Announcement PDF Annual Report 2024 For the year ended 31 March 2024 Annual Report End-to-end connectivity across global supply chains 1 About TradeWindow 2 FY24 at a glance 3 Chair & CEO Letter 4 Our Leadership 7 Our Strategy 10 Our Solutions 12 Revenue Composition 13 Growing from solid foundations 14 Our Customers 15 Environmental, Social & Governance 16 Corporate Governance Report 21 Consolidated financial statements 38 Shareholder Information 116 Glossary 119 This Annual Report is dated 27 June 2024 and is signed on behalf of the Board of Directors of Trade Window Holdings Limited by Alasdair MacLeod, Chair, and AJ Smith, Chief Executive Officer. Alasdair MacLeod Chair AJ Smith Chief Executive Officer Contents 2 3 Built to super-connect global trade Our mission To make global supply chains more productive, connected and visible What we do Traditional trade processes are complex, time-consuming, expensive and prone to human error. TradeWindow provides the tools and support for exporters, importers, freight forwarders, and customs brokers to move away from inefficient trade processes and begin the journey to digital transformation, streamlining business processes and driving profitability. Visit www.tradewindow.io for more information About Trade Window Our vision End-to-end connectivity across global supply chains FY24 at a glance TradeWindow’s strong FY24 growth reflects increasing demand for our digital trade solutions. Exporters, importers and freight forwarders are seeing the benefits of moving from manual processes to digital trade and are selecting TradeWindow solutions to be more efficient, connected and transparent. Cash and cash equivalents Trading revenue growth Net loss after tax $6.2m +26% $6.8m $6.6m 93% $8.0m $6.3m Annual recurring revenue $0.2m Trading revenue Total income EBITDA loss Customer retention 4 5 Chair & CEO letter Dear Shareholders Against a backdrop of challenging economic and capital market conditions, TradeWindow has delivered an outstanding result for shareholders. We have continued to grow at a rate ahead of most Australasian software companies1 . We have strengthened our presence in the New Zealand export sector. We have extended our penetration into Australia - a market that is more than seven times2 the size of New Zealand’s and one that offers enormous promise. We have also set TradeWindow on a path to breakeven and long-term sustainability and established deep reserves of resilience that will position us to thrive as the winds of the economy return to our favour. These achievements are a testament to both the commitment and talent of the team and the value TradeWindow solutions offer to global shippers. They also reflect diligent execution of our strategy, careful management of risks and our capital, and effective demonstration of the value of TradeWindow’s solutions. Financial Update3 Trading revenue was $6.2 million, up 26% from the $4.9 million achieved in the prior year reflecting solid organic growth. This result followed from increased sales across all core product lines. Total customer numbers grew to 513 from 4984 a year earlier, with around 50% of our customers now based in Australia. The rate of growth was diluted by industry consolidation in the freight forwarding sector, but TradeWindow overcame these pressures by replacing lost smaller customers with larger customers who take more of the company’s services. Customer retention was steady over the year at 93%. The silver lining of the current environment of subdued consumer demand, rising costs and high interest rates, is that it is highly conducive to demonstrating the productivity benefits TradeWindow solutions offer. Monthly Average Revenue Per Customer (ARPC) was up 32% to $1,707 for exporters, and up 17% to $638 for freight forwarders. This improvement reflected customers using more of our services as well as the benefits of price increases as we passed on our higher costs to customers. ARR5 was up 21% to $6.3 million from $5.2 million a year earlier. This figure does not include several large customers recruited before the end of the financial year and are in the process of being onboarded. Total income, which includes grants and other income, was $6.8 million, up 18% from $5.7 million. Total operating expenses were down 23% to $13.4 million, from $17.4 million, with the fall reflecting a 58% reduction in staff numbers since the start of the financial year as we shifted our focus to putting the company on a sustainable financial footing rather than longer-term innovation and development projects. We meanwhile lifted gross margins by 8 percentage points on the prior year to 54% as we have focused on improving cash generation by driving a reduction in the average sales cycle and maximising the sales opportunity of our existing customers. Our EBITDA6 loss for the year was $6.6 million, down 43% from $11.7 million, and the net loss after tax reduced to $8.0 million from $9.8 million. Monthly average cash