Half Year Results to 31 Dec 2020 and Interim Dividend

1

Results for announcement to the market
Name of issuer FREIGHTWAYS LIMITED
Reporting Period 6 months to 31 December 2020
Previous Reporting Period 6 months to 31 December 2019
Currency New Zealand dollars
Amount (000s) Percentage change
Revenue from continuing
operations
$410,332 29%
Total Revenue $410,332 29%
Net profit/(loss) from
continuing operations
$21,967 (25%)
Total net profit/(loss)
$21,967 (25%)
Final Dividend
Amount per Quoted Equity
Security
$0.21527778
Imputed amount per Quoted
Equity Security
$0.06027778
Record Date 12 March 2021
Dividend Payment Date 1 April 2021
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
($0.88) ($0.58)
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Refer to the section “Half Year Review” for commentary.
Authority for this announcement
Name of person

authorised
to make this announcement
Stephan Deschamps
Contact person for this
announcement
Stephan Deschamps
Contact phone number +64 27 562 5666
Contact email address stephan.deschamps@freightways.co.nz
Date of release through MAP

22/02/2021


Unaudited financial statements accompany this announcement.

---

Section 1: Issuer information
Name of issuer Freightways Limited
Financial product name/description Fully Paid Ordinary Shares
NZX ticker code FRE
ISIN (If unknown, check on NZX
website)
NZFREE0001S0
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year Quarterly
Half Year X Special
DRP applies
Record date 12 March 2021
Ex-Date (one business day before the
Record Date)
11 March 2021
Payment date (and allotment date for
DRP)
1 April 2021
Total monies associated with the
distribution
1

$25,658,000
Source of distribution (for example,
retained earnings)
Current earnings for the year ending 30 June 2021
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.21527778
Gross taxable amount
3
$0.21527778
Total cash distribution
4
$0.15500000
Excluded amount (applicable to listed
PIEs)
$-
Supplementary distribution amount $0.02735294
Section 3: Imputation credits and Resident Withholding Tax
5

Is the distribution imputed Fully imputed
If fully or partially imputed, please
state imputation rate as % applied
6

28%
Imputation tax credits per financial
product
$0.06027778

1
Continuous issuers should indicate that this is based on the number of units on issue at the date of the form
2
“Gross distribution” is the total cash distribution plus the amount of imputation credits, per financial product, before the deduction of
Resident Withholding Tax (RWT).
3
“Gross taxable amount” is the gross distribution minus any excluded income.
4
“Total cash distribution” is the cash distribution excluding imputation credits, per financial product, before the deduction of RWT.
This should include any excluded amounts, where applicable to listed PIEs.
5
The imputation credits plus the RWT amount is 33% of the gross taxable amount for the purposes of this form. If the distribution is
fully imputed the imputation credits will be 28% of the gross taxable amount with remaining 5% being RWT. This does not constitute
advice as to whether or not RWT needs to be withheld.

6
Calculated as (imputation credits/gross taxable amount) x 100. Fully imputed dividends will be 28% as a % rate applied.

Resident Withholding Tax per
financial product
$0.01076389
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
N/A
Start date and end date for
determining market price for DRP
N/A N/A
Date strike price to be announced (if
not available at this time)
N/A

Specify source of financial products to
be issued under DRP programme
(new issue or to be bought on market)
N/A

DRP strike price per financial product
N/A

Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms
N/A

Section 5: Authority for this announcement
Name of person

authorised to make
this announcement
Stephan Deschamps
Contact person for this
announcement
Stephan Deschamps
Contact phone number +64 27 562 5666
Contact email address stephan.deschamps@freightways.co.nz
Date of release through MAP

22/02/2021

---

FREIGHTWAYS HALF YEAR
RESULTS PRESENTATION
for the six months ended 31 December 2020

Highlights
–Growth in courier revenue of x%
through a combination of; organic &
market share gains (including new
courier users) and Pricing For Effort
–Growth in Big Chill 3PL and
distribution revenue of y% with
pleasing utilisation of facilities and
network resources
–PFEreached 97c per item by
December which delivered both
increased contractor earnings, up
6.5% year on year, and improved B2C
margin
–Storage revenue has increased by 4%
over 1H with utilisation now at 83% in
NZ and 70% in AU
–Activity revenue (media and
documents) is 17% below the pcp due
to lower levels of activity through
lockdown (particularly in AU)
–Print and copy margins have improved
steadily over the 1H
–Secure Destruction has rebounded in
NZ and is improving in AU
–Medical Waste business has grown
and even though demand has fallen
off the peak in Victoria we have a
sustainably larger business going into
2H
The financial results in this presentation should be read in
conjunction with the abridged financial statements for the six
months ended 31 December 2020 which can be found in the NZX
preliminary results announcement.
Freightways Limited and itssubsidiaries
Half Year Report for the six months ended 31 December 2020

Highlights
–Growth in courier revenue of 12%
through a combination of organic &
market share gains (including new
courier users) and Pricing For Effort
–Growth in Big Chill transport and
3PLrevenue of 10% (over their pcp)
with pleasing utilisation of facilities and
network resources
–PFEreached $1.01 per item by
December, which delivered improved
B2Cmargin
–Trans Tasman revenue contributed
around 3% to EP in the half
–Contractor earnings up 10% for the
half v. the pcp
–Storage revenue has increased over
the pcpwith utilisation now at 83% in
NZ and 70% in AU
–Activity revenue (media and
documents) isbelow the pcpdue to
lower levels of activity through
lockdown (particularly in AU)
–Print and copy margins have improved
steadily over the 1H
–Secure Destruction has rebounded in
NZ and is improving slowly in AU
–Medical Waste has grown strongly
andwe have a sustainably larger
business going into 2H
Freightways Limited and itssubsidiaries
Half Year Report for the six months ended 31 December 2020

Financial Summary
for the six months ended 31 December 2020
NOTES
i. Operating profit before interest, tax and amortisation, before change in fair value of contingent consideration – BCD.
ii. Operating profit before interest, tax and amortisation.
iii. Net profit after tax (NPAT), before change in fair value of contingent consideration – BCD.
iv. Profit for the half year attributable to shareholders.
Freightways Limited and itssubsidiaries
Half Year Report for the six months ended 31 December 2020
HY21HY20Change
$M$M%
Revenue410.3 318.9 28.7
EBITA, before change in fair value of contingent
consideration – Big Chill Distribution Limited (BCD)
i.71.0 50.1 41.7
Change in fair value of contingent consideration – BCD(19.2)0.0
EBITAii.51.8 50.1 3.4
NPAT, before change in fair value of contingent
consideration – BCD
iii.41.2 29.2 41.0
Change in fair value of contingent
consideration – BCD
(19.2)0.0
NPATiv22.0 29.2 (24.8)
Basic EPS (cents)
(before change in fair value of contingent consideration -
BCD)
24.9 19.5 27.7

Change in fair value of contingent
consideration (Non-recurring Item)
2021
Non-recurring expense of $19.2 million (no tax applicable) in respect of a change in fair value of contingent consideration (increasing
accrual for estimated future Big Chill (BCD) final settlement payment). Stronger than expected performance for the half year ended 31
December 2020, combined with the expectation that this performance will be maintained, has substantially increased the estimated
discounted future final payment from $27.2 million to $46.8 million. A $0.4 million interest charge was expensed during the period,
representing the unwinding of the discounted amount.Generally Accepted Accounting Practice (GAAP) requires that this increase in final
payment accrual be included in the income statement rather than adjusted against goodwill.
Freightways Limited and itssubsidiaries
Half Year Report for the six months ended 31 December 2020

