Annual Shareholders Meeting – Chairman’s & MD’s Commentary

Annual Shareholders Meeting 2017

Sue Sheldon
Chairman

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Agenda
1.Chairman’s Introduction
2.Managing Director’s Review and Trading Update
3.Resolutions

General Highlights
Completion of significant
projects to budget and
within timetable that
ensure important future
capacity for both
divisions
Strength of underlying
volume growth and
margins in the Express
Package & Business
Mail division
Execution of robust
contingency plans that
ensured least possible
service disruption to
customers, as a result of
the North Canterbury
earthquake
Performance of our
Information
Management
businesses; other than
TIMG Australia, which
demonstrated improved
results in the second
half of the year

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Note
2017
$M
2016
$M
Increase
%
Revenue545.3505.47.9
EBITA (before non-recurring items)(i)89.387.71.9
Non-recurringitems3.7(6.3)
EBITA(ii)93.081.414.3
NPAT (before non-recurring items)(iii)56.654.44.1
Non-recurring items after tax4.3(4.6)
NPAT(iv)60.949.822.3
Basic EPS (cents)
(before non-recurring items)
36.535.1
Financial Highlights
NOTES
(i)Operating profit before interest, tax and amortisation, before non-recurring items
(ii)Operating profit before interest, tax and amortisation
(iii)Net profit after tax (NPAT), before non-recurring items
(iv)Profit for the year attributable to the shareholders

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Express Package & Business Mail
Jun-17
$M
Jun-16
$M
Change
Operating
Revenue
402.6370.38.7%
EBITDA*70.466.55.8%
EBITA*65.362.15.1%
EBITA Margin*16.2%16.8%
* Excluding non-recurring items

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Information Management
Jun-17
$M
Jun-16
$M
Change
Operating
Revenue
144.2136.85.4%
EBITDA*32.733.2(1.5)%
EBITA*27.728.4(2.7)%
EBITA Margin*19.2%20.8%
* Excluding non-recurring items

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Final Dividend
•Finaldividend:14.75cps
•Imputationcredits:5.7361cps(at28%taxrate)
•Supplementarydividend:2.6029cps
•Recorddate:15September2017
•Paymentdate:2October2017
•NoDRPwasofferedinrespectofthisdividend

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Corporate Governance
•NewNZXCorporateGovernanceCode
•Asmallnumberofnewpoliciesandnewdisclosuresarerequired
•FREwillbeincompliancewiththisnewCodebytherequireddateof
30June2018

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Dean Bracewell Managing Director

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Agenda
1.Industry Overview and Business Description
2.Business Strategy
3.Trading Update
4.Outlook

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Express Package & Business Mail

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Network CourierPoint-to-PointBusiness MailSupport
Express Package & Business Mail

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Information Management

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ManageTransformDestroy
Archive SecurityImaging & document captureSecure destruction
DataBank & Data SecurityAutomated accounts payableeDestruction
FileSaverWorkflow SolutionsProduct destruction
Secure Distribution ServicesDigital mailroomPaper recycling
LitSupport –Bureau Services LitSupport -eDiscovery
Information Management

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Business Strategy

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Business Strategy
•Executeorganicgrowthopportunities
-Positioning,People,Performance,Profit
•Diversificationbyindustry
•Diversificationbygeography
•Executecomplementaryacquisitionandallianceopportunities

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Trading Update

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Operating Revenue
2
nd
Half
1
st
Half
-
100
200
300
400
500
600
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
$M
Year Ended 30 June

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EBITA
-
10
20
30
40
50
60
70
80
90
100
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
$M
Year Ended 30 June
2
nd
Half
1
st
Half

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Consolidated Financial Performance
Quarter ended:
Sep-17
$000
Sep-16
$000
Increase
OperatingRevenue143,236 133,8687.0%
EBITDA*26,938 25,9178.1%
EBITA*23,561 22,1376.4%
NPATA*15,51514,5666.5%
NPAT*15,05114,1486.4%
* Excluding non-recurring items

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Quarter ended:
Sep-17
$000
Sep-16
$000
Increase
OperatingRevenue105,34098,2187.3%
EBITDA18,18517,3175.0%
EBITA16,53716,1592.3%
EBITAMargin15.7%16.5%
Express Package & Business Mail

