Mainfreight Interim Report September 2017 to Shareholders

0162 lirpA 1 ta ecnalaB
Profit for the period
emocnI evisneherpmoC rehtO
Total Comprehensive Income for the Per iod
Transaction with Owners in Their Capacity as Owners:
Shares Issued
stsoC emehcS erahS evitucexE
Supplementary Dividends
Dividends Paid
Foreign Investor Tax Credit
30 September 2016 ta ecnalaB
MAINFREIGHT LIMITED
INTERIM REPORT
TO SHAREHOLDERS
SIX MONTHS TO
30 SEPTEMBER 2017
(UNAUDITED)
REGISTERED OFFICE
2 Railway Lane, Otahuhu
P.O. Box 14-038, Panmure, Auckland
Phone 09-259-5500
www.mainfreight.com
Balance Sheet as at 30 September 2017
30 Sept30 Sept31 March
201720172016
$000$000$000
Shareholder’s Equity
Accumulated Surplus 539,668 478,165 521,619
Share Capital 85,821 85,821 85,821
Revaluation Reserve 50,972 51,523 50,616
Defined Benefit Pension Reserve (449) - (420)
Foreign Currency Translation Reserve (13,232) (17,867) (12,034)
TOTAL EQUITY 662,780 597,642 645,602
Non-current Liabilities
Bank Term Loan 284,892 312,561 283,029
Employee Entitlements 745 715 3,800
Deferred Tax Liability 24,462 25,698 23,879
Finance Lease Liability 2,565 2,761 2,473
312,664 341,735 313,181
Current Liabilities
Bank - - 947
Trade Creditors & Accruals 280,521 258,813 261,206
Employee Entitlements 50,698 42,846 47,907
Finance Lease Liability 1,838 1,896 1,801
Provision for Taxation 7,569 4,275 14,121
340,626 307,830 325,982
TOTAL LIABILITIES AND EQUITY $1,316,070 $1,247,207 $1,284,765
Non-current Assets
Property, Plant & Equipment 586,300 556,534 570,706
Software 45,326 39,142 43,086
Brand Names 11,262 10,693 10,546
Goodwill 204,093 198,974 200,721
Other Intangible Assets 10,065 12,058 10,814
Deferred Tax Asset 8,851 7,905 8,855
865,897 825,306 844,728
Current Assets
Bank 67,487 76,486 75,312
Trade Debtors 330,872 304,443 314,888
Income Tax Receivable 644 - 1,829
Properties Available for Sale - 2,240 -
Other Debtors 51,170 38,732 48,008
450,173 421,901 440,037
TOTAL ASSETS $1,316,070 $1,247,207 $1,284,765
Statement of Changes in Equity for the Six Months Ended 30 September 2017
DEFINED
BENEFIT
PENSION
RESERVE
FOREIGN
CURRENCY
TRANSLATION
RESERVE
ASSET
REVALUATION
RESERVE
ORDINARY
SHARES
RETAINED
EARNINGSTOTAL
DEFINED
BENEFIT
PENSION
RESERVE
FOREIGN
CURRENCY
TRANSLATION
RESERVE
ASSET
REVALUATION
RESERVE
ORDINARY
SHARES
RETAINED
EARNINGS
TOTAL
0172 lirpA 1 ta ecnalaB
Profit for the period
emocnI evisneherpmoC rehtO
Total Comprehensive Income for the Per iod
Transaction with Owners in Their Capacity as Owners:
Shares Issued
stsoC emehcS erahS evitucexE
Supplementary Dividends
Dividends Paid
Foreign Investor Tax Credit
30 September 2017 ta ecnalaB
Statement of Changes in Equity for the Six Months Ended 30 September 2016
Statement of Changes in Equity for the Twelve Months to 31 March 2017
1602 lirpA 1 ta ecnalaB
Transfer of Revaluation Reserve for Land Sold
Profit for the period
emocnI evisneherpmoC rehtO
Total Comprehensive Income for the Per iod
Transaction with Owners in Their Capacity as Owners:
deussI serahS
stsoC emehcS erahS evitucexE
Supplementary Dividends
Dividends Paid
Foreign Investor Tax Credit
1702 hcraM 13 ta ecnalaB
85,821 50,616 (12,034) (420) 521,619 645,602
42,217 42,217
356 (1,198) (29) (871)
356 (1,198) (29) 42,217 41,346
-
-
824 824
(24,168) (24,168)
(824) (824)
85,821 50,972 (13,232) (449) 539,668 662,780
73,912 52,303 (4,619) 459,477 581,073
41,848 41,848
(780) (13,248) (14,028)
(780) (13,248) - 41,848 27,820
11,854 11,854
55 55
(652) (652)
(23,160) (23,160)
652 652
85,821 51,523 (17,867) - 478,165 597,642
DEFINED
BENEFIT
PENSION
RESERVE
FOREIGN
CURRENCY
TRANSLATION
RESERVE
ASSET
REVALUATION
RESERVE
ORDINARY
SHARES
RETAINED
EARNINGSTOTAL
73,912 52,303 (4,619) 459,477 581,073
101,523 101,523
(898) 898 -
(789) (7,415) (420) (8,624)
(1,687) (7,415) (420) 102,421 92,899
11,854 11,854
55 55
(1,212) (1,212)
(40,279) (40,279)
1,212 1,212
85,821 50,616 (12,034) (420) 521,619 645,602
0141 Mainfreight Sept 2017 report V3.pdf 1 17/11/17 6:21 am

Mainfreight Segmental Reporting
The Group operates in various geographical freight markets.