consumption reduced from $1 million in FY23 to $0.7 million in 1H FY24 and $0.3 million in 2H FY24. In line with guidance given during the capital raising, we expect this trend to continue in the new financial year as the significant cost savings and large new customer acquisitions flow through to our financial results. Customers and Growth Our growth strategy is now most focused on increasing usage among existing customers and attracting new ones. Product innovation continues to play an important role, but we now operate a self-sustaining model of iterative product development which is directed at meeting our customers’ most acute needs. We have meanwhile offshored much development work to our Philippine team to manage costs. With more than half of New Zealand’s primary industry export volume being facilitated by TradeWindow software, our strongest prospects for new customer recruitment are now in Australia. In the coming year we expect the Origin service, launched in Australia at the end of 2023, will play a key role in boosting revenue growth and bringing on new customers to our platform. Exporters need a certificate of origin to access preferential duty rates under free trade agreements, a service where TradeWindow stands out with its 24/7 availability in Australia and New Zealand. After recruiting new customers to the Origin service, we can then more easily demonstrate the productivity benefits of our other functions in Cube, TradeWindow’s global trade platform, including ocean carrier bookings, customs clearance, e-commerce, supply chain tracking, and encrypted data storage. Capital Management At the end of March 2024 TradeWindow had cash reserves of $0.2 million, down from $1.8 million at the end of September 2023. The successful share issue we concluded in April raised a total of $2.2 million from existing shareholders including cornerstone investors ASB Bank, AJ and Co-Founder, Kerry Friend. It also attracted a new institutional investor and more than 1,000 new retail shareholders and has provided the capital to see us through to financial self-sustainability. ASB meanwhile agreed ahead of the capital raising to the removal of the requirement for TradeWindow to carry consolidated cash balances of twice the amount of our bank facility limits. It also extended loan amortisation relief to 31 March 2025. Governance TradeWindow’s governance is characterised by our values which emphasise accountability, integrity, competence, responsibility, fairness and transparency. These qualities have been abundantly on show around the Board room table over the last year as we have managed the capital constraints and undertaken the necessary and deep reorganisation of the business. TradeWindow has placed an outsized demand on its Directors, and we want to thank them on behalf of all shareholders. We want to particularly acknowledge the independent directors Phil Norman and Diana Puketapu. Diana stepped aside from the board in November after two years with the company and in line with the broader capital management initiatives we have resolved not to replace her. Outlook The productivity benefits offered by TradeWindow solutions continued to resonate strongly with customers and we expect this to continue, even as the company begins to see a stabilisation in shipping costs and an easing in inflationary pressures. We are well positioned to benefit from these trends should they translate into a broader economic recovery as we expect such a recovery to be accompanied by an increase in transaction volumes. New trade agreements and regulatory changes are also continuing to support 1 Ord Minnett Research, November 2023. 2 Australia Trade | WITS Data (worldbank.org) 3 All comparisons are to the 12 months ended 31 March 2024 unless otherwise stated. 4 Customer numbers and categorisation methodology have been refined to include contracted and pay as you go customers. Prior year comparatives have been restated. 5 Annual recurring revenue (ARR) is calculated using subscription revenue for March 2024 and the monthly average of transaction revenue for Q4 FY 2024 annualised. 6 EBITDA is a non-GAAP measure of financial performance it is defined and reconciled to the GAAP measure of net loss after tax on slide 16 of the full year results announcement for FY24: https://www.nzx.com/announcements/431995 6 7 Directors and senior leadership team Board of directors Alasdair MacLeod has broad governance experience across the software, technology and not for profit sectors and has worked extensively with primary industry exporters. He is a former Partner of Deloitte NZ and until December 2022 was Chair of NZX-listed Napier Port Holdings Limited. He is currently Chair of Silverstripe Limited, a Wellington-based digital experience company. He was Chair of the Hawke’s Bay chapter of Export NZ for seven years. AJ Smith is a founding shareholder of TradeWindow and has been the CEO from the company’s inception in 2018 building on a track record of innovation