Ann: HALFYR: FRE: Half Year Results to 31 Dec 201

• Release Date: 18/02/13 11:56
• Summary: HALFYR: FRE: Half Year Results to 31 Dec 2012 and Interim Dividend
• Price Sensitive: No
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FRE
18/02/2013 09:56
HALFYR

REL: 0956 HRS Freightways Limited

HALFYR: FRE: Half Year Results to 31 Dec 2012 and Interim Dividend

SUMMARY OF PRELIMINARY HALF YEAR ANNOUNCEMENT

Name of Listed Issuer: Freightways Limited

Reporting Period: 6 months to 31 December 2012.

This report has been prepared in a manner which complies with generally
accepted accounting practice and fairly presents the matters to which the
report relates and is based on unaudited financial statements. These
financial statements have been subject to an independent review by our
auditors, PricewaterhouseCoopers.

CONSOLIDATED INCOME STATEMENT

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

OPERATING REVENUE:
206,712; 8%; 192,183

PROFIT BEFORE INTEREST AND INCOME TAX
34,624; 7%; 32,273

Net interest and finance costs
6,661; (4%); 6,971

PROFIT BEFORE INCOME TAX
27,963; 11%; 25,302

Income tax
6,929; 9%; 6,333

NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS
21,034; 11%; 18,969

Earnings per share:
13.7; 11%; 12.3

Interim Dividend (fully imputed)
9.0cps; 8.5cps
Record date: 15 March 2013
Payment date: 2 April 2013
Appendix 7 is attached.

Detailed information: The Half Year Report December 2012 and the presentation
are attached and can also be located in the Investor Relations section of
Freightways' website (www.freightways.co.nz).

HALF YEAR REVIEW
From the Chairman and Managing Director

The Directors are pleased to present the financial result of Freightways
Limited (Freightways) for the half year ended 31 December 2012, that was
above the prior half year in all respects and a record result for the
company.

Highlights include sustaining the growth momentum in the express package
businesses throughout the half compared to a very strong prior comparative
period (pcp), the deployment of several customer-facing technology
initiatives which added further value to the service we already provide, and
market share growth we achieved in Australia from the winning of some
significant nationwide customers.

Operating performance

Consolidated operating revenue of $207 million for the half year was 8%
higher than the pcp.

EBITDA (excluding non-recurring items) of $40 million for the half year and
EBITA (excluding non-recurring items) of $34 million for the half year were
9% and 8% higher than the pcp, respectively.

Consolidated NPAT (excluding non-recurring items) of $20 million for the half
year was 10% higher than the pcp.

Cash flows generated from operations were again strong at $37 million.

Earnings per share (EPS) for the half year (excluding non-recurring items)
was 13 cents per share, an improvement of 9% over the pcp.

A one-off $1 million EBITA benefit ($1 million after tax) relating to the
reversal of an accrued acquisition earnout payment that is not expected to be
payable when it falls due on 30 June 2013 has been recorded in the Income
Statement. This amount has been treated as a non-recurring item and has not
been included in the above operating revenue and earnings numbers. The
business that this acquisition earnout payment relates to is performing well,
albeit it is not expected to reach the performance hurdle that would trigger
this final earnout payment.

Dividend

The Directors have declared an interim dividend of 9.0 cents per share, fully
imputed at an effective tax rate of approximately 28%, as the last imputation
credits at 30% are used and the balance of the dividend is imputed at 28%.
This represents a pay out of approximately $13.9 million compared with $13.1
million for the pcp interim dividend of 8.5 cents per share. The interim
dividend will be paid on 2 April 2013. The record date for determination of
entitlements to the interim dividend is 15 March 2013.

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

REVIEW OF OPERATIONS

Strong results have again been achieved in both the express package &
business mail and information management divisions.

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, DX Mail and
Dataprint.

Operating revenue of $158 million for the half year was 6% higher than the
pcp.

EBITDA of $29 million for the half year was 4% higher than the pcp and EBITA
of $26 million for the half year was 2% higher than the pcp.

The sustained performance of the express package & business mail division in
the first and second quarters, that again demonstrated steady year-on-year
improvement, is encouraging, particularly given the very strong performance
experienced in the prior year. Underpinning this result was growth in volumes
from existing customers, pricing improvement and some acquired revenue. We
have continued to develop and extend our suite of services and how we take
them to market. Technology-based innovation plays an important part in our
service offer. A number of technology-based initiatives have been deployed
recently, following the completion of a major IT project in the prior year.
Overall margin as a percentage of revenue was slightly below the prior year
due to the currently higher cost of servicing the Canterbury region and the
impact of reduced postal volumes from existing customers in our business mail
operations. The recently acquired Dataprint is performing well and to
expectation.

Overall, Freightways' express package & business mail division has been able
to once again demonstrate its resilience and its growth attributes to deliver
a good half 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 $50 million for the half year was 15% above the pcp.

EBITDA of $11 million for the half year was 21% higher than the pcp and EBITA
of $9 million for the half year was 23% higher than the pcp.

The information management division has again recorded a very good result,
with growth occurring in all locations that we operate from in both New
Zealand and Australia. This growth is offsetting the impact of the currently
low prices we continue to receive from the sale of recycled paper from the
document destruction operations. A number of contingencies to mitigate the
impact of these reduced prices have been implemented, however the
contribution from this particular revenue source remains significantly lower
than the pcp. Following the recent gaining of another significant nationwide
customer, the Shred-X business has invested in resources to extend its paper
collection network beyond metropolitan areas to regional areas throughout the
east coast of Australia.

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.  Net bank borrowings
increased by $4 million during the half year; in part to fund the recent
acquisition of Dataprint in July 2012.

Capital expenditure of $7 million was invested during the half year to
maintain Freightways' airfreight and IT infrastructure and to support the
group's growth strategies.

OUTLOOK

Overall we expect to be operating in a slow growth environment for the
foreseeable future. We do however remain mindful of any further deterioration
in the global economy that will inevitably influence the markets that we
operate in.

The positive momentum that we have been achieving in our express package
businesses is expected to continue at similar levels for the foreseeable
future. Along with gradual growth in our traditional customer base, we are
experiencing continued strong growth in volume that originates from
businesses and consumers shopping online. Our business mail operations, which
are a smaller part of this division, will continue to face declining letter
volumes, though we do expect it to offset much of this decline by increasing
its share of the market.

The growth that we have consistently been achieving in the information
management division is expected to continue. Strong market support for the
services we provide and the gaining of a number of nationwide customers
following our investment in capacity and resources in recent years is very
positive. A number of new digital services to complement our traditional
physical information management services have recently been introduced. No
near-term improvement is expected in the prices we receive from the sale of
recycled paper, that continue to track significantly lower than we were able
to achieve in the prior year.

Capital expenditure for the full year ending 30 June 2013 is expected to be
$14 million to support the growth and development of both the Freightways'
operating 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 record half year result. The positive features of
the markets it operates in, the resilience of its business models 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 9.0 cents per share interim dividend.

The Directors acknowledge the outstanding work and ongoing dedication of the
Freightways team of people throughout New Zealand and Australia.
End CA:00233051 For:FRE    Type:HALFYR     Time:2013-02-18 09:56:07