NOTES
* Other includes Digital Services, Print & Copy and Cold Storage revenue
Revenue Segmentation
for the six months ended 31 December 2020
Freightways Limited and itssubsidiaries
Half Year Report for the six months ended 31 December 2020
HY21HY20Change
$M$M%
Express package & refrigerated transport296.0209.441.3
Postal24.827.2(8.7)
Storage & handling30.031.2(3.8)
Destruction activities35.531.911.5
Other23.919.224.8
Total revenue 410.3318.928.7

HY21HY20Change
$M$M%
Operating Revenue84.982.33.2
EBITDA26.523.015.0
EBITA15.612.623.4
EBITA Margin18.4%15.4%
HY21HY20Change
$M$M%
Operating Revenue327.7237.637.9
EBITDA74.449.849.5
EBITA57.439.944.1
EBITA Margin17.5%16.8%
Information Management
for the six months ended 31 December 2020
Express Package & Business Mail
for the six months ended 31 December 2020
Freightways Limited and itssubsidiaries
Half Year Report for the six months ended 31 December 2020

Express Package
Freightways Limited and itssubsidiaries.
Half Year Report ended 31 December 2020.
19%
21%
20%
19%
19%
22%
0%
5%
10%
15%
20%
25%
Jul-20Aug-20Sep-20Oct-20Nov-20Dec-20
B2C Proportion
% OF NETWORK
ITEMS
Note: Excludes point to point and dedicated B2C items
39%
52%
50%
37%
34%
46%
0%
10%
20%
30%
40%
50%
60%
JulAugSepOctNovDec
B2C Item Growth vs 2019
ITEMS

Express Package
Freightways Limited and itssubsidiaries.
Half Year Report ended 31 December 2020.
$0.71
$0.92
$0.94
$0.96 $0.96
$1.01
$-
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
Jul-20Aug-20Sep-20Oct-20Nov-20Dec-20
Pricing For Effort Trend
PFE PER ITEM

NPS
13.3
27.1
20.3
22.7
32.7
0
5
10
15
20
25
30
35
Net Promoter Score -Network Couriers
Express Package
Freightways Limited and itssubsidiaries.
Half Year Report ended 31 December 2020.
9%
14%
10%
9%
9%
10%
0%
2%
4%
6%
8%
10%
12%
14%
16%
JulAugSepOctNovDec
Growth in Network Courier Items v 2019
Volume Trend EP
% GROWTH IN ITEMS
Note: Excludes point to point and dedicated B2C items

Information Management and
Secure Destruction Metrics
Freightways Limited and itssubsidiaries.
Half Year Report ended 31 December 2020.
-16.0
-14.0
-12.0
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
JulAugSepOctNovDec
% Change
Months
Australian Secure Destruction and
Medical Waste Bin Swaps v 2019
0
50
100
150
200
250
JulAugSepOctNovDec
% Change
Med-X Revenue Growth v 2019

Balance Sheet
KEY POINTS
•Total assets increased from FY20 by $9m, including $11m increase in cash &
cash equivalents and higher trade & other receivables from increased activity
and timing of receipts ($7m), partially offset by decrease in property, plant &
equipment ($3m) and right-of-use assets ($5m) due to depreciation.
•Total liabilities decreased from FY20 by $11m, including:
–$40m decrease in borrowing as a result of repayments from positive cash
flows from operations
–$19m increase in payables in respect of change in fair value of contingent
consideration (increasing accrual for estimated future Big Chill (BCD) final
settlement payment)
–$14m increase in trade and other payable from increased activity and
timing of payments
–Prudential increase of doubtful debt provisions to 3.4% of debtors
•Gearing as at 31 December 2020 is 30% (excluding lease liabilities related to
NZ IFRS16) and 57% (including lease liabilities related to NZ IFRS16).
Freightways Limited and itssubsidiaries
Half Year Report for the six months ended 31 December 2020

Cashflow
KEY POINTS
•Cash generated from operations of $104m was $42m above the PCP due to
strong results compared to PCP and the inclusion of Big Chill (acquired on 1
April 2020)
•Net cash inflows from operating activities (i.e. after deducting interest and tax
payments) were $39m above the PCP
•Interest paid increased reflecting higher average debt level during this half
year, following the BCD acquisition, compared to the PCP.
•Cashflows from investing activities were down $19m on the PCP with no
acquisitions made during the period.
•The $35m increase in cash outflows from financing activities compared to the
PCP reflects:
‒repayment of $41m of debt compared to drawdown of $13m in the PCP
‒$6m increase in lease payments, partly due to inclusion of Big Chill
‒no dividend paid this period compared to $24m of dividend paid in the
PCP
Freightways Limited and itssubsidiaries
Half Year Report for the six months ended 31 December 2020

2020
Full Year Actual
$M
2021
Full Year Forecast
$M
Capital Expenditure2320 - 22
Depreciation and software amortisation
(including impact of NZ IFRS 16)
4759*
Depreciation and software amortisation
(excluding impact of NZ IFRS 16)
1822*
* Increase from FY20 predominantly due to the annualised impact of depreciation on assets of businesses acquired in FY20
Capital Expenditure
for the six months ended 31 December 2020
Freightways Limited and itssubsidiaries
Half Year Report for the six months ended 31 December 2020

•INTERIM DIVIDEND: 15.5 cps
•IMPUTATION CREDITS: 6.0278 cps (fully imputed at 28% tax rate)
•SUPPLEMENTARY DIVIDEND: 2.7353 cps
•RECORD DATE: 12 March 2021
•PAYMENT DATE: 1 April 2021
•THE DRP WILL NOT BE OFFERED FOR THIS DIVIDEND
Dividend
Freightways Limited and itssubsidiaries
Half Year Report for the six months ended 31 December 2020

STRATEGY
Freightways Limited and itssubsidiaries
Half Year Report for the six months ended 31 December 2020

Express Package
STRATEGY
•Pricing For Effort will be used to target those areas of our business where
the price does not yet fully reflect the true cost of performing the service:
Stage II of PFE was launched effectiveAugust at an additional 50c per
residential delivery. In Stage III, a final additional tranche of 50c per
residential delivery was levied from February2021
•New services will be launched where market demand exists: NOW Couriers
same-day-guaranteed service and evening delivery services werelaunched
in Auckland in late 2020. KiwiDrive was launched in April 2020. There are a
number ofnewopportunities being investigated in 2021
•New customer facing systems are being launched to NOW Couriers
customers, and will later be implemented in the other brands, to improve
customer experience by providing better visibility and improved freight
management tools
•Big Chill will assess opportunities to further grow the networkalong with
adoption of courier technology for express chilled parcels
Freightways Limited and itssubsidiaries
Half Year Report for the six months ended 31 December 2020

Express Package
Business Mail
STRATEGY
•Continue to expandour network to meet customer demand and achieve
greater efficiencies in the last mile
•Provide customers with a multi-channel offer (digital and physical mail)
•Provide high levels of service at premium prices
Freightways Limited and itssubsidiaries
Half Year Report for the six months ended 31 December 2020

Express Package
Information Management
STRATEGY
•Target high-security 3PL customers to fill excess capacity at sites wheresite
utilisation is low
•Further streamline AU cost base to improvemargins
•Continue to provide high service levels to the AU digitalisation project which
has commenced.Timing of project has been COVID impacted with more of
the margin now expected in H2.
•Pursue digitalisation opportunities in the pipeline for FY22
•Develop new services to market to our large NZ and AU customer bases
Freightways Limited and itssubsidiaries
Half Year Report for the six months ended 31 December 2020

