AGM 2021

Jul 30, 2021

Slides

Today, we're holding the Annual Shareholders Meeting in conjunction with a special shareholders meeting to discuss in relation to the Cortex acquisition. So, I'd also like to welcome to the meeting, So, I'd also like to welcome to the meeting, Selwyn Peller, who's sitting here in the front row. Selwyn is the CEO and driving force behind Cortex. And we appreciate that you've all taken the time to join us here today. So with that said, I'm pleased to be able to confirm that we have a quorum represented here today, and therefore, I'll declare the 2021 Annual Shareholders Meeting and the Special Shareholders Meetings both open. Upfront on the table sitting to my left today is CEO and Board Member, Steven Newman to his left, Tony Gibson to his left, Susan Patterson and to her left, CFO, Alex Vaughan. And online in Pennsylvania, we have Barry Einsig. I can't see him on the screen. Also in the room today is our company secretary and secretary to the Board, General Counsel, Mark Heiney. And our CIO, sitting next to Mark Samuelsch between Mark and Selwyn, on the front row, Tim Hogan. So welcome, Tim. I think this is your first he wrote Annual Shareholders' Meeting. So the acquisition of Cortez is expected to complete around October this year. And on completion, Selwyn will become a member of the EROAD Board. As an Executive Director, he will also be an adviser to Stephen during a period of the integration. Selwyn has worked in the technology sector in New Zealand and overseas for over 20 years and has particular expertise in telematics and network security. We're also joined here today by a number of the Erode senior team and staff, many of whom are shareholders. On arriving today, you will have been greeted by staff from Computershare, our share register. The Computershare team are here to support you with the formal aspects of the meeting. Also in the room today are KP and G, our company's auditor and Chapman Tripp, our company's solicitor. The agenda for today's meeting will start with a short overview from myself, followed by a more fulsome address from Stephen. Alex will present the financial statements, and then we'll move to the formal part of the meeting, where we have 6 resolutions to consider, 3 for the annual shareholders meeting and 3 in relation to the special shareholders meeting. For those of you that are in the room today, I'll encourage you to stay on after we've concluded the formal part of the meeting to have a drink and mix with staff and ask any of those questions that you're too shy to ask during the meeting. The last financial year was an interesting one. As you're well aware, the impacts of COVID affected the business community and E Road wasn't exempt from that. It brought some interesting challenging macroeconomic conditions across all of our markets, most particularly North America, but also here in New Zealand and Australia. The wildfires, civil unrest and political unrest in the United States sort of compounded the COVID impacts. And you would have seen that outgrowth in the United States in terms of units was significantly less than we would have we've experienced in previous years. But despite this, our business model and our customer value proposition sort of ensured that we weathered the storm relatively well. Revenue increased year on year by 13%, up now to $91,600,000 and earnings before interest, tax, depreciation and amortization or EBITDA as it's referred to, grew by 13% to $30,700,000 One of the key measures that we keep an eye on for the business is our annualized monthly recurring revenue, which provides a forward view of the sustainable revenue generated by the business. This increased from CAD84 1,000,000 to CAD88.4 million during the year. Contracted units increased by 8% over the year, reflecting the quality of our service and our product offering. In a year that brought with it a certain large amount of uncertainty for our customers, our asset retention rate stayed around that 95% mark, 94.9%, which was very pleasing. And it reflect the and ARPU sort of remained stable at $58,300,000 58.3 dollars So $58.30 It would have been a little bit higher if the exchange rate hadn't moved against this in unfavorable way. So we are growing our SaaS services to customers. But it was good in a year, complicated by the COVID to be able to maintain ARPU, keep a high retention rate and still show strong growth in both revenue and EBITDA. Throughout the last year, 300 E Road staff, the management and the Board all stepped up and navigated us through a new reality working differently, increased focus on managing our cost base, a large amount of working from home. Rather than retrench in the face of the COVID threat, we recognize that this is a time to be bold and we're prepared to take advantage of growth opportunities. For Ero, this meant increasing and accelerating investment in our platform and in productivity. The ASX listing and the simultaneous $53,000,000 capital raise in September 2020 ensured that we had upfront funding to be able to begin this acceleration. We were ensuring that E Road was stronger than ever and ready to grow and to grow quickly. And you'll see evidence of that with what we're going to present to you today around the acquisition of Cortex. Cortex is a perfect complement for ERODE. We are both aligned behind the same