Full year Results to 30 June 2019 and Final Dividend

2019 FULL YEARRESULTSPRESENTATION26 August
2019

1. HIGHLIGHTS2. OPERATING PERFORMANCE3. DIVIDEND4. STRATEGY5. OUTLOOK6. CONCLUSION
AGENDA
© Freightways 2019
2

AHERITAGE
THAT
STARTED
IN 1964

New Zealand Couriers
Post Haste Couriers
Castle Parcels
NOW Couriers
DX Mail
Dataprint
TIMG Australia and
New Zealand
Shred-X
Med-X
TIMG NZ
SUB60
Kiwi Express
Security Express
PROVEN, MARKET LEADINGBRANDS
© Freightways 2019
4

© Freightways 2019
HIGHLIGHTSSECTION
1

1. HIGHLIGHTS
•
Lift in Full Year EBITA margin % in Expre
ss Package (EP), despite softer 2HY revenue growth
•
Positioning the EP business with IT and sales tools
to launch Pricing For Effort initiative from 1
July 2019
•
Improving route density in residential areas
•
An increase in average daily
courier earnings by 7%
•
Expanding the DX Mail network in response to customer demand
•
Improved utilisation of the Austra
lian document storage facilities by 10%
•
Positioning the TIMG business as a
market leading digitalisation service
•
Revenue growth in Australia in Document & Product
Destruction and Medical Waste
•
Sustained cash generation leading to reduced gearing levels
© Freightways 2019
HIGHLIGHTS
6

© Freightways 2019
OPERATING PERFORMANCESECTION
2

FINANCIAL SUMMARY
2. OPERATING PERFORMANCE
Note
Jun-19
$M
Jun-18
$M
Increase
%
Revenue
615.7
580.9
6.0
EBITA (before non-recurring items)
(i)
96.7
93.7
3.2
Non-recurring items
2.4
2.6
EBITA
(ii)
99.1
96.3
2.9
NPAT (before non-recurring items)
(iii)
61.0
59.6
2.3
Non-recurring items after tax
2.4
2.6
NPAT
(iv)
63.4
62.2
1.9
Basic EPS (cents)(before non-recurring items)
39.3
38.4
2.3
NOTES(i)
Operating profit before interest, tax and
amortisation, befor
e non-recurring items
(ii) Operating pr
ofit before interest, tax and
amortisation
(iii) Net profit after tax (NPAT), before non-
recurring items
(iv) Profit for the year
attributable to the
shareholders
© Freightways 2019
8

NON-RECURRING ITEMS
2. OPERATING PERFORMANCE
2019Non-recurring benefits before tax totalling $2.4 million (no tax applicable) in respect of reversing $0.5 millionof previously accrued acquisition payables that are no l
onger expected to be required and a $1.9 million gain
upon recording the replacement of earthquake-related damaged racking funded by insurance proceeds.
2018Non-recurring benefits before tax totalling $2.6 million (no tax applicable) in respect of reversing $1.6 millionof a previously accrued final acquisition payable that is no longer expected to be required and a $1 milliongain upon recording the replacement of earthquake-re
lated damaged racking funded by insurance proceeds.
The gain on the racking replacement arises from the $3 million of insurance proceeds received during theyear for new racking exceeding the $2 million writte
n down book value of the structurally-compromised
racking that was written-off.
© Freightways 2019
9

REVENUE SEGMENTATION
2. OPERATING PERFORMANCE
Jun-19
$M
Jun-18
$M
Change
Express package
397.2
376.6
5.5%
Postal
54.0
50.5
6.9%
Storage & handling
62.6
62.1
0.8%
Destruction activities
59.7
52.7
13.3%
Other
42.2
39.0
8.2%
Total revenue
615.7
580.9
6.0%
© Freightways 2019
10

27%
73%
REVENUE
29%
71%
EBITA*
CONSOLIDATED RESULTS
2. OPERATING PERFORMANCE
EP & BMIM
NOTES* Excluding non-recurring items
© Freightways 2019
11

EXPRESS PACKAGE & BUSINESS MAIL
2. OPERATING PERFORMANCE
Jun-19
$M
Jun-18
$M
Change
Operating Revenue
453.0
428.8
5.6%
EBITDA
80.0
74.8
6.9%
EBITA
72.2
67.9
6.3%
EBITA Margin
15.9%
15.8%
© Freightways 2019
12

INFORMATION MANAGEMENT
2. OPERATING PERFORMANCE
Jun-19*
$M
Jun-18*
$M
Change
Operating Revenue
164.5
153.8
6.9%
EBITDA*
35.3
35.4
(0.1%)
EBITA*
29.3
29.8
(1.9%)
EBITA Margin*
17.8%
19.4%
NOTES* Excluding non-recurring items
© Freightways 2019
13

OPERATING REVENUE
2. OPERATING PERFORMANCE
© Freightways 2019
2
nd
HALF
1
st
HALF
14

NOTEThis graph represents the operating profit before interest, tax and amortisation of Intangibles, exclusive of any non-recurringitems
2. OPERATING PERFORMANCE
2
nd
HALF
1
st
HALF
EBITA
© Freightways 2019
15

BALANCE SHEET – KEY POINTS
2. OPERATING PERFORMANCE
• Total assets increased from FY18 by $24m, including
$7m of intangible assets in respect of the
acquisitions of three small businesses in Australia. Higher trade & other receivables from increased activity ($6m) and a higher cash balance ($9m) due to
timing of receipts & payments also contributed
to higher recorded assets
• Total liabilities increased from FY18 by $8m due to
a $6m increase in borrowings to fund the three
small acquisitions
• No significant changes to issued capital during the year
© Freightways 2019
16

