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

MOVING FORWARDFreightways 2020 Annual Shareholders Meeting

Mark Verbiest
CHAIRMAN
Freightways Limited and its subsidiaries.Annual Shareholder Meeting Presentation
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

Today’s Business
1. CHAIRMAN’S INTRODUCTION2. CEO’S REVIEW & TRADING UPDATE3. RESOLUTIONS
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

General Highlights
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

COVID-19 Impacts
Highlights
• Safe working practices including contactless
delivery
• Reduced working hours to meet lower demand
and reduced salaries and fees
• Redirected resources to where they were most
required as volumes returned
• Adjusted linehaul and airfreight sectors to meet
demand
• Protected the balance sheet through a range of
debt and capital initiatives
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

Express Package & Business Mail
Highlights
• Encouraging organic volume in March – prior to
level 4 lockdown
• Dramatic change in volume through
lockdown levels 4 to 2 including a swing toward home delivery
• Pricing for Effort of 73c per item by June
assisted to generate some margin from home delivery and boost courier earnings
• Took over Big Chill on April 1• Provided 1.4kg of trans-Tasman capacity• Business mail volumes fell by 30% through
lockdown but recovered by the end of the year
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

Information Management & Secure Destruction
Highlights
• Storage revenue was resilient, but activity
declined dramatically through lockdown – by up to 90% in NZ and 25% in Australia
• Print and copy declined by up to 50% in
Australia
• In Victoria many businesses are yet to return
to their offices in CBD areas – recovery will take longer for our destruction and archive businesses
• Medical Waste collections increased
significantly toward the end of the financial year
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

Financial SummaryFor the year ended 30 June
2020
NOTES(i)
Operating profit
before interest, tax and amortisa
tion, 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 attribut
able to the shareholders
GAAP – Generally Accepted Account
ing Principles (IFRS-compliant)
FY19
FY20
Change
GAAP
$M
IFRS16
lease adj.
$M
Excl.
leasing
$M
GAAP
$M
IFRS16
lease adj.
$M
Excl.
leasing
$M
GAAP
%
Excl.
leasing
%
Note
Revenue
615.7 -
615.7
630.9
-
630.9 2.5 2.5
EBITA, before non-recurring items
i.
96.
8 -
96.8
97.8 5.3 92.5
1.0 (4.4)
Non-recurring items
2.6 -
2.6
(9.6)
-
(9.6)
(462.9)
(462.9)
EBITA
ii.
99.4 -
99.4
88.2
5.3 82.9
(11.3)
(16.6)
NPAT, before non-recurring items
iii.
61.
0 -
61.0
56.0 (2.5)
58.5
(8.2)
(4.1)
Non-recurring items after tax
2.4 -
2.4
(8.7)
-
(8.7)
(467.9)
(467.9)
NPAT
iv
63.4 -
63.4
47.4 (2
.5)
49.8 (25.2)
(21.4)
Basic EPS (cents)
39.3 39.3 35.5 37.0 (9.7)
(5.9)
(before non-recurring items)
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

Non-recurring Items
2020
Non-recurring (gains) losses:
2020$000
Impairment of goodwill
5,194
Impairment of brand names
1,581
Impairment of intangible assets -software
608
Write-off of obsolete software
2,739
Acquisition advisory fee
981
Reversal of earn-out payables
(1,505)
Total non-recurring losses
(9,598)
Non-recurring benefits before tax totalling $2.6 million (no tax applicable) in respect of revers
ing $1.6 million of a previously
accrued final acquisition payable t
hat is no longer expected to be
required and a $1 million gain upon recording the replacement of earthquake-related damaged racking funded by insurance proceeds. The gain on the racking r
eplacement arises from the $3
million of insurance proceeds re
ceived during the year for new
racking exceeding the $2 million written down book value of the structurally-compromised racking that was written-off.
2019
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

FY19
FY20
Change
$M
$M
%
Operating Revenue
453.0
474.4
4.7
EBITDA
80.0
85.6
7.0
EBITA
72.2
75.9
5.2
EBITA Margin
15.9%
16.0%
Express Package & Business MailFor the year ended 30 June
2020
Information Management For the year ended 30 June
2020
NOTES•
EBITDA, EBITA and EBITA margins on this sli
de represent operating
results, exclusive of the im
pact of NZ IFRS 16 and non-recurr
ing items
•
Refer to appendix for reconciliation to GAAP results
FY19
FY20
Change
$M
$M
%
Operating Revenue
164.5
158.7
(3.5)
EBITDA
35.3
29.6
(16.3)
EBITA
29.3
22.4
(23.5)
EBITA Margin
17.8%
14.1%
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

