Full Year Results to 30 June 2023 and Final Dividend
Section 1: Issuer information
Name of issuer Freightways Group Limited
Financial product name/description Fully Paid Ordinary Shares
NZX ticker code FRW
ISIN (If unknown, check on NZX
website)
NZFREE0001S0
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year X Quarterly
Half Year Special
DRP applies X
Record date 15 September 2023
Ex-Date (one business day before the
Record Date)
14 September 2023
Payment date (and allotment date for
DRP)
2 October 2023
Total monies associated with the
distribution
1
$33,712,000
Source of distribution (for example,
retained earnings)
Current earnings for the year ending 30 June 2023
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.26388889
Gross taxable amount
3
$0.26388889
Total cash distribution
4
$0.19000000
Excluded amount (applicable to listed
PIEs)
$-
Supplementary distribution amount $0.03352941
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
$0.07388889
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
$0.01319444
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
2%
Start date and end date for
determining market price for DRP
18 September 2023 22 September 2023
Date strike price to be announced (if
not available at this time)
25 September 2023
Specify source of financial products to
be issued under DRP programme
(new issue or to be bought on market)
New issue
DRP strike price per financial product
TBA
Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms
5:00pm on 18 September 2023
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
21 August 2023
---
1
Results for announcement to the market
Name of issuer FREIGHTWAYS GROUP LIMITED
Reporting Period 12 months to 30 June 2023
Previous Reporting Period 12 months to 30 June 2022
Currency New Zealand dollars
Amount (000s) Percentage change
Revenue from continuing
operations
$1,121,620 28.5%
Total Revenue $1,121,620 28.5%
Net profit/(loss) from
continuing operations
$75,297 7.3%
Total net profit/(loss) $75,297 7.3%
Final Dividend
Amount per Quoted Equity
Security
$0.26388889
Imputed amount per
Quoted Equity Security
$0.07388889
Record Date 15 September 2023
Dividend Payment Date 2 October 2023
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$(1.06) $(0.80)
A brief explanation of any
of the figures above
necessary to enable the
figures to be understood
Refer to the section “Full Year Review” for commentary.
Authority for this announcement
Name of person
authorised
to make this announcement
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
21 August 2023
The information set out in this announcement is based on the audited financial statements of the Group for the
financial year ended 30 June 2023. An unqualified audit opinion was issued by the Group’s auditors in
relation to those financial statements.
2
FINANCIAL SUMMARY
FOR THE YEAR ENDED 30 JUNE 2023
Note
2023
2022 Increase
$000 $000
%
Operating revenue
1,121,620 873,094 28.5%
EBITA* (i) 145,285 126,522 14.8%
NPAT (ii) 75,297 70,182 7.3%
EBITA*, excluding other expenses
145,285 130,222 11.6%
NPAT, excluding other expenses, net of tax
75,297 73,882 1.9%
Other expenses:
- Change in fair value of contingent consideration
– Big Chill Distribution Limited (BCD)
(iii)
- (3,700)
Total - (3,700)
Tax benefit applicable to other expenses - -
Other expenses, net of tax - (3,700)
Note:
(i) Operating profit before interest, income tax and amortisation of intangibles
(ii) Profit for the year attributable to the shareholders
(iii) The estimated discounted future final payment for the BCD acquisition was increased from $51.3
million as at 30 June 2021 to $56.2 million as at 30 June 2022. This increase of $3.7 million (net
of impact of unwinding of discount on acquisition earn-out liability of $1.2 million) reflected the
strong performance of BCD, which determined the final payment in August 2022 for the
acquisition of the company.
The Directors believe that the other expenses detailed above should not be included when assessing the
underlying trading performance of the Group.
* EBITA is a non-GAAP measure.
3
FULL YEAR REVIEW
From the Chairman and Chief Executive Officer
GROWTH ON BOTH SIDES OF THE TASMAN
Against a backdrop of quite different market dynamics on each side of the Tasman, our teams have worked
tirelessly to meet the needs of our customers and we have selectively invested in the exciting future we see
for ourselves.
Growth in the Australian economy in FY23 helped deliver solid financial performance from our Allied
Express business, which lifted the overall Group result. The New Zealand economy, by contrast, was
sluggish as businesses grappled with the challenges of a tight labour market, high labour costs,
inflationary pressures and, of course, destructive weather. While some parts of our business, such as
Information Management, have rebuilt after COVID-19, our linehaul businesses for both courier and
temperature-controlled goods incurred much higher operating costs and disruptions during the year along
with subdued growth in the operating environment.
The end result reflected these contrasts. Overall, operating revenue increased by 29% from last year, with
our Australian businesses growing by 143% and our New Zealand businesses increasing by 6% - net
profit after tax lifted by 7% overall.
INVESTING IN MOVING YOU TO A BETTER PLACE
Despite economic pressures, we remain committed to "Moving you to a better place". Investment across
our four key activities – Express Package and Business Mail, Temperature Controlled, Information
Management and Waste Renewal – is broadening our business footprint, leveraging our expertise and
presence in exciting ways.
Strategically, we are confident these investments will form a powerful, collective catalyst for sustained
growth in FY24 and beyond. Along the way, they will create opportunities to increase volume and
achieve economies of scale, enhance our responsiveness and reliability for customers and strengthen our
Group overall with more resilient, more efficient businesses.
OUR THREE HORIZONS FUTURE
The exciting feature of our three horizons approach is that it enables us to expand, in a disciplined way,
into new areas characterised by greater value.
Our first horizon revenue streams are the backbone. Often built over decades, they provide the
core expertise, infrastructure and national network capabilities. Businesses here range from
business-to-business (B2B) deliveries to temperature-controlled transport to archive storage and
document destruction.
Second horizon businesses utilise the fixed cost base established for horizon one but have faster
growth prospects. These are activities like business-to-consumer (B2C) deliveries, temperature-
controlled 3
rd
Party Logistics (3PL), digitisation and medical waste.
Our third horizon businesses are the innovators – focused on delivering long-term revenue
streams by identifying emerging niches with healthy potential. Opportunities in this space include
4
oversize express couriers, same-day temperature-controlled deliveries, high-value recycling and
3PL for eCommerce.
CREATING ROOM TO GROW
Our investments this year and next are about adding capacity for growth within our integrated model.
For example, our new Big Chill facility in Ruakura will give us the room for growth that we need to meet
the ongoing demand for temperature-controlled 3PL as well as expanding our nationwide delivery
capability. Equally, our new ProducePronto facility in Auckland will allow us to grow our temperature-
controlled same-day and 4PL offering.
The arrival of our first Boeing 737-800 is a game-changer for our air freight services, enabling us to
improve the resilience and efficiency of our first horizon businesses. This newer, faster and more fuel-
efficient aircraft will allow us to carry more freight with reduced emissions and at better levels of
reliability. The remainder of the fleet will be steadily upgraded over the rest of this decade.
In Australia, installing a new automated sortation system for Allied Express and establishing a new
medical waste processing facility for Shred-X in Victoria will underpin efficiencies and enable these
businesses to pick-up, process and deliver greater quantities at improved efficiency.
LEVERAGING OUR EXISTING NETWORKS
25kg+ couriers, same-day temperature-controlled delivery and high-value recycling all align with our
core pick-up, process and deliver ethos. These activities have all been developed by using the facilities,
teams of people, IT systems and customer-bases of our horizon one businesses.
A BUSY YEAR FOR ALL
Our Allied Express business has had a very good first year. Leveraging its footprint across five states has
produced pleasing revenue growth. Now we are looking to make even more of their presence through
world-class facilities that have the capacity to cope with a doubling of revenue in an express delivery
market which is around 8 times larger than New Zealand's.
Complementing the larger facilities with automation in NSW and Victoria is the first step. This project,
which started towards the end of the year, will pair investment in the best freight sorting automation with
Allied Express’ deep business relationships to build the capacity for material growth. This will allow us
to pursue growing market share and grow the business without worrying about constraints in
infrastructure. To assist that growth, we are building a new business sales team in Australia to maximise
the opportunities from Allied Express' service proposition.
We are also actively looking for synergistic merger or acquisition opportunities to complement this
investment in the years ahead.
After a surge in growth driven by demand for our services during the peak COVID-19 period, our Waste
Renewal businesses have reverted to trend levels in terms of both volumes and growth expectations. We
foresaw this. But we also anticipated the opportunity for investment, again to allow these businesses to
pursue more growth in the years ahead. With that in mind, we have developed a new medical waste
facility set to open in Victoria in early FY24.
5
In New Zealand, our Express Package brands have experienced a net gain in market share thanks to
strong relationship/business development and differentiated service offerings that customers value.
While the New Zealand economy goes through tougher times, it has been inspiring to see our teams
winning new customers aided by superior performance and reliability and keeping customers better
informed about their deliveries.
Cost pressures have been material this year. High labour costs, in particular, have prompted us to
announce new pricing from the beginning of the next financial year (1 July 2023) to offset those costs.
Our Temperature Controlled businesses have also faced their share of challenges, with Cook Strait ferry
disruptions and Cyclone Gabrielle adversely affecting a finely tuned supply chain system and generating
cost pressures through the year's second half. Our teams have done a remarkable job of countering
setbacks across a network where there is no inherent ‘give’ in the system. For both Big Chill and
ProducePronto, time is our most significant advantage but potentially a costly adversary. When frozen
perishables are waylaid because trucks are stranded in remote locations, often some distance from the
nearest depot, the pressures come thick and fast. Our people battled disruptions, shortage of trucks and
drivers, and delays to do the best for our customers.
For many of those customers, daily or even multiple-times-per-day deliveries are a commercial necessity.
With no redundant refrigeration anywhere in the system to hold stock, stoppages can potentially hurt
everyone. The big out-take from what has happened this year was that some extra capacity across our
network is a game changer.
We’re excited about the opening of Big Chill’s new 13,000sqm 3PL cold store facility in Ruakura, adding
to the nine depots we already have in our nationwide network. From October 2023, this state-of-the-art
facility will enhance our existing capabilities with increased links to Port of Tauranga, the Waikato and
the Bay of Plenty, and increase same-day and overnight services to Auckland. The new site will also
allow us to store a significant number of temperature-controlled pallets.
This generates new opportunities to build our customer base in these active food-producing regions and
strengthen volumes. Adding 3PL services will align the site with our Auckland and Christchurch facilities
and enable us to add more logistics services for clients if needed as part of our nationwide expansion.
We’re also investing in new vehicles for the business over the next 12 months. These fleet improvements
will add resilience to our model, provide more capacity to take on new business as we look forward to
strengthening the Big Chill network and produce lower emissions through better fuel efficiency.
Our Information Management business grew well this year in terms of volumes as people returned to the
office. We are especially pleased with our TIMG team's fantastic job in successfully completing a large
digitisation project.
The significant growth of the ProducePronto network in recent months has led us to invest in a new,
much larger depot for Auckland to meet the same-day delivery needs of the growing convenience food
market and quick services restaurants demands. We’ve identified a similar opportunity for such an offer
in Australia. Work over the coming year will highlight the size of the Australian market, our cost of entry
and the approach we will take should we decide to progress.
6
OUR SUSTAINABILITY JOURNEY CONTINUES
We continue to make steady progress in the area of sustainability. We remain committed to our science-
based target of a 50% drop in Scope 1, 2 and 3 emissions by 2035.
We have been TOITŪ certified since 2014. This year, we have brought together our performance and
sustainability reporting into this one report, reflecting our wish to think about – and report on – our
broader progress as a business. As we signalled last year, we reviewed our Sustainable Development
Goals (SDGs) materiality as part of a review we do every five years to ensure our Goals continue to align
with the interests of our stakeholders.
We will continue to report on SDG 13 - Climate Action because we have firm commitments to this. Still,
we will set a new baseline for those actions with the inclusion of our Australian businesses (and will
include a full year of Allied Express in our FY24 report) and our Big Chill business in New Zealand.
We already have milestones in place to move us to alternative fuels through our light vehicle and metro
truck fleets as and when the technology to do so realistically becomes available. Well over 95% of our
total Group emissions come from the fuel we use across our vehicles and aircraft. Our 2030 target of a
35% reduction in CO2e and our 2035 target of a 50% reduction in C02e align with what society needs to
achieve globally to keep global warming to within 1.5 degrees Celsius.
Electrification of our forklifts and company vehicles has been a key initiative which commenced this
year. At this stage, we plan to convert 25% of our company cars to PHEV by 2025, with 100% either
PHEV, EV or hydrogen by 2030. Our contractors' light vehicles will begin to meaningfully transition to
EVs from 2028, with our entire light vehicle fleet made up of low-emission vehicles by 2035. We are
looking at finance options and continued upward movements in courier incomes to help our contractors
do this. We also anticipate that our heavy transport fleet will commence using alternative fuels from
2030, and by 2035 we foresee that half of these vehicles will have transitioned – in particular the metro
trucks which service customers within city and town locations.
OUTLOOK FY24
The economic climate has presented challenges over the past six months, and we expect this to continue
through FY24. In NZ, while same-customer volume is lower than in FY23, we have secured new
customers who are mitigating this impact. The tight labour markets in both NZ and Australia are
beginning to ease. In the short term, we are cautious about the impact of the economy, particularly in NZ.
Notwithstanding the current economic environment, we are excited about the potential to grow our
revenue and profitability on both sides of the Tasman in the longer term.
We look forward to a resumption of demand across our New Zealand businesses as the economy steadies
and re-gathers confidence, hopefully later in the financial year. For our Express Package brands, our
goals will be maintaining our quality network at the right price and containing and recovering costs where
we can.
Investing in our aviation assets will strengthen the network. At the same time, our investments in Big
Chill are about taking advantage of growth opportunities where we see them. What heartens us are the
number of new business opportunities we have identified in some of our divisions. Information
7
Management will benefit from utilising existing capacity and Waste Renewal will take advantage of new
capacity in Victoria.
We will continue to develop our third horizon business and expect growth in 25kg+ courier, same-day
temperature-controlled transport, high value waste opportunities and Stocka – our 3PL eCommerce
offering.
In Australia, we’re confident that our investment in Allied Express will benefit from organic growth and
will seek out complementary acquisition targets.
We will continue to manage capital in a prudent way that seeks to achieve a number of objectives:
Invest to maintain or improve the level of service quality and network resilience: for example,
fleet replacement or new facilities;
Invest in new technologies that support our value proposition;
Invest in businesses that support our horizons of growth.
In addition, Freightways, through the acquisition of Allied Express in Australia, has acquired a strong
network across Australia and is further investing in capacity there as well as considering bolt-on
acquisitions.
We will manage the level of debt carefully and aim to preserve our Investment Grade credit profile at all
times. Our capital management will continue to reflect this objective.
ASX DUAL LISTING
Freightways Group Limited will today apply for admission to the official list of the Australian Securities
Exchange (ASX) by way of an ASX Foreign Exempt Listing. Freightways’ primary listing will remain
on the NZX Main Board (NZX) while its dual listing on the ASX reflects the changing profile of the
business, with Australian operations representing a higher proportion of Freightways’ revenue and profit,
particularly since the acquisition of Allied Express in October 2022. Freightways has had a presence in
Australia since its 2007 acquisition of Databank and has steadily grown its footprint through the
acquisition and growth of its information management, secure destruction and waste management
businesses.
Freightways’ name was changed to “Freightways Group Limited” and NZX ticker code was changed to
“FRW”, each with effect from market open on 1 March 2023 to allow for a potential dual listing. Its ASX
ticker code will also be “FRW”.
Subject to ASX approval, Freightways expects to become officially listed in mid-September 2023.
REGULATORY
Freightways is subject to a Commerce Commission investigation and is cooperating with the Commerce
Commission. Freightways does not consider that this process will have a material financial or operational
impact on the Group.
TOTAL CAPITAL EXPENDITURE FOR THE YEAR WAS $37M
As we reach the upper range of our target gearing we will assess the tools available to us to reduce debt
and stay within the guidelines established by our capital management policy while taking into account
the merger and acquisition opportunities that can be accretive for shareholders.
8
In closing, we'd like to acknowledge our people's fierce loyalty and commitment. Thanks to all of you
for engaging with our challenges and giving your all every day to make us the Freightways we are all so
proud of.
Thanks, too, to our board for your guidance as we stepped up our investments this year and to our
shareholders and customers who continue to believe in and support us. We're excited about what's ahead.
Mark Cairns Mark Troughear
Chairman Chief Executive Officer
21 August 2023
9
INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
Group
2023
$000
2022
$000
Operating revenue
1,121,620 873,094
Transport and logistics expenses (479,169) (344,534)
Employee benefits expenses
(309,879) (252,488)
Occupancy expenses
(6,935) (6,857)
General and administration expenses
(110,754) (80,634)
Change in fair value of contingent consideration –
Big Chill Distribution Limited
- (3,700)
Depreciation and software amortisation (69,598) (58,359)
Amortisation of intangibles (11,323) (7,528)
Operating profit before interest and income tax
133,962 118,994
Net interest and finance costs
(28,585) (20,292)
Profit before income tax 105,377 98,702
Total income tax (30,080) (28,520)
Profit for the year
75,297 70,182
Profit for the year is attributable to:
Owners of the parent 75,144 70,095
Non-controlling interests 153 87
75,297 70,182
10
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
Group
2023
$000
2022
$000
Profit for the year (NPAT)
75,297 70,182
Other comprehensive income
Items that may be reclassified subsequently to profit
or loss:
Exchange differences on translation of foreign
operations
(5,796) 2,858
Cash flow hedges taken directly to equity, net of tax
226 3,373
Total other comprehensive income after income
tax
(5,570) 6,231
Total comprehensive income for the year 69,727 76,413
Total comprehensive income for the year is
attributable to:
Owners of the parent 69,574 76,326
Non-controlling interests 153 87
69,727 76,413
11
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2023
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 2021
182,571
163,522
(1,195)
(6,945)
148
338,101
Profit for the year
-
70,095
-
-
87
70,182
Exchange differences on translation of foreign operations
-
-
-
2,858
-
2,858
Cash flow hedges taken directly to e
quity, net of tax
-
-
3,373
-
-
3,373
Total Comprehensive Income
-
70,095
3,373
2,858
87
76,413
Dividend payments
-
(59,678)
-
-
-
(59,678)
Shares issued
1,778
-
-
-
-
1,778
Balance at 30 June 2022
184,349
173,939
2,178
(4,087)
235
356,614
Profit for the year
-
75,144
- - 153 75,297
Exchange differences on translation of foreign operations
-
-
-
(5,796)
-
(5,796)
Cash flow hedges taken directly to
equity, net of tax
-
-
226
-
-
226
Total Comprehensive Income
- 75,144 226 (5,796) 153 69,727
Dividend payments
-
(63,465)
-
-
-
(63,465)
Shares issued
113,726
-
-
-
-
113,726
Balance at 30 June 2023
298,075
185,618
2,404
(9,883)
388
476,602
12
BALANCE SHEET
AS AT 30 JUNE 2023
Group
2023
$000
2022
$000
Current assets
Cash and cash equivalents 44,485 24,137
Trade and other receivables 150,434 127,072
Inventories 9,650 8,674
Contract assets 1,875
1,332
Derivative financial instruments 1,126
963
Total current assets 207,570 162,178
Non-current assets
Trade receivables and other non-current assets 5,999 6,070
Property, plant and equipment 155,200 134,180
Right-of-use assets 315,536 271,020
Intangible assets 677,639 501,668
Investment in associates and joint venture 12,480 11,407
Derivative financial instruments 2,212 2,061
Total non-current assets 1,169,066 926,406
Total assets 1,376,636 1,088,584
Current liabilities
Trade and other payables 138,602 172,822
Lease liabilities 44,774 34,735
Income tax payable 16,807 7,209
Provisions 3,552 1,550
Contract liability 14,407 15,876
Total current liabilities 218,142 232,192
Non-current liabilities
Trade and other payables 4,159 3,709
Borrowings 297,194 176,210
Deferred tax liability 56,824 37,087
Provisions 10,216 7,382
Lease liabilities 313,499 275,390
Total non-current liabilities 681,892 499,778
Total liabilities 900,034 731,970
NET ASSETS 476,602 356,614
EQUITY
Contributed equity 298,075 184,349
Retained earnings 185,618 173,939
Cash flow hedge reserve 2,404 2,178
Foreign currency translation reserve (9,883) (4,087)
476,214 356,379
Non-controlling interests 388 235
TOTAL EQUITY 476,602 356,614
13
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
Group
2023
$000
2022
$000
Inflows
(Outflows)
Inflows
(Outflows)
Cash flows from operating activities
Receipts from customers
1,119,913 851,573
Payments to suppliers and employees
(909,812) (672,075)
Cash generated from operations
210,101 179,498
Interest received 1,003 83
Interest and other costs of finance paid
(29,589) (20,375)
Income taxes paid
(25,707) (35,522)
Net cash inflows from operating activities
155,808 123,684
Cash flows from investing activities
Payments for property, plant and equipment
(34,190) (23,020)
Payments for software
(3,061) (4,098)
Proceeds from disposal of property, plant and equipment
2,296 1,148
Payments for businesses acquired (net of cash acquired)
(128,472) (12,070)
Payments for investment in associates (612) (2,674)
Receipts from joint venture and associate 2,711 2,930
Cash flows from other investing activities
- 2
Net cash outflows from investing activities (161,328) (37,782)
Cash flows from financing activities
Dividends paid
(63,465) (59,678)
Increase in bank borrowings
128,088 9,803
Proceeds from issue of ordinary shares
644 1,778
Principal elements of lease payments
(41,734) (34,008)
Net cash inflows (outflows) from financing activities
23,533 (82,105)
Net increase in cash and cash equivalents 18,013 3,797
Cash and cash equivalents at beginning of year
24,137 19,940
Exchange rate adjustments 2,335 400
Cash and cash equivalents at end of year 44,485 24,137
14
SEGMENT REPORTING
A segment is a component of the Group that can be distinguished from other components of the Group by the
products or services it sells, the primary market it operates in and the risks and returns applicable to it. Operating
segments are reported upon in a manner consistent with the internal reporting used by the Chief Executive
Officer, as the chief operating decision maker, and the Board for allocating resources, assessing performance
and strategic decision making.
The Group is organised into the following reportable operating segments:
Express package & business mail
Comprises network (hub & spoke) courier, express freight, refrigerated transport, point-to-point courier and
postal services.
Information management
Comprises secure paper-based and electronic business information management services. This segment also
comprises secure handling, treatment and disposal of clinical waste, waste renewal and related 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.
As at and for the year ended 30 June 2023:
Express
Package &
Business Mail
Information
Management
Corporate Inter-
Segment
Elimination
Consolidated
Operations
$000 $000 $000 $000 $000
Income statement
Sales to external customers
907,637 213,983 - - 1,121,620
Inter-segment sales
3,510 315 8,125 (11,950) -
Total revenue
911,147 214,298 8,125 (11,950) 1,121,620
Operating profit (loss) before
interest, income tax, depreciation
and software amortisation and
amortisation of intangibles
169,776
56,411
(11,304)
-
214,883
Depreciation and software
amortisation
(44,329) (23,717) (1,552) - (69,598)
Operating profit (loss) before
interest, income tax and
amortisation of intangibles
125,447
32,694
(12,856)
-
145,285
Amortisation of intangibles (9,050) (2,273) - - (11,323)
Profit (loss) before interest and
income tax
116,397 30,421 (12,856) - 133,962
Net interest and finance costs (8,606) (4,607) (15,372) - (28,585)
Profit (loss) before income tax
107,791 25,814 (28,228) - 105,377
Income tax (29,675) (7,777) 7,372 - (30,080)
Profit (loss) for the year attributable
to the shareholders
78,116 18,037 (20,856) - 75,297
Balance sheet
Segment assets 866,301 350,506 159,829 - 1,376,636
Segment liabilities 411,652 180,882 307,500 - 900,034
15
As at and for the year ended 30 June 2022:
Express
Package &
Business Mail
Information
Management
Corporate Inter-
Segment
Elimination
Consolidated
Operations
$000 $000 $000 $000 $000
Income statement
Sales to external customers
687,023 186,071 - - 873,094
Inter-segment sales
2,009 996 5,639 (8,644) -
Total revenue
689,032 187,067 5,639 (8,644) 873,094
Operating profit (loss) before other
income and expense, interest,
income tax, depreciation and
software amortisation and
amortisation of intangibles
142,156
55,232
(8,807)
-
188,581
Change in fair value of contingent
consideration – Big Chill
Distribution Limited
- - (3,700) - (3,700)
Operating profit (loss) before
interest, income tax, depreciation
and software amortisation and
amortisation of intangibles
142,156
55,232
(12,507)
-
184,881
Depreciation and software
amortisation
(34,687) (22,105) (1,567) - (58,359)
Operating profit (loss) before
interest, income tax and
amortisation of intangibles
107,469
33,127
(14,074)
-
126,522
Amortisation of intangibles (5,195) (2,333) - - (7,528)
Profit (loss) before interest and
income tax
102,274 30,794 (14,074) - 118,944
Net interest and finance costs (6,200) (4,804) (9,289) - (20,292)
Profit (loss) before income tax
96,074 25,990 (23,362) - 98,702
Income tax (26,067) (7,745) 5,292 - (28,520)
Profit (loss) for the year attributable
to the shareholders
70,007 18,245 (18,070) - 70,182
Balance sheet
Segment assets 702,906 344,361 41,317 - 1,088,584
Segment liabilities 315,888 185,085 230,997 - 731,970
Segment assets and liabilities are disclosed net of inter-company balances.
For the year ended 30 June 2023, external revenue from customers in the Group's New Zealand and Australian
operations was $775.8 million and $345.8 million, respectively (2022: $730.1 million and $142.4 million,
respectively). As at 30 June 2023, non-current assets in respect of the New Zealand and Australian operations
(excluding deferred tax assets and financial assets) were $779.7 million and $398.8 million, respectively (2022:
$707.8 million and $259.8 million, respectively).
16
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 and
Refrigerated
Transport &
Storage
Postal Storage &
Handling
Destruction
Activities
Other
including
Digital
Services
Total
$000 $000 $000 $000 $000 $000
2023
Revenue from external
customers
855,631 52,005 64,395 87,175 62,414 1,121,620
Timing of revenue
recognition:
At a point in time - 2,794 - 27,311 18,326 48,431
Over time 855,631 49,211 64,395 59,864 44,088 1,073,189
855,631 52,005 64,395 87,175 62,414 1,121,620
2022
Revenue from external
customers
641,410 45,613 59,319 83,521 43,231 873,094
Timing of revenue
recognition:
At a point in time - 2,540 - 22,033 13,406 37,979
Over time 641,410 43,073 59,319 61,488 29,825 835,115
641,410 45,613 59,319 83,521 43,231 873,094
17
LEASES
The following tables show the movements and analysis in relation to the ROU assets and lease liabilities under
NZ IFRS 16.
The balance sheet shows the following amounts relating to leases:
Right-of-use assets:
Group
2023 2022
$000 $000
Opening net book value 271,020 275,849
Lease additions, modifications and terminations 79,073 29,719
Additions through business combinations 12,791 -
Depreciation for the yea
r (45,423) (36,909)
Exchange rate movement (1,925) 2,361
Closing net book value 315,536 271,020
Cost 497,950 420,968
Accumulated depreciation (182,414) (149,948)
Closing net book value 315,536 271,020
Lease liabilities:
Group
2023 2022
$000 $000
Opening lease liabilities 310,125 311,635
Lease additions, modifications and terminations 79,298 29,818
Additions through business combinations 12,791 -
Interest for the yea
r 13,625 10,864
Lease repayments (55,442) (44,815)
Exchange rate movement (2,124) 2,623
Closing lease liabilities 358,273 310,125
Lease liabilities maturity analysis:
Group
2023
Minimum lease
payments
Interest
Present value
$000 $000 $000
Within one yea
r 59,108 14,207 44,901
One to five years 188,886 39,557 149,329
Beyond five years 189,170 25,127 164,043
Total 437,164 78,891 358,273
Right-of-use assets:
Buildings
285,709 248,950
Equipment
6,271 7,630
Motor vehicles 23,556 14,440
315,536 271,020
Analysis of lease liabilities:
Curren
t 44,774 34,735
Non-curren
t 313,499 275,390
358,273 310,125
18
Group
2022
Minimum lease
payments
Interest
Present value
$000 $000 $000
Within one yea
r 46,710 10,575 36,135
One to five years 144,045 31,987 112,058
Beyond five years 189,784 27,852 161,932
Total 380,539 70,414 310,125
Lease related expenses included in the income statement:
Total cash outflow in relation to leases is $41.7 million (2022: $43.1 million).
INTANGIBLE ASSETS
(i) Goodwill
Goodwill represents the excess of the consideration transferred in an acquisition over the fair value of the
Group’s share of the net identifiable assets of the acquired business at the date of acquisition. Goodwill is
not amortised but is tested for impairment annually or whenever events or changes in circumstances
indicate that it might be impaired and is carried at cost less accumulated impairment losses. Goodwill is
allocated to cash-generating units for the purpose of impairment testing.
(ii) Brand names
Acquired brand names are recognised at cost, being their fair value at the date of acquisition if acquired
in a business combination. Brand names with indefinite useful lives are not subject to amortisation but are
tested for impairment annually or whenever events or changes in circumstances indicate that they might
be impaired and are carried at cost less amortisation and impairment losses. Brand names with finite
useful lives are amortised over their expected useful lives. The useful lives and amortisation methods are
reviewed and adjusted, if appropriate, at each balance sheet date.
Brand names are allocated to cash-generating units for the purpose of impairment testing. The allocation
is made to those cash-generating units or groups of cash-generating units that are expected to benefit from
the brand names.
Group
Depreciation charge for right-of-use assets
2023
$000
2022
$000
Buildings
36,153 28,122
Motor vehicles 3,166 5,991
Equipment 6,104 2,494
45,423 36,607
Interest on leases 13,625 10,864
19
(iii) Computer software
External software costs, together with payroll and related costs for employees directly associated with the
development of software, are capitalised if the development creates an intangible asset that the Group
controls and the intangible asset meets the recognition criteria. Cloud-based software costs that do not
result in intangible assets are expensed as incurred, unless the costs are paid to the suppliers of the cloud-
based software to significantly customise the cloud-based software for the Group, in which case the costs
paid upfront are recorded as prepayments for services and amortised over the expected terms of the cloud
computing arrangements. Amortisation is charged on a straight-line basis over the estimated useful life
of the software which ranges between 3 and 10 years. Included in the cost of software is work in progress
of $0.4 million (2022: $0.1 million) for which amortisation has not commenced. Software under
development not yet available for use is tested annually for impairment.
(iv) Customer relationships
Contractual
An intangible asset is recorded at fair value in respect of the amount of any contractual termination fees
payable by customers of businesses acquired in respect of their document holdings. As it is not known
when permanent retrieval fees may arise, this asset is only amortised upon the actual retrieval fee being
charged to the respective customer.
Other
Non-contractual customer relationships acquired in a business combination are recognised at fair value at
the acquisition date. These customer relationships have an estimated finite useful life and are carried at
cost less accumulated amortisation. Amortisation is calculated using the straight-line method over the
expected useful life of the customer relationship which ranges between 10 and 20 years.
Group Goodwill
Brand
names
Software
Customer
relationships
Other Total
2023 $000 $000 $000 $000 $000 $000
Opening net book value 306,116 128,286 12,896 50,814 3,556 501,668
Additions
- - 3,030 - 31 3,061
Acquisition through business
combinations
106,606 30,654 2,167 56,329 3,141 198,897
Disposals / Transfers - - 162 - - 162
Amortisation expense
- (77) (4,443) (10,501) (745) (15,766)
Exchange rate movement (6,072) (1,580) (107) (2,451) (173) (10,383)
Closing net book value 406,650 157,283 13,705 94,191 5,810 677,639
As at end of year
Cost
425,312 157,411 33,701 129,458 11,031 756,913
Accumulated amortisation and
impairmen
t
(18,662) (128) (19,996) (35,267) (5,221) (79,274)
Net book value 406,650 157,283 13,705 94,191 5,810 677,639
20
Group Goodwill
Brand
names
Software
Customer
relationships
Other Total
2022 $000 $000 $000 $000 $000 $000
Opening net book value
295,505 126,869 12,872 52,568 3,568 491,382
Additions - - 3,788 - 310 4,098
Acquisition through business
combinations
7,549 873 - 4,554 525 13,501
Amortisation expense - (51) (3,650) (6,549) (928) (11,178)
Written-off - - (144) - - (144)
Exchange rate movement
3,062 595 30 241 81 4,009
Closing net book value 306,116 128,286 12,896 50,814 3,556 501,668
As at end of year
Cost
324,778 128,337 36,171 75,772 8,047 573,105
Accumulated amortisation and
impairmen
t
(18,662) (51) (23,275) (24,958) (4,491) (71,437)
Net book value 306,116 128,286 12,896 50,814 3,556 501,668
Impairment tests for indefinite life intangible assets
Goodwill and brand names are allocated to those cash-generating units (CGU) or groups of CGU that are
expected to benefit from them. The carrying amount of intangible assets allocated by CGU or group of CGU
is outlined below:
Goodwill Brand names
2023
$000
2022
$000
2023
$000
2022
$000
Allied Express 100,271 - 29,399 -
Big Chill 85,183 85,183 14,638 14,714
Messenger Services
8,766 8,766 5,100 5,100
New Zealand Couriers 47,752 47,752 58,500 58,500
New Zealand Document Exchange and Dataprint 15,092 15,092 7,318 7,318
Post Haste, Castle Parcels and NOW Couriers 27,159 27,159 18,395 18,395
Total Express Package & Business Mail 284,223 183,952 133,350 104,027
The Information Management Group (New Zealand) 17,577 17,577 4,400 4,400
The Information Management Group (Australia) 57,526 58,478 16,168 16,438
Shred-X 47,324 46,109 3,365 3,421
Total Information Management 122,427 122,164 23,933 24,259
Total
406,650 306,116 157,283 128,286
21
(i) Key assumptions used for value-in-use calculations
On an annual basis, the recoverable amount of goodwill and brand names is determined based on the greater
of value-in-use and fair value less costs of disposal calculations specific to the CGU or group of CGUs
associated with both goodwill and brand names.
The value-in-use calculations use pre-tax cash flow projections based on financial budgets prepared by
management and approved by the Board for the year ended 30 June 2024. Cash flows beyond June 2024 have
been extrapolated using growth rates which take into consideration current and forecast economic conditions
for the relevant products and industries. A probabilistic approach was also adopted where a number of different
growth scenarios were considered and weighted by likelihood of achievement. In addition, the sensitivity of
the main financial variables was tested and considered in the final estimation. No adjustments have been made
to forecast cash flows for the unknown impacts of future legislative changes in relation to climate change, as
further disclosed in the note “Climate change” below.
Revenue growth rates and a consistent EBITDA margin assuming costs increase in line with revenue, reflecting
both historical and expected growth, have been applied to the value-in-use calculation with the same scenarios
and sensitivities applied as described in the Significant estimate – sensitive to changes in assumptions section
below. Growth rates have been aligned with the observed long-term inflation for each geographic region and
each CGU’s ability to increase customer prices and grow with nominal GDP. Pre-tax discount rates, reflecting
the current environment in financial markets and the countries each CGU or group of CGUs operates in, have
been used. The CGU or group of CGUs specific growth rates and pre-tax discount rates applied are:
Growth rate beyond
next financial year,
including terminal
growth
Pre-tax discount rate
2023 2022 2023 2022
Allied Express 3.0% - 13.7% -
Big Chill 2.5% 2.0% 13.5% 12.1%
Messenger Services 2.5% 2.0% 15.8% 11.1%
New Zealand Couriers 2.5% 2.0% 14.1% 11.1%
New Zealand Document Exchange and Dataprint 2.5% 2.0% 16.9% 16.9%
Post Haste, Castle Parcels and NOW Couriers 2.5% 2.0% 14.6% 11.1%
The Information Management Group (New Zealand) 2.5% 2.0% 16.1% 11.1%
The Information Management Group (Australia) 3.0% 2.5% 14.0% 13.2%
Shred-X 3.0% 2.5% 14.0% 13.2%
Note: Post-tax discount rates were disclosed in the annual report for the year ended 30 June 2022. Pre-tax
discount rates, including for the 2022 comparatives, are now disclosed to conform with NZ IAS 36: Impairment
of Assets.
(ii) Significant estimate - Sensitivity to changes in assumptions
From the value-in-use assessment for all CGU’s, management believes that no reasonably possible change in
any of the above key assumptions would cause the carrying values of goodwill and brand names to exceed
their respective recoverable amounts.
Following are the significant estimate notes included in last year’s annual report carried forward to this year’s
annual report for comparative purposes:
COVID-19 has particularly impacted the financial performance of NZDX and TIMG AU, which are more
sensitive to changes in the key assumptions. Revenue of the two businesses have decreased and in the case of
NZDX, costs have increased due to inefficiencies arising from operating in the COVID-19 environment,
especially due to staff absenteeism. The value-in-use analysis prepared for NZDX and TIMG AU assume the
22
FY23 financial performance returns to pre COVID-19 level, through higher volume and significant price
increases that are already being implemented. Growth rate of 2.0% for NZDX and 2.5% for TIMG AU is then
assumed from FY24.
The value-in-use analysis prepared for NZDX is based on the following key assumptions:
- 100% achievement of FY23 budgeted revenue;
- 2% Revenue growth per year (with a range of scenarios from -4% to 4% p.a considered);
- 2% terminal EBITDA growth rate; and
- post-tax discount rate of 12.5%.
The recoverable amount of NZDX would equal its carrying amount if any of the key assumptions were to
change as follows:
2022
From To
Achievement of FY24 budgeted revenue 100% 72%
Revenue growth per year (FY25-FY28) 2% (8.8%)
Terminal EBITDA growth rate 2% (5.8%)
Post-tax discount rate 12.5% 17.0%
The value-in-use analysis prepared for TIMG AU is based on the following key assumptions:
- 100% achievement of FY23 budgeted revenue;
- 2.5% Revenue growth per year (with a range of scenarios from -4% to 4% p.a considered);
- 2.5% terminal EBITDA growth rate; and
- post-tax discount rate of 9.9%
The recoverable amount of TIMG AU would equal its carrying amount if any of the key assumptions were to
change as follows:
2022
From To
Achievement of FY24 budgeted revenue 100% 81%
Revenue growth per year (FY25-FY28) 2.5% (3.9%)
Terminal EBITDA growth rate 2.5% 0%
Post-tax discount rate 9.9% 11.7%
Climate change
Freightways strongly believes that sustainable business practices are fundamental to our future. These include
minimising the environmental impact of our daily operations and actively seeking initiatives to protect the
environment.
