Ann: FLLYR: FRE: Full Year Results to 30 June 2014 and Final...

• Release Date: 18/08/14 10:18
• Summary: FLLYR: FRE: Full Year Results to 30 June 2014 and Final Dividend
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					FRE
18/08/2014 10:18
FLLYR

REL: 1018 HRS Freightways Limited

FLLYR: FRE: Full Year Results to 30 June 2014 and Final Dividend

SUMMARY OF PRELIMINARY FULL YEAR ANNOUNCEMENT

Name of Listed Issuer: Freightways Limited

Reporting Period: 12 months to 30 June 2014

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:
432,279; 6%; 406,117

PROFIT BEFORE INCOME TAX
58,017; 8%; 53,722

INCOME TAX
16,315; 22%; 13,375

NET PROFIT ATTRIBUTABLE TO ORDINARY SHAREHOLDERS
41,702; 3%; 40,347

Earnings per share
27.0; 26.2

Final Dividend (fully imputed)
11.25; 9.75
Record Date: 19 September 2014
Payment Date: 6 October 2014
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 consolidated financial result of
Freightways Limited (Freightways) for the year ended 30 June 2014. This
report discusses the 2014 full year result, reflects on some of Freightways'
achievements over the past year and provides our outlook for the future.

Highlights include; the widespread strength of this result, good first half
earnings growth followed by even better growth in the second half, organic
growth strategies well executed, recent acquisitions successfully integrated
and overall a record consolidated result for Freightways, enabling a record
dividend to shareholders.

Operating performance

Consolidated operating revenue of $432 million for the year was 6% higher
than the prior comparative period (pcp).

Earnings (operating profit) before interest, tax, depreciation and
amortisation (EBITDA), Earnings (operating profit) before interest, tax and
amortisation (EBITA), Net Profit after tax (NPAT) and NPAT before
amortisation (NPATA) discussed below and throughout this commentary exclude
the following non-recurring amounts that the Directors believe should not be
included when assessing the underlying performance of the Freightways group:

- Full Year 2013 - a one-off benefit of $2.1 million ($1 million in the
express package & business mail division and $1.1 million in the information
management division) relating to the reversal of accrued acquisition earnout
payments that were not expected to be paid; and

- Full Year 2014 - a one-off expense of $1.2 million in the information
management division that relates to the expected final earnout payment for
the Filesaver business acquired in 2011.

Excluding the above non-recurring items:
- EBITDA of $84 million for the year and EBITA of $72 million for the year
were 9% and 11% higher than the pcp, respectively.

- Consolidated NPAT of $43 million for the year and NPATA of $44m for the
year were 12% and 14% higher than the pcp, respectively.

- Earnings per share (EPS) for the year was 27.9 cents per share, an
improvement of 12% over the pcp.

Cash flows generated from operations were again strong at $85 million.

Dividend

The Directors have declared a final dividend of $17.4 million compared with
$15 million for the pcp final dividend. This represents a 15% increase in the
final dividend to 11.25 cents per share, fully imputed at a tax rate of 28%,
compared to 9.75 cents in the pcp. The final dividend will be paid on 6
October 2014. The record date for determination of entitlements to the final
dividend is 19 September 2014.

The non-recurring item described above has been excluded from NPATA in
determining the final dividend.

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

Divisional results are provided below for the express package & business mail
division and the information management division for the full year ended 30
June 2014.

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 $332 million for the full year was 8% higher than the
pcp.

EBITDA of $61 million for the full year and EBITA of $54 million for the full
year were 11% and 12% higher than the pcp, respectively.

The widespread improved performance evident in our first half year result
continued and gathered further momentum through the second half year. The
execution of strategies to retain existing and attract new customers has been
successful and we have seen an overall increase in volume growth from within
this customer base. Pricing improvements to offset rising costs have also
been well implemented.

Freightways' express package brands are positioned to service different
niches of the market, including urgent one hour delivery, premium through
economy metropolitan, and overnight to two day nationwide deliveries. Our
brands service a broad range of industry sectors.

The large majority of Freightways' express package volumes are collected from
businesses and delivered to businesses (B2B). The B2B volume increase we are
experiencing from within our existing customer base reflects a growing
domestic marketplace. The balance of our volume is collected either from
businesses or consumers and delivered to consumers (B2C and C2C). A large
amount of this volume is new to the industry as consumers increasingly shop
online. With growth trends prevalent in both B2B and B2C the overall growth
in the express package industry is positive.

