Ann: FLLYR: FRE: Full Year Results to 30 June 201

• Release Date: 13/08/12 11:49
• Summary: FLLYR: FRE: Full Year Results to 30 June 2012 and Final Dividend
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FRE
13/08/2012 09:49
FLLYR

REL: 0949 HRS Freightways Limited

FLLYR: FRE: Full Year Results to 30 June 2012 and Final Dividend

SUMMARY OF PRELIMINARY FULL YEAR ANNOUNCEMENT

Name of Listed Issuer: Freightways Limited

Reporting Period: 12 months to 30 June 2012

The abridged financial statements attached to this report have been audited
and are not subject to a qualification. A copy of the audit report applicable
to the full financial statements is attached to this announcement.

CONSOLIDATED INCOME STATEMENT

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

OPERATING REVENUE:
382,455; 8%; 352,520

PROFIT BEFORE INCOME TAX
49,305; 24%; 39,851

INCOME TAX
12,300; 24%; 9,952

NET PROFIT ATTRIBUTABLE TO ORDINARY SHAREHOLDERS
37,005; 24%; 29,899

Earnings per share
24.1; 19.5

Final Dividend (fully imputed)
9.50; 7.25
Record Date: 14 September 2012
Payment Date: 1 October 2012
Appendix 7 is attached.

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

FULL YEAR REVIEW
From the Chairman and Managing Director

The Directors are pleased to present the financial result of Freightways
Limited (Freightways) for the year ended 30 June 2102, that is above the
prior year in all respects and a record result for the company.

Highlights include the consistently strong financial performance of the
company throughout the year and the successful execution of growth strategies
across both operating divisions. In addition, the integration of recent
acquisitions in New Zealand and Australia have added to the depth of
Freightways' presence in the Australasian information management industry and
the renegotiation of Freightways' finance facilities has provided the benefit
of reduced funding costs.

Operating performance

Consolidated operating revenue of $382 million for the full year was 8%
higher than the prior comparative period (pcp).

EBITDA (excluding non-recurring items) of $72 million for the full year and
EBITA (excluding non-recurring items) of $62 million for the full year were
both 9% higher than the pcp.

Consolidated NPAT (excluding non-recurring items) of $36 million for the full
year was 17% higher than the pcp.

Cash flows generated from operations were again strong at $70 million.

Earnings per share (EPS) for the full year (excluding non-recurring items)
was 23.4 cents per share, an improvement of 15% over the pcp.

A one-off $1.5 million EBITA benefit ($1 million after tax) relating to
proceeds from Christchurch earthquake insurance claims made in the prior year
has been treated as non-recurring and has not been included in the above
revenue and earnings numbers. Similarly, a one-off $1.3 million EBITA charge
($0.9 million net of tax) relating to Christchurch earthquake costs subject
to insurance claims was treated as non-recurring in the prior year and is
also excluded from the above pcp revenue and earnings numbers. Non-recurring
items are included in the full year financial statements.

Dividend

The Directors have declared a final dividend of 9.5 cents per share, fully
imputed at a tax rate of 30%. This represents a pay out of approximately
$14.6 million compared with $11.2 million for the pcp final dividend of 7.25
cents per share. The final dividend will be paid on 1 October 2012. The
record date for determination of entitlements to the final dividend is 14
September 2012.

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

REVIEW OF OPERATIONS

The industry and geographical diversification strategy embarked upon by
Freightways in previous years has broadened its revenue and earnings base and
created a wide range of growth opportunities that are being successfully
developed by the Freightways team. Within this full year result the
contribution to both revenue and earnings from the Express Package & Business
Mail division and the Information Management division was approximately 75%
and 25%, respectively. Over half of the Information Management division's
revenue and earnings contribution was generated in Australia.

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 and DX Mail.
Subsequent to year-end DataPrint was acquired and will operate as a separate
brand alongside DX Mail.

Operating revenue of $292 million for the full year was 5% higher than the
pcp.

EBITDA of $53 million for the full year was 7% higher than the pcp and EBITA
of $48 million for the full year was 8% higher than the pcp.

A particularly strong first quarter underpinned a very good first half year.
As expected, revenue in the second half was comparatively not as strong as in
the first half, yet revenue growth nevertheless remained positive and
consistent throughout the period.  Increased volumes from many existing
customers, quality market share gains and price increases underpinned the
revenue growth in this division. Revenue from fuel surcharges used to offset
the impact of higher fuel prices is also included in this result. Revenue
growth in this division came from all locations in New Zealand and from most
industry sectors. Online shopping continued to generate our fastest growing
source of volume. Costs continued to be prudently managed, albeit the impact
of stepped increases in property insurance and road user charges relating to
the linehaul of inter-city volumes will continue to be felt throughout the
next financial year.

Activity levels in most of our businesses located in Christchurch have
returned to pre-earthquake levels, with the exception being DX Mail that
continues to be affected by relatively low tourism-related mail volume. The
overall cost of doing business in Christchurch has however lifted due to the
increased difficulty in moving around Christchurch to effect pick-ups and
deliveries and also in regards to labour and related costs.

During the year, our Hawkes Bay businesses relocated to new larger premises
and work was all but completed on the redevelopment of the Post Haste and
Castle Parcels depots at our main Auckland site. This redevelopment enables
the accommodation of NOW Couriers that has operated from a separate Auckland
location.