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Quarter ended:
Sep-17
$000
Sep-16
$000
Increase
OperatingRevenue38,379 35,9376.8%
EBITDA*9,245 7,99515.6%
EBITA*7,9236,78316.8%
EBITAMargin*20.6% 18.9%
Information Management
* Excluding non-recurring items

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Outlook

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Outlook
•ThemarketsinwhichFreightwaysoperatesinremainpositive
•Increasedvolumeandactivityevidentinthistradingupdatehas
providedasoundstarttothe2018financialyear
•Freightwayscontinuestotargetyear-on-yearearningsgrowth
•ExpressPackage&BusinessMail:Investmentincapacitywillbe
madeinbothairfreightandpremisestoaccommodatecurrent
volumesandgrowth
•InformationManagement:Betterresultscurrentlybeingachievedat
TIMGAustraliaareexpectedtocontinuetocontributetotheoverall
positiveperformanceofthisdivision
•Capitalexpenditureofapproximately$14millionwillbeinvestedto
supportgrowthinitiatives.Cashflowsexpectedtoremainstrong
throughout2018
•Strategicgrowthopportunities,includingacquisitionsandalliances,
willbeexecutedwheretheymakecommercialsense

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Dean Bracewell

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Achievements since listing in 2003
1
•CompoundAnnualGrowthRate(CAGR):15%p.a.
•TotalShareholderReturn(TSR):>600%
$1.60
$7.60
20032017
Share Price
$0.2B
$1.2B
20032017
Market Capitalisation
$0.2B
$0.5B
20032017
Assets

KIA ORA, WELCOME
Questions

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Resolutions
•Re-election of Directors
•Approval of Directors’ Fees
•Authority to fix Auditor’s Remuneration

Annual Shareholders Meeting 2017

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ANNUAL SHAREHOLDERS MEETING


A. CHAIRMAN’S INTRODUCTION

Slide 1. Freightways – 26 October 2017, Annual Shareholders Meeting

Slide 2. Sue Sheldon, Chairman

Shareholders and guests, welcome to Freightways’ Annual Shareholders Meeting.
My name is Sue Sheldon and I am the Chairman of Freightways’ Board of
Directors.

Slide 3. Agenda

Before we get underway I will run through the structure of the meeting.

 I will begin with procedural matters, introduce the Freightways Board and some
of the team to you, and then summarise some of the Company’s 2017 highlights.
I will then ask Dean Bracewell, Freightways’ Managing Director, to provide a
review of the Company and an update on current trading performance.

 I ask that you hold all questions about the performance of the Company until the
close of the Managing Director’s presentation and direct them through the Chair.
Any questions related to resolutions should be asked when we consider those
resolutions.

 Following the Managing Director’s presentation, I will introduce the resolutions
as outlined in the Notice of Meeting. Again this year, polls will be held in respect
of the resolutions put to shareholders. The polls will be conducted following the
meeting.

 The Notice of Meeting, which includes the explanatory notes, was circulated to
all shareholders and I intend to take it as read.

The Company’s constitution prescribes a quorum requirement of 3 shareholders.
As you can see this requirement is met. As a quorum is present, the meeting is duly
constituted and I declare it open.

Proxies have been appointed for the purpose of this meeting in respect of
approximately 70 million ordinary shares. As was indicated on the proxy form,
where proxy discretion has been given, the Directors, and I as Chairman, intend to
vote those proxies we have received in favour of resolutions 1, 2 and 4 set out in
the Notice of Meeting. As also indicated on the proxy form, unless directed how to
vote by the shareholder giving the proxy in respect of resolution 3 relating to
Directors’ fees, the Directors, including myself, will not be able to vote on
resolution 3 on behalf of the proxy.

I would now like to introduce those at the table with me:

Your Directors are:

 Dean Bracewell, Freightways’ Managing Director. As was announced to the
market in August, Dean has decided that the time is right for him to step aside
from Freightways. Dean joined the company in 1978 and was appointed
Managing Director in 1999. During his tenure, Dean has led a team that has
achieved significant growth and shareholder value accretion.