purpose. Both Erode and Cortex aspire to create safer and more sustainable and more productive society. Stephen and I first sat down with Selwyn and members of his Board before Christmas to discuss this. We entered those conversations talking about a merger and the tone of a merger has prevailed throughout the conversations. And even now as we're preparing planning around integration, the mindset is a merger. So even though technically this is an acquisition by Euro of Cortex, the mindset and the way that we've approached this is a merger. We have for a long time talked about how Euro's customer solutions not only help reduce speed, ensure vehicles are safe, improve driver behavior, but also help our customers achieve greater fuel efficiency. They reduce compliance costs and increase fleet productivity. Cortex's specialist products complement eRoads solutions. For example, Cortex's refrigerated transport solutions optimize compliance, safety and fuel consumption and help reduce wastage and emissions. Their construction solutions help reduce construction and industrial wastage and their waste and recycling solutions help reduce contamination. We've always stated that an acquisition would be part of our growth strategy. We have been clear that we would seek complementary and proven technology to augment our product range. To accelerate growth, any acquisition needs to be able to deliver increased capability, improved customer experiences and access to additional industries. In Cortex, we have found a highly complementary partner that allows us to satisfy all of these criteria. The acquisition of Cortex is truly transformational and it significantly accelerates our key growth measures and propels us 2 years into the future. The strategic rationale is clear. Cortex brings with it a proven technology solution in refrigerated transport, construction, less than truckload haulage and waste and recycling. Cortex brings with it enterprise solutions, increasing the ability of E Road to win large enterprise customers. We gained Cortex's next generation platform, which means we can accelerate our technology and our product roadmaps. We also had over 64,000 units in our key markets, significantly lifts our position in both North America and Australia. Now while there are some cost synergies, this merger is not about cost synergies, it's all about revenue synergies. And there are a huge amount of those. We see growth acceleration and revenue synergies in North America and Australia. And we also see a large amount of synergies around the technology as well. You will hear about these some more when Stephen talks through the acquisition in more detail. So with that, I'll pass it across to you, Stephen. Thank you, Graham. Welcome, everybody. I really enjoy this meeting and the year because we get to sort of share our report card, and we've definitely got some wonderful things to share with you today. So welcome, everybody, and welcome to our new shareholders that we now have in Australia as a result of the ASX listing. If we turn to the next slide. So this one here is a slide that is on every deck that we produce and shows the growth of the company sort of half year on half year. It's fair to say that COVID was a trip into the unknown and we caught up at last year's ASX. We were very clear in terms of how we were going to face it. And as Graeme said, we were going to do it boldly. And we have retained our staff. We got very busy, and we've delivered some incredible new technology, which allows us to come out of this COVID period in a lot more competitive position. And in conjunction with that, the acquisition of Cortex really sets us up beautifully for the years to come. Next slide, please. So these are some of the products that we've been working on. I'll take a little bit of time to explain what each of them are. So over on the left hand side, this is a dashcam. So that either faces the driver or it faces out the window. The primary market to start with is North America, and it's about what happens in an accident. Most of the statistics the statistics show that if there's an accident between a car and a truck, about 70% of the time, it's not the truck. And you would expect that because they're professional drivers. But invariably, the most hurt and injured are the passengers in the light vehicle. So being able to show what happened is really important and particularly for our customers. That's kind of where it starts, but it is a start. So cameras can also be used for health and safety, and that's really the business case from a New Zealand Australian perspective in terms of being able to provide additional coaching support for drivers. Really excited about cameras because the next step beyond that is using the camera as a sensor in terms of processing the images and getting additional information to help our customers. So we'll talk more about that in the future. Next product, the ZRoad Go, and this is about providing a more enriched driver interface. So the driver can be told where to go, navigate there and whatever they're doing, if it's delivering a load or delivering a service. Next product is the log book. I think everyone knows about the paper log books that drivers have. This one here makes it really easy for them to comply with their rules and it pretty well almost falls itself in. So instead of it being an