The new B2C volume means that we are often delivering to addresses that we
may not have delivered to in the past. A wide range of B2C specific
strategies have been implemented to ensure the expectations of both the
sender and receiver of the item are satisfied. These strategies have included
the establishment in 2011 of the Pass The Parcel service that is dedicated to
TradeMe's members and latterly the introduction of an expanded suite of
online services to enable consumers to manage the delivery of their own items
either to their own preferred secure drop-zone or to arrange re-delivery
options when they are not at home to receive an item, possibly to an
alternative address. We have also increased our network of agents to provide
collection points in local neighbourhoods and introduced applications so that
communication can be easily conducted from mobile phones or tablets. B2C and
C2C volume can be challenging, particularly during peak buying periods such
as in the lead-up to Christmas. Capacity planning within our linehaul and
delivery fleets well in advance of these peaks contributes to our ability to
provide a quality service at these times. This B2C and C2C volume growth is
an exciting and challenging aspect of our industry that will continue to grow
as consumers increasingly buy online.

Our smaller business mail operator, DX Mail, has been successful in growing
its share of the postal services market, despite the industry's overall
decline as increasingly more of us communicate electronically. DX Mails
growth has come from businesses that still require overnight delivery for
their standard-priced letters. Accordingly, DX Mail has introduced additional
postie runs in many locations around New Zealand. To satisfy the demand from
those businesses seeking electronic delivery of their mail, Dataprint was
acquired two years ago. Dataprint positions our services higher on the supply
chain than previously with a full suite of both physical and electronic
mailhouse services. Dataprint's customers can choose from the options of
physical or electronic delivery of their mail or a combination of both
services, as most do. Dataprint has successfully grown its customer base in a
variety of industry sectors. Dataprint is well positioned in the marketplace
with an experienced team operating from modern premises and with new
equipment. Dataprint has also recently joined a small number of New Zealand
businesses in achieving Enviro-Mark Diamond Certification, in recognition of
its sustainability efforts and comprehensive environmental management system.

Overall the express package & business mail division has delivered a strong
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 $103 million for the full year was 3% above the pcp.

Excluding non-recurring items, EBITDA of $24 million for the full year and
EBITA of $20 million for the full year were 5% and 8% higher than the pcp,
respectively.

The translation of this division's results from its Australian operations
into New Zealand dollars (NZD) was naturally impacted by the higher NZD that
prevailed throughout 2014, compared to the pcp. A comparison of the
division's performance using the 2013 average exchange rate shows revenue
growth of 11%, EBITDA growth of 18% and EBITA growth of 14%, compared to the
pcp.

Growth on both sides of the Tasman has been equally strong. Increased revenue
relating to document and computer back-up tape storage, document destruction
service activity and a growing take-up of the digital services offered by
this division have all contributed to this strong performance. Five
acquisitions with operations in Hawkes Bay, Otago, Queensland, New South
Wales and Victoria were completed during the latter stages of the half year
and early in the second half. All these acquisitions have been well
implemented, are delivering against our expectations, have added scale and
further geographic reach to our existing operations and expanded our customer
base.

Overall, the performance of the information management division has again
been very strong.

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. Acquisitions during
the full year have been funded from operating cash flows and an increase of
approximately $6 million in net debt drawn from existing finance facilities.

Capital expenditure of $19 million was invested during the full year,
primarily to provide capacity for growth, including expenditure on facilities
and related equipment, IT infrastructure and airfreight capability. This
capital expenditure also included $3 million to acquire two properties
adjacent to our main Auckland site. These properties will assist in ensuring
that we have sufficient physical capacity to accommodate future growth in our
express package businesses.

OUTLOOK

We expect the positive performance evident in this full year result to
continue and expect to achieve year-on-year earnings growth again in 2015,
subject to business factors beyond its control.

Within our express package businesses we are particularly encouraged by the
increased activity amongst our existing customer base. We expect this growth
to continue both from Business to Business (B2B) and Business to Consumer
(B2C) deliveries.

Our smaller DX Mail business will continue to operate in a challenging
market, despite which it is expected to continue to attract customer demand,
particularly for its overnight street delivery service. Demand for
Dataprint's physical and particularly its digital mailhouse services is
expected to continue to increase.

The growth that we are experiencing in our information management businesses
is expected to continue, including from the digital services that we offer.
Revenue earned from the sale of recycled paper is expected to remain at
similar levels to those which have been achieved within this full year
result.

Capital expenditure for the year ahead 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

Freightways has delivered a record full year result. The positive features of
the markets it operates in, the resilience and adaptability of its business
models to accommodate growth and changing market circumstances and the
successful execution of its growth strategies by a very experienced and
capable team are evident in this result. Accordingly, the Directors have been
able to declare a fully imputed 11.25 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:00253987 For:FRE    Type:FLLYR      Time:2014-08-18 10:18:22