Express Package
Secure Destruction
STRATEGY
•Grow the Med-X brand through AU
•Continue to target market share gains and find innovative ways of targeting
customers who have relocated from CBD zones
•Invest in high value waste streams and recycling opportunities to divert
waste from landfill and improve circular economies
•Use a combination of acquisition, alliance and start-ups to grow scale
•Generate transport efficiencies across the Shred-X and Med-X fleets
Freightways Limited and itssubsidiaries
Half Year Report for the six months ended 31 December 2020

Express Package
Product Development
STRATEGY
•The Startery – dedicated resource to design and test new products and
services in conjunction with our businesses
•Specialised skills and processes to develop ideas that leverage design
thinking, lean start-up and business model canvas methodologies
•Primarily focussed on opportunities and ideas that are aligned or
complementary to existing business activities
•Operational for 18 months – in that time, we have launched two new
services
•The Startery has seven new product opportunities currently at various
stages of the design process
Freightways Limited and itssubsidiaries
Half Year Report for the six months ended 31 December 2020

Outlook
Freightways Limited and itssubsidiaries
Half Year Report for the six months ended 31 December 2020
•Whilst the economic environment remains uncertain, we are encouraged by the strong
trading results achieved in the first half of FY21
•We would expect that
–In Express Package, volume will be influenced by macro-economic activity, new
consumption trends and supplemented by new business wins;
–In Information Management, whilst storage revenues are resilient, activity-based
revenue streams will relyon CBD workers returning to offices.
•We have well-established systems and processes to revert to if we experience another
lockdown in NZ or AU. EP volumes will generally benefit in level 2 and 3, whereas
IMactivity will typically decline.
•We will continue to review the portfolio of services we provide with a view to delivering
superior long-term value to shareholders through short, medium and long-term initiatives.
•The company will continue to consider acquisition opportunities that are complementary to
our existing operations and capabilities.

WhileFY21hasstartedstronglyforFreightways,weareawarethatwemust
notbecomplacent- thatfactorsbeyondourimmediatecontrolwillrequireus
to actasswiftlyaswehavedemonstratedwecanin thepast.
Weareproudofourachievementstodateingrowingcontractorincomes,
developingnewservicesandreducingemissionsperitem. Wewillactively
explorefutureopportunitiesto enhanceourpositionin thesekeyESGareas.
Conclusion
The Freightways directors would again like to thank the efforts of every one of our people
across Australasia during these exceptional times.
Freightways Limited and itssubsidiaries.
Half Year Report ended 31 December 2020.

Appendix: Reconciliation of GAAP
for the six months ended 31 December 2020
Freightways Limited and itssubsidiaries
Half Year Report for the six months ended 31 December 2020
Freightways Group
NOTE
•GAAP – Generally Accepted Accounting Principles (IFRS-compliant)
•The table above shows a reconciliation from GAAP to results excluding the impact of NZ
IFRS16 and change in fair value of contingent consideration –Big Chill Distribution
Limited (BCD)
HY21HY20Change
$M$M%
Operating Revenue410.3318.928.7
EBITDA (GAAP)80.671.313.1
Add back: Change in fair value of contingent consideration – BCD19.2-
Less: NZ IFRS16 adjustment(21.6)(15.1)42.3
EBITDA (before NZ IFRS16 and change in fair value of contingent
consideration – BCD)
78.256.139.4
EBITA (GAAP)51.850.13.4
Add back: Change in fair value of contingent consideration – BCD19.2-
Less: NZ IFRS16 adjustment(3.6)(2.4)48.7
EBITA (before NZ IFRS16 and change in fair value of contingent
consideration – BCD)
67.447.741.3

Appendix: Reconciliation of GAAP to pre-NZ IFRS16
for the six months ended 31 December 2020
Freightways Limited and itssubsidiaries
Half Year Report for the six months ended 31 December 2020
Express Package & Business Mail
HY21HY20Change
$M$M%
Operating Revenue327.7237.637.9
EBITDA (GAAP)74.449.849.5
Less: NZ IFRS16 adjustment(12.7)(6.4)99.0
EBITDA (before NZ IFRS16)61.743.442.2
EBITA (GAAP)57.439.944.1
Less: NZ IFRS16 adjustment(1.7)(0.8)115.2
EBITA (before NZ IFRS16)55.739.142.6
NOTE
GAAP – Generally Accepted Accounting Principles (IFRS-compliant)

Appendix: Reconciliation of GAAP to pre-NZ IFRS16
for the six months ended 31 December 2020
Freightways Limited and itssubsidiaries
Half Year Report for the six months ended 31 December 2020
Information Management
HY21HY20Change
$M$M%
Operating Revenue84.982.33.2
EBITDA (GAAP)26.523.015.2
Less: NZ IFRS16 adjustment(8.7)(8.6)1.7
EBITDA (before NZ IFRS16)17.814.423.3
EBITA (GAAP)15.612.623.8
Less: NZ IFRS16 adjustment(1.9)(1.6)16.9
EBITA (before NZ IFRS16)13.711.024.8
NOTE
GAAP – Generally Accepted Accounting Principles (IFRS-compliant)

Freightways Limited and itssubsidiaries
Half Year Report for the six months ended 31 December 2020

Highlights
–Growth in courier revenue of x%
through a combination of; organic &
market share gains (including new
courier users) and Pricing For Effort
–Growth in Big Chill 3PL and
distribution revenue of y% with
pleasing utilisation of facilities and
network resources
–PFEreached 97c per item by
December which delivered both
increased contractor earnings, up
6.5% year on year, and improved B2C
margin
–Secure Destruction has rebounded in
NZ and is improving in AU
–Medical Waste business has grown
and even though demand has fallen
off the peak in Victoria we have a
sustainably larger business going into
2H
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 presentationconstitutes 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 consulttheir 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 futurefinancial 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 anyfo rward
‐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, ortheir 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 itssubsidiaries
Half Year Report for the six months ended 31 December 2020

