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

• Release Date: 24/02/14 11:55
• Summary: HALFYR: FRE: Half Year Results to 31 Dec 2013 and Interim Dividend
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					FRE
24/02/2014 09:55
HALFYR

REL: 0955 HRS Freightways Limited

HALFYR: FRE: Half Year Results to 31 Dec 2013 and Interim Dividend

SUMMARY OF PRELIMINARY HALF YEAR ANNOUNCEMENT

Name of Listed Issuer: Freightways Limited

Reporting Period: 6 months to 31 December 2013.

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:
218,282; 6%; 206,712

PROFIT BEFORE INTEREST AND INCOME TAX
35,686; 3%; 34,624

Net interest and finance costs
5,942; (11%); 6,661

PROFIT BEFORE INCOME TAX
29,744; 6%; 27,963

Income tax
8,001; 15%; 6,929

NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS
21,743; 3%; 21,034

Earnings per share:
14.1; 3%; 13.7

Interim Dividend (fully imputed)
10.0cps; 9.0cps
Record date: 21 March 2014
Payment date: 7 April 2014
Appendix 7 is attached.

Detailed information: The Half Year Report December 2013 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 2013.

Highlights include the widespread strength of this result, which has
delivered record performance in the express package and information
management businesses, the successful execution of a number of acquisitions
that has enhanced the strategic positioning of the Company, and express
package market leader New Zealand Couriers reaching the 50th year milestone.

Operating performance

In respect of the prior comparative period (pcp) for the half year ended 31
December 2012, a one-off $1 million non-taxable benefit to operating profit
relating to the reversal of an accrued acquisition earnout payment that was
not payable was recorded in the Income Statement as a non-recurring item. The
Directors believe that this non-recurring income amount should not be
included when assessing the underlying operating performance of the Company
and again this benefit has been excluded from the pcp numbers referred to in
this narrative.

Consolidated operating revenue of $218 million for the half year was 6%
higher than the pcp.

Earnings (operating profit) before interest, tax, depreciation and
amortisation (EBITDA), of $42 million for the half year and Earnings
(operating profit) before interest, tax and amortisation (EBITA) of $36
million for the half year were 6% and 7% higher, respectively, than the pcp.

Consolidated net profit after tax (NPAT) of $22 million for the half year was
9% higher than the pcp.

Cash flows generated from operations were again strong at $40 million.

Earnings per share (EPS) for the half year was 14.1 cents per share, an
improvement of 8% over the pcp.

Dividend

The Directors have declared an interim dividend of 10 cents per share, fully
imputed at a tax rate of 28%. This represents a pay out of approximately
$15.4 million compared with $13.9 million for the pcp interim dividend of 9
cents per share. The interim dividend will be paid on 7 April 2014. The
record date for determination of entitlements to the interim dividend is 21
March 2014.

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

Divisional results are provided below for the express package & business mail
division and the information management division for the half year ended 31
December 2013.

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 $168 million for the half year was 7% higher than the
pcp.

EBITDA of $31 million for the half year and EBITA of $28 million for the half
year were 6% and 7% higher than the pcp, respectively.

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 wide range of industry sectors. A particularly positive
characteristic of our half year performance is that it was widespread, with
all Freightways brands recording improved performance compared to the pcp.
Underpinning this result is the successful execution of a range of business
strategies that have been rewarded with continuing support and progressively
increasing activity from our existing customer base. Quality market share
gains and pricing improvement, that has assisted in offsetting cost
increases, have also been achieved during the period.

Freightways' suite of express package brands includes the iconic New Zealand
Couriers, or NZC, as it is often labelled. NZC was the pioneer of New
Zealand's express package industry when it started as a local door-to-door
delivery company in 1964. Demand grew quickly and so did the services it
offered. Today NZC services every New Zealand town and city and delivers to
around 98% of all addresses throughout the nation. NZC's business model is
supported by a large team of employees and a fleet of independent contractors
who provide the physical pick-up, linehaul and delivery of packages,
including some individuals who have contracted to NZC for over 30 years.
NZC's growth and development has been characterised by constant operational
and service innovation and, most importantly, by a service culture that sets
it apart as a market leader. 2014 sees NZC reach its '50th year' milestone.

Our business mail operator, DX Mail, is successfully executing a wide range
of growth strategies. At the half year its performance, as expected, was
behind the pcp, however the traction it is achieving in the market is
encouraging, particularly in regards to its physical postal delivery
business. On the back of customer demand, DX Mail continues to expand its
nationwide offering of 'overnight' delivery for standard-priced letters. DX
Mail's strategies also include working alongside its existing and new
customers as they contemplate the benefits of moving to increased digital
communication, and accordingly is experiencing good activity levels in the
digital services offered by its Dataprint mailhouse business.

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 $51 million for the half year was 3% above the pcp.

EBITDA of $12 million for the half year and EBITA of $10 million for the half
year were 5% and 8% higher than the pcp, respectively.

The information management division has again recorded a strong result on
both sides of the Tasman, with revenue growth in their respective currencies
of 13% in New Zealand and 9% in Australia ahead of the pcp.

Growth in document and computer back-up tape storage, increased document
destruction service activity and a growing take-up of the digital services
offered by this division have all contributed to this strong performance.
Four acquisitions were completed during the latter stages of the half year
that add scale to our existing operations and significantly expand our
customer base. All these acquisitions have migrated successfully and are at
this early stage performing to expectations.

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 half year have been funded from operating cash flows and an increase of
approximately $9 million in net debt drawn from existing finance facilities.

Capital expenditure of $9 million was invested during the half year,
primarily to provide capacity for growth, including expenditure on facilities
and related equipment, IT infrastructure and airfreight capability.

OUTLOOK

We expect the positive growth evident in this half year result to continue
for the foreseeable future.

Within our express package businesses we are particularly encouraged by the
growth that has led to this half year result. 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 and
overall declining physical letters market, despite which it is expected to
continue to attract increasing customer demand for its street delivery,
mailhouse and digital services (that also leverages the information
management division's capabilities).

The growth that we are experiencing in our information management businesses
is expected to continue and will be compounded by the benefit of our
newly-acquired businesses. Revenue earned from the sale of recycled paper is
expected to remain at similar levels to those which have been achieved within
this half year result and are not expected to recover in the near term.

Capital expenditure for the half year was $9 million and is expected to be
approximately $16 million to support the growth and development of both
Freightways operating divisions. Overall, cash flows are expected to remain
strong throughout the 2014 financial year.

Freightways will continue to seek out and develop growth opportunities,
including acquisitions and alliances that complement its core capabilities.

Subject to business factors beyond its control, Freightways is well
positioned to benefit from any 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 and flexibility 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 10 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 and in
particular acknowledge NZC's 50th year.
End CA:00247391 For:FRE    Type:HALFYR     Time:2014-02-24 09:55:53