and investment in successful rapid-growth companies including MediFin, GreenFin and Bonds Africa (South Africa) and Commonwealth Finance Group (Switzerland). With a strong belief in building high-performance teams, AJ is an active executive member of the Young Presidents Organisation. Kerry has three decades of financial management experience. He started his career with EY Wellington before following a career across Asia primarily in the media and entertainment sector. Kerry has previously held senior finance positions with Take-Two Interactive Software (Singapore), Jupiter TV (Japan), Bloomberg (Japan) and News Corporation (Japan). He is a current director of Northpower and Northpower Fibre. Phil Norman is a professional director and business advisor for growth companies. His career has included management, ownership and governance roles in many local and international businesses. He was founding chairman of Xero Limited and is a current director of ASX listed TASK Group Holdings Limited, and Loyalty New Zealand Limited (Fly Buys). Alasdair MacLeod Independent Chair AJ Smith Executive Director and Chief Executive Officer Phil Norman Independent Director Kerry Friend Executive Director Up 26% (Total Revenue $6.8m, up 18%) Up 8 ppt on FY23​ UP 32% on FY23 Unchanged Up 21% on FY23 Up 15% Up 17% on FY23 Down 9ppt on FY23 $6.2m $6.3m 513 $638 47% 54% $1,707 93% Trading revenue Gross Margin ARPC (Shippers) Customer retention rate % of expenses R&D and Commercialisation ARPC (Freight Forwarders) Annual Recurring Revenue Customers Key performance indicators - FY24 digitisation of trade information and the long-term outlook for the company. We have the talent and intellectual property and the capital to advance our strategy. Our focus is now entirely back on matters that offer the greatest value for shareholders: executing on our plans to take advantage of the significant opportunities we see. TradeWindow is delighted with the progress we have made in the first two months of the new financial year. In line Alasdair MacLeod Chair AJ Smith Co-Founder and CEO with the guidance given at the time of our capital raising we continue to expect FY25 trading revenue to range between $7.3 million and $8.3 million and to achieve monthly EBITDA breakeven by the end of the financial year. We are immensely proud of - and on behalf of shareholders grateful for - the way the TradeWindow team have risen to the challenges of the past year. We look forward to providing a further update on the progress we have made in the first quarter of the financial year in July and seeing you at our Annual Shareholders Meeting in August. 8 9 Senior leadership team AJ Smith is a founding shareholder of TradeWindow and has been the CEO from the company’s inception in 2018 building on a track record of innovation and investment in successful rapid-growth companies including MediFin, GreenFin and Bonds Africa (South Africa) and Commonwealth Finance Group (Switzerland). With a strong belief in building high-performance teams, AJ is an active executive member of the Young Presidents Organisation. Kerry Friend Executive Director Deidre Campbell Chief Financial Officer Deidre joined TradeWindow in February 2020. Prior to this, she was Group CFO of Methven Limited. Deidre has extensive experience in leading and building teams, policy and processes in finance and governance to support and enable business through NZX listing, mergers and acquisitions and international growth. Deirdre holds a Bachelor of Accounting from Auckland University of Technology and Wintec – Waikato Institute of Technology. She is also a member of the Chartered Accountants Australia and New Zealand. AJ Smith Executive Director and Chief Executive Officer Andrew is an experienced business strategist, deal maker, and problem solver. His background is in planning, strategy, corporate finance and consultancy. He has a proven track record for delivering complex transactions including the procurement of NBN Co’s satellite network. Andrew has a Bachelor of Business Studies in Accounting from Massey University and an MBA from the Australian Graduate School of Management. Andrew Balgarnie Chief Strategy Officer Dewald is a lawyer with more than 20 years’ experience in corporate and commercial law. Prior to joining TradeWindow in December 2019, Dewald worked as Registrar at a South African university where he oversaw governance and compliance for more than 40 institutional committees. He has served as Director on various Boards and has a BProc and an LLM in International Corporate Finance Law, and is currently pursuing a Doctorate in Business Administration Dewald van Rensburg Chief Operating Officer Kerry has three decades of financial management experience. He started his career with EY Wellington before following a career across Asia primarily in the media and entertainment sector. Kerry has previously held senior finance positions with Take-Two Interactive Software (Singapore), Jupiter TV (Japan), Bloomberg (Japan) and News Corporation (Japan). He is a current director of Northpower and Northpower FIbre. 