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FREIGHTWAYS LIMITED














Half Year Report
December 2020

1


HALF YEAR REVIEW
From the Chairman and Chief Executive Officer

Freightways is a resilient and entrepreneurial business. This has been demonstrated through the most disruptive
challenge we have seen in recent times. The ability for our teams to respond to the pandemic and safely provide
essential services has been illustrated over the last 9 months through initiatives such as: the swift establishment
of a temporary international airfreight service for NZ exporters from scratch; providing high levels of service
despite the rapid acceleration of express package and medical waste volumes; growing our contractors’
incomes far in excess of normal wage growth; and maintaining a workforce of 5,000 people pre and post the
initial lockdowns.
Our service performance has been recognised, by both current and newly acquired customers, with our
businesses gaining positive feedback and achieving their highest ever NPS scores, which is a tribute to our
culture, systems and experienced teams of people.
This has translated into a very solid performance across all our business units during the first half of this year.
Through a combination of organic growth and new-customer acquisition, as well as a very focused control of
costs, we have delivered results that we are very proud of. The performance of our new acquisition, Big Chill,
has also been very strong and has resulted in an increase of $19.2m in the accrual for the final payment of the
purchase price (part of the contracted arrangement provided for a final payment which would be reflective of
performance post purchase). This impacts our reported NPAT for the half year.
COVID-19 lockdowns affect our businesses in different ways. While the harshest level 4 lockdowns present
significant efficiency, resourcing and financial challenges, outside of level 4 we have seen several new
dynamics establish themselves – a larger market for courier services driven heavily by eCommerce and a
higher awareness and demand for medical waste disposal. Our Pricing For Effort (PFE) strategy has seen
improved margins and enabled us to allocate the appropriate level of contractor income for the increased
volume of B2C deliveries which have been performed with a superior level of reliability. On the negative side,
we have had to adapt to lower levels of office activity among our customers in our Information Management
businesses, which we have partially offset by repurposing vehicles and re-training people to provide alternate
services.
We have made strategic investments in R&D through establishing a product development team - The Startery
– which is charged with developing complementary revenue streams for our businesses so that we can leverage
horizon 1 (mature) business with horizon 2 and 3 (emerging) opportunities.
As we head into 2021, we are conscious that we operate in a carbon emitting industry (by virtue of the vehicles
and aircraft we operate either directly or through contracts) and that operating sustainably is critical for the
future of our environment. While we have made great strides in reducing our relative emissions per item
through optimisation of the routes and size of our fleets and adopting modern vehicles, we also continue to
monitor alternative fuel cell vehicle development that will eventually allow us and our contractors to achieve
step changes in carbon reduction. Key to this will be to ensure our contractors are in a position to switch from
diesel to alternative fuel cell technology. Within our Secure Destruction business we are investing in our ability
to grow circular economy initiatives - through our ability to pick-up, process and deliver high-value waste.
From an efficient platform (document destruction where we already divert 50,000 tonnes of paper fibre from
landfill), we are adding new high-value waste streams to be repurposed and recycled. We intend to use the
power of our networks to pick-up, process (shredding, treating) and deliver to those who demand the end
product - reliably and efficiently.

2

Through the latter half of 2020 we have been encouraged by growing eCommerce demand fuelling greater
express package volume. This will help our industry grow profitably for those who can meet its challenges.
We are also excited by the emphasis on waste reduction and increased sustainability initiatives which our
destruction business can leverage.
Freightways is well positioned to take advantage of the opportunities that are in front of us with loyal
customers, high-performing businesses, a strong balance sheet as well as experienced and adaptable teams.
We will return to paying a dividend in April 2021 based on the strong performance of the business in the first
half of FY21.
Divisional performance
Each division’s highlights are listed below along with the strategic priorities for FY21.
Express Package & Business Mail
 Experienced strong volume growth from new and existing customers. The EP brands were successful in
winning market share and helping new-to-market customers with their logistics needs. This resulted in
11% improvement in volume over the pcp.
 B2C deliveries also contributed positively to revenue and contractor incomes without negatively impacting
margins. B2C deliveries increased by 46% over the pcp with peaks during level 2 and 3 lockdowns
establishing a sustainable higher base volume for 2021.
 PFE peaked at $1.01 per item in the 1
st
half of FY21, which has assisted courier incomes to grow by an
average of 10% on the pcp.
 Service performance was particularly strong in spite of materially higher volumes and this was no better
demonstrated than through the Xmas peak season. NPS score for all brands have shown consistent
improvement through the year.
 Big Chill achieved high levels of utilisation for their new 3PL facility in Auckland which aided margins
and also saw increased volume from existing and new customers driving revenue growth of 10%. The
strong performance of Big Chill is also reflected in the forecast final instalment to be paid to the vendors
of the business for its acquisition in FY22. Based on the trading results this year, we have increased our
provision by $19.2m.
 While the Trans-Tasman airfreight scheme ended for Freightways at the end of November, the operation
contributed meaningfully to the business and more importantly for our customers over a 6-month period
and gives the group a new-found capability which may present opportunities if international lockdowns
persist over the coming year.
 By December DX Mail volumes were up 3.9% on the pcp which was a pleasing result and suggest the
various lockdowns have not had a detrimental effect on physical mail volumes.

The year ahead
Express Package will continue to focus on building a strong and profitable market position through providing
superior levels of service and pricing our services appropriately.
This focus will include introducing a further phase of our pricing for effort (PFE) strategy for B2C deliveries
in February 2021. This will finalise the B2C pricing required to ensure well paid and sustainable courier runs
are the norm, rewarding effort appropriately as well as establishing a sustainable operating margin for B2C
deliveries.
Our new customer facing IT systems are being launched, starting with NOW Couriers and, as they are fully
tested by their customers and refined, will be rolled out across our other EP brands.

3
NOW Couriers’ guaranteed same-day Auckland service has proven to be a successful model. It builds upon
our PFE strategy of rating local same day deliveries appropriately for the effort required and gives our
customers market leading local delivery performance.
The Big Chill network has expanded storage facilities over the last year in: Auckland, Wellington and Hawkes
Bay and we will continue to invest to meet increasing demand in strategic locations. Work will commence on
new market opportunities for Big Chill, some of which will leverage the ability to provide a last-mile express
delivery service to customers as well as continuing to improve their customer experience by leveraging our
suite of express package technology.
DX Mail will continue to develop their physical networks in response to demand and our multi-channel
offering through closer alignment with Dataprint’s capabilities.
Information Management & Secure Destruction
 We achieved incremental gains in storage volume through the first half of FY21 but understandably many
prospective clients had bigger issues to manage through the period – particularly in markets such as
Melbourne, Sydney and Auckland. Utilisation has improved to 83% for NZ and 70% for Australia.
 Demand for pick-up and delivery of archives and media tapes is lower in both NZ and Australia.
 Our litigation support services – in particular print and copy services - have improved their profitability
through a number of initiatives to streamline the ways customers interact with us and managing the level
of resource required accordingly.
 The Australian digitalisation project continues and is expected to carry on well into FY22 but at lower
levels of monthly revenue than initially expected.
 Document destruction has recovered to pre-COVID levels in NZ and is slowly recovering in Australia as
people return to offices in Victoria and, to a lesser extent, Sydney.
 Medical Waste revenue was up 100% on the pcp and while there will be peaks around lockdowns, we now
have a substantially larger business than we did pre-COVID.

The year ahead
There are a number of promising avenues to increase facility utilisation in NZ and Australia over the remainder
of FY21 whilst still allowing flexibility to cater to growth in archives when customers return to BAU. There
is also an encouraging pipeline of digitalisation opportunities in Australia, which our team will look to
capitalise on to provide on-going revenue in FY21.
In addition to continuing to grow our presence in Medical Waste, we will invest in collecting new high-value
waste streams that can be diverted from landfill or treated to add value.
Balance sheet strength
Capital expenditure for FY21 is forecast to be in a range of $20-22m in FY21 and spent on a range of IT
development projects, replacement of vehicles and freight handling equipment. Our gearing continues to
reduce, as expected following the BCD acquisition. We remain committed to a solid investment-grade debt
profile.
Outlook
Whilst the immediately foreseeable economic climate remains uncertain, we are encouraged by the strong
trade in Express Package and the resilience of our Information Management businesses, as demonstrated in
our results over the first half of FY21.
We would expect that:
 In Express Package, our existing volumes will be supplemented by market share gains and the growth
of eCommerce while our existing B2B volume will be influenced by macro-economic activity;

4
 In Information Management, whilst storage revenues will remain resilient, our activity-based revenue
streams will be driven by the number of people returning to office environments, noting this could be
lower than pre-COVID-19.
We have well-established systems and processes to be able to adapt to any future lockdowns in NZ or Australia
and we can reasonably expect that B2C Express Package volumes will accelerate in a level 2 or 3 lockdown
and that IM activity will decline as office workers move to working from home.
Our portfolio of services will be continually reviewed with a view to delivering superior long-term value to
shareholders by assessing our short, medium and long-term opportunities and applying the best allocation of
capital to them.
The company will continue to consider growth or acquisition opportunities that may be complementary to our
existing operations and capabilities.
We are proud of our achievements to date in growing contractor incomes, developing new services and
reducing emissions per item. We will actively explore future opportunities to enhance our position on these
key ESG areas.
The Freightways directors would again like to acknowledge the efforts of every one of our team across
Australasia.






