Ann: ADDRESS: FRE: Annual Shareholders Meeting -

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• Summary: ADDRESS: FRE: Annual Shareholders Meeting - Chairman's & MD's Commentary
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					FRE
31/10/2013 10:27
ADDRESS

REL: 1027 HRS Freightways Limited

ADDRESS: FRE: Annual Shareholders Meeting - Chairman's & MD's Commentary

A.  CHAIRMAN'S INTRODUCTION

Slide 1. Freightways - 31 October 2013, Annual Shareholders Meeting

Slide 2. Sue Sheldon, Chairman

Ladies and Gentlemen, welcome to Freightways' Annual Shareholders Meeting. My
name is Sue Sheldon. I am the Chairman of Freightways' Board of Directors.

Slide 3. Agenda

Before we get underway I will run through the structure of the meeting.

- I will begin with procedural matters, introduce the Freightways Board and
senior executive team to you, and then summarise some of the Company's 2013
highlights. I will then ask Dean Bracewell, Freightways' Managing Director,
to provide a review of the Company and an update on current trading
performance.

- I ask that you hold all questions about the performance of the Company
until the close of the Managing Director's presentation and direct them
through the Chair. Any questions related to resolutions should be asked when
we consider those resolutions.

- Following the Managing Director's presentation, I will introduce the
resolutions as outlined in the Notice of Meeting. Again this year, polls will
be held in respect of the resolutions put to shareholders. The polls will be
conducted following the meeting.

- The Notice of Meeting, which includes the explanatory notes, has been
circulated to all shareholders, and I intend to take it as read.

The Company's constitution prescribes a quorum requirement of 3 shareholders.
As you can see this requirement is met. As a quorum is therefore present, the
meeting is duly constituted and I declare it open.

Proxies have been appointed for the purpose of this meeting in respect of
approximately 61 million ordinary shares. As was indicated on the proxy form,
where proxy discretion has been given, the Directors, and I as Chairman,
intend to vote those proxies we have received in favour of resolutions 1, 2
and 4 set out in the Notice of Meeting. As also indicated on the proxy form,
unless directed how to vote by the shareholder giving the proxy in respect of
resolution 3 relating to Directors' fees, the Directors, including myself,
will not be able to vote on resolution 3 on behalf of the proxy.

I would now like to introduce those at the table with me:

- Mark Royle, Freightways' Chief Financial Officer and Company Secretary.
Mark has 28 years accounting and commercial experience of which 13 years were
with a major international chartered accounting firm. Mark was appointed
Chief Financial Officer and Company Secretary of Freightways 13 years ago,
having spent a number of years prior to that with Freightways' then
Australian owner.

Your Directors at the table are:

- Dean Bracewell, Freightways' Managing Director. Dean has spent almost his
entire career with Freightways after initially joining the company in 1978.
He worked his way through the company and held a number of senior Executive
and General Management roles within Freightways' subsidiary businesses prior
to his appointment as Managing Director in 1999.

- Mark Verbiest. Mark was appointed a Director in February 2010.  He is a
professional director who has a strong working knowledge of technology and
technology-related businesses, as well as having extensive capital markets
experience. A lawyer by training, with widespread corporate legal experience
in private practice, he spent 7.5 years on the senior executive team of
Telecom NZ through until mid-2008, where among other things he had executive
accountability for two business units. Mark is Chairman of Telecom
Corporation of New Zealand Limited, Transpower New Zealand Limited and Willis
Bond Capital Partners Limited. Mark is also a member of the Financial Markets
Authority and a consultant to law firm Simpson Grierson.

- Sir William Birch. Sir William began his career in 1957, when he
established a private practice as a surveyor in Pukekohe. His keen interest
in community affairs led to six years as Deputy Mayor of Pukekohe and
election to Parliament in 1972.  During his 27 years in Parliament he served
for 15 years as a Minister of the Crown, including 6 years as Minister of
Finance between 1993 and 1999. Sir William retired from Parliament in 1999
and commenced a private consultancy.  He is a director of a number of public
and private companies, a trustee of the MFL and SIL superannuation funds and
a senior advisor to Forsyth Barr in New Zealand. Sir William was knighted by
the Queen for public services in 1999.