•
The prudent course of action was to
not declare a final dividend for FY20
given a number of factors, principally;
–
Trading uncertainty in both the NZ and Australian markets at each level of lockdown
–
The consensus is that the full economic impact has yet to be felt in either country at this stage.
–
Our decision also better positions our balance sheet for an uncertain wider economic impact and preserves headroom for potential growth opportunities which may emerge from the current environment.
–
It is also important to acknowledge also that many of our team took pay cuts through the lockdown period and that some of our businesses accessed the government wage subsidy to ensure that we kept our people in work.
•
For all of these reasons - not declaring a final dividend for FY20, which is
expected to be a one-off decision, is the right thing to do.
•
We envisage a resumption of dividends in the current financial year
(FY21), subject to a continuation of our current trading conditions.
Dividend
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

Mark Troughear
CHIEF EXECUTIVE OFFICER
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

Today’s Business
1. BUSINESS STRATEGY2. ESG INITIATIVES3. TRADING UPDATE4. OUTLOOK
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.
Video

Strategy
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

Express Package
STRATEGY
• Pricing For Effort: Stage II has been launched effective 1st
August at an additional 50c per item
• We have elected to levy a modest 1.9% price increase
across all services
• NOW Couriers same-day-guaranteed service has been
launched in Auckland
• Streamlined IT systems will be launched to continue to
improve customer experience
• Big Chill will leverage the new 3PL facility in Auckland as well
as increased capacity in Wellington and Hawkes Bay
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

Image
Business Mail
STRATEGY
• Continue to expand our network to meet customer demand
and achieve greater efficiencies through scale
• Provide customers with a multi-channel offer (digital and
physical mail)
• Provide high levels of service at premium prices
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

Information Management
STRATEGY
• Target alternate storage revenue streams in NSW and WA
while Archives continue to be slow to transition in
• Continue to grow Digitisation which will largely shift from
FY20 to FY21, there are significant opportunities in the pipeline for FY21 & FY22
• Develop new services to market to our large NZ and AU
customer bases
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

Image
Secure Destruction
STRATEGY
• Continue to target market share gains in all lines of
business
• Target new waste streams to divert from landfill• Use a combination of acquisition, alliance and start-ups to
grow scale in NZ and AU
• Generate transport efficiencies across the Shred-X and
Med-X fleets
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

SDG UPDATE
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.
250 Leaders attended Mental Health Awareness training in FY20
250
9
In FY20
LTIFR (12 months rolling)
1,000
People
Registered

SDG UPDATE
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.
Increase in contractor income YOY Q1.
200
Aspiring leaders
attended development training.
10%
200
50:50
Gender Mix

SDG UPDATE
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.
LTIFR -3 to 9
New product development
Provide
critical
capacity
In FY21
Expand Medical Waste footprint
Express Package Productivity4.5% improvement in items per route.
4.5%

SDG UPDATE
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.
LTIFR -3 to 9
Top 10 NZ Business Carbon Reduce & Carbon Zero(measure and reportISO 14064-1 organisation
)
Member of Love NZ Soft Plastic Recycling Scheme.
Fleet modernisation & run rationalisation,EV Trials

Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.
Q1 Trading Update

Highlights
Q1 Consolidated Performance
Unaudited
NOTES(i)
Operating profit before interest, tax,
depreciation and amortisation
(ii)
Operating profit before interest, tax and
amortisation
(iii)
Net profit after tax before amortisation
(iv)
Net profit after tax
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.
Q1 FY21
Q1 FY20
Increase
$M

$M

%
(iii)
(ii)
NPATA
21.1
14.0
50.9
47.0
(i)
EBITA 34.8
23.3
49.1
(iv)
Operating Revenue
211.7
156.7
35.1
Note
NPAT
19.2
13.4
43.4
EBITDA 49.4
33.6
Note:
 
Freightways
 
uses
 
a
 
4
‐
4
‐
5
 
weeks
 
accounting
 
calendar. In
 
the
 
first
 
quarter
 
of
 
FY21,
 
there
 
is
 
one
 
extra
 
week
 
compared
 
to
 
prior
 
year. Revenue
 
and
 
EBITA
 
are
 
respectively
 
$12.4m
 
and
 
$2.1m
 
for
 
the
 
extra
 
week

Highlights
Q1 Express Package & Business Mail
Unaudited and excludes new
lease accounting
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.
Q1 FY21
Q1 FY20
Increase
$M