More than 95% of Freightways’ emissions come from the combustion of transport fuel, including that of our
contracted couriers. The most significant financial impact would therefore be due to an increase to the cost of
fuel and the cost of carbon credits linked to the volume of fuel used. Freightways would expect, however, to
be able to recoup most of that impact as mechanisms are already in place to adjust prices for movement of the
price of fuel. The risk of disruption due to natural events linked to climate change can be managed through the
flexibility of our network across New Zealand. Finally, most of the vehicles used in the Express Packaging
businesses are owned by contractors and Freightways is exploring ways through which it will be able to
facilitate the transition of the vehicles to electric or hydrogen.
23
The New Zealand External Reporting Board (XRB) published the Aotearoa New Zealand Climate Standards
in December 2022. The new standards are effective for annual reporting periods beginning on or after 1
January 2023. Early adoption is permitted. The Group is currently assessing the new standards and intends to
adopt the new standards in the 2024 financial year.
EARNINGS PER SHARE
Basic earnings per share
Basic earnings per share is calculated by dividing the profit for the year attributable to shareholders by the
weighted average number of ordinary shares outstanding during the year:
Group
2023 2022
Profit for the year attributable to shareholders ($000) 75,29770,182
Weighted average number of ordinary shares (‘000) 174,525165,739
Basic earnings per share (cents) 43.142.3
Diluted earnings per share
Diluted earnings per share is calculated by dividing the profit for the year attributable to shareholders by the
weighted average number of ordinary shares outstanding during the year, adjusted to include all dilutive
potential ordinary shares (for example, share rights on issue) as if they had been converted to ordinary shares
at the beginning of the year:
Group
2023 2022
Profit for the year attributable to shareholders ($000) 75,29770,182
Weighted average number of ordinary shares (‘000) 174,525165,739
Effect of dilution (‘000) 392403
Diluted weighted average number of ordinary shares (‘000) 174,917166,142
Diluted earnings per share (cents) 43.142.2
NET TANGIBLE ASSETS PER SECURITY
Net tangible assets (liabilities) per security at 30 June 2023 was ($1.06) (2022: ($0.80)). Net tangible assets
exclude intangible assets but includes software. There were 177,431,358 shares issued and fully paid as at 30
June 2023 (2022: 165,803,446).
24
BUSINESS COMBINATIONS
Acquisition of Allied Express Transport Pty Limited (AEX)
Effective 30 September 2022, the Group acquired 100% of AEX, a company operating in Australia in the
courier and express freight market for total consideration of $215.3 million. The consideration comprises of
cash payment of $88.1 million, issue of Freightways shares of $112.1 million, promissory note of $14.5 million
and a completion adjustment of $0.7 million. A$50 million of the shares issued to the vendors are subject to
an escrow on sale for a period of 12 months from 30 September 2022 and A$25 million of those shares will
then remain subject to an escrow on sale for a further period of 12 months thereafter.
Included in AEX at the time of the acquisition was a shareholder loan of $14.5 million receivable by AEX
from the vendor. Concurrent with the acquisition, this receivable of $14.5 million in AEX was satisfied
through the issue of a promissory note (non-cash) from IMS Group Australia Pty Limited (IMS), a Freightways
subsidiary, to AEX. This obligation is now within the Freightways Group and is reflected in the respective
Group legal entities of AEX and IMS. The receivable and promissory note are eliminated in the consolidated
financial statements of Freightways.
AEX operates within the Group’s express package & business mail division.
The contribution of AEX to the Group results for the year ended 30 June 2023 was revenue of $187.2 million
and net profit after tax of $13.2 million. If this acquisition had occurred at the beginning of the year, the
contribution to revenue and net profit after tax for the period is estimated at $249.2 million and $18.2 million,
respectively.
The following table summarises the amounts determined for purchase consideration and the provisional fair
value of assets acquired and liabilities assumed:
Preliminary
Purchase consideration $000
Cash paid during the yea
r 88,070
Issue of Freightways shares 112,066
Promissory note 14,472
Completion adjustmen
t 681
Total purchase consideration 215,289
Fair value of assets and liabilities arising from the acquisition
Cash and cash equivalents 18,512
Trade and other receivables 24,414
Intercompany receivable 14,472
Plant and equipmen
t 8,644
Righ
t-of-use assets 12,791
Software 2,167
Brand name 30,654
Customer relationships 54,739
Non-compete agreemen
t 3,141
Goodwill 104,553
Trade and other payables (18,319)
Income tax payable (2,053)
Deferred tax liability (25,635)
Lease liabilities (12,791)
215,289
The goodwill of $104.6 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 Australian courier and express
freight market.
25
The fair value of certain assets and liabilities arising from the acquisition have been determined on a
provisional basis as the completion adjustment is currently being finalised. Plant and equipment, software,
customer relationships, brand name, non-compete agreement, other payables and income tax payable have
been measured provisionally, pending confirmation of certain determinants and finalisation of independent
valuations. The fair value of these assets will be finalised within 12 months from the acquisition date.
Other acquisition
During the year, the Group acquired a small IT asset disposal and recycling services business in Australia for
$2.7 million. This business operates with the Group’s information management division.
Prior period acquisition – ProducePronto (“PP”)
Effective 1 November 2021, the Group acquired the business and assets of PP for an initial consideration of
approximately $12.1 million and future earn-out of up to $3.8 million over 3 years. PP operates fourth party
logistics (4PL) services with 365 day per year, same-day fresh and frozen delivery to convenience outlets in
New Zealand and businesses across Auckland. This acquired business operates within the Group’s express
package & business mail operating segment.
As at 30 June 2023, the estimated discounted future earn-out payment for the acquisition of PP was $3.7 million
(30 June 2022: $3.7 million). This represents no change in the estimated undiscounted future earn-out payment
from the last balance date. The Group has forecast several scenarios and probability-weighted each to
determine an updated fair value for this contingent payment arrangement. The liability is presented within non-
current trade and other payables in the balance sheet.
Prior period acquisition – Big Chill Distribution Limited (“BCD”)
On 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 $114.6 million and future contingent
consideration representing approximately 20% of BCD Enterprise Value as at 30 June 2022.
At 30 June 2022 the estimated discounted future contingent consideration for the acquisition of BCD was
$56.2 million and this was paid in August 2022.
Reconciliation of payments for businesses acquired
$000
Cash paid for the acquisition of AEX 88,070
Cash paid for contingent consideration for the acquisition of BCD 56,162
Cash paid for other acquisitions during the yea
r 2,752
Cash acquired from acquisition of AEX (18,512)
Payments for
businesses acquired (net of cash acquired) 128,472
DIVIDEND
Dividends declared
On 21 August 2023, the Directors declared a fully imputed final dividend of 19 cents per share (approximately
$33.7 million) in respect of the year ended 30 June 2023. The dividend will be paid on 2 October 2023. The
record date for determination of entitlements to the dividend is 15 September 2023. The Freightways Dividend
Reinvestment Plan will be offered for this dividend.
On 20 February 2023 the Directors declared an interim dividend of 18 cents per share, fully imputed at a tax
rate of 28%. That represented an aggregate payout of approximately $32 million. The dividend was paid on
3 April 2023 and had a record date of 10 March 2023.
26
Dividend policy
The Group’s dividend policy is to declare dividends at a rate of between 75% and 80% of NPATA (net profit
after tax and before amortisation, and excluding one-off non-cash items) in conjunction with the release of the
half year and full year results. Payment of dividends is proposed to be in April and October each year.
The Directors reserve the right to amend the dividend policy at any time. Each dividend will be determined
after due consideration of the capital requirements, operating performance, financial position and cash flows
of the Group at the time.
---
FREIGHTWAYS
FY23 RESULTS
21 AUGUST 2023 | NZX FRW
A NEW PLATFORM FOR GROWTH
Readthispresentationwiththefinancialstatements
Thefinancialresultsinthispresentationshouldbereadinconjunctionwiththefinancialstatementsfortheyearended30June2023, whichcanbefoundintheNZX
preliminaryresultsannouncement.
Noofferorinvestmentadvice
Thispresentationisforinformationpurposesonly. It isnota productdisclosurestatement,prospectusorinvestmentstatement.Nothinginit constitutesaninvitationto
subscribeforshares,securitiesorfinancialproductsinFreightways,orfinancialproduct,legal,financial,investment,taxoranyotheradviceora recommendation. Any
investorshouldconsulttheirownprofessionaladvisorsandconducttheirownindependentinvestigationofFreightwaysandtheinformationcontainedinthispresentation,
includinganystatementsrelatingtothefutureperformanceofFreightways. Theinformationinthispresentationis giveningoodfaithandhasbeenobtainedfromsources
believedtobereliableandaccurateatthedateofthispresentation.
Ournon-GAAPinformation
Certainitemsoffinancialinformationincludedinthispresentationare"non-GAAP"financialmeasures. Thesenon-GAAPfinancialmeasuresdonothavea standardised
meaningprescribedbyNewZealandAccountingStandardsandsomaynotbecomparabletosimilarlynamedmeasurespresentedbyotherentities. Freightwaysbelieves
thatthesemeasuresprovideusefulinformationinmeasuringthefinancialpositionandperformanceoftheFreightwaysbusiness.However,unduerelianceshouldnotbe
placedonnon-GAAPfinancialmeasuresincludedinthispresentation.
Forwardlookingstatements
Thispresentationmayincludeforward‐lookingstatementsregardingfutureeventsandthefuturefinancialperformanceofFreightways. Suchforward‐lookingstatements
arebasedoncurrentexpectationsandinvolverisksanduncertainties. Freightwayscautionsinvestorsnottoplaceunduerelianceontheseforward-lookingstatements,
whichreflectFreightways’viewsonlyasofthedateofthispresentation.Actualresultsmaybemateriallydifferentfromthosestatedinanyforward‐looking
statements. Freightwaysgivesnowarrantyorrepresentationastoitsfuturefinancialperformanceoranyfuturematter. Theinformationinthispresentationiscurrentat
thedateofthispresentation,unlessotherwisestated. Freightwaysisnotunderanyobligationtoupdatethispresentationafteritsrelease,whetherasa resultofnew
information,futureeventsorotherwise.
Disclaimer
NoneofFreightways,itsaffiliates,ortheirrespectiveadvisersorrepresentatives,giveanywarrantyorrepresentationastotheaccuracyorcompletenessoftheinformation
containedinthispresentation,andexcludetheirliabilitytothemaximumextentpermittedbylaw.
DISCLAIMER
FREIGHTWAYS FY23 RESULTS PRESENTATION
2
AGENDAPRESENTERS
1.Introduction and Highlights
2.Financial Summary
•Capital Management
•Business Performance
3.Business Strategy
4.Outlook
5.Appendices
Mark Troughear
Chief Executive
Stephan Deschamps
Chief Financial Officer
Neil Wilson
General Manager
Steve Wells
General Manager of
Express Package
FREIGHTWAYS FY23 RESULTS PRESENTATION
3
A DIVERSIFIED PLATFORM FOR GROWTH
4
70%
30%
New ZealandAustralia
FREIGHTWAYS FY23 RESULTS PRESENTATION
EXPRESS PACKAGE &
BUSINESS MAIL
(EP &BM)
TEMPERATURE
CONTROLLED
INFORMATION
MANAGEMENT
WASTE RENEWAL
SERVICES
•Network overnight and
same-day couriers
•Point-to-point
•Oversize parcels
•Mail delivery
•Airfreight capability
•Refrigerated national
transport services
•Temperature
controlled 3PL
•Same day refrigerated
delivery
•Physical storage and
information
management services
•Suite of digitalisation
services
•eCommerce 3PL
•Medical waste
collection and
processing
•Product destruction &
renewal
•Document e-
destruction
FY23 REVENUE
$908m$214m
BRANDS
FY23 REVENUE BY GEOGRAPHY
FY23 HIGHLIGHTS
FREIGHTWAYS FY23 RESULTS PRESENTATION
5
REVENUE GROWTH
ACROSS
FREIGHTWAYS
29
%
REVENUE GROWTH
EXPRESS PACKAGE
& BUSINESS MAIL
32
%
REVENUE GROWTH
INFORMATION
MANAGEMENT
15
%
NPAT
*
GROWTH
ACROSS
FREIGHTWAYS
7
%
EBITA
* *
GROWTH
ACROSS
FREIGHTWAYS
15
%
ACROSS
FREIGHTWAYS
26
%
CASH FLOW
* GAAP – Generally Accepted Accounting Principles (IFRS-compliant)
** Non-GAAP
FINANCIAL SUMMARY & CAPITAL MANAGEMENT
Note
FY23
$m
FY22
$m
Change
%
Operating Revenue
1,121.6 873.1 28.5
EBITDA (non-GAAP)(i)
214.9 184.9 16.2
EBITA (non-GAAP)(ii)
145.3 126.5 14.8
NPATA (non-GAAP)(iii)
86.6 77.7 11.5
NPAT (GAAP)(iv)
75.3 70.2 7.3
Basic Earnings Per
Share (cents)
43.1 42.3
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
•GAAP – Generally Accepted Accounting Principles (IFRS-compliant)
•Results in this table are after adjustments for NZ IFRS16 (Leases). Refer to
appendices for reconciliation to results before NZ IFRS16.
•Revenuegrowthof29%supportedbygrowthacross
bothEP&BM of32%andIMof 15%divisions
•Successfulintegration ofAlliedExpress(“Allied”)and
strongperformanceinthe nine-monthperiod since
acquisition
•NZmarketimpactedbya same-customerslowdown
throughFY23.AUhasbeenmoreresilientthrough the
FYbutweexpectmorechallengingmacroconditions in
FY24
•Shred-X impactedby $4mEBITA throughlower medical
wastevolumeandpricingassignalledatthe endof
FY22
•StrongperformancefromInformationManagement
inNZandAUassistedbya largeprojectinNZ
•One-offeventsimpactedEBITAby$4.5mdueto
weather relatedevents and non-recurring costs related
toM&Aactivitiesandthepreparationfor a potential
duallistingontheASX
•EBITAgrowthof15%
•Amortisation increased 29%andinterest expense
increased30%
FY23 CONSOLIDATED PERFORMANCE
FREIGHTWAYS FY23 RESULTS PRESENTATION
7
CAPITAL MANAGEMENT PRINCIPLES
‒Targeting solid Investment Grade credit profile, at a
level that minimises the cost of capital
‒Net Debt / EBITDA between 2x and 3x (currently 2.8x)
DIVIDEND POLICY
‒Dividend Policy aligned with Capital Management
Policy, balancing a number of objectives:
1.The setting of the dividend is subordinated to the
overall capital structure of Freightways. When debt is
considered high, the cash dividend will be reduced to
allow for faster debt reduction
2.The dividend is set at a level that the Board expects
to be sustainable in the medium term
3.Subject to the first two principles, the Board will aim
to pay 75% to 80% of the NPATA adjusted for
significant one-offs
CAPITAL MANAGEMENT AND DIVIDEND POLICY
FINAL DIVIDEND19 CPS (37 CPS FOR THE YEAR)
Imputation credits
7.39 cps (fully imputed in NZ at
28% tax rate)
Supplementary dividend3.3529 cps
Record date15 September 2023
Payment date2 October 2023
Dividend Reinvestment
Plan
Offered with a
discount of 2%
FREIGHTWAYS FY23 RESULTS PRESENTATION
8
•Whilst the majority of our business is in New Zealand, and the NZX is our primary listing, Australia is
a larger and growing part of our activity, and it is likely that the pace of growth in Australia will
surpass that of New Zealand
•A dual listing in Australia therefore makes sense to reflect the new reality of our business
•It also allows us to work with Australian Fund Managers that have a mandate to only invest in ASX-
listed companies and thus broaden our investor base in line with our business activity
•We are now applying for a dual listing and expect the listing to take place by the end of September
ASX DUAL LISTING
FREIGHTWAYS FY23 RESULTS PRESENTATION
9
DIVISONAL PERFORMANCE
FY23
$m
FY22
$m
Change
%
Operating Revenue
911.1689.032.2
EBITDA (non-GAAP)
169.8142.219.4
EBITA (non-GAAP)
125.4107.516.7
EBITA Margin
13.8%15.6%
NPAT (GAAP)
78.170.011.6
•Results in this table are after adjustment for NZ IFRS16 (Leases). Refer to appendices
for reconciliation to results before NZ IFRS16.
•GAAP – Generally Accepted Accounting Principles (IFRS-compliant)
FREIGHTWAYS FY23 RESULTS PRESENTATION
11
FY23 EXPRESS PACKAGE & BUSINESS MAIL
New Zealand
•EP&BM Network courier volumes were largely as predicted
for H2
•Volume for the H2 was down 2% on the pcp(down 1.3%
adjusting for the additional holiday and the two weeks of
weather events)
•Market share gains of 4% helped offset organic volume
declines
•EP&BM division revenue up 5% ex Allied, up 32% including
Allied’scontribution over the nine-month period since
acquisition
•Headline courier (GRI) pricing improvement initiated for
FY24 of 7.5%, expect to realise around 75% of this
•EP&BM EBITA up 17% (including nine months of contribution
from Allied)
•Labour costs continue to be a feature, up 10% on the pcp
(excluding Allied), however the number of applicants per job
has increased materially in last 2-3 months
•Strong service performance by all EP&BM businesses has
continued to be a differentiator
Australia
•Allied has provided a national footprint for profitable growth
in express package across Australia and assisted in
diversifying FRW earnings so that they are less reliant on
NZ’s economic performance
•Strong financial performance over the year
•Volumes and revenueare steady to date with incremental
new business gains being achieved
•NSW automation due to be commissioned by Q2 FY24
•New business team actively targeting market share
opportunities
•Headline price increase of 4% in FY24
FY23 EXPRESS PACKAGE & BUSINESS MAIL
FREIGHTWAYS FY23 RESULTS PRESENTATION
12
NZ NETWORK COURIER ITEM TREND FOR H2, FY23 as a % of FY22
FREIGHTWAYS FY23 RESULTS PRESENTATION
13
Weeks
89.4%
92.0%
94.2%
90.3%
90.6%
95.5%
84.4%
99.8%
102.6%
102.3%
101.8%
99.3%
100.3%
83.4%
101.5%
123.8%
98.9%
99.9%
100.4%
99.9%
99.3%
98.2%
100.2%
98.2%
117.9%
94.6%
75.0%
80.0%
85.0%
90.0%
95.0%
100.0%
105.0%
110.0%
115.0%
120.0%
125.0%
2728293031323334353637383940414243444546474849505152
AKL
Floods
Cyclone
Gabriel
EasterEasterMatariki
2022
NZ NETWORK COURIER PFE REVENUE PER ITEM
FREIGHTWAYS FY23 RESULTS PRESENTATION
14
$0.71
$1.04
$1.32
$1.52
$1.62
$-
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
$1.80
20202021202220232024
•IM Revenue up 15% (FX, recovery of activity in TIMG NZ and
AU)
‒Strong growth in digitisation, up 52% on pcp
‒Major NZ digital project helped to deliver 27% revenue
growth at TIMG NZ
‒Return of service work for media and documents
‒Stronger destruction revenues assisted by strong paper
prices although these began to ease at the end of FY23
‒LitSupport revenues are now consistent and finished
the year up 8% on pcp
•IM EBITA down 1%, $0.4m
‒Revenue decline of A$7.7m in Med-X and higher
operating costs in waste renewal led to a decline in
margins of A$4m
‒Investment in the VIC Med-X facility, which is due to
commence operations in Q1 FY24
FY23
$m
FY22
$m
Change
%
Operating Revenue
214.3187.114.6
EBITDA (non-GAAP)
56.455.22.1
EBITA (non-GAAP)
32.733.1(1.3)
EBITA Margin
15.3%17.7%
NPAT (GAAP)
18.018.2(1.1)
•Results in this table are after adjustment for NZ IFRS16 (Leases). Refer to appendices
for reconciliation to results before NZ IFRS16.
•GAAP – Generally Accepted Accounting Principles (IFRS-compliant)
FY23 INFORMATION MANAGEMENT AND WASTE RENEWALHIGHLIGHTS
FREIGHTWAYS FY23 RESULTS PRESENTATION
15
STRATEGY UPDATE
THREE HORIZONS OF GROWTH
FREIGHTWAYS FY23 RESULTS PRESENTATION
17
ACTIVITIESHORIZON 1HORIZON 2HORIZON 3
Extend and DefendGrow Scale
Establish New Lines of
Business
EXPRESS PACKAGE
& BUSINESS MAIL
B2B
•Focus on a profitable market
sharegains
•Improve the resilience of
airfreight network
•Assess metropolitan“local”
service levels, infrastructure
costs and pricing
B2C
•Leverage our trans-Tasman
presence for common
eCommerce customers
•Maintain high levels of service
to maintain a premium for
B2C deliveries
Oversize (25kg+)
•Scale Oversize revenue in NZ
•New business teams to grow
Allied’s market share in
Oversize in AU
•Assess bolt-on M&A
opportunities in AU
TEMPERATURE
CONTROLLED
LOGISTICS
National Delivery
•Pursue market share
opportunities as infrastructure
(trucks and depots) come on
stream
3PL
•Utilisation of 95% in Auckland
•Ruakura due to open in
October 2023, targeting 50%
utilisation by end of FY24
Same Day
•Roll out of national delivery for
convenience stores
•Grow scale with new coolstore
capacity brought on during
2023
STRIVE FOR EFFICIENCY
NETWORK DENSITY
DELIVER RELIABLY
ALWAYS DELIVER ON TIME
LOVE OUR CUSTOMERS
SALES APPROACH & CULTURE
ACT LIKE AN ENTREPRENEUR
M&A GROWTH/THE STARTERY
OUR CAPABILITIES
THREE HORIZONS OF GROWTH
FREIGHTWAYS FY23 RESULTS PRESENTATION
18
ACTIVITIESHORIZON 1HORIZON 2HORIZON 3
Extend and DefendGrow Scale
Establish New Lines of
Business
INFORMATION
MANAGEMENT
Storage
•Improvement in utilisation of
existing warehouses through
market share gains
•AU boxes now >3m, strongest
growth achieved in WA (up 7%
year on year)
Digitisation
•Large scale digital project
completed in FY23
•Digital revenues in AU up 39%
for year. Digital services now
contribute 30% of TIMG AU
EBITA
eCommerce 3PL
•STOCKAeCommerce offering
showing strong growth. To
meet demand a new 3PL
warehouse is expected to be
added in June 2024
WASTE RENEWAL
Secure Destruction
•Paper prices likely to be more
volatile in FY24
•Continued focus on market
share gains
Medical Waste
•VIC processing plant built and
awaiting EPA approval
•Target market share gains in
VIC, NSW, QLD
High Value Waste
•Build profitability in
SaveBoardafter
establishment year
•Target product destruction
market
•Continue to source circular
loop solutions for hard to
recycle waste
STRIVE FOR EFFICIENCY
NETWORK DENSITY
DELIVER RELIABLY
ALWAYS DELIVER ON TIME
LOVE OUR CUSTOMERS
SALES APPROACH & CULTURE
ACT LIKE AN ENTREPRENEUR
M&A GROWTH/THE STARTERY
OUR CAPABILITIES
SDGFREIGHTWAYS KEY FY24 INITIATIVES
SDG#3
GOOD HEALTH & WELLBEING
•Health and safety in employment: Injury reduction. TRIFR continues to reduce year
on year
SDG#8
DECENT WORK & ECONOMIC GROWTH
•Our commitment is to improve Contractor earnings year on year
•L&D –We will continue to invest in training our people so 80% or more of our
promotions come from within
SDG#9
INDUSTRY, INNOVATION & INFRASTRUCTURE
•We have a customer churn rate of <2% of revenue
•We are committed to continued growth in Horizon's 2 & 3
SDG#13
CLIMATE ACTION
•GHG emissions reduction with a target to reduce Scope 1, 2 & 3 emissions by
50%by 2035, ensuring that our contribution to Global Warming is no greater than
1.5degreescelsius
•The average age of linehaul vehicles (in our direct control) is 4 years or less
•Commitment to assisting the development of circular re-use of waste
SUSTAINABILITY - KEY INITIATIVES FOR FREIGHTWAYS
FREIGHTWAYS FY23 RESULTS PRESENTATION
19
M&A GROWTH
FREIGHTWAYS FY23 RESULTS PRESENTATION
20
SUCCESSFUL M&A TRACK RECORD (recent examples)ACQUISITIONSTRATEGY& INVESTMENT CRITERIA
✓Targetcharacteristics:
1.Established/ profitable,well-managedandgrowing
businesses
2.Earningsaccretive acquisitionswith achievable
synergies and well-understood integrationcosts
✓Strategic rationale:
1.Access new customer segments that we can grow
earnings from, using our core capabilities
2.Increaseoursize, capability and capacity across existing
business units
✓Size:Bolt-onacquisitionsthat complement existing business
divisionsthroughtolarger opportunities
✓Geography: AustraliaandNewZealand
✓Method:Disciplinedadherencetoderiving value
(A$160m, 2022)
•Entry point to the Australian
market for EP&BM
•Platform for growth in the
Oversize category of the
Australian express market
(NZ$16m, 2021)
•Complements successful
acquisition of Big Chill to
expand same-day and
overnight temperature-
controlled delivery niche
(NZ$171m, 2020)
•Expansion into refrigerated
logistics to provide short and
long-term growth
opportunities, while further
diversifying earnings base
OUTLOOK
•Theeconomicclimatehaspresentedchallengesoverthepastsixmonths,andweexpectthisto
continuethroughFY24.In NZ, whilesame-customervolumeis lowerthaninFY23,wehave
secured newcustomerswhoaremitigatingthisimpact.ThetightlabourmarketsinbothNZand
Australiaarebeginningtoease
•In the short term we are cautious about the impact of the economy, particularly in NZ, and 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. We will do so
whilst monitoring costs closely and acting quickly if we see additional pressure on our margins
•Our NZ Express Package businesses will use efficiency, pricing and market share levers to
manage any decline in volume
•We are positive about the diversification and resilience our business model offers with
operations in Australia and NZ and across a number of logistics segments – many of which are
not directly tied to domestic NZ economic activity
•With the acquisition of Allied, we now have a strong platform in Australia, which we can
leverage. There are opportunities for both organic and acquisition-related growth
•We have unique competitive positioning in a number of Horizon 3 segments which we can
grow over the longer term
•Maintaining strong service performance, retaining our existing customers and seeking
out profitable new business will be a feature for all our businesses
•An ASX dual listing is on track for HY24
OUTLOOK
FREIGHTWAYS FY23 RESULTS PRESENTATION
22
QUESTIONS
FREIGHTWAYS FY23 RESULTS PRESENTATION
23
FREIGHTWAYS FY23 RESULTS PRESENTATION
24
APPENDICES
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
GAAP – Generally Accepted Accounting Principles
FREIGHTWAYS GROUP
Note
FY23
$m
FY23
$m
FY23
$m
FY22
$m
FY22
$m
FY22
$m
Post NZ IFRS16NZ IFRS16
adjustment
Pre NZ IFRS16
(non-GAAP)
Post NZ IFRS16NZ IFRS16
adjustment
Pre NZ IFRS16
(non-GAAP)
Operating Revenue
1,121.6-1,121.6873.1-873.1
EBITDA (non-GAAP)(i)
214.9(53.5)161.3184.9(43.8)141.1
EBITA (non-GAAP)(ii)
145.3(8.7)136.6126.5(7.2)119.3
NPATA (non-GAAP)(iii)
86.63.490.077.72.680.3
N PAT(iv)
75.33.478.770.22.672.8
Appendix - Reconciliation of Post-NZ IFRS16 to Pre-NZ IFRS16
FREIGHTWAYS FY23 RESULTS PRESENTATION
25
EXPRESS PACKAGE & BUSINESS MAIL
FY23
$m
FY22
$m
Change
%
Operating Revenue
911.1689.032.2
EBITDA (after NZ IFRS16)
169.8142.219.4
Less: NZ IFRS16 adjustment
(34.3)(26.3)30.2
EBITDA (before NZ IFRS16)
135.5115.817.0
EBITA (after NZ IFRS16)
125.4107.516.7
Less: NZ IFRS16 adjustment
(4.7)(4.0)18.0
EBITA (before NZ IFRS16)
120.7103.516.7
NOTES
EBITDA and EBITA are non-GAAP measures
Appendix - Reconciliation of Post-NZ IFRS16 to Pre-NZ IFRS16
FREIGHTWAYS FY23 RESULTS PRESENTATION
26
Appendix - Reconciliation of Post-NZ IFRS16 to Pre-NZ IFRS16
FREIGHTWAYS FY23 RESULTS PRESENTATION
27
INFORMATION MANAGEMENT & WASTE RENEWAL
FY23
$m
FY22
$m
Change
%
Operating Revenue
214.3187.114.6
EBITDA (after NZ IFRS16)
56.455.22.1
Less: NZ IFRS16 adjustment
(19.0)(17.3)10.3
EBITDA (before NZ IFRS16)
37.438.0(1.6)
EBITA (after NZ IFRS16)
32.733.1(1.3)
Less: NZ IFRS16 adjustment
(3.9)(3.2)22.9
EBITA (before NZ IFRS16)
28.829.9(3.9)
NOTES
EBITDA and EBITA are non-GAAP measures
---
A New Platform for Growth
Annual Report 2023
Increasingly, business for the Freightways
Group is about mapping growth across
two complementary markets as we think,
work and organise as a Trans-Tasman
organisation. This year that dual presence
worked well for us with the New Zealand
market quieter while Australia grew at a
good pace.
Mapping our growth
The significant contributions coming from Allied Express,
Big Chill, Shred-X and others prove that we make successful
acquisitions. The emerging successes of our innovative start-
ups show that we have what it takes to build out a presence
in emerging markets like 3PL, digitisation and medical waste.
Our workhorse businesses remain well-managed, to meet our
busy customers’ needs and expectations.
Key things unite us: our underlying capability of pick-up,
process and deliver infuses everything we do. Our shared
capabilities and principles drive our vision to “move you to a
better place”. And our commitment to grow sustainably and
responsibly is evident in the way we established science-
based targets and the plans put in place to achieve them.
Market dynamics will always be cyclical. Our approach to
growth focuses on seeing past that, through holistic planning,
a portfolio approach and investing methodically for the future.
BRISBANE
TOWNSVILLE
HOBART
MELBOURNE
ADELAIDE
TAURANGA
HAWKE'S BAY
WHANGANUI
ROTORUA
WELLINGTON
NELSON / BLENHEIM
CHRISTCHURCH
DUNEDIN
HAMILTON / PUTARURU
CANBERRA
SYDNEY
TAUPO
PALMERSTON NORTH
DARWIN
NEW PLYMOUTH
CENTRAL OTAGO /
CROMWELL
INVERCARGILL
PERTH
Key
NETWORK COURIER
POINT-TO-POINT
TEMPERATURE CONTROLLED
BUSINESS MAIL
SUPPORT
INFORMATION MANAGEMENT
WASTE RENEWAL
NETWORK COURIER
AU: ALLIED EXPRESS
NZ: NEW ZEALAND
COURIERS, POST HASTE,
CASTLE PARCELS,
NOW COURIERS,
PASS THE PARCEL
POINT-TO-POINT
COURIER
AU: ALLIED EXPRESS
NZ: SUB60, KIWI
EXPRESS, STUCK
TEMPERATURE
CONTROLLED
NZ: BIG CHILL,
PRODUCEPRONTO
BUSINESS MAIL
NZ: DX MAIL, DATAPRINT
GROUP SUPPORT
NZ: FIELDAIR,
PARCELINE
INFORMATION
MANAGEMENT
NZ: TIMG / AU: TIMG
WASTE RENEWAL
AU: SHRED-X, MED-X
AUCKLAND / NORTH SHORE
WHANGAREI
TIMARU
Freightways Annual Report | Financial Year ended 30 June 2023Freightways Group Limited and its subsidiariesfreightways.co.nz1
Our Annual Report
4 This year's highlights
6 Our growth strategy
8 Our family of brands
10 Chair and CEO’s Report
16 Living our capabilities in 2023
18 Oversize courier case study
24 Our people
28 ProducePronto case study
32 Our communities
34 Stocka case study
Our Sustainability Report
40 Environmental Statement
42 Materiality review
43 Our SDGs
54 Climate-related disclosures
76 Our Board and Leadership
79 Financial summary
80 Directors' Report
91 Financial statements and notes
Chair and
CEO's Report
1018
34
54
80
28
39
76
Bigger proves to be better.
The oversize courier story
Sustainability
Report
Fresh ideas for convenience
foods. ProducePronto
Parcel-sized fulfilment.
The Stocka story
Climate-related
disclosures
Directors' Report
and financials
Our board
and leadership
Contents
This year we combine our Annual and Sustainability
Reports to provide insight into our financial and
non-financial matters in one document.
Freightways Group Limited and its subsidiariesfreightways.co.nz32Freightways Annual Report | Financial Year ended 30 June 2023
1. Operating revenue for FY23
2. NPAT growth in FY23
3. EBITA** growth for FY23
4. Cash flow growth FY23
5. Express Package
revenue FY23
6. Information Management
revenue FY23
7. Express Package EBITA**
8. Australia revenue for FY23
9. Digitisation growth
year-on-year
10. Boxes archived in
TIMG NZ/AU
This year's highlights
7
%
Group wide
NPAT growth
Group wide
revenue growth
29
%
15
%
Group wide
EBITA growth**
17
%
Express
Package
EBITA**
7
Boxes archived at
TIMG, Group wide
3
MILLION
32
%
Group wide
Express Package
revenue growth
143
%
Australia
revenue growth
Group wide
cash flow growth
26
%
15
%
Information
Management
revenue growth
*Calculation includes impacts of
flooding, and Cyclone Gabrielle
on volumes
**EBITA is a non-GAAP measure
(GAAP – Generally Accepted
Accounting Principles)
1
2
5
3
8
10
6
4
52
%
Digitisation growth
year-on-year
9
4A NewPlatformGGhtnruNRp lrr2rrAeGtG0etnr3Nt rNGMNMrigrThGNrsgsiA NewPlatforc phRrbedelNMrtGMrelorohEoeMet eNox NewPlatfo,0p,GB5
The Freightways
Growth Strategy
OUR ACTIVITIES
OUR CAPABILITIES
OUR PRINCIPLES
OUR VISION
STAKEHOLDERS:
Our customers
Our team
Our shareholders
Our communities
OUR PURPOSE:
What we do
Freightways is a business that is always on the move.
Across the Group, we pick-up, process and deliver physical
and digital items providing a reliable and efficient service for
our customers. We look to develop our people through career
opportunities. We seek appropriate and sustainable returns for
our investors. And we look to move the dial for communities
through the causes we support by reducing our emissions
and employing or contracting local people.
OUR PRINCIPLES & CAPABILITIES:
How we work
Three principles guide how our teams and our partners deliver:
• We take ownership and responsibility at every level for what we
do and what we can improve.
• We think commercially about the deals we make so that they
make sense for our customers, our contractors, our business and
our shareholders.
• We work as a family by supporting people, by prioritising their
safety and wellbeing and by doing everything we can to ensure
they get home safe each day.
We depend on our capabilities to deliver what our customers,
investors and communities expect. We’re efficient. This critical
capability enables us to move around 100,000,000 items
through our various businesses every year. We are reliable.
We target flawless execution, which enables us to shift multiple items
through multiple touchpoints in our network, across two nations,
every day. We act like entrepreneurs. We recognise and execute on
high-value opportunities. We always look forward and up. We love
our customers, both internal and external because we know they’re
crucial to our commercial success.
OUR VISION:
Why we do this
Better outcomes won’t just happen. It takes a conscious effort
from our team to move things forward for our customers, our team,
our shareholders and our communities.
Our “why” is to move you to a better place.
– OUR STRATEGY ON A PAGE – OUR STRATEGY ON A PAGE – OUR STRATEGY ON A PAGE – OUR STRATEGY ON A PAGE – OUR STRATEGY ON A PAGE – O
6A NewPlatformGGhtnruNRp lrr2rrAeGtG0etnr3Nt rNGMNMrigrThGNrsgsiA NewPlatforc phRrbedelNMrtGMrelorohEoeMet eNox NewPlatfo,0p,GB7
P
i
c
k
–
u
p
P
r
o
c
e
s
s
D
e
l
i
v
e
r
Our market-leading brands combine shared
infrastructure with specialist knowledge in
each niche.
We work across a range of business sectors,
achieving high levels of quality and efficiency,
through our focus on adding value to how
we pick-up, process and deliver.
Our strong culture and commitment unifies
our people and feeds our deep team spirit.
We draw on all of that to continue to evolve
our businesses to meet the changing needs
of our customers.
EXPRESS PACKAGE AND BUSINESS MAIL
Our multi-brand strategy in the Australasian courier and
business mail markets caters to a range of customer needs
and delivery timeframes. Our New Zealand courier operations
share branch networks, air and road linehaul, and IT.
These brands include New Zealand Couriers, Post Haste,
Castle Parcels, NOW Couriers, SUB60, Security Express,
Kiwi Express, STUCK and Pass the Parcel. We also offer
airfreight capability for our overnight Express Package delivery
service through our joint venture airline, Parcelair, and our
linehaul partner, Parceline. Our national Australian network
is operated by Allied Express and includes a full spectrum of
national, local and 3
rd
Party Logistics (3PL) courier services.
DX Mail is New Zealand’s only dedicated business mail specialist
offering time-sensitive physical postal services.
Dataprint offers mailhouse-print services and digital mail
presentation platforms across New Zealand. Our technology
and solutions transform data into effective communications
for customers.
TEMPERATURE CONTROLLED
Big Chill Distribution and ProducePronto make up our national
temperature-controlled business, together servicing the chilled
logistics needs of Kiwi businesses. Combining our chilled
national linehaul with an urban, chilled van network allows us to
offer national delivery, same day delivery, 3PL & 4PL under one
responsive umbrella.
