Ann: FLLYR: FRE: Full Year Results to 30 June 2015 and Final...

• Release Date: 17/08/15 09:53
• Summary: FLLYR: FRE: Full Year Results to 30 June 2015 and Final Dividend
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					FRE
17/08/2015 09:53
FLLYR
PRICE SENSITIVE
REL: 0953 HRS Freightways Limited

FLLYR: FRE: Full Year Results to 30 June 2015 and Final Dividend

SUMMARY OF PRELIMINARY FULL YEAR ANNOUNCEMENT

Name of Listed Issuer: Freightways Limited

Reporting Period: 12 months to 30 June 2015

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:
479,458; 11%; 432,279

PROFIT BEFORE INCOME TAX
59,643; 3%; 58,017

INCOME TAX
16,360; 0%; 16,315

NET PROFIT ATTRIBUTABLE TO ORDINARY SHAREHOLDERS
43,283; 4%; 41,702

Earnings per share
28.0; 27.0

Final Dividend (fully imputed)
12.50; 11.25
Record Date: 18 September 2015
Payment Date: 5 October 2015
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 full year ended 30 June 2015. This
report discusses the result, reflects on some of Freightways' recent
achievements and provides an outlook for the future.

Highlights include:
o a strong annual result;
o an 11% increase in the final dividend compared to that of the prior
comparative period (pcp);
o improved performance from all businesses, in all regions; and
o the successful implementation of organic and strategic growth strategies.

Operating performance

The below table (refer attachments) presents the reported 2015 result and the
underlying trading result for Freightways compared to the pcp, when excluding
the impact of non-recurring items:

$ million - 2015 Result; Non-recurring items; Underlying 2015 Trading Result;
Underlying 2014 Trading Result; Increase %
Revenue: 479.5; -; 479.5; 432.3; 11%
EBITDA (i): 86.5; 9.0; 95.5; 83.9; 14%
EBITA (ii): 73.8; 9.0; 82.8; 72.0; 15%
NPATA (iii): 44.8; 6.5; 51.3; 44.0; 17%
NPAT (iv): 43.3; 6.5; 49.7; 43.0; 16%
EPS (cents): 28.0; 4.2; 32.2; 27.9; 15%

Notes:
(i)   Operating profit before interest, tax, depreciation and amortisation
(ii)   Operating profit before interest, tax and amortisation
(iii) Net profit after tax (NPAT) before amortisation
(iv) Profit for the year attributable to the shareholders

Freightways' first quarter Trading Update provided a breakdown of the benefit
relating to five additional trading days in that quarter compared to the pcp
that contributed approximately $7 million of operating revenue, $2 million of
EBITDA & EBITA and $1.4 million of NPATA & NPAT. This full year result also
includes the benefit of these additional trading days compared to the pcp.

The results discussed throughout this commentary exclude the impact of the
following non-recurring items that the Directors believe should not be
included when assessing underlying trading performance:

o Full Year 2014: a one-off expense of $1.25 million in the information
management division that related to the final earn-out payment for the
Filesaver business acquired in 2011; and

o Full Year 2015: a total non-recurring charge of $9 million ($6.5 million
after tax) that comprised:
- a one-off expense of $7.6 million relating to the write-down of the
carrying value of the existing Convair fleet of aircraft and related spare
parts ($5.5 million after tax). As a non-cash item this write-down will not
impact on Freightways' dividend payments to its shareholders;
- a one-off expense of $0.7 million expected to be incurred in the 2016
financial year relating to the transition from the Convair aircraft ($0.5
million after tax); and
- a one-off expense of $0.65 million expected to be incurred in the 2017
financial year relating to the relocation of three of Freightways'
Sydney-based information management businesses into a single purpose-built
site ($0.45 million after tax).

Dividend

The Directors have declared a final dividend of 12.5 cents per share, fully
imputed at a tax rate of 28%. This represents a payout of approximately $19.3
million compared with $17.4 million for the pcp dividend of 11.25 cents per
share; an 11% increase. The dividend will be paid on 5 October 2015. The
record date for determination of entitlements to the dividend is 18 September
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 year ended 30 June 2015 are provided below for the
express package & business mail division and the information management
division. Both divisions had record results.

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 $360 million was 8% higher than the pcp.