$M

%
EBITA Margin
16.2%
15.2%
Operating Revenue
168.4
115.6
EBITDA 30.2
19.7
EBITA 27.3
17.5
45.753.855.6
Note:•
Freightways
 
uses
 
a
 
4
‐
4
‐
5
 
weeks
 
accounting
 
calendar. In
 
the
 
first
 
quarter
 
of
 
FY21,
 
there
 
is
 
one
 
extra
 
week
 
compared
 
to
 
prior
 
year. Revenue
 
and
 
EBITA
 
are
 
respectively
 
$11.6m
 
and
 
$1.9m
 
for
 
the
 
extra
 
week
•
Refer
 
to
 
appendix
 
for
 
reconciliation
 
to
 
GAAP
 
results

Highlights
Q1 Information Management
Unaudited and excludes new
lease accounting
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.
Q1 FY21
Q1 FY20
Increase
$M

$M

%
Operating Revenue
43.8
41.5
5.4
EBITDA 9.9
7.6
30.8
EBITA 7.9
5.9
33.4
EBITA Margin
18.1%
14.3%
Note:•
Refer
 
to
 
appendix
 
for
 
reconciliation
 
to
 
GAAP
 
results

Outlook
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

Whilst the future economic environment remains highl
y uncertain, we are encouraged by the strong trading
results achieved in the first quarter of FY21 which re
flect improved margin, organic growth and market share
gains in all our businessesWe expect that
– In Express Package, volume will be impacted by
any slow down in macro-economic activity;
– In Information Management, whilst storage revenues are
resilient, activity-based revenue recovery will
be dependent on the number of people returning to offices, especially in Victoria.
We have learnt from the previous lockdowns and will r
eact quickly to any volume change by adjusting our cost
base to protect our margins.We will also review the portfolio of services we provi
de with a view to delivering superior long-term value to
shareholders.We expect that COVID will continue to provide challeng
es as well as opportunities for new services, market
share gains & accretive acquisitions.
Outlook
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.
Resolutions

Resolutions
1. RE-ELECTION OF DIRE
CTOR: MARK RUSHWORTH
2. AUTHORITY TO FIX AUDITOR’S REMUNERATION
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

Mark Rushworth
Re-Election of Mark Rushworth.Mark who retires by rotation and is eligible for re-election, be re-elected as a Director of the Company.
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.
Resolution 1.

Resolutions
1. RE-ELECTION OF DIRE
CTOR: MARK RUSHWORTH
2. AUTHORITY TO FIX AUDITOR’S REMUNERATION
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

Appendix: Reconciliation to GAAPFor the year ended 30 June
2020
Express Package & Business MailInformation Management
FY19
FY20
Change
$M
$M
%
Operating Revenue
453.0
474.4
4.7
EBITDA (before non-recurring it
ems and NZ IFRS16)
80.0
85.6
7.0
Non-recurring items
-
(3.3)
100.0
NZ IFRS16 adjustment
-
16.1
100.0
EBITDA (after non-recurring items and NZ IFRS16)
80.0
98.3
22.9
Depreciation expense (including NZ IFRS16)
(7.8)
(23.9)
206.0
EBITA (GAAP)
72.2 74.4 3.1
EBITA (GAAP) Margin
15.9%
15.7%
FY19
FY20
Change
$M
$M
%
Operating Revenue
164.5
158.7
(3.5)
EBITDA (before non-recurring it
ems and NZ IFRS16)
35.3
29.6
(16.3)
Non-recurring items
2.4 (5.3)
(323.9)
NZ IFRS16 adjustment
-
17.5
100.0
EBITDA (after non-recurring items and NZ IFRS16)
37.7
41.8
10.8
Depreciation expense (including NZ IFRS16)
(6.1)
(21.2)
248.8
EBITA (GAAP)
31.6 20.6 (34.9)
EBITA (GAAP) Margin
19.2%
13.0%
NOTES*
GAAP – Generally Accepted Accounti
ng Principles (IFRS-compliant)
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

Appendix: Reconciliation to GAAPFor the quarter ended 30 September
2020
Express Package & Business Mail
NOTES*
GAAP – Generally Accepted Accounti
ng Principles (IFRS-compliant)
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.
Q1 FY20
Q1 FY21
Change
$M
$M
%
Operating Revenue
115.6
168.4
45.7
EBITDA (bef ore NZ IFRS16)
19.7
30.2
53.8
NZ IFRS16 adjustment
2.9 6.6
129.9
EBITDA (af ter NZ IFRS16)
22.5 36.9
63.5
EBITA (bef ore NZ IFRS16)
17.5 27.3
55.6
NZ IFRS16 adjustment
0.3
0.8
134.9
EBITA (GAAP)
17.9 28.1
57.2
EBITA (GAAP) Margin
15.5%
16.7%