 Kim Ellis. Kim was appointed a Director in August 2009, having spent 28 years
in chief executive roles in a number of sectors, including 13 years as Managing
Director of Waste Management NZ Limited, and has developed businesses in
both New Zealand and Australia. Kim is now a professional director working
with both private and listed companies. Kim is Chairman of Metlifecare,
Sleepyhead Group and NZ Social Infrastructure Fund and a director of Port of
Tauranga.

 Mark Rushworth. Mark was appointed a Director in September 2015. Mark has
extensive experience in the technology sector, with a decade’s governance
experience, predominantly in the high tech and innovation space. An electrical
engineer by training, with widespread operations and marketing experience, he
spent 4 years on the senior executive team of Vodafone NZ through until 2010,
where among other things he had executive accountability for the fixed line
business and as executive director of marketing. Mark previously served as
CEO of Pacific Fibre, internet provider ihug and most recently, New Zealand’s
digital payments business Paymark Limited.

 Peter Kean. Peter was appointed a Director in July 2016. Peter brings to
Freightways many years of senior executive experience with the Lion group of
companies in both New Zealand and Australia. Peter's last executive roles were
as Managing Director of Lion Nathan New Zealand and Managing Director of
Lion Dairy and Drinks, based in Melbourne. Peter retired from Lion in 2014
and has since developed his career in governance. Peter is also a Director of
Sanford Limited, the New Zealand Rugby Union and a number of private
companies.

 I was appointed a Director of Freightways ahead of its IPO in 2003 and elected
Chairman in 2010. I am a Chartered Accountant and full-time professional
director with previous roles in a number of large organisations. I am currently a
Director of Contact Energy Limited and Real Journeys Limited and Independent
Chair of the Audit & Risk Management Committee of both Christchurch City
Council and Auckland Council. I am a former president of the New Zealand
Institute of Chartered Accountants and was made a Companion of the New
Zealand Order of Merit in 2007.

 Our 6
th
Director, Mark Verbiest, regrets that he has had to give his apologies to
shareholders for his inability to attend today. Mark was recently appointed to
the board of Meridian Energy, which unfortunately already had its AGM set
down for this morning. He is required to stand for election at that meeting. Mark
has been a Director of Freightways for more than 7 years. A lawyer by training,
he has widespread experience in the capital markets and digital & technology
businesses. Mark will complete his term as Chairman of Spark at the end of this
year, is Chairman of Willis Bond Capital Partners (a private equity fund) and
sits on the boards of ANZ Bank NZ, Meridian Energy (as noted) and MyCare
(a digital services company in the health sector). Mark is also a member of NZ
Treasury’s Advisory Board and Commercial Operations Advisory Board and is
a consultant to law firm Simpson Grierson.

Also at the table are:

 Mark Royle, Freightways’ Chief Financial Officer and Company Secretary.
Mark was appointed to these roles 17 years ago, having spent a number of years
prior to that with Freightways’ then Australian owner. As a member of the
senior executive team, Mark is a key contributor to the strategic direction and
performance of the Company. Mark has over 30 years accounting and
commercial experience of which 13 years were with a major international
chartered accounting firm.

 And it is my pleasure to introduce to you Mark Troughear, who will assume the
role of Chief Executive Officer in January 2018. One of Freightways’ strengths
is its succession depth and your Board was delighted to have been able to make
this key appointment from within the Freightways team, after a robust external
process. I’ll let Mark further introduce himself to you.

Thank-you Sue and good morning. And I’m equally delighted to have been
appointed to the CEO role. I joined Freightways in 1996 as a sales rep for New
Zealand Couriers and have worked through a number of sales, marketing and
general management roles over the subsequent 21 years.

I am currently responsible for overseeing the Information Management division in
NZ and Australia (which includes our newest acquisition in the medical waste
industry). I also look after a number of our NZ-based businesses in the Express
Package & Business Mail division.

My primary objective as CEO will be to work with our very capable team to build
on the successful performance of the company through the execution of our core
strategies. These strategies include; realising organic growth opportunities in both
the Business to Business niche and the fast growing Business to Consumer niche
of the market, driving the acceleration of growth in our new suite of digital
Information Management services and continuing to pursue complementary
acquisitions and alliances (including those in the medical waste industry).