electronic paper, a substitute for the log book, it actually helps the driver be compliant. And that product has been well received in New Zealand. And in less than 6 months, we have been able to deliver 6,500 drivers. So most regard to 10,000 drivers using it during the course of this half the next half of the year. This is a product that's an application. So you can use this as a driver without having a road in your vehicle. And 500 drivers are using this just as an application. And that allows us in conjunction with another application here in SPECT to start selling products to customers alongside competitors, which may have telematics on them. So this is a really new interesting way to get to win business from customers and it really supports the digital marketing approach. The next 2, the my aero fleet maintenance in conjunction with inspect that is really useful for making sure vehicles and assets are fit for purpose. So at the beginning of the day, you have a pre vehicle inspection from the driver. Any defects, they can be reported if they're serious like brakes, then they'll be told not to use the vehicle. It's completely customized. So if you want to have specific things checked, you can have that programmed into that application. And then of course, we've talked about erode wear, which is our sort of intro into the IoT side of things. So this is a product that costs around about $25 for the piece of hardware. And then we can micro assets at around that $3 to $5 a month. So you can see quite a few products delivered in the 12 months, which is FY 'twenty one, and we're really pleased that we're in such a good position as markets start to open up. If we go to the next slide. So we'll go through the markets quickly. So in New Zealand, which remains our home market and very important to us, we grew 9%, which was adding 7,500, which was below what we would have expected in an uncovered impacted world. But it was good growth in the market. And I think we did very well in achieving that. In addition to that, we also renewed 7,500 vehicles. So that's customers on the 36 month contract, which we're coming to the end of their contract. And I think that speaks an awful lot to the quality of our service and the importance to our customers that in a time of COVID where they're really focused about are we going to get through this as a business, making a 3 year commitment to eRoad. So we're very pleased with that. Our retention rates remained high at 95.8%, and we saw 11% growth in our EBITDA. New Zealand is definitely a significant cash cow for driving the business forward. In America, as Graeme mentioned, this was a really hard market for us last year. At one point, when I was talking to some of our staff virtually in Oregon, it's like what could go wrong. Everything seems to have gone wrong. So at that point, there were riots in Portland. There were fires that were out of control and then there was COVID. So we've seen a huge improvement in how that market is starting to come back. There's definitely the 2nd wave or 3rd wave from the delta variant, but definitely confidence is coming back into that market and we're expecting it to open a lot more than it currently is. Our retention rates did drop a bit. Some of that was smaller companies unfortunately going out of business. One of the things that we did manage to achieve with the re signing of customers, we did increase our monthly ARPU 1 dollars to 42.95 dollars But with the unfavorable exchange rate moving even more than that, that didn't translate to an increase in New Zealand dollars. And we got the full annualized benefit of our North American customer base, which saw our EBITDA increase from CAD7.5 million to CAD10 1,000,000. Dollars And then on to Australia. So Australia was a pretty good year for us, adding 745 units to market. That is a big focus for us, putting a moving our marketing to Australia, hiring a country manager and extending out people on the ground to support enterprise customers and increase further sales. So as a result of some of the good work that's been happening there and also in New Zealand, we won a company called Ventia. So Ventia had been a customer in New Zealand, 600 vehicles for nearly 3 years. As a result of what we did well here, there was pilots done in Australia, and we got an order from the Australian sort of parent, which was 1500 units in New Zealand and 2,500 in Australia. So that was really one of the things we have been talking about in terms of these 300 trans Tasman customers that we have their operations in New Zealand being able to step across the Tasman and win their business in Australia. So we're really pleased with the preparation that happened in FY 'twenty one in Australia, and we're definitely well placed going forward. I'm going to hand over to Alex to go through the financials. Thank you, Stephen. Good afternoon, everybody. As a group revenue, I'm going to talk through the key metrics, financial metrics for the financial year 'twenty one result, and then I'll move and talk briefly about the trading update we provided for the Q1 of this financial year to 30 June 2021 at the back end of the discussion. So group revenue increased 13%, as we've said, from $81,200,000 to $91,600,000 reflecting the growth that Stephen just talked about in both those key markets of New Zealand and North America. New