Appendix: Reconciliation to GAAPFor the quarter ended 30 September
2020
Information Management
NOTES*
GAAP – Generally Accepted Accounti
ng Principles (IFRS-compliant)
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.
Q1 FY20
Q1 FY21
Change
$M
$M
%
Operating Revenue
41.5
43.8
5.4
EBITDA ( bef or e NZ IFRS16)
7.6
9.9
30.8
NZ IFRS16 adjustment
4.4 4.4
-0.2
EBITDA (af ter NZ IFRS16)
12.0 14.3
19.4
EBITA (bef ore NZ IFRS16)
5.9 7.9
33.4
NZ IFRS16 adjustment
0.9
1.0
12.3
EB ITA ( GA A P)
6.8 8.9
30.7
EBITA (GAAP) Margin
16.4%
20.4%

Disclaimer.
This presentation has been prepared by Freightways Limited ("Freightways") for
information purposes only. This presentation is not a product disclosure statement, prospectus or investment statement. Nothing in this presentation constitutes an invitation to subscribe for shares, securities or financial products in Freightways. Nothing in this presentation 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 Freightways and the information contained in this presentation, including any statements relating to the future performance of Freightways. The information in this presentation is given in good faith and has been obtained from sources believed to be reliable and accurate at the date of this presentation. This presentation may include forward
-
looking statements regarding future events
and the future financial performance of Freightways. Such forward
-
looking statements are based
on current expectations and involve risks and uncertainties. Actual results may be materially different from those stated in any forward
-
looking statements.
Nothing contained in this document is or should be relied on as a promise as to the future performance or condition of Freightways or as to any other future 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 or representation as to the accuracy or completeness of the information contained in this presentation, and exclude their liability to the maximum extent permitted by law.
Freightways Limited and its subsidiaries.Annual Shareholder 2020 Meeting Presentation.

---

ANNUAL SHAREHOLDERS MEETING


A. CHAIRMAN’S INTRODUCTION

Slide 1. Freightways - 29 October 2020, Annual Shareholders Meeting

Slide 2. Mark Verbiest, Chairman

Shareholders and guests, welcome to Freightways’ Annual Shareholders Meeting.
I am Mark Verbiest and I am the Chairman of Freightways.

Today we are running this physical meeting, but also a Virtual Meeting over the
internet. Welcome to all those online as well.

Before we proceed, for those in the room here today, I would like to point out some
housekeeping matters. The bathrooms are located along the corridor. In the
unlikely event of an emergency, you will be required to evacuate and assemble
outside the building in a designated safe area. Should this occur please exit the
room through the rear doors and follow the directions of Eden Park staff. Please
also take this opportunity to switch your mobile phones to silent.

Slide 3. Agenda

I would now like to 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 2020 highlights.
I will then ask Mark Troughear, Freightways’ Chief Executive Officer, to
provide an overview of the Company, an update on current trading performance
and a commentary on our outlook for the rest of the financial year.

• I ask that you hold all questions about the performance of the Company until the
close of the CEO’s presentation and direct them through me. Any questions
related to formal resolutions outlined in the Notice of Meeting should be asked
when we consider those resolutions.

• Following the CEO’s presentation and questions relating to the management of
the company, I will introduce the formal resolutions as outlined in the Notice of
Meeting and polls will be held in respect of them. 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 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 70.5 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 the 2 resolutions set out in the
Notice of Meeting. As requested by the New Zealand Shareholders Association,
we will not disclose the voting of valid proxies received for each resolution before
shareholders vote today, and as usual we will declare the outcome of the polls after
the meeting on the NZX.

Today’s meeting is also being held online via the Lumi platform. This allows
Shareholders, Proxies and Guests to attend the meeting online via live webcast.


Like our shareholders in the room, online shareholders and proxies can ask
questions and submit votes. To ask a question press on the speech bubble icon.

Voting today will be conducted by way of a poll on both items of business. In order
to provide you enough time to vote, I will shortly open voting for both resolutions.

For those attending online, once I open the voting, and if you are eligible to vote at
this meeting, a new polling icon will appear.

Selecting this icon will bring up a list of resolutions and present you with your
voting options. To cast your vote simply select one of the options. There is no need
to hit a submit or enter button as the vote is automatically recorded. You do have
the ability to change your vote, up until the time I declare voting closed.

If you are attending this meeting in person voting will be by way of poll, which
means it will be a secret ballot and you will need to complete your voting forms.