- Roger Corcoran. Roger is based in Australia and was appointed a Director in
May 2009. He gained extensive global business experience during a 30-year
career with multi-national transport & logistics operator, TNT. Roger retired
as CEO of TNT Australia, New Zealand and the Pacific Islands in 2008.

- Kim Ellis. Kim was appointed a Director in August 2009, having spent 28
years in chief executive roles in a number of sectors, including 13 years as
Managing Director of Waste Management NZ Limited, and has developed
businesses in both New Zealand and Australia. Kim is now a professional
director working with both private and listed companies. Kim's current Board
appointments include Port of Tauranga Ltd, FSF Management Company Ltd,
Ballance Agri-Nutrients Ltd, NZ Social Infrastructure Fund Ltd, Moa Brewing
Ltd and Envirowaste Services Ltd.

- I was appointed a Director of Freightways ahead of its IPO in 2003 and
elected Chairman in 2010. I am a Chartered Accountant and full-time
professional director. I am currently Chairman of Chorus Limited and Paymark
Limited, Deputy Chairman of the Reserve Bank of New Zealand and a Director of
Contact Energy Limited. I am a former president of the New Zealand Institute
of Chartered Accountants and was made a Companion of the New Zealand Order of
Merit in 2007.

Also present today are several members of the Freightways executive team who
I would like to introduce to you:

- Steve Wells, General Manager of New Zealand Couriers.

- Mark Troughear, General Manager of the Freightways Information Management
Division.

- Richard Mitchell-Lowe, General Manager of Freightways Information Services.

- Mark Brightwell, General Manager of DX Mail and Online Security Services.

- Charles Giliam, General Manager of Fieldair Holdings.

- Neil Wilson, General Manager of Post Haste Limited.

- Devon Buckingham, Auckland Regional Manager of New Zealand Couriers.

- Aaron Stubbing, General Manager of Messenger Services Limited.

- Mark Skews, General Manager of Castle Parcels Limited.

And from our Australian businesses:

- Chris Cotterrell, General Manager of The Information Management Group Pty
Limited, which operates the DataBank, Archive Security and Filesaver
businesses.

- Van Karas, General Manager of Shred-X Pty Limited.

- Nick Karos, Founder and now Sales Director of Shred-X Pty Limited.

These people are representative of the wider Freightways team who operate in
every town and city throughout New Zealand and in all states & territories of
Australia. This executive team has considerable experience, often in more
than one Freightways business and has an average tenure at Freightways of
approximately 15 years per executive. It is a particular strength of
Freightways that it is able to identify and promote talent from within, not
only in these senior roles, but across many occupations within the greater
company.

The Company's Auditors, PricewaterhouseCoopers, are represented here today by
Pip Cameron and the Company's legal advisors Russell McVeagh are represented
here today by Pip Greenwood.

The Financial Statements for the year ended 30 June 2013 are set out in the
Company's Annual Report that was released to shareholders last month.

I would now like to speak briefly to some of the financial highlights of
Freightways' 2013 year. As the 10th anniversary of Freightways' listing on
the NZX passed recently, I will also take this opportunity to reflect on the
Company's performance over those 10 years. I will then ask Dean Bracewell to
address you.

Slide 4. Financial Highlights - 2013

This slide shows Freightways' financial performance in 2013 compared to 2012.

EBITDA refers to earnings (or operating profit) before interest, tax,
depreciation and amortisation. EBITA refers to earnings (or operating profit)
before interest, tax and amortisation. NPAT refers to net profit after tax.
And EPS refers to earnings per share.

A one-off $2.1 million EBITA and NPAT benefit relating to acquisition earnout
payments not now expected to be paid was treated as non-recurring and is not
included in these 2013 earnings numbers. Similarly, a one-off $1.5 million
EBITA benefit ($1 million net of tax) relating to proceeds from the
Christchurch earthquake insurance claims was treated as non-recurring in the
prior year and is also excluded from the comparative 2012 numbers.