10 11 Our strategy Market penetration Build on the foundations of our acquired customer base across A/NZ Acquire Accelerate growth Continue to look for ways to accelerate our strategic priorities and growth through targeted acquisition Add customer value Build trusted relationships with our existing customers; with market leading brands taking up Cube Global trade platform Converge proprietary and acquired software solutions into a highly scalable global trade platform Build capability Create and maintain an environment focused on performance, innovation and accountability Land Grow Unify People We remain focused on delivering our high-level strategy, with a shift in emphasis to focus our resources on the Land and Grow pillars. We believe this will provide a faster path to having a self-sustaining model. Strategic summary Trusted digital trade facilitation delivered through Cube a global trade platform that connects our customers with their supply chain ecosystem. TradeWindow provides the tools to move away from inefficient trade processes and begin the journey to digital transformation, streamlining business processes and driving profitability. 12 13 TradeWindow’s Cube solution enables organisations involved in global trade to securely share mission-critical data and collaborate with partners across the supply chain ecosystem. Trusted collaboration is made possible using an enterprise-grade security underpinned by blockchain technology. Permissioned parties can view and edit, with actions recorded on an immutable audit trail. Cube is designed to connect all parties through integration into incumbent systems used in each part of the supply chain. Connectivity TradeWindow’s Prodoc, Freight, and SpeEDI, Origin solutions are designed for exporters, importers, freight forwarders, and customs brokers to run business critical processes. Solutions are purpose- built, with each designed to capture data at source and automate workflows to deliver efficiency, accuracy, and quality for all involved. Integration into Cube enables automation of cross-organisational workflow, with data available from the source in near real-time. Productivity TradeWindow’s Assure+ solution is designed to enhance transparency both within organisations and across the supply chain. Assure+ enables organisations to re-use data to build trust with both businesses and consumers. Visibility + Origin SpeEDI Our solutions Revenue composition TradeWindow’s solutions are designed to be adopted in increments, delivering increasing value to customers Trading revenues highly predictable with 94% recurring Customers start by digitising their back-end operations with TradeWindow’s Productivity solutions. Digitisation of internal processes can provide a catalyst for organisations to take the next step in their digital transformation journey – secure connectivity with permissioned partners across the supply chain ecosystem. Data captured by the Productivity and Connectivity solutions can be re- purposed, aggregated, and enriched to provide customers increased levels of visibility across their supply chain to more effectively manage risk and engage customers. Transactional revenue TradeWindow generates transactional revenue each time a customer either creates or shares a set of trade documents. Subscription revenue Customers pay monthly, quarterly, or annual subscription fees to access solutions.​ The amount of fee varies depending on the number of solutions subscribed for and the number of users. TradeWindow generates transactional revenue each time a customer either creates or shares a set of trade documents. TradeWindow generates transactional revenue each time a customer either creates or shares a set of trade documents. Revenue ​ Composition1 Installation revenue Subscription revenue Transactional revenue Service revenue 48% 46% 4% 2% 1. Based on actual trading revenue in the year to the end of March 2024 14 15 513 organisations use our technology​ Some of the Australasia’s most prolific shippers and freight forwarders rely on our solutions to run business critical operations. Dairy Meat Seafood Horticulture Logistics & Other Growing from solid foundations Delivered a CAGR of 104%1 since the start of commercialisation in January 2020.