CASH FLOW – KEY POINTS
2. OPERATING PERFORMANCE
• Cash generated from operations of $109m was $4m abov
e the PCP. Net cash inflows from operating
activities (i.e. after deducting interest and tax payments) were marginally above the PCP at $76m. Income tax paid in the PCP was lower due to payment timing, but also a tax refund for overpaid provisional tax from FY17
• Cashflows from investing activities were up $5m
on the PCP, which included $3m more in acquisition
payments compared to the PCP
• The $15m decrease in cash outflows from financing activities compared to the PCP reflects the
drawdown of $10m of debt in FY19 compared to $8m being repaid in the PCP
© Freightways 2019
17

CAPITAL EXPENDITURE & DEPRECIATION
2. OPERATING PERFORMANCE
2019
Full Year Actual
$M
2020
Full Year Forecast
$M
Capital Expenditure
21
22 - 24
Depreciation
15
17
© Freightways 2019
18

© Freightways 2019
DIVIDENDSECTION
3

3. DIVIDEND
•
FINAL DIVIDEND -
15.5 cps
•
IMPUTATION CREDITS -
6.0278 cps (fully imputed at 28% tax rate)
•
SUPPLEMENTARY DIVIDEND -
2.7353 cps
•
RECORD DATE -
13 September 2019
•
PAYMENT DATE -
1 October 2019
•
NO DRP IS OFFERED IN RESPECT OF THIS DIVIDEND
DIVIDEND
© Freightways 2019
20

DIVIDEND PAYMENT HISTORY
3. DIVIDEND
YEAR ENDED 30 JUNE 2019
© Freightways 2019
21

© Freightways 2019
STRATEGYSECTION
4

4 COREAREAS OFBUSINESS
4. STRATEGY
© Freightways 2019 © Freightways 2019
23

FOCUSED ON
SERVICE
AND INNOVATION
4000+staff and contractorsDeepcustomer and consumer focus
Committed tomarket leadershipTrack record ofdiversification and innovation
© Freightways 2019
24
4. STRATEGY

EXPRESS P
ACKAGE
LOOKING AHEAD:Current State• Softer same-customer growth in 2HY• Higher price increases in
FY20 from all market
participants driven by labour cost increases
• FRE’s B2C proportion of deliveries is ~ 20%
after PFE introduced
• Stable and loyal customer base
Strategy•
Pricing For Effort: Stage I in effect for residential
deliveries
•
Residential productivity now embedded as BAU
•
Tracking and notification systems being
introduced to customers
•
Enhanced local delivery service being
developed for Auckland
4. STRATEGY
© Freightways 2019
25

BUSINESS MAIL
LOOKING AHEAD:Current State• Bulk mail pricing has become complex• NZ Post’s zonal pricing directly targets
DX Mail
• Important to customers to maintain an
operational competitor to NZ Post
• Overall mail market continues to
experience organic decline
Strategy• DX Mail is the only provider capable of
performing overnight and five-days-per-week delivery
• Continue to target customers who require
superior service levels
• Provide a bundled digital & physical mail delivery
service
• Building-out our network to meet customer
demand and achieve greater efficiencies through scale
• Engage NZCC on NZ Post’s pricing strategies
4. STRATEGY
© Freightways 2019
26

LOOKING AHEAD:
Current State
•
NZ is a high utilisation / high margin business
(82% utilisation)
•
AU experiencing good growth in document
storage but has lower margins due to lower utilisation of facilities at 67%
•
Activity-related revenue for Media is declining
•
Rationalised market
•
Customers can be hard to transition, but once
won, are sticky with
annuity revenue streams
Strategy•
Improve margins in AU by improving the
utilisation of our facilities to 82% over the next 2 years
•
Exploit our scale digitalisation capability in
NZ and AU
•
Develop new services to
market to our large NZ
and AU customer bases
4. STRATEGY
INFORMATION MANAGEMENT
© Freightways 2019
27

LOOKING AHEAD:SECURE DESTRUCTIONCurrent State•
Rationalised market
•
Large volumes of active paper and
archives to be destroyed
•
FRE capabilities are transferrable to
other niches
•
Mix of fixed rates for paper and spot
market pricing
•
Spot-market prices expected to be
softer in the short term
Strategy•
Continue to target market share gains
•
Move into adjacent markets which require
efficient pick-up, processing (e.g. separation, shredding, baling) and de
livery (selling into
commodity markets)
•
Target business customers looking for assistance
with electronic waste, medical waste, coffee cups, plastic and textiles
•
Use a combination of acquisition, alliance and
start-ups to grow scale in NZ and AU
4. STRATEGY
© Freightways 2019
28

© Freightways 2019
OUTLOOKSECTION
5

OUTLOOK
•
In the short term, expect the
trend from 2HY to continue in
terms of same-customer sales
•
Focus on pricing and efficiency should deliver YoY earnings
growth, which will position
the business well when organic
growth levels improve
•
Expect utilisation to improve
in AU, targeting 75% in FY20
•
Continue to target scale digital opportunities in NZ and AU
•
Build density in the expanded destruction networks
•
Target acquisition opportunities
that are synergistic or
complementary to Freightways’ networks and capabilities
5. OUTLOOK
© Freightways 2019
30
© Freightways 2019

© Freightways 2019
CONCLUSIONSECTION 6

While the Full Year results for 2019 were impacted by lower organic growth rates in EP and slow
er transition of archives into
IM, we are encouraged by:
•
margin expansion in 2HY in EP
•
pricing initiatives which are underway and expected to
provide a profitable base for B2C growth in the future
•
the capability we have developed in Digitalisation and
eDiscovery
•
the opportunities to lever
age our secure destruction
network
Freightways will continue to invest in its people, service quality and growth opportunities for the long-term benefit of all of its stakeholders.
6. CONCLUSION
CONCLUSION
© Freightways 2019
32