On behalf of the Freightways team around both NZ and Australia, I’d like to
acknowledge and thank Dean for his outstanding contribution to the business over
many decades.

Thank-you Mark. Mark will be leading a team of 3,800 people in New Zealand and
Australia. By way of an introduction to some of these people on our wider team
and what they do, we will now play a short video from Freightways’ largest
subsidiary business, New Zealand Couriers. The video includes some footage of
Freightways’ new automated facility in Christchurch.

Also present today are representatives from the Freightways executive team who
you will be able to meet following the meeting. This executive team has
considerable experience, often in more than one Freightways business and has an
average tenure at Freightways of approximately 17 years per executive.

The Company’s Auditors, PricewaterhouseCoopers, are represented here today by
Leo Foliaki and the Company’s legal advisors, Russell McVeagh, are represented
here today by Pip Greenwood.

The Financial Statements for the year ended 30 June 2017 are set out in the
Company’s Annual Report that was released to shareholders last month.

I would now like to speak briefly to some of the financial highlights of
Freightways’ 2017 year. I will then ask Dean Bracewell to address you.

Slide 4. General highlights – 2017

The strength of the underlying volume growth in the Express Package & Business
Mail division, with consistent month-on-month growth, was a clear highlight of
Freightways’ again positive overall result. This volume is representative of a
positive economy, but it is also representative of the winning of good quality
market share and the successful execution of pricing strategies to offset rising costs.

The company has recently invested significantly in capacity to accommodate
current and expected future volumes. The projects related to this investment,
particularly in Christchurch, in Sydney, and in relation to both aircraft and IT, have
all been successfully completed.

The North Canterbury earthquake had a major impact on the operations of the
company. The execution of robust contingency plans ensured the least possible
service disruption to customers. Our team’s quick reaction to the issue, their
creation of additional capacity and restoration of service to customers was
outstanding.

The performance of our information management businesses, other than TIMG
Australia (that demonstrated improved results in the second half), was another
highlight of the year.

Slide 5. Financial highlights – 2017

This slide presents the reported 2017 result and the underlying trading result
compared to the prior comparative period, excluding the impact of non-recurring
items. EBITA refers to earnings (or operating profit) before interest, tax and
amortisation. NPAT refers to net profit after tax. And EPS refers to earnings per
share.

The 2017 non-recurring items are comprised of a benefit before tax of $5.6 million
relating to final acquisition payments no longer expected to be required, and a cost
of $1.9 million relating to the relocation of the TIMG business in Sydney. While
these non-recurring items are included in the full year financial statements
contained in your annual report, we believe for the purposes of assessing the
underlying year-on-year operational performance of Freightways, these one-off
items should be excluded and accordingly have been excluded for this presentation
and my commentary.

Consolidated operating revenue of $545 million for the 2017 full year was 7.9%
higher than the prior comparative period.

EBITA of $89.3 million was 1.9% higher than the prior comparative period.

Consolidated NPAT of $56.6 million was 4.1% higher than the prior comparative
period.

EPS for the full year (and again exclusive of non-recurring items) was 36.5 cents
per share, an improvement of 3.9% on the prior comparative period.

Overall, and particularly given the challenges to the company during the year,
Freightways delivered another sound annual result.

Slide 6. Express Package & Business Mail division - 2017 performance

Volume growth throughout the year was consistently strong, particularly so in the
peak month of December. This growth created pressure on the service capability
of this division at a time when it was transitioning to a new model of freighter
aircraft, relocating its South Island freight hub and implementing wide-reaching
operational contingencies in the aftermath of the North Canterbury earthquake.

A decision in February to introduce additional airfreight capacity through regularly
operating an extra return flight of a 737-400 aircraft and/or the chartering of a
Convair aircraft was made to provide essential capacity for the greater than
anticipated airfreight volume and for maintenance of service quality. While this
additional airfreight capacity comes at a cost, due to it not being immediately fully-
utilised, it is required to ensure a sustainable premium service offer. The possibility

of adding a fourth freighter aircraft to our fleet in the New Year is currently being
investigated.