While these non-recurring items are included in the full year financial
statements contained in your annual report, we believe for the purposes of
assessing the underlying year-on-year operational performance of the
business, these non-operational items should be excluded for this
presentation.

Consolidated operating revenue of $406 million for the full year was 6%
higher than the prior comparative period.

EBITDA of $77 million for the full year (which excludes the non-recurring
items I just described) was 7% higher than the prior comparative period and
EBITA of $65 million for the full year (also excluding the non-recurring
items I just described) was 5% higher than the prior comparative period.

Consolidated NPAT of $38 million for the full year, excluding non-recurring
items, was 6% higher than the prior comparative period.

Earnings per share (EPS) for the full year (and again exclusive of
non-recurring items) were 24.9 cents per share, an improvement of 6% over the
prior comparative period.

Strong operating cash flows of $77 million enabled bank borrowings to be
reduced by $13 million during the year.

Slide 5. Express Package & Business Mail division - 2013 performance

The Express Package & Business Mail division's 2013 result was characterised
by good revenue growth, yet only modest earnings growth. This was due to a
changing business mix in both the express package and business mail
businesses and the cost of related investment to capture new growth. Dean
will discuss these business mix changes during his presentation.

Overall, the Express Package & Business Mail division delivered sound
performance in a challenging year.

Slide 6. Information Management division - 2013 performance

The performance of the Information Management division was again very strong.
Achievement of $100 million in revenue was a significant milestone for this
division, as were the stronger profit margins.

Slide 7. Final Dividend - 2013

The Directors declared a final dividend of 9.75 cents per share, fully
imputed at a tax rate of 28%, which was paid on 1 October 2013. This
represented a payout of approximately $15 million compared with $14.6 million
for the prior comparative period dividend of 9.5 cents per share. The full
year's dividend was in line with the Company's dividend policy of paying out
75% of annual Net Profit After Tax before Amortisation (or NPATA).

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

Freightways' performance in 2013 was a record for the Company. The Board
acknowledges the excellent work and ongoing dedication of the Freightways
team throughout New Zealand and Australia.

Slide 8. A decade of achievement

I noted earlier that Freightways has just completed its 10th year since
listing on the NZX. In its 2003 investment statement & prospectus,
Freightways was described to potential investors as "a strong successful
business ... positioned to deliver continuing earnings growth ... offering an
attractive dividend yield." By any measure, Freightways has delivered upon
these statements.

Slide 9.  A strong successful business...

Freightways' core operating culture has stood the test of time. Its business
model has been progressively enhanced through investment in the development
and retention of its people (approximately 3,000 across New Zealand and
Australia), progressive capacity expansion to accommodate growth, the
successful acquisition and start-up of a number of new businesses, the
introduction each year of innovative new services and on-going investment in
the technology that supports our core business processes and the services
that we offer our customers. Our customers ultimately tell us if we are on
the right track and the retention and growth of our large customer base is a
particularly pleasing aspect of the Company's development.

Diversification into the information management industry, has been a highly
successful strategic move for Freightways. The information management
strategy, while strengthening Freightways' overall earnings profile, has
enabled our entry into the Australian market.

Freightways is a stronger and more successful business today than it was in
2003.

Slide 10. ... positioned to deliver continuing earnings growth...

Freightways' performance has seen its revenue and profits more than double
since listing on the NZX:
- Revenue growth since 2003 of 107%;
- Operating Earnings (EBITDA & EBITA) growth since 2003 of 102%; and
- NPAT growth since its first NZX published result in 2004 of 137%.

Freightways is better positioned today than it was in 2003 to deliver
continuing earnings growth.

Slide 11. ...offering an attractive dividend yield.

Freightways' policy since its listing in 2003 has been to pay 75% of NPATA as
dividends each year. The strong annual cash generation achieved by
Freightways has meant that the Directors have been able to consistently
comply with this policy objective. This has delivered:
- Gross dividends since listing of 241 cents per share; and
- Total gross shareholder return (i.e. dividends plus share price
appreciation) from September 2003 to September 2013 of 380%.

The very positive cash generating ability of the Company is such that
Directors remain comfortable with the current dividend policy for the
foreseeable future.
I'll now call on Dean Bracewell to address the meeting.