Mark Verbiest Mark Troughear
Chairman Chief Executive Officer

22 February 2021

PricewaterhouseCoopers, 15 Customs Street West, Private Bag 92162, Auckland 1142, New Zealand
T: +64 9 355 8000, F: +64 9 355 8001, pwc.co.nz
Independent auditor’s review report
To the shareholders of Freightways Limited

Report on the consolidated financial statements

Our conclusion
We have reviewed the consolidated financial statements of Freightways Limited (the Company) and its
subsidiaries (the Group), which comprise the consolidated balance sheet as at 31 December 2020, and
the consolidated income statement, the consolidated statement of comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the six
month period ended on that date, and significant accounting policies and other explanatory
information.
Based on our review, nothing has come to our attention that causes us to believe that the
accompanying consolidated financial statements of the Group do not present fairly, in all material
respects, the financial position of the Group as at 31 December 2020, and its financial performance
and cash flows for the six months then ended, in accordance with International Accounting Standard
34 Interim Financial Reporting (IAS 34) and New Zealand Equivalent to International Accounting
Standard 34 Interim Financial Reporting (NZ IAS 34).
Basis for conclusion
We conducted our review in accordance with the New Zealand Standard on Review Engagements 2410
(Revised) Review of Financial Statements Performed by the Independent Auditor of the Entity (NZ
SRE 2410 (Revised)). Our responsibilities are further described in the Auditor’s responsibilities for the
review of the financial statements section of our report.

We are independent of the Group in accordance with the relevant ethical requirements in New Zealand
relating to the audit of the annual financial statements, and we have fulfilled our other ethical
responsibilities in accordance with these ethical requirements. In addition to our role as auditor, our
firm carries out other services for the Group of agreed upon procedures over the poll for the
shareholder resolutions at the Annual General Meeting and Executives’ remuneration benchmarking.
The provision of these other services has not impaired our independence.
Directors’ responsibility for the financial statements
The Directors of the Company are responsible on behalf of the Company for the preparation and fair
presentation of these consolidated financial statements in accordance with IAS 34 and NZ IAS 34 and
for such internal control as the Directors determine is necessary to enable the preparation and fair
presentation of consolidated financial statements that are free from material misstatement, whether
due to fraud or error.
Auditor’s responsibility for the review of the financial statements
Our responsibility is to express a conclusion on the consolidated financial statements based on our
review. NZ SRE 2410 (Revised) requires us to conclude whether anything has come to our attention
that causes us to believe that the consolidated financial statements, taken as a whole, are not prepared
in all material respects, in accordance with IAS 34 and NZ IAS 34. A review of consolidated financial
statements in accordance with NZ SRE 2410 (Revised) is a limited assurance engagement. We perform
procedures, primarily consisting of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures.

PwC 2
The procedures performed in a review are substantially less than those performed in an audit
conducted in accordance with International Standards on Auditing and International Standards on
Auditing (New Zealand) and consequently does not enable us to obtain assurance that we might
identify in an audit. Accordingly, we do not express an audit opinion on these consolidated financial
statements.
Who we report to
This report is made solely to the Company’s Shareholders as a body. Our review work has been
undertaken so that we might state to the Company’s Shareholders those matters which we are required
to state to them in our review report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the Shareholders, as a body, for our
review procedures, for this report, or for the conclusion we have formed.
The engagement partner on the review resulting in this independent auditor’s review report is Keren
Blakey.

For and on behalf of:





Chartered Accountants Auckland
22 February 2021

7

FREIGHTWAYS LIMITED
CONSOLIDATED INCOME STATEMENT
for the half year ended 31 December 2020 (unaudited)



Note
6 mths
ended
31 Dec 2020
$000
6 mths
ended
31 Dec 2019
$000
Variance
%

Operating revenue
4 & 5
410,332 318,914 29%




Transport and logistics expenses

(162,216) (124,672) 30%
Employee benefits expenses

(112,667) (92,440) 22%
Occupancy expenses

(3,585) (2,623) 37%
General and administrative expenses

(32,061) (27,890) 15%
Change in fair value of contingent consideration – Big
Chill Distribution Limited
10 (19,200) - 100%
Depreciation and software amortisation

(28,809) (21,178) 36%
Amortisation of intangibles
11
(3,791) (1,151) 229%
Operating profit before interest and income tax
4
48,003 48,960 (2%)
Net interest and finance costs

(11,222) (8,530) 32%
Profit before income tax

36,781 40,430 (9%)
Income tax

(14,814) (11,235) 32%
Profit for the period

21,967 29,195 (25%)



Profit for the period attributable to:


Owners of the parent

21,930 29,173 (25%)
Non-controlling interests

37 22 68%


21,967 29,195 (25%)



Earnings per share for the period*:


Basic earnings per share (cents)

13.3 18.8
Diluted earnings per share (cents)

13.2 18.8

*Basic and diluted earnings per share for the 6 months ended 31 December 2020 calculated on the profit for the
period attributable to shareholders, excluding Change in fair value of contingent consideration – Big Chill
Distribution Limited, are 24.9 cents and 24.8 cents, respectively.





The above Income Statement should be read in conjunction with the accompanying notes.

8


FREIGHTWAYS LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the half year ended 31 December 2020 (unaudited)


6 mths ended
31 Dec 2020
$000
6 mths ended
31 Dec 2019
$000

Profit for the period 21,967 29,195

Other comprehensive income
Items that may be reclassified subsequently to profit or loss:

Exchange differences on translation of foreign operations
(2,817) (437)
Cash flow hedges taken directly to equity, net of tax
(701) 890
Total other comprehensive income after income tax (3,518) 453

Total comprehensive income for the period 18,449 29,648

Total comprehensive income for the period is attributable to:
Owners of the parent 18,412 29,626
Non-controlling interests 37 22
18,449 29,648

The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

FREIGHTWAYS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the half year ended 31 December 2020 (unaudited)

GROUP 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 2020
180,630 142,746 (2,075) (4,635) 114 316,780
Profit for the period

- 21,930 - - 37 21,967
Exchange differences on translation of foreign operations

- - - (2,817) - (2,817)
Cash flow hedges taken directly to equity, net of tax

- - (701) - - (701)
Total Comprehensive Income

- 21,930 (701) (2,817) 37 18,449
Dividend payments

- - - - - -
Shares issued

1,391 - - - - 1,391
Balance at 31 December 2020

182,021 164,676 (2,776) (7,452) 151 336,620



Balance at 1 July 2019

126,440 157,226 (3,901) (5,879) 124 274,010
Impact of adoption of NZ IFRS 16

- (16,499) - - - (16,499)
Restated Balance at 1 July 2019

126,440 140,727 (3,901) (5,879) 124 257,511
Profit for the period

- 29,173 - - 22 29,195
Exchange differences on translation of foreign operations

- - - (437) - (437)
Cash flow hedges taken directly to equity, net of tax

- - 890 - - 890
Total Comprehensive Income

- 29,173 890 (437) 22 29,648
Dividend payments

- (24,084) - - - (24,084)
Shares issued

729 - - - - 729
Balance at 31 December 2019

127,169 145,816 (3,011) (6,316) 146 263,804


The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

FREIGHTWAYS LIMITED
CONSOLIDATED BALANCE SHEET
as at 31 December 2020 (unaudited)