Auckland’s growth North and West of the city has led to a decision to run a twin-
city operation within the greater metropolitan area. As such, new premises have
been leased in Albany to accommodate the current and expected growth in volume
from these areas for many years to come. These new premises will complement
and effectively extend the life of the existing site in Penrose.

Overall volume mix is gradually changing as consumers increasingly shop online,
resulting in Business to Consumer - or B2C - deliveries growing faster than
Business to Business - or B2B - deliveries. A wide range of initiatives are being
implemented to ensure these B2C deliveries are completed as efficiently as
possible and to the satisfaction of customers.

Freightways’ business mail operator, DX Mail, again extended its postal delivery
network to several additional locations around New Zealand to satisfy the
increasing demand for overnight and 5-day per week delivery of standard-priced
letters.

2017 certainly had its challenges for our express package & business mail division,
but despite these it performed very well and once again increased its year-on-year
earnings.

Slide 7. Information Management division - 2017 performance

Good results from Shred-X and TIMG New Zealand were in contrast to the
performance from TIMG Australia, which did not meet our expectation.

Within TIMG Australia, its LitSupport business performed at the bottom end of
the range of expectations set at the time of acquiring the business, and below the
prior comparative period. The possibility of this outcome was anticipated at the
time of acquisition and hence the purchase price payment for this business was
structured to reduce Freightways’ financial risk should it occur. This pricing
structure saw the LitSupport vendors refund part of the initial purchase price.
Restructuring of the LitSupport business (completed during November and
December 2016) and the winning of a number of new contracts did, as expected,
improve LitSupport’s performance in the second half of the 2017 financial year.

The relocation of three Sydney-based information management businesses into a
single purpose-built facility in Sydney was completed in the second half of the
year, on time and within budget.

Demand for the broad suite of services offered by TIMG in Australia and New
Zealand and the e-destruction services offered by Shred-X continues to gain
momentum. It is expected that these new revenue streams, that now also include
the collection and destruction of Medical Waste following our recent acquisition

in Sydney, will become an increasingly important part of the overall information
management division’s revenue and earnings in the near to medium term.

The North Canterbury earthquake also had significant repercussions for this
division, leading to the need to replace racking in our major Porirua site. The
project to remediate this site will continue for the next 12 months. Freightways has
comprehensive insurance which will cover the cost of this project.

Slide 8. Final Dividend - 2017

The Directors declared a final dividend of 14.75 cents per share, fully imputed,
which was paid at the start of this month. This represented a pay-out of
approximately $22.9 million compared with $22.5 million for the pcp; a 2%
increase. The full year’s dividend pay-out was in line with the Company’s dividend
policy of paying 75% of annual NPATA, excluding any non-cash, non-recurring
items.

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

The strength of Freightways’ business models, the expertise of its people and the
positive features of the markets it operates in were once again evident in this full
year result.

The Directors acknowledge the outstanding work and ongoing dedication of the
Freightways team of people throughout New Zealand and Australia.

Slide 9. Corporate Governance

The New Zealand Stock Exchange released a new Corporate Governance Code in
May this year that will take effect during 2018. As a responsible corporate citizen,
Freightways is naturally in compliance with the existing Code. The introduction of
a small number of new policies, some enhancements to existing policies and a
range of additional disclosures will ensure compliance with this new Code by the
required date of 30 June 2018. In this regard, new and revised policies will be
presented on a refreshed Freightways website in coming months and in future
annual reports and our website will include disclosures to meet the requirements
of the new Code.

I’ll now call on Dean Bracewell to address the meeting.

Slide 10. Freightways – Dean Bracewell, Managing Director

B. MANAGING DIRECTOR’S REVIEW AND TRADING UPDATE

Thanks Sue and thank-you ladies and gentlemen for coming along today.

Slide 11. Managing Director’s presentation agenda

My presentation will discuss some of the features of the industries that Freightways
works in and its businesses. I will then touch on Freightways’ over-arching
business strategy, before finishing with an update on recent trading performance
and our outlook for the remainder of the year ahead.