Geographical Segments
Mainfreight Six Months Ended September 2017 ($000’s)
This Year
RevenuesEBITDATotalAssets
New Zealand 287,546 37,163 437,129
Australia 273,950 17,110 275,763
The Americas 319,798 13,878 193,025
Asia 44,481 6,052 55,097
Europe 216,662 12,145 306,666
Intercompany - - (20,473)
Total Group $1,225,583 $88,766 $1,316,070
Last Year
RevenuesEBITDATotalAssets
Total Group $1,142,437 $86,348 $1,247,207
EBITDAis defined as earnings before net interest expense, tax,
depreciation, amortisation, abnormals, share based payment expense,
minority interests and associates.
103,16442,32642,772
Abnormal Items
(906) (679) (2,448)
351 201 807
Income Tax on Abnormal Items
(555) (478) (1,641)
Abnormal Items After Taxation
Profit Before Taxation for the Year60,818 60,370 144,322
Income Tax Expense (18,601) (18,522) (42,799)
Net Profit for the Year 42,217 41,848 101,523
Profit Before Abnormal Items and
Taxation for the Year
Net Profit Before Abnormal Items
for the Year
Income Statement for the Six Months
Ended 30 September 2017
30 Sept30 Sept31 March
201720172016
$000$000$000
Operating Reven ue1,225,583 1,142,437 2,333,088
503--emocnI tseretnI
1,225,583 1,142,437 2,333,591euneveR latoT
Transport Costs(748,541)(701,578)(1,432,556)
Labour Expenses Excluding Share Based Payments(266,441)(242,085)(476,256)
Occupancy Expenses and Rental Recharge(35,727)(31,790)(65,792)
Depreciation and Amortisation Expenses(23,115)(21,454)(43,492)
Other Expenses (86,108) (80,636) (160,942)
(7,728)(3,790)(3,927)stsoC ecnaniF
Non-cash Share Based Payment Expense - (55) (55)
61,724 61,049 146,770
Income Tax on Profit Before
Abnormal Items
(18,952) (18,723) (43,606)
Financial result for the six months ended 30 September 2017 (Unaudited)
Commentary
Mainfreight is pleased to report our six monthly financial results to 30 September 2017.
• Total revenue (sales) increased by $83.15 million, or 7.3% over the same period last year, to
$1.23 billion (excluding foreign exchange effects, the increase is 7.4%).
• EBITDA improved $2.42 million or 2.8% to $88.77 million (no net foreign exchange effects).
• Net profit (before abnormals) is up 1.1% over the prior period at $42.77 million. Abnormal
costs of $0.56 million after tax relate to restructuring our operations in the Americas.
Whilst our financial results are again ahead of the year prior, we had expected a better
performance in this first half of our financial year.
Trading in our New Zealand Domestic operations was impacted by the additional costs
associated with servicing inter-Island freight movements via road and coastal shipping following
the Kaikoura earthquakes of last November.
Results from the Americas and Asia continue to disappoint, offset by a very satisfactory
performance in Australia and ongoing improvement in Europe.
Trading through October and into November has seen improvement over the prior year, with
increasing volumes of freight throughout all regions.
Divisional Performance (figures in local currencies)
New Zealand (NZ$)
Our New Zealand Domestic operations have had to contend with increased transport and
overhead costs to address the difficulties of moving freight to and from the South Island via
increased usage of road and coastal shipping alternatives. Offsetting this, stronger intra Island
volumes, together with an expanded and improving Logistics warehousing operation have
assisted. In addition, the performance and resilience of our people has ensured continuity of
supply chain services for our customers in what has been a challenging environment
Total revenue for the New Zealand division was up 10.2% at $316.87 million, while EBITDA
improved 3.5% compared to the same period last year, to $38.45 million.
Domestic Transport freight volumes are increasing as pre-Christmas retail builds towards its
peak season. Our Logistics operation continues to develop and is experiencing substantial
activity which is expected to continue through to year end. Our Air & Ocean business maintains
steady progress, with import revenues continuing to see more growth over exports. A
concentration of focus on our own global network development remains a key differentiator for
this business unit.
Australia (AU$)
Strong sales improvement across our domestic and warehousing divisions has assisted an
improved financial performance from our Australian division. Two new regional branches
(Toowoomba, Queensland and Bendigo, Victoria) are expected to open by year end, extending
our Australian network to 53 branches.
Sales revenues increased 13.7% to AU$292.91 million, and EBITDA levels improved 29.4% to
AU$20.83 million.
Both Domestic Transport volumes and Logistics warehousing activity continue to increase as
the pre-Christmas season influences October and November trading.