Persons attending the meeting, who are not shareholders, proxy holders or
corporate representatives of a shareholder, may not vote.

I now declare voting open on all items of business. The polling icon will soon
appear to our online attendees, so please submit your votes at any time. I will give
you a warning before I move to close voting.

I would now like to introduce those at the table with me, online in the case of
Andrea Staines:

Your Directors are:

• Kim Ellis - Kim was appointed a Director in 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. Kim is Chairman of Metlifecare,
Green Cross Health and NZ Social Infrastructure Fund and has other
directorships, including Port of Tauranga.

• Abby Foote - Abby joined the Board in 2018 and is qualified in both law and
accounting. She brings to the Board over 10 years’ of governance experience,
including time spent in senior management roles. Abby is currently Chair of Z
Energy and a director of TVNZ and Sanford Limited.

• Mark Rushworth - Mark was appointed a Director in 2015 and has extensive
experience in the technology sector, with a decade’s governance experience,
predominantly in the high tech and innovation space. He has widespread
operational and marketing experience. He spent 4 years on the senior executive
team of Vodafone NZ and has previously served as CEO of Pacific Fibre, ihug
and Paymark. Mark is currently CEO of private equity-owned UP Education.

• Peter Kean - Peter was appointed a Director in 2016, bringing to Freightways
many years of senior executive experience with the Lion group of companies in
both New Zealand and Australia. After retiring from Lion in 2014 he has
developed a career in governance. Peter is also a Director of Sanford Limited
and a number of private companies.

• Andrea Staines - Andrea is a professional director based in Australia and was
appointed to the Board in August 2018. Andrea has 12 years’ governance
experience on the Boards of a range of Australian entities, mostly in the
transport and retail services sectors, having previously held senior management
roles in the airline industry, in particular. She is currently a director of Sealink
Travel (Australia), UnitingCare Queensland, Acumentis and was recently
appointed as Deputy Chair of Australia Post. As announced through the NZX
recently, Andrea will be retiring as a Director of Freightways at the end of
today’s meeting. Andrea felt she needed to balance her commitments, following
the increased demands from her Australia Post appointment. The Board wishes
to thank Andrea for her significant contribution while on the Board and wishes
her all the very best for the future.

• I was appointed a Director of Freightways in February 2010 and elected
Chairman in 2018. I am a lawyer by training and have widespread corporate
legal experience in private practice, having also spent over 7 years on the senior
executive team of Telecom NZ through until mid-2008, where among other
things I had executive accountability for two business units. I’m currently
Chairman of Meridian Energy and a director of ANZ Bank New Zealand. I’m
also a member of the Advisory Board of The Treasury.

The Board is conscious of the need for continuity of experience and Board renewal
and will continue the search for new directors.

Also at the table are:

• Stephan Deschamps, Freightways’ Chief Financial Officer and Company
Secretary. Stephan joined the Freightways senior leadership team six months

ago in the midst of the Covid-19 crisis. Stephan has previously held a number
of senior finance roles; most recently as acting-CFO of Air New Zealand.
Stephan also spent 14 years at Fonterra, including 2 regional CFO roles in Latin
America and China; and

• Mark Troughear, Freightways’ Chief Executive Officer, who was appointed to
the role of CEO in January 2018. Mark has been with Freightways in various
senior executive roles for approximately 25 years and has a comprehensive
knowledge of the group’s operations across all divisions in New Zealand and
Australia.

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 around 20 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 David Raudkivi.

The Financial Statements for the year ended 30 June 2020 are set out in the
Company’s Annual Report that was released to shareholders last month. This
year’s Annual Report continues the practice of recent years in giving shareholders
and other interested parties a lot more information about what we do at
Freightways. As for all of you, this year has been unique and COVID-19 as well
as the public health response to it, have had a significant impact on the operations
of FRE. In the Annual Report, we provide detailed information on how the
Company was impacted and how we responded. I would like to convey how
impressed the Board has been by how each and everyone employee and contractor
of FRE responded to the circumstances. Everyone went the extra mile to make sure
we not only looked after the welfare of our team, but also provided outstanding
service to our customers, including pivoting into Trans-Tasman airfreight when
that opportunity arose. We also completed our largest acquisition to date, Big Chill
Distribution, and I am very pleased to say that this new part of FRE is performing
extremely well.

The intent is to continually improve our reporting to you, our shareholders, on the
matters we think are most relevant to our business.

I would now like to speak briefly to some of the financial highlights of
Freightways’ 2020 year. I will then ask Mark Troughear to address you.

