using technology in those days very much to make, you know, that very efficient for the companies that were coming up to forming of the European Union. I've also had stints in logistics being on the board of Port of Auckland, and during that time, we actually reduced the footprint of the Port of Auckland. It used to go right from Westhaven all along to where it currently is. I was on the property committee that did all the planning for the Wynyard Quarter, and then sold off Princes Wharf, et cetera, and consolidated that footprint to be much more efficient and effective as a port in the City of Auckland.
I've had 13.5 years on the board of Goodman Property Trust, which, if any of you that understand that company or are investors in it will understand that it's very much around dealing with the logistics market and providing buildings for companies that are involved in logistics and the supply chain, and especially, you know, in that last mile delivery. A lot of experience there. I've been on the audit committee on both Goodman Property Trust. I chaired the Port of Auckland. I chair the Audit and Risk Committee of the Reserve Bank of New Zealand. I'm also on the board of Steel & Tube. Again, if you know, that's been a real turnaround story.
I'm, you know, not afraid of coming on to companies which actually need a refresh, need some changing of the board, need, you know, getting that management team right and, being part of a turnaround, you know, of a company that's now doing particularly well. In my background, as far as the environment, I was on the board of the Energy Efficiency and Conservation Authority, going back into the 1990s. I've always been very interested in that and chaired the New Zealand Ecolabelling Trust. I'm also really interested in developing the next, cohort of female directors and have been mentoring for the IoD for many years. This year I've, mentored a Pasifika lady who's, now up for some of the major awards and the Women in Governance Awards.
Again, I do like to give back and help build that director community in New Zealand. I'm very excited and would love to serve you further on the board. I think EROAD is an iconic New Zealand company. Very exciting, founded by you know, a visionary leader, but taking our technology to the world. Thank you. I appreciate your support.
Thank you, Susan. Is there any discussion on this resolution? There being no discussion, we'll move to the next resolution. The fourth resolution is the appointment of the auditors and the auditor's remuneration. The resolution reads as follows, "That the directors be authorized to fix the fees and the expenses of KPMG as the auditor of EROAD." Is there any discussion of this resolution? There appears to be no discussion. We'll move to the next resolution. The board is conscious of its obligations to provide transparency to stakeholders, and this year we have elected to voluntarily comply with the Australian Corporations Act say on pay regime by publishing a comprehensive remuneration report as part of our annual report package and by putting a vote for the adoption of the report under this resolution. We trust that the remuneration report assists with your understanding of our remuneration strategy and objectives.
Our underlying remuneration strategy is to attract and retain talented executives and employees who can deliver the company's vision and strategies in accordance with our values. Both the CEO and the CFO are paid a base salary that is subject to annual review. These employees are also considered for participation in any short-term incentive plans and any long-term incentive plans offered by the board. In the financial year 2022, both the CEO and the CFO earned a short-term incentive payout for the first half of the year. Neither received short-term incentive payments in the second half of the year as the financial and non-financial targets for the second half were not met.
During the year, long-term incentive shares were granted to the CEO under the financial year 2018 and the financial year 2019 plans, and performance share rights were granted under the financial year 2020 long-term incentive plan. In the interest of transparency, the board has also chosen to disclose Mark's remuneration at the time of Mark's appointment to the CEO role in the company. Our remuneration strategy for non-executive directors is to remunerate them appropriately for their time and expertise and insight into strategic and governance issues, and to ensure that we are able to attract and retain experienced, qualified directors.
The fifth and final resolution is a non-binding say on pay vote to consider, and if thought fit, to pass a special ordinary resolution that EROAD's remuneration report for the year ending the 31st of March 2022, and as set out in the FY 2022 annual report be adopted. Is there any discussion of this resolution? Bruce, why did I anticipate you'd be asking a question?
For being on the board during the resolution. It's a great thing. May I have a say?
Thank you. No question, Bruce. That's, there's a question over here. Thank you.
Yes, Mr. Shroff, shareholder. My question is, if the outcome of the vote is non-binding, why are you even putting it up for consideration?
Well, first up, if the outcome of the vote, I mean, the board are gonna be conscious of how shareholders feel. The vote in that sense is a poll, and if a large number of shareholders vote against this, then the board would be foolish to ignore that sentiment among shareholders. It's a poll and it's a signal from, second up under the say-on-pay regime in Australia, which we've adopted from next year onwards. If we get two years in a row where we're 25% or more shareholders vote against this, then the board will put themselves up for re-election. That's the process, how that works. We're not tone-deaf. Is there any further discussion of this resolution? Right. With no further discussion, we're at the end of the resolutions.
We'll now pause for a few minutes for voting to be completed. I'll give a reminder 15 seconds before I close voting. Once voting is closed, those voting online will not be able to amend their vote. We'll now just take time, two minutes to allow voting to be completed. Close voting in 15 seconds or thereabout. Thank you, everyone. Votes will now be counted by Computershare staff under the supervision of KPMG, and final tallies will be announced later this afternoon. That brings us to general business. Is there any general business that shareholders wish to raise? Yes. Microphone's just coming.
Hello, Dicky. Yes, I'm a shareholder. I just want to know this technology that you've developed, does it have a place in non-industrial vehicles like my car or your car or somebody else's car?
We have been building up more and more customers in the light commercial vehicle space. We do already, for companies, support them with our technology solution. Over time, there may be opportunities to go into, you know, passenger vehicles more generally, but at the moment, we're very much focused on corporate fleets and we've been growing that segment, particularly in New Zealand over the last few years.
Thank you.
I was just saying to my colleague, the most frequently asked question I ever get about the company is, when can I have an ERUC solution for my ute? I sympathize with that. Thank you. Any further questions or comments? There being no further business, that brings us to an end of the meeting. The votes or the voting will be posted shortly. Those of you attending the meeting here in person today at Eden Park, please feel welcome to join with us and next door for some refreshments and to have a look at some of our technology. I thank you all for your attendance and your continuing interest and support of the company, and I now declare this meeting over. Thank you.