THANK YOU
Disclaimer. This presentation has
been prepared by Freightways Limi
ted ("Freightways") for inform
ation purposes only. This pres
entation is not a product disclosure state
ment, prospectus or investment statem
ent. Nothing in this presentation
constitutes an invitation to subscribe for
shares, securities or financial products in
Freightways. Nothing in this presentatio
n constitutes legal, accounting, financial
or taxation advice or any other advice of
any kind. Any investor should consult
their own professional advisors and conduct
their own independent investigation of Frei
ghtways and the information contained in
this presentation, including any statem
ents relating to the future performance
of Freightways. The information in
this presentation is given in
good faith and has been obtained from sources believ
ed to be reliable and accurate at the date of
this presentation.
This presentation may include forward
‐
looking statements regarding fu
ture events and the future
financial performance of Freightways. Such forward
‐
looking statements are based on current expectations and involve risks and unc
ertainties. Actual results may be materially different from those sta
ted in any forward
‐
looking statements.
Nothing contained in this document is or should be relied on as a promise as t
o the future performance or condition of Freightways or as to any other futur
e events Except as required by law or the NZX Listing Rules, Freightways undertakes
no obligation to update any forward
‐
looking statements, whether as a result of new information,
future events or otherwise or to report against any forward
‐
looking statements. None of Freightways, their affiliates, or their respective advisers or
representatives, give any warranty o
r representation as to the accuracy or completeness of t
he information contained in this presentation, and excl
ude their liability to the maximum extent permitted by law.
© Freightways 2019
33

---

FREIGHTWAYS LIMITED













Full Year Report
June 2019

1




Results for announcement to the market
Name of issuer FREIGHTWAYS LIMITED
Reporting Period 12 months to 30 June 2019
Previous Reporting Period 12 months to 30 June 2018
Currency
Amount (000s) Percentage change
Revenue from continuing
operations
$615,692 6%
Total Revenue $615,692 6%
Net profit/(loss) from
continuing operations
$63,377 2%
Total net profit/(loss) $63,377 2%
Final Dividend
Gross Amount per Quoted
Equity Security
21.5278 cents
Imputed amount per Quoted
Equity Security
6.0278 cents
Record Date 13 September 2019
Dividend Payment Date 1 October 2019
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$(0.47) $(0.55)
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Refer to the section “Full Year Review” for commentary.
Authority for this announcement
Name of person

authorised
to make this announcement
Mark Royle
Contact person for this
announcement
Mark Royle
Contact phone number +61 407 777 039
Contact email address mark.royle@freightways.co.nz
Date of release through MAP

26 August 2019

Audited financial statements accompany this announcement.

2


FULL YEAR REVIEW
From the Chairman and Chief Executive Officer

The Directors are pleased to present the consolidated financial results of Freightways Limited (Freightways)
for the year ended 30 June 2019. This report discusses the results for each division and outlines the key
strategies and the outlook for the year ahead.
Highlights of the year include:
 Overall year-on-year revenue, earnings and dividend growth.
 In the express package & business mail (EP&BM) division:
- Completing a number of business-critical IT projects to enable our new Pricing For Effort
initiative for residential deliveries;
- Improving route density, in residential areas in particular, and using the benefits to reinvest into
the contractor fleet, which resulted in an average increase in contractor earnings of 7% above the
previous year, and
- Expanding our business mail network to take on new customers and once again demonstrating
growth year-on-year.
 In the information management (IM) division:
- Improving utilisation in our Australian document storage footprint by 10% (from 61% to 67%).
While this was short of our goal of 70%, it reflected a strong step forward in generating improved
returns in our document storage business;
- The completion of another large data collection/transformation contract win, supporting the growth
of the division’s suite of digital IM services, and
- Strong growth in our secure destruction business, which is successfully diversifying into
complementary waste streams which require efficient logistics and processing.
 Sustained strong cash generation from both divisions, leading to reduced gearing levels.

Operating performance
The below table presents the reported 2019 result compared to the prior comparative period (pcp), both before
and after the inclusion of non-recurring items:




Note
Jun-19
$M
Jun-18
$M
Increase
%
Revenue
615.7 580.9 6.0%

EBITA, before non-recurring items i. 96.7 93.7 3.2%
Non-recurring items 2.4 2.6
EBITA ii. 99.1 96.3 2.9%

NPAT, before no
n-recurring items iii. 61.0 59.6 2.3%
Non-recurring items after tax 2.4 2.6
NPAT iv 63.4 62.2 1.9%

Basic EPS (cents), before non-recurring items 39.3 38.4
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 shareholders.

The results discussed throughout this commentary exclude the impact of the following non-recurring items
that the Directors believe should not be included when assessing underlying trading performance:
 2019: Non-recurring benefits before tax totalling $2.4 million (no tax applicable) in respect of reversing
$0.5 million of previously accrued acquisition payables that are no longer expected to be required and a
$1.9 million gain upon recording the replacement of earthquake-related damaged racking funded by
insurance proceeds.

3

 2018: Non-recurring benefits before tax totalling $2.6 million (no tax applicable) in respect of reversing
$1.6 million of a previously accrued final acquisition payable that is no longer expected to be required
and a $1.0 million gain upon recording the replacement of earthquake-related damaged racking funded by
insurance proceeds. The gain on the racking replacement arises from the insurance proceeds for new
racking ($3.0 million) exceeding the $2.0 million written down book value of the structurally-
compromised racking written-off.