Slide 4. General highlights - 2020 (cover slide)

Slide 5. Highlights and COVID impact

Our response to COVID and the 1st lockdown included a number of key decisions:

Firstly looking after our staff by implementing safe working procedures including
the provision of protective equipment and the implementation of contactless
delivery;

We also needed to quickly adjust the cost base of our businesses with measures
such as staff and management and directors taking pay and fees cuts respectively.
Through the various levels of lockdown our staff moved to provide support where
it was most required to ensure our customers were well served;

We adjusted our network and reduced linehaul and airfreight sectors, and rostered
couriers to match volume;

Finally, we moved quickly to protect our balance sheet and make sure we had
sufficient cash to face whatever a range of liquidity scenarios. This included
increasing our banking facilities temporarily by $50m, paying the half year
dividend through a Dividend Reinvestment Plan and partially completing the
acquisition of Big Chill with new shares.

Slide 6. Express Package & Business Mail - 2020

Despite COVID, the EP division of FRE experienced a solid year. The key
highlights of the year are:
• Steady increases in organic volume up until March 25th (when Level 4
lockdown began in New Zealand) generated encouraging revenue and margin
gains;

• As New Zealand moved through lockdown levels 4 to 2, we experienced a
dramatic change in our business mix with business deliveries generally
declining and home delivery (B2C) increasing to make up around half of all
deliveries performed. We also delivered a significant number of charitable food
boxes and care packages at cost. By June, this B2C proportion had moderated
from around half of all deliveries back to 24%, and it has remained roughly 4%
higher than pre- COVID-19;

• COVID has accelerated a trend that was expected before the epidemic, and for
which we had been preparing through our Pricing For Effort (PFE) programme.
B2C deliveries attract lower margins than B2B, but this situation is improving
and we expect to continue to make progress in this area over the coming years;

• Pricing for Effort (PFE) of 73c per item has thus helped considerably through
the heightened B2C volumes our brands have experienced since level 3
lockdown;

• Courier pay was impacted by the COVID-19 lockdown period, being 2% behind
last year’s average of $103k p.a. per contractor. Self-employed contractors were
able to draw on the government wage subsidy if their income dropped by 30%

in a given month YoY contractor incomes have increased on average by 10%,
ie, the contractor model is working well for our people and us;

• We acquired Big Chill on the 1
st
April. Big Chill initially suffered a 22% decline
in revenue through level 4 and 15% through level 3. Business conditions had
improved by June, with the last month of the year delivering revenue growth of
15% on the pcp;

• Through Q4 we provided 1.4m kgs of international trans-Tasman airfreight
capacity as part of the Government’s International Airfreight Capacity Scheme.
The profitability of this service depends heavily on the degree of utilisation.
This has varied, as the Australian States transition through various phases of
lockdown but is overall a positive contributor to performance. Chasing this
opportunity is an example of the entrepreneurial culture that is part of the
Freightways DNA.

• The volume trajectory for Business Mail followed a similar trend to that of
Express Package. Despite a 30% reduction in mail volumes during the months
of April and May overall, DX Mail recovered by the end of the year. This
growth was achieved through market share gains obtained on the basis of better
and more frequent mail delivery services;

Slide 7. Information Management and Secure Destruction- 2020

• Storage revenue was solid through the year and particularly resilient to the
impacts of COVID-19. However, the number of new archives coming into
facilities virtually halted as lockdowns occurred in New Zealand and Australia;
• Collection and retrieval of archives and media tapes reduced by 90% in New
Zealand and by about 25% in Australia in the last quarter of the year;

• Our litigation support services – in particular print and copy services - were also
heavily impacted as lawyers vacated their offices as a result of COVID-19 and
have remained working from home, in many cases reducing the demand by up
to 50% for printed material.

• There have been positive signs of recovery in New Zealand, but Australia will
take longer to recover because staff in many organisations continue to work
from home. CBD areas in particular are still devoid of many of their office staff

• Our Medical waste collection business in Australia has also seen significant
growth on the back of on-going demand from public and private health and age
care facilities.

Slides 8. Financial Summary - 2020

This slide presents the reported 2020 result and the underlying trading result
compared to the prior comparative period, including and 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. EPS refers to earnings per
share. The FY20 results are measured including the impact of IFRS16.

Consolidated operating Revenue in FY20 was $631m, 2.5% above last year.
Before the non-recurring items, EBITA of $98m was 1% above last year if we
include the impact of IFRS16 in the FY20 results, but 4% below last year on the
same accounting basis (i.e. excluding the impact of IFRS16).
Finally, before non-recurring items, NPAT of $56m was 8% lower than last year
including the impact of IFRS16, (4% lower than last year on the same accounting
basis).