Notes
As at
31 Dec 2020
$000
As at
31 Dec 2019
$000
As at
30 Jun 2020
$000
Current assets
Cash and cash equivalents 27,437 4,272 16,686
Trade and other receivables 106,989 102,119 100,381
Inventories 6,708 6,006 6,019
Income tax receivable - 1,196 384
Total current assets 141,134 113,593 123,470

Non-current assets
Trade receivables and other non-current assets 7,421 3,855 7,348
Property, plant and equipment 131,227 110,600 134,649
Right-of-use assets 273,220 194,948 278,142
Intangible assets 498,511 371,373 498,966
Investment in associates 7,692 7,758 7,842
Total non-current assets 918,071 688,534 926,947
Total assets 1,059,205 802,127 1,050,417

Current liabilities
Trade and other payables 100,747 75,997 87,656
Borrowings (secured) 7 3,861 - 5,210
Lease liabilities 38,602 22,030 30,641
Income tax payable 19,564 3,862 18,824
Provisions 1,638 998 1,225
Derivative financial instruments 422 858 750
Contract liability 14,925 14,641 15,142
Total current liabilities 179,759 118,386 159,448

Non-current liabilities
Trade and other payables 46,798 2,567 27,386
Borrowings (secured) 7 176,744 179,635 216,484
Deferred tax liability 40,493 30,788 41,425
Provisions 6,519 5,152 6,331
Lease liabilities 268,838 198,472 280,431
Derivative financial instruments 3,434 3,323 2,132
Total non-current liabilities 542,826 419,937 574,189
Total liabilities 722,585 538,323 733,637
NET ASSETS 336,620 263,804 316,780

EQUITY
Contributed equity 6 182,021 127,169 180,630
Retained earnings 164,676 145,816 142,746
Cash flow hedge reserve (2,776) (3,011) (2,075)
Foreign currency translation reserve (7,452) (6,316) (4,635)
336,469 263,658 316,666
Non-controlling interests 151 146 114
TOTAL EQUITY 6 336,620 263,804 316,780



The above Balance Sheet should be read in conjunction with the accompanying notes.

11
FREIGHTWAYS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
for the half year ended 31 December 2020 (unaudited)



6 mths
ended
31 Dec 2020
$000
6 mths
ended
31 Dec 2019
$000


Inflows
(Outflows)
Inflows
(Outflows)
Cash flows from operating activities


Receipts from customers

405,524 305,501
Payments to suppliers and employees

(301,907) (244,095)
Cash generated from operations

103,617 61,406
Interest received

18 25
Interest and other costs of finance paid

(11,042) (8,844)
Income taxes paid

(17,147) (16,132)
Net cash inflows from operating activities

75,446 36,455



Cash flows from investing activities


Payments for property, plant & equipment

(6,112) (10,508)
Payments for software

(3,163) (1,924)
Proceeds from disposal of property, plant & equipment

93 89
Payments for businesses acquired (net of cash acquired)

16 (7,159)
Payments for investment in associates

- (7,468)
Receipts from joint venture

1,450 702
Cash flows from other investing activities

(63) (77)
Net cash outflows from investing activities

(7,779) (26,345)



Cash flows from financing activities


Dividends paid

- (24,084)
Increase (decrease) in bank borrowings

(40,717) 12,970
Proceeds from issue of ordinary shares

423 453
Principal elements of lease payments

(16,645) (11,129)
Net cash outflows from financing activities

(56,939) (21,790)



Net increase (decrease) in cash and cash equivalents

10,728 (11,680)
Cash and cash equivalents at the beginning of the period

16,686 15,986
Exchange rate adjustments

23 (34)
Cash and cash equivalents at the end of the period

27,437 4,272



The above Statement of Cash Flows should be read in conjunction with the accompanying notes.

12

FREIGHTWAYS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the half year ended 31 December 2020 (unaudited)

1. Basis of preparation

The interim financial statements are those of Freightways Limited (the ‘Company’) and its subsidiary
companies (together with the Company, referred to as the ‘Group’). The Company is registered under the
Companies Act 1993 and is an FMC Reporting Entity under Part 7 of the Financial Markets Conduct Act
2013. The financial statements of the Group have been prepared in accordance with the requirements of the
Financial Markets Conduct Act 2013 and the NZX Main Board Listing Rules.

The financial statements are stated in New Zealand dollars and rounded to the nearest thousand, unless
otherwise indicated.

The consolidated financial statements of the Group have been prepared in accordance with Generally
Accepted Accounting Practice in New Zealand (NZ GAAP). They comply with New Zealand Equivalent to
the International Accounting Standard 34: Interim Financial Reporting (NZ IAS 34) and International
Accounting Standard 34: Interim Financial Reporting (IAS 34) and consequently, do not include all the
information required for full financial statements. These condensed Group interim financial statements
should be read in conjunction with the annual report for the year ended 30 June 2020.

The presentation of the consolidated income statement has been simplified in the current period to remove
the presentation of non-NZ GAAP financial measures as these were not prepared in accordance with NZ
IFRS.

The Group is designated as a for-profit entity for the purposes of complying with NZ GAAP.


2. Accounting policies

The accounting policies and methods of computation are consistent with those used in the most recent annual
report.

There are various standards, amendments and interpretations which were assessed as having an immaterial
impact on the Group. There are no NZ IFRS, NZ IFRIC interpretations or other applicable IFRS that are
effective for the first time for the financial year beginning on or after 1 July 2020 that had a material impact
on the financial statements.

13
FREIGHTWAYS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the half year ended 31 December 2020 (unaudited)

3. Impact of COVID-19

The on-going COVID-19 global pandemic has accelerated a number of trends that were already evident
before the start of the pandemic. Amongst them is a faster adoption of online shopping that positively impacts
volume for Freightways’ express package businesses. At the same time, with a number of information
management’s customers having employees working from home and using less paper, some of the
information management activities continue to recover at a slower pace. This slower recovery is partially
mitigated by continuing to develop new service lines and managing costs. The risk of a resurgence of
COVID-19 in New Zealand or Australia creates a continued level of uncertainty, although Freightways’
businesses are now well prepared to operate efficiently in different levels of lockdown. During the period an
additional $0.9 million was received from the Australian government in relation to the JobKeeper subsidy.
Management and the Directors have considered and concluded that there are no events or changes in
circumstances giving rise to an impairment indicator since the recognition of impairment as at 30 June 2020
and the signing of the 2020 financial statements.


4. Segment reporting

(a) Description of segments

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, refrigerated transport, 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 4% of external sales revenue.

