Trading Update

NZX Announcement & Media Release


25 October 2018
Trading Update

An update on the unaudited trading performance of Freightways Limited (Freightways) for the three
months ended 30 September 2018 is provided below.

Freightways’ 1
st
quarter result (unaudited):


Quarter ended:


Note
Sep-18
$000
Sep-17
$000
Variance
Operating revenue 155,134 143,236 8.3%
EBITDA
(i)
27,612 26,938 2.5%
EBITA
(ii)
23,884 23,561 1.4%
NPATA
(iii)
15,553 15,515 0.2%
NPAT
(iv)
15,075 15,051 0.2%

Notes:
(i) Operating profit before interest, tax, depreciation and amortisation. (ii) Operating profit before
interest, tax and amortisation. (iii) Net profit after tax (NPAT), before amortisation. (iv) Profit for the
period attributable to shareholders.

This first quarter result demonstrates the ongoing revenue growth within both our operating divisions. It
also is a good start to the financial year, with earnings growth above the prior comparative period (pcp),
at a time when the businesses are implementing a number of strategies to enhance earnings in the medium
to long term. The express package & business mail division is very focussed on pricing for effort,
particularly in relation to residential deliveries, as well as improving the efficiencies of the fleet servicing
those areas. The information management division continues to see strong uptake in its digital services
and positive trading through its recent acquisitions in the medical waste industry in Australia, which
have involved some one-off acquisition costs in this first quarter.

Express Package & Business Mail division
This division’s unaudited result is as follows:


Quarter ended:


Sep-18
$000
Sep-17
$000
Variance
Operating revenue 114,058 105,340 8.3%
EBITDA 19,379 18,185 6.6%
EBITA 17,529 16,537 6.0%
EBITA Margin 15.4% 15.7%


Revenue growth in this first quarter has been positive against the pcp and was contributed to by this
financial year’s general price increase (and an approximate 2.3% lift in fuel surcharge revenue).
Operating cost increases reflect increased payments to courier contractors and operational labour. When
compared to the pcp, there has been an increase of approximately $0.2m in depreciation relating to our
newly-commissioned automation equipment and related IT. The EBITDA and EBITA increases above
the pcp reflect a sound first quarter start to the 2019 financial year.

Information Management division
This division’s unaudited result is as follows:


Quarter ended:


Sep-18
$000
Sep-17
$000
Variance
Operating revenue 41,636 38,379 8.5%
EBITDA 9,257 9,245 0.1%
EBITA 7,786 7,923 (1.7%)
EBITA Margin 18.7% 20.6%


Solid revenue growth compared to the pcp was driven by Shred-X, with its newly-acquired medical
waste businesses, as well as by TIMG, particularly from document storage in Australia. Media revenue
declined against the pcp. During the quarter there were costs incurred associated with the four recent
acquisitions in Australia, as well as an increase in sales & marketing and IT development resource in
relation to the new investment in digital products, which are forecast to deliver longer term benefit.

Corporate
Corporate costs increased by $0.5m compared to the pcp, of which approximately half were one-off
costs associated with Managing Director transition and appointment of two new directors. First quarter
capital expenditure is within budgeted expectations.

Freightways' financial performance over the longer term
The graphs below demonstrate the strong historical performance of Freightways:

Freightways Operating Revenue



Freightways EBITA*


* This EBITA graph represents the operating results of the company, exclusive of any non-recurring
items.




 ‐
 100
 200
 300
 400
 500
 600
 700
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
$M
Year Ended 30 June
 ‐
 10
 20
 30
 40
 50
 60
 70
 80
 90
 100
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
$M
Year Ended 30 June
1
st
half 2
nd
half

Outlook
The markets in which Freightways operates in both New Zealand and Australia remain positive.
Freightways has continued to experience increased demand for its services in both divisions, which has
provided a sound start to the 2019 financial year. Accordingly, Freightways continues to target year-on-
year earnings growth.

Within the express package & business mail division significant effort has been made to implement
pricing which reflects the cost of providing the service and this has assisted us to match cost increases
in respect of our staff and contractors. Within the information management division, we have recently
acquired four small businesses and are currently integrating their operations into our existing business
units, as well as increasing our investment in IT and sales & marketing.

Overall capital expenditure for the 2019 financial year is still expected to be approximately $20-22
million. Operating cash flows are expected to remain strong throughout the 2019 financial year.

Strategic growth opportunities, including acquisitions and alliances that complement existing
capabilities, will continue to be executed where they make commercial sense.

ENDS

For further information please contact
Mark Troughear
Chief Executive Officer
Freightways Limited
+64 571 9670