INFORMATION MANAGEMENT
The Information Management Group (TIMG) helps businesses
protect and add value to the data they entrust us with. It offers
physical storage and information management services, as well
as digital information processing services such as digitalisation,
business process outsourcing, online back-up and eDiscovery
services. This year we increased the utilisation of our storage
facilities by starting an eCommerce 3PL service called Stocka.
WASTE RENEWAL
Shred-X offers document destruction, eDestruction and product
destruction services. We also provide medical waste collection
and processing services under the Med-X brand. This year we
continued to find new ways to transform what would once have
been waste into new products.
Our family
of brands
OUR ORGANISATIONAL DIAGRAM – OUR ORGANISATIONAL DIAGRAM – OUR ORGANISATIONAL DIAGRAM – OUR ORGANISATIONAL DIAGRAM – OUR ORGANISATIONAL
Freightways Group Limited and its subsidiaries8Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz9
Strategically, we are confident
these investments will form a
powerful, collective catalyst
for sustained growth in FY24
and beyond.
"
Against a backdrop of quite different
market dynamics on each side of the
Tasman, our teams have worked tirelessly
to meet the needs of our customers
and we have selectively invested in the
exciting future we see for ourselves.
Growth in the Australian economy in FY23 helped deliver
solid financial performance from our Allied Express
business, which lifted the overall Group result.
The New Zealand economy, by contrast, was sluggish
as businesses grappled with the challenges of a tight
labour market, high labour costs, inflationary pressures
and, of course, destructive weather. While some parts of
our business, such as Information Management, have
rebuilt after COVID-19, our linehaul businesses for both
courier and temperature-controlled goods incurred much
higher operating costs and disruptions during the year
along with subdued growth in the operating environment.
The end result reflected these contrasts. Overall,
operating revenue increased by 29% from last year,
with our Australian businesses growing by 143% and
our New Zealand businesses increasing by 6% —
net profit after tax lifted by 7% overall.
INVESTING IN MOVING YOU
TO A BETTER PLACE
Despite economic pressures, we remain committed to
"Moving you to a better place". Investment across our
four key activities – Express Package and Business Mail,
Temperature Controlled, Information Management and
Waste Renewal – is broadening our business footprint,
leveraging our expertise and presence in exciting ways.
Strategically, we are confident these investments will form
a powerful, collective catalyst for sustained growth in FY24
and beyond. Along the way, they will create opportunities
to increase volume and achieve economies of scale,
enhance our responsiveness and reliability for customers
and strengthen our Group overall with more resilient,
more efficient businesses.
OUR THREE HORIZONS FUTURE
The exciting feature of our three horizons approach is that
it enables us to expand, in a disciplined way, into new areas
characterised by greater value.
• Our first horizon revenue streams are the backbone.
Often built over decades, they provide the core
expertise, infrastructure and national network
capabilities. Businesses here range from business-to-
business (B2B) deliveries to temperature-controlled
transport to archive storage and document destruction.
• Second horizon businesses utilise the fixed cost base
established for horizon one but have faster growth
prospects. These are activities like business-to-
consumer (B2C) deliveries, temperature-controlled
3
rd
Party Logistics (3PL), digitisation and medical waste.
• Our third horizon businesses are the innovators –
focused on delivering long-term revenue streams by
identifying emerging niches with healthy potential.
Opportunities in this space include oversize express
couriers, same-day temperature-controlled deliveries,
high-value recycling and 3PL for eCommerce.
CREATING ROOM TO GROW
Our investments this year and next are about adding
capacity for growth within our integrated model.
For example, our new Big Chill facility in Ruakura will
give us the room for growth that we need to meet the
ongoing demand for temperature-controlled 3PL as well
as expanding our nationwide delivery capability. Equally,
our new ProducePronto facility in Auckland will allow us to
grow our temperature-controlled same-day and
4PL offering.
The arrival of our first Boeing 737-800 is a game-changer
for our air freight services, enabling us to improve the
resilience and efficiency of our first horizon businesses.
This newer, faster and more fuel-efficient aircraft will allow
us to carry more freight with reduced emissions and at
better levels of reliability. The remainder of the fleet will be
steadily upgraded over the rest of this decade.
In Australia, installing a new automated sortation system
for Allied Express and establishing a new medical waste
processing facility for Shred-X in Victoria will underpin
efficiencies and enable these businesses to pick-up, process
and deliver greater quantities at improved efficiency.
LEVERAGING OUR EXISTING NETWORKS
25kg+ couriers, same-day temperature-controlled delivery
and high-value recycling all align with our core pick-up,
process and deliver ethos. These activities have all been
developed by using the facilities, teams of people, IT
systems and customer-bases of our horizon one businesses.
A BUSY YEAR FOR ALL
Our Allied Express business has had a very good first year.
Leveraging its footprint across five states has produced
pleasing revenue growth. Now we are looking to make even
more of their presence through world-class facilities that
have the capacity to cope with a doubling of revenue in an
express delivery market which is around 8 times larger than
New Zealand's.
Complementing the larger facilities with automation in
NSW and Victoria is the first step. This project, which
started towards the end of the year, will pair investment in
the best freight sorting automation with Allied Express’ deep
business relationships to build the capacity for material
growth. This will allow us to pursue growing market share
and grow the business without worrying about constraints
in infrastructure. To assist that growth, we are building
a new business sales team in Australia to maximise the
opportunities from Allied's service proposition.
We are also actively looking for synergistic merger or
acquisition opportunities to complement this investment
in the years ahead.
After a surge in growth driven by demand for our services
during the peak COVID-19 period, our Waste Renewal
businesses have reverted to trend levels in terms of both
volumes and growth expectations. We foresaw this. But we
also anticipated the opportunity for investment, again to
allow these businesses to pursue more growth in the years
ahead. With that in mind, we have developed a new medical
waste facility set to open in Victoria in early FY24.
In New Zealand, our Express Package brands have
experienced a net gain in market share thanks to strong
relationship/business development and differentiated
service offerings that customers value. While the
New Zealand economy goes through tougher times, it has
been inspiring to see our teams winning new customers
aided by superior performance and reliability and keeping
customers better informed about their deliveries.
GROWTH ON BOTH SIDES OF THE TASMAN
"
Chair & CEO's Report
2023
Freightways Group Limited and its subsidiaries10Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz11
A BUSY YEAR FOR ALL (CONTINUED)...
Cost pressures have been material this year. High labour
costs, in particular, have prompted us to announce new
pricing from the beginning of the next financial year
(1 July 2023) to offset those costs.
Our Temperature Controlled businesses have also faced
their share of challenges, with Cook Strait ferry disruptions
and Cyclone Gabrielle adversely affecting a finely tuned
supply chain system and generating cost pressures
through the year's second half. Our teams have done a
remarkable job of countering setbacks across a network
where there is no inherent ‘give’ in the system. For both
Big Chill and ProducePronto, time is our most significant
advantage but potentially a costly adversary. When frozen
perishables are waylaid because trucks are stranded in
remote locations, often some distance from the nearest
depot, the pressures come thick and fast. Our people
battled disruptions, shortage of trucks and drivers, and
delays to do the best for our customers.
For many of those customers, daily or even multiple-times-
per-day deliveries are a commercial necessity. With no
redundant refrigeration anywhere in the system to hold
stock, stoppages can potentially hurt everyone. The big
out-take from what has happened this year was that some
extra capacity across our network is a game changer.
We’re excited about the opening of Big Chill’s new
13,000sqm 3PL cold store facility in Ruakura, adding to the
nine depots we already have in our nationwide network.
From October 2023, this state-of-the-art facility will
enhance our existing capabilities with increased links
to Port of Tauranga, the Waikato and the Bay of Plenty,
and increase same-day and overnight services to
Auckland. The new site will also allow us to store a
significant number of temperature-controlled pallets.
This generates new opportunities to build our customer
base in these active food-producing regions and
strengthen volumes. Adding 3PL services will align the site
with our Auckland and Christchurch facilities and enable us
to add more logistics services for clients if needed as part
of our nationwide expansion.
We’re also investing in new vehicles for the business over
the next 12 months. These fleet improvements will add
resilience to our model, provide more capacity to take on
new business as we look forward to strengthening the
Big Chill network and produce lower emissions through
better fuel efficiency.
Our Information Management business grew well this
year in terms of volumes as people returned to the office.
We are especially pleased with our TIMG team's fantastic
job in successfully completing a large digitisation project.
The significant growth of the ProducePronto network in
recent months has led us to invest in a new, much larger
depot for Auckland to meet the same-day delivery needs
of the growing convenience food market and quick
services restaurants demands. We’ve identified a similar
opportunity for such an offer in Australia.
Work over the coming year will highlight the size of the
Australian market, our cost of entry and the approach
we will take should we decide to progress.
OUR SUSTAINABILITY
JOURNEY CONTINUES
We continue to make steady progress in the area of
sustainability. We remain committed to our science-based
target of a 50% drop in Scope 1, 2 and 3 emissions
by 2035.
We have been TOIT
Ū certified since 2014. This year, we
have brought together our performance and sustainability
reporting into this one report, reflecting our wish to
think about – and report on – our broader progress as
a business. As we signalled last year, we reviewed our
Sustainable Development Goals (SDGs) materiality as
part of a review we do every five years to ensure our Goals
continue to align with the interests of our stakeholders.
We will continue to report on SDG 13 - Climate Action
because we have firm commitments to this. Still, we will
set a new baseline for those actions with the inclusion
of our Australian businesses (and will include a full year
of Allied Express in our FY24 report) and our Big Chill
business in New Zealand.
We already have milestones in place to move us to
alternative fuels through our light vehicle and metro truck
fleets as and when the technology to do so realistically
becomes available.
Well over 95% of our total Group emissions come from
the fuel we use across our vehicles and aircraft. Our 2030
target of a 35% reduction in CO2e and our 2035 target of
a 50% reduction in C02e align with what society needs
to achieve globally to keep global warming to within 1.5
degrees Celsius.
Electrification of our forklifts and company vehicles has
been a key initiative which commenced this year. At this
stage, we plan to convert 25% of our company cars to
PHEV by 2025, with 100% either PHEV, EV or hydrogen
by 2030. Our contractors' light vehicles will begin to
meaningfully transition to EVs from 2028, with our entire
light vehicle fleet made up of low-emission vehicles by
2035. We are looking at finance options and continued
upward movements in courier incomes to help our
contractors do this. We also anticipate that our heavy
transport fleet will commence using alternative fuels from
2030, and by 2035 we foresee that half of these vehicles
will have transitioned – in particular the metro trucks which
service customers within city and town locations.
GROWTH ON BOTH SIDES OF THE TASMAN
Chair & CEO's Report
2023
Freightways Group Limited and its subsidiaries12Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz13
OUTLOOK FY24
The economic climate has presented challenges over the
past six months, and we expect this to continue through
FY24. In New Zealand, while same-customer volume
is lower than in FY23, we have secured new customers
who are mitigating this impact. The tight labour markets
in both New Zealand and Australia are beginning to ease.
In the short term, we are cautious about the impact of the
economy, particularly in New Zealand.
Notwithstanding the current economic environment,
we are excited about the potential to grow our revenue
and profitability on both sides of the Tasman in the
longer term.
We look forward to a resumption of demand across our
New Zealand businesses as the economy steadies and
re-gathers confidence, hopefully later in the financial
year. For our Express Package brands, our goals will be
maintaining our quality network at the right price and
containing and recovering costs where we can.
Investing in our aviation assets will strengthen the network.
At the same time, our investments in Big Chill are about
taking advantage of growth opportunities where we see
them. What heartens us are the number of new business
opportunities we have identified in some of our divisions.
Information Management will benefit from utilising existing
capacity and Waste Renewal will take advantage of new
capacity in Victoria.
We will continue to develop our third horizon business and
expect growth in 25kg+ courier, same-day temperature-
controlled transport, high value waste opportunities and
Stocka – our 3PL eCommerce offering.
In Australia, we’re confident that our investment in
Allied Express will benefit from organic growth and
will seek out complementary acquisition targets.
Chair & CEO's Report
2023
GROWTH ON BOTH SIDES OF THE TASMAN
We will continue to manage capital in a prudent way
that seeks to achieve a number of objectives:
• Invest to maintain or improve the level of service
quality and network resilience: for example,
fleet replacement or new facilities;
• Invest in new technologies that support our
value proposition;
• Invest in businesses that support our horizons
of growth.
In addition, Freightways, through the acquisition of
Allied Express in Australia, has acquired a strong network
across Australia and is further investing in capacity there
as well as considering bolt-on acquisitions.
We will manage the level of debt carefully and aim to
preserve our Investment Grade credit profile at all
times. Our capital management will continue to reflect
this objective.
ASX DUAL LISTING
Freightways Group Limited will today apply for
admission to the official list of the Australian Securities
Exchange (ASX) by way of an ASX Foreign Exempt
Listing. Freightways’ primary listing will remain on the
NZX Main Board (NZX) while its dual listing on the
ASX reflects the changing profile of the business, with
Australian operations representing a higher proportion
of Freightways’ revenue and profit, particularly since
the acquisition of Allied Express in October 2022.
Freightways has had a presence in Australia since its
2007 acquisition of Databank and has steadily grown
its footprint through the acquisition and growth of its
information management, secure destruction and waste
management businesses.
Freightways’ name was changed to “Freightways Group
Limited” and NZX ticker code was changed to “FRW”,
each with effect from market open on 1 March 2023 to
allow for a potential dual listing. Its ASX ticker code will
also be “FRW”.
Subject to ASX approval, Freightways expects to become
officially listed in mid-September 2023.
REGULATORY
Freightways is subject to a Commerce
Commission investigation and is cooperating with the
Commerce Commission.
Freightways does not consider that this process will have a
material financial or operational impact on the Group.
TOTAL CAPITAL EXPENDITURE
FOR THE YEAR WAS $37M
As we reach the upper range of our target gearing we
will assess the tools available to us to reduce debt and
stay within the guidelines established by our capital
management policy while taking into account the merger
and acquisition opportunities that can be accretive for
shareholders.
In closing, we'd like to acknowledge our people's fierce
loyalty and commitment. Thanks to all of you for engaging
with our challenges and giving your all every day to make
us the Freightways we are all so proud of.
Thanks, too, to our board for your guidance as we stepped
up our investments this year and to our shareholders and
customers who continue to believe in and support us.
We're excited about what's ahead.
MARK TROUGHEAR
CHIEF EXECUTIVE
MARK CAIRNS
CHAIRMAN
Freightways Group Limited and its subsidiaries14Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz15
Living our
capabilities in 2023
Our organisational capabilities are a set of strategic skills that we continuously draw on
to get work done, execute our business strategies and meet our customers' expectations.
Here are some standout examples from our FY23 activities.
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WE MAINTAIN LEADING
DIFOT (DELIVER IN FULL
ON TIME) THROUGH
ALL OF OUR OPERATIONS
WE HAVE MOVED OUR FOCUS
FROM CUSTOMER SERVICE TO
CUSTOMER EXPERIENCE TO
IMPACT THE WAY WE INTERACT
WITH OUR CUSTOMERS
WE HAVE LEASED NEXT
GENERATION AIRCRAFT
FOR OUR AIR NETWORK
D
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L
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L
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A
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A
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P
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N
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E
F
F
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N
C
Y
S
T
R
I
V
E
F
O
R
ESTABLISHMENT OF A
MEDICAL WASTE TREATMENT
FACILITY IN VICTORIA
RESULTING IN LOWER COST
PER KG FOR PROCESSING
48% INCREASE IN ADDRESS
VALIDATIONS, IMPROVING
DELIVERY ACCURACY, SORTING
EFFICIENCY AND SUCCESSFUL
FIRST ATTEMPT DELIVERIES
WE COMMENCE ALLIED EXPRESS’
AUTOMATION STRATEGY IN VIC
AND NSW IN FY24
ALL NEW BUSINESS AND
PRODUCT DEVELOPMENT,
GROUP WIDE, IS BUILT
USING DIRECT CUSTOMER
RESEARCH AND INSIGHT
WE HAVE EXPERIENCED
GROUP LEVEL EXECUTIVES
AND MANAGEMENT TO DRIVE
CULTURAL CAPABILITY AROUND
CUSTOMER INTERACTION
AND SERVICE
THE CUSTOMER-CENTRICITY
OF OUR EXPRESS PACKAGE
BRANDS CONTINUES TO BE A
COMMERCIAL DIFFERENTIATOR
WE LAUNCH TWO NEW
BUSINESSES: STOCKA
AND KIWI OVERSIZE
WE HAVE BROADENED OUR
FOOTPRINT ACROSS EXPRESS
PACKAGE AND TEMPERATURE
CONTROLLED TO MAKE ROOM
FOR GROWTH
WE CONTINUE TO
ACTIVELY SEARCH FOR NEW
HIGH-VALUE RECYCLING
BUSINESS OPPORTUNITIES
Freightways Group Limited and its subsidiaries16A NewPlatformGGhtnruNRp lrr2rrAeGtG0etnr3Nt rNGMNMrigrThGNrsgsic NewPlatfob0pbGd17
Our two carriers of
express oversized parcels,
Allied Express in Australia,
and Kiwi Oversize in
New Zealand, have quite
different backgrounds –
but together, they intend
to contribute considerably
to Freightways in the
years ahead.
Bigger
proves to
be better
18Freightways Annual Report | Financial Year ended 30 June 2023Freightways Group Limited and its subsidiariesfreightways.co.nz19
LIVING OUR CAPABILITIES EVERYDAY:
700 drivers, 450 staff and an agency
network across the country mean
Allied Express can deliver to almost
any location in Australia, with a 98%
on-time performance.
D
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The company has a solid customer
service ethic that has built a portfolio
of loyal customers. In fact, their top 20
customers have been with them on
average for 10 - 12 years.
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Founded 45 years ago, Allied Express
specialise in larger courier parcels - items
typically greater than 22kgs. The company
can reach every corner of Australia with
operations across all states and partnerships
with key linehaulers and long-term agents in
more rural or regional centres.
In fact, Allied Express are now one of the largest independent
courier operators in the country, with an established,
well-recognised brand and a reputation as the national market
leader in specialised freight, including big and bulky freight.
Not only does Allied Express operate at a different scale than
anyone else, but they can also reach every rural or urban
destination, and they specialise in larger, hard-to-handle items.
And because almost everything goes through their network
(as opposed to being contracted out to another operator),
delivery performance and customer service are consistently high.
The decision to specialise was conscious, enabling Allied Express
to side-step the low margin mainstream courier volumes and focus
instead on so-called “ugly freight” – the items that mainstream
operators struggle to move through their automated sortation
systems but that Allied Express can transport efficiently via the
specialised network they have built around oversize parcels.
Allied Express has around 1800 customers, ranging from blue
chip large corporates to SMEs, predominantly in the business-to-
business and business-to-consumer sectors. Prominent industry
groups include automotive, retail, electronics, homeware, whiteware
and manufacturing. A key reason the company has grown so
significantly is its nimbleness. It led the market by evolving quickly
and effectively to meet eCommerce needs, doing well through
COVID-19 with the rise in demand for online shopping. Allied’s
bigger depots have also allowed them to use space more efficiently,
and their excellent service record has generated more work.
Since being acquired by Freightways, the company has
invested significantly in an automation strategy that will give
them unique technology to deal with oversized items through
their largest depots in Sydney and Melbourne. At the same time,
the business has increased the size of its operation to prepare
for the projected growth. New or expanded facilities in Sydney,
Melbourne, Perth, Adelaide and Brisbane (new build completed
July 2024) will create room to pursue more expansion opportunities.
ABOUT ALLIED EXPRESS:
•Founded in 1978
•$200m+ revenue annually
•Five primary depots across
all key states
•700 drivers (contractor model)
and 450 staff
•Nationwide agency of 50
independent partners
•Partners with a network of key
linehaulers and airlines
•98% on-time delivery
CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE
Allied Express
20Freightways Annual Report | Financial Year ended 30 June 2023Freightways Group Limited and its subsidiariesfreightways.co.nz21
LIVING OUR CAPABILITIES EVERYDAY:
The idea for this business was
seeded by our people, who then used
The Startery as support. Because the
concept is new in New Zealand, we
have the advantage of learning and
developing with the business and
using an entrepreneurial mindset.
This opportunity is born out of
customer need, with a service
approach based on deep and recent
customer research from The Startery.
Kiwi Oversize is a customer-centric
business at its core.
C
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ABOUT KIWI OVERSIZE:
•Founded in 2022
•Ready-made for B2B
and B2C deliveries
•National reach
through Freightways
depot network
locations
•Leverages Express
Package linehaul
and technology
Kiwi Oversize started in New Zealand
more than 12 months ago. Like many
innovations in the Freightways business,
it was made market-ready in The Startery.
They are currently at Phase Five in that
process - developing out the prototype by
finding customers for the product.
Just as in Australia, Kiwi Oversize proved to be the missing link in
the market, sitting between bulk transport and Express Package
but not fitting easily into the existing business models for either.
Customers also said they wanted a service that could reliably
deliver at similar network speeds to Express Package. That meant
Kiwi Oversize was able to operate a national service out of key
locations in Auckland, Wellington and Christchurch, using existing
resources within Express Package, including linehaul.
Express Package contractor owners/drivers were already
investing in long wheel-based vehicles and box trucks to handle
the freight volumes they move daily. A significant advantage for
Kiwi Oversize is that they can recruit contractors from the
existing network, which ensures experience and high-quality
control. Drivers are now opting to do both traditional and
Kiwi Oversize courier runs, which lifts their income and enables
greater efficiency across runs.
Speed and accuracy are critical, which is also why Kiwi Oversize
has used the learnings from Freightways’ Price for Effort initiative
to ensure contractors’ remuneration matches the effort required
to deliver.
The company also has a direct sales force in place to target
customers. So far, key verticals are predominately in the
business-to-consumer (B2C) sector, including flatpack furniture,
medical equipment, construction, truck parts and automotive.
Between the established Allied Express business in Australia and
the emerging Kiwi Oversize venture, the goal is to build significant
business across two markets over the next ten years.
Kiwi Oversize
CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE
22Freightways Annual Report | Financial Year ended 30 June 2023Freightways Group Limited and its subsidiariesfreightways.co.nz23
While COVID-19 has not released its grip
entirely in terms of illness and staff and supply
shortages, by and large, we saw a solid return
to business as usual this year.
Team has always been a critical component of Freightways'
culture and that hasn't wavered. We value every individual
for their hard work, skills, and contributions to our collective
effort daily.
We are as committed to our people as they have proven loyal to
us. We want them to be able to develop personally, find happiness
here and contribute to our overall cultural health. We foster an
inclusive, safe workplace where people can be confident of job
security and career advancement if they want it and where we
care about their wellbeing.
NEW HEAD OF PEOPLE & CULTURE
APPOINTED FOR THE GROUP
People are at the centre of everything we do – they are what
makes the difference. To ensure this focus is maintained and
progressed, we welcomed Ami Van Gils as our Group Head
of People and Culture. Ami’s role is responsible for driving the
people-related strategic priorities of the business. Ami comes to
us after eight years in the Freight and Logistics environment.
She is a commercially focused, empathetic HR Leader with a
passion for offering pragmatic advice and building strong,
high-performing teams. We will utilise Ami’s experience across
our employee life cycle - including recruitment, talent and
capability management, diversity and inclusion, wellbeing,
learning and leadership development and remuneration.
REMAINING ATTRACTIVE AS AN EMPLOYER
The talent market remained tight, but we are expecting that to
ease slightly in the foreseeable future. We remain competitive,
with a workplace offer that includes strong levels of security,
competitive salary and wage packages, Pricing for Effort (PFE)
for our contractors and career progression inside the business
as a cultural norm.
Our commitment to Sustainable Development Goal 8
influences how we help people advance and feel good at work.
On page 46, you can read more about what we're doing around
learning and development opportunities. We also take wellbeing
seriously. Recent developments include a Psychological Safety
Training module which is due to go company-wide in FY24.
Another distinguishing feature of our culture is executive
accessibility. We recognise the need for structure for commercial
reasons. Still, it's essential that everyone feels they can engage
personally with leaders when they need to. Executive availability
is an intrinsic part of that.
WELCOMING NEW PEOPLE AS WE EXPAND
As we expand our Group and acquire and merge with other
businesses, we continue to welcome new people into our
Group. It's great to see the fantastic people at Allied Express and
ProducePronto now fully embedded into the Freightways family.
We are delighted to have all of them with us.
We are cognisant of the challenges associated with joining a large
and diverse Group like Freightways, especially for those who have
been part of a smaller team. The key to making this work is to give
everyone time to adjust to working in the Group, to be supportive
and, above all, to respect them and the expertise and experience
they bring. We are here to learn from each other.
LEARNING AS WE GROW – LEARNING AS WE GROW – LEARNING AS WE GROW – LEARNING AS WE GROW – LEARNING AS WE GROW – LEARNING AS WE GROW –
Our people
AMI VAN GILS
STOCKA TEAM
24Freightways Annual Report | Financial Year ended 30 June 2023Freightways Group Limited and its subsidiariesfreightways.co.nz25
SOUNDBYTES FROM OUR PEOPLE – SOUNDBYTES FROM OUR PEOPLE – SOUNDBYTES FROM OUR PEOPLE – SOUNDBYTES FROM OUR PEOPLE – SOUNDBYTES FROM OUR PEOPLE
Our people
Ben Armstrong
NATIONAL BUSINESS DEVELOPMENT
MANAGER, SHRED-X
I joined Freightways 12 years ago when Shred-X acquired
my business. We were based in Geelong, shredding and
recycling paper. So, I came to Freightways with some
experience in entrepreneurship.
My role is business development. I find it’s important
to have a structured week. The first four days I work
on sales numbers, and then Friday is when I think about
stuff outside the box. Typically that’s around searching
for residual value in waste.
Textiles are my current obsession. It’s a big problem for
us all because we never get rid of the stuff we import, so
it goes to landfills. We can’t recycle textiles, so we look at
processes that reduce them to more useful sub-materials
or turn them into biodiesel.
It pays to have a bit of tenacity in my job. Finding value in
waste means creating a market need and developing the
product. We also support many start-ups to help them
develop a product we can use.
Making revenue is the end goal, and margins can be
small, so it’s essential to be efficient – collect volume,
build in value, find a market, link it up with our logistics
and then scale!
I’ve learnt a lot in my time here. Always give things
a try, fail small, make margin as you go, and create
tension between structure and freedom to keep the
entrepreneurial spirit alive.
Tony Aspey-Gordon
NATIONAL OPERATIONS MANAGER,
PARCELINE
It's my job to balance efficiency and cost-effectiveness
with our service levels. But the most crucial thing I
contribute is helping us deliver the 'can do' attitude –
our role is to ensure we 'get through'. That is who we
are as a business. Operationally and culturally.
The easiest thing to do is to park and wait. It's much
harder to make up our minds about what happens
next and find a way. What became very apparent during
the lockdowns was the amount of medical, perishable,
and critical freight we transported - not getting through
had a knock-on effect on everyone connected.
Dealing with disruption is part of our business. Weather,
road closures, ferries, trucks breaking down, and aircraft
having issues will happen. It's the experience and
flexibility of our people that all collaborate to identify
options and find the correct answer.
Reliability is in our DNA, but it's more complex than being
on time. It's about investing in our equipment, building
relationships, looking after the trucks, prioritising freight,
and knowing our customers. Our network is entirely
shaped by the end customers' expectations.
As a Freightways business, we have a clear focus,
good support, and governance. Our guidelines
and expectations are clear. I like the tagline
"Driven by Freightways" our brands use with their
logos – it encapsulates our strength in numbers.
Scarlett Liu
COMMERCIAL FINANCE MANAGER,
HEAD OFFICE – POST HASTE GROUP
It’s my job to help the business be more efficient -
for Head Office, branches, finance and non-finance.
Improvements must be quick and make sense to the
practical nature of our people — complete information,
a bit of guidance and a strong collaborative approach.
I have lots of respect for our operational teams.
They have deadline pressures every day.
I am always impressed at how collaborative the business
is – within Post Haste and across Express Package.
Reliability is vital to what we do, and the collaboration
makes that a reality. It honestly takes a village of
dedicated people to make reliability happen.
We talk a lot about service at Post Haste. It’s how
we show love for our customers, and I see strong
expressions of this love daily.
Having a duty of care as an employee is essential to
excelling at work. I believe we must think and act as if we
own the business and ask questions like ‘What can I do
or how can I respond today to make things better than
they were yesterday?'
The family-feel of Post Haste/ Freightways has made
engaging easy. I appreciate being part of an organisation
that values this. I also appreciate how hard that is to do,
considering we are such a large organisation. Our culture
builds loyalty, and it stimulates personal growth within
our people.
Rebecca Westbury
CHRISTCHURCH OPERATIONS
MANAGER, DX MAIL
I look after about 35 DX posties in our Christchurch
branch. The job attracts all types - semi-retirees,
young people just starting and everything in between.
That’s my pastoral care role, plus, my business care role
ensures we meet our customers’ expectations.
A lot is happening in mail. New technology to help
efficiency. An increase over here, a decrease over there.
It keeps us flexible because we are constantly moving to
suit the market.
Reliability in the mail industry is everything. You have
to work like clockwork because that’s what builds trust.
We deal with volume, and we must be consistent.
Reliable, over and over again, being great at processing
volume - for the long term.
And yet, we still do extraordinary things if needed -
like dropping mail off on the way home. It’s about
looking after the people that trust us with their post.
We work with our customers for a long time, some
since the earthquakes. The business had to be built from
the ground and they were there when we did that.
That creates loyalty, and it makes business a personal
thing for me. We are a business, but theres nothing
wrong with a bit of heart mixed into your professional life.
The future is bright, which is probably a funny thing to say
about mail, but I believe it’s true.
26Freightways Annual Report | Financial Year ended 30 June 2023Freightways Group Limited and its subsidiariesfreightways.co.nz27
Fresh
ideas for
convenient
foods
ProducePronto is a
fast-growing part of our
Group with a national
presence enabling us to
stay close to the major
fresh produce markets.
Freightways Group Limited and its subsidiaries28A NewPlatformGGhtnruNRp lrr2rrAeGtG0etnr3Nt rNGMNMrigrThGNrsgsic NewPlatfob0pbGd29
LIVING OUR CAPABILITIES EVERYDAY:
ProducePronto's entrepreneurship
was evident when Freightways first
met them. The ability to self-assess
and stay curious while delivering daily
for their existing customer base is an
excellent capability to be proficient in.
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30
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The business started in 2011 when
two friends, Josh and Jason, came
home from corporate life in the UK and
decided to open what they envisaged
as an online fresh grocery delivery
company that would deliver fresh food to
homes, just like they had seen overseas.
The founders imagined it would be a rival to online
supermarkets. But a lack of last-mile temperature-controlled
logistics options made the business model hard to scale.
They pivoted to fresh commercial deliveries such as fruit
and milk to offices and quickly built density. "We tried hard
to make the first iteration of the business work", says
Co-founder Jason Brennan. "We'd seen it do well in the
UK, but we were probably a little ahead of the curve here."
From this experience, a picture began to form of where
their real future potentially lay – last-mile chilled and frozen
boxed deliveries. The challenge was getting enough volume
to support a national network of vehicles and depots. The
convenience food market was a perfect gateway (service
station cafes and large retail cafe chains) as this market was
growing strongly and required specialised temperature-
controlled boxed deliveries to support this growth.
Once one customer saw the benefits, others followed –
and today ProducePronto connects food suppliers
with several large retail networks wanting to offer great
convenience food to their customers.
Along the way, ProducePronto's food delivery portfolio has
grown to include pies, sweet treats, muffins, sandwiches,
drinks and most recently, Krispy Kreme doughnuts. They
have quickly become an integral part of New Zealand's
growing obsession for convenience food on the go and to
take home.
Fresh stock is prepared daily by various food suppliers in
Auckland and then delivered nationwide by ProducePronto.
Daily flights to Wellington and Christchurch meet waiting
vehicles where product is cross-docked and road-freighted
to multiple destinations making logistics unique
and complex.
Alongside their fresh foods, the company also delivers
longer-life (frozen or ambient) products. Together, these
food deliveries now add up to serious volumes at over
400 sites nationwide daily. And ProducePronto is confident,
given trends overseas, that there is still plenty of potential
for growth in the years ahead. "Convenience food is a huge
business in developed markets like the US and Europe",
says Co-founder Josh Bartley-Smith. "We are seeing
remarkable growth. Our customers are deeply investing in
their store fit-outs and the quality of products to grow sales.
Some take a full van-load of food every day."
As they accumulated these more significant volumes, the
business realised they would need customised technology.
Building it as they went, ProducePronto innovated quickly,
allowing customers to place orders directly into the
ProducePronto integrated logistics and stock management
system. A customer billing system, live delivery tracking,
proof of delivery and temperature control management are
all part of the system.
In the time that ProducePronto has been part of
Freightways, they have grown over 30%, leading to
challenges with space. As a result, new premises in
Auckland, Wellington, and Christchurch come online
through 2023. In Auckland, a considerably larger depot –
more than eight times the size of their current premises –
goes live in October. Wellington and Christchurch
operations will join more extensive shared facilities with
Big Chill Distribution.
The business will also undertake a strategic change in the
next 12 months to adopt the Freightways contracted owner/
drivers model in a bid to lift efficiency and delivery reliability.
ProducePronto is conscious of sustainable business
practices, with most vehicles now meeting the Euro 6
emission standard. In the medium term, the company
plans to trial EVs as soon as technology allows by utilising
the charging stations at many of the service stations they
visit. The business is also taking steps to reduce waste via
recycling and participating in the Soft Plastics Recycling
Scheme with pallet wraps.
Carrying perishable freight requires
logistics that work like clockwork.
This means working on the plan daily
and having alternatives and back-ups
available when the plan goes array.
ProducePronto is an expert here because
they know fresh food waits for no one.
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CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE
Freightways Group Limited and its subsidiaries30Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz31
Supporting a deeper
sense of community
RSPCA QueenslandRonald McDonald HouseClontarf Foundation
KidsCanLife FlightNZRSA
OUR COMMUNITIES – OUR COMMUNITIES – OUR COMMUNITIES – OUR COMMUNITIES – OUR COMMUNITIES – OUR COMMUNITIES – OUR COMMUNITIES – OUR
We support a wide
range of organisations in
the community.
We have 16 charitable organisations that
we have worked with for some time.
In addition, many of our brands and
branches also support worthy grassroots
causes locally – from sports clubs and
sports people, schools, and childhood
care centres to community initiatives.
We encourage all businesses to develop
relationships with the charities of
their choice and to offer them support
through volunteered time and resources.
• Beanies for Babies
• Cancer Society
New Zealand
• Child Cancer Foundation
• Clontarf Foundation
• Keep New Zealand Beautiful
• KidsCan
• Life Flight
• New Zealand Breast
Cancer Foundation
• Prostate Cancer
Foundation Australia
• NZRSA
• Ronald McDonald House
• RSPCA Queensland
• The Hearing House
• Westpac Rescue Helicopter
KIDSCAN
The 2022 Child Poverty Monitor found
that 16.3% of New Zealand's children
live in low-income households. One in
six children lives in households where
food runs out sometimes or often due
to a lack of money. Students growing up
in disadvantaged communities are also
more likely to leave school before they
achieve NCEA levels.
Our company’s principal charity KidsCan
is dedicated to helping Kiwi kids affected
by poverty. KidsCan's programmes are
available in 897 schools and 206 early
childhood centres nationwide -
where they are helping to feed over
55,000 children, plus provide jackets,
shoes, socks, and health products,
so our most vulnerable can thrive.
RSPCA QUEENSLAND
Sadly, pets can also be the victims of
domestic violence situations.
TIMG Australia is proud to support the
excellent work of RSPCA Queensland
as part of their ‘Pets in Crisis, supported
by the Petbarn Foundation’ – set up to
regularly investigate and find safe shelter
for pets in domestic violence incidents.
Most domestic violence refuges are
neither equipped nor permitted to take
pets, which can cause stress to violence
victims, potentially preventing them from
leaving. Indeed, research has shown that
25% of victimised women have stayed in
violent relationships due to pets at home.
Pets in Crisis provides a safe house,
and vet care for pets of individuals at
serious risk of domestic violence.
With an average stay of up to 33 days,
and some 350 people affected annually,
the programme finds shelter at
RSPCA's Animal Care Shelters or
through RSPCA foster carers network.
TIMG Australia supports RSPCA
Queensland via an annual donation.
RONALD MCDONALD HOUSE
Ronald McDonald House Charities
(RMHC) keeps families of seriously ill
or injured children together and close
to the medical care they need. Families
of children undergoing treatment are
accommodated within walking distance
of major hospitals across Australia
through their network of support homes.
The charity has been close to our
company's heart as a part of our
workplace giving for over 20 years. Our
people have donated for every 'Dress
Down' or casual Friday. Shred-X and
Med-X partnered with RMHC as part
of the national Easter 2023 campaign,
raising $17,000 by donating a percentage
of sales over the campaign. RMHC's 11
Australian chapters will benefit from the
funds raised.
In New Zealand, New Zealand Couriers
and Post Haste - Christchurch are also
proud to support this foundation.
LIFE FLIGHT
Freightways are proud to partner
with Life Flight, a registered charity
that operates aeromedical services
in both fixed-wing aircraft and
rescue helicopters in New Zealand.
The partnership has a tenure of 15 years
now, and it has helped Life Flight support
over 1,200 Kiwis every year in their times
of greatest need, from hospital transfers
to accidents and emergencies.
The Fieldair Group, Freightways' aviation
business, operates fixed-wing aircraft
for Life Flight, including all the crewing
and regulatory functions. Fieldair also
provides aviation engineering services
for these aircraft. The partnership has
recently expanded to include the Fieldair
Group as the primary sponsor of Life
Flight's annual company golf day.
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Parcel–sized
fulfilment
Stocka is revolutionising how
eCommerce businesses based
in Australia can build their
customer base in New Zealand.
Freightways Group Limited and its subsidiaries34A NewPlatformGGhtnruNRp lrr2rrAeGtG0etnr3Nt rNGMNMrigrThGNrsgsic NewPlatfob0pbGd35
As part of the service, the Stocka team can prepare stock
for delivery and select from Freightways' Express Package
couriers to deliver packages at the best speed and price.