​ 1. CAGR period FY20 to FY24​ 2. Forward-looking financial information should be read in conjunction with key assumptions on Slide 26 of the full year results announcement for FY24: https://www.nzx.com/announcements/431995 Forecasting continued revenue growth in the range of 20% to 34% year-on-year for FY25 (1 April 2024 to 31 March 2025)​ . Trading revenue guidance of $7.3m to $8.3m for FY25​ . Forecast revenue growth underpinned by cross-selling to existing customers and winning new customers in Australia. Revenue2 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 FY20A FY21A FY22A FY23A FY24A FY25F 0.0 NZ$M 16 17 Introduction Responsible leadership, characterised by our values which emphasise accountability, integrity, competence, responsibility, fairness and transparency, has been the defining ethos of TradeWindow, and contributes towards ensuring good corporate citizenship. Decisions, actions and deliberations are conducted with sensitivity to the legitimate interests and expectations of all stakeholders and TradeWindow fully understands the triple context in which it operates – economy, society, and environment. TradeWindow exercises leadership within a governance system to ensure that its mission is carried out within a framework that promotes diversity and inclusion, benefits society, protects the environment, and ensures sustainability. TradeWindow aspires to have a low environmental impact and we encourage customers, suppliers, and other stakeholders to do the same. Environmental As a software development company TradeWindow operates in an online environment, with its operational model primarily utilising office-based employees. For this reason, TradeWindow’s direct environmental footprint is relatively small and is made up largely from third-party data centres, energy used in its offices, employee travel and from the typical consumables of an online, office- based business. TradeWindow is committed to minimising our environmental impact as an integral part of our business strategy and operating methods. Our key environmental initiatives include: • Hybrid working – TradeWindow employees can choose to work from home part of the time, reducing the carbon emissions associated with commuting. • Travel – We are conscientious when booking travel and, where possible, combine meetings to minimise our trips and reduce CO2 emissions. • Minimal-paper office – TradeWindow uses digital solutions to store and manage company records. • Cloud-computing – TradeWindow partners with both Microsoft and Amazon Web Services (‘AWS’) as providers of cloud services. Microsoft has been carbon neutral since 2012 and is committed to zero-waste by 2030. AWS has a long-term commitment to use 100% renewable energy by 2027. • Recycling – Our offices are equipped with, and staff fully embrace recycling. This Environmental, Social and Governance (‘ESG’) Report, which incor- porates TradeWindow’s Statement on Governance was approved by the Board of TradeWindow Holdings Limited on 27 June 2024 and is ac- curate as at that date. The Board does not undertake any obligation to revise this Report to reflect events or circumstances after 27 June 2024 (other than in accordance with the continuous disclosure requirements of the applicable Listing Rules). Environmental, Social and Governance Report Social TradeWindow is committed to creating an open workplace where every team member is welcomed, supported, and inspired, and where diversity is celebrated. TradeWindow’s diversity and inclusion principles will be practically implemented across the business by: • providing training and education that raises employee awareness of inclusion and diversity and associated benefits supported by; • ensuring our recruitment, development and management approaches enable inclusion and diversity at all levels; • ensuring our people receive fair and equitable pay and benefits. Our remuneration is governed by the Nomination and Remuneration Committee; Climate-related disclosures TradeWindow is supportive of efforts to mitigate the impact of commercial activities on the environment. TradeWindow will make annual disclosures covering governance arrangements, risk management, strategies, metrics and targets for mitigating and adapting to climate change impacts once it meets the definition of a Climate Reporting Entity. It is not anticipated that TradeWindow will meet the market capitalisation threshold requirements in the medium term. Notwithstanding, TradeWindow will continue to monitor its status and prepare accordingly. As an early stage company TradeWindow’s primary focus is on building its revenues and becoming financially sustainable, while being conscious of its role in the supply chain and attempting to put environmentally friendly behaviours in place. Be real We value diversity of thought, honesty and openness – we challenge with respect Always engaged We take time to understand our customers and stakeholders to deliver the best work of our lives Think big We challenge the definition of possible Own it We always deliver, and on time One team We take bold steps together to deliver the smartest solution Fiercely efficient We make each minute and every dollar count TradeWindow’s values 18 19 enhancing processes and policies to encourage greater flexibility and diversity; • entrenching inclusion and diversity in our culture through engaging internal communications and events; • regularly tracking progress against targets; and • having zero tolerance for harassment, discrimination, or victimisation which is documented in TradeWindow’s Code of Ethics. TradeWindow’s