Zealand revenue increased by 12%, as we've said, reflecting an additional 7,500 contracted units. Through both continuing expansion into the customer fleets that we already have as well as winning new customers. And in North America, revenue increased $4,800,000 reflecting the additional just over 1400 units that we contracted during that financial year. Australian revenue increased slightly in a group sense from $700,000 to $1,400,000 but obviously that was a doubling of revenue just in the Australian business. Our operating expenditure increased by the same amount, under 13%, by $6,800,000 in terms of dollars, in line with the revenue as I say, reflecting the acceleration of our R and D operating expenditure as well as some ongoing spend in company wide initiatives, which is intended to deliver further long term improvements in operating leverage. So as a result, our EBITDA grew $3,600,000 or 13 percent to $30,700,000 And finally, the profit before tax increased from $1,400,000 in the prior year to $1,900,000 And this is really just reflecting that EBITDA growth offset partially by depreciation and amortization charges. If we turn to the next slide and talk about some of our key metrics, which we've touched on briefly. As we've said, one of the main focuses for us in this financial year that's just gone was to weather the storm as we went through what was going on in our markets internationally and domestically. And not only come out of the year far more competitive, but also retain all of the underlying metrics that we've historically enjoyed and the strength of those and particularly focusing around strong monthly recurring revenue metrics and high the enterprise value of this organization. And we believe we've done a very good job at achieving that. Our average revenue per connected unit per month, ARPU, was essentially the same at $58.30 And as Stephen has indicated earlier, that reflected underlying good growth in the metric in North America, at least that dollar. But unfortunately, after the exchange bank movement from U. S. Dollars into New Zealand dollars, that actually reversed that growth. If we move on to asset retention rates, Graham mentioned, that's maintained itself at the 95% level. We operate 36 month customer contracts. So during the course of the year, we re signed our new 36 month service contracts, 640 customers, which represents about 14,000 connected units. So when you look at that as the number of vehicles per customer, that works out to be about 22 vehicles per fleet. So that's a lot of smaller customers continuing to sign up for our service, really demonstrating the importance of the service to them as customers and particularly in that small and medium sized customer segment, which is a very important segment for us in each of our key markets. Annualized monthly recurring revenue or AMRR, as we talked about before, grew from $84,000,000 at a group level to $88,400,000 And that figure would have been higher, but again, there was a significant impact on the foreign exchange rate with the New Zealand dollar strengthening significantly during the year against the U. S. Dollar. If we move on to the quarterly operating update for this new financial year of FY 'twenty two, at the same time, we announced the acquisition of Cortex, which will be discussed further in the meeting. We also released our quarterly operating update for the Q1, I. E. For the 3 months ended 30th June 2021. Erode had a good quarter. Met sold 4,000 152 contracted units during the quarter, reflecting accelerating quarterly growth across all markets. Unit growth in North America remains slower. However, there are signs of economies opening up, as we've said. We currently have 2 customer enterprise customer prospects in pilot for eHovo delivered services as well as a solid mix of mid market pilots as well. And we've got further pilots for clarity dashcam product sales into new and existing customers. In our back of the room today, we have a demonstration of the clarity dashcam product, which I do encourage you to take some time after the meeting if you have it to look at that. Eero continues to make good progress with selling additional services. So these are over and above the HOBO contracted services. So ERO day logbook sales, we added 425 Drive subscriptions in the quarter. We added 627 Inspect subscriptions in the quarter and 15 80 tags, zebra wear tags during that same 3 month period. On the second of June, we announced that we'd entered into a strategic partnership with Philips Connect, which is a leader, a global leader in expandable and durable telematics solutions, specifically focused on trailer and asset operations as well as safety and health. And since entering into the partnership, erodes sold 322 of those Phillips Connect solutions in that period between the 2nd June 30th June. So just to round out, we provided guidance in November last year at the time of our half year presentation for how we thought this financial year of to the 31st March 2022 was going to go. And the same level as that pre COVID year of FY 'twenty, which was the same level as that pre COVID year of FY 'twenty, which was 32% growth. We do continue to expect that our R and D spend will be between 24% 27% of revenue during FY 'twenty two as we continue that acceleration for future growth. And given the expected one off integration