14
FREIGHTWAYS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the half year ended 31 December 2020 (unaudited)

(b) Segment analysis

Express
package &
business
mail
Information
management
Corporate Inter-
segment
elimination
Consolidated
operations
$000 $000 $000 $000 $000
Half year ended
31 December 2020


Sales to external customers 325,300 84,997 35 - 410,332
Inter-segment sales 2,383 (81) 2,428 (4,730) -
Total revenue 327,683 84,916 2,463 (4,730) 410,332

Operating profit (loss) before
change in fair value of
contingent consideration,
interest, income tax,
depreciation and software
amortisation and amortisation of
intangibles 74,442 26,485 (1,124) - 99,803
Change in fair value of
contingent consideration – Big
Chill Distribution Limited (Note
10) - - (19,200) - (19,200)
Operating profit (loss) before
interest, income tax,
depreciation and software
amortisation and amortisation of
intangibles 74,442 26,485 (20,324) - 80,603
Depreciation and software
amortisation (16,995) (10,883) (931) - (28,809)
Operating profit (loss) before
interest, income tax and
amortisation of intangibles 57,447 15,602 (21,255) - 51,794
Amortisation of intangibles,
excluding software amortisation (2,640) (1,151) - - (3,791)
Operating profit (loss) before
interest and income tax 54,807 14,451 (21,255) - 48,003
Net interest and finance costs (3,201) (2,458) (5,563) - (11,222)
Profit (loss) before income tax 51,606 11,993 (26,818) - 36,781
Income tax (14,158) (3,520) 2,864 - (14,814)
Profit (loss) for the period
attributable to the shareholders 37,448 8,473 (23,954) - 21,967

15

FREIGHTWAYS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the half year ended 31 December 2020 (unaudited)

Segment Reporting (continued)

Express
package &
business
mail
Information
management
Corporate Inter-
segment
elimination
Consolidated
operations
$000 $000 $000 $000 $000
Half year ended
31 December 2019


Sales to external customers 236,635 82,279 - - 318,914
Inter-segment sales 931 - 2,436 (3,367) -
Total revenue 237,566 82,279 2,436 (3,367) 318,914

Operating profit (loss) before
interest, income tax,
depreciation and software
amortisation and amortisation of
intangibles 49,805 23,037 (1,553) - 71,289
Depreciation and software
amortisation (9,929) (10,394) (855) - (21,178)
Operating profit (loss) before
interest, income tax and
amortisation of intangibles 39,876 12,643 (2,408) - 50,111
Amortisation of intangibles,
excluding software amortisation (25) (1,126) - - (1,151)
Operating profit (loss) before
interest and income tax 39,851 11,517 (2,408) - 48,960
Net interest and finance costs (1,399) (2,667) (4,464) - (8,530)
Profit (loss) before income tax 38,452 8,850 (6,872) - 40,430
Income tax (10,574) (2,623) 1,962 - (11,235)
Profit (loss) for the period
attributable to the shareholders 27,878 6,227 (4,910) - 29,195

16
FREIGHTWAYS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the half year ended 31 December 2020 (unaudited)

5. 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 &
Refrigerated
Transport
Postal
Storage &
Handling
Destruction
Activities
Other Total
Half year ended
31 December 2020
$000 $000 $000 $000 $000 $000
Revenue from external
customers
295,974 24,835 30,042 35,545 23,936 410,332
Timing of revenue
recognition:

At a point in time - 1,407 - 9,919 5,047 16,373
Over time 295,974 23,428 30,042 25,626 18,889 393,959
295,974 24,835 30,042 35,545 23,936 410,332

Half year ended
31 December 2019

Revenue from external
customers
209,430 27,205 31,215 31,885 19,179 318,914
Timing of revenue
recognition:

At a point in time - 1,774 - 9,715 5,376 16,865
Over time 209,430 25,431 31,215 22,170 13,803 302,049
209,430 27,205 31,215 31,885 19,179 318,914


6. Equity


Contributed equity

Fully paid ordinary shares
As at 31 December 2020, there were 165,538,104 fully paid ordinary shares on issue (2019: 155,458,437).
All fully paid ordinary shares have equal voting rights and share equally in dividends and surplus on winding
up.

Share rights
During the period, Freightways implemented a new executive Long Term Incentive (LTI) Scheme. This
equity settled scheme replaces the previous senior executive performance share plan. The new LTI Scheme
offers share rights to senior executives, with vesting determined at the end of a 3-year vesting period.
Vesting is subject to the achievement of certain financial hurdles set by the Board and included in the annual
offer of participation to executives. Once is has been determined how many share rights have vested, each
share right will convert to one Freightways fully paid ordinary share at that time.

Share rights of 141,916 and 166,352 were issued on 31 July 2020 and 19 October 2020 respectively to
senior executives under the Freightways LTI Scheme (2019: Nil). As at 31 December 2020, there were
308,268 share rights on issue (2019: Nil). Share rights do not carry a dividend entitlement and are non-
transferable.

17
FREIGHTWAYS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the half year ended 31 December 2020 (unaudited)



Partly-paid ordinary shares
During the period, 63,474 partly-paid shares were redeemed and cancelled (2019: 25,227). As at 31
December 2020, there were 200,342 partly-paid ordinary shares on issue (2019: 263,816). Partly-paid
ordinary shares have no voting rights and no rights to dividends and surplus on winding up.

Employee share plan
On 13 October 2020, the Company issued 125,000 fully paid ordinary shares at $6.64 each to Freightways
Trustee Company Limited, as Trustee for the Freightways Employee Share Plan (2019: 80,000 fully paid
ordinary shares at $7.24 each). In total, participating employees were provided with interest-free loans of
$0.8 million to fund their purchase of the shares in the Share Plan (2019: $0.6 million). The loans are
repayable over three years and repayment commenced in October 2020.


7. Borrowings (secured)

In December 2016, a US$125 million uncommitted finance facility was established with a US-based lender
on the same terms as those that are in place with the existing banking syndicate. Of this facility, the US
dollar equivalent of NZ$10 million and A$30 million has been drawn as at 31 December 2020 (2019: NZ$10
million and A$30 million).

As at 31 December 2020, the Group’s debt facilities with its banking syndicate comprised NZ$213.5 million
and A$90.4 million (2019: NZ$163.5 million and A$90.4 million), of which NZ$69 million and A$61.7
million (2019: NZ$67.5 million and A$68.2 million) had been drawn, respectively.

The Group had an undrawn bank overdraft facility of NZ$8 million available (2019: NZ$8 million).

The Group also has a fleet financing facility with a NZ$6 million (2019: Nil) limit operated by Big Chill
Distribution Limited. As at 31 December 2020, NZ$3.9 million (2019: Nil) of the fleet financing facility
has been drawn. This facility is scheduled to be repaid progressively by April 2021 and will then be
cancelled.

The Group was in compliance with all its banking covenants throughout this financial period.

8. Transactions with Related Parties

Trading with related parties: The Group has not entered into any material external related party
transactions which require disclosure. The Group does trade, on normal commercial terms, with certain
companies in which there are common directorships. These counterparties include Z Energy Limited and
Sanford Limited.

Payments to associate: During the period, the Group paid Parcelair Limited $7.5 million (2019: $6.4
million) for the provision of airfreight linehaul services to the express package businesses on normal
commercial terms. Parcelair Limited is incorporated in New Zealand and is half-owned by the Group.

Key management compensation: Compensation paid during the period (or payable as at 31 December
2020 in respect of the half year) to key management, which includes senior executives of the Group and
non-executive independent directors, is as follows:


2020
$000
2019
$000
Short-term employee benefits 3,530 3,241
Share-based payments 651 438

18
FREIGHTWAYS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the half year ended 31 December 2020 (unaudited)

9. Financial Risk Management

The Group has a treasury policy which is used to assist in managing foreign exchange and interest rate risks.
The interim financial statements do not include all financial risk management information and disclosures
and should be read in conjunction with the Group’s annual financial statements as at 30 June 2020 contained
in its Annual Report, which can be obtained from the Company’s registered office or www.freightways.co.nz.

There have been no significant changes in the Group’s risk management objectives and policies since 30
June 2020.

In the period to 31 December 2020 there were no significant changes in the business or economic
circumstances that affect the fair value of the Group’s financial assets and financial liabilities.