Slide 12. Freightways - Dean Bracewell, Managing Director

B.  MANAGING DIRECTOR'S REVIEW AND TRADING UPDATE

Thank-you Sue and thank-you ladies and gentlemen for coming along today.

Slide 13. Managing Director's presentation agenda

My presentation will discuss some of the features of the industries that
Freightways works in and its businesses. I will then touch on Freightways'
over-arching strategy, before finishing with an update on recent trading
performance and our outlook for the foreseeable future.

Slide 14.  Express Package & Business Mail

Slide 15.  Express Package & Business Mail (brands)

We operate a multi-brand strategy in the domestic express package industry,
as represented on this slide. Having pioneered the express package industry
back in the mid-1960's we have adapted to the many changes in our industry
through the acquisition and start-up of many of these brands and through
constant innovation and service development, which we have done alongside our
customers.

The express package industry continues to change. The increasing number of
consumers buying goods online has meant faster growth in Business-to-Consumer
(or B2C) volume than in our Business-to-Business (or B2B) volume.  We have
addressed this changing business mix through various strategies so as to
capture our share of this B2C growth, and we have been successful in doing
so. Compared to B2B volume, a feature of the B2C market is typically smaller
packages and consequently lower revenue and margin per item. Over time we
expect these margins to increase, particularly as delivery density into
residential areas increases. Overall we view this industry growth, both from
the newer B2C volumes and from our more traditional B2B volumes, as being
very positive.

Our business mail division has also continued to experience a changing
business mix as its traditional box-to-box letter volumes and general mail
have declined through digital substitution. Our strategy to address this
decline is threefold:
- We have invested in a network of posties throughout New Zealand to enable
the capture of a greater share of street delivery mail;
- We acquired Dataprint, a full service mailhouse that offers both physical
and digital mail delivery to customers and in its first year of Freightways
ownership it has performed very positively; and
- We have established a business process outsourcing service that brings
together the capabilities of DX Mail, Dataprint and our information
management division to assist those customers wishing to transition to a
digital workflow environment.

Our express package & business mail division currently contributes around 70%
of revenue and earnings to the Freightways group.

Slide 16. Information Management

Slide 17. Information Management (brands)

The Information Management division, represented on the slide before you,
contributes approximately 30% of Freightways' revenue and earnings. This
division continues to deliver strong growth across all our locations
throughout New Zealand and Australia.

Features of our recent performance include:
- Strong growth of stored archive boxes;
- Stepped growth in service activity and revenue achieved by our document
destruction operations in Australia, contributing to increased utilisation of
our recently established regional runs, that has helped mitigate the impact
of the lower prices we receive from recycled paper; and
- Growth in our emerging digital services, which enable us to participate in
the digital management, archiving and back-up of business information.

Inevitably this division will also experience a changing business mix as our
customers increasingly seek digital solutions to process their business
information. We are excited about the opportunity to work alongside our
customers in developing services that make commercial sense to them. In the
meantime we continue to see strong growth in all three primary service
streams of document storage, document destruction and data storage and have
accordingly invested in larger facilities in several locations in New Zealand
and Australia.

Slide 18. Business strategy

Slide 19. Business strategy

Freightways' strategy contains several key elements. At a high level these
are:

- Firstly, and most importantly, our strategy to enhance capability and
service levels wherever possible within each of Freightways' existing
businesses to ensure the retention of existing customers and to grow market
share;
- Secondly, our strategy to diversify the company into the information
management industry to further strengthen the earnings base and increase the
company's resilience to adverse economic cycles that have a more immediate
impact on Freightways' core express package & business mail division;
- Thirdly, our strategy to diversify activity away from a sole reliance on
the domestic New Zealand market. This has been achieved by establishing
operations throughout Australia; and
- Lastly, the strategy to extend Freightways' presence into complementary
areas of growth, either through the establishment of alliances or by
acquisition.

Your company is very well positioned with quality capability and capacity to
benefit from further improvement in the New Zealand and Australian economies
and in each of its markets.

Freightways will continue to train and develop its people to ensure the
future of its business is in experienced hands.