costs from the acquisition of Cortex, we do expect standalone EBITDA margin now to be between 28% 31%. If you exclude these integration costs, EBITDA margin would be consistent with that of FY 2021, which is 3%. Learn about the acquisition that we're proposing. So on the slide here, you see where we are at the end of FY 2021. And if we had been together and the acquisition complete for the same period, you get to see what Ebrod and Cortex together looks like. I refer to this acquisition as absolutely transformational for the company, and you can see that reflected in the metrics. Revenue going from CNY91.6 million to CNY138.2 million EBITDA increasing 50% to CNY46 million and significant increase in the ongoing recurring revenues from $88,400,000 to $132,000,000 When we look at it in terms of units, and that's really one of the ways that telematics companies kind of report their size and importance. So we've talked about the 250 ks challenge before and what we aspire to become. This acquisition really accelerates us at least 2 years in achieving that. So going from $126,000 to $190,000 By the time we complete this post ComCom commission clearance, which is September, October, that number will be close to 200,000. The ARPU between the two businesses are very similar. The composition of that is quite different. I'll talk to that in a minute. A large part of Cortex's connections in North America are trailers, and many of those got parked up during COVID that reflected in the reduction in retention. We're confident that the number of those will come back as that market opens up again. Next slide please. So at the beginning of this, I talked about the real importance of the New Zealand market in terms of funding growth. With this transaction, we get a lot more diversity in our business and a bit more spread. So you can see we go from 70%, New Zealand to 51%, and North America goes from 28% to 43%. So that's a real balancing of revenues for the business. And you see the Australian market goes from 2% to 6%. When we also look at enterprise mix, because of the services of what both companies do, we're destined to have more enterprise customers than small to medium type of customers. That doesn't mean we're turning our back on our SMB customers, not at all. They will get to enjoy the quality of an enterprise grade solution. There will be more than they will ever need. So very important to us, but the mix tends to change. So from 40% enterprise, we get to 53%. So I think as we progress over time, that will get to more like 65%, 35%. And then the next slide talks about the strategic verticals or the strategic market segments that we're in. So you can see by just looking at the pie chart, there's more sections to the pie. We're very focused in that sort of construction and civil engineering space, particularly in New Zealand. That remains a very important segment for the merged company, but that drops down to 23%. That doesn't mean it's not a high growth segment for us, it absolutely is. But we get revenue coming from new segments from Cortex such as the refrigerated transportation, waste and the construction that which they do, which is ready mix concrete. Next slide, please. So a bit more about this wonderful company, Cortex. So you've got the metrics over there on the side just under 65,000 vehicles connected. Their entry into North America was round refrigerated transport trailers. So you can see in the middle here when we break down the types of connections into in cab, which is trucks, or trailers, the high percentage of trailers. That's how they entered the U. S. Market and then having got established, then got more into the trucks, particularly in the construction side of things. So I look at the 65% trailers as potentially an opportunity to get into the truck. All of those trailers are being dragged around by trucks. So that's potentially a good opportunity for us. When you look at where the units are, 74% is in North America, 14% in New Zealand and 12% in Australia. This acquisition has been really focused on growth in North America and Australia. There is a small impact from a New Zealand perspective, but that really hasn't been the focus. When we look at other things on here, Cortex's entry into America was initially through the dealer network. So they use the dealer network to sell refrigerated solutions. And then further on from that, they started going direct. And then they also have some good OEM relationships with telematics trailer manufacturers. So there's some new channels for us to go to market as well. Next slide. So if you look in the information packs that were provided on ASX and NZX around this transaction, you will get some case studies and a bit more explanation about market size, etcetera, for these 3 specialists verticals, refrigerated transport, construction, waste and recycling. 