Fair values and valuation techniques
The Group uses various methods in estimating the fair value of financial instruments. The methods comprise:

Level 1 - Quoted prices (adjusted) in active markets for identical assets or liabilities at the reporting date. A
market is regarded as active if quoted prices are readily and regularly available from an exchange,
dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent
actual and regularly occurring market transactions on an arm’s length basis.
Level 2 - Inputs that are observable for the asset or liability, either directly (i.e., as prices; other than quoted
prices referred to in Level 1 above) or indirectly (i.e., derived from prices). The fair value of
financial instruments that are not traded in an active market (for example, over-the-counter
derivatives) is determined by using valuation techniques. These valuation techniques maximise the
use of observable market data where it is available and rely as little as possible on entity specific
estimates. If all significant inputs required to fair value an instrument are observable, the fair value
of an instrument is included in Level 2.
Level 3 - Inputs for the asset or liability that are not based on observable market data (i.e., unobservable
inputs). In these cases, the fair value of an instrument would be included in Level 3.

Specific valuation techniques used to value financial instruments include:
 In respect of interest rate swaps, the fair value is calculated as the present value of the estimated future
cash flows based on observable yield curves;
 In respect of forward foreign exchange contracts, the fair value is calculated using forward exchange
rates at the balance sheet date, with the resulting value discounted back to present value; and
 discounted cash flow analysis for other financial instruments.

Specific valuation techniques used to value contingent consideration in a business combination and estimated
purchase price adjustments include:
 fair value is calculated as the present value of the estimated future cash flows based on management’s
assessment of future performance; and
 management’s knowledge of the business and the industry it operates in.

The Group’s derivative financial instruments are all Level 2 financial instruments. Contingent consideration
in a business combination and estimated purchase price adjustments are all Level 3 financial instruments.
There have been no transfers between levels of the fair value hierarchy used in measuring the fair value of
financial instruments in the period to 31 December 2020.

There have been no reclassifications of financial assets and finance liabilities since 30 June 2020.

The carrying value of the following financial assets and liabilities approximate their fair value:
 cash and cash equivalents
 trade and other receivables
 trade and other payables
 bank borrowings

19
FREIGHTWAYS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the half year ended 31 December 2020 (unaudited)

10. Business Combinations

Prior period acquisitions:

Acquisition of Big Chill Distribution Limited (“BCD”)

Effective 1 April 2020, the Group acquired 100% of BCD, a company operating in the New Zealand
temperature-controlled transport and facilities market, for an initial consideration of approximately $114.6
million and a future earn-out representing 20% of BCD Enterprise Value as at 30 June 2022. This acquired
subsidiary operates within the Group’s express package & business mail division.

Given the size of the transaction and proximity to the end of financial year, the Group had not yet finalised
the fair value assessment of the assets acquired, the liabilities assumed and goodwill as at 30 June 2020. As
at 31 December 2020, the Group revised the assessment of the fair value of the assets acquired and liabilities
assumed.

The following table summarises the revised amounts determined for purchase consideration and the fair value
of assets acquired and liabilities assumed:

1 Apr 2020 31 Dec 2020
Preliminary Adjustments Revised
Purchase consideration $000 $000 $000
Cash paid during the period 84,553 - 84,553
Issue of Freightways shares 30,000 - 30,000
Fair value of future earn-out payment 27,193 - 27,193
Total purchase consideration 141,746 - 141,746

Fair value of assets and liabilities arising from the acquisition
Cash and cash equivalents 5,715 - 5,715
Trade and other receivables 11,706 - 11,706
Plant and equipment 24,256 - 24,256
Right-of-use assets 91,292 - 91,292
Net investment in sublease 4,506 - 4,506
Brand name 5,500 8,500 14,000
Customer relationships 40,900 - 40,900
Non-compete agreement 1,900 - 1,900
Goodwill 83,754 (6,120) 77,634
Trade and other payables (12,802) - (12,802)
Borrowings (6,023) - (6,023)
Deferred tax liability (12,723) (2,380) (15,103)
Lease liabilities (96,235) - (96,235)
141,746 - 141,746

The fair value of the trade and other receivables acquired as part of the business combination amounted to
$11.7 million. The gross contractual amount is $12.1 million, with a loss allowance of $0.4 million
recognised on acquisition.

The goodwill of $77.6 million arising upon this acquisition is attributable to the business know how and the
premium paid for strategic reasons, including acquiring an entry point into the temperature-controlled
transport and facilities industry. None of the goodwill recognised is expected to be deductible for income
tax purposes.

(a) Big Chill brand name
As indicated in the 30 June 2020 annual report, the fair values were provisional. The brand name value has
been finalised during the six months ended 31 December 2020

20
FREIGHTWAYS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the half year ended 31 December 2020 (unaudited)

(b) Fair value of future final payment – 30 June 2020
The estimated discounted future final payment of $27.2 million may be payable in August 2022 and has been
accrued for in the financial statements but is contingent upon certain financial performance hurdles being
achieved for the years ended 30 June 2021 and 2022. The potential undiscounted amount of the future final
payment that the Group expects could be required to be made in respect of this acquisition is between nil and
$30 million. The Group has forecast several scenarios and probability-weighted each to determine a fair value
for this contingent payment arrangement.

(c) Fair value of future final payment – 31 December 2020

As at 31 December 2020 the estimated future final payment was increased to $46.8 million, the increase of
$19.2 million has been recognised in the income statement. The potential undiscounted amount of the future
final payment that the Group expects could be required to be made in respect of this acquisition is between
nil and $48.8 million. The Group has forecast several scenarios and probability-weighted each to determine
a fair value for this contingent payment arrangement. The liability is presented within trade and other
payables in the balance sheet.

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.

The potential earn-out is contingent upon certain financial performance hurdles being achieved for the years
ended 30 June 2019, 2020 and 2021. The Group has forecast several scenarios and probability-weighted each
to determine a fair value for this contingent payment arrangement. As at 31 December 2020, based on the
actual performance of the acquired business, management has estimated that there is likely to be no future
earn-out payment payable in September 2021 and accordingly there is no accrual for this earn-out.


11. Amortisation of Intangibles

Amortisation of intangibles in the current period is $3.8 million (2019: $1.2 million). The increase of $2.6
million is due to amortisation of definite life intangible assets arising from the acquisition of Big Chill
Distribution Limited on 1 April 2020.


12. Capital Commitments and Contingent Liabilities

As at 31 December 2020, the Group had capital commitments to purchase equipment of $2.4 million (2019:
$1.9 million).

As at 31 December 2020, the Group had outstanding letters of credit and bank guarantees issued by its lenders
totalling approximately $5.1 million (2019: $4.6 million). The letters of credit relate predominantly to support
for regular payroll payments. The bank guarantees relate to security given to various landlords in respect of
leased operating facilities.

There were no other contingent liabilities as at 31 December 2020 (2019: nil).


13. Net Tangible Assets per security

Net tangible assets (liabilities) per security at 31 December 2020 was ($0.88) (2019: ($0.58)).

21
FREIGHTWAYS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the half year ended 31 December 2020 (unaudited)


14. Post Balance Date Events

Dividend declared
On 22 February 2021, the Directors declared a fully imputed interim dividend of 15.5 cents per share
(approximately $25.7 million) in respect of the year ended 30 June 2021. The dividend will be paid on 1
April 2021. The record date for determination of entitlements to the dividend is 12 March 2021. A
supplementary dividend of 2.74 cents per share will be paid to overseas shareholders when the interim
dividend is paid. The Freightways Dividend Reinvestment Plan will not operate for this dividend.

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