Ann: HALFYR: FLI: IPO Earnings Forecast Exceeded, Interim...

• Release Date: 23/02/16 08:32
• Summary: HALFYR: FLI: IPO Earnings Forecast Exceeded, Interim Dividend Declared
• Price Sensitive: No
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					FLI
23/02/2016 08:32
HALFYR
PRICE SENSITIVE
REL: 0832 HRS Fliway Group Limited

HALFYR: FLI: IPO Earnings Forecast Exceeded, Interim Dividend Declared

FLIWAY GROUP EXCEEDS IPO EARNINGS FORECAST, INTERIM DIVIDEND DECLARED

FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
HIGHLIGHTS:

o 1H16 earnings well ahead of 1H16 Prospective Financial Information (PFI)
forecasts, NPAT of $3.58 million, up 25.0% on PFI
o 12MDec15 Pro-Forma NPAT ahead of PFI forecast by 17%, core financial
objectives achieved
o Challenging revenue environment with lower fuel and shipping rates
o Continued improvements in capacity management in the domestic business unit

o Payback validated on capital expenditure for HPMV opportunity invested
prior to NZX listing
o New Christchurch site construction completed in time, adding 2,000 sqm
warehousing
o Working capital management and earnings over-delivery generated strong cash
flows
o Net debt of $6.4 million at 31 December 2015, 28.5% lower than PFI forecast

o Interim ordinary dividend declared of 3.3 cents per share

New Zealand Freight and Logistics business Fliway Group Limited (NZX:FLI)
today reports earnings for the six months ended 31 December 2015 (1H16)
exceeded the PFI forecasts contained in its IPO prospectus.

Key financial metrics
$000's, Unaudited

1H16 Actual, 1H16PFI(1), Var %, 1H15 Actual,
12MDec15Actual, 12MDec15PFI1

Sales Revenue
43,822, 44,749, -2.1%, 44,371
83,620, 85,642

Operating Profit
4,450, 3,615, 23.1%, 3,223
4,686, 3,390

Net Profit after Tax
3,580, 2,865, 25.0%, 2,420
3,350, 2,092

Pro-Forma EBIT(2)
5,316, 4,329, 22.8%, 3,833
8,354, 7,107

Pro-Forma EBITDA(3)
6,325, 5,541, 14.1%, 4,708
10,546, 9,514

Pro-Forma NPAT
3,580, 2,865, 25.0%, 2,240
5,335, 4,546

(1)PFI is the prospective financial information included in the Fliway
prospectus dated 6 March 2015 (as amended on 19 March 2015).
(2)EBIT is earnings before interest and tax and is a non-GAAP measure and is
reconciled below.
(3)EBITDA is earnings before interest, tax, depreciation and amortisation and
is a non-GAAP measure and is reconciled below.

Group revenue of $43.8 million for 1H16 was slightly below 1H15 by 1.2% and
2.1% below 1H16PFI, as a result of a reduced recovery of fuel costs to
customers in the Transport business and lower international shipping rates.
Sound cost management resulted in a pleasing Pro-forma EBIT of $5.3 million
for 1H16 which was up 38.7% on 1H15 and 22.8% ahead of 1H16 PFI. The
resulting net profit after tax (NPAT) of $3.6 million was 59.8% above the
prior year and 25.0% above PFI.

For the 12 months ended 31 December 2015 (12MDec15), comparing performance
against 12Dec15 PFI, pro-forma NPAT of $5.3 million was 17.0% above the
forecasted $4.5 million.  The pro-forma adjustments accounted for the cost
disparity year on year of listing and being a listed company.  Pro-forma EBIT
for 12MDec15 of$8.4 million was 17.5% ahead of the company's 12MDec15 PFI
forecast of $7.1 million, and pro-forma EBITDA of $10.5 million was 10.6%
ahead of the 12MDec15 PFI forecast.

Fliway Group Limited's Chairman, Craig Stobo, said: "The 2016 interim result
is the second and final forecast reporting point the business was required to
meet following our NZX listing in April 2015. Fliway has delivered a very
good result and has exceeded on its core financial objectives at both
reporting points.  The company has continued to demonstrate earnings growth
via payback on capital expenditure invested and continued improved capacity
management in the domestic business unit, in the face of a challenging
trading environment."

OPERATIONAL PERFORMANCE

Within the Domestic division, the Transport business unit continued to
improve its operating costs.  This was mainly through optimising the line
haul cost base via the HPMV capital investment and the business unit
benefited from the ongoing strategy of selling to capacity in the network.

In the Logistics business unit, the larger warehouse premises in Auckland
allowed Fliway to facilitate growth from existing customers and on-board new
work, resulting in both higher storage and activity revenues.  In Wellington,
where the Fliway warehouse was previously operating below capacity, the new
customers signed up in 2H15 resulted in the warehouse being fully utilised.

In November 2015, the Transport business unit moved into its new Christchurch
site, which delivers a larger, more efficient transport dock.  The completed
5,000 square metre building will see the Warehousing business relocate there
in February 2016, providing additional warehousing capacity of 2,000 square
metres.  This new site will allow Fliway to facilitate the growth in customer
warehousing requirements within the Christchurch market.

The Fliway International division saw lower revenue than forecast as a result
of reduced shipping rates, and some customer churn.  The volatile pricing on
shipping rates, combined with lower volumes, meant that the International
division experienced softer revenue during the first half of FY16 than
anticipated, and this will likely continue for the remainder of FY16.  The
International division remains focused on bringing in new customers and
ensuring its cost base is optimised.