Slide 12. Express Package & Business Mail

Slide 13. Express Package & Business Mail (brands)

The multi-brand strategy that we operate in the express package industry targets
different niches of the market, including urgent one hour delivery, premium
through economy metropolitan, overnight to 2-day nationwide and international
deliveries. Our brands are highly-regarded and some of the most well-known in
the industry.

We pick up items typically up to 25 kilograms from a broad range of businesses
and individuals and deliver to businesses and homes throughout New Zealand and
overseas.

We also deliver letters overnight and 5 days per week in most urban locations
throughout New Zealand through our DX Mail business. Our DataPrint business
provides physical and digital transactional mailhouse services.

Our support businesses of Fieldair (which provides airfreight services), Parceline
(which operates our inter-city road linehaul network) and Freightways Information
Services (which provides our businesses with IT support and innovation) all play
a key part in the success of the express package & business mail division.

Our services are achieved by the coming together of teams of people and
infrastructure that includes vans, trucks, aircraft, a nationwide branch network and
technology that provides real-time visibility of key stages of the delivery process
to our customers.

The express package & business mail division currently contributes around 70%
of the revenue and earnings of the Freightways group.

Slide 14. Information Management

Slide 15. Information Management (brands)

TIMG provides both physical and digital information management services,
including document and data archiving, workflow solutions, document imaging
and conversion, media restoration, online back-up, disaster recovery, e-discovery

and digital mailrooms, to name a few. The demand for both the physical and digital
services we offer continues to increase in New Zealand and Australia.

We also collect paper from businesses, shred and bale it, and then sell it to paper
mills, which recycle it. In Australia, these secure document destruction services are
provided nationwide by Shred-X.

As announced, we have recently acquired a Medical Waste business which opens
up a new growth market for us. This business will be overseen by our Shred-X
team which has been successful in developing its business from a single state
operation 10 years ago to now being Australia’s largest secure document
destruction business, with operations in all states and territories of Australia.

The Information Management division contributes approximately 30% of
Freightways’ revenue and earnings.

Slide 16. Business strategy

Slide 17. Business strategy

Freightways’ strategy contains several key elements. At a high level these are:

 First, and most importantly, our organic growth strategy to enhance capability
and service levels wherever possible within each of Freightways’ existing
businesses to ensure the retention of existing customers and to grow market
share.

In this regard, our recent investment in capacity in both divisions and in IT is
designed to ensure we are able to accommodate and service forecast growth
from both our Business to Business and Business to Consumer customers, both
of which present many opportunities for the Company.

Disruption, whether in the form of new competition or new ways of servicing
customers, is viewed by us as creating more opportunity than risk for
Freightways, both in contributing to the growth of the overall market and
through enabling greater service efficiencies. Certainly in time to come we will
be talking with customers about autonomous vehicles in the air and on the road,
of an electric fleet of commercial vehicles, of increasing automation within our
operations and having far greater connectivity through our IT systems. As a
company, Freightways has a long and successful history of adapting to change
and of innovating alongside customer demand.

 Second, our ongoing strategy to diversify the Company into related industries,
including through acquisitions and alliances, to further strengthen the earnings
base and increase the Company’s resilience to adverse economic cycles.
 
 

An example of this is our recent entry into the medical waste industry. While
only a relatively small initial investment, we do naturally plan to grow our
presence in this industry.

 Third, our strategy to diversify activity away from a sole reliance on the
domestic New Zealand market. This has been achieved by establishing and
building scale in our operations throughout Australia over the past 10+ years.

We have made great progress in Australia and have much more to do to increase
the utilisation of the capacity that we have invested in.

The strategies I have outlined are designed to sustain Freightways’ profitability and
continue to deliver long-term value to shareholders.

Slide 18. Trading update

These next 2 slides present the long-term performance of your Company.

Slide 19. Operating revenue

This slide shows Freightways’ revenue results since its IPO in 2003.

Slide 20. EBITA

Our operating earnings (or EBITA) results over the same period are equally sound.

Slide 21. Consolidated financial performance – Q1 result

This slide provides Freightways’ financial performance for the 1
st
quarter period
from 1 July to 30 September 2017.