Air & Ocean activity remains subdued compared to the prior period.
Asia (US$)
A disappointing performance from our Asian operations. Whilst headline revenue growth is
satisfactory, gross margins were adversely affected by the decline in inter company airfreight
revenue.
Sales revenues increased 19.6% to US$37.61 million. EBITDA levels declined 52.70% on
those of the prior period to US$2.03 million.
Senior management changes took effect from early October, with an ongoing focus on branch
profitability improvement.
The Americas (US$)
A disappointing six months from our operations in the Americas.
Revenues declined 10.20% to US$203.06 million, and EBITDA performance reduced 14.0% to
US$8.44 million, down US$1.37 million on the prior period.
The largest contributor to revenue and EBITDA decline was our Air & Ocean division, where
the loss of a significant airfreight import account impacted our returns. When extracting this
one-off large customer, divisional trading has seen market share and freight volumes
improve.
The Domestic Transport and Logistics divisions did not achieve trading expectations during
the period.
In the CaroTrans wholesale business, revenue levels were stable compared to the prior
period, halting the decline of the previous two years. Gross margin levels declined slightly. A
senior management change also took effect in CaroTrans from 7th June 2017, with a clear
mandate to improve quality and sales growth.
Activity across all USA divisions improved through September and October, and we would
expect to see results at year end similar to the 2017 full year.
Europe (Euro )
Ongoing improvement in our European business units sees revenues up 19.1% over the
same period last year to €162.51 million, an increase of €26.03 million, and EBITDA up 9.8%
to €8.40 million.
Our Logistics operation has contributed significantly to this result, whilst absorbing set-up
costs for an additional 26,000m2 warehouse facility in The Netherlands. Further
warehousing sales gains have been signalled subsequent to the half year, and will require
investment in additional facilities in The Netherlands and Belgium.
Domestic forwarding is showing small progress across all countries with freight volumes
markedly increasing during October, and now into November. Our new cross dock facility has
opened and is operational in Genk, Belgium.
Our Air & Ocean business continues to find good growth and is contributing to our profitability.
Network expansion has seen our first Italian operation opened in Milan on 4th September
2017, and it is pleasing to see that branch contributing positively.
Trading through October and November remains ahead of the year prior.
Group Operating Cash Flows
Operating cash flows were NZ$57.15 million compared to the prior year’s half year figure of
NZ$52.03 million.
During the half year, net capital expenditure totalled NZ$32.34 million, of which NZ$7.68
million related to property development, NZ$11.0 million to software development with the
balance relating to plant and equipment across Europe, New Zealand and Australia.
Dividend
The Directors of Mainfreight have approved an interim dividend of 19.0 cents per share, up
2.0 cents on last year’s interim dividend level, reflecting current profit levels and ongoing
confidence for further improvement at the year end result.
This dividend will be fully imputed and will be paid on 15 December 2017, with books closing
on 8 December 2017. A supplementary dividend will be paid to non-resident shareholders.
Outlook
Whilst our expectations were higher for our first half result, to still be ahead of what was a
strong performance in the prior period is a credit to our team, particularly in New Zealand, as
they worked through the logistical difficulties and increased costs resulting from the Kaikoura
earthquake.
With rail services reinstated and functioning to the South Island from the start of November, it
is our expectation that our New Zealand Domestic operations will outperform the
corresponding prior period in this next six months.
Our Australian businesses have significant momentum, and we expect full year results for this
region to be at record levels.
Our European businesses continue to outperform the year prior, and we are seeing
incremental improvements in Asia and the Americas as our new leadership teams settle into
their roles.
It is our expectation that this current momentum will continue into the New Year, and will
deliver another improved full year 2018 result.
Mainfreight will release its financial results for the full 2018 financial year to the market on 29
May 2018.
New Zealand 316,867 38,446 438,047
Australia 314,319 22,351 305,432
The Americas 284,037 11,809 188,813
Asia 52,611 2,833 55,733
Europe 257,749 13,327 345,123
Intercompany - - (17,078)
Statement of Comprehensive Income for the
Six Months Ended 30 September 2017
Net Profit for the Year 42,217 41,848 101,523
Other Comprehensive Income
Exchange Dif ferences on Translation of Foreign Operations
(1,198) (13,248) (5,260)
Income Tax effect
Revaluation of Land
Income Tax effect
356 (780) (789)
- - 215
Defined Benefit Pension Provision
(29) - (635)
- - (2,155)
Other Comprehensive Income for the Year, Net of Tax
(871) (14,028) (8,624)
Total Comprehensive Income for the Year, Net of Tax
41,346 27,820 92,899
Statement of Cash Flows for the Six Months
Ended 30 September 2017
Operating Activities 57,148 52,034 131,226
Investing Activities (32,131) (27,904) (61,647)
Financing Activities (31,898) (36,472) (85,556
FXRate Fluctuations on Cash Held 3 (3,904) (2,394)
NETINCREASE (DECREASE) IN CASH (6,878) (16,246) (18,371)
0141 Mainfreight Sept 2017 report V3.pdf 2 17/11/17 6:21 am