Our latest acquisition, DataPrint, is a full service mailhouse that provides
its customers with both a physical and an electronic service for their
transactional mail. DataPrint will work alongside DX Mail. Customers of both
these businesses and the wider Freightways group will be offered a broader
suite of services as a result of this acquisition, including the ability to
send electronic invoices to their respective customers who can then also pay
these invoices online.

Overall, Freightways' Express Package & Business Mail division has been able
to once again demonstrate its resilience and its growth attributes to deliver
a very good full year result.

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
DataBank, Archive Security, Filesaver and Shred-X.

Operating revenue of $92 million for the full year was 21% above the pcp.

EBITDA of $21 million for the full year and EBITA of $16 million for the full
year were both 18% above the pcp.

During the year, Freightways acquired Iron Mountain's New Zealand operations
and the business and assets of Filesaver Pty Limited in Sydney. The Iron
Mountain New Zealand business has been fully integrated into Freightways'
existing New Zealand information management business. The Filesaver business
is operating from within Freightways' existing information management
business in Australia as a stand-alone brand. Restructuring and relocation
costs relating to these acquisitions were expensed primarily within the first
half of this full year result. The expected financial contribution from these
acquisitions, including the value of synergies achieved under Freightways'
ownership, is tracking to expectation and evident in this division's strong
second half year result.

The very strong growth experienced in this division has assisted in
offsetting the increased costs associated with leasing significant additional
capacity in both Australia and New Zealand and related premise relocations.
Part of this growth has come from winning nationwide customers in Australia
that would not have been achieved without this investment. The storage and
management of archived documents continues to be our fastest growing revenue
stream in this division. In our document destruction operations the reduced
demand for recycled paper in the global market has not yet recovered and
accordingly the price we receive for the sale of this product declined
further in the second half of the year. A number of contingencies to mitigate
the impact of these reduced prices were implemented, however the contribution
from this particular revenue source was significantly lower than the pcp.

New service lines have been added to Freightways' suite of information
management services, adding breadth to our revenue and earnings growth
profile. Strategic growth opportunities continue to be explored and executed
where they make commercial sense.

Overall, the performance of the Information Management division and its
demonstrated ability to sustain high levels of growth has been outstanding.

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 outstanding
service, underpinning the service offered by our front line businesses.

Corporate

Corporate overhead costs continue to be well contained.

Newly-negotiated finance facilities came into effect on 1 September 2011.
These include facilities of NZD110 million and AUD70 million, spread equally
between 3-year, 4-year and 5-year maturity dates. This multi-currency
facility, with an evenly spread maturity profile, demonstrates the support of
Freightways' banking syndicate and provides funding certainty for the company
and important diversity of duration. The reduced cost of these facilities is
clearly evidenced in the decreased interest charge to the company for the
full year.

Bank borrowings have increased above the pcp to fund the acquisitions
completed during 2012.

Capital expenditure of $15 million was invested during 2012 to maintain
Freightways airfreight and IT infrastructure and to support the group's
growth strategies.

OUTLOOK

We are mindful of the current issues relating to the global economy that may
have a further adverse impact on the economies of New Zealand and Australia.
Inevitably these global issues will influence our business performance.
Against this uncertain background we do nevertheless expect to see continued
overall gradual improvement in the markets that our businesses are positioned
in, as has been experienced in recent times. Drivers of business success,
other than the performance of the economy, have and will continue to
contribute to future performance. These drivers include our ability to
execute our growth initiatives, actively managing costs, striving to further
improve service quality and innovating, not only in regard to our suite of
services, but also in regard to our internal processes to assist
productivity.

Growth trends evident in this latest full year result within the Express
Package & Business Mail division are positive. If this growth amongst our
existing customer base is sustained it will contribute to further
year-on-year performance improvement. Our Express Package and Business Mail
teams have consistently demonstrated their ability to compete successfully in
an openly-competitive environment and we expect them to continue to do so.
Our Express Package brands are among the most recognised in New Zealand, our
people have a depth of experience second to none and our service culture will
continue to set us apart from our competitors.

As has occurred in 2012, we expect the Information Management division to
deliver sound overall year-on-year earnings growth, despite stepped costs
related to investment in new capacity and the impact of lower prices for the
paper we sell from our document destruction operations. Within this division
we expect continued good earnings growth from our document and data storage
and related services businesses. Conversely, our document destruction
businesses on both sides of the Tasman will continue to be impacted by the
aforementioned lower global paper prices, meaning a relatively flat year
ahead is forecast for this particular segment.

Capital expenditure for 2013 is expected to be $14 million to support the
growth and development of both of Freightways' divisions. Overall, cash flows
are expected to remain strong throughout the 2013 financial year.

In recent years, Freightways has strengthened its earnings profile by
diversifying its activities both geographically and deeper into the
information management market. Freightways will continue to seek out and
develop growth opportunities to support this strategy and will also explore
other opportunities that complement its core capabilities.

Subject to business factors beyond its control, Freightways is well
positioned to reap the benefits of further improvement in the markets in
which it operates.

CONCLUSION

Freightways has delivered a strong full year result that is above the prior
year in all respects and a record for the company. This result again
demonstrates the resilience of the Group, the positive features of the
industries it operates in and the high quality of its subsidiary businesses
and their teams of people. Accordingly, the Directors have been able to
declare a fully imputed 9.5 cents per share final dividend.

The Directors acknowledge the outstanding work and ongoing dedication of the
Freightways team of people throughout New Zealand and Australia.
End CA:00225864 For:FRE    Type:FLLYR      Time:2012-08-13 09:49:24