SHIPPING MADE EASY
Stocka was established to cater for all-sized businesses but
has the specific capability to help start-ups and smaller
eCommerce companies who need a logistics partner that
understands their challenges and will work constructively with
them to remove obstacles. Dan Ward, Head of Product at
The Startery, says, "It makes sense to cater to new and smaller
customers because they aren't that well served presently. We can
teach them so much and grow our footprint alongside them".
For emerging eCommerce companies, organising to get what
they offer to the people who have bought from them is not a
core business. So, the Stocka team teach their customers how
to build up stock, manage and deliver their products into the
market. The flat fee structure removes much of the uncertainty
that eCommerce businesses might otherwise face. Stocka's
set-up also means customers don't have to arrange storage or
run delivery vehicles. Removing all these potential barriers and
points of worry adds stability and simplicity to businesses that
want to cross borders.
AIMING TO BE A TOP PERFORMER
A new venture by TIMG and supported by Freightways' innovation
programme, The Startery, the goal is for Stocka to become
New Zealand's go-to eCommerce fulfilment company, with the
highest Net Promoter Score in the industry and strong annual
revenues in the next few years. As part of embedding the business
into the Group, Freightways' executives will stay involved to
ensure consistency across processes, lift performance, establish
reporting set-ups and strengthen customer service and stock
control processes as Stocka continues to scale. For example, one
of the significant learnings for the Stocka team has been shifting
their understanding of stock control from documents and boxes
to products as varied as electronics and cosmetics. Mid to long-
term stock management needed a series of small trials and errors
to work out how best to ensure stock was cared for and always
consumer-ready. Customers are 50% New Zealand-based and
50% based in Australia.
The business is scaling nicely, with several big clients
already onboard and a healthy growing pipeline. A lot of the
enquiries are coming through Stocka's digital platforms as
digitally savvy business owners interact in the ways that feel
most natural to them.
A BIT OF A SQUEEZE, BUT A GREAT FIT
Space is the one big issue for the business as it expands.
Until now, Stocka has been using TIMG's warehousing capacity –
but with their three businesses already growing into those spaces,
having enough room is a pressing priority. "Striking the balance
between space for the business to grow and paying for unutilised
space is the challenge for this business, but one we are working
to solve", says Dan. The benefit is that Stocka is very close, both
physically and philosophically, to other businesses inside the
Freightways Group, and, as everyone is finding out, there are
plenty of learnings from different parts of the Group that can be
applied to Stocka's benefit.
The current site in Auckland is also an advantage. Recent research
recommends locating a 3PL provider as close to the most
significant concentration of consumers and customers as possible.
We decided not to extend the idea to other New Zealand locations
due to the Express Package courier brands' reliability and ability
to reach all parts of the country within 24 hours. This is well inside
customers' expected timeframes. So one existing building offers
fulfilment for a nationwide end-customer base in one place.
A feasibility study on opening in Australia will need to be
completed before we can be confident about that opportunity.
The immediate goal is to firm up the pathway to profit, which
includes securing good margins as Stocka scales. Achieving this
is about balancing set-up costs with planned revenue to achieve
a consistent margin. At this point, Stocka has surpassed its
initial target, hitting $1 million in annual revenue during start up.
The business is now ready to scale and set new growth records
in the coming 24 months.
LIVING OUR CAPABILITIES EVERYDAY:
Stocka is a meeting place for
several need states for our business,
plus some need states we saw that
customers required to have met.
Familiarity with 3PL was a strength,
and the pathway to profit was
reasonably straightforward.
We developed Stocka with a particular
customer in mind. This customer profile
has influenced all business set-up and
growth aspects, including Stocka's
processes, key performance indicators
and rate card calculations.
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REVENUE:
$
1M
annually
during
development
Stocka
In a first for small-to-medium-sized eCommerce companies looking to grow their
New Zealand presence, Australian businesses can store their inventory on this side of the
Tasman and Stocka's Auckland-based team will manage, pick, pack and book couriers to
ship their offering around the country.
CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE STUDIES – CASE
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Our Impact is Expanding
Sustainability Report 2023
Our Sustainability Report
40 Environmental Statement
42 Materiality review
43 Our SDGs
SDG 3
SDG 8
SDG 9
SDG 13
SDG 16
54 Climate-related disclosures
Contents
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Environmental
Statement
01: Our Responsible
Growth Strategy
GOAL:
To balance the commercial needs of our business with
our responsibility to protect the environment in which
we operate.
SUPPORTING POLICIES:
• When implementing our positioning, people, performance
and profit strategies, we will incorporate tactics that support
our environmental approach.
• We will ensure development, growth and capital projects
align with our commitment to TOIT
Ū certification, so that as
we grow, we reduce our carbon emissions and minimise our
environmental impact.
02: Our Cleaner Air Strategy
GOAL:
To promote cleaner air by minimising carbon emissions.
SUPPORTING POLICIES:
• Our vehicle fleet will not be leased for a period longer than
four years to ensure that it’s within current technology.
• As part of this transition we are continuing to trial hybrid and
electric vehicles.
• Our contractors are strongly encouraged to use later model,
lower emission vehicles.
• Our hub & spoke network is segmented and reviewed on a
continuous basis to ensure minimisation of kilometres.
• Our aviation business actively measures and manages its
performance to ensure minimisation of fuel usage
and emissions.
• We maintain TOIT
Ū certification by measuring our carbon
emissions on a business-by-business basis and committing
to managing and reducing them.
03: Our Conservation &
Waste Management Strategy
GOAL:
To implement actions that, wherever practical, see us
recycle, reuse and minimise waste of the products and
resources we consume.
SUPPORTING POLICIES:
• Our range of recyclable courier satchels is currently
transitioning to contain no less than 80% New Zealand
sourced plastic waste.
• Wherever possible, our destruction business utilise ‘best in
class’ recycling technologies to avoid resource waste and
landfill solutions.
• We position and promote our document destruction business
in the marketplace as ‘secure recycling’.
• We encourage our customers to receive electronic invoices to
minimise paper wastage.
• We commit to identifying, measuring and documenting our
carbon emissions as part of our TOIT
Ū certification.
We will continue to develop and refine systems to reduce
emissions overtime.
04: Our Education &
Awareness Strategy
GOAL:
To promote education and awareness of better environmental
practice among stakeholders.
SUPPORTING POLICIES:
• We promote our environmental approach among staff
and ensure individuals understand their role with our
environmental objectives.
• Our suppliers are actively encouraged to demonstrate their
environmental practices to ensure they align with
our objectives.
• We actively promote the benefits of good environmental
practice among our customer base.
• We endeavour to actively educate and communicate with our
staff, contractors, customers and suppliers, our commitment
to TOIT
Ū certification, ensuring they understand our
objectives and the role they can play in achieving these.
05: Our Responsible
Partnership Strategy
GOAL:
To seek to partner and work with others who can demonstrate a
commitment to the environment.
SUPPORTING POLICIES:
• To make our business partners aware of our environmental
policy, our TOIT
Ū certification commitment, and the
expectations arising from these.
• Where all other things are equal, to choose the
partners and contractors who can demonstrate sound
environmental policies.
We recognise that our core business is reliant
on transportation to service our customers.
As an emissions intense organisation, our
commitment to the TOIT
ŪŪ certification
process (which includes external audit and
year-on-year carbon reduction) encourages
our people and our partners to make
environmentally positive decisions every day.
Guiding Principles
• We recognise that protecting the environment today is
essential to creating a sustainable business future.
• We actively seek to minimise the environmental impact of all
our activities.
• We work in partnership with all stakeholders to promote good
environmental practice.
• We comply with relevant environmental legislation.
• We are a TOIT
Ū certified organisation. Our greenhouse gas
emissions are measured in accordance with ISO 14064-1:2018
and we are committed to managing and reducing our
relative emissions.
• We recognise that by gaining efficiencies for our core
business model we enable our services to be delivered with
as low environmental impact as possible.
• We regularly review our operational activities, systems and
training to ensure our business practices are aligned with
these guiding principles.
TOITŪ Certification
TOITŪ certification allows us to take a very positive step toward
reducing our carbon emissions and further minimising our
relative impact on the environment. We are currently committed
to a 50% reduction to Scope 1,2 and 3 emissions by 2035.
STRATEGIES FOR COMMITMENT – STRATEGIES FOR COMMITMENT – STRATEGIES FOR COMMITMENT – STRATEGIES FOR COMMITMENT - STRATEGIES
OUR GOAL:
50
%
reduction in
C02e Scope 1,
2 and 3 by 2035
Freightways Group Limited and its subsidiaries40A NewPlatformGGhtnruNRp lrr2rrAeGtG0etnr3Nt rNGMNMrigrThGNrsgsic NewPlatfob0pbGd41
ASSESSING OUR MATERIAL ISSUES
Four years ago, we undertook an assessment
of our material issues for stakeholders as we
looked to incorporate more non-financial
criteria into our decision-making and reporting.
In FY23, we reviewed our materiality to check
the relevance of our ESG activities.
Results will be published in FY24, and we will update
our reporting then to reflect the findings. We expect the
assessment to lead to some adjustments in how we report
beyond the bottom line.
This year we will continue to report on our existing SDG framework
and Areas of Focus as part of our non-financial decision making and reporting in FY23.
A DOUBLE APPROACH
The assessment has involved an external party
engaging with various internal and external
stakeholders – from board members and leadership
to staff and contractors to customers, suppliers and
investors – to get their opinions.
We've used a double materiality assessment approach
because it provides greater insights and directly recognises
that organisations such as ours have financial and non-financial
impacts that are significant and that need to live alongside
one another. As the name suggests, double materiality adopts
different perspectives to gain a more holistic view:
• 'Inside out' impacts – which looks at the company's impacts
on society and the environment by assessing scale (impact on
health, the environment and society), scope (how many people
are affected) and irremediability (the ability to fix issues or not)
• 'Outside in' financial materiality impacts – which examines size
(the amount of financial impact) and likelihood (the chances of
an impact happening).
Having a material impactStaying on course for 2023
Importance and impact on Freightways' business success
Impact of Freightways' on people and environment
2023 DOUBLE MATERIALITY MATRIX
• Cybersecurity resilience
• Operating culture of accountability and ownership
• Significant linehaul network and building
infrastructure investment
• Airfreight network upgrade
SDG
#
9
Industry, innovation
and infrastructure
• Health and safety in employment. Injury reduction
TRIFR reduced from 8 to 6
• Deployment of handbrake alarm technology in all
linehaul vehicles
SDG
#
3
Good health
and wellbeing
• Delivered numerous training and skills
development programmes
• Increased contractor earnings, ensuring sustainability
• Increased employee earnings
SDG
#
8
Decent work and
economic growth
• GHG Emissions reduction with a target to reduce Scope 1, 2
and 3 emissions by 50% by 2035 to ensure that our contribution
to global warming is no greater than 1.5 degrees Celsius
• Reduced plastic usage and waste by replacing single use
mother bags with multi-use bags
SDG
#
13
Climate action
• Ethics and integrity
• Transparency
SDG
#
16
Peace, justice and
strong institutions
42Freightways Annual Report | Financial Year ended 30 June 2023Freightways Group Limited and its subsidiariesfreightways.co.nz43
OUR AREAS OF FOCUS:
•Health and safety in employment. Injury
reduction TRIFR reduced from 8 to 6
•Deployment of handbrake alarm
technology in all linehaul vehicles
SDG 3
Good health & wellbeing
We adopt a proactive approach to minimising
physical and mental harm across our
business. A crucial part of that is encouraging
people to speak up when needed and
providing external help and support when
they need guidance.
INJURY / SICKNESS REDUCTION
TRIFR (Total Recordable Incident Frequency Rate)
is a calculation that includes every incident relating to
health and safety, including lost time, injuries, accidents,
medical treatment, and medical practitioner visits -
divided by manhours.
We use this metric because we regard it as a more
transparent, holistic calculation: it records all injuries,
not just lost time, giving us a more accurate view of how
often incidents happen, not just the serious injuries.
This year, we are pleased to report that our TRIFR reduced
from 8 to 6. We had a lot less COVID-19 cases this year.
ROAD SAFETY TOP-OF-MIND
On any given day, we have a significant number of drivers
on the road in two countries. In the course of their work,
they are subject to a range of pressures - weather, traffic,
personal stress and deadlines – that have the potential to
compromise their safety.
Mitigating the risks to our drivers and contractors is very
important to us. We've had in-cab monitoring in place for
well over 12 months. It's proven very successful, helping
us to diagnose and eliminate driver behaviours such
as fatigue and distraction that could put drivers at risk.
Cameras in cabins look in on the driver and out on the road,
enabling us to quickly resolve situations if incidents occur.
We've also installed handbrake alarms in our linehaul and metro
trucks across the New Zealand fleet. They sound if the driver's
door opens and the handbrake hasn't been applied.
Another vital component for safety is vehicle age and
maintenance. We have high minimum standards for our owned
and contractor-owned vehicles. Our Pricing for Effort strategy
(PFE) ensures our contractors are well compensated so they
can afford to upgrade their vehicles regularly. Pride in their work
and vehicles has proven a compelling motivation to our people
to engender a duty of care towards their customers and us.
NEW AI TECH IS IMPROVING
OUR FORKLIFT SAFETY
Forklifts are a safety focus for all companies that use them.
They are responsible for most of the accidents and near misses
in any depot situation.
We are currently trialing AI technology to analyse all our depot
video footage retrospectively. After hours, the technology
assesses CCTV footage of human versus forklift interactions
and checks that a safety distance of three metres has been
followed. Importantly, it captures near-miss situations where
people may have breached the three-metre rule and loads
those incidents into a reel for us to view the following day.
We use this technology primarily as an identification and
education tool to keep safety in the depot front-of-mind for
the people concerned. It helps us pick up patterns and gives
us lead indicators of potential issues. It also enables us to
identify repeat offenders so that we can take this up with
them individually.
PSYCHOLOGICAL HEALTH
AND SAFETY TRAINING
We are currently developing a training module to encourage
open dialogue within our workplaces. We want people to speak
up and ask questions, to forward ideas, concerns or mistakes,
share feedback, and work through disagreements together —
knowing that leaders value honesty, candour, and truth-telling
and that team members will have one another's backs. The
training will help leaders identify and control risks associated
with psychological safety at work and how to respond to
incidents. The new module will be available company-wide
in 2023/24.
EMPLOYEE ASSISTANCE PROGRAMME (EAP)
EAP offers access to external confidential counselling
professionals to help people address physical and mental
health issues and provide financial advice and partner
counselling. It's proven a powerful and practical resource
for our people, especially during the last few years with the
pressures of COVID-19, rising economic pressures and cost
of living matters.
SDG3 & OUR BUSINESS:
People lie at the heart of who we are. Relationships,
expertise and hard work are integral to our ability to add
value on a daily basis. Our commitment to SDG3 reflects
our intention to protect the health and wellbeing of those
who work here and to minimise the adverse impacts that
our vehicles have on communities. Applying this SDG to
how we plan ensures that we always carefully consider
the human implications in the acquisitions we make and
the actions and initiatives we undertake.
TRIFR REDUCTION FROM:
8 -6
All Total Recordable Injury Frequency
Rates are based on 200,000 hours worked”
Freightways Group Limited and its subsidiaries44Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz45
OUR AREAS OF FOCUS:
•Delivered numerous training and
skills development programmes
•Increased contractor earnings,
ensuring sustainability
•Increased employee earnings
SDG8 & OUR BUSINESS:
To be successful as a business, employer and as a partner
to our contractor drivers, we need to foster an inclusive
work environment and provide the services that meet the
needs of our customers. Success depends on building
an environment where a diverse team of committed
Kiwis and Australians can contribute, develop their skills,
and be paid fairly. Our businesses growth is fuelled by
encouraging our team of professionals to consistently
learn and develop.
SDG 8 Decent work & economic growth
It matters deeply to us that our people feel happy
and safe in their work. Our people were paid fairly
this year, and we competed effectively in the labour
market to maintain our service levels. As part of
that, we continued our serious commitment to
training and developing our people at all levels.
GROUP LEARNING & DEVELOPMENT
Learning and development was in full swing this year, with a full
range of courses and modules available across the business.
Some of those programmes included:
• IGNITE - a customer experience programme initiated by
New Zealand Couriers. A core team of customer experience
(CX) experts representing different business areas come
together to diagnose, implement and coach improvements
in our customer experience delivery.
• Grow our People – a development course for budding
people leaders at our Post Haste Group. This course
covers both personal growth (via self-presentation and
management) and business information (improving sales
and reporting).
• Strengths Development - a Strengths-based approach is
a powerful differentiator that helps companies attract top
talent, bringing out the best performance in every employee
and creating organic business growth.
• Manual Handling and Dangerous Goods – this training
is for all Freightways staff who lift, hold and move freight.
It also provides crucial learning for those who interact
with dangerous goods.
• Driving Safety Culture (DSC) - a Health & Safety Culture
awareness programme delivered to all operational
managers and supervisors.
LEADERSHIP DEVELOPMENT
New Zealand Couriers are currently running a leadership
development programme – Driving Ahead – a partially funded
programme by the Tertiary Education Commission (TEC)
through the employer-led Workplace Literacy and Numeracy
fund. Driving Ahead focuses on core leadership skills like health
and safety practices, feedback processes and problem-solving
that leaders can directly implement into their roles.
Graduates with 52 credits receive a New Zealand Certificate
in Business (Introduction to Team Leadership) – Level Three,
a nationally recognised qualification. Driving Ahead started
with four groups in Auckland but is now rolling out nationally.
PEOPLE MANAGER TRAINING
This two-year course equips managers at all levels of TIMG NZ,
DX Mail, Dataprint and Parceline in New Zealand with essential
people management skills in the modern workplace. Immersive,
hands-on and practical, the training covers employee relations,
communication, conflict, mentoring and coaching techniques
and problem-solving.
PAYING OUR PEOPLE WELL
It's important to us that our people feel remunerated fairly for
their energy and expertise. We regularly review salaries and
wages to ensure they are competitive. We offer clear pathways
for anyone looking to increase their take-home pay and value to
the business through learning and development.
Contractor remuneration is another area of ongoing focus for
us. Through our groundbreaking PFE initiative, we ensure our
contractors are fairly paid for their effort. Underpinning the
initiative is the philosophy of loading rates to our customers
where delivery involves extra time, care and resources.
Examples include deliveries that are 25kg+ on Saturdays or in
rural areas or regions that lack density to support delivery costs.
As customers adjust to this approach to pricing, we will
continue to incrementally lift our rates. In doing so, we want to
prepare our contractors to invest in alternatively fuelled vehicles.
We want them to be able to move quickly when the right
technology becomes available.
NUMBER OF PARTICIPANTS:
4400
+
completed training and
development, Group wide
PERCENTAGE INCREASE:
6.6
%
in contractor
remuneration for FY23
Freightways Group Limited and its subsidiaries46Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz47
OUR AREAS OF FOCUS:
•Cybersecurity resilience
•Operating culture of accountability
and ownership
•Significant linehaul network and
building infrastructure investment
•Airfreight network upgrade
SDG 9 Industry, innovation& infrastructure
Our commitment to growing our horizon
opportunities continued at a pace this year.
Getting this right is about building our network
to meet the needs of our expanding capacity.
Businesses like ProducePronto successfully
supply nationwide convenience stores and
service stations daily and have outgrown their
Auckland depot, while the new Ruakura depot
for Big Chill is about accommodating their
next ten years of growth.
SO MUCH HAPPENING ON THE HORIZON
Particularly exciting has been the steady emergence of
the third horizon activities, with the launch of Stocka
(a horizon 3 initiative for our Information Management
businesses), textile waste as a high-value recycling
opportunity in Australia for Shred-X (horizon 3 for our
Waste Renewal activities) and the launch of Kiwi Oversize
in New Zealand and ongoing growth of Allied Express
in Australia (horizon 3 for the Express Package and
Business Mail part of our Group). ProducePronto is also
a horizon 3 business for Temperature Controlled.
At the same time, we have been careful to ensure
our growth remains aligned with our sustainability
responsibilities. The lease of the more fuel efficient
737-800 aircraft with lower emissions is a good example.
ACCOUNTABILITY AND OWNERSHIP
Our principles of Take Ownership, Think Commercially,
and Work as a Family build accountability and ownership
for staff and people leaders and are an intrinsic part of our
shared cultural DNA.
Our growth strategy permits our people to take ownership
and treat the business like their own.
Our experience is that promoting accountability and ownership
motivates people to think in commercial ways, display good
problem solving and stand by their decisions. Our goal
for all our people is increased feelings of competency and
commitment. Ownership for leaders means no overbearing or
micro-management practices. We assess our leaders by their
ability to build team confidence, trust and respect.
Together, these principles and ideas engender commercially
strong, industrious, innovative companies resourced by
confident problem solvers.
INFRASTRUCTURE INVESTMENT
ACROSS THE BOARD
Our new 737-800 aircraft will allow us to carry more freight
at better economies of scale. The remainder of the fleet will
be steadily upgraded over the rest of this decade as part of a
significant upgrade to our air network. Our goal is a fleet that is
wider, longer and can shift more freight in fewer cycles.
Our new Big Chill facility in Ruakura is a 13,000 sqm 3PL cold
store that will help us prepare for the next ten years of growth
in that business. It also improves our links from the Port of
Tauranga and the food-producing Waikato and Bay of Plenty
and enables easy, daily links to Auckland.
We are making ongoing fleet improvements in linehaul and
metro vehicles for our Express Package and Temperature
Controlled businesses to cover replacement, increasing the
fleet size for growth and having contingency vehicles available
in times of need. These improvements are on top of our ongoing
high quality and maintenance standards for our vehicles,
which give us the best performance, better safety, lower
emissions and positive brand association.
ProducePronto's new, much larger depot in Auckland will
help them meet same-day delivery demands for convenience
and QSR restaurants in Auckland and enable easier stock
transfer nationally.
Allied Express is beginning its automation strategy through
the purchase of the only automation belt for oversized items in
Australia - for Sydney and Melbourne. They have also expanded
facilities in all five major cities: Sydney, Melbourne, Adelaide,
Perth and Brisbane.
Our new recycling facility for Shred-X in Victoria is in preparation
for expected growth as the business continues finding new ways
to find value in the stuff people throw away.
SECURING OUR CYBER-ENVIRONMENTS
We are aligning to industry best practices by adopting a risk-
based approach to cybersecurity.
Recognising that each business within the Group has a different
risk profile and appetite, we've taken a business-led risk-based
approach to discovering, mapping, and applying risk measures
for their services and the information and IT assets they manage.
This approach enables us to leverage a consistent Group-wide
baseline capability while also individually tailoring cyber risk
management strategies that are suitable and appropriate for
each business's unique risk profile within the Group.
To ensure the best outcome for our businesses and stakeholders,
we've had the programme externally audited receiving feedback
that the consistency and pragmatism of the program reflected
a comprehensive and mature understanding of our diverse
business functions and associated risks.
Compliance requirements remain different for each business
and industry vertical, making external audits against security
standards such as ISO27001, SOC2 and PCI DSS an
essential part of our businesses offering. Customising the risk
management and mitigation across the Group, and having a
governance function across security, provides cost oversight
and peace of mind for our businesses and investors. It also
means cybersecurity is one less roadblock for sales because
our customers are confident that we are operating at the correct
levels of capability.
SDG9 & OUR BUSINESS:
Freightways businesses are focused on adding value for
our customers at every opportunity. Whether it is working
to constantly improve our transport businesses, helping
our customers improve their supply chain and ‘final mile’
services, or introducing ‘step-change’ improvements
in our Information Management businesses, we play
an integral role in helping our customers work more
efficiently, responsibly and profitably.
Freightways Group Limited and its subsidiaries48Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz49
OUR AREAS OF FOCUS:
•GHG Emissions reduction with a
target to reduce Scope 1, 2 and 3
emissions by 50% by 2035 to ensure
that our contribution to global warming
is no greater than 1.5 degrees Celsius
•Reduced plastic usage and waste by
replacing single use mother bags with
multi-use bags
SDG 13Climate action
As a transport-focused business, we are well aware of the climate implications of our everyday business.
One of the key reasons we instigated science-based targets was to look realistically at what reductions
we could achieve over time in greenhouse gas (GHG) emissions. Elsewhere, we continue to make good
progress with reducing our use of virgin plastics.
EACH OF OUR BUSINESSES
CONTRIBUTE INDIVIDUALLY TO
OUR GREATER TRANS-TASMAN
ENVIRONMENTAL FOOTPRINT
ALLIED EXPRESS COURIERS
CO2 EMISSIONS MEASURED FY24
BIG CHILL
TOITŪ CARBON REDUCE MEMBER
CASTLE PARCELS COURIERS
TOITŪ CARBON REDUCE MEMBER
DATAPRINT
TOITŪ ENVIROMARK DIAMOND
DX MAIL
TOITŪ CARBON REDUCE MEMBER
FIELDAIR
TOITŪ CARBON REDUCE MEMBER
LEASE OF 737 800 FOR
FUEL EFFICENCIES AND
LOWER EMISSIONS
KIWI EXPRESS
TOITŪ CARBON REDUCE MEMBER
MED-X
CLOSED LOOP SYSTEM FOR
SHARPS AND SHARPS CONTAINERS
NOW COURIERS
TOITŪ CARBON REDUCE MEMBER
NEW ZEALAND COURIERS
TOITŪ CARBON REDUCE MEMBER
CUSTOMER EMISSION
REPORTING–ISO14041 COMPLAINT
VIRGIN PLASTIC USAGE REDUCTION
MEMBER OF SOFT PLASTICS
RECYCLING SCHEME
UPCYCLING OF USED COURIER
SATCHELS INTO BUILDING-BOARD
PARCELINE
TOITŪ CARBON REDUCE MEMBER
PASS THE PARCEL
TOITŪ CARBON REDUCE MEMBER
POST HASTE COURIERS
TOITŪ CARBON REDUCE MEMBER
VIRGIN PLASTIC USAGE REDUCTION
PRODUCEPRONTO
TOITŪ CARBON REDUCE MEMBER
EURO 6 EMISSION
STANDARD VEHICLES
SECURITY EXPRESS
TOITŪ CARBON REDUCE MEMBER
SHRED-X
PAPER / CARD RECYCLING
EWASTE AND IT ASSETS
REPURPOSING AND RECYCLING
PRINTER'S WASTE RECYCLING
STUCK
TOITŪ CARBON REDUCE MEMBER
SUB60
TOITŪ CARBON REDUCE MEMBER
TIMG AU
PAPER / CARD RECYCLING
TIMG NZ
TOITŪ CARBON REDUCE MEMBER
PAPER / CARD RECYCLING
DOING WHAT WE CAN WITHIN LIMITATIONS
While there are strong expectations from customers and
investors that logistics companies like us will address
contributions to climate change within their businesses, there
has been a noticeable slowdown from Government from a
legislative / directional perspective this year. Our enterprise-
sized clients are also looking for movement, or direction
setting at the least, to comply with their international reporting
standards. This is significant because the infrastructural support
for all alternative fuels needs to rest with central Government.
There is a shared appetite between all stakeholders to address
the climate change profile of the logistics sector. Indeed, we
are feeling pressure from customers and investors to show
progress in this area and to help our enterprise-sized clients to
comply with their international reporting standards. We are also
acutely aware of the reputational risk should they think we need
to be faster to change.
We would move quickly and decisively if we could, but the
reality is more complex. For example, there have been no
significant technology improvements since last year for either
EVs or hydrogen transportation in New Zealand. Hydrogen
trucks were due to land last year. They haven't arrived yet –
and, not surprisingly, there is corresponding reluctance for
scaled first-mover investment from a range of parties.
Some first-generation EV vans have arrived in the country,
but they remain too small for our purposes, and once loaded,
the battery doesn't last long enough.
Dialogue continues. We have engaged with Government about
commercial infrastructure for EVs. We are also awaiting further
details on the capacity of the power grid to handle the capacity
that would be needed."
Creating our own infrastructure through Government funding,
while an alternative, would also require us to make the refuelling
centre publicly accessible around the clock. That's impractical
given the items we carry 24/7 (dangerous goods, medicines,
secure documents etc.)
Currently, the Government's EV rebate scheme caps out at
$80,000 – far below the cost of the light commercial vehicles
we need. However, we are in the process of putting together
finance packages for our contractors to enable them to transit
to alternatively fuelled vehicles once this becomes tenable.
We are prepared to move quickly and decisively. Still, any
transition must make commercial sense, and the infrastructure
has to be reliable. We can't afford to break down or not have
the ability to recharge our vehicles – because of the types
of products we move. We must play it safe. Our customers
depend on us doing so.
PLASTICS REDUCTION
We continue to reduce our use of plastic waste through
recycling and repurposing. In particular, we are now using less
virgin plastic than ever before.
Our courier express packs across Express Package are made
from up to 80% reclaimed New Zealand-sourced plastic
diverted from landfills. All our courier brands are also part of the
Soft Plastics Recycling Scheme.
Enviro360 is a New Zealand Couriers innovation that has been
running for two years. Enviro360 allows customers to collect
used express packs using our Enviro360 collection bag.
When the bag is full, we pick them up, consolidate the load
and linehaul them to saveBOARD, where they are upcycled
into a new low-carbon building board.
Mother bags enable us to consolidate our express courier packs
into destination/branch-specific bags, protecting them from
the rigours of the network and improving security and accuracy
by consolidating all items into one inter-branch movement.
In the past, mother bags have been made of virgin, single-use
soft plastic and were only good for two/three cycles. Thanks to
the excellent work of our inventory team, we have now sourced
reusable mother bags that can be used hundreds of times and
last for years. We currently have over 14,000 of these bags in
our branches and networks throughout our courier businesses,
vastly reducing the amount of Class 4 plastics we use.
SDG13 & OUR BUSINESS
The efficiencies our transport business brings to our customers’
supply chain substantially reduce emissions through the
economy. Intensification of all our networks – increasing the
business we do against the kilometres we travel – means
growth doesn’t necessarily equate to higher emissions.
We are in an emissions-intensive industry – but long-term
planning and collaboration, coupled with our modern,
fuel efficient fleet of planes, trucks and vans means we are on
track for a steady reduction in CO2e per item we carry.
Freightways Group Limited and its subsidiaries50Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz51
OUR AREAS OF FOCUS:
•Ethics and integrity
•Transparency
SDG 16 Peace, justice
& strong institutions
We place significant emphasis on being
straight-up and acting as good corporate
citizens. We pay our taxes in both countries
we operate in and abide by all laws and
regulations. We pay our suppliers on time,
every time, and we seek to enter into
responsible partnerships.
WORKING OPENLY
Our Annual Reports and investor presentations bring
a high level of disclosure to our communications with
regulators, investors, customers, communities and
other stakeholders.
It's important to us that stakeholders know our stories
and our intentions.
This year, we decided to combine our sustainability and
annual reporting to give investors a clearer sense of
what we are doing across our financial and non-financial
activities. We are also in the middle of reviewing our
materiality. This year, we've included TCFD filings for the
third time. In Australia, we have filed our latest Modern
Slavery Statement for our businesses.
We openly acknowledge our teams' hard work and
commitment and the collective impact they have on our
success. Our people make our success real. We maintain
a focus on engagement, accountability and ownership to
build duty of care and loyalty.
Finally, we know that we cannot affect change on our
own. Our Climate Leaders Coalition and TOIT
Ū
membership indicates our willingness to work alongside
others to achieve cleaner ways of doing business.
OUR RANGE OF POLICIES AND PROCESSES
INCLUDES THE FOLLOWING:
• Charters for our board and each of our sub-committees
• Code of Ethics
• Disclosure & Communication Policy
• Diversity & Inclusion Policy
• Insider Trading Policy
• Protected Disclosures (Whistleblower) Policy
• Remuneration Policy
• Risk Management
OUR WEBSITE INCLUDES DETAILED
INFORMATION ABOUT THE FOLLOWING:
• Our Board of Directors
• Our leadership team
• Our brands
• Our results
• Our dividends – including our dividend history,
reinvestment plan and policy
WE REPORT ON OUR ACTIONS THROUGH:
• Disclosures to the NZX
• Climate Leaders Coalition Annual Questionnaire
SDG16 & OUR BUSINESS:
As a publicly listed company that partners with
numerous other institutions and contractors in both
Australia and New Zealand, our geographic spread of
brands, employees and worksites, and our desire to
contribute to business and community leaves no
flexibility in the context of ethics and legal obligations.
Whether it be gender equality, diversity of thought and
origin, or justice – we will be fair and accountable.
Freightways Group Limited and its subsidiaries52Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz53
Background
CLIMATE CHANGE IS ONE OF
THE MOST SIGNIFICANT
CHALLENGES WE FACE AS
A SOCIETY AND WILL RAISE
MANY BUSINESS RISKS –
AND OPPORTUNITIES -
ACROSS THE ECONOMY.
Governments and businesses alike are taking
steps to face these challenges in several ways:
enacting legislation to foster a low-carbon
economy, defining transition pathways and
deadlines to achieve carbon neutrality, making
the disclosure of greenhouse gas (‘GHG’)
emissions inventories and reduction targets
mandatory, and industry-led initiatives such
as the Climate Leader’s Coalition, which
Freightways joined in 2019.
Aotearoa New Zealand’s first Emissions
Reduction Plan (‘ERP’) was published in June
2022, containing strategies, policies, and
actions for New Zealand to achieve its first
emissions budget as required by the Climate
Change Response Act 2002
1
. The transport
sector is responsible for 17% of New Zealand’s
total gross GHG emissions and 39% of total
CO2 emissions
2
. To support New Zealand’s
emissions budget, the ERP states that the
transport sector would need to achieve a 41%
reduction in total emissions by 2035 from
2019 levels. For freight transport
3
, this would
mean a 35% reduction in emissions by 2035.
As one of New Zealand’s major transport
services providers, the bulk of Freightways’
GHG emissions are generated from
consuming transport fuels. We operate
several businesses in New Zealand and
Australia, covering express package and
other complementary services in information
management, business mail and chilled
transport (Figure 1 displays our organisational
structure). Freightways has grown organically
and through acquisitions, and now has
representation in every major town in
New Zealand.
Our core business of picking up, processing,
and delivering goods enables us to move
thousands of items per day in a resource and
emissions-efficient way. Our investments in
technology to drive continuous improvement
of fuel efficiency aligns with the objective of
reducing our GHG emissions.
This is our third annual climate-related
disclosure and describes our current
governance and management approach to
assessing and managing climate change risks
and opportunities to our businesses.
1
New Zealand Government, 2022. Aotearoa New Zealand’s First Emissions Reduction Plan. June 2022.
2
Figures are 2019 emissions based on New Zealand's Greenhouse Gas Inventory 1990–2020.
3
Freight transport includes emissions from trucks, rail, and ships. It excludes light vehicles and aviation.
EXPRESS PACKAGE AND BUSINESS MAIL
NEW ZEALANDAUSTRALIANEW ZEALAND
NETWORK COURIERPOINT-TO-POINT
REFRIGERATED
TRANSPORT
BUSINESS MAILSUPPORT
The fresh way to buy.
™
INFORMATION
MANAGEMENT
NEW ZEALANDAUSTRALIA
Climate–related disclosures
FIGURE 1: FREIGHTWAYS
GROUP LIMITED'S STRUCTURE
Freightways Group Limited and its subsidiaries54Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz55
Freightways’
position on
climate change
Climate-related
disclosures
Governance
Freightways recognises
that our core business of
providing transportation
services for our customers
is currently emissions
intensive.
We have an important role
to play, both in building
resilience to climate
change impacts and in the
transition to a low-carbon
economy. We intend to
make direct contributions
to climate adaptation and
mitigation efforts within our
sector and the markets
we operate in.
We will also work to be a
strategic partner for our
customers, supporting
and enabling their
responses to the climate
change challenge.
4
https://www.freightways.co.nz/about/corporate-governance/
Following the release by the New Zealand External Reporting Board (“XRB”) of New Zealand
Climate Standards (“NZ CS”) in December 2022, mandatory climate-related reporting now applies
to certain New Zealand entities – including Freightways - for reporting periods commencing
1 January 2023 onwards.
For Freightways, this means the first year of mandatory reporting is 1 July 2023 to 30 June 2024.
The NZ CS follows the format of the Task Force on Climate-related Financial Disclosures (“TCFD”)
guidelines and is structured around four thematic areas that represent core elements of how
organisations operate: governance, strategy, risk management, and metrics and targets.
GOVERNANCE BODY OVERSIGHT
Freightways’ Board of Directors are
responsible for overseeing the management
of risk, including those related to
climate change.
The Board is also responsible for approving
the development of Freightways’ GHG
emission reduction target and strategic
climate initiatives. The Board receives
monthly updates on progress against
climate-related metrics and reviews strategic
objectives and climate targets annually.
Freightways performs annual measurement
and receives third-party assurance of
our GHG emissions, which allows us to
understand changes in our GHG emissions
and our carbon price exposure year on year.
The Board is also responsible for approving
management remuneration, which is not
currently linked to climate-related metrics.
The Audit and Risk Committee is responsible
for the management, monitoring, and
reporting of risks, as well as the review of
risk management policy. Climate risks fit
within Freightways’ definition of risk and are
assessed according to their likelihood and
potential impact. Each Freightways-owned
business is responsible for identifying their
own risks and opportunities (including those
relating to climate) and developing future
strategies. These are then consolidated
at corporate level and taken to the Board
for review. The Audit and Risk Committee
conducts an annual review of those risks
and mitigating actions
4
.
Our Directors have experience in climate
change and sustainability matters and this
is supplemented by specialist external third
party when required. Third-party support
has included advice related to our climate-
related reporting.
MANAGEMENT’S ROLE
Freightways’ Chief Executive Officer (CEO)
and Chief Financial Officer (CFO) have
delegated authority from the Board to take
responsibility for assessing and managing
consolidated risks and opportunities related
to all controlled businesses. As part of this
role, the CEO and CFO are engaged in
structuring Freightways’ strategic and risk
management approach to these climate-
related risks and opportunities. General
Managers and executive teams at each
of Freightways’ controlled businesses are
responsible for identifying and assessing
risks at an operational level, including
climate-related risks and opportunities,
and providing those to Freightways’
executive leadership team. This process
occurs annually.
At the corporate level, the daily management
of Freightways’ sustainability metrics and
strategy (including climate) is delegated
to the General Manager (“GM”) of Safety
and Sustainability. The GM of Safety and
Sustainability prepares monthly reports
on progress against targets and relevant
metrics, which is shared with the executive
leadership and the Board.