EBITDA of $68 million and EBITA of $62 million were both 13% higher than the
pcp. These earnings amounts exclude $8 million of non-recurring charges
associated with the write-down in the carrying value of the existing Convair
fleet of aircraft and related spare parts and the transition from that fleet.

All businesses in this division had improved revenue and earnings compared to
the pcp. Increased volumes from within our existing customer base, quality
new business wins and some improved pricing all contributed to this result.
Additionally, innovative new and expanded services across our businesses
within this division realised new revenue and increased market share. Our
larger businesses of New Zealand Couriers, Post Haste, Castle Parcels and NOW
Couriers experienced particularly strong growth in the first three quarters
of the year, whereas the final quarter experienced lower levels of growth.

Freightways' business mail operator, DX Mail, continued to grow market share
in the postal services market. DX Mail's growth has come from customers who
still require overnight delivery for their standard-priced letters. DX Mail
has increased its postie delivery fleet in response to this positive market
demand. The Dataprint business, which is positioned higher on the supply
chain than DX Mail with a full suite of both physical and digital
transactional mailhouse services, also achieved a strong result through
increased market share in all of its service lines.

Branch relocations to larger premises that occurred during the year or are
planned to occur in the coming year include Auckland's North Harbour & East
Tamaki, New Plymouth, Tauranga, Dunedin and Palmerston North.

The transition from Convair aircraft to Boeing 737-400 aircraft will occur
between February and May 2016. Boeing 737-400's are expected to provide
increased capacity, faster sector speeds, savings in annual capital
expenditure and operating costs and reduced carbon emissions per item of
freight carried.

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 $122 million was 18% above the pcp.

EBITDA of $29 million and EBITA of $24 million were 18% and 20% higher than
the pcp, respectively. These earnings amounts exclude the non-recurring item
discussed above of $0.65 million in the 2015 financial year and $1.25 million
in the pcp.

Growth on both sides of the Tasman has been consistently strong throughout
the year. Demand for physical storage services for both documents and
computer media continues to increase. Newly-introduced digital information
management services have gained support from existing customers and assisted
the winning of new customers. The document destruction businesses,
particularly Shred-X in Australia, have seen increased demand for secure
destruction services and improved prices from the sale of shredded paper for
recycling. LitSupport, acquired in December 2014, is not yet trading to our
expectations. The renegotiation of two major customer contracts and
investment in additional sales resource since acquisition has meant that
earnings are not yet at anticipated levels. If earnings targets are not
achieved by December 2015, up to A$5m of the purchase price will be
reimbursed by the vendors. Investment in larger document storage facilities
in Queensland and South Australia occurred during the year, as well as the
establishment of new document destruction facilities in New South Wales and
the Australian Capital Territory. A new facility has been identified in
Sydney to enable the consolidation of TIMG's business units, which are
currently operated from 3 existing locations, and will be operational in
2017. A one-off charge of $0.65 million ($0.45 million after tax) relating to
the future relocation of these businesses has been treated as a non-recurring
item in this full year result.

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 year have been funded from a combination of operating cash flows and
borrowings from existing finance facilities.

Capital expenditure of $14 million was invested during the year, primarily to
provide capacity for growth, including expenditure on facilities and related
equipment, IT infrastructure and airfreight capability.

OUTLOOK

Freightways' businesses are well-positioned to benefit from the growth
opportunities that exist in both the express package & business mail and
information management markets.

The express package market is expected to continue to expand, albeit not at
the same rate as seen in this full year result. This outlook is consistent
with general economic forecasts and has been evident in express package
volumes in the fourth quarter of the 2015 financial year. The business mail
operations of DX Mail and Dataprint are expected to sustain their positive
growth, largely from market share gains.

The information management market is expected to continue to grow due to the
service and cost advantages for 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 continue to seek complementary and substitute
electronic services relating to the creation and management of business
information, which Freightways' businesses are also able to offer.

Capital expenditure for the full year is expected to be approximately $20
million to support the growth and development of both Freightways operating
divisions. Overall cash flows are expected to remain strong throughout the
2016 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 Freightways 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 again evident in this record result.
Accordingly, the Directors have been able to declare a fully imputed, 12.5
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:00268501 For:FRE    Type:FLLYR      Time:2015-08-17 09:53:09