Dividend
The Directors have declared a final dividend of 15.5 cents per share, fully imputed at a tax rate of 28%, being
a 2% increase above the pcp final dividend of 15.25 cents per share. This represents a payout of approximately
$24.1 million compared with $23.7 million for the pcp. The dividend will be paid on 1 October 2019. The
record date for determination of entitlements to the dividend is 13 September 2019. The total dividend payout
in respect of the year ended 30 June 2019 will be 30.5 cents, being 2.5% above the pcp of 29.75 cents.

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

DIVISIONAL PERFORMANCE
Divisional results for the year ended 30 June 2019 are provided below for each division.

Express Package & Business Mail (EP&BM) Division

2019 Result
Operating revenue of $453 million was 5.6% higher than the pcp. EBITA of $72.2 million was 6.3% higher
than the pcp.

2019 was a year of two halves with respect to organic growth levels within the EP&BM division. The first half
was characterised by solid organic growth (circa 2.5%), whereas same-customer volume flattened off
noticeably in the second half of the year. Some hard calls were also made on low margin business during the
year, with pricing reviews for customers where margins were unacceptably low for the value provided through
our networks. The results were pleasing for the year when these factors, alongside material contractor earnings
and wage increases, were also taken into account. Freightways has consistently paid above minimum wage in
its freight sorting operations and to ensure it continues to do so, wages were lifted at the lower levels by
around 6% to maintain that premium. Volume growth, and consequently revenue and earnings, were stronger
in the first half of the year than the second half.

Freightways’ small postal business, DX Mail, has come under direct attack from NZ Post’s new zonal pricing
structure for bulk mail, which effectively offers the cheapest rates to those areas that DX Mail delivers into,
and more expensive rates to those areas where DX Mail does not deliver. Freightways is assisting the NZ
Commerce Commission with its preliminary investigation into NZ Post’s pricing tactics. DataPrint,
Freightways’ mailhouse business, expanded its range of services during the year and is well positioned to help
customers transition to digital communications augmented by high quality physical delivery through DX Mail.

The EP&BM division delivered a sound full year result, and has positioned itself well to avoid the pitfalls of
many express package operators that appear to have thrown themselves into residential deliveries at what we
view as unsustainably low margins. Freightways is confident that its brands will be able to provide higher
quality delivery services to residential areas, sustainable courier remuneration and ultimately generate returns
from the growing B2C market.

Key Strategies in 2020

Pricing for Effort: Differential pricing was introduced from 1 July 2019 for items travelling to residential
addresses as the first of a two-step process to generate higher remuneration for couriers performing residential
deliveries and to begin to recover the higher costs associated with low density deliveries. This strategy has
been enabled by significant investment in geo-mapping and coding of addresses as either business, residential
or rural, as well as the introduction of systems to enable billing for residential delivery. As this strategy
unfolds, Freightways expects to achieve a higher quality final mile delivery, with couriers earning superior
returns for their efforts and Freightways’ brands also generating positive margins. This will motivate the
EP&BM division to invest further into service quality initiatives for the growing residential delivery sector.

4

Residential Network Review: In 2019 good progress was made to better collaborate across the courier brands
to improve the division’s delivery efficiency in residential areas. This strategy has now become business-as-
usual, with the use of a number of analytical tools to continually monitor and evolve residential runs so as to
drive better productivity and lower direct costs for couriers through the need to travel fewer kilometres each
day.

Customer Visibility and Data Analytics: New scanning technology was rolled-out during 2019 which
positions the business well to provide value-added services to customers and receivers by improving visibility
and ultimately the final-mile delivery experience.

Information Management (IM) Division

2019 Result
Operating revenue of $164.5 million was 6.9% higher than the pcp. EBITA of $29.3 million was 1.9% lower
than the pcp.

While utilisation of facilities improved in Australia and New Zealand, the margins generated from data
transformation were slightly lower. In 2019, the Shred-X business invested in growing its fleets through New
South Wales, Victoria and Queensland in response to demand from medical waste and product destruction
customers. Shred-X also incurred transition costs while merging its Western Australia site with a recently-
acquired document destruction business. This business was fully integrated by May 2019.

Australian IM annual earnings marginally exceeded those of New Zealand IM for the first time in 2019. Given
the larger scale of the Australian market, and the broader range of opportunities, including in the medical
waste industry, it is expected that Australia will widen its lead on New Zealand’s earnings into the future.

Key Strategies in 2020:
Facility Utilisation: Despite solid growth in the Australian IM facilities, there were a number of new
customers secured that had not transitioned their volume into TIMG (The Information Management Group) by
the end of the financial year, meaning the division fell 3% short of its 70% utilisation target. The focus for
2020 is to on-board and maintain double digit revenue growth in this line of business.

Digital Services Growth: In Australia, TIMG will focus on its capability with respect to large digitalisation
jobs. In 2019, it completed a significant job which required data extraction, electronic discovery and delivery
of data within tight timeframes (mirroring the capability used for the NZ Census by the NZ TIMG business in
2018). There are scale opportunities in the Australian market for quality providers of digitalisation and e-
discovery services.

Secure Destruction and Medical Waste: Additional investment was made in teams, fleets and facilities in
2019 to support the growth of Shred-X’s document destruction, medical waste and product processing
capabilities. It is planned to continue the investment and management focus on revenue streams in related
markets that complement the physical footprint established by Shred-X in the secure destruction market. These
related markets present an opportunity to apply Shred-X’s consistent and high-quality national service
standards and sales methodologies to grow through a number of niches, including eDestruction, medical
waste, product destruction and other high value recycling.