The relationship between the Board and
Management in relation to climate risk and
opportunities is provided in Figure 2.
FIGURE 2: GOVERNANCE STRUCTURE FOR CLIMATE-RELATED RISKS AND OPPORTUNITIES, AND METRICS
Risks and opportunities
Sustainability metrics (inc. climate)
FREIGHTWAYS BOARD
BOARD AUDIT
& RISK COMMITTEE
FREIGHTWAYS CFOFREIGHTWAYS CEO
GM SUSTAINABILITY
& SAFETY
CONTROLLED BUSINESSES' EXECUTIVE LEADERSHIP / GM'S
Climate–related disclosures
Freightways Group Limited and its subsidiaries56Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz57
Strategy
5
https://www.ipcc.ch/site/assets/uploads/2018/02/ipcc
–
wg3
–
ar5
–
chapter8.pdf
6
https://www.iea.org/reports/energy-technology-perspectives-2020
7
https://www.climatecommission.govt.nz/our-work/advice-to-government-topic/inaia-tonu-nei-a
low-emissions-future-for-aotearoa/modelling/
FREIGHTWAYS’ BOARD OF DIRECTORS ARE RESPONSIBLE
FOR OVERSEEING THE MANAGEMENT OF RISK,
INCLUDING THOSE RELATED TO CLIMATE CHANGE.
SCENARIO ANALYSIS
TABLE 1: CLIMATE-RELATED RISK AND OPPORTUNITY
SCENARIOS RELEVANT TO THE TRANSPORTATION SECTOR
SCENARIO THE PATH TO 2100 IN A
HIGH EMISSIONS SCENARIO
THE PATH TO 2100 IN A
LOW EMISSIONS SCENARIO
Physical impactEmissions continue to rise
Average global temperature rise of 3.2°C
– 5.4°C by 2100
Global emissions decline from the short-term
Average global temperature rise of 0.9°C
– 2.3°C by 2100
Policy
Little / ineffectual policy action on climate change
The Paris Agreement fails as major
economies withdraw
Australia continues its current climate
and energy policy, e.g. no pricing on
carbon emissions
Consistent with the International IEA Sustainable Development
Scenario and NZ Climate Change Commission advice, which
shows a carbon price of around US$80/tCO2e (NZD$110-120) by
2030 and NZD$160 by 2035
Strict regulatory requirements e.g. carbon budgets,
fuel emission restrictions, increased monitoring and
reporting obligations
Technology
Advancements in low-carbon technologies
such as alternative transport fuels and
energy mainly driven by market supply and
demand mechanisms
The NZ Climate Change Commission’s advice to the Government
is for 100% of new light vehicles and 10% of heavy trucks be
electric by 2035
Globally, IEA modelling projects EVs to reach 12.25% of global
vehicle fleet, and 28.8% of sales by 2030
MarketConsumer and business purchasing behaviour
is driven by quality / price ratio irrespective of
the carbon footprint of the product or service
High demand for low-carbon products or services to reduce
emissions, this could provide a competitive advantage /
disadvantage depending on whether the business can meet the
market demand
StakeholderLittle to no expectations from stakeholders
to act on climate change
High stakeholder expectations concerning climate mitigation
efforts and resilient investments
Freightways conducted a qualitative
assessment of its climate-related risks
and opportunities in a low and high GHG
emissions scenario, considering the physical,
policy, technology, markets, and stakeholder
impacts associated with those scenarios.
The scenario analysis process is led by
Freightways’ management, who engage
a third-party consulting service with
expertise in analysing climate-related risks
and opportunities to support internal risk
assessment activities.
The results of any scenario analyses are
provided to the Freightways Board of
Directors annually. Climate-related scenario
analysis is currently a standalone process;
however, Freightways will continue to look
for ways to integrate scenario analysis into
our strategy processes as the management
of climate-related risks and opportunities
matures. Our scenario analysis was first
set in 2020 and will be updated prior to
FY24 reporting.
Due to the qualitative nature of this
assessment, the results do not speak to
the impact on earnings and only assess
the likelihood based on our enterprise risk
management framework. Freightways will
continue to develop an understanding of
the full risk assessment rating to enable
quantitative modelling of the financial impact
of each risk in the future.
The scenarios outlined in Table 1 are informed
by Intergovernmental Panel on Climate
Change (IPCC) reports
5
, the International
Energy Agency (IEA) energy scenarios
6
and recommendations provided by the
New Zealand Climate Change Commission
on how New Zealand can meet its emissions
budgets
7
. Leveraging the public reports from
these organisations provides a transparent
and credible source of information on physical
climate change predictions, the energy and
transportation transition, and potential
New Zealand-specific policy settings.
Because of this, we believe that the scenarios
are relevant and appropriate for assessing the
resilience of our business model and strategy
in relation to climate-related risks
and opportunities.
For our key transition risk – exposure to an
increasing carbon cost – we conducted a
quantitative assessment of the cost of fuel
under the New Zealand Climate Change
Commission’s ‘Headwinds’ and ‘Tailwinds’
scenarios in combination with our in-house
assessment of our fleet’s transition to low
emission vehicles (Table 1).
The tables that follow below describe the
physical risks (Table 2), transition risks
(Table 3) and climate-related opportunities
(Table 4) that were identified, and their
expected impacts on the business.
Climate–related disclosures
Freightways Group Limited and its subsidiaries58Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz59
PHYSICAL RISK
DESCRIPTION 1:
DISRUPTED TRANSPORT
NETWORK
Freightways’ business model relies on
a network of transportation assets and
logistics infrastructure to move goods
for our customers.
The impacts of climate change,
including more prevalent extreme
weather events, sea level rise,
increased average temperatures
and high wind speeds all threaten to
damage and disrupt the roads, airports
and shipping ports that keep our
customers’ goods moving around the
country and the world.
Extreme weather events such as
storms combined with king tides are
likely to increase temporary disruption
to the transport network, especially
coastal roads in New Zealand and
Australia. This could lead to longer
delivery times for customers and higher
transport costs as freight is diverted
to alternative routes. In the second
half of this century, sea level rise and
increased temperatures are expected
to lead to long term or permanent
damage to assets such as Auckland
Airport or the Cook Strait ferry crossing
and further amplify the impacts of
extreme weather events (e.g. storm
surges, surface flooding). This could
cause cost increases and impacts on
the resilience of our operations. Our
planning of alternate routes or alternate
runways is helping to address this risk.
Freightways understands this risk
is greater under a high emissions
scenario where physical climate
impacts are more prevalent. According
to the New Zealand National Climate
Change Risk Assessment, the
exposure to physical climate hazards
experienced by New Zealand roads,
airports and ports varies
8
.
PHYSICAL CLIMATE RISKS
TABLE 2: SIGNIFICANT PHYSICAL CLIMATE-RELATED RISKS
RISK TO FREIGHTWAYSCLIMATIC
DRIVERS
TCFD RISK TYPEOPERATIONAL IMPACTTYPE OF RISK
ASSESSMENT
RISK ASSESSMENT AND
TIMEFRAME
INITIAL RISK TREATMENT
ACTIONS
BUSINESS MODEL
AND STRATEGY
RESPONSE
1. Extreme weather events and sea level rise
cause prolonged/sustained disruptions to the
transport network
Extreme weather
Sea level rise
Increased temperature
Acute/chronicTemporary disruption to certain
transport routes
Delays in service delivery
Higher costs for transportation
Significant alteration to network design, routes
and transport methods
Qualitative2035 Likelihood ratings
Low emission scenario: Unlikely
High emission scenario: Possible
Review our established processes for dealing
with weather related events preparing alternate
operational plans
Review the capability of our experienced
team who are involved in the decision-making
process to prepare for future events
Build flexibility and
redundancies through
our network
Build facilities to
increase resistance to
weather-related events
2050 Likelihood ratings
Low emission scenario: Unlikely
High emission scenario: Very likely
2. Higher temperatures and extreme weather
impair operating assets and disrupt utility
services
Extreme weather
Sea level rise
Increased temperature
Heat Stress
Acute/chronicTemporary disruption to processing activities at
select buildings
Increased delivery times for customers
Higher insurance costs for
certain buildings
Certain buildings are no longer usable
Qualitative2035 Likelihood ratings
Low emission scenario: Unlikely
High emission scenario: Possible
Further analyse our assets and associated
utility services for their vulnerability to physical
climate impacts
2050 Likelihood ratings
Low emission scenario: Unlikely
High emission scenario: Likely
Ports are currently considered to
have limited exposure to climate
hazards; however, this increases to a
moderate exposure in 2050. Roads and
airports, on the other hand, are already
considered to have a major exposure
to climate hazards through to 2050.
Under a low emissions scenario, this
risk is expected to be
significantly lower.
We are currently in the beginning
stages of understanding this risk to our
business, particularly in relation to our
business strategy. Previous disruptions
to the transportation network,
most notably the 2016 Kaikoura
Earthquake and 2023 flooding in
Auckland and Hawkes Bay, have
provided us with experience in
managing disruption successfully.
PHYSICAL RISK
DESCRIPTION 2: ASSET
DAMAGE AND UTILITY
SERVICES DISRUPTION
A core part of our business is the
processing of items we deliver for our
customers. To achieve this, we rely on a
wide range of fixed assets and utilities
services (e.g., fuel, electricity) across
our network. Physical climate change
impacts such as more prevalent
extreme weather, sea level rise and
heat stress threaten to damage and
disrupt operations at our buildings
or the utilities that support these
buildings. This may limit our ability
to process and deliver goods for our
customers on time.
Due to the expansive nature of our
network, our buildings are likely to
experience different physical climate
impacts depending on their location.
For buildings in Australia and the north
of New Zealand, building failure due
to heat may become an issue, making
it difficult for buildings’ electrical
systems to operate and, in some areas,
uncomfortable and unproductive for
our staff during high temperature days.
For operational assets in low lying
and coastal areas, damage from
continued flooding caused by sea level
rise and storm events may eventually
render the buildings unusable or
uninsurable from mid-century. These
kinds of disruption could have a
longer-term impact on our network
while a suitable replacement building
is found. At a country wide level,
extreme weather events may lead to
damage of electricity infrastructure
that could impact several of our sites
simultaneously.
Under a high emissions scenario the
physical risk posed to buildings is
expected to be greater than under a
8/9
https://environment.govt.nz/publications/national-climate-change-risk-assessment-for-new-zealand-main-report
low emissions scenario.
According to the National Climate
Change Risk Assessment, the exposure
of New Zealand’s buildings to climate
hazards is already considered major
and is expected to grow to an extreme
exposure by 2050
9
.
As with the risk of damage and
disruption to the transportation network,
we are currently still in the early stages of
understanding this risk to our business.
Going forward, we will need to assess
the climate-related risks at a site
level. This information will allow us to
proactively manage our assets as climate
change impacts materialise, as well as
providing a better understanding of the
overall impact of this risk on our business
strategy.
Table 2, below, describes the significant
physical risks that were identified,
and their expected impacts on the
business strategy.
Climate–related disclosures
Freightways Group Limited and its subsidiaries60Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz61
Our business model
and strategy is reliant
on efficient utilisation
of various vehicles and
assets to process and
transport our customers’
items at each step in our
logistics network.
TRANSITION RISK
DESCRIPTION 1:
INCREASING FUEL COSTS
RESULTING FROM HIGHER
COST OF CARBON
Fuel costs at Freightways are
largely paid by our independent
contractor drivers as a cost of
operating their vehicles.
We believe that this model promotes
efficient fuel usage, reducing the
amount of transport fuel used by
our businesses.
However, regardless of how our fuel
costs are paid, we understand that
our business has significant financial
exposure to changes in transport
fuel prices.
With the cost of carbon expected to
rise in New Zealand, increases in the
carbon price will impact Freightways’
fuel costs and could make other forms
of freight transport, such as electric
vehicles more cost competitive.
A higher carbon price may also provide
an increased incentive to source goods
locally, decreasing the demand
for freight.
This, together with offering an
adequate return to our contractor
drivers, is driving our transition strategy
of adopting low-emission alternatives
to reduce carbon costs from fossil fuel
consumption.
In 2021 we undertook quantitative
modelling to better understand the
approximate financial impact that
higher carbon prices would have on
our fuel costs by 2035.
Table 3, below, describes the
significant transition risks that were
identified, and their expected impacts
on the business.
10
Freightways 2020 Sustainability Report
CLIMATE TRANSITION RISKS
TABLE 3: SIGNIFICANT TRANSITIONAL RISKS
RISK TO FREIGHTWAYSTRANSITION DRIVERSTCFD RISK TYPEOPERATIONAL IMPACTTYPE OF RISK
ASSESSMENT
RISK ASSESSMENT
AND TIMEFRAME
RISK TREATMENT BUSINESS MODEL
AND STRATEGY
RESPONSE
1. Increasing cost of fuel
as a result of higher
carbon costs
Reduced availability of
New Zealand Units (NZUs)
Reducing carbon allowance under national
carbon budgets
Higher costs of operating
ICE vehicles
Technology
Policy and Legal
Higher operational costs
Increased costs for customers
Loss of competitive advantages over other
freight companies that have lower carbon
footprints
Exacerbation of the cost
of inefficiencies across the
delivery network
Quantitative (2035 assessment)2035
Low emission scenario: Medium
High emission scenario: High
Achieve reductions in line with our
science-based targets
Currently planning to transition the fleet to
low emissions vehicles in line with targets set
using the Paris-aligned targets
Continue ongoing optimisation and
utilisation improvements to our routes and
service offerings
Frequent upgrading of linehaul units to lower
emitting vehicles
In the past year, we have managed to
decrease our fleet by 4% while increasing the
number of items sent through our networks
10
Progressively replace our fleet
of vans and trucks with cleaner
energy models
Continue to optimise our
network to reduce energy
consumption
Support our contractors to
acquire clean-energy vehicles
Ensure drivers are
enabled to switch to cleaner
energy vehicles
Qualitative (2050 assessment)2050 Likelihood rating
Low emission scenario: Unlikely
High emission scenario: Possible
2. Climate compliance
requirements raise barriers
for new drivers, hindering
business growth
Restrictions on import and use of internal
combustion engine vehicles
Increasing fuel costs (due to cost of carbon)
High upfront cost of low emissions vehicles
Technology
Reputation
Inability to retain or attract drivers or
higher cost to contract drivers due to their
need for EVs
Delays and a loss of reliability for
our services
Reputational damage
Qualitative2035
Low emission scenario: Possible
High emission scenario: Very Unlikely
Designing of contracts to incentivise efficient
driving, route choices and proper vehicle
maintenance
Providing early signals to contractors
about when replacement vehicles must be
low emission
Reviewing and adapting contractor
remuneration rates to support them into low
emission vehicle
2050 Likelihood rating
Low emission scenario: Likely
High emission scenario: Possible
Climate–related disclosures
Freightways Group Limited and its subsidiaries62Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz63
Assessment
methodology
Low emission
vehicle
adoption rates
Carbon price
We have assessed the net present value
(NPV) of our financial exposure to increasing
fuel costs resulting from an increasing cost
of carbon under two different scenarios
as of 2021 – note this will expand to three
scenarios for FY24. These scenarios took
into consideration the estimated rates of
low-emission vehicle uptake within our
fleet, our Paris-aligned targets work, and
the “Headwinds” and “Tailwinds” scenarios
released as part of the draft advice from the
New Zealand Climate Change Commission in
February 2021.
Our methodology assumes that 100% of the
carbon price is translated to the cost of fuel.
Freightways’ (and its driver-contractors’) adoption of low emissions vehicles varies between the
Headwinds and Tailwinds scenarios. This reflects the differing rate of change between the two
scenarios as illustrated in Figure 3 below. Under a Tailwinds scenario, Freightways acts early to
reduce emissions with relevant technology being widely available, while a Headwinds scenario sees
us delay our emissions response. This is based on the differing availability and costs of technology
between the Headwinds and Tailwinds scenario, with low emissions vehicle technology costs
decreasing more quickly under Tailwinds than Headwinds. Due to uncertainties surrounding the
adoption of low emissions technologies for heavy vehicles and aircraft, the costs associated with
transitioning the fleet to low-carbon fuel sources is currently excluded from this analysis.
The annual carbon price in the Climate Change Commission’s analysis is consistent across both
the Headwinds and Tailwinds scenarios. They are a yearly prediction of what the price of carbon
could be to create economic incentives to meet emission reduction targets. This is presented in
Figure 4 below:
New Zealand Climate Change Commission
Scenarios used for modelling the impact of
carbon price changes on fuel costs:
'TAILWINDS'
• The most optimistic emissions reductions
scenario with a steady and clear reduction
to net zero emissions by 2050.
• Presents a future where there are fewer
barriers to the uptake of new vehicle
technology and widespread behaviour
change amongst the population.
• Freightways can follow its planned
transition to low emissions vehicles,
beginning in 2024.
'HEADWINDS'
• The least optimistic emissions reductions
scenario with a much more sudden and
aggressive reduction to net zero emissions
by 2050.
• Presents a future where there is delayed
uptake of new vehicle technology and slow
behaviour change amongst the population.
• Freightways’ planned transition to low
emissions vehicles is delayed by five years,
beginning in 2029.
FIGURE 3: LOW EMISSIONS VEHICLE ADOPTION COMPARED FOR A HEADWINDS
AND TAILWINDS SCENARIO. SOURCE: FREIGHTWAYS MODELLING
FIGURE 4: ESTIMATED CARBON PRICE (2021-2035) UNDER HEADWINDS AND TAILWINDS
SCENARIOS. SOURCE: CLIMATE CHANGE COMMISSION
Due to Australia not having a carbon price
at this time, this modelling was limited to our
New Zealand operations. As a reference point,
Freightways estimated exposure to the cost
of carbon (embedded in fuel prices) based
on 2019 fuel consumption was approximately
NZD1.3m. Work is under way to capture all
emissions from our Australian businesses and
model the financial impact.
Low emissions vehicles as a proportion of total fleet (Tailwinds vs Headwinds)
Estimated Carbon Price (2021-2035)
'Tailwinds' and
'Headwinds'
Climate–related disclosures
Freightways Group Limited and its subsidiaries64Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz65
Assessment
findings
Our transition
initiatives
Under a “Tailwinds” scenario, by 2034 all vehicles in the motorbike, passenger vehicle, and van
fleets are expected to be fully electric. The 2021 NPV of our financial exposure to the cost of carbon
in transport fuels over the 2022 to 2035 period is approximately NZD 68.3m with a peak financial
exposure of approximately NZD 10.1m in 2029 when the risk subsides as the proportion of EVs in the
fleet increases steadily. Despite this, continued growth in aviation fuel use means the cost of carbon
to the business in 2035 is 33% higher than 2019 levels. By 2050, it is expected that all land-based
light transport fleets will be fully electric (or similar low emissions technology), which will considerably
reduce Freightways’ exposure to this risk. While we have not made any commitments at this time
to invest in low-emission aviation fuels or propulsion types, we anticipate more of these options
becoming available from 2030 onwards.
Under a “Headwinds” scenario, none of our vehicle fleets become fully electric by 2035. The
NPV of our financial exposure to the cost of carbon in transport fuels between 2022 and 2035 is
approximately NZD 82.1m, with a peak financial exposure of approximately NZD 13.4m in 2032,
when the reduction in fuel use from the introduction of plug-in hybrid electric vehicles (PHEVs) in the
passenger vehicle fleet (from 2029) begins to counteract the rising cost of carbon. Combined with
the growth in aviation fuel use, the cost of carbon in 2035 remains at 86% higher than 2019 levels.
By 2050, this risk is expected to have reduced from 2035 levels. However, the delay in adoption of
low emission heavy vehicles and the continued use of hydrocarbons in the aircraft fleet mean that
Freightways may have exposure to the risk posed by the increasing cost of carbon in transport fuels.
The overall financial impact of this increasing carbon cost exposure will depend on the extent to which
this cost can be passed onto consumers. Freightways’ ability to pass this cost on to consumers will
itself depend on the impact that these higher carbon costs have on the demand for transportation
services and the speed at which our competitors decarbonise their fleets.
Additional cost of fuel due to carbon prices 2019-2035 (NZ only)
FIGURE 5: FINANCIAL IMPACTS OF CARBON CONTENT IN TRANSPORT
FUELS (2019-2035). SOURCE: FREIGHTWAYS MODELLING
To help reduce this risk over time, we have several initiatives underway. Firstly, we have annual
measurement and third-party assurance of our GHG emissions, which allows us to understand the
trajectory of our carbon exposure year-on-year. Secondly, Freightways has developed its emissions
reduction using Paris-aligned targets. This work includes planning our transition towards low
emissions vehicles. Lastly, Freightways is constantly exploring ways to improve the efficiency and
utilisation of our routes and service offerings.
Figure 5, to the right, shows the projected financial exposure that Freightways has to a rising
cost of carbon in transport fuels. The New Zealand dollar amount represents only the carbon
cost component of the cost of fuel. The remaining components embedded in the price per litre
(i.e., other taxes and the cost of the fuel itself) are in addition to the amount show.
Climate–related disclosures
Freightways Group Limited and its subsidiaries66Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz67
TRANSITION RISK DESCRIPTION 2:
CLIMATE COMPLIANCE REQUIREMENTS
IMPACT POOL OF CONTRACTOR DRIVERS
Freightways recognises the essential role that our
contractor drivers play in the success of our business
model and strategy. To ensure we attract and retain the
best people in the freight and logistics sector, we work to
offer a competitive package for our contractors. A transition
to a low carbon economy has the potential to undermine
this competitiveness if we do not factor in costs that a
transition could bring. In particular, we understand that a
low carbon economy will likely lead to higher upfront costs
for contractors as they transition to low emissions vehicles.
Additionally, the projected carbon prices in New Zealand
will increase fuel costs for those who continue to use
fossil fuel vehicles, which may raise barriers to attracting
new contractor drivers. This would limit many of our core
business activities, causing delays in our services and
causing reputational damage amongst our customers.
To help mitigate this risk in the future, Freightways is
leveraging several initiatives. Firstly, we have designed the
agreements with our contractors to incentivise fuel-efficient
driving, route choice and vehicle maintenance. This helps
to reduce the emission intensity of our operations and
improves margins for our contractors. Having established
our emissions reduction plan, we can signal to our
contractors when we will require any new replacement
vehicles to be low emissions to meet our reduction targets.
This allows our current and future contractors to factor
in the potential additional up-front cost of this transition
early on in their financial planning. Finally, to support the
upcoming changes to our fleet, we have been improving
the remuneration rates for contractors to help them meet
any higher upfront costs of transitioning to low emissions
vehicles when the time comes.
Table 4, to the right, describes the climate-related
opportunities that were identified, and their expected
impacts on the business.
TABLE 4: CLIMATE-RELATED OPPORTUNITIES
OPPORTUNITY
FOR FREIGHTWAYS
OPPORTUNITY
DRIVERS
TCFD
OPPORTUNITY
TYPE
POTENTIAL
BENEFITS
TYPE OF
OPPORTUNITY
ASSESSMENT
OPPORTUNITY
MATERIALISATION
TIMEFRAME
BUSINESS MODEL
AND STRATEGY
RESPONSE
1. New markets and efficiencies
spring up as part of the
economic transition to net zero
Increased investment and
expansion of renewable, low
emission, zero waste and social
equity activities throughout
the economy
Markets
Products and Services
Market growth
Market share
Improved fleet utilisation
Greater breadth of revenue
streams
Qualitative5 to 10 years Ensure that our
contractors are
sufficiently rewarded and
incentivised to be able to
invest in cleaner energy
vehicles
2. New offerings enhance
customer relationships
Freightways being a partner in its
customers’ emission reduction
Customer demand for greater
emissions transparency
Improved emissions measuring
and reporting tools
Resource Efficiency
Products and Services
Additional/ enhanced service
offerings for customers
Lower prices for freight services
for customers
Improved company reputation
Qualitative5 to 10 yearsMeasure and reflect
the environmental cost
of services
3. Climate resilient transport
network provides Freightways
a strategic advantage
Impact of physical climate risks
Customer demand for a reliable
freight delivery network
Investment in the resilience and
adaptability of Freightways’ network
ResilienceImproved reputation amongst
both current and potential
customers
Overall business resilience
against climate change
Qualitative20 to 30 yearsInvest in clean energy
infrastructures and fleet
OPPORTUNITY 1: NEW MARKETS
AND EFFICIENCIES
The drivers of climate change are known to extend beyond
simply emissions from transport. As the world continues
to invest in sustainability activities that reduce carbon
emissions, we believe that there will be new markets and
customers that our business can serve. For example, the
rise of product stewardship and producer responsibility is
increasing the need for reverse logistics. Not only will this
develop new business opportunities for Freightways, but it
will also support improved fleet utilisation and optimisation
through a reduction in ‘empty kilometres’ vehicles
travel. This will work to support our business strategy by
strengthening our capability of striving for efficiency.
OPPORTUNITY 2: CUSTOMER GROWTH
AND IMPROVED RELATIONSHIPS
Our customers are becoming increasingly aware of not
just their own direct carbon emissions but the often much
larger volume of indirect emissions of their suppliers and
business partners. Leveraging our technology to provide
customers with accurate data on the emissions embedded
in their transported goods is a transition action we are
already fielding requests for. As low emissions vehicles
enter the fleet over the coming decade, customers will also
be able to report on the reduction in indirect transportation
emissions. Additionally, transitioning our fleet to low
emissions, low cost-to-run vehicles could yield cost savings
to our drivers and our business. As with the new markets
and efficiencies opportunity, this will work to support
our business strategy by strengthening our capability of
striving for efficiency.
OPPORTUNITY 3 - IMPROVED
COMPETITIVE ADVANTAGE
As physical climate risks become more material, the
importance of a resilient transport network will grow.
Through investing in our network over the coming decade,
including assessing and responding to our network’s
vulnerabilities to physical climate change impacts, we can
improve our network resilience and flexibility. This has
the potential to give Freightways an advantage amongst
others in our sector who do not attempt to invest in their
network’s resiliency. The result would likely see new
customers leverage our network as they seek our reliability
in the face of increase physical climate impacts. This will
work to support our business strategy by strengthening our
capability of delivering reliably.
Climate–related disclosures
Freightways Group Limited and its subsidiaries68Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz69
Risk
management
Risk
management
Climate-related risks are identified through multiple internal and external sources. These include:Freightways’ process of identifying, assessing, and managing climate-related risks and opportunities
takes into consideration activities occurring across its value chain. This approach requires Freightways
to consider both the upstream and downstream risks of its direct operations. For example, physical
risks impacting upstream infrastructure such as ports are considered due to their impact on our ability
to deliver packages to our customers.
Freightways uses climate scenario analysis to support our identification and assessment of climate
related risks. Climate-related risks are identified as:
PHYSICAL CLIMATE IMPACTS:
Physical climate impacts arise from extreme weather events (e.g., storm, flood, drought) or from the
longer-term shifts in climate patterns (e.g., increasing temperatures). These changes may result
in financial risks or opportunities due the direct and indirect impacts they can have on business
operations, assets, markets or to supply chains.
TRANSITION CLIMATE PACTS:
Transition climate impacts refer to risks and opportunities resulting from the policy, legal, technology,
and market changes occurring in the transition to a low carbon economy. Depending on the nature,
speed, and focus of these changes, transition impacts may pose varying levels of financial and
reputational risk or opportunity.
For example, the New Zealand’s Ministry of Transport’s Pathway to Net Zero by 2050 document
11
sets out three themes to phase out emissions across our transport system. Table 5 below shows
Freightways’ actions in line with them (where applicable).
INTERNAL SOURCES
• Our disaster recovery and business
continuity plans assess the impacts of
acute events.
• Regular reviews of critical risks
assessments.
EXTERNAL SOURCES
• Our involvement in the Climate Leaders
Coalition
12
and other industry groups
focused on addressing climate change.
• Briefings and advice from climate
change specialists.
• Reports produced by government
agencies, such as the Emissions
Reduction Plan and the Climate Change
Commission’s recommendations.
TABLE 5: PATHWAYS TO ZERO CARBON BY 2050 – INITIATIVES BY THEME
TRANSPORT SECTOR EMISSION REDUCTION
THEMES
FREIGHTWAYS INITIATIVES
Theme 1
Changing
the way we
travel
Land-use changes; improvements to walking,
cycling, and public transport networks; and demand
management levers (including parking, congestion,
and distance-based pricing).
N/A
Theme 2
Improving
passenger
vehicles
Phasing out the importation of Internal Combustion
Engine (ICE) light vehicles by 2035; banning the use
of all ICE light vehicles in 2050; adoption of biofuels
in light vehicles and buses and electrifying the Public
Transport bus fleet by 2035.
Our plan for EV uptake starts in 2024 and ramps up
as availability of alternatives allow. With early action
our entire fleet can be made up of low emission
vehicles by 2035.
Theme 3
Supporting
a more
efficient
freight
system
Energy saving and logistic improvements (such as
freight routes optimisation; freight consolidation and
improved last mile efficiency); mode-shift from road
freight to rail and to coastal shipping; adoption of
biofuels for road freight and accelerating uptake of
electric medium trucks.
Freightways have systems in place to enable
optimisation, such as freight consolidation and last
mile efficiency and driver training.
As a consolidation business we understand the
economic and environmental benefit of being
resource efficient.
11
Ministry of Transport – Transport Emissions: Pathway to Net Zero by 2050
12
https://www.climateleaderscoalition.org.nz/who/signatories/signatories/freightways
Climate–related disclosures
Freightways Group Limited and its subsidiaries70Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz71
LIKELIHOOD AND IMPACT
To determine the risk rating of climate-related risks, we use our general business risk matrix
(Figure 6). This approach considers two variables: likelihood and impact (Table 6 and Table 7).
The ratings reflect our short, medium, and long-term timeframes and the financial impact on the
company; scenario analysis is also included in assessing risks. As most of our risks and opportunities
assessments are currently only qualitative, we only use the likelihood rating elements. The likelihood
rating produced from the assessment of each identified climate-related risk is used to determine the
relative significance of all climate-related risks. Because we also use the likelihood rating as part of
our determination of other risks Freightways faces, we can also determine the relative likelihood of
climate-related risks in relation to other risks.
TABLE 6: FREIGHTWAYS' RISK LIKELIHOOD RATINGS
LIKELIHOODDEFINITIONCOULD HAPPEN
WITHIN:
TIME HORIZON
Very unlikely Only expected to happen in
exceptional circumstances
10 yearsLong-term
Unlikely Has been known to
occur, including in other
organisations
3 to 5 yearsMedium-term
Possible Has happened before within
the company or the industry
1 to 2 yearsShort-term
LikelyRegular occurrence within the
industry or company
1 yearShort-term
Very likely Happens with
high frequency
1 monthShort-term
TABLE 7: FREIGHTWAYS' RISK IMPACT RATINGS
FINANCIAL IMPACTREPUTATIONH&SCOMPLIANCE
IMPACTCOULD > EBITA BY:
Minor<1%Can be ignored or
managed through informal
communication
Minor physical injury or emotional
impact or near miss; can be
managed at team level
Breach of internal policy only
Moderate<5%Minor but credibility/
integrity of FRE questioned
and requires formal
response
Lost time injury less than 5 days;
emotional impact requiring EAP
assistance; minor increase in
absenteeism or turnover
Breach of external guidelines;
non-notifiable breach of privacy
law; breach of administrative or
non-material provision of other
statute or regulation
Significant<10%Moderate incident that
could damage FRE's
reputation and lead to some
media coverage
Lost time injury between 5 and
10 days, professional/medical
treatment required; incident
attracts some media attention;
WorkSafe investigation with risk of
improvement or prohibition notice
Breach of statutory or regulatory
obligation; relevant regulator aware
or must be notified (e.g. privacy
breach requiring notification to
privacy regulator)
Major<33%Credibility/integrity of FRE
challenged with national/
sustained media coverage;
shareholder enquiries likely
Serious harm with hospitalization/
lost time injury of more than 10 days;
WorkSafe investigation with risk of
prosecution/significant penalties
Breach of NZX Listing Rule or other
material legislative breach with risk
of financial penalty and/or restriction
on operation
Catastrophic33%+Significant and sustained
negative media coverage;
requires communications to
shareholders and/or NZX
Severe accident involving multiple
hospitalisations/permanent
disability or death; WorkSafe
investigation with risk of
prosecution/significant penalties
Breach of NZX Listing Rule or other
material legislative breach with
risk of trading suspension, high
profile court proceeding, FMA/SFO
investigation and/or criminal penalty
Risk
management
Climate–related disclosures
Freightways Group Limited and its subsidiaries72Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz73
54321
Likelihood: probability of occurrence
Very
likely
MediumMediumHighVery highVery high
A
Likely
LowMediumHighHighVery high
B
Possible
LowMediumMediumHighHigh
C
Unlikely
LowLowMediumMediumHigh
D
Very
unlikely
LowLowLowMediumHigh
E
MinorModerateSignificantMajorCatastrophic
Impact when occurs (EBITA reduction)
Metrics
and targets
RISK REGISTER
We conducted our scenario analysis in 2020, and the resulting climate risks were incorporated into
Freightways’ risk register. Each controlled business is required to maintain their risk register which
also considers mitigation and risk trends, including climate related risks. Freightways’ executive
leadership team is required to reflect on each risk at least annually. A collective agreement on
prioritisation follows, which informs the decisions on how to mitigate, transfer, accept or control each
risk. Note that the scenario analysis and risk register will be updated prior to FY24 reporting to reflect
the XRB requirement to analyse three scenarios (currently Freightways has considered two).
During our initial scenario analysis, we identified that climate risks will peak in impact beyond the
upper 10-year limit of our risk assessment framework with a reasonably high degree of certainty.
Therefore, it is possible that these risks may not be rated sufficiently using our current risk framework.
Given this, and the fact that Freightways has acquired new businesses, we will update our risk
assessment approach over the next year to review time horizons, risks and opportunities identified,
and use most up-to-date scientific data.
Freightways uses emissions data and targets to measure and assess our climate related risks, as
well as emissions price. Emissions price used (NZD per tonne of CO2e) are as per Climate Change
Commission’s advice, set as NZD140 in 2030, NZD190 in 2040 and NZD250. Below, we outline our
Scope 1, 2 and 3 emissions, and our Paris-aligned targets.
EMISSIONS REDUCTION TARGETS
In FY21, we set 2030 and 2035 emission reduction targets, which were supported by a third-
party consultant. We are working toward a 2030 target of 30% reduced GHG emissions and a
2035 target of 50% reduction in absolute GHG emissions from a 2019 baseline. Over 95% of our
emissions come from the fuel we use in our fleet cars, our contracted courier vans and trucks, and
the aircrafts we use. Freightways’ efforts to achieve our targets are dependent on low emissions
technology, which is not yet available to allow for meaningful progress made against the targets.
Risk
management
SCOPE 1, SCOPE 2, AND 3 EMISSIONS
To understand and report transparently against our emissions reduction goals, we are committed
to managing and reducing our carbon footprint and have been measuring Scope 1, 2, and 3
GHG emissions since 2014 for our New Zealand operations, meeting the requirements of TOITŪ
Carbonreduce
TM
certification and ISO 14064-1:2006. Table 8 provides a summary of emissions.
Our emissions calculation approach can be found here (https://www.toitu.co.nz/our-members/
members/freightways-limited). Freightways’ emissions calculation uses an operational control
consolidation approach and only includes fuel, electricity, and refrigerants. Emissions factors
and Global Warming Potentials (GWPs) were provided by TOITŪ and reference the IPCC fifth
assessment report (AR5). Remaining sources have been excluded on the basis that they are de
minimis. The following business unit was excluded:
• Prior to FY22, GHG emissions below excluded Big Chill Distribution Limited and the Group’s
Australia operations.
• Freightways acquired Allied Express Transport Pty Limited (Allied) effective 30 September
2022. The GHG emissions below exclude Allied. Freightways intends to include Allied’s GHG
emissions from FY24.
TABLE 8: SUMMARY OF GHG EMISSIONS *FY23 GHG emissions data to be audited in November 2023
BASELINE 2019FY20FY21FY22FY23*
Scope 1 (tCO2e)
3,912.343,679.8 84 ,151. 3 410,083.6111,7 0 0 . 31
Scope 2 (tCO2e)
873.07825.95802.044,485.673,5 49. 3 3
Scope 3 (tCO2e)
40,277.6046,118.7447, 4 8 3 . 4971, 5 0 2 .1568,271.04
Total absolute
emissions (tCO2e)
45,063.0150,624.5752,436.8786,071.4 383,520.68
Total emissions
intensity (gross
tCO2e / $Millions
90.85102.9894.1698.5889.38
FIGURE 6: RISK RATING MATRIX
Climate–related disclosures
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Our BoardOur Leadership
MARK TROUGHEAR
Chief Executive Officer
BMS – University of Waikato
STEPHAN DESCHAMPS
Chief Financial Officer, MBA – Master in Finance
B Poli Sci, M Fin (Institut d’Etudes Politiques, Paris)
NICOLA SILKE
General Counsel and Company Secretary
LLB (Hons), BA – University of Canterbury
STEVE WELLS
General Manager
Express Package Division
MATTHEW COCKER
Chief Information Officer
PhD – Georgetown University
NEIL WILSON
General Manager
Freightways
AMI VAN GILS
Head of People and Culture, BA – University of Auckland
Freightways
MARK CAIRNS
Chairman
BE (Hons), BBS, MMGT, FIPENZ, CF Inst D
ABBY FOOTE
LLB (Hons), BCA,
CF Inst D, INFINZ (Cert)
DAVID GIBSON
B.Com LL.B (Hons)
FIONA OLIVER
LLB, BA, CF Inst D
MARK RUSHWORTH
BE(Hons), MEM
PETER KEAN
PMD – Harvard
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*EBITA is a non-GAAP measure
Note
2023
$000
2022
$000
Increase
%
Operating revenue1,121,620873,09428.5
EBITA*(i)145,285126,52214.8
NPAT(ii)75,29770,1827.3
EBITA* (excluding other expenses)145,285130,22211.6
NPAT (excluding other expenses, net of tax)75,29773,8821.9
Other expenses:
Change in fair value of contingent consideration –
Big Chill Distribution Limited (BCD)(iii)-(3,700)
Total-(3,700)
Tax benefit applicable to other expenses--
Other expenses, net of tax-(3,700)
Notes:
(i) Operating profit before interest, income tax and amortisation of intangibles
(ii) Profit for the year attributable to the shareholders
(ii) The estimated discounted future final payment for the BCD acquisition was increased from $51.3 million as at 30 June 2021 to $56.2 million
as at 30 June 2022. This increase of $3.7 million (net of impact of unwinding of discount on acquisition earn-out liability of $1.2 million)
reflected the strong performance of BCD, which determined the final payment in August 2022 for the acquisition of the company.