1 that I'll talk a little bit more about is the construction side of things. And this is really to explain why Cortex and E Road is so complementary because they're so different. So for E Road, our claim to fame has really been around regulatory telematics. So when you think about that, we're talking about health and safety, we're talking about road user charging, we're talking about driver fatigue, and that applies to all transportation vehicles. Cortex has to do that for some of their customers, but their primary DNA is really around helping their customers get work done. So in this area of construction and particularly making concrete, there's a whole lot of things you need to be really good at. One of those is you want to make sure that that concrete is made the best it can. And when you talk about making concrete, you've got your dry ingredients and then you add water to it. If you add too much water, then the strength and integrity of the concrete is compromised. If you don't mix it up enough, likewise. So they have sensors on the drum of rotating drum of the concrete trucks, which can count the number of revolutions. They have water sensors to measure the amount of water that's in there. Very perishable goods. So as soon as you have mixed that water in, that needs to come out of that concrete barrel and into a hole. Hopefully, one that a customer wants, but it can't stay in that truck for more than 3 hours. So when you think about that and you think about a large industrial concrete sort of construction site, the typically continuous pause. So it's not about getting one truck there. It's about getting a whole lot of convoy of trucks there, typically sort of 15 minutes apart, so you can get your continuous pour happening when the barrel rolls, it's actually impacting the maneuverability of the truck. So if you drive it incorrectly, the truck will fall on its side. So there's a lot of specialist things that Cortex do for this particular vertical based on the product and the effort that we've put in the last 3 years to really understand that reduce the installation times. And the quality of the solution means we've got something that's incredibly competitive. And the analysis that we did during DD, we can see that they've got a very clear path to get to a number 2 position in that North American market. So these are the 3 verticals I can talk about these all day long and so can sell. But there is so many exciting additional things that's happening when we talk about refrigerated transport. One of the things that happened in COVID was a lot of people bought their groceries online. So being able to deliver food that you can say how it was looked after all the way through to a customer's home, super important. So that's a growing market. So there's so many things once we can get together that we can expand out what we could go after. And many of the customers that we will be able to attract will be global in nature. So in that construction side, there is one concrete customer that we will have in all three markets that we operate in. So yes, there's a lot of exciting leverage points off this and also back into the civil engineering side. So when we look at what we had said in terms of what our strategic initiatives for this year were, and that wasn't too long ago, we had set ourselves these tasks in North America during FY 'twenty two. We wanted to get to 50,000 connected vehicles. This acquisition gets us at the 31st March. FY 2021 gets us to about $86,000 So over this 18 month period, we'll be north of 100,000 When we start looking at the technology that Cortex brings, it accelerates what we were planning to do in terms of introducing new technology into the U. S. So that significantly improves our product market, which makes us far more competitive. Cortex has been in North America since 2007 and has built up a lot of expertise, particularly dealing with the enterprise. So there's good opportunities for us to go and win together. Next slide, please. So in Australia, when we joined the 2 companies together, we achieved the first objective by having 12,000 connect vehicles in Australia. And then on top of that, you have the rollout of VENTEER. In terms of the construction vertical, that's very close to Civil Engineering. And there are target customers which operate in both areas. The team that and capability we bought into Australia can immediately provide additional support for existing customers as well as accelerate our growth in that market by selling the Cortex products there. So I think you can see what the benefit of the acquisition is in these two markets. Next slide please. So we come all the way up to the top, which is what's happening globally in telematics. We've previously talked about high annual cumulative growth rates. COVID actually brought that market back about 8% from this research that we recently purchased. In terms of the go forward, the next 5 years looks like there is a CAGR, which is around 19%. For us as a company, it's about scaling up and maximizing that high growth rate because you can't grow up 19% every year at some point. You do saturate the market. So this acquisition greatly accelerates our ability to get the biggest share of what is essentially a land grab in the markets that we're operating in. Next slide. So with that, I'll hand back to Graeme. Thank you, Stephen. Now this is an opportunity for general questions. So there will be an opportunity when we address the more formal part of the meeting and have the resolutions to ask questions right into the resolutions. But now any questions online or from the floor relating to anything that's been discussed or Jack Suhoi, shareholder. Congratulations. I just had a quick look online as well on Cortex. So I didn't know much about it. But apparently, they are a New Zealand company and operating in similar