Freightways will continue to innovate and wherever possible further improve
its service performance to customers. As demand emerges for complementary
and/or substitute services relating to digital communication and management
of both transactional mail and general business information, we will work
alongside our customers to develop appropriate solutions utilising the skills
we have developed internally over a number of years and those that we have
acquired through our recent acquisitions.

The strategies I have outlined are designed to sustain Freightways'
profitability and deliver long-term value to shareholders.

Slide 20. Trading update

These next two slides present the long-term performance of your company.

Slide 21. Operating revenue

Our 2013 revenue result was a good, sound step-up from the prior year and
brings our 10-year compound average annual growth rate for revenue to 7.6%.

Slide 22. EBITA

Our 2013 operating earnings (or EBITA) result, as Sue has mentioned, was a
record result for the company, bringing our 10-year compound average annual
earnings growth performance to 7.3%.

Slide 23. Current financial performance

This slide provides Freightways' financial performance for the 1st quarter
period from 1 July to 30 September 2013.

Revenue totalled $105 million, a 4% increase on the prior comparative period
(pcp). EBITDA of $19.2 million was 3% above the pcp and EBITA of $16.3
million was 4% above the pcp. NPAT of $9.8 million was 7% above the pcp.

Our overall first quarter performance is positive and, while still early in
the financial year, it underpins our expectation of a full year result ahead
of the prior year.  This expectation of increased earnings will be further
assisted by the anticipated contribution from newly-acquired information
management businesses in New Zealand and Australia.

Slide 24. Express Package & Business Mail division - current performance

Our express package & business mail division's revenue of $80 million was 5%
above the pcp. EBITDA of $13.5 million and EBITA of $12.1 million were both
2% ahead of the pcp, respectively.

Sound activity from existing customers has been further assisted by quality
market share gains across all our retail businesses. New Zealand Couriers,
the Post Haste Group (that also includes Castle Parcels, NOW Couriers and
Pass The Parcel) and the Messenger Services Group (that includes the
point-to-point business of SUB60, Kiwi Express, Stuck and Security Express),
all performed well compared to the prior year. The year-on-year performance
of our smaller DX Mail business has, as expected, declined during this period
as it continues to adapt to its previously discussed changing business mix.
DX is nonetheless making very good progress in transitioning through this
structural change to its industry and it continues to contribute profitably
to this division's performance.

Slide 25. Information Management division - current performance

Our information management division has again performed strongly, with
revenue of $25 million being on par with the pcp. EBITDA of $5.9 million and
EBITA of $4.8 million were 1% and 4% ahead of the pcp, respectively.

Our businesses on both sides of the Tasman continue to perform very well,
with strong revenue growth of 9% in New Zealand and 6% in Australia (on a
constant currency basis) ahead of the pcp. The translation of our Australian
performance at the currently stronger New Zealand dollar exchange rate
compared to the lower New Zealand dollar exchange rate in the pcp has
resulted in a divisional revenue result on par with the pcp. Growth from
existing customers and market share gains in all locations contributed to
offsetting our higher costs in relation to the increased capacity we recently
invested in and again lower recycled paper prices.

Slide 26. Recent acquisition activity

Effective from 1 October 2013, Freightways has acquired the business and
assets of Brisbane-based  Document & Data Storage Management and
Dunedin-based Document Destruction Services. The total cost of these
acquisitions is approximately $4.5m. Upon completion of the integration of
these businesses the full 12-month EBITDA contribution expected from them is
$800k. These acquisitions complement our existing capabilities and add
long-standing customer relationships, experienced people and scale to our
existing operations.

Slide 27.  Outlook

Slide 28. Outlook

Our express package & business mail division is expected to perform soundly
overall and continue the positive trend seen in our first quarter result.

Our information management division is expected to continue its strong growth
and deliver further improved margins as its new capacity is progressively
utilised and its newly-acquired businesses are fully integrated within our
existing businesses.

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

Subject to business factors beyond its control, Freightways is well
positioned to benefit from any further improvement in the markets in which it
operates.

Thank-you.
End CA:00243129 For:FRE    Type:ADDRESS    Time:2013-10-31 10:27:10