The Directors believe that the other expenses detailed above should not be included when assessing the underlying trading performance of the Group.
Financial Summary
For the year ended 30 June 2023
78A NewPlatformGGhtnruNRp lrr2rrAeGtG0etnr3Nt rNGMNMrigrThGNrsgsic NewPlatfob0pbGd79
DIRECTORS
The names of the Directors of the Company in office at the date of this report are:
INDEPENDENCE OF THE BOARD
The Board has determined for the purposes of the NZX Listing Rules that,
as at 29 June 2023, Mark Cairns, Abby Foote, David Gibson, Peter Kean,
Fiona Oliver and Mark Rushworth are independent Directors.
The Board assessed each Director’s independence with regard to the
NZX Listing Rules, the interests and relationships of each Director and by
considering each of the factors set out in Table 2.4 of the NZX Corporate
Governance Code. The Board is satisfied that none of the factors set out in
Table 2.4 apply to any of the Directors.
The Directors of Freightways Group Limited (Freightways) resolved to submit the following report with respect to the financial position of the Group as at
30 June 2023 and its financial performance and cash flows for the year ended on that date.
Mark Cairns | BE (Hons), BBS, MMGT, FEngNZ, CF Inst D
Mark was appointed a Director in April 2021. He was Chief Executive of
Port of Tauranga, New Zealand’s largest and most successful port, from
2005 until his retirement in June 2021 to pursue a full-time governance
career. Mark was previously Chief Executive of Toll Owens Limited and
Owens Cargo Company Limited. Mark has extensive experience in
logistics, infrastructure, contracting and significant exposure to capital
markets. Mark is also a director of Auckland International Airport
Limited and Meridian Energy Limited.
Abby Foote | LLB (Hons), BCA, CF Inst D, INFINZ (cert)
Abby was appointed a Director in June 2018. She is a professional
director with over 14 years’ governance experience, with qualifications
in both law and accounting. Abby has experience in a range of senior
management, finance and legal roles, with a focus on corporate finance
and commercial transactions. Abby is currently a director of KMD
Brands Limited, Sanford Limited and Christchurch City
Holdings Limited.
David Gibson | B.Com, LLB (Hons)
David was appointed to the Board in April 2022. David is a
professional director and has a strong background in strategy and
finance with over 20 years investment banking experience, including
as Co-Head of Investment Banking in New Zealand for Deutsche Bank
and Deutsche Craigs. During his finance career David has advised on
many of New Zealand’s largest capital market transactions. David is
also a director of NZME Limited, Goodman (NZ) Limited and
Rangatira Limited.
Peter Kean | PMD Harvard
Peter was appointed a Director in July 2016. He brings to Freightways
many years of senior executive experience with the Lion group of
companies in both New Zealand and Australia. Peter’s last executive
roles were as Managing Director of Lion Nathan New Zealand and
Managing Director of Lion Dairy and Drinks, based in Melbourne.
Peter retired from Lion in 2014 and has since developed his career in
governance. Peter is involved in a number of private companies both in
New Zealand and in Australia.
Fiona Oliver | LLB, BA, CF Inst D
Fiona was appointed a Director in July 2021. She is a professional
director, holding governance roles across a range of business sectors
including renewable energy, natural gas, technology, and financial
services. She is a director (and Audit Committee Chair) of Gentrack
Group Limited, the First Gas Group, and Wynyard Group Limited
(in liquidation). Fiona’s executive career was in the financial services
sector in New Zealand and overseas. In New Zealand, her roles
included Chief Operating Officer of Westpac’s investment arm, BT
Funds Management, and General Manager of AMP NZ’s Wealth
Management division. In Sydney and London, Fiona managed the Risk
and Operations function for AMP’s private capital division. Prior to this,
Fiona was a senior corporate and commercial solicitor in New Zealand
and overseas, specialising in mergers and acquisitions.
Mark Rushworth | BE (Hons), MEM
Mark was appointed a Director in September 2015. He has extensive
experience in the technology sector, with a decade’s governance
experience, predominantly in the high tech and innovation space. An
electrical engineer by training, with widespread operations and marketing
experience, he spent 4 years on the senior executive team of Vodafone NZ,
where among other things he had executive accountability for the fixed
line business and as Director of Marketing. Mark previously served as chief
executive of Pacific Fibre, ihug and financial services company, Paymark
Limited. Mark is currently Chief Executive Officer of private equity owned
UP Education and a director of a number of private companies.
Director’s Report
Deep Expertise (NED)
Mark
Cairns
Abby
Foote
David
Gibson
Peter
Kean
Fiona
Oliver
Mark
Rushworth
Governance
NZ Listed Market
Audit And Risk
Business Operations At Scale
International Transport, Logistics,
Sector Aligned Expertise
Marketing / Brand / Sales
It Platforms And Digital Innovation
Australian Market
Health & Safety
Environmental, Social & Governance (ESG)
Entrepreneurial
BOARD SKILL MATRIX
The Board focuses on governance, strategy and the oversight of the performance of the different Freightways businesses and brands. The Directors bring
both proven experience in governance and a strong background in business to their decision making. Together, they provide the wide-ranging skills needed
to ensure the Board has the expertise to set and approve strategic direction, make senior management appointments, monitor performance, manage risk and
oversee our many stakeholder relationships. The Board Skill Matrix below sets out the skills of each Director against the range of expertise Freightways requires
to succeed.
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year ended 30 June 2023 were the operation of express package & business mail services and information
management services.
Director’s Report
Freightways Group Limited and its subsidiaries80Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz81
Group Fees (per annum)
Position
Note
2023
$
2022
$
Board of DirectorsChair(i)180,000180,000
Member – NZ100,000100,000
Member – NZ100,000100,000
Member – NZ100,000100,000
Member – NZ100,000100,000
Audit & Risk CommitteeChair(i)120,000120,000
People & Remuneration CommitteeChair(i)115,000115,000
Committee work pool (if required)42,14542,145
Total annual fee pool limit(ii)857,145857,145
Notes:
(i) Inclusive of Board member fee
(ii) Approved by shareholders at Annual Shareholders Meeting in October 2021
APPROVED REMUNERATION OF DIRECTORS
(EFFECTIVE 1 NOVEMBER 2021)
DIRECTORS HOLDING OFFICE DURING THE YEAR WERE:
Parent:
Mark Cairns (Chairman)
Abby Foote
David Gibson
Peter Kean
Fiona Oliver
Mark Rushworth
Subsidiaries:
Mark Troughear
Stephan Deschamps
Stephen Micallef (Australian subsidiaries only)
2023
$000
2022
$000
Operating revenue1,121,620873,094
Operating profit before interest and income tax133,962118,994
Net interest and finance costs(28,585)(20,292)
Profit before income tax105,37798,702
Income tax(30,080)(28,520)
Profit for the year attributable to the shareholders75,29770,182
CONSOLIDATED RESULT FOR THE YEAR
Director’s Report
2023
$
2022
$
Directors of Freightways (Parent company)
Mark Cairns180,000123,917
Abby Foote120,000114,667
David Gibson (appointed 1 April 2022)100,00025,000
Peter Kean115,000101,417
Fiona Oliver (appointed 5 July 2021)100,00097,667
Mark Rushworth100,00097,667
Mark Verbiest (resigned 31 March 2022)-130,000
Kim Ellis (resigned 28 October 2021)-33,333
Total non-executive Directors715,000723,668
Directors of the Company’s subsidiaries do not receive any remuneration or other benefits in their capacity as a director of those companies, except
indemnity and insurance referred to in the Directors’ and Officers’ Liability Insurance section on page 89.
REMUNERATION RECEIVED BY DIRECTORS
2023
$
2022
$
CEO – Mark Troughear
Salary
945,000874,000
Benefits
39,00039,000
Subtotal
984,000913,000
Pay for Performance:
STI
511,000565,000
LTI
298,000190,000
Subtotal
809,000755,000
Total remuneration
1,793,0001,668,000
CHIEF EXECUTIVE'S REMUNERATION
Director’s Report
Key% –OURSTAEeGYNAP%I%OyLARDLA%OTATYMT%L%Re%yT82Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz83
Financial
Year
CEOTotal remuneration
($000)
% STI against
maximum
% vested LTI against
maximum
Span of LTI
performance period
2023Mark Troughear1,7939184FY20-FY22
2022Mark Troughear1,668100100N/A
2021Mark Troughear97088-N/A
2020Mark Troughear84372-N/A
2019Mark Troughear873100-N/A
The remuneration of the CEO in the remuneration tables above includes the STI and LTI incentive payments made during the year ended 30 June 2023 in
respect of the two previous six-month performance periods (1 January to 30 June 2022 and 1 July to 31 December 2022). No amount is included above in
respect of incentive payments for the period 1 January to 30 June 2023, as these were paid in August 2023.
FIVE-YEAR SUMMARY: CHIEF EXECUTIVE’S REMUNERATION
DescriptionPerformance measuresAchieved (%)
STI55% of base salary. Based on a
combination of financial and non-financial
performance measures.
50% weighting on achievement of Board
approved earnings before interest, tax and
amortisation (EBITA).
60
50% weighting on individual performance
comprising strategy development & delivery, health
& safety and carbon emissions reduction strategy.
100
LTIConditional awards of shares under long-term
incentive scheme. Introduced in July 2019 with a
vesting period of 3 years ending 30 June 2023.
Relative TSR (rTSR) - Based on Freightways’
TSR compared to that of the constituents of the
NZX50 Index over the vesting period. 50% of the
rTSR Share Rights eligible for vesting will vest
if Freightways outperforms the NZX50 Index
median, pro-rated up to 100% for achieving the
75th quartile of the Index constituents.
91% achieved and will
be exercised in the
first half of FY24
Absolute TSR (aTSR) - Up to 50% of Share Rights
will vest based on exceeding a cost of capital
hurdle over the vesting period.
91% achieved and will
be exercised in the
first half of FY24
BREAKDOWN OF CHIEF EXECUTIVE’S PAY FOR PERFORMANCE (RELATED TO FY23 OBJECTIVES)
Director’s Report
REMUNERATION OF OTHER OFFICERS
IN THE FREIGHTWAYS GROUP
Fixed remuneration of other officers, not being Directors of the Company,
representing a range from 73% to 80% of their total remuneration,
is benchmarked to market and consists of base salary and matched
KiwiSaver contributions up to a maximum of 3%. The officers participate
in an at-risk short-term incentive (STI) scheme, representing a range from
20% to 27% of their total remuneration, that reflects the achievement
of predetermined company profit levels and individual performance
objectives aligned to business strategy and goals. In addition, the officers
receive a range from 1% to 2% of earnings before interest, tax and
amortisation (EBITA) over a Board approved EBITA target. The officers
also participate in the Freightways Senior Executive Performance Share
Plan (the ‘Plan’) described in Note 22 of the Financial Statements by way
of an annual allocation of PSRs. The PSRs have a 3-year vesting period
and are subject to the achievement of financial hurdles, as described in
Note 22. Both the STI scheme and Senior Executive Performance Share
Plan are variable, performance-based incentives and are only awarded if
specific financial and non-financial performance hurdles are met, and at
the discretion of the Board.
The Company’s Remuneration Policy can be found at
https://www.freightways.co.nz/about/corporate-governance/.
CHIEF EXECUTIVE’S REMUNERATION
PERFORMANCE PAY FOR FY23
$000
Financial Quarter
TSR %
THREE-YEAR SUMMARY: TSR PERFORMANCE
Director’s Report
Freightways Group Limited and its subsidiaries84Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz85
Group
2023202220232022
$100,000 – $109,999136101$350,000 – $359,99942
$110,000 – $119,9999656$360,000 – $369,9991-
$120,000 – $129,9996341$370,000 – $379,9992-
$130,000 – $139,9994842$380,000 – $389,999-1
$140,000 – $149,9993329$390,000 – $399,999-1
$150,000 – $159,9992416$400,000 – $409,999-1
$160,000 – $169,9992218$410,000 – $419,9991-
$170,000 – $179,9992411$420,000 – $429,999-2
$180,000 – $189,9991411$430,000 – $439,999-2
$190,000 – $199,999139$440,000 – $449,9991-
$200,000 – $209,999136$480,000 – $489,999-1
$210,000 – $219,999912$510,000 – $519,999-1
$220,000 – $229,99984$530,000 – $539,999-1
$230,000 – $239,99947$550,000 – $559,9991-
$240,000 – $249,99943$580,000 – $589,9991-
$250,000 – $259,99963$610,000 – $619,9991-
$260,000 – $269,99918$640,000 – $649,9991-
$270,000 – $279,99942$650,000 – $659,99911
$280,000 – $289,99913$740,000 – $749,999-1
$290,000 – $299,99945$780,000 – $789,999-2
$300,000 – $309,99921$820,000 – $829,999-1
$310,000 – $319,99911$840,000 – $849,9991-
$320,000 – $329,99911$1,660,000 – $1,669,999-1
$330,000 – $339,99911$1,790,000 – $1,799,9991-
$340,000 – $349,9992-
REMUNERATION OF EMPLOYEES
The number of employees, not being Directors of the Company, within the Group receiving annual remuneration and benefits above $100,000 are as
indicated in the following table:
Director’s Report
Number
$000
Acquired
(Disposed)
Cost
(Sale)
Mark Rushworth
Ordinary shares acquired on 24 March 202310,00093
Fully-paid ordinary shares
Director
Mark Cairns50,000
Abby Foote14,363
David Gibson20,812
Peter Kean51,500
Fiona Oliver2,800
Mark Rushworth28,000
The following table shows transactions recorded in respect of securities
acquired or disposed of by Directors of Freightways Group Limited
during the year ended 30 June 2023:
FREIGHTWAYS GROUP LIMITED SHARES
At balance date Directors of Freightways Group Limited held the following number of equity securities in the Company:
ENTRIES IN THE REGISTER OF DIRECTORS’ INTERESTS
The Register of Directors’ Interests records that the following Directors of Freightways Group Limited have an equity interest in the Company.
Director’s Report
Key% –OURSTAEeGYNAP%I%OyLARDLA%OTATYMT%L%Re%yT86Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz87
NameName of company / entityNature of interest
Mark CairnsAuckland International Airport LimitedDirector
Meridian Energy LimitedDirector
Sanford LimitedDirector**
Abby Foote Christchurch City Holdings LimitedDirector*
KMD Brands LimitedDirector
Sanford LimitedDirector
David Gibson Goodman (NZ) Limited Director
NZME LimitedDirector
Rangatira Limited Director
Peter KeanSanford LimitedDirector**
Trojan Holdings LimitedDirector
Fiona OliverBarramundi LimitedDirector
BNZ Life Insurance LimitedDirector**
BNZ Insurance Services LimitedDirector**
Gentrack Group LimitedDirector
First Gas group companiesDirector
Guardians of New Zealand SuperannuationDirector*
Kingfish LimitedDirector
Marlin Global LimitedDirector
Summerset Group Holdings LimitedDirector*
Mark RushworthUP EducationGroup Chief Executive
* Entry added by notice given by the Director during the year.
** Entry removed by notice given by the Director during the year.
OTHER INTERESTS
Listed below are details of the entries made in the Interests Register of the Company during the year, together with the existing entries as at 30 June 2023.
Director’s Report
DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE
Deeds of indemnity have been granted by the Company in favour of the Directors of the Company and its subsidiaries, to the fullest extent permitted
by the Companies Act 1993. In accordance with the deeds of indemnity, the Company has insured all its Directors and the Directors of its subsidiaries
against liabilities to other parties (except the Company or a related party of the Company) that may arise from their positions as Directors.
Freightways’ liability insurance also covers Officers of the Group. The insurance does not cover liabilities arising from criminal actions.
For and on behalf of the Board this 21st day of August 2023.
Abigail Foote
Director
Mark Cairns
Chairman
Director’s Report
Key% –OURSTAEeGYNAP%I%OyLARDLA%OTATYMT%L%Re%yT88Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz89
Independent auditor’s report
To the shareholders of Freightways Group Limited (formerly known as Freightways Limited)
Our opinion
In our opinion, the accompanying financial statements of Freightways Group Limited (the Company),
including its subsidiaries (the Group), present fairly, in all material respects, the financial position of the
Group as at 30 June 2023, its financial performance and its cash flows for the year then ended in
accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS)
and International Financial Reporting Standards (IFRS).
What we have audited
The Group's financial statements comprise:
●the balance sheet as at 30 June 2023;
●the income statement for the year then ended;
●the statement of comprehensive income for the year then ended;
●the statement of changes in equity for the year then ended;
●the statement of cash flows for the year then ended; and
●the notes to the financial statements, which include significant accounting policies and other
explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
(NZ)) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in theAuditor’s responsibilities for the audit of the financial statementssection of our
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group in accordance with Professional and Ethical Standard 1International
Code of Ethics for Assurance Practitioners (including International Independence Standards) (New
Zealand)(PES 1) issued by the New Zealand Auditing and Assurance Standards Board and the
International Code of Ethics for Professional Accountants (including International Independence
Standards)issued by the International Ethics Standards Board for Accountants (IESBA Code), and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
Our firm carries out other services for the Group in the areas of standardised general treasury training.
In addition, certain partners and employees of our firm may deal with the Group on normal terms
within the ordinary course of trading activities of the Group. The provision of these other services and
relationships have not impaired our independence as auditor of the Group.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial statements of the current year. These matters were addressed in the context
of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
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
91 Independent Auditor’s Report
97 Income Statement
98 Statement of Comprehensive Income
99 Statement of Changes in Equity
100 Balance Sheet
101 Statement of Cash Flows
102 Notes to the Financial Statements
152 Shareholder information
154 Corporate Governance Statement
160 Directory
161 Company particulars
Financial
Statements
Independent Auditor's Report
To the shareholders of Freightways Group Limited
A NewPlatform GhnrueRelNprt2preloroh0oepet eNo3 NewPlatfoMiGM2g9190A NewPlatformGGhtnruNRp lrr2rrAeGtG0etnr3Nt rNGMNMrigrThGNrsgsi
Description of the key audit matterHow our audit addressed the key audit matter
Revenue recognition
The Group’s revenue of $1,122 million for
the current year primarily consisted of
express package and business mail –
courier, express freight, refrigerated
transport and storage and postal services
and information management – storage,
destruction and digital services, as disclosed
in Note 3 of the financial statements.
The Group has deferred revenue o f $14.4
million included in contract liabilities for
service obligations not yet performed as at
30 June 2023.
Revenue recognition under NZ IFRS 15 is a
key audit matter due to the number of
revenue streams and information systems
used to record revenue. Management
judgement is also required to estimate the
contract liability for deferred revenue based
upon historical usage patterns as disclosed
in Note 19.
We obtained an understanding and evaluated the
Group’s processes and controls relating to revenue
recognition for each material revenue stream and
recognition of a contract liability for deferred
revenue.
Our audit procedures in relation to revenue
recognition for each material revenue stream
included:
● challenging the material judgements made by
management in applying the standard, including
assessing a sample of individual contracts
against the requirements of NZ IFRS 15,
particularly the determination of performance
obligations;
● performed test of controls to ensure the controls
in place are effective to prevent and detect
material misstatement at a transactional level;
● performed substantive analytical procedures to
ensure the accuracy of revenue for specific
revenue streams, including considering the
reliability of the data used in the analytics;
● testing a sample of revenue transactions to
assess the completion of performance
obligations;
● testing a sample of revenue transactions to
assess the accuracy of pricing to supporting
documentation;
● for a sample of transactions within accounts
receivable at balance date we obtained either
confirmation of the amount owing from the
customer, or evidence of the amount owing from
alternative procedures including testing of
subsequent receipts or shipping documentation;
and
● assessing the disclosures made against the
requirements of the accounting standards.
Our audit procedures in relation to the contract
liability for deferred revenue included:
● testing the system reports from which the data
used in the contract liability calculation is
derived; and
● understanding the models used by management
to determine the release to revenue for
estimated unredeemed tickets based upon
historical usage patterns by utilising substantive
analytical procedures.
PwC
Description of the key audit matterHow our audit addressed the key audit matter
Impairment assessment of goodwill and
indefinite lived brand names
As disclosed in Note 14, the Group has
goodwill and indefinite lived brands with
carrying values of $406.7 million and $157.3
million respectively (30 June 2022: $306.1
million and $128.3 million) which include the
provisional goodwill and indefinite lived
brands for Allied Express Transport Pty
Limited (AEX) of $100.3 million and $29.4
million respectively.
Goodwill and brand names are allocated to
cash-generating units (CGUs) for the
purpose of impairment testing.
Management performed an annual
impairment assessment using valu e in use
(VIU) models to determine whether the
carrying value of assets held by each CGU
is recoverable.
Our audit focused on this area as it involves
estimation and judgement about future
business performance which includes
certain key assumptions such as revenue
growth, earnings before Interest, tax,
depreciation and amortisation (EBITDA)
margin, terminal year growth rate, the
pre-tax discount rate and the likely impact of
climate change. A probabilistic approach
was also adopted where a number of
different growth scenarios were considered
and weighted by likelihood of achievement.
For each CGU, the recoverable a mount
based on the value in use
was higher than
the carrying value of the CGU and as a
result, no impairment charge was
recognised.
Based on the level of headroom and the sensitivity
to impairment of each CGU, our audit procedures
relating to the estimations and judgments in the VIU
models included some or all of the following:
● gaining an understanding of the business
process applied by management in preparing the
impairment assessments;
● considering the appropriateness of the
determination of each CGU and recalculating the
carrying amounts of the CGU net assets;
● evaluating whether corporate costs had been
allocated appropriately and included in the cash
flows for each CGU;
● testing the mathematical accuracy of the models
used to determine the VIU of each CGU;
● reviewing historical years actual revenue and
EBITDA against the original budgeted
performance to determine the reliability of the
budgeting process and considering the impact
on forecast performance;
● obtaining an understanding of the current and
forecast outlook for the business and
management’s basis for determining the key
assumptions in preparing the forecast cash
flows.This included management's assessment
of the likely impact of climate change;
● agreeing forecast future performance included in
the impairment assessments to the budgets
approved by the Board of Directors, based on
the FY24 forecasts with a growth rate applied for
the future periods;
● with the assistance of our auditor’s valuation
expert, assessing the appropriateness of the
terminal growth and discount rates and
assessing against industry trends and external
market forecasts; and
● performing a sensitivity analysis over key
assumptions to determine whether reasonably
possible changes would result in impairment of
goodwill.
We also reviewed the financial statements for
appropriate identification and disclosure of key
assumptions, including the impact of reasonably
possible changes which would result in an
impairment.
PwC
Independent Auditor's Report
To the shareholders of Freightways Group Limited
Independent Auditor's Report
To the shareholders of Freightways Group Limited
Freightways Group Limited and its subsidiaries92Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz93
Description of the key audit matterHow our audit addressed the key audit matter
Allied Express Transport Pty Limited
(AEX) acquisition accounting
As disclosed in Note 30, on 30 September
2022, the Group completed the acquisition
of AEX, for a total consideration of
approximately NZ$215.3 million which
includes cash, the issue of shares in the
Group, a promissory note and a completion
adjustment. AEX was an independently
owned courier and express freight business
in Australia at the time of purchase. As
disclosed in Note 30, the fair value of certain
assets and liabilities arising from the
acquisition have been determined on a
provisional basis as the completion
adjustment is currently being finalised.
We consider this acquisition to be a key
audit matter due to the significance of the
acquisition to the Group and the application
of significant management judgement in
completing a provisional assessment of the
fair value of the assets and liabilities
acquired, including recognising the following
separately identifiable intangible assets:
●Brands of $30.6 million
●Non-compete agreements with the
founders/directors of $3.1 million
●Customer relationships of $54.7 million.
Our procedures over accounting treatment of the
acquisition included:
● reading the Sale and Purchase Agreement to
understand the key terms and conditions;
● agreeing the consideration to supporting
documentation. This included agreeing the value
assigned to the Company shares that were
issued as part of the consideration to the market
value of the Company’s shares at the transaction
date;
● with the assistance of our internal experts
considered the appropriateness of the accounting
treatment and disclosure of the Promissory Note
under NZ IFRS 3 Business combinations (NZ
IFRS 3);
● gaining an understanding of the valuation
approach and methodology undertaken by
management to identify separately identifiable
intangible assets against the criteria in NZ IFRS 3
and fair value the assets and liabilities acquired;
●obtaining and reading the valuation report
prepared by management’s external experts on
the purchase price allocation for the acquisition
and engaging our auditor’s valuation expert to:
a)assess the valuation approach, methodology
and assumptions undertaken by
management in relation to the valuation of
the brands, customer relationships and non-
compete agreements;
b)test the mathematically accuracy of the
calculations;
●recalculating the provisional purchase price
allocation and the resulting provisional goodwill
as a result of the acquired assets and liabilities;
and
●assessing the disclosures made against the
requirements of the NZ IFRS 3.
PwC
Ourauditapproach
Overview
Overallgroupmateriality:$5,268,000whichrepresents
approximately5%of profitbeforetax.
We choseprofitbeforetaxasthebenchmarkbecause,in ourview, it
is thebenchmarkagainstwhichtheperformanceof theGroupis
mostcommonlymeasuredbyusers,andis a generallyaccepted
benchmark.
Followingourassessmentof theriskof materialmisstatement,
●Fullscopeauditswereperformedforfourcomponentsof the
Groupbasedontheirfinancialsignificance
●Specifiedauditproceduresandanalyticalreviewprocedures
wereperformedontheremaining22entities.
Asreportedabove,wehavethreekeyauditmatters,being:
●Revenuerecognition
●Impairmentassessmentof goodwillandindefinitelivedbrand
names
●AlliedExpressTransportPtyLimited(AEX)acquisition
accounting
Aspartof designingouraudit,wedeterminedmaterialityandassessedtherisksof material
misstatementin thefinancialstatements.In particular, weconsideredwheremanagementmade
subjectivejudgements;forexample,in respectof significantaccountingestimatesthatinvolved
makingassumptionsa
ndconsideringfutureeventsthatareinherentlyuncertain.Asin allof ouraudits,
wealsoaddressedtheriskof managementoverrideof internalcontrols,includingamongother
matters,considerationof whethertherewasevidenceof biasthatrepresenteda riskof material
misstatementdueto fraud.
Materiality
Thescopeof ourauditwasinfluencedbyourapplicationof materiality. Anauditis designedto obtain
reasonableassuranceaboutwhetherthefinancialstat
ementsarefreefrommaterialmisstatement.
Misstatementsmayarisedueto fraudorerror. Theyareconsideredmaterialif, individuallyorin
aggregate,theycouldreasonablybeexpectedto influencetheeconomicdecisionsof userstakenon
thebasisof thefinancialstatements.
Basedonourprofessionaljudgement,wedeterminedcertainquantitativethresholdsformateriality,
includingtheoverallGroupmaterialityforthefinancialstatementsasa wholeasseto
ut above.These,
togetherwithqualitativeconsiderations,helpedusto determinethescopeof ouraudit,thenature,
timingandextentof ourauditproceduresandto evaluatetheef fectof misstatements,bothindividually
andin aggregate,onthefinancialstatementsasa whole.
Howwe tailoredourgroupauditscope
We tailoredthescopeof ourauditin orderto performsufficientworkto enableusto provideanopinion
onthefinancialstatementsasa whole,takingintoacc
ountthestructureof theGroup,theaccounting
processesandcontrols,andtheindustryin whichtheGroupoperates.
PwC
Independent Auditor's Report
To the shareholders of Freightways Group Limited
Independent Auditor's Report
To the shareholders of Freightways Group Limited
Freightways Group Limited and its subsidiaries94Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz95
Other information
The Directors are responsible for the other information. The other information comprises the
information included in the Annual report, but does not include the financial statements and our
auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not express
any form of audit opinion or assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated. If, based on the work we have performed on the other information that we obtained prior to
the date of this auditor’s report, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the financial statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of
the financial statements in accordance with NZ IFRS and IFRS, and for such internal control as the
Directors determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements, as a whole,
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (NZ) and ISAs will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located at the
External Reporting Board’s website at:
https://www.xrb.govt.nz/assurance-standards/auditors-responsibilities/audit-report-1/
This description forms part of our auditor’s report.
Who we report to
This report is made solely to the Company’s shareholders, as a body. Our audit work has been
undertaken so that we might state those matters which we are required to state to them in an auditor’s
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 Company and the Company’s shareholders, as a body, for our
audit work, for this report or for the opinions we have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Keren Blakey.
For and on behalf of:
Chartered Accountants
21 August 2023
Auckland
PwC
Group
Note
2023
$000
2022
$000
Operating revenue
2 & 3
1,121,620873,094
Transport and logistics expenses
(479,169)(344,534)
Employee benefits expenses
(309,879)(252,488)
Occupancy expenses
(6,935)(6,857)
General and administration expenses
(110,754)(80,634)
Change in fair value of contingent consideration –
Big Chill Distribution Limited
30
-(3,700)
Depreciation and software amortisation
4
(69,598)(58,359)
Amortisation of intangibles
4
(11,323)(7,528)
Operating profit before interest and income tax
133,962118,994
Net interest and finance costs
4
(28,585)(20,292)
Profit before income tax
105,37798,702
Total income tax
5
(30,080)(28,520)
Profit for the year
75,29770,182
Profit for the year is attributable to:
Owners of the parent
75,14470,095
Non-controlling interests
15387
75,29770,182
Earnings per share
25
Basic earnings per share (cents)
43.1 42.3
Diluted earnings per share (cents)
43.142.2
NB: All revenue and earnings are from continuing operations.
The above Income Statement should be read in conjunction with the accompanying notes.
Income Statement
For the year ended 30 June 2023
Independent Auditor's Report
To the shareholders of Freightways Group Limited
Freightways Group Limited and its subsidiaries96Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz97
Group
Note
2023
$000
2022
$000
Profit for the year (NPAT)75,29770,182
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations21(5,796)2,858
Cash flow hedges taken directly to equity, net of tax212263,373
Total other comprehensive income after income tax(5,570)6,231
Total comprehensive income for the year 69,72776,413
Total comprehensive income for the year is attributable to:
Owners of the parent69,57476,326
Non-controlling interests15387
69,72776,413
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
Statement of Comprehensive Income
For the year ended 30 June 2023
The Board of Directors of Freightways Group Limited authorised these financial statements for issue on the date below.
For and on behalf of the Board this 21st day of August 2023.
Mark Cairns
Chairman
Abigail Foote
Director
Group
Note
Contributed
equity
$000
Retained
earnings
$000
Cash flow
hedge
reserve
$000
Foreign
currency
translation
reserve
$000
Non-
controlling
interests
$000
Total
equity
$000
Balance at 1 July 2021182,571163,522(1,195)(6,945)148338,101
Profit for the year-70,095--8770,182
Exchange differences on translation
of foreign operations---2,858-2,858
Cash flow hedges taken directly
to equity, net of tax--3,373--3,373
Total Comprehensive Income-70,0953,3732,8588776,413
Dividend payments6-(59,678)---(59,678)
Shares issued211,778----1,778
Balance at 30 June 2022184,349173,9392,178(4,087)235356,614
Profit for the year-75,144--15375,297
Exchange differences on translation
of foreign operations---(5,796)-(5,796)
Cash flow hedges taken directly
to equity, net of tax--226--226
Total Comprehensive Income-75,144226(5,796)15369,727
Dividend payments6-(63,465)---(63,465)
Shares issued21113,726----113,726
Balance at 30 June 2023298,075185,6182,404(9,883)388476,602
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Statement of Changes in Equity
For the year ended 30 June 2023
Freightways Group Limited and its subsidiaries98Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz99
Group
Note
2023
$000
2022
$000
Current assets
Cash and cash equivalents744,48524,137
Trade and other receivables8150,434127,072
Inventories99,6508,674
Contract assets1,8751,332
Derivative financial instruments101,126963
Total current assets207,570162,178
Non-current assets
Trade receivables and other non-current assets85,9996,070
Property, plant and equipment12155,200134,180
Right-of-use assets13315,536271,020
Intangible assets14677,639501,668
Investment in associates and joint venture1512,48011,407
Derivative financial instruments102,2122,061
Total non-current assets1,169,066926,406
Total assets1,376,6361,088,584
Current liabilities
Trade and other payables17138,602172,822
Lease liabilities1344,77434,735
Income tax payable16,8077,209
Provisions183,5521,550
Contract liability1914,40715,876
Total current liabilities218,142232,192
Non-current liabilities
Trade and other payables174,1593,709
Borrowings20297,194176,210
Deferred tax liability1656,82437,087
Provisions1810,2167,382
Lease liabilities13313,499275,390
Total non-current liabilities681,892499,778
Total liabilities900,034731,970
NET ASSETS476,602356,614
EQUITY
Contributed equity21298,075184,349
Retained earnings185,618173,939
Cash flow hedge reserve102,4042,178
Foreign currency translation reserve(9,883)(4,087)
21476,214356,379
Non-controlling interests388235
TOTAL EQUITY476,602356,614
The above Balance Sheet should be read in conjunction with the accompanying notes.
Balance Sheet
As at 30 June 2023
Group
2023
$000
Inflows
2022
$000
Inflows
Note(Outflows)(Outflows)
Cash flows from operating activities
Receipts from customers1,119,913851,573
Payments to suppliers and employees(909,812)(672,075)
Cash generated from operations210,101179,498
Interest received1,00383
Interest and other costs of finance paid(29,589)(20,375)
Income taxes paid(25,707)(35,522)
Net cash inflows from operating activities23155,808123,684
Cash flows from investing activities
Payments for property, plant and equipment(34,190)(23,020)
Payments for software (3,061)(4,098)
Proceeds from disposal of property, plant and equipment2,2961,148
Payments for businesses acquired (net of cash acquired) 30(128,472)(12,070)
Payments for investment in associates(612)(2,674)
Receipts from joint venture and associate2,7112,930
Cash flows from other investing activities-2
Net cash outflows from investing activities(161,328)(37,782)
Cash flows from financing activities
Dividends paid(63,465)(59,678)
Increase in bank borrowings128,0889,803
Proceeds from issue of ordinary shares 6441,778
Principal elements of lease payments(41,734)(34,008)
Net cash inflows (outflows) from financing activities23,533(82,105)
Net increase in cash and cash equivalents18,0133,797
Cash and cash equivalents at beginning of year24,13719,940
Exchange rate adjustments 2,335400
Cash and cash equivalents at end of year744,48524,137
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
Statement of Cash Flows
For the year ended 30 June 2023
Freightways Group Limited and its subsidiaries100Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz101
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Reporting entity and statutory base
Freightways Group Limited, formerly known as Freightways Limited, is a
company 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 Part 7 of the Financial Markets Conduct Act 2013 and the
NZX Main Board Listing Rules. In accordance with the Financial Markets
Conduct Act 2013, Group financial statements are prepared and presented
for Freightways Group Limited and its subsidiaries. Accordingly, separate
financial statements for Freightways Group Limited are not required to be
prepared and presented.
The financial statements are stated in New Zealand dollars rounded to the
nearest thousand, unless otherwise indicated.
Basis of preparation
The financial statements of the Group have been prepared in accordance
with Generally Accepted Accounting Practice in New Zealand (NZ GAAP).
The Group is a for-profit entity for the purposes of complying with NZ
GAAP. The financial statements comply with New Zealand equivalents to
International Financial Reporting Standards (NZ IFRS), other New Zealand
accounting standards and authoritative notices that are applicable to entities
that apply NZ IFRS. The financial statements also comply with International
Financial Reporting Standards (IFRS).
The financial statements have been prepared on a historical cost basis,
except for derivative financial instruments and acquisition earn-out payables,
which have been measured at fair value.
Critical accounting estimates and judgements
The preparation of financial statements in conformity with NZ IFRS requires
the use of certain critical accounting estimates, where necessary, and may
require management to exercise judgement in the process of applying the
Group’s accounting policies. Specific areas of critical accounting estimates
and assumptions used are as follows:
(i) Carrying value of indefinite life intangible assets
Impairment assessments are performed by management, annually or
where there is an indicator of impairment, to assess the carrying value of
indefinite life intangible assets, including goodwill and brand names. The
recoverable amounts of cash-generating units have been determined
based on the greater of value-in-use and fair value less cost of disposal
calculations. These calculations require the use of estimates. Refer to
Note 14.
(ii) Customer relationships
The estimation of the useful lives of customer relationships has been
based on historical experience. The useful lives are reviewed at
least once per year and adjustments to useful lives are made when
considered necessary. Refer to Note 14.
(iii) Acquisition earn-out amounts payable
The valuation of the Group’s acquisition earn-out amounts payable are
based on the post-acquisition performance of the acquired businesses.
These fair value measurements require, among other things, significant
estimation of post-acquisition performance of the acquired business
and judgement on time value of money. Acquisition earn-out amounts
payable shall be remeasured at their fair value resulting from events or
factors that emerge after the acquisition date, with any resulting gain
or loss recognised in the income statement. Judgement is applied to
determine key assumptions (such as growth in sales and margins)
adopted in the estimate of post-acquisition performance of the acquired
business. Judgement is also applied to determine the appropriate
discount rate applied to calculate the present value of the amount
payable. Changes to key assumptions may impact the future payable
amount. Refer to Note 30.
(iv) Purchase price allocation for acquisitions
During the financial year ended 30 June 2023, the Group acquired
Allied Express Transport Pty Limited. All identifiable assets and liabilities
including intangible assets were measured at fair value at acquisition
date (refer Note 30). In deriving a fair value for identifiable intangibles,
the Group used a variety of valuations methods and key assumptions to
reflect what a typical market participant would apply if they were to buy
or sell each asset on an individual basis.
Notes to the financial statements
For the year ended 30 June 2023
(b) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities that are controlled either directly by the
Company or where the substance of the relationship between the
Company and the entity indicates the Company controls it. The results
of businesses acquired or disposed of during the year are included in
the income statement from the date of acquisition or up to the date
of disposal.
The financial statements include the Company and its subsidiaries
accounted for using the acquisition method. The cost of an acquisition
is measured as the fair value of the assets acquired, equity instruments
issued and liabilities incurred or assumed at the date of acquisition.