To enable an accurate comparison of the underlying operating performance of the
company, the 2016 EBITDA and EBITA results are presented exclusive of a net
$542,000 benefit, being the difference between a $934,000 non-cash benefit
relating to earn-out payments not required to be paid and $392,000 of one-off costs
relating to the relocation of our Sydney businesses. The net benefit after tax
excluded from the 2016 NPATA and NPAT is $660,000.
Consolidated operating revenue of $143.2 million was 7% higher than the prior
comparative period.

EBITDA of $26.9 million and EBITA of $23.6 million were 8.1% and 6.4% higher
than the prior comparative period, respectively.

Consolidated NPATA of $15.5 million and NPAT of $15 million were 6.5% and
6.4% higher than the prior comparative period, respectively.

This first quarter result represents a sound start to the financial year, the highlights
being; the strong revenue growth in the express package & business mail division,
the completion of our transition to new premises in Christchurch and the stepped
earnings improvement in the information management division.

Slide 22. Express Package & Business Mail division – Q1 result

Revenue growth in this first quarter has increased above the positive growth
experienced throughout the prior comparative period. Operating costs include the
higher cost of recent investment in additional airfreight capacity and premises,
including related one-off transition costs during the quarter to complete the merger
of the operations of four of our businesses in Christchurch into a single operating
team. When compared to the prior comparative period, there has been an increase
of approximately $0.3 milion in depreciation relating to our newly-commissioned
automation equipment and related IT. The EBITDA and EBITA increases above
the prior comparative period reflect a sound first quarter start to the 2018 financial
year.

Slide 23. Information Management division – Q1 result

The 2016 earnings result presented for this division has been adjusted, as I just
described in respect of the consolidated result.

Sound revenue growth and improved performance at TIMG AU, including from
its subsidiary business of LitSupport, contributed to this strong earnings result.
Also included in this quarter’s result is the first month’s trading from our new
Medical Waste business, acquired effective from 1 September and which is trading
to expectation.

Slide 24. Outlook

Slide 25. Outlook (key points)

The markets in which Freightways operates in both New Zealand and Australia
remain positive. The increased volume and activity, compared to the prior
comparative period, that is evident in this trading update has provided a sound start
to the 2018 financial year. Accordingly, Freightways continues to target year-on-
year earnings growth.

Within the express package & business mail division, investment has been made
in capacity, for both airfreight and larger premises on Auckland’s North Shore.
New Zealand Couriers will relocate there during October 2017, followed by Post
Haste and Castle Parcels in July 2018. This capacity, which is not initially fully-
utilised, comes at some cost, but enables us to better service current volumes and
projected growth. Within the information management division, the better results

currently being achieved at TIMG Australia, compared to the prior comparative
period, are expected to continue to contribute to the overall positive performance
of this division.

Overall capital expenditure for the 2018 financial year is now expected to be
approximately $14 million. Operating cash flows are expected to remain strong
throughout the 2018 financial year.

Strategic growth opportunities, including acquisitions and alliances that
complement existing capabilities, will be executed where they make commercial
sense.
 
This will be the last occasion that I will address you as the Managing Director of
Freightways. I have had a wonderful career with this great company. Thank-you,
our shareholders, for your support throughout my tenure and thank-you in advance
for your continued support of Mark and the wider Freightways team. I am leaving
our company in very capable hands.
 
 
Thank-you.

Slide 26. Dean Bracewell

It is appropriate that we reflect today, at Dean’s final meeting with shareholders,
on the extraordinary achievements of Freightways under Dean’s long and
successful tenure.

Slide 27. Achievements since listing in 2003

Dean lead Freightways through its IPO in 2003 at a listing price of $1.60 and an
initial market cap of $0.2 billion to the latest share price of around $7.60 and market
cap of $1.2 billion.
Dean’s relentless focus on organic growth and strategic investment in acquisitions
and operating capacity, combined with strong business disciplines, has generated
a compound annual growth rate of 15% for shareholders over this period.
Dean’s focus on developing internal talent and capability, together with his long
period of notice, allows Freightways to continue without interruption while
transitioning its leadership.
It is my pleasure on behalf of Shareholders, to extend thanks and gratitude to Dean
for his very substantive contribution to Freightways over a long and successful
career with the Company.