Freightways Limited

Wednesday 7th October 2015

Freightways Limited (FRE.NZ) is a provider of express package services throughout New Zealand, with complementary business servicing the information management and business mail sectors. The Company operates in three segments: Express package & business mail, which consists of network courier, point-to-point courier and postal services; Information management, which consists of secure paper-based and electronic business information management services, and Corporate and other, which consists of corporate, financing and property management services. The Express Package & Business Mail division operates through New Zealand Couriers, Post Haste, Castle Parcels, NOW Couriers, Pass The Parcel, SUB60, Kiwi Express, DX Mail, Fielddair Holdings Ltd and Air freight NZ Ltd. The Information Management division operates through Archive Security, Document Destruction Services and Data Security Services. In December 2013, the Company acquired Advance Security Destruction Services and Docushred. Freightways Limited was founded in 1964 and is based in Penrose, New Zealand. Freightways bought Australian information management Company LitSupport in 2014.

Freightways posted a 16% gain in full-year profit for FY 2015, driven by growth in both of its express package and business mail business and Information Management business. The results stated excluded the following items

· 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

· 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);

- 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).

Excluding the above items Freightways reported:

· Operating revenue climbed 11%t to $479.5 million.

· EBITDA of $95.5 million for the year and EBITA of $82.8 million for the year were 14% and 15% higher than the previous corresponding period (pcp), respectively.

· Earnings per share (EPS) for the year was 32.2 cents per share, an improvement of 15% over the pcp.

· Cash flows generated from operations were again strong at $98.8 million.

Sales at express packaging and business mail rose 8.4% to $360 million and earnings before interest, tax, depreciation and amortization (EBITDA) climbed 12.6% to $68 million. 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. Freightway’s larger businesses (contributing 75% of Total revenue) 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. The Dataprint business also achieved a strong result through increased market share in all of its service lines.

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