Acquisitions and Alliances:
Freightways continues to actively explore and investigate acquisition and alliance opportunities for synergistic
and complementary service offerings. Freightways completed three small acquisitions early in the 2019
financial year and these have been successfully integrated into the Australian IM division. The businesses
acquired included a records storage business, a secure destruction business and a majority stake in the software
company that provides the online back-up service for TIMG’s customers.

Corporate
Corporate costs increased by $0.7 million compared to the pcp, primarily due to the reclassification of certain
managers from the divisions into newly-created corporate roles, but also as a result of an uplift in consulting
costs relating to internal audit, external reporting and ESG initiatives.

5



Net debt decreased by approximately $3 million to $151 million during the year, driven by strong cash flows
from operations, offsetting investment in operating capacity and a number of small acquisitions. Debt to debt
& equity gearing levels have decreased further below 40%.

OUTLOOK
Freightways has observed a slowdown in New Zealand in terms of same-customer trade over the second half
of 2019 in its express package businesses. Despite this headwind, management remains optimistic that pricing
and efficiency initiatives in express package and Freightways’ diversification strategy in information
management will provide growth opportunities in 2020. Freightways is once again targeting year-on-year
earnings growth in 2020.

Within the EP&BM division, indications are that organic volume growth will be lower in 2020 than it was in
2019. There will be a strong focus on maintaining and improving margins, along with improving visibility to
customers and receivers for express package deliveries. Focus on continuing to build courier remuneration
through intensification of their runs and improved residential delivery pricing will also be a priority.

Within the IM division, there will be a continued drive on expanding storage and handling margins through
improved facility utilisation. Leveraging digital capability to attract new customers will also be a key platform
for growth in 2020. Within the secure destruction business, the division will look to leverage the networks it
has invested in to provide medical waste and product destruction services to both new and existing customers.

Overall capital expenditure for the 2020 financial year is expected to be between $22-24 million. Operating
cash flows are expected to remain strong throughout 2020.

Strategic growth opportunities, including acquisitions and alliances that are synergistic or complementary to
our existing capabilities, will be executed where they make commercial sense.

CONCLUSION
Freightways has continued to innovate and invest in its businesses to achieve market-leading service quality
and return on investment. The results for 2019 were impacted in the latter half of the year by modest to flat
organic growth as the New Zealand economy slowed. Despite these headwinds, Freightways expects to
continue to demonstrate its long-held disciplines in terms of managing margins, investing appropriately for
growth and exploring new service opportunities. There are opportunities for all of the group’s business
activities to continue to grow and evolve their service offerings to meet customers’ demands. Freightways’
agility and entrepreneurial outlook should see it continue to adapt to changing markets and conditions and
continue to be resilient in the face of external factors. Freightways is committed to improving the long-term
sustainability of its business for the benefit of its teams of people, its customers, its shareholders and the
environments in which it operates.

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







Mark Verbiest Mark Troughear
Chairman Chief Executive Officer

26 August 2019

6


FREIGHTWAYS LIMITED
CONSOLIDATED INCOME STATEMENT
for the year ended 30 June 2019

2019

$000
2018
$000
Percentage
Variance
Operating revenue
615,692 580,886 6%
Other income 1,252 2,572 (51%)
Transport and logistics expenses (241,907) (229,812) 5%
Employee benefits expenses
(174,537) (159,161) 10%
Occupancy expenses
(28,912) (26,385) 10%
General and administration expenses
(58,119) (57,798) 1%
Other expenses (1,252) (2,572) (51%)
Non-recurring items 2,354 2,556 (8%)
Operating profit before interest, income tax,
depreciation and software amortisation and
amortisation of intangibles

114,571 110,286 4%
Depreciation and software amortisation (15,438) (14,000) 10%
Operating profit before interest, income tax and
amortisation of intangibles

99,133 96,286 3%
Amortisation of intangibles (2,071) (1,954) 6%
Profit before interest and income tax
97,062 94,332 3%
Net interest and finance costs (9,566) (9,666) (1%)
Profit before income tax
87,496 84,666 3%
Income tax (24,119) (22,505) 7%
Profit for the year
63,377 62,161 2%
Profit for the year is attributable to:
Owners of the parent 63,367 62,161 2%
Non-controlling interests 10 - 100%
63,377 62,161 2%

7


FREIGHTWAYS LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 June 2019


2019

$000
2018
$000
Profit for the year (NPAT) 63,377 62,161
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:


Exchange differences on translation of foreign operations (2,210) 1,775
Cash flow hedges taken directly to equity, net of tax 328 2,261
Total other comprehensive income after income tax (1,882) 4,036
Total comprehensive income for the year 61,495 66,197
Total comprehensive income for the year is attributable to:
Owners of the parent 61,485 66,197
Non-controlling interests 10 -
61,495 66,197

8


FREIGHTWAYS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 30 June 2019


Contributed
equity
Retained
earnings
Cash flow
hedge
reserve
Foreign
currency
translation
reserve
Non-
controlling
interests
Total equity
$000 $000 $000 $000 $000 $000 Balance at 1 July 2017
124,430
124,072
(6,490)
(5,444)
-
236,568
Profit for the year
-
62,161
-
-
-
62,161
Exchange differences on translation of foreign operations
-
-
-
1,775
-
1,775
Cash flow hedges taken directly to equity, net of tax
-
-
2,261
-
-
2,261
Total Comprehensive Income
-
62,161
2,261
1,775
-
66,197
Dividend payments
-
(45,372)
-
-
-
(45,372)
Shares issued
830
-
-
-
-
830
Balance at 30 June 2018
125,260
140,861
(4,229)
(3,669)
-
258,223
Profit for the year
-