To be noted, our results include close to $16m of wage subsidies received by some
of our businesses in New Zealand and Australia. These subsidies were used to
maintain staff employed during the significant drop in activity observed from April
2020.

FY20 also included a total of $9.6m of non-recurring items before tax that
negatively impacted results. While these non-recurring items were 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 so far. The next slide presents
more details about these one-offs

Slides 9. Non recurring items

The most significant non-recurring item is linked to our IM business in Australia,
and more specifically its Litigation Support operations. Recognising that many
lawyers are now operating in a much more paperless fashion, we decided the
appropriate course was to impair the value of our investment in TIMG by $5.8m.
We have also accelerated our investment in a number of digital projects and
systems, and as a result, recognised that older versions of our software and systems
were obsolete and had to be written off, for a total of $3.3m.
Other non-recurring items were less significant.

Slide 10. 2020 performance by division

Reflecting the trends I have described earlier, our EP and BM division saw an
increase of revenue in FY20, with a 4.7% increase to $474m.The EBITA margin
was stable at 16%, leading to an EBITA of almost $76m. The EBITA was $3.7m
higher than last year.

In contrast, the IM business saw revenue drop by 3.5% to $159m, whilst margins
weakened as many activities dropped during the lockdown and reached 14%,
delivering an EBITA of $22.4m, almost $7m lower than the previous year.

Slide 11. Final Dividend - 2020

The Board felt it was prudent not to declare a final dividend for the year ended 30
June 2020 due a combination of factors.

The first one was the highly uncertain economic and operating environment
Freightways was facing, and the consensus at the time which remains today, is that
the full economic impact is yet to be felt in both New Zealand and Australia.

In addition, with many of our staff having been directly impacted through reduced
hours or pay, and some of the businesses having received wage subsidy, the board
felt paying a final dividend might have a negative impact on engagement.

Finally, the Board wanted to demonstrate its absolute focus on protecting the
balance sheet.

For all of these reasons it was felt not declaring a final dividend was the right thing
to do. Having said that, the Board envisages a resumption of dividends in the
current financial year, subject to a continuation of current trading conditions.

I’ll now call on Freightways’ CEO, Mark Troughear, to address the meeting.

Slide 12. Freightways – Mark Troughear, Chief Executive Officer

B. CHIEF EXECUTIVE OFFICER’S REVIEW AND TRADING
UPDATE

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

Slide 13. Chief Executive Officer’s presentation agenda
I will talk to FRE’s;
− Business Strategy
− ESG Initiatives
− Trading Update
− Outlook

Slide 14. Play Video
Before commencing my presentation, I would like to play a short video which well
summarises the tremendous performance of the business through COVID
lockdowns in the eyes of our customers.

Slide 15. Strategy

Slide 16. Express Package

• Pricing For Effort: Stage II has been launched effective 1st August at an
additional 50c per item

• We have elected to levy a modest 1.9% price increase across all services to
help our customers recover form Covid lockdown impacts

• NOW Couriers same-day-guaranteed service has been launched in Auckland

• Streamlined IT systems will be launched to continue to improve customer
experience

• Big Chill will leverage the new 3PL facility in Auckland as well as increased
network capacity in Wellington and Hawkes Bay

Slide 17. Business mail

• Continue to expand our network to meet customer demand and achieve
greater efficiencies through scale

• Provide customers with a multi-channel offer (digital and physical mail)

• Provide high levels of service at premium prices

Slide 18. Information Management

• Target alternate storage revenue streams in NSW and WA while Archives
continue to be slow to transition in

• Continue to grow Digitisation which will largely shift from FY20 to FY21,
there are significant opportunities in the pipeline for FY21 & FY22

• Develop new services to market to our large NZ and AU customer bases

Slide 19. Secure Destruction

• Continue to target market share gains in all lines of business

• Target new waste streams to divert from landfill

• Use a combination of acquisition, alliance and start-ups to grow scale in NZ
and AU

• Generate transport efficiencies across the Shred-X and Med-X fleets

Slide 20. SDG3
FRE has also made good progress on a number of ESG initiatives which we have
categorised under the United Nations SDG’s. I will give some detail on a few of
these programmes
• Over 1,000 of our people have joined The Movement

• 250 Leaders attended Mental Health Awareness training in FY20

• LTIFR - 9 Injuries reported in FY20

Slide 21. SDG8

• 10% increase in contractor income YOY Q1 through increased payments
and productivity gains

• 200 Aspiring Leaders attended development training – out of those attended
there was a 50:50 gender mix.