countries as you are. So it all looks very, very good from what I can see, what you've shown me. Just in Cortex's logic to be taken over, who was the bigger company by capitalization? Euro by a factor of about 2.3x, 2.4x. Okay. Now N96 1,000,000 to buy it in shares. Is there an embargo on this sale of our shares? Yes. So 16,000,000 shares will be offered as partial consideration. And there are essentially the shareholders of Cortex will be able to sell those in 3 tranches staged over 6, 12 18 months. So a third of them coming onto the market at each stage across that timeframe. And you're talking about 60 odd 1000000 units, 64,000,000 units that Cortex has sold in the 3 markets, their units. What was the attraction to them? Did they like some of your products and wanted to move some of your products into their customer base? Yes. So 64,000 units as at the 31st March, looking backwards, both of us are growing. So that number is increasing. Cortex not only had 64,000 units, but they've got a healthy pipeline in front of them. So, Cortex has a higher proportion of its sales made to enterprise customers. And typical enterprise customers are going to be somewhere between 9 2 years 9 months 2 years in the pipeline as you work through their procurement processes. So they have customers in that pipeline, which are they've invested money in getting them to that stage that are ready to pop out in this next 12 to 18 months. So the 64 is sort of the backward looking number. But if you look forward, it's a significantly healthier number than that. Yes, there isn't a potential for us to be putting our technologies and Stephen sort of gave you the example. 2 thirds of their fleet are traders, 1 third the tractor unit. And so there's all those tractor units that we have the opportunity to put our technologies into as well. It takes us into different verticals. We'll be jointly stronger around construction, takes us into the whole food safety or refrigeration vertical, where we have the opportunity to sell our compliance products. And they have their products, which are more related around managing the food safety through that process. Well, congratulations. Thanks very much. Thank you, Jack. The man with the mic and then but we leave him like that. Okay. Michael Troth. This is probably a left of scene question, but do you store your data in the cloud? And what plans have you got to deal with cyber hacking? We are cloud based, and definitely cybersecurity is very important to us. It is an internal capability that we do have. In terms of the sort of things we have in place, things are very petitioned and locked down in terms of access to our systems. We have software that is running on our systems on every machine that we have to make sure that there is nothing spurious coming in. And if that happens, then we will lock down to a single computer. So a lot more of the things that we do to protect our systems, of course, we don't want to publicly share for obvious reasons, but it is a focus. A company like ours becomes quite interesting to look at. So we do need to make sure that we have the appropriate securities in there. Certainly, having enterprise accounts, that's something which they very much expect we have well under control. Does that answer your question? I think most companies are getting cyber attacks all the time. So it is a case of what mechanisms you've got. Some of them are just decent. But for companies to say they haven't had a go at would be not really genuine. Thanks for asking for my first question. I'm Bruce Parks from the Insurance Association. The question is around direct and officer liability insurance. You've got to have it. What are the complexities having operations in Australia, in the States and here? And we have a feel for what it cost the company where our shareholders for that insurance, please? Good question, Bruce. And thanks for giving me the heads up that you're going to ask that question before meeting. I've had time to think about it. So, yes, the most recent well, if you look back across the last few years, typically year on year increases in the rates of insurance from the small number of reinsurers that offer D and O insurance has been about 30% per annum. So, it's close to hyperinflation. The big increments and risk we've had in the yes, having an operation in the U. S. Creates risk in the beginning. Listing on the Australian Stock Exchange also added to the premium because the more likely prevalence of class actions by shareholders in Australia, last time we want to active a shareholders like Bruce. So that's sort of I don't have the number exactly in my mind, but the order of magnitude is, it's about $800,000 a year in premium for D and O insurance, which is this year about 30% higher than it was last year. Good afternoon, everybody. My name is Peter Mewsberger. I'm a guest investor and interested to hear what you have done today. I'm interested in what the situation is in the EU, in Britain, China and South America. Have you been able to research similar companies in those areas of oil? So as a company, we're really focused on the 3 markets of New Zealand, Australia and the U. S. We have people on the business which look at what's happening globally. The hurdle rate for us to actually consider something in a new market would have to be quite considerable for us to look anywhere