63,367

-

-

10 63,377

Exchange differences on translation of foreign operations
-

-

-

(2,210)

- (2,210)

Cash flow hedges taken directly to equity, net of tax
-

-

328

-

- 328

Total Comprehensive Income
-

63,367

328

(2,210)

10 61,495

Dividend payments
-

(47,002)

-

-

- (47,002)

Acquisition of non-controlling interests
-
-
-
-
114
114
Shares issued
1,180
-

-

-

- 1,180

Balance at 30 June 2019
126,440

157,226

(3,901)

(5,879)

124 274,010

9

FREIGHTWAYS LIMITED
CONSOLIDATED BALANCE SHEET
as at 30 June 2019




2019

$000
2018
$000

Current assets

Cash and cash equivalents 15,986 7,410
Trade and other receivables 87,805 82,150
Inventories 5,009 4,804
Total current assets 108,800
94,364

Non-current assets
Trade receivables and other non-current assets 3,984 4,803
Property, plant and equipment 106,710 103,102
Intangible assets 365,152 358,419
Total non-current assets 475,846 466,324
Total assets 584,646 560,688

Current liabilities
Trade and other payables 68,967 66,887
Finance lease liabilities 127
126
Income tax payable 6,429 5,525
Provisions 860 710
Derivative financial instruments 880 451
Contract liability 15,664 15,864
Total current liabilities 92,927
89,563

Non-current liabilities
Trade and other payables 3,137 3,446
Borrowings (secured) 167,394 161,800
Deferred tax liability 37,762 37,506
Provisions 4,750 4,465
Finance lease liabilities 129 286
Derivative financial instruments 4,537 5,399
Total non-current liabilities 217,709 212,902
Total liabilities 310,636 302,465
NET ASSETS 274,010 258,223

EQUITY
Contributed equity 126,440 125,260
Retained earnings 157,226 140,861
Cash flow hedge reserve (3,901) (4,229)
Foreign currency translation reserve (5,879) (3,669)
273,886 258,223
Non-controlling interests 124 -
TOTAL EQUITY 274,010 258,223

Net Tangible Assets (Liabilities) per Security ($0.47) ($0.55)

10



FREIGHTWAYS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2019

2019

$000
2018
$000

Inflows

(Outflows)
Inflows

(Outflows)
Cash flows from operating activities

Receipts from customers
609,744 575,864
Payments to suppliers and employees
(501,203) (471,175)
Cash generated from operations
108,541 104,689
Interest received 137 182
Interest and other costs of finance paid
(9,379) (9,710)
Income taxes paid
(23,292) (19,451)
Net cash inflows from operating activities
76,007 75,710

Cash flows from investing activities
Payments for property, plant and equipment
(16,844) (14,062)
Payments for software
(6,429) (4,343)
Proceeds from disposal of property, plant and equipment
2,450 1,160
Payments for businesses acquired (net of cash acquired)
(11,111) (7,865)
Receipts from joint venture 2,478 464
Cash flows from other investing activities
(470) (218)
Net cash outflows from investing activities (29,926) (24,864)

Cash flows from financing activities
Dividends paid
(47,002) (45,372)
Increase (decrease) in bank borrowings
9,512 (7,521)
Proceeds from issue of ordinary shares
748 704
Finance lease liabilities repaid
(91) (114)
Net cash outflows from financing activities
(36,833) (52,303)

Net increase (decrease) in cash and cash equivalents 9,248 (1,457)
Cash and cash equivalents at beginning of year
7,410 8,423
Exchange rate adjustments (672) 444
Cash and cash equivalents at end of year 15,986 7,410

11



Earnings per Security (EPS)

Calculation of basic and fully diluted EPS in accordance with NZ IAS 33: Earnings Per Share:


Current full year
(cents per share)
Previous corresponding
full year (cents per share)
Basic EPS 40.8 40.1
Diluted EPS 40.7 40.0



Dividends Paid


Date Paid Cents per share (fully
imputed)
Final Dividend for the year ending 30 June
2018
2 October 2018 15.25
Interim Dividend for the year ending 30 June
2019
1 April 2019 15.00
30.25


Subsequent Events after Balance Date

Dividend declared
On 26 August 2019, the Directors declared a fully imputed final dividend of 15.5 cents per share
(approximately $24.1 million) in respect of the year ended 30 June 2019. The dividend will be paid on 1
October 2019. The record date for determination of entitlements to the dividend is 13 September 2019.

Debt facilities
The Group has negotiated a three-year extension to its existing syndicated bank facilities of NZ$26 million
and A$2 million that were maturing on 1 September 2020. The extension is effective from 31 July 2019.

At the date of this report, there have been no other significant events subsequent to the reporting date.

12

Segment Reporting
A segment is a component of the Group that can be distinguished from other components of the Group by
the products or services it sells, the primary market it operates in and the risks and returns applicable to it.
Operating segments are reported upon in a manner consistent with the internal reporting used by the Chief
Executive Officer, as the chief operating decision maker, and the Board for allocating resources, assessing
performance and strategic decision making.

The Group is organised into the following reportable operating segments:

Express package & business mail
Comprises network (hub & spoke) courier, point-to-point courier and postal services.

Information management
Comprises secure paper-based and electronic business information management services.

Corporate and other
Comprises corporate, financing and property management services.

The Group has no individual customer that represents more than 3% of external sales revenue.

