ERoad gets 'please explain' after shares surge

Steven Newman, chief executive of EROAD. Photo / Dean Purcell

ERoad, the logistics and fleet management company, got a 'please explain' by NZX regulation after its stock gained 16 percent since the end of last month.

The Auckland-based company said it complied with NZX listing rules, without offering any further explanation behind the gain in share price, after it was asked by NZXR to queried the stock's 58 cent gain to trade at $4.25 this morning from $3.67 on Oct. 29.

Under continuous disclosure rules listed companies must inform the market of all price sensitive events as soon as possible.

The stock recently traded at $4.22, a 41 percent premium to its August initial public offer price.

The company debuted on the bourse in August, raising $40 million in new capital to fund international growth, selling 15.3 million shares at $3 apiece. Existing owners sold 2 million shares, or $6 million worth, into the initial public offer, to keep a 75 percent stake in the company.

Founded in 2000, ERoad says it was the first company to provide a nationwide GPS-based road user charge system in 2009. It first turned a profit of $2.9 million in the year ended March 31, 2014, on $10 million in sales. In its July prospectus it forecast revenue to rise to $19 million in 2015, and to $34 million in 2016, but expected to post a loss of $1 million in 2015, due to $2 million in listing costs, before returning to profit of $5.5 million in 2016.

The company doesn't intend to pay dividends in the near term, as it reinvests profit for growth, but long-term Newman did envision shareholders to be paid.