Slide 22. SDG9

• The Startery – New product development team

• EP productivity improvement increased by 4.5% in items per route

• Expanded our medical footprint – provided critical capacity in FY21

Slide 23. SDG13

• Freightways is listed within the Top 10 carbon reducers by Toitu Envirocare
for FY20.

• We have run Electric vehicle trials and implemented fleet modernisation and
run rationalisation initiatives.

• Freightways is a member of the Love NZ Soft Plastic Recycling Scheme.

Slide 24. Q1 trading update (cover)

Slide 25. Trading commentary
It is important to consider that FY21 has 53 weeks of trade given our use of a 4-4-
5 accounting calendar and Q1 reflects this extra week representing approximately
$2.5m in EBITA. Q1 FY21 also reflects the inclusion of Big Chill and a number
of other smaller acquisitions which were not part of the group in the prior period.

After the lockdown impact of Q4 FY20, FRE has seen a promising recovery across
its operations, and the Q1 results are significantly better than the same period last
year. In fact revenue is up 35% and EBITA has increased by 49% v’s the same

period last year. It is satisfying to see that we have been able to efficiently adjust
to the new trading environment, we have found ways to mitigate activities that are
still impacted by the COVID pandemic such as demand for trans-Tasman airfreight
services, an increase in the proportion of B2C deliveries and increased demand for
medical waste services. We have been able to maintain our quality of service, gain
market share, pay contractors more and strengthen our margins.

Slide 26. Express Package and Business Mail

Our EP division as delivered very strong results in Q1. Revenue, including Big
Chill and the extra week was 46% higher than last year at $168m, whilst our
margins improved, allowing us to deliver an EBITA 56% higher than last year, at
$27.3m.

Firstly, the first quarter of the new financial year has seen a strong recovery of
volume from Q4 last year, with the number of items handled on average 11%
higher than the same period last year. This is the combination of higher organic
growth as companies and consumers are now selling and purchasing more online,
but also market share gains, as our high level of services and delivery have attracted
new customers to us. The proportion of B2C is also slightly higher, but this is
mitigated by the increase in PFE, that has now reach 87c per item. This has also
allowed us to improve the average incomes of our couriers, which have increased
by around 10% on average from the same time last year.

Our new acquisition, Big Chill, is also delivering strong results, and last year’s
investment in a temperature controlled 3PL facility is performing well ahead of the
business plan.

Our business mail volumes have also recovered from Q4, to reach volumes
comparable to the same period last year.

Slide 27. IM

Our IM business continues to be impacted by a number of trends that were
accelerated by the COVID pandemic, including many companies now relying on a
number of employees working from home and therefore reduced use of paper for
archives and destru ction.

However, our teams in NZ and Australia have worked hard to mitigate these trends,
including by reducing the cost base of the operation, increasing productivity and
seeking new revenue streams, be they digitisation, medical waste or other high
value waste recycling opportunities.

We have had particularly strong growth in medical waste in Q1 driven by the
situation in Victoria.

Overall, our revenue was 5% higher at $44m, whilst EBITA was 33% higher at
$7.9m.

Slide 28. Outlook Cover Page

Slide 29. Outlook

The first quarter of FY21 has been pleasing, as we have seen all the hard work of
our teams pay off. The business has proven that it can adapt to a fast-changing
operating environment to provide long term sustainable returns to our shareholders.

We will continue to leverage the entrepreneurial spirit of our teams, and our deep
knowledge of the industries in which we operate, to ensure we continue to
demonstrate an extremely high level of service, and that this is rewarded by
customers.

Whilst the future economic environment remains highly uncertain, we are
encouraged by the strong trading results achieved in the first quarter of FY21 which
reflect improved margin, organic growth and market share gains in all of our
businesses

We expect that;
• In Express Package, volume will be impacted by any slowdown in macro-
economic activity;

• In Information Management, whilst storage revenues are resilient, activity-
based revenue recovery will be dependent on the number of people returning to
offices, especially in areas affected by lockdowns such as Victoria.

We have learnt from the last 6 months and will react quickly to any volume change
by adjusting our cost base to protect our margins while preserving a level of service
that leads the market.

We will also continue review the portfolio of services we provide with a view to
delivering superior long-term value to shareholders.

We expect that COVID will continue to provide challenges as well as opportunities
for new services, market share gains & accretive acquisitions.

I’d like to take a final opportunity to extend my thanks to the teams of people we
have across NZ and Australia for the sacrifices many have made and their efforts
that see us performing day in and day out for our customers.

Thank-you.