Costs directly attributable to the acquisition are expensed to the
income statement. Identifiable assets acquired, liabilities and contingent
liabilities assumed in a business combination are measured initially
at their fair values at acquisition date. The Group recognises any non-
controlling interest in an acquired entity on an acquisition-by-acquisition
basis either at fair value or as the non-controlling interest’s proportionate
share of the acquired entity’s net identifiable assets. The excess of the
consideration transferred over the fair value of the Group’s share of the
identifiable net assets acquired is recorded as goodwill.
All material transactions between subsidiaries or between the Company
and subsidiaries are eliminated on consolidation. Accounting policies of
subsidiaries are consistent with those adopted by the Group.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent changes
to the fair value of the contingent consideration that is deemed to be
an asset or liability is recognised in accordance with NZ IFRS 9 in the
income statement. Contingent consideration that is classified as equity
is not remeasured, and its subsequent settlement is accounted for
within equity.
(ii) Joint arrangements and joint ventures
The Group applies NZ IFRS 11 to all joint arrangements. Under NZ
IFRS 11 investments in joint arrangements are classified as either joint
operations or joint ventures depending on the contractual rights and
obligations of each investor. The Group has assessed the nature of its
joint arrangements and determined them to be joint ventures. Joint
ventures are accounted for using the equity method.
Under the equity method of accounting, interests in joint ventures are
initially recognised at cost and adjusted thereafter to recognise the
Group’s share of the post-acquisition profits or losses and movements
in other comprehensive income. When the Group’s share of losses
in joint venture equals or exceeds its interests in the joint venture
(which includes any long-term interests that, in substance, form part
of the Group’s net investment in the joint venture), the Group does not
recognise further losses, unless it has incurred obligations or made
payments on behalf of the joint venture.
Unrealised gains on transactions between the Group and its joint
ventures are eliminated to the extent of the Group’s interest in the joint
ventures. Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the asset transferred. Accounting
policies of joint ventures are changed where necessary to ensure
consistency with the policies adopted by the Group.
(c) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each entity in the
Group are measured using the currency that best reflects the primary
economic environment in which the entity operates (the “functional
currency”). The financial statements are presented in New Zealand
Dollars, which is the Company’s functional currency and the Group’s
presentation currency.
(ii) Transactions and balances
Transactions in foreign currencies are translated into the functional
currency using the foreign exchange rate ruling at the date of the
transaction. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year-end
exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the income statement, except
when deferred in equity as qualifying cash flow hedges.
(iii) Foreign operations
The results and balance sheets of foreign operations (none of which
has the currency of a hyperinflationary economy) that have a functional
currency different from the presentation currency are translated into the
presentation currency as follows:
- assets and liabilities for the balance sheet presented are translated at
the closing rate at the date of the balance sheet;
- income and expenses for the income statement are translated at
average exchange rates (unless this is not a reasonable approximation
of the cumulative effect of the rates prevailing on the transaction
dates, in which case income and expenses are translated at the dates
of the transactions); and
- all resulting exchange differences are recognised as a separate
component of equity.
Goodwill and fair value adjustments arising on the acquisition of a
foreign operation are treated as assets and liabilities of the foreign
operation and translated at the closing rate.
Notes to the financial statements
For the year ended 30 June 2023
Freightways Group Limited and its subsidiaries102Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz103
(d) Impairment of non-financial assets
Assets that have an indefinite life are not subject to amortisation and are
tested annually for impairment. Assets that are subject to amortisation or
depreciation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of an asset’s fair value, less costs of disposal, and value-in-use.
For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows
(cash-generating units).
(e) Financial assets
(i) Classification
The Group classifies its financial assets in the following measurement
categories:
- those to be measured subsequently at fair value either through
other comprehensive income or through the income statement; and
- those to be measured at amortised cost.
The classification depends on the Group’s business model for managing
the financial assets and the contractual terms of the cash flows. For assets
measured at fair value, gains and losses will either be recorded in the income
statement or other comprehensive income.
(ii) Recognition and derecognition
Regular purchases and sales of financial assets are recognised on the trade
date, i.e. the date on which the Group commits to purchase or sell the asset.
Financial assets are derecognised when the rights to receive cash flows
from the investments have expired or the Group has transferred substantially
all the risks and rewards of ownership.
(iii) Measurement
At initial recognition, the Group measures a financial asset at its fair value
plus, in the case of a financial asset not at fair value through the income
statement, transaction costs that are directly attributable to the acquisition of
the financial asset. Transaction costs of financial assets carried at fair value
through the income statement are expensed in the income statement.
(f) Fair value estimation
The fair value of financial assets and financial liabilities is estimated for
recognition and measurement or for disclosure purposes. The fair value of
financial instruments that are not traded in an active market (for example,
over the counter derivatives) are determined using accepted treasury
valuation techniques, such as estimated discounted cash flows, by an
external treasury management system provider. The carrying value of
trade receivables (less provision for doubtful receivables) and payables
approximate their fair values.
(g) Goods and services tax (GST)
The income statement and statement of cash flows have been prepared
so that all components are stated exclusive of GST. All items in the balance
sheet are stated net of GST, with the exception of trade receivables and
payables, which include GST invoiced.
(h) Changes in accounting policies
The accounting policies and methods of computation are consistent with
those used in the year ended 30 June 2022.
Notes to the financial statements
For the year ended 30 June 2023
NOTE 2. SEGMENT REPORTING
A segment is a component of the Group that can be distinguished from other components of the Group by the products or services it sells, the primary market
it operates in and the risks and returns applicable to it. Operating segments are reported upon in a manner consistent with the internal reporting used by the
Chief Executive Officer, as the chief operating decision maker, and the Board for allocating resources, assessing performance and strategic decision making.
The Group is organised into the following reportable operating segments:
Express package and business mail
Comprises network (hub & spoke) courier, express freight, refrigerated transport, point-to-point courier and postal services.
Information management
Comprises secure paper-based and electronic business information management services. This segment also comprises secure handling, treatment and
disposal of clinical waste, waste renewal, and related 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.
Notes to the financial statements
For the year ended 30 June 2023
Express
Package &
Business Mail
$000
Information
Management
$000
Corporate
$000
Inter-
Segment
Elimination
$000
Consolidated
Operations
$000
Income statement
Sales to external customers907,637213,983--1,121,620
Inter-segment sales3,510 3158,125 (11,950) -
Total revenue911,147214,2988,125(11,950) 1,121,620
Operating profit (loss) before interest,
income tax, depreciation and software amortisation
and amortisation of intangibles169,776 56,411(11,304)-214,883
Depreciation and software amortisation(44,329) (23,717) (1,552) -(69,598)
Operating profit (loss) before interest,
income tax and amortisation of intangibles125,44732,694(12,856)-145,285
Amortisation of intangibles(9,050)(2,273)--(11,323)
Profit (loss) before interest
and income tax116,39730,421(12,856)-133,962
Net interest and finance costs(8,606)(4,607)(15,372)-(28,585)
Profit (loss) before income tax107,79125,814(28,228)-105,377
Income tax(29,675)(7,777)7,372-(30,080)
Profit (loss) for the year attributable to
the shareholders78,11618,037(20,856) -75,297
Balance sheet
Segment assets866,301350,506159,829-1,376,636
Segment liabilities411,652180,882307,500-900,034
As at and for the year ended 30 June 2023:
Freightways Group Limited and its subsidiaries104Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz105
Express
Package &
Business Mail
$000
Information
Management
$000
Corporate
$000
Inter-
Segment
Elimination
$000
Consolidated
Operations
$000
Income statement
Sales to external customers687,023186,071--873,094
Inter-segment sales2,0099965,639 (8,644)-
Total revenue689,032187,0675,639(8,644)873,094
Operating profit (loss) before other income and
expense, interest, income tax, depreciation and software
amortisation and amortisation of intangibles142,15655,232(8,807)-188,581
Change in fair value of contingent consideration –
Big Chill Distribution Limited (Note 30)--(3,700)-(3,700)
Operating profit (loss) before
interest, income tax, depreciation and software
amortisation and amortisation of intangibles142,15655,232(12,507)-184,881
Depreciation and software amortisation(34,687)(22,105)(1,567)-(58,359)
Operating profit (loss) before interest,
income tax and amortisation of intangibles107,46933,127 (14,074)-126,522
Amortisation of intangibles(5,195)(2,333)--(7,528)
Profit (loss) before interest and
income tax102,27430,794(14,074)-118,994
Net interest and finance costs(6,200)(4,804)(9,289)-(20,292)
Profit (loss) before income tax96,07425,990(23,362)-98,702
Income tax(26,067)(7,745)5,292-(28,520)
Profit (loss) for the year attributable to
the shareholders70,00718,245(18,070)-70,182
Balance sheet
Segment assets702,906344,36141,317-1,088,584
Segment liabilities315,888185,085230,997-731,970
Segment assets and liabilities are disclosed net of inter-company balances.
For the year ended 30 June 2023, external revenue from customers in the Group’s New Zealand and Australian operations was $775.8 million and
$345.8 million, respectively (2022: $730.1 million and $142.4 million, respectively). As at 30 June 2023, non-current assets in respect of the New Zealand
and Australian operations (excluding deferred tax assets and financial assets) were $779 . 3 million and $389 . 8 million, respectively (2022: $707 . 8 million
and $259.8 million, respectively).
As at and for the year ended 30 June 2022:
Notes to the financial statements
For the year ended 30 June 2023
Notes to the financial statements
For the year ended 30 June 2023
NOTE 3. REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue recognition
The majority of contracts the Group entered into with its customers contain
multiple performance obligations. The transaction price is allocated to each
performance obligation based on the stand-alone selling prices. As the
stand-alone selling prices of all goods and services provided are observable
and there is no implicit discount offered, transaction prices allocated to
individual performance obligations usually match with respective stand-
alone selling prices.
(i) Express package & business mail – courier, express freight,
refrigerated transport & storage and postal services
The Group operates network (hub & spoke) courier, express freight,
refrigerated transport and storage, point-to-point courier and postal
services. Revenue from these services is recognised over the time of
delivery, being from the time of acceptance of the goods to delivery to
the final destination. Revenue from sale of postal products is recognised
at the point the sale occurs. Income invoiced and received in advance
of a service being provided is recorded in the balance sheet as ‘Contract
Liability’. This income is brought to account in the year in which the
service is provided. Revenue from refrigerated storage is recognised
over time in the reporting period in which the service is provided.
(ii) Information management – storage and destruction revenue
The Group provides archive management services for documents and
computer media, including storage, retrieval and destruction services.
The Group also provides secure handling, treatment and disposal of
clinical waste, waste renewal and related services. Revenue from these
services is recognised over time in the reporting period in which the
service is provided. Revenue from sale of archive boxes, computer
media and products generated from destruction activities is recognised
when control of the products has transferred, being when the products
are delivered to the customer.
(iii) Information management – digital services
The Group provides digital information management services, including
imaging and document capture (scanning), data extraction, customised
digital workflow solutions and application (app) development, under
fixed-price and variable-price contracts. Revenue from providing these
digital information management services is recognised in the period
in which the services are rendered. For fixed-price contracts, revenue
is recognised based on the actual service provided to the end of the
reporting period as a proportion of the total service to be provided,
because the service does not create an asset with an alternative use
to the Group and the Group has an enforceable right to payment for
performance completed. This revenue is determined based on the
efforts expended relative to the total expected effort.
Estimates of revenues, costs or extent of progress towards completion
are revised if circumstances change. Any resulting increases or
decreases in estimated revenues or costs are reflected in the income
statement in the period in which the circumstances that give rise to the
revision become known by management.
In the case of fixed-price contracts, the customer pays the fixed amount
based on a payment schedule. If the services rendered by the Group
exceed the payment, a contract asset is recognised. If the payments
exceed the services rendered, a contract liability is recognised.
If the contract includes an hourly fee, revenue is recognised in the
amount to which the Group has a right to invoice.
(iv) Financing components
The Group does not expect to have any contracts where the period
between the transfer of the promised goods or services to the customer
and payment by the customer exceeds one year. As a consequence, the
Group does not adjust any of the transaction prices for the time value of
money.
(v) Interest income
Interest income is recognised on a time-proportionate basis using the
effective interest method, which takes into account the effective yield on
the relevant financial asset.
(vi) Dividend income
Dividend income from investments is recognised when the
shareholder’s right to receive payment is established.
Freightways Group Limited and its subsidiaries106Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz107
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
and Refrigerated
Transport &
Storage
PostalStorage &
Handling
Destruction
Activities
Other
including
Digital
Services
Total
2023
$000$000$000$000$000$000
Revenue from external customers855,63152,00564,39587,17562,4141,121,620
Timing of revenue
recognition:
At a point in time
-2,794-27,31118,32648,431
Over time
855,63149,21164,39559,86444,0881,073,189
855,63152,00564,39587,17562,4141,121,620
2022
Revenue from external customers641,41045,61359,31983,52143,231873,094
Timing of revenue
recognition:
At a point in time
-2,540-22,03313,40637,979
Over time641,41043,07359,31961,48829,825835,115
641,41045,61359,31983,52143,231873,094
Notes to the financial statements
For the year ended 30 June 2023
(i) The estimated discounted future final payment for the BCD acquisition was increased from $51 . 3 million as at 30 June 2021 to $56 . 2 million as at 30 June
2022. This increase of $3 .7 million (net of impact of unwinding of discount on acquisition earn-out liability of $1 . 2 million) reflected the strong performance
of BCD, which determined the final payment in August 2022 for the acquisition of the company. Refer Note 30.
Group
Note
2023
$000
2022
$000
Income
Interest income1,00383
Operating expenses
Net gain on disposal of property, plant and equipment(137)(81)
Depreciation of property, plant and equipment1219,73217,800
Depreciation of right-of-use assets1345,42336,909
Amortisation of intangible assets1411,3237,528
Amortisation of software144,4433,650
Auditor’s fees
Audit of annual financial statements and review of interim
financial statements
PwC New Zealand561485
PwC Australia363143
Total924628
General treasury training1-
Executives’ remuneration benchmarking-6
Costs of offering credit
Impairment loss (gain) on trade receivables(650)(782)
Interest and finance costs
Interest on bank borrowings15,8278,352
Interest on leases1313,62510,864
Other interest expense1361,232
Other
Directors’ fees718724
Donations271215
Net foreign exchange (gain) loss(287)465
Change in fair value of contingent consideration –
Big Chill Distribution Limited "(BCD)"30 & (i)-3,700
Notes to the financial statements
For the year ended 30 June 2023
NOTE 4. INCOME AND EXPENSES
Profit before income tax includes the following specific income and expenses:
A NewPlatform GhnrueRelNprt2preloroh0oepet eNo108A NewPlatformGGhtnruNRp lrr2rrAeGtG0etnr3Nt rNGMNMrigrThGNrsgsic NewPlatfob0pbGd109
Group
2023
$000
2022
$000
Current tax
Current tax on net profit for the year35,77631,121
Deferred tax (Note 16):
Reversal of temporary differences(5,696) (2,601)
Total deferred tax(5,696) (2,601)
Income tax expense30,08028,520
Income tax applicable to the Group’s net profit before tax differs from the theoretical amount that would arise using the weighted average tax rate
applicable to the profits of the consolidated entities, as follows:
Profit before income tax105,37798,702
Income tax calculated at domestic tax rates applicable to the
accounting profits in the respective countries30,040 27,880
Tax-effect of amounts which are treated differently when calculating
taxable income:
- Additional amounts non-deductible (405) 640
- Other445-
Income tax expense30,08028,520
The Group has no tax losses (2022: Nil).
There are no unrecognised temporary differences (2022: Nil).
Notes to the financial statements
For the year ended 30 June 2023
NOTE 5. INCOME TAX EXPENSE
The income tax expense for the year is the tax payable on the current year’s taxable income based on the income tax rate for each jurisdiction adjusted by
changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in
the financial statements.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are
settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts
of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising
from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose as
a result of a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable income. No
deferred tax liability is recognised if it arises from initial recognition of goodwill from a business combination.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available
to utilise those temporary differences and losses.
Current and deferred tax balances attributable to amounts that have been recognised in other comprehensive income or directly in equity, are also taken to
other comprehensive income or directly to equity, respectively.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when
the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable
entities where there is an intention to settle the balances on a net basis.
Group
2023
$000
2022
$000
Imputation credits account
Imputation credits available for use in subsequent reporting periods58,26656,872
The above amounts represent the balance of the imputation account as at the end of the reporting period, adjusted for:
(a) Imputation credits that will arise from the payment of the amount of the provision for income tax;
(b) Imputation debits that will arise from the payment of dividends recognised as a liability at the reporting date; and
(c) Imputation credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
2023
Before tax
$000
Tax (charge) /credit
$000
After tax
$000
Exchange difference on translation of foreign operations(6,865)1,069(5,796)
Cash flow hedges taken directly to equity 314(88)226
Other comprehensive income(6,551)(981)(5,570)
Current tax-
Deferred tax 981
(981)
2022
Before tax
$000
Tax (charge) /credit
$000
After tax
$000
Exchange difference on translation of foreign operations2,907(49)2,858
Cash flow hedges taken directly to equity 4,685(1,312)3,373
Other comprehensive income7,592(1,361)6,231
Current tax-
Deferred tax (1,361)
(1,361)
The tax (charge)/credit relating to components of other comprehensive income is as follows:
Notes to the financial statements
For the year ended 30 June 2023
Freightways Group Limited and its subsidiaries110Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz111
NOTE 7. CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash balances and cash deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group’s
cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. Bank overdrafts are shown
within borrowings in the current liabilities on the balance sheet to the extent they exceed the legal right of off-set against cash included in current assets.
Group
2023
$000
2022
$000
Recognised amounts
Fully imputed dividends declared and paid during the year:
Final dividend paid 2022 at 19 cents per share (2021: 18 cents)31,52729,833
Interim dividend for 2023 at 18 cents per share (2022: 18 cents)31,93829,845
63,46559,678
Unrecognised amounts
Final dividend for 2023 at 19 cents per share (2022: 19 cents)33,71231,503
Group
2023
$000
2022
$000
Cash at bank44,376 24,026
Cash deposits109111
Cash and cash equivalents in statement of cash flows44,48524,137
Notes to the financial statements
For the year ended 30 June 2023
NOTE 6. DIVIDENDS
Group
2023
$000
2022
$000
Current
Trade receivables129,254107,747
Provision for doubtful receivables(3,219)(2,124)
126,035105,623
Accrued revenue7,9186,865
Other debtors and prepayments16,00014,100
Share plan loans receivable from employee481484
150,434127,072
Non-current
Share plan loans receivable from employees406470
Other non-current assets5,5935,600
5,9996,070
Trade receivables are non-interest bearing and are generally on 7-30 day terms.
Recoverability of trade and other receivables is reviewed on an ongoing basis. Amounts that are known to be uncollectible are written-off when identified.
The Group applies a simplified approach in calculating expected credit losses, which uses a lifetime expected loss allowance for all trade receivables.
To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. For other
receivables, an allowance for doubtful receivables is raised when there is objective evidence that the Group will not be able to collect all amounts due
according to the original terms of the receivable.
The movements in the provision for doubtful receivables for the Group were as follows:
Group
2023
$000
2022
$000
Opening balance
2,1243,014
Provision for doubtful receivables
589124
Receivables written off during the year as uncollectible
(97)(244)
Provisions added from acquired businesses
750-
Unused amounts reversed
(104)(792)
Exchange rate movement
(43)22
Closing balance (Note 28.1(b))
3,2192,124
NOTE 8. TRADE RECEIVABLES AND OTHER NON-CURRENT ASSETS
Trade and other receivables are recognised at their fair value and subsequently measured at amortised cost using the effective interest rate, less provision
for impairment.
Notes to the financial statements
For the year ended 30 June 2023
Freightways Group Limited and its subsidiaries112Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz113
Group
2023
$000
2022
$000
Finished goods
5,4804,324
Ticket stocks, uniforms and consumables
4,1704,350
9,6508,674
NOTE 10. DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial instruments, such as interest rate caps and collar contracts and interest rate swaps, are entered into from time to time to manage interest
rate exposure on borrowings. Forward exchange contracts are also entered into from time to time to manage foreign exchange exposures. Derivative financial
instruments are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the
reporting date. The method of recognising the resultant gain or loss depends on whether the derivative financial instrument is designated as a hedging
instrument, and if so, the nature of the item being hedged. The Group designates derivative financial instruments as either fair value hedges (hedges of the fair
value of recognised assets or liabilities or a firm commitment) or cash flow hedges (hedges of highly probable forecast transactions).
At the inception of the transaction, the Group documents the relationship between the hedging instrument and the hedged item, as well as its risk
management objective and strategy for undertaking the hedge transaction. The Group also documents its assessment, both at hedge inception and on an
ongoing basis, of whether the derivative financial instruments that are used in hedging transactions have been and will continue to be highly effective in
offsetting changes in fair values or cash flows of hedged items.
(i) Cash flow hedges
The effective portion of changes in the fair value of derivative financial instruments that are designated and qualify as cash flow hedges is recognised in
equity in the cash flow hedge reserve. The gain or loss relating to any ineffective portion is recognised immediately in the income statement.
Amounts taken to equity are transferred to the income statement when the hedged transaction affects profit or loss, such as when hedged income or
expenses are recognised or when a forecast sale or purchase occurs. When the hedged item is the cost of a non-financial asset or liability, the amounts
taken to equity are transferred to the initial carrying amount of the non-financial asset or liability.
If the forecast transaction is no longer expected to occur, amounts previously recognised in equity are immediately transferred to the income statement.
If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts
previously recognised in equity remain in equity until the forecast transaction occurs. If the related transaction is not expected to occur, the amount is taken
immediately to the income statement.
(ii) Derivatives that do not qualify for hedge accounting
Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting or where hedge accounting has not been adopted are
recognised immediately in the income statement.
Notes to the financial statements
For the year ended 30 June 2023
NOTE 9. INVENTORIES
Inventories are stated at the lower of cost, determined on a first-in-first-out basis, and net realisable value. Full provision is made for obsolescence, where
applicable. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs
necessary to make the sale. The cost of inventories recognised as an expense and included in ‘general and administration expenses’ amounted to $10 . 5 million
(2022: $9 . 8 million).
Group
2023
$000
2022
$000
Asset (Liability)Asset (Liability)
Current
Interest rate swaps – cash flow hedge107175
Forward foreign exchange contracts – cash flow hedge1,019788
1,126963
Non-current
Interest rate swaps – cash flow hedge2,2121,189
Forward foreign exchange contracts – cash flow hedge-872
2,2122,061
Cash flow hedge reserve
Intrinsic
value of
options
$000
Spot
component
of currency
forwards
$000
Interest
rate swaps
$000
Total hedge
reserve
$000
Balance at 1 July 2021-123(1,318)(1,195)
Change in fair value of hedging instrument
recognised in Other Comprehensive Income (OCI)-1,4913,1934,684
Less: Deferred tax-(417)(894)(1,311)
Balance at 30 June 2022-1,1979812,178
Change in fair value of hedging instrument
recognised in OCI-(641)955314
Less: Deferred tax-179(267)(88)
Balance at 30 June 2023-7351,6692,404
The Group’s hedging reserves relate to the following hedging instruments:
Notes to the financial statements
For the year ended 30 June 2023
Freightways Group Limited and its subsidiaries114Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz115
NZDAUD
2023
$000
2022
$000
2023
$000
2022
$000
Interest rate swaps:
Notional amount52,00037,00015,00010,000
Maturity date05/25 – 04/28 05/23 – 05/26 07/23 – 04/2706/23 – 07/23
Hedge ratio1:11:11:11:1
Change in fair value of outstanding
hedging instrument1,9862,325333868
Change in value of hedge item used to
determine hedge effectiveness(1,986)(2,325)(333)(868)
Weighted average strike rate for the year2.4%2.7%2.7%3.1%
Forward foreign exchange contracts:
Notional amount12,63112,988--
Maturity date07/23 – 06/2407/22 – 06/24--
Hedge ratio1:11:1--
Change in fair value of outstanding
hedging instrument1,0191,491--
Change in value of hedge item used to
determine hedge effectiveness(1,019)(1,491)--
Weighted average strike rate for the yearUSD0.71: NZD1USD0.69: NZD1--
There was no derivative movement recognised in the income statement during the year (2022: nil).
Notes to the financial statements
For the year ended 30 June 2023
Effects of hedge accounting on the financial position and performance are:
Notes to the financial statements
For the year ended 30 June 2023
HEDGE EFFECTIVENESS
Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an
economic relationship exists between the hedged item and the hedging instrument.
For hedges of foreign currency purchases, the Group enters into hedge relationships where the critical terms of the hedging instrument match exactly with the
terms of the hedged item. The Group therefore performs a qualitative assessment of effectiveness. If changes in circumstances affect the terms of the hedged
item such that the critical terms no longer match exactly with the critical terms of the hedging instrument, the Group uses the hypothetical derivative method to
assess effectiveness.
In hedges of foreign currency purchases, ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated, or if
there are changes in the credit risk of the Group or the derivative counterparty.
The Group enters into interest rate swaps that have similar critical terms as the hedged item, such as reference rate, reset dates, payment dates, maturities
and notional amount. The Group does not hedge 100% of its loans, therefore the hedged item is identified as a proportion of the outstanding loans up to the
notional amount of the swaps. As all critical terms matched during the year, the economic relationship was 100% effective.
Hedge ineffectiveness for interest rate swaps is assessed using the same principles as for hedges of foreign currency purchases. It may occur due to:
- The credit or debit value adjustment on the interest rate swaps not being matched by the loan; and
- Differences in critical terms between the interest rate swaps and loans.
Freightways Group Limited and its subsidiaries116Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz117
Name of entityPrincipal activities
Country of
Incorporation
Air Freight NZ LimitedExpress package linehaulNew Zealand
Allied Express Transport Pty LimitedExpress package servicesAustralia
Allied Overnight Express Pty LimitedExpress package servicesAustralia
Big Chill Distribution LimitedTemperature-controlled transport & facilitiesNew Zealand
Castle Parcels LimitedExpress package servicesNew Zealand
Fieldair Engineering LimitedGeneral & aviation engineering servicesNew Zealand
Fieldair Holdings LimitedAviation-related servicesNew Zealand
Freightways Finance LimitedGroup treasury managementNew Zealand
Freightways Information Services LimitedIT infrastructure support servicesNew Zealand
Freightways Properties LimitedProperty managementNew Zealand
Freightways Trustee Company LimitedTrustee of Freightways Employee Share PlanNew Zealand
Info Management Services Australia LPAustralian treasury servicesAustralia
LitSupport Pty LimitedInformation managementAustralia
Med-X Pty LimitedInformation managementAustralia
Messenger Services LimitedExpress package servicesNew Zealand
New Zealand Couriers LimitedExpress package servicesNew Zealand
New Zealand Document Exchange LimitedBusiness mailNew Zealand
NOW Couriers LimitedExpress package servicesNew Zealand
Parceline Express LimitedExpress package linehaulNew Zealand
Post Haste LimitedExpress package servicesNew Zealand
Shred-X Pty LimitedInformation managementAustralia
The Information Management Group (NZ) LimitedInformation managementNew Zealand
The Information Management Group Pty LimitedInformation managementAustralia
Other than the acquisition of Allied Express Transport Pty Limited and subsidiaries, there has been no change in investments in subsidiaries during
the year.
Notes to the financial statements
For the year ended 30 June 2023
NOTE 11. INVESTMENTS IN SUBSIDIARIES
The Company’s investment in its only directly-owned subsidiary, Freightways Express Limited (FEL), comprises shares at cost. Listed below are all the
significant subsidiaries wholly-owned directly or indirectly by FEL. All subsidiaries have a balance date of 30 June.
Land
$000
Buildings
$000
Leasehold
Alterations
$000
Motor
Vehicles
$000
Equipment
$000
Total
$000
Group
2023
Opening net book value
15,88616,118 12,81432,20157,161134,180
Additions
--3,975 3,037 27,178 34,190
Acquisitions through business
combinations (Note 30)--5143207,8568,690
Depreciation expense
-(1,328) (1,923) (5,247) (11,234) (19,732)
Disposals / Transfers
-796
97
(678)(1,255) (1,040)
Exchange rate movement
(59) (26) (55) (215) (733) (1,088)
Closing net book value
15,827 15,56015,42229,41878,973155,200
As at end of year
Cost
15,827 43,309 28,46266,497 163,510317,605
Accumulated depreciation
-(27,749) (13,040) (37,079) (84,537) (162,405)
Net book value
15,82715,560 15,42229,41878,973155,200
Notes to the financial statements
For the year ended 30 June 2023
NOTE 12. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes all
expenditure directly attributable to the acquisition or construction of the item, including interest.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic
benefits associated will flow to the Group and the cost of the asset can be measured reliably. Such cost includes the cost of replacing parts that are eligible
for capitalisation when the cost of replacing the parts is incurred. The carrying amount of the replaced part is derecognised. All other repairs and maintenance
costs are recognised in the income statement as incurred.
Depreciation is calculated on a straight-line basis on all tangible fixed assets, other than land and leasehold improvements, so as to expense the cost of the
assets to their estimated residual values over their estimated useful lives. Land is not depreciated. Leasehold improvements are depreciated over the shorter of
the unexpired period of the lease and the estimated useful life of the improvements. Estimated useful lives are as follows:
Estimated useful life
Buildings 25 to 50 years
Leasehold alterations Shorter of the period of the lease or estimated useful life
Motor vehicles 5 to 10 years
Equipment 3 to 20 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date.
Interest and finance costs incurred for the construction of a qualifying asset are capitalised during the period of time that is required to complete and prepare
the asset for its intended use. Other interest and finance costs are expensed.
Freightways Group Limited and its subsidiaries118Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz119
Land
$000
Buildings
$000
Leasehold
Alterations
$000
Motor
Vehicles
$000
Equipment
$000
Total
$000
Group
2022
Opening net book value15,782 17,448 11,599 28,58854,921128,338
Additions--2,928 7,433 10,511 20,872
Acquisitions through
business combinations---1,6848782,562
Depreciation expense-(1,376) (1,727) (4,818) (9,879) (17,800)
Disposals--(43)(1,050) (100) (1,193)
Exchange rate movement104 4657 364 830 1,401
Closing net book value15,886 16,118 12,814 32,20157,161134,180
As at end of year
Cost15,886 39,915 23,06753,145 151,655 283,668
Accumulated depreciation-(23,797) (10,253) (20,944) (94,494) (149,488)
Net book value15,88616,118 12,81432,20157,161134,180
The cost of equipment in respect of assets under construction for which depreciation has not commenced as at 30 June 2023 is $20 . 3 million
(2022: $0 . 7 million).
The latest independent valuations of land and buildings (performed in June 2022) assess these assets to have a total fair value of $104 . 4 million.
The fair values have been derived using the direct capitalisation approach. The valuation technique uses significant unobservable inputs, namely
capitalisation rate and potential new market income of land and buildings. Therefore, these are considered level 3 valuations, as defined in Note 28 . 1(d).
NOTE 13. LEASES
This note provides information for leases where the Group is a lessee.
The Group’s leases predominantly relate to property, equipment and vehicles. Rental contracts are typically made for fixed periods of 3 to 12 years but may
have extension options. Lease terms are negotiated on an individual basis and contains a wide range of different terms and conditions. The lease agreements
do not impose covenants other than the leased assets may not be used as security for borrowing purposes. The right-of-use (ROU) asset is depreciated over
the shorter of the asset’s useful life and the expected lease term on a straight-line basis.
Lease liabilities have been measured at the present value of the remaining lease payments, discounted using a discount rate derived from the incremental
borrowing rate (IBR) when the interest rate implicit in the lease was not readily available. Factors taken into consideration when calculating the IBR for each
asset category included observable market rates, economic conditions and lease tenure. The incremental borrowing rates applied to lease liabilities range
between 1 . 69% to 7 . 22% (2022: 1 . 69% to 5 . 27%), with a weighted average rate of 4 . 37% (2022: 3.74%).
Some property leases contain an extension option exercisable by the Group. At the commencement of a lease, the Group assesses whether it is reasonably
certain an extension option will be exercised. The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects
this assessment and that is within the control of the Group. The extension options are only exercisable by the Group and not the lessor. Where it is reasonably
certain the extension will be exercised, that extension period and related costs are recognised on the balance sheet.
Notes to the financial statements
For the year ended 30 June 2023
Group
2023
$000
2022
$000
Right-of-use assets
Opening net book value271,020275,849
Lease additions, modifications and terminations79,07329,719
Additions through business combinations12,791-
Depreciation for the year(45,423)(36,909)
Exchange rate movement(1,925)2,361
Closing net book value315,536271,020
Cost497,950420,968
Accumulated depreciation(182,414)(149,948)
Closing net book value315,536271,020
Group
2023
$000
2022
$000
Right-of-use assets
Buildings285,709248,950
Equipment6,2717,630
Motor vehicles23,55614,440
315,536271,020
The following tables show the movements and analysis in relation to the ROU assets and lease liabilities.
The balance sheet shows the following amounts relating to leases:
Group
2023
$000
2022
$000
Lease liabilities
Opening lease liabilities310,125311,635
Lease additions, modifications and terminations79,29829,818
Additions through business combinations12,791-
Interest for the year13,62510,864
Lease repayments(55,442)(44,815)
Exchange rate movement(2,124)2,623
Closing lease liabilities358,273310,125
Notes to the financial statements
For the year ended 30 June 2023
Freightways Group Limited and its subsidiaries120Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz121
Lease liabilities maturity analysis:
2023
Minimum lease
payments
$000
Interest
$000
Present value
$000
Within one year59,10814,20744,901
One to five years188,88639,557149,329
Beyond five years189,17025,127164,043
Total437,16478,891358,273
2022
Within one year46,71010,57536,135
One to five years144,04531,987112,058
Beyond five years189,78427,852161,932
Total380,53970,414310,125
Lease related expenses included in the income statement:
Group
2023
$000
2022
$000
Depreciation charge for right-of-use assets
Buildings
36,15328,122
Motor vehicles6,1045,991
Equipment
3,1662,494
45,42336,607
Interest on leases
13,62510,864
Total cash outflow in relation to leases is $41 . 7 million (2022: $43 . 1 million).
Notes to the financial statements
For the year ended 30 June 2023
Group
2023
$000
2022
$000
Analysis of lease liabilities:
Current
44,77434,735
Non-current
313,499275,390
358,273310,125
NOTE 14. INTANGIBLE ASSETS
(i) Goodwill
Goodwill represents the excess of the consideration transferred in an acquisition over the fair value of the Group’s share of the net identifiable assets
of the acquired business at the date of acquisition. Goodwill is not amortised but is tested for impairment annually or whenever events or changes in
circumstances indicate that it might be impaired and is carried at cost less accumulated impairment losses. Goodwill is allocated to cash-generating units
for the purpose of impairment testing.
(ii) Brand Names
Acquired brand names are recognised at cost, being their fair value at the date of acquisition if acquired in a business combination. Brand names with
indefinite useful lives are not subject to amortisation but are tested for impairment annually or whenever events or changes in circumstances indicate
that they might be impaired and are carried at cost less amortisation and impairment losses. Brand names with finite useful lives are amortised over their
expected useful lives. The useful lives and amortisation methods are reviewed and adjusted, if appropriate, at each balance sheet date.
Brand names are allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or
groups of cash-generating units that are expected to benefit from the brand names.
(iii) Computer software
External software costs, together with payroll and related costs for employees directly associated with the development of software, are capitalised if the
development creates an intangible asset that the Group controls and the intangible asset meets the recognition criteria. Cloud-based software costs that
do not result in intangible assets are expensed as incurred, unless the costs are paid to the suppliers of the cloud-based software to significantly customise
the cloud-based software for the Group, in which case the costs paid upfront are recorded as prepayments for services and amortised over the expected
terms of the cloud computing arrangements. Amortisation is charged on a straight-line basis over the estimated useful life of the software which ranges
between 3 and 10 years. Included in the cost of software is work in progress of $0 . 4 million (2022: $0 . 1 million) for which amortisation has not commenced.
Software under development not yet available for use is tested annually for impairment.
(iv) Customer relationships
• Contractual
An intangible asset is recorded at fair value in respect of the amount of any contractual termination fees payable by customers of businesses
acquired in respect of their document holdings. As it is not known when permanent retrieval fees may arise, this asset is only amortised upon the
actual retrieval fee being charged to the respective customer.
• Other
Non-contractual customer relationships acquired in a business combination are recognised at fair value at the acquisition date.
These customer relationships have an estimated finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated
using the straight-line method over the expected useful life of the customer relationship which ranges between 10 and 20 years.
Notes to the financial statements
For the year ended 30 June 2023
A NewPlatform GhnrueRelNprt2preloroh0oepet eNo122A NewPlatformGGhtnruNRp lrr2rrAeGtG0etnr3Nt rNGMNMrigrThGNrsgsic NewPlatfob0pbGd123
Group
Goodwill
$000
Brand
names
$000
Software
$000
Customer
relationships
$000
Other
$000
Total
$000
2023
Opening net book value306,116 128,286 12,89650,8143,556501,668
Additions--3,030 -313,061
Acquisition through
business combinations (Note 30)106,60630,6542,16756,3293,141198,897
Disposals / Transfers--162--162
Amortisation expense-(77) (4,443) (10,501) (745) (15,766)
Exchange rate movement(6,072)(1,580)(107)(2,451)(173)(10,383)
Closing net book value406,650157,28313,70594,1915,810677,639
As at end of year
Cost425,312 157,41133,701129,458 11,031 756,913
Accumulated amortisation
and impairment(18,662)(128) (19,996) (35,267) (5,221) (79,274)
Net book value406,650157,28313,70594,1915,810677,639
Group
Goodwill
$000
Brand
names
$000
Software
$000
Customer
relationships
$000
Other
$000
Total
$000
2022
Opening net book value295,505126,86912,87252,568 3,568491,382
Additions--3,788 -310 4,098
Acquisition through
business combinations7,549873-4,55452513,501
Amortisation expense-(51)(3,650) (6,549) (928) (11,178)
Written-off--(144)--(144)
Exchange rate movement3,06259530241814,009
Closing net book value306,116128,28612,89650,814 3,556501,668
As at end of year
Cost324,778 128,33736,17175,772 8,047 573,105
Accumulated amortisation
and impairment(18,662)(51)(23,275) (24,958) (4,491) (71,437)
Net book value306,116 128,286 12,89650,8143,556501,668
Notes to the financial statements
For the year ended 30 June 2023
Goodwill Brand names
2023
$000
2022
$000
2023
$000
2022
$000
Allied Express
100,271-29,399-
Big Chill
85,18385,18314,63814,714
Messenger Services
8,7668,7665,1005,100
New Zealand Couriers
47,75247,75258,50058,500
New Zealand Document Exchange and Dataprint
15,09215,0927,3187,318
Post Haste, Castle Parcels and NOW Couriers
27,15927,15918,39518,395
Total Express Package & Business Mail
284,223183,952133,350104,027
The Information Management Group (New Zealand)
17,57717,5774,4004,400
The Information Management Group (Australia)
57,52658,47816,16816,438
Shred-X
47,32446,1093,3653,421
Total Information Management
122,427122,16423,93324,259
Total
406,650306,116157,283128,286
Impairment tests for indefinite life intangible assets
Goodwill and brand names are allocated to those cash-generating units (CGU) or groups of CGU that are expected to benefit from them.