As at and for the year ended 30 June 2019:
Express
Package &
Business Mail
Information
Management
Corporate Inter-
Segment
Elimination
Consolidated
Operations

$000 $000 $000 $000 $000
Income statement
Sales to external customers
451,261 164,429 2 - 615,692
Inter-segment sales
1,716 67 4,651 (6,434) -
Total revenue
452,977 164,496 4,653 (6,434) 615,692


Operating profit (loss) before non-
recurring items, interest, income tax,
depreciation and software
amortisation and amortisation of
intangibles




80,015



35,347



(3,145)



-



112,217
Non-recurring items - 2,354 - - 2,354
Operating profit (loss) before
interest, income tax, depreciation
and software amortisation and
amortisation of intangibles




80,015



37,701



(3,145)



-



114,571
Depreciation and software
amortisation

(7,821) (6,082) (1,535) - (15,438)
Operating profit (loss) before
interest, income tax and
amortisation of intangibles



72,194


31,619


(4,680)


-


99,133
Amortisation of intangibles (50) (2,021) - - (2,071)
Profit (loss) before interest and
income tax

72,144 29,598 (4,680) - 97,062
Net interest and finance costs (11) (30) (9,525) - (9,566)
Profit (loss) before income tax
72,133 29,568 (14,205) - 87,496
Income tax (19,967) (8,427) 4,275 - (24,119)
Profit (loss) for the year attributable
to the shareholders

52,166 21,141 (9,930) - 63,377


Balance sheet

Segment assets 306,525 236,096 42,025 - 584,646
Segment liabilities 63,543 29,165 217,928 - 310,636

13



As at and for the year ended 30 June 2018:
Express
Package &
Business Mail
Information
Management
Corporate Inter-
Segment
Elimination
Consolidated
Operations

$000 $000 $000 $000 $000
Income statement
Sales to external customers
427,096 153,789 1 - 580,886
Inter-segment sales
1,664 38 4,535 (6,237) -
Total revenue
428,760 153,827 4,536 (6,237) 580,886


Operating profit (loss) before non-
recurring items, interest, income tax,
depreciation and software
amortisation and amortisation of
intangibles




74,840



35,378



(2,488)



-



107,730
Non-recurring items - 2,556 - - 2,556
Operating profit (loss) before
interest, income tax, depreciation
and software amortisation and
amortisation of intan
gibles



74,840



37,934



(2,488)



-



110,286
Depreciation and software
amortisation

(6,931) (5,550) (1,519) - (14,000)
Operating profit (loss) before
interest, income tax and
amortisation of intan
gibles


67,909


32,384


(4,007)


-


96,286
Amortisation of intangibles (50) (1,904) - - (1,954)
Profit (loss) before interest and
income tax

67,859 30,480 (4,007) - 94,332
Net interest and finance costs (20) (251) (9,395) - (9,666)
Profit (loss) before income tax
67,839 30,229 (13,402) - 84,666
Income tax (18,729) (8,105) 4,329 - (22,505)
Profit (loss) for the year attributable
to the shareholders

49,110 22,124 (9,073) - 62,161


Balance sheet

Segment assets 300,254 220,930 39,504 - 560,688
Segment liabilities 60,080 29,623 212,762 - 302,465

Segment assets and liabilities are disclosed net of inter-company balances.

For the year ended 30 June 2019, external revenue from customers in the Group's New Zealand and
Australian operations was $496.0 million and $119.7 million, respectively (2018: $472.6 million and
$108.3 million, respectively). As at 30 June 2019, non-current assets in respect of the New Zealand and
Australian operations (excluding deferred tax assets and financial assets) were $310.6 million and $161.2
million, respectively (2018: $306.2 million and $155.3 million, respectively).

14



Revenue from Contracts with Customers

The Group derives revenue from the transfer of goods and services over time and at a point in time in the
following major product lines:


Express
Package

Postal
Storage &
Handling

Destruction
Activities

Other Total
2019 $000 $000 $000 $000 $000 $000
Revenue from external
customers
397,220 54,041 62,567 59,707 42,157 615,692
Timing of revenue
recognition:

At a point in time - 3,480 - 20,083 8,848 32,411
Over time 397,220 50,561 62,567 39,624 33,309 583,281
397,220 54,041 62,567 59,707 42,157 615,692

2018
Revenue from external
customers
376,604 50,492 62,130 52,721 38,939 580,886
Timing of revenue
recognition:

At a point in time - 3,468 - 18,990 6,974 29,432
Over time 376,604 47,024 62,130 33,731 31,965 551,454
376,604 50,492 62,130 52,721 38,939 580,886

15



Business Combinations

During the year ended 30 June 2019, the Group acquired three small information management businesses
in Australia for an aggregate purchase consideration totalling approximately $10.5 million. These
businesses have been integrated into the Australian businesses of the Group’s information management
division. The acquisitions were:
 the business & assets of Formfile Records Management in Victoria on 5 July 2018
 the business & assets of Specialised Security Shredding in Western Australia (WA) on 1 August 2018
 a 75% interest in Southwest Onsite Data Backup Management Pty Ltd in WA on 1 October 2018

The contribution of these businesses to the Group results for the year ended 30 June 2019 was revenue of
$3.2 million and operating profit before interest, income tax and amortisation of intangibles of $0.2 million.

If these acquisitions had all occurred at the beginning of the period, the contribution to revenue and
operating profit before interest, income tax and amortisation of intangibles for the year is estimated at $3.4
million and $0.2 million, respectively.