The UPS-Fliway joint venture delivered a strong contribution to the group
result with growth in revenue ahead of forecast and the payment of the first
half dividend expected in the second half of FY16.

Fliway's CIO Peter Sapiatzer has resigned, and will be replaced by Colin
Burrow on March 7th 2016. Peter is continuing to work with Fliway through the
transition period to ensure a smooth handover.

NET DEBT AND CAPITAL MANAGEMENT

Operating cash flows for the half year were $3.8 million, ahead of FY15 by
$1.2 million and ahead of PFI forecast by $0.3 million, as a result of higher
earnings.

Capital expenditure totalled $0.9 million, $0.3 million below the PFI
forecast, mainly as a result of longer than anticipated lead times on new
vehicle acquisitions and timing of the warehouse management system (SCE10)
project spend.

A combination of improved working capital and increased earnings resulted in
Fliway having a better net debt position than forecast in the PFI, with net
debt of $6.4 million as at 31 December 2015 compared to forecast net debt of
$8.9 million.  Fliway has renegotiated its banking agreement resulting in the
entire bank debt capacity of $18 million being a re-drawable facility. This
will enable more efficient management of net debt without any loss of
capacity or flexibility.

DIVIDEND

Consistent with the prospectus guidance with respect to the percentage of
NPAT payable and the weighting between first half and second half earnings,
Fliway's Directors have approved the payment of an interim ordinary dividend
of 3.3 cents per share. The dividends are payable on 20 April 2016 to
shareholders recorded on the share register as at 5.00pm (New Zealand time)
on 31 March 2016.

OUTLOOK

Fliway Group Limited's Managing Director, Duncan Hawkesby, said: "It is
satisfying that the first half of FY16 has seen significant earnings growth
over the prior comparable period and we are pleased with the progress at our
new Christchurch site as the building nears completion. Fliway is now very
well positioned and we are focused on growing the revenue line and building a
larger more efficient business by driving harder for growth and capitalising
on future opportunities."

Mr Stobo further commented: "As communicated to our shareholders at the
Annual General Meeting in October 2015, we continue to experience softer
revenue than forecast, however, our profit position continues to strengthen,
delivering improved earnings and positioning the business well for future
growth.  We will continue to seek to increase our relationships with existing
customers, pursuing work in new sectors and looking to grow strategically
through acquisitions. The Fliway balance sheet is robust, operating cash
flows are strong and the capacity the business has to respond to
opportunities remains."

For further information contact:

Duncan Hawkesby
Managing Director
Ph: +64 (0) 21 882 882

or

Jim Sybertsma
Chief Financial Officer
Ph: +64 (0) 275 716 464

ABOUT FLIWAY
Listed on the NZX Main Board (NZX:FLI), Fliway is one of New Zealand's
largest fully integrated logistics providers.  We offer seamless global
supply chain solutions - from international freight to warehousing, and
domestic delivery to businesses or the home.  We have a great team of over
400 people, backed by a strong network of global partners, built off an
extensive New Zealand footprint.  For more information visit
www.fliway.co.nz.

APPENDIX: EXPLANATION OF NON-GAAP FINANCIAL INFORMATION, RECONCILIATION
BETWEEN REPORTED EARNINGS AND PRO-FORMA EARNINGS

Fliway monitors its profitability using the non-GAAP financial measures of
EBIT and EBITDA. The use of EBIT removes the effects of Fliway Group's
capital structure and tax position and the impact of certain non-cash items
(fair value movements in financial instruments and other gains or losses on
the sale of assets). The use of EBITDA further removes the effect of
depreciation and amortisation.

A reconciliation between EBIT, EBITDA and NPAT is presented below. The
measures are not defined by NZ GAAP, IFRS, or any other body of accounting
standards, and therefore Fliway's calculation of these measures may differ
from the similarly titled measures presented by other companies. These
measures are intended to supplement the NZ GAAP measures presented in
Fliway's financial information. They should not be considered in isolation
and are not a substitute for NZ GAAP measures.

Pro Forma EBITDA and Pro Forma EBIT are non-GAAP profit measures which
reflect a number of historical and prospective Pro Forma adjustments. Fliway
uses EBITDA to evaluate the operating performance of the business without the
impact of depreciation, amortisation, capital structure and the tax position.
Fliway uses EBIT to evaluate the operating performance over time without the
impact of the capital structure and Fliway's tax position.

Fliway considers that it is common practice to evaluate profitability based
on both EBITDA and EBIT which allow for a better comparison of operating
performance with that of other companies in comparison to NZ GAAP measures,
although caution should be exercised as other companies may calculate EBITDA
and EBIT differently.

In addition, EBIT and EBITDA also include the attributed EBIT or EBITDA from
Fliway's 50% interest in UPS-Fliway as set out below. $000's
1H16 Actual, 1H16 PFI, 1H15Actual, 12MDec15Actual, 12MDec15PFI

Reported Operating Profit
4,450, 3,615, 3,223, 4,686, 3,390

Adjust for:
Listing Costs
-, -, -, 2,035, 2,505

Public Company Costs (Full Year Effect)
-, -, -250, -70, -70

UPS-Fliway EBIT
848, 714, 831, 1,602, 1,282

Loss on sale
18, -, 29, 101, -

Pro-Forma EBIT
5,316, 4,329, 3,833, 8,354, 7,107

Depreciation
1,009, 1,212, 876, 2,172, 2,407

Pro-Forma EBITDA
6,325, 5,541, 4,708, 10,526, 9,514

Pro-Forma NPAT
3,580, 2,865, 2,240, 5,335, 4,546
End CA:00278115 For:FLI    Type:HALFYR     Time:2016-02-23 08:32:49