growth plans rely on attracting and retaining highly skilled and experienced subject matter experts from both commercial and technical domains. As TradeWindow operates in an industry that is competitive for talent, the senior leadership team has been focused on shaping a culture that people aspire to be a part of. Our environment is focused on performance, innovation,and accountability. Early in TradeWindow’s history, the senior leadership team came together to define the behaviours that underpin the Company’s high- performance team culture. TradeWindow’s culture manifesto and values are shown in the diagram on the preceding page, and regular company- wide meetings are used to reinforce their importance to all staff. They describe what is important, set expectations, and guide decisions. TradeWindow’s culture manifesto Innovation starts with people. We’re a diverse team of highly skilled subject matter experts. Together with our customers we work to overcome the challenges in global trade. Shared values, creativity and passion push us to deliver the best work of our lives. TradeWindow operates in a dynamic, fast-paced environment. Our people need to continuously acquire knowledge and learn new skills, as we believe new ideas spur opportunities for innovation. Board and Committee Composition Board Audit and Risk Committee Nomination and Remuneration Committee Alasdair MacLeod Chair and Independent Director Phil Norman Chair Alasdair MacLeod Chair Phil Norman Independent Director Alasdair MacLeod Phil Norman AJ Smith Executive Director and CEO Kerry Friend AJ Smith Kerry Friend Executive Director People by Tenure People by Age People by Nationality We make wellbeing a priority at TradeWindow. Our people are provided with health insurance, and five days paid “Chill” days. TradeWindow provides a stimulating and healthy work environment and flexible working options. Governance focus The Board and management of TradeWindow are committed to ensuring that TradeWindow maintains corporate governance practices that are in line with best practice, and that TradeWindow adheres to the highest ethical standards. TradeWindow is listed on the New Zealand Stock Exchange (‘NZX Main Board’) and needs to comply with the NZX Listing Rules. The Board has had regard to the NZX Listing Rules and a number of corporate governance recommendations when establishing its governance framework, including the NZX Corporate Governance Code dated 17 June 2022. TradeWindow’s implementation of these recommendations is set out in the Corporate Governance Statement. TradeWindow’s Board has been appointed to protect and enhance the long-term value of TradeWindow and to act in the best interests of its stakeholders. The Board is the ultimate decision-making body of the company and is responsible for the corporate governance of the company. The role and responsibilities of the Board are set out in the Board Charter, which can be found on the investor centre of the Company’s website. The Board has established two standing Board Committees to assist in the execution of the Board’s responsibilities, namely the Audit and Risk Committee and the Nomination and Remuneration Committee. An overview of the composition of the Board and Board Committees is shown below and biographical information for directors is set out on pages 6 – 7 of this Annual Report. 0 - 6 months South African 6 - 12 months China Singaporean Indian British New Zealand Australian Vietnamese Indonesian Brazilian Filipino 20-29 12 - 18 months 30-39 60+ 18 - 24 months 40-49 24 months + 50-59 20 21 Corporate governance statement TradeWindow actively embraces good corporate governance as it protects the interests of all stakeholders and creates and enhances value over the short and long term. At TradeWindow, we regularly review our corporate governance systems and are always looking at opportunities for improvement. The NZX Listing Rules (‘Listing Rules’) require TradeWindow to formally report its compliance with the recommendations contained in the NZX Code. TradeWindow’s implementation of these recommendations is set out in this Corporate Governance Statement. The Board considers that (unless specifically stated) TradeWindow’s corporate governance structures, practices and processes have followed the recommendations in the NZX Code, except where stated, since listing on the NZX on 22 November 2021 until 31 March 2024. This Corporate Governance Statement was approved by the TradeWindow Board (the ‘Board’) on 27 June 2024. All of the policies and charters referred to below are available on our website at https://tradewindow.io/investor-centre. Unless stated otherwise, all of the information in this statement is current as at 31 March 2024. 22 23 PRINCIPLE 2 – BOARD COMPOSITION & PERFORMANCE “To ensure an effective Board, there should be a balance of independence, skills, knowledge, experience and perspectives.” Recommendation 2.1 The Board of an issuer should operate under a written charter whi