Ann: HALFYR: FRE: Half Year Results to 31 Dec 2014 and Interim Dividend

• Release Date: 23/02/15 09:48
• Summary: HALFYR: FRE: Half Year Results to 31 Dec 2014 and Interim Dividend
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					FRE
23/02/2015 09:48
HALFYR
PRICE SENSITIVE
REL: 0948 HRS Freightways Limited

HALFYR: FRE: Half Year Results to 31 Dec 2014 and Interim Dividend

SUMMARY OF PRELIMINARY HALF YEAR ANNOUNCEMENT

Name of Listed Issuer: Freightways Limited

Reporting Period: 6 months to 31 December 2014.

This report has been prepared in a manner which complies with generally
accepted accounting practice and fairly presents the matters to which the
report relates and is based on unaudited financial statements. These
financial statements have been subject to an independent review by our
auditors, PricewaterhouseCoopers.

CONSOLIDATED INCOME STATEMENT

Current Half Year NZ$'000: Up(Down)%; Previous Corresponding Half Year
NZ$'000

OPERATING REVENUE:
241,760; 11%; 218,282

PROFIT BEFORE INTEREST AND INCOME TAX
41,802; 17%; 35,686

Net interest and finance costs
5,826; (2%); 5,942

PROFIT BEFORE INCOME TAX
35,976; 21%; 29,744

Income tax
9,669; 21%; 8,001

NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS
26,307; 21%; 21,743

Earnings per share:
17.0; 21%; 14.1

Interim Dividend (fully imputed)
12.0cps; 10.0cps
Record date: 20 March 2015
Payment date: 7 April 2015
Appendix 7 is attached.

Detailed information: The Half Year Report December 2014 and the presentation
are attached and can also be located in the Investor Relations section of
Freightways' website (www.freightways.co.nz).

HALF YEAR REVIEW
From the Chairman and Managing Director

The Directors are pleased to present the consolidated financial result of
Freightways Limited (Freightways) for the half year ended 31 December 2014.
This report discusses the result, reflects on some of Freightways'
achievements and provides an outlook for the future.

Highlights include:
o a record result and interim dividend;
o all businesses in all regions improving their performance;
o organic growth strategies rewarded through the continued support and
increased activity from customers, along with increased demand for
newly-introduced digital services; and
o acquisition of further Australian-based information management businesses
and good performance from businesses acquired in the prior financial year.

Operating performance

Freightways' first quarter Trading Update provided a breakdown of the benefit
relating to five additional trading days in that quarter compared to the
prior comparative period (pcp). The second quarter had two less trading days
compared to the pcp. Accordingly, this half year result includes the net
total benefit of three extra trading days. Given the overall immateriality of
the impact of these three days to the half year result, no additional
analysis of the result excluding them is provided and the result discussed
below is as reported.

Operating revenue of $242 million was 11% higher than the pcp.

Earnings (operating profit) before interest, tax, depreciation and
amortisation (EBITDA) of $49 million and earnings (operating profit) before
interest, tax and amortisation (EBITA) of $42 million were 16% and 17% higher
than the pcp, respectively.

Net profit after tax (NPAT) of $26 million and NPAT before amortisation
(NPATA) of $27 million were both 21% higher than the pcp.

Earnings per share (EPS) was 17 cents per share, an improvement of 21% over
the pcp.

Cash generated from operations was again strong at $50 million.

Interim Dividend

The Directors have declared an interim dividend of 12 cents per share, fully
imputed at a tax rate of 28%. This represents a payout of approximately $18.5
million compared with $15.4 million for the pcp dividend of 10 cents per
share; a 20% increase. The dividend will be paid on 7 April 2015. The record
date for determination of entitlements to the dividend is 20 March 2015.

The Dividend Reinvestment Plan (DRP) will not be offered in relation to this
dividend. As a capital management tool, the application of the DRP will be
reviewed for each future dividend.

REVIEW OF OPERATIONS

Divisional results for the half year ended 31 December 2014 are provided
below for the express package & business mail division and the information
management division.

Express Package & Business Mail

The express package & business mail division operates a multi-brand strategy
in the domestic market through New Zealand Couriers, Post Haste, Castle
Parcels, NOW Couriers, SUB60, Security Express, Kiwi Express, Stuck, Pass The
Parcel, DX Mail and Dataprint.

Operating revenue of $185 million was 10% higher than the pcp.

EBITDA of $36 million and EBITA of $33 million were 16% and 17% higher than
the pcp, respectively.