else. But if there was something that highly leveraged all the R and D assets that we have and we had potentially a good partner in those markets that would do all the stuff that needs to be done on the ground around sales acquisition and support, we might look at it. But there is so much opportunity in the markets that we're currently in. So we're just really focused on those. But in terms of the global trends and the digitalization of transportation companies and the need for telematics solutions, that is a pretty global need. Does that answer your question? Do you think you could be a target for takeover? I think every public company is the potential target. I mean, we really don't I think potentially that becomes of interest, certainly this transaction and our U. S. Market presence potentially makes us more interesting than we were before. But certainly, we're very focused on running our own plan at the moment. But if there was an offer to be made, of course, the Board would act responsibly in how it would consider that. But certainly, that's not our primary plan is to be attractive and sold off to somewhere else. There's an awful lot of value that we can bring to this organization executing well. Any other questions? What about online? Well, thank you, ladies and gentlemen. There being no further questions, I'll now move to the formal part of the meeting and the resolutions. So if you don't have a pen or a voting paper and you'd like one and you're in the room, please raise your hand and one of the Computershare team will provide one to you. At this time, I can ask if there are any questions regarding the financial statements and the auditors report. So at this stage in the meeting, bearing in mind the nature of the next resolution, I'll pass the chair across to Tony Gibson, who chairs our Appointments and Remuneration Committee and let him propose the resolution. Thank you, Graham. And is that on? Yes. Thank you. Good afternoon, shareholders. So it's my pleasure to put to you the first resolution of the day, which is that Graeme Stewart, who was eligible for election, be elected as a Director of the company. The Board recommends Graeme to you as a Director of EROAD Limited and unanimously supports his reelection. I now invite Graeme to address the meeting. Thank you, Tony. I've been a member of the E Road Board for 3.5 years. I was first appointed in January 2018 and I've been the Chair for just over 2.5 years. I'm proud of what the company has achieved during this time and the work that we as a Board have done. We're in the process now of revitalizing the Board, with both Susan and Barry having joined in the last 2 years or so. And in that same time, we've had the retirement of 3 directors. Had it not been for COVID, yes, we would have most likely made another appointment by now. We were looking to appoint a second U. S. Resident director. And unfortunately, with the intervention of COVID and our Board being a little bit traditional in our view, we sort of want to be able to see their people in their flesh. So we decided not to proceed with an appointment in an online or virtual space. This Board is very engaged with the business and we work diligently to provide ERO with good governance. We challenged Stephen and the management team in a constructive way to drive performance and we also engaged very positively with Stephen and the management team set the strategy for the business. I feel that the stage is now set for Ero to drive to a new level of growth and performance and I feel that we have the skills and the expertise around the Board table to contribute towards achieving this. I'm excited at the prospect of being able to play a part in that and hopefully I'll win your support to do that. Thank you. Thank you, Graham. Is there any discussion on this resolution both from the floor and online? There appears to be no further discussion. I now put to the vote the ordinary resolution that Graham Stewart, who is eligible for election, be elected as a director of the company. So please take a moment to mark your voting form in relation to Resolution 1. Thank you. And I'll now hand the meeting back to you, Graham. Thank you, Tony. What a great job you did of sharing that piece in the year. Well done, Tony. Now moving to Resolution 2, an increase in the non executive director remuneration pool. As proposed that the total amount of the BPOOL be increased from $500,000 to $850,000 which represents an increase of $350,000 or 70%. This is to allow sufficient funds to increase the number of non executive directors on the Board. The Board currently comprises 5 directors of whom 4 are non executive. It's proposed that in the next 12 to 18 months, the number of non executive directors has increased to 5 or 6. As we continue to build the expertise of the Board and to allow ongoing rotation of non executive directors. It's also proposed that fees for the non executive directors and the Chairs, the Chair of the Board and the remuneration talent and nomination committee be increased. In accordance with Listing Rule 6.3.1, non executive no non executive director or any of their associated persons as defined under the NZX listing rules can vote in favor of this resolution, unless casting votes under an express proxy of a person who is not disqualified from voting. Is there any discussion of this resolution?