Details of net assets acquired and goodwill for these acquisitions are as follows:

Purchase consideration
$000
Cash consideration paid during the year 10,540

Fair value of assets and liabilities arising from the acquisition

Cash 526
Trade and other receivables 120
Inventories 223
Plant and equipment 679
Customer relationships
1,722
Goodwill 8,426
Trade and other payables (273)
Provisions
(365)
Deferred tax liability (404)
Non-controlling interest (114)

10,540

The goodwill of $8.4 million arising upon these acquisitions is attributable to the intellectual property
obtained and economies of scale expected to be enhanced by integrating these businesses into the
operations of the Group. None of the goodwill recognised is expected to be deductible for income tax
purposes.

The non-controlling interest in Southwest Onsite Data Backup Management Pty Ltd has been recognised at
fair value.

The acquisition accounting for these acquisitions has been determined on a provisional basis. The fair value
of assets and liabilities acquired, including identified intangible assets, will be finalised within 12 months
from the respective acquisition dates and upon confirmation of certain determinants.

Prior period acquisitions:

LexData

On 1 July 2016, the Group acquired the business & assets of LexData Management Pty Ltd (LexData), an
Australian-based information management business, for initial payments in aggregate of approximately
$2.9 million (A$2.8 million) and a future maximum earn-out of $3.6 million (A$3.5 million). LexData has
been integrated into the Group’s information management division.

16

It has been determined, as at 30 June 2019, that there is no earn-out payment payable, as the relevant
financial performance hurdles based on earnings performance for the years ended 30 June 2017, 2018 and
2019 were not met. The estimated discounted future earn-out payment that the Group had been carrying of
$0.3 million was released to the income statement and included in non-recurring items for the year ended
30 June 2019.

State Waste Services (SWS)

Effective 1 September 2017, the Group acquired the business and assets of SWS, an Australian-based
medical waste collection and destruction business, for an initial payment of approximately $6.5 million
(A$5.9 million) and a future maximum earn-out of up to $4.5 million (A$4.1 million). SWS was branded as
Med-X and integrated into the Group’s Shred-X business within the information management division.

As at 30 June 2019, an estimated discounted future earn-out payment of $1.5 million may be payable in
September 2021, but is contingent upon certain financial performance hurdles being achieved for the years
ending 30 June 2019, 2020 and 2021, collectively. This current estimated earn-out payment is $0.2 million
lower than the prior year and the difference was released to the income statement and included in non-
recurring items for the year ended 30 June 2019. The potential undiscounted amount of the future earn-out
payment that the Group expects could be required to be made in respect of this acquisition is between nil
and $4.5 million. The Group has forecast several scenarios and probability-weighted each to determine a
fair value for this contingent payment arrangement.

---

APPENDIX 7 – NZSX Listing Rules
Number of pages including this one
(Please provide any other relevant
NZSX Listing Rule 7.12.2. For rights, NZSX Listing Rules 7.10.9 and 7.10.10. details on additional pages)
For change to allotment, NZSX Listing Rule 7.12.1, a separate advice is required.
Full name
of Issuer
Name of officer authorised to
Authority for event,
make this notice
e.g. Directors' resolution
Contact phone
Contact fax
numbernumber
Date
Nature of event
BonusIf ticked,
Rights Issue
Tick as appropriate
Issue
state whether:Taxable
/ Non TaxableConversionInterestRenouncable
Rights IssueCapitalCallDividend
If ticked, stateFull
non-renouncable
change
x
whether:
InterimYear
x
SpecialDRP Applies
EXISTING securities affected by this
If more than one security is affected by the event, use a separate form.
Description of theISIN
class of securities
If unknown, contact NZX
Details of securities issued pursuant to this eventIf more than one class of security is to be issued, use a separate form for each class.
Description of theISIN
class of securities
If unknown, contact NZX
Number of Securities toMinimum
Ratio, e.g
be issued following eventEntitlement
1 for 2 for
Conversion, Maturity, Call
Treatment of Fractions
Payable or Exercise Date
Tick if
provide an
pari passu
ORexplanation
Strike price per security for any issue in lieu or date
of the
Strike Price available.
ranking
Monies Associated with Event
Dividend payable, Call payable, Exercise price, Conversion price, Redemption price, Application money.
Source of
Amount per security
Payment
(does not include any excluded income)
Excluded income per security
(only applicable to listed PIEs)
Supplementary
Amount per security
Currencydividendin dollars and cents
details -
NZSX Listing Rule 7.12.7
Total monies
TaxationAmount per Security in Dollars and cents to six decimal places
In the case of a taxable bonusResident
Imputation Credits
issue state strike priceWithholding Tax(Give details)
Foreign
FDP Credits
Withholding Tax(Give details)
Timing
(Refer Appendix 8 in the NZSX Listing Rules)
Record Date 5pmApplication Date
For calculation of entitlements -Also, Call Payable, Dividend /
Interest Payable, Exercise Date,
Conversion Date. In the case
of applications this must be the
last business day of the week.
Notice DateAllotment Date
Entitlement letters, call notices,For the issue of new securities.
conversion notices mailedMust be within 5 business days
of application closing date.
OFFICE USE ONLY
Ex Date:
Commence Quoting Rights:Security Code:
Cease Quoting Rights 5pm:
Commence Quoting New Securities:Security Code:
Cease Quoting Old Security 5pm:
13 September, 20191 October, 2019
$$0.010764$0.060278
$
NZD$0.027353
$24,107,000
Date Payable
1 October, 2019
Enter N/A if not
applicable
NZFREE0001S0
In dollars and cents
Current earnings for the year ended 30 June 2019
$0.1550
(09) 571 9670(09) 571 967126082019
Fully Paid Ordinary Shares
EMAIL: announce@nzx.com
Notice of event affecting securities
1
Freightways Limited
Mark RoyleDirectors' resolution