A pleasing feature of this result was that all businesses improved their
year-on-year performance compared to what was a strong second quarter result
in the pcp. Planning and resourcing for the peak volumes experienced in the
weeks leading up to Christmas occurred well in advance. These plans included
anticipating the continued growth of internet shopping and the many new
delivery points that would require servicing. Overall service quality, while
always able to be improved, held up particularly well throughout this period.
Throughout the half year, activity from existing customers progressively
increased. Good traction was achieved with pricing strategies to recover cost
increases and new customers were introduced across the division.  Variable,
and recently volatile, fuel prices are managed through applying a surcharge
to customers' prices to mitigate the impact of this cost as it rises and
falls.

Freightways' business mail operator, DX Mail, has again grown its share of
the postal services market, despite the industry's overall decline due to
electronic substitution. DX Mail's growth has come from customers that still
require overnight delivery for their standard-priced letters. The Dataprint
business, that positions its services higher on the supply chain than DX Mail
with a full suite of both physical and digital mailhouse services, has also
had a strong first half. Dataprint's customers can choose between physical or
digital delivery of their mail or a combination of both services, as most do.

Information Management

The information management division is established in New Zealand through the
brands of Online Security Services, Archive Security, Document Destruction
Services and Data Security Services and in Australia through the brands of
TIMG (The Information Management Group), DataBank, Archive Security,
Filesaver, LitSupport and Shred-X.

Operating revenue of $58 million was 12% above the pcp.

EBITDA of $14 million and EBITA of $11 million were 15% and 18% higher than
the pcp, respectively.

Growth on both sides of the Tasman has again been equally strong. Demand for
physical storage services for both documents and computer media continues to
increase. Newly-introduced digital information management services have
gained encouraging support from within this division's existing customer base
and assisted the winning of new customers. The document destruction
businesses, particularly Shred-X in Australia, have seen increased demand for
secure destruction services, improved prices from the sale of shredded paper
and the benefit of the acquisition of Advance Security Destruction, all of
which have contributed positively to performance. The businesses acquired in
the prior year are performing well and, as previously announced, further
information management businesses were recently acquired in Australia.
Investment during this period in future capacity and capability included the
establishment of a new document shredding facility in Sydney and the
relocation and consolidation of multiple operational sites to a single
facility in Queensland.

Internal service providers

Fieldair Holdings provides airfreight linehaul services, Parceline Express
provides road linehaul services and Freightways Information Services provides
IT development and support to the express package & business mail division.
All three internal service providers have continued to deliver quality
service, and in doing so have strongly underpinned the service offered by the
front line businesses.

Corporate

Corporate overhead costs continue to be well-contained. Acquisitions during
the half year have been funded from a combination of operating cash flows and
borrowings from existing finance facilities.

Capital expenditure of $7 million was invested during the half year,
primarily to provide capacity for growth, including expenditure on facilities
and related equipment, IT infrastructure and airfreight capability.

OUTLOOK

Both the express package & business mail and information management markets
remain positive and Freightways' businesses remain well-positioned to benefit
from the opportunities that exist in these markets.

The express package market is expected to continue to expand due to
increasing activity amongst existing users and due to new volume created by
online retailers. Within the business mail market, increasing demand is
expected from businesses who still value overnight delivery of
standard-priced letters and from businesses seeking alternative or new
digital mailhouse services.

The information management market is expected to continue to grow due to the
lower cost to businesses of outsourcing their document and computer media
storage requirements. Privacy of business information will continue to be a
primary driver of demand for secure document destruction services. Customers
will increasingly seek complementary and substitute electronic services
relating to the creation and management of business information.

Capital expenditure for the full year is expected to be approximately $17
million to support the growth and development of both Freightways operating
divisions. Overall, cash flows are expected to remain strong throughout the
2015 financial year.

Freightways will continue to seek out and develop strategic growth
opportunities, including acquisitions and alliances that complement its core
capabilities.

CONCLUSION

The positive features of the markets it operates in, the resilience of its
business models to accommodate growth and adapt to changing market
circumstances and the successful execution of its growth strategies by a very
experienced and capable team are evident in this record result. Accordingly,
the Directors have been able to declare a fully imputed, 12 cents per share
interim dividend.

The Directors acknowledge the outstanding work and ongoing dedication of the
Freightways team of people throughout New Zealand and Australia.
End CA:00260979 For:FRE    Type:HALFYR     Time:2015-02-23 09:48:07