The carrying amount of intangible assets allocated by CGU or group of CGU is outlined below:
Notes to the financial statements
For the year ended 30 June 2023
Freightways Group Limited and its subsidiaries124Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz125
(i) Key assumptions used for value-in-use calculations
On an annual basis, the recoverable amount of goodwill and brand names is determined based on the greater of value-in-use and fair value less costs of
disposal calculations specific to the CGU or group of CGUs associated with both goodwill and brand names.
The value-in-use calculations use pre-tax cash flow projections based on financial budgets prepared by management and approved by the Board for the
year ended 30 June 2024. Cash flows beyond June 2024 have been extrapolated using growth rates which take into consideration current and forecast
economic conditions for the relevant products and industries. A probabilistic approach was also adopted where a number of different growth scenarios
were considered and weighted by likelihood of achievement. In addition, the sensitivity of the main financial variables was tested and considered in
the final estimation. No adjustments have been made to forecast cash flows for the unknown impacts of future legislative changes in relation to climate
change, as further disclosed in the note “Climate change” below.
Revenue growth rates and a consistent EBITDA margin assuming costs increase in line with revenue, reflecting both historical and expected growth,
have been applied to the value-in-use calculation with the same scenarios and sensitivities applied as described in the Significant estimate – sensitive to
changes in assumptions section below. Growth rates have been aligned with the observed long-term inflation for each geographic region and each CGU’s
ability to increase customer prices and grow with nominal GDP. Pre-tax discount rates, reflecting the current environment in financial markets and the
countries each CGU or group of CGUs operates in, have been used. The CGU or group of CGUs specific growth rates and pre-tax discount rates
applied are:
Notes to the financial statements
For the year ended 30 June 2023
Growth rate beyond
next financial year, including
terminal growth
Pre-tax discount rate
2023
%
2022
%
2023
%
2022
%
Allied Express3.0%-13.7%-
Big Chill2.5%2.0%13.5%12.1%
Messenger Services2.5%2.0%15.8%11.1%
New Zealand Couriers2.5%2.0%14.1%11.1%
New Zealand Document Exchange and Dataprint2.5%2.0%16.9%16.9%
Post Haste, Castle Parcels and NOW Couriers2.5%2.0%14.6%11.1%
The Information Management Group (New Zealand)2.5%2.0%16.1%11.1%
The Information Management Group (Australia)3.0%2.5%14.0%13.2%
Shred-X3.0%2.5%14.0%13.2%
Note: Post-tax discount rates were disclosed in the annual report for the year ended 30 June 2022. Pre-tax discount rates, including for the 2022
comparatives, have now been disclosed to conform with NZ IAS 36: Impairment of Assets.
(ii) Significant estimate – Sensitivity to changes in assumptions
From the value-in-use assessment for all CGU’s, management believes that no reasonably possible change in any of the above key assumptions would
cause the carrying values of goodwill and brand names to exceed their respective recoverable amounts.
Following are the significant estimate notes included in last year’s annual report carried forward to this year’s annual report for comparative purposes:
COVID-19 has particularly impacted the financial performance of NZDX and TIMG AU, which are more sensitive to changes in the key assumptions.
Revenue of the two businesses have decreased and in the case of NZDX, costs have increased due to inefficiencies arising from operating in the COVID-19
environment, especially due to staff absenteeism. The value-in-use analysis prepared for NZDX and TIMG AU assume the FY23 financial performance returns
to pre COVID-19 level, through higher volume and significant price increases that are already being implemented. Growth rate of 2.0% for NZDX and 2.5% for
TIMG AU is then assumed from FY24.
The value-in-use analysis prepared for TIMG AU is based on the following key assumptions:
- 100% achievement of FY23 budgeted revenue;
- 2 . 5% Revenue growth per year (with a range of scenarios from – 4% to 4% p.a considered);
- 2 . 5% terminal EBITDA growth rate; and
- Post-tax discount rate of 9 . 9%
The recoverable amount of TIMG AU would equal its carrying amount if any of the key assumptions were to change as follows:
2022
From
%
To
%
Achievement of FY24 budgeted revenue100%81%
Revenue growth per year (FY25-FY28)2.5%(3.9%)
Terminal EBITDA growth rate2.5%0%
Post-tax discount rate9.9%11.7%
Climate change
Freightways strongly believes that sustainable business practices are fundamental to our future. These include minimising the environmental impact of our daily
operations and actively seeking initiatives to protect the environment.
More than 95% of Freightways’ emissions come from the combustion of transport fuel, including that of our contracted couriers. The most significant financial
impact would therefore be due to an increase to the cost of fuel and the cost of carbon credits linked to the volume of fuel used. Freightways would expect,
however, to be able to recoup most of that impact as mechanisms are already in place to adjust prices for movement of the price of fuel. The risk of disruption
due to natural events linked to climate change can be managed through the flexibility of our network across New Zealand. Finally, most of the vehicles used in
the Express Packaging businesses are owned by contractors and Freightways is exploring ways through which it will be able to facilitate the transition of the
vehicles to electric or hydrogen.
The New Zealand External Reporting Board (XRB) published the Aotearoa New Zealand Climate Standards in December 2022. The new standards are
effective for annual reporting periods beginning on or after 1 January 2023. Early adoption is permitted. The Group is currently assessing the new standards and
intends to adopt the new standards in the 2024 financial year.
2022
From
%
To
%
Achievement of FY24 budgeted revenue100%72%
Revenue growth per year (FY25-FY28)2%(8.8%)
Terminal EBITDA growth rate2%(5.8%)
Post-tax discount rate12.5%17.0%
Notes to the financial statements
For the year ended 30 June 2023
The value-in-use analysis prepared for NZDX is based on the following key assumptions:
- 100% achievement of FY23 budgeted revenue;
- 2 . 5% Revenue growth per year (with a range of scenarios from -4% to 4% p.a considered);
- 2 . 5% terminal EBITDA growth rate; and
- Post-tax discount rate of 9 . 9%.
The recoverable amount of NZDX would equal its carrying amount if any of the key assumptions were to change as follows:
Freightways Group Limited and its subsidiaries126Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz127
GSS
2023
$000
2022
$000
Summarised Balance Sheet
Total current assets4,4496,257
Total non-current assets430563
Total current liabilities(2,287) (2,706)
Total non-current liabilities--
Net Assets2,5924,114
Reconciliation to carrying amounts:
Opening net assets4,1141,689
Profit for the period4,9205,116
Other comprehensive income--
Dividend paid(6,442) (2,691)
Closing Net Assets2,5924,114
Group’s share in GSS33.3%33.3%
Group’s share in net assets8631,370
Goodwill6,9486,948
Carrying Amount7,8118,318
GSS
2023
$000
2022
$000
Summarised Statement of Comprehensive Income
Revenue32,29833,380
Profit from continuing operations4,9205,116
Profit for the year4,9205,116
Other comprehensive income--
Total Comprehensive Income4,9205,116
NOTE 15. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
The Group has a 33 . 3% investment and voting rights in Sweetspot Group Limited (GSS), a company that provides freight brokerage service.
The principal place of business and country of incorporation of GSS is New Zealand.
GSS is the only material associate of the Group as at 30 June 2023. GSS has share capital consisting solely of ordinary shares, which are held directly
by the Group.
GSS is accounted for using the equity method. The carrying value of the investment in GSS is $7 . 8 million (2022: $8 . 3 million). GSS is a private entity with no
quoted price available.
The tables below provide summarised financial information for GSS. The information disclosed reflects the amounts presented in the financial statements of
GSS and not Freightways Group Limited’s share of those amounts.
GSS does not have any capital commitments and contingent liabilities as at 30 June 2023 (2022: Nil).
The carrying value of other individually immaterial investments in associates and joint ventures as at 30 June 2023 is $4 . 7 million (2022: $3 . 1 million).
Notes to the financial statements
For the year ended 30 June 2023
Group
Property,
plant and
equipment
$000
Employee
entitlements
$000
Accruals and
provisions
$000
Derivative
financial
instruments
$000
Intangible
assets
$000
Leases
$000
Total
$000
2023
Balance at beginning of year(7,717)8,278 4,245(848)(50,612)9,567(37,087)
Prior period adjustment(1,071)(217)(141)-39105(1,285)
Transfer to income statement909416413-3,6501,5936,981
Amounts relating to business
combinations (Note 30)(1,139)1,183871-(27,037)-(26,122)
Adjustment for cash flow
hedge reserve---(88)--(88)
Other480-(468)142(347)(292)
Exchange rate movement51(101)(56)-1,253(78)1,069
Balance at end of year(8,487)9,5594,864(935)(72,665)10,840(56,824)
Group
Property,
plant and
equipment
$000
Employee
entitlements
$000
Accruals and
provisions
$000
Derivative
financial
instruments
$000
Intangible
assets
$000
Leases
$000
Total
$000
2022
Balance at beginning of year(7,980)7,964 5,001464(50,576)8,401(36,726)
Prior period adjustment(138)74(415)-(140)-(619)
Transfer to income statement407112(378)-2,0511,0283,220
Amounts relating to business
combinations-35--(1,636)-(1,601)
Adjustment for cash flow
hedge reserve---(1,312)--(1,312)
Exchange rate movement(6)9337-(311)138(49)
Balance at end of year(7,717)8,278 4,245(848)(50,612)9,567(37,087)
NOTE 16. DEFERRED TAX LIABILITY
The movement in deferred tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same
jurisdiction, is as follows:
Notes to the financial statements
For the year ended 30 June 2023
Freightways Group Limited and its subsidiaries128Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz129
NOTE 18. PROVISIONS
A provision is recognised when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of
economic benefits will be required to settle the obligation and a reliable estimate of the obligation can be made. If the effect is material, provisions are
determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where
appropriate, the risks specific to the liability. The increase in the provision due only to the passage of time is recognised as an interest expense.
Explanation of provisions
Provision for customer claims relates to actual claims received from customers that are being considered for payment as at reporting date and are expected to
be resolved within the next two months.
Provision for long service leave relates to the potential leave obligation for employees who reach continuous employment milestones required under Australian
regulations. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.
Provision for lease obligations relates to estimated payments to reinstate leased buildings and equipment used to an appropriate condition upon the expiry of
the respective lease terms.
Group
2023
$000
2022
$000
Current
Trade creditors51,29148,416
Employee entitlements32,35827,587
Acquisition earn-out payables67656,184
Other creditors and accruals54,27740,635
138,602172,822
Non-current
Acquisition earn-out payables4,1593,709
Other non-current payables--
4,1593,709
Notes to the financial statements
For the year ended 30 June 2023
NOTE 17. TRADE AND OTHER PAYABLES
Trade and other payables are recognised when the Group becomes obligated to make future payments resulting from the purchase of goods or services.
They are initially recognised at fair value and subsequently measured at amortised cost using the effective interest rate method. Acquisition earn-out payables
have been measured at fair value. The amounts are unsecured.
Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within 12 months of the reporting date are
recognised in respect of employees’ services rendered up to the reporting date. They are measured for recognition by assessing the amounts expected to be
paid when the liabilities are settled. Included in employee entitlements is an accrual of $2. 8 million (2022: $2. 8 million) for potential remediation for
New Zealand Holidays Act non-compliance.
Liability for long service leave is recognised and measured as the present value of expected future payments to be made in respect of services provided by the
employee. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.
Notes to the financial statements
For the year ended 30 June 2023
Group
Customer
claims
$000
Long service
leave
$000
Lease
obligations
$000
Total
$000
2023
Balance at beginning of year8734,3883,6718,932
Additions through business combinations2221,7737282,723
Current year provision 3841,3101,5983,292
Amounts used during the year(54)(517) (239)(810)
Movement in exchange rate(8)(303) (58)(369)
Balance at end of year1,4176,6515,70013,768
2023
$000
2022
$000
Analysis of total provisions
Current3,5521,550
Non-current10,2167,382
Total13,7688,932
Group
Customer
claims
$000
Long service
leave
$000
Lease
obligations
$000
Total
$000
2022
Balance at beginning of year9384,1083,4958,541
Current year provision 8733851281,386
Amounts used during the year(938) (232) -(1,170)
Movement in exchange rate-127 48 175
Balance at end of year8734,3883,6718,932
NOTE 19. CONTRACT LIABILITY
A contract liability of $14 . 4 million (2022: $15 . 9 million) is recorded in the balance sheet reflecting the future service obligation for courier and postal products
that have been sold in advance of their use. The balance is supported by reference to historical customer prepaid product usage patterns.
Revenue recognised during the year that was included in the contract liability balance at the beginning of the year was $9 .4 million (2022: $9 . 6 million).
There are no other significant financing components in the Group’s revenue arrangement.
Freightways Group Limited and its subsidiaries130Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz131
Group
2023
$000
2022
$000
Bank borrowings
Non-current
297,194176,210
297,194176,210
(a) Bank borrowings
The bank borrowings agreement contains a negative pledge deed. The negative pledge includes a provision restricting the Group from granting security
interests and a cross-guarantee of all relevant indebtedness by majority of the Company’s subsidiaries.
(b) Finance facilities
The following finance facilities existed at the reporting date:
Facilities denominated in
New Zealand Dollars
Facilities denominated in
Australian Dollars
2023
$000
2022
$000
2023
$000
2022
$000
Bank overdraft
Total bank overdraft facilities available8,0008,000--
Amount of overdraft facilities unused8,0008,000--
Loan facilities
Total loan facilities available170,000170,000180,000200,000
Maturing 30 June 2023---70,000
Maturing 11 July 2025--20,00020,000
Maturing 15 March 2026120,000120,000--
Maturing 15 December 202610,00010,00010,00010,000
Maturing 15 March 202730,00030,00080,00080,000
Maturing 19 March 202810,00010,00020,00020,000
Maturing 14 December 2029--50,000-
Amount of loan facilities used124,00089,000158,70078,200
Amount of loan facilities unused46,00081,00021,300121,800
Effective interest rate at 30 June as
amended for interest rate hedges5.67%5.30%4.92%4.13%
Notes to the financial statements
For the year ended 30 June 2023
NOTE 20. BORROWINGS
Interest-bearing bank loans and overdrafts are initially recognised at fair value and subsequently measured at amortised cost using the effective interest rate
method. Costs incurred in establishing finance facilities are amortised to the income statement over the term of the respective facilities.
Liabilities from financing activities
Group
Cash
$000
Leases
$000
Bank
borrowings
$000
Total
$000
Balance at 1 July 202119,940(311,635) (163,696)(455,391)
Cashflow3,79734,008(9,803)28,002
Lease additions, modifications and terminations-(29,818)-(29,818)
Other non-cash movements--(471)(471)
Exchange rate movement400 (2,680)(2,240)(4,520)
Balance at 30 June 202224,137(310,125) (176,210)(462,198)
Cashflow14,71341,734(128,088)(71,641)
Lease additions, modifications and terminations-(79,298)-(79,298)
Additions through business combinations-(12,791)-(12,791)
Other non-cash movements--(516)(516)
Exchange rate movement5,6352,2077,62015,462
Balance at 30 June 202344,485(358,273) (297,194)(610,982)
The fair values of borrowings are not materially different to their carrying amount, since the interest payable on those borrowings is either close to market rate
or the borrowings are of a short-term nature.
In March 2021, the Group entered into a new US$160 million uncommitted finance facility with a US-based lender on the same terms as the syndicated bank
facilities. Of this facility, the US dollar equivalent of NZ$20 million and A$100 million was drawn as at 30 June 2023 (2022: NZ$20 million and A$50 million).
The drawn amounts mature in July 2025, December 2026, March 2028 and December 2029, as detailed in the maturity table above.
In June 2023, A$70 million of the syndicated bridge facility used to fund the acquisition of Allied Express Transport Pty Limited matured. The Group has
sufficient headroom in its remaining finance facilities and the A$70 million was not required to be renewed.
Compliance with banking covenants
The Group was in compliance with all of its banking covenants throughout the year ended 30 June 2023. The Group’s banking covenants forecast indicates
that the Group will remain compliant with all of its banking covenants in the next twelve months. The forecast includes a sensitivity analysis of a 20% decline in
forecast earnings before interest, income tax, depreciation and amortisation.
Net debt reconciliation
An analysis of net debt and movements in net debt are as follow:
Notes to the financial statements
For the year ended 30 June 2023
Freightways Group Limited and its subsidiaries132Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz133
Group
2023
Ordinary shares
2022
Ordinary shares
2023
$000
2022
$000
Balance at beginning of year165,795,056165,530,836184,349182,571
Share-based payment expenses---(471)
Shares issued during the year:
- Partly-paid shares, fully paid up to ordinary shares-200,342-1,489
- Share rights127,565-1,016-
- Employee share plan65,00065,000595747
(Increase) decrease in employee share plan
unallocated shares5,250(1,122)4913
Issue of fully paid ordinary shares11,435,347-112,066-
Balance at end of year177,428,218165,795,056298,075184,349
Contributed equity
(i) Fully paid ordinary shares
As at 30 June 2023, there were 177 , 431 , 358 shares issued and fully paid (2022: 165 , 803 , 446). All fully paid ordinary shares have equal voting rights and
share equally in dividends and surplus on winding up.
(ii) Share rights
Share rights are issued to certain senior executives under the rules of the Freightways Long Term Incentive (LTI) Scheme, 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. Each share right converts to one Freightways fully paid ordinary share upon vesting. Share rights do not carry a dividend
entitlement and are non-transferable.
On 16 September 2022, 127 , 565 share rights vested upon achievement of certain financial hurdles set by the Board and each of the share rights converted
to one Freightways fully paid ordinary share (2022: Nil). The issue price per share was $8 . 06 (2022: Nil).
On 21 September 2022, 35 , 227 share rights were redeemed and cancelled (2022: Nil).
On 17 May 2023, 152 , 160 share rights were issued to certain senior executives under the rules of the Freightways LTI Scheme (2022: 94 ,370).
As at 30 June 2023, there were 392 , 006 share rights on issue (2022: 402 , 638).
(iii) Partly-paid ordinary shares
No partly-paid shares were fully paid-up during the year (2022: 200,342). The average issue price per share for the shares issued in 2022 was $7 . 43.
As at 30 June 2023, there were no partly-paid shares on issue (2022: Nil).
Notes to the financial statements
For the year ended 30 June 2023
NOTE 21. EQUITY
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a reduction in the amount of
proceeds arising from the issue of shares.
(iv) Employee Share Plan
On 5 December 2022, the Company issued 65 , 000 fully paid ordinary shares at $9.16 each to Freightways Trustee Company Limited, as Trustee for the
Freightways Employee Share Plan (December 2021: 65 , 000 fully paid ordinary shares at $11 . 49 each). In total, participating employees were provided with
interest-free loans of $0 . 6 million to fund their purchase of the shares in the Share Plan (December 2021: $0 . 7 million). The loans are repayable over three
years and repayment commenced in December 2022.
As at 30 June 2023, the Trustee held 579 , 717 (2022: 593 , 573) fully paid ordinary shares representing 0 . 3% (2022: 0 . 4%) of all issued ordinary shares of
which 3 ,140 (2022: 8 , 390) were unallocated. These shares are held for allocation in the future.
The Employee Share Plan operates in accordance with section CW 26C of the New Zealand Income Tax Act 2007 and the Trustees are appointed by the
Freightways Group Limited Board of Directors.
Issue of fully paid ordinary shares
On 30 September 2022, the company issued 11 , 435 , 347 fully paid ordinary shares as part of a placement to the vendors of Allied Express Transport Pty
Limited (AEX) in connection with the acquisition of AEX by the Group. (Refer to Note 30).
Nature and purpose of reserves
(i) Cash flow hedge reserve
The cash flow hedge reserve is used to record gains or losses on a hedging instrument within a cash flow hedge.
The amounts are recognised in the income statement when the associated hedged transactions affect profit or loss, as described in Note 10(i).
(ii) Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign
operations into New Zealand dollars, as described in Note 1(c).
The increase from the prior year reflects:
- increased value of foreign operations and balance sheet following the acquisition of AEX (refer Note 30 for fair value of assets and liabilities arising from
the AEX acquisition); and
- a change in the NZD:AUD closing exchange rate from 1:0.9031 at 30 June 2022 to 1:0.9182 at 30 June 2023.
Notes to the financial statements
For the year ended 30 June 2023
Freightways Group Limited and its subsidiaries134Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz135
NOTE 22. SHARE-BASED PAYMENTS
The Group operates equity-settled, share-based compensation arrangements for senior executives, under which the Group receives services from employees
as consideration for share rights in the Company. The fair value of the employee services received in exchange for the share rights is recognised as an expense.
The total amount to be expensed is determined at grant date by reference to the fair value of the share rights allotted, taking into account market vesting
conditions (for example, total shareholder return measures such as outperforming the median of the NZX50 Index), but excluding the impact of any non-market
service and performance vesting conditions (for example, compound growth rates for earnings per share, expected profit target against the capital employed
and remaining an employee of the Group over a specified time period). Non-market vesting conditions are included in assumptions about the number of share
rights that are expected to vest. The total amount expensed is recognised over the relevant vesting period, which is the period over which all of the specified
vesting conditions are to be satisfied. At each balance sheet date, the Group revises its estimates of the number of share rights that are expected to vest based
on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement.
a) Description of share-based payment arrangements
Freightways Long-term Incentive Scheme (the ‘Scheme’)
In July 2020, the Board approved a long-term incentive scheme for certain Freightways senior executives. Under this Scheme, share rights are issued at
‘Nil’ consideration which entitles participants to receive ordinary shares in Freightways within three years of vesting period. The total contractual life of
share rights is 3 years.
Share rights will vest if the participant remains employed by Freightways for the duration of the vesting period and the following performance hurdles are
met over the assessment period. They will vest in the following proportions:
- Total Shareholder’s Return (TSR) class of rights (50% of share rights)
This will vest over the assessment period on a progressive vesting scale based on the Group’s TSR relative to the TSR of other
constituents of the NZX50 Index.
- Cost of Capital class of rights (50% of share rights)
This will vest based on net operating profit after tax (NOPAT) exceeding a cost of capital hurdle (determined by the Board) over the
assessment period.
On vesting date, subject to meeting service and performance conditions, each share right can be exercised to receive one ordinary share. The senior
executives are liable for tax on the shares received at this point.
b) Reconciliation of outstanding partly-paid shares and share rights
Number of partly-paid sharesNumber of share rights
2023202220232022
Balance at beginning of the year-200,342402,638308,268
Issued during the year--152,16094,370
Cancelled during the year--(35,227)-
Fully paid-up or exercised during the year-(200,342)(127,565)-
Balance at end of the year--392,006402,638
Exercisable at end of the year--166,352158,854
Notes to the financial statements
For the year ended 30 June 2023
2023
$000
2022
$000
Total amount expensed during the year
1,0161,031
c) Effect of share-based payment arrangements on profit or loss, financial position and equity
Share rights
Grant date:19 Oct 202028 Oct 202124 Nov 22
Fair value at grant date
$4.14 - TSR
class of rights
$7.43 – NOPAT
class of rights
$7.28 - TSR
class of rights
$11.73 – NOPAT
class of rights
$6.51 - TSR
class of rights
$9.13 – NOPAT
class of rights
Exercise priceNilNilNil
Share price at grant date
$8.29$12.71$9.99
Expected dividends
4%2.5%2.5%
Expected volatility
24.9%26.8%29.9%
Expected life
0.2 years1.2 years2.2 years
Risk free interest rate (based on government bonds)
0.10%1.82%4.48%
Fair value measurement of share-based payment arrangements
The fair value of share rights has been measured using Monte Carlo simulation. The fair value measurement also considers the terms and conditions upon
which partly-paid shares and share rights were issued. Service and non-market performance conditions attached to the arrangements were not considered in
measuring fair value.
The inputs used in the measurement of fair values at grant date of share rights issued during the year were as follows:
Expected volatility has been based on an evaluation of the historical volatility of the Freightways’ share price, particularly over the historical period
commensurate with the expected term. The expected term of share rights has been based on historical experience and general option holder behaviour.
Notes to the financial statements
For the year ended 30 June 2023
Freightways Group Limited and its subsidiaries136Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz137
Group
Note
2023
$000
2022
$000
Profit for the year75,29770,182
Add non-cash items:
Depreciation and amortisation480,92165,887
Movement in provision for doubtful debts650(782)
Movement in deferred income tax(2,595)(2,601)
Net gain on disposal of property, plant and equipment (137)(81)
Net foreign exchange (gain) loss(287)466
Change in fair value of contingent consideration –
Big Chill Distribution Limited-3,700
Write-off of software-144
Share of profits of associates(3,173)(3,386)
Movement in working capital, net of effects of acquisitions of businesses:
Increase in trade and other receivables(3,385) (20,907)
Increase in inventories (1,556)(2,498)
Increase in trade and other payables3,10615,432
Increase (decrease) in income taxes payable6,967(1,872)
Net cash inflows from operating activities155,808123,684
NOTE 23. RECONCILIATION OF PROFIT FOR THE YEAR
WITH CASH FLOWS FROM OPERATING ACTIVITIES
NOTE 24. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
The Group had made capital commitments to purchase or construct buildings and equipment for $9 . 3 million at 30 June 2023 (2022: $6 . 5 million),
principally relating to the completion of operating facilities and purchase of replacement equipment throughout the Group.
As at 30 June 2023, the Group had outstanding letters of credit and bank guarantees issued by its lenders totalling approximately $9 . 9 million
(2022: $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.
Freightways is subject to a Commerce Commission investigation and is cooperating with the Commerce Commission. Freightways does not consider that this
process will have a material financial or operational impact on the Group.
Group
20232022
Profit for the year attributable to shareholders ($000)75,29770,182
Weighted average number of ordinary shares (‘000)174,525165,739
Basic earnings per share (cents)43.142.3
NOTE 25. EARNINGS PER SHARE
Basic earnings per share
Basic earnings per share is calculated by dividing the profit for the year attributable to shareholders by the weighted average number of ordinary shares
outstanding during the year:
Notes to the financial statements
For the year ended 30 June 2023
NOTE 26. NET TANGIBLE ASSETS PER SECURITY
Net tangible assets (liabilities) per security at 30 June 2023 was ($1 . 06) (2022: ($0 . 80)). Net tangible assets exclude intangible assets but includes software.
There were 177 , 431 , 358 shares issued and fully paid as at 30 June 2023 (2022: 165 , 803 , 446).
Group
20232022
Profit for the year attributable to shareholders ($000)75,29770,182
Weighted average number of ordinary shares (‘000)174,525165,739
Effect of dilution (‘000)392403
Diluted weighted average number of ordinary shares (‘000)174,917166,142
Diluted earnings per share (cents)43.142.2
Diluted earnings per share
Diluted earnings per share is calculated by dividing the profit for the year attributable to shareholders by the weighted average number of ordinary shares
outstanding during the year, adjusted to include all dilutive potential ordinary shares (for example, share rights on issue) as if they had been converted to
ordinary shares at the beginning of the year:
Notes to the financial statements
For the year ended 30 June 2023
Freightways Group Limited and its subsidiaries138Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz139
Group
2023
$000
2022
$000
Sale of courier services to GSS13,30414,841
Purchase of goods and services from GSS1,4631,620
Receivables from GSS at end of year1,2901,616
Payables to GSS at end of year82140
Group
2023
$000
2022
$000
Short term employee benefits 10,66811,384
Share-based payments (Note 22)1,0161,031
NOTE 27. 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.
Purchases from entities controlled by key management personnel
The Group leases a property, on normal commercial terms, from an entity that is controlled by a member of the Group’s key management personnel.
Payments to associates
During the year, the following transactions occurred with Sweetspot Group Limited (GSS), an entity incorporated in New Zealand and is 33 . 3%
owned by the Group:
Notes to the financial statements
For the year ended 30 June 2023
Payments to joint venture
During the year, the Group paid Parcelair Limited $16 . 3 million (2022: $14 . 8 million) for the provision of airfreight linehaul services on normal commercial terms.
Parcelair Limited is incorporated in New Zealand and is half-owned by the Group.
Intercompany loan
An intercompany promissory note of $14 . 5 million and intercompany receivable which arose on the acquisition of Allied Express Transport Pty Limited (AEX),
exists between IMS Group Australia Pty Ltd (IMS) and AEX. The receivable and promissory note are eliminated in the consolidated financial statements of
Freightways. (Refer to Note 30).
Key management compensation
Compensation paid during the year (or payable as at year end in respect of the year) to key management, which includes senior executives of the Group and
non-executive independent directors, is as follows:
Short-term employee benefits paid during the year are lower than the prior comparative period (pcp) due predominantly to:
- a higher number of partly-paid shares vesting in the pcp upon achievement of agreed performance targets
in accordance with the terms of the Freightways Senior Executives Performance Share Plan; and
- short-term incentives paid to key management during the pcp were higher due to achievement
of predetermined company profit levels and individual performance objectives.
Group
Less than
6 months
$000
6-12
months
$000
1-2
years
$000
2-5
years
$000
More than
5 years
$000
Total
$000
2023
Bank borrowings9,2439,252 18,238 283,21759,306379,256
Trade and other payables117,499 33,0084,159 - -154,666
Lease liabilities29,95529,150 55,228133,659189,171437,163
2022
Bank borrowings4,2314,638 8,614 163,24532,852213,580
Trade and other payables149,912 22,910 - 3,709 -176,531
Lease liabilities23,15822,152 41,885 103,833189,784380,812
The amounts expected to be payable in relation to the interest rate swaps have been estimated using forward interest rates applicable at the reporting date.
Notes to the financial statements
For the year ended 30 June 2023
NOTE 28. FINANCIAL RISK MANAGEMENT
28.1 Financial Risk Factors
The Group’s activities expose it to various financial risks, including liquidity risk, credit risk and market risk (which includes currency risk and cash flow interest
rate risk). The Group’s overall risk management programme focuses on the uncertainty of financial markets and seeks to minimise potential adverse effects on
the Group’s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures.
Treasury activities are performed centrally by the Group’s corporate team, supplemented by external financial advice and the use of derivative financial
instruments is governed by a Group Treasury Policy approved by the Company’s Board of Directors.
The Group does not engage in speculative transactions or hold derivative financial instruments for trading purposes.
(a) Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they fall due. The Group’s approach to liquidity risk
management includes maintaining sufficient cash reserves and ensuring adequate committed finance facilities are available. In assessing its exposure to
liquidity risk, the Group regularly monitors rolling 3, 6 and 12 months cash requirement forecasts.
The table below analyses the Group’s financial liabilities into relevant maturity groupings, based on the remaining period from the reporting date to the
contractual maturity date.
The amounts disclosed below are contractual, undiscounted cash flows.
Freightways Group Limited and its subsidiaries140Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz141
Group
2023
$000
2022
$000
Cash and cash equivalents44,485 24,137
Trade and other receivables137,510118,529
181,995142,666
Cash and cash equivalents are held with banks with Standard & Poor’s rating of AA-.
(b) Credit risk
Credit risk refers to the risk of a counterparty failing to discharge its obligation. Financial instruments which potentially subject the Group to credit risk
principally consist of bank balances, accounts receivable and derivative financial instruments.
The Group has credit policies that are used to manage the exposure to credit risk. As part of these policies, exposures with counterparties are monitored on a
regular basis. The Group performs credit evaluations on all customers requiring credit and generally does not require collateral.
A default in a financial asset is when the counterparty fails to make contractual payments when debt recovery processes have been exhausted and/or the
counterparty is declared bankrupt or in the case of companies, placed in administration, receivership or liquidation.
The Group’s Treasury Policy ensures due consideration is given to the financial standing of the counterparty banks with which the Group holds cash
reserves and transacts derivative financial instruments. A minimum Standard & Poor’s long-term credit rating of A/A- is required to qualify as an approved
counterparty, with the exception that a maximum of 1% of total debt exposure may be with counterparty with BBB credit rating. The quantum of transactions
entered into with the Group’s various financial lenders is also balanced to mitigate exposure to concentrated counterparty credit risk with any one financial
provider.
The Group does not have any significant concentrations of credit risk.
For counterparties to trade receivables that are neither past due nor impaired, payments have historically been received regularly and on time.
The Group considers its maximum exposure to credit risk to be as follows:
20232022
Group
Gross
carrying
amount
$000
Expected
loss rate
%
Loss
allowance
$000
Gross
carrying
amount
$000
Expected
loss rate
%
Loss
allowance
$000
Current105,3821.0%1,05390,2460.5%451
31-60 days over standard terms20,0814.5%90012,2052.0%244
60-90 days over standard terms2,20225.0%5512,55916.0%409
91+ days over standard terms1,58945.0%7152,73737.2%1,020
129,2543,219107,7472,124
Trade receivables analysis
At 30 June aging analysis of trade receivables is as follows:
The Group has $ 20 . 7 million (2022: $15 . 4 million) of financial assets that are overdue and not impaired.
Notes to the financial statements
For the year ended 30 June 2023
(c) Market risk
Foreign exchange risk
Exposure to foreign exchange risk arises when (i) a transaction is denominated in a foreign currency and any movement in foreign exchange rates will affect
the value of that transaction when translated into the functional currency of the Company or a subsidiary; and (ii) the value of assets and liabilities of overseas
subsidiaries are required to be translated into the Group’s reporting currency.
The Group’s Treasury Policy is used to assist in managing foreign exchange risk. In accordance with Treasury Policy guidelines, foreign exchange hedging is
used as soon as a defined exposure to foreign exchange risk arises and exceeds certain thresholds.
As disclosed in Note 20, at 30 June 2023 the Group had Australian dollar denominated bank borrowings of AUD158 , 700 , 000 (2022: AUD78 , 200 , 000). Of these
borrowings, AUD14 , 200 , 000 (2022: AUD14 , 200 , 000) were borrowed by a New Zealand subsidiary and have been translated at the prevailing foreign currency
rate as at balance date. The rest of the Australian dollar denominated bank borrowings have been borrowed by an Australian subsidiary and are translated as
part of the consolidation of the Group for reporting purposes. The Group has no other outstanding foreign currency denominated monetary items.
The table on the following page details the Group’s sensitivity to the increase and decrease in the New Zealand dollar (NZD) against the Australian dollar
(AUD) in respect of the Australian dollar denominated bank borrowings, borrowed in New Zealand. The sensitivity analysis only includes outstanding foreign
currency denominated monetary items at the reporting date and adjusts their translation as at that date for the change in foreign currency rates. A positive
number indicates a decrease in liabilities (bank borrowings) where the NZD strengthens against the AUD.
Interest rate risk
Exposure to cash flow interest rate risk arises in borrowings of the Group that are at the prevailing market interest rate current at the time of drawdown and are
re-priced at intervals not exceeding 180 days.
Interest rate risk is identified by forecasting short and long-term cash flow requirements.
The Group’s Treasury Policy is used to assist in managing interest rate risk. Treasury Policy requires projected annual core debt to be effectively hedged within
interest rate risk control limits against adverse fluctuations in market interest rates.
The following table demonstrates the sensitivity of the Group’s equity and profit after tax to a potential change in interest rates by plus or minus 100 basis
points, with all other variables held constant and in relation only to that portion of the Group’s borrowings that are subject to floating interest rates.
Significant assumptions used in the interest rate sensitivity analysis include:
(i) reasonably possible movements in interest rates were determined based on the Group’s current mix of debt in New Zealand and Australia, the level of debt
that is expected to be renewed and a review of the last two year’s historical movements; and
(ii) price sensitivity of derivatives has been based on a reasonably possible movement of interest rates at balance dates by applying the change as a parallel
shift in the forward curve.
Notes to the financial statements
For the year ended 30 June 2023
Freightways Group Limited and its subsidiaries142Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz143
Sensitivity Analysis
Interest rate
Movement
NZD/AUD
Movement
Impact on profit
Impact on other
components of equity
Impact on
liabilities & equity
Carrying
amounts
$000
+100
basis
points
$000
-100
basis
points
$000
+100
basis
points
$000
-100
basis
points
$000
+ or – 10%
in value
of NZD
$000
2023
Financial assets
Cash and cash equivalents44,485320(320)320(320)-
Trade and other receivables143,510-----
Derivative financial instruments3,338453(453)1,652(1,864)-
Financial liabilities
Borrowings297,194(2,140) 2,140(2,140) 2,1401,406/(1,718)
2022
Financial assets
Cash and cash equivalents24,137187(187)187(187)-
Trade and other receivables122,336-----
Derivative financial instruments3,024340(340)1,017(1,300)-
Financial liabilities
Borrowings176,210(1,269) 1,269(1,269) 1,2691,429/(1,747)
(d) Fair value estimation
The carrying value less impairment provision of trade receivables and payables is a reasonable approximation of their fair values due to the short-term nature of
trade receivables and payables. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the
current market interest rate that is available to the Group for similar financial instruments.
The fair values of financial instruments are estimated using discounted cash flows. The fair value of interest rate swaps and foreign exchange hedges are
calculated as the present value of the estimated future cash flows.
Unless otherwise stated, all other carrying amounts are assumed to equal or approximate fair value.
The Group uses various methods in estimating the fair value of a financial instrument. 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 and US
Private Placement (USPP)) 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.
Notes to the financial statements
For the year ended 30 June 2023
Level 1
$000
Level 2
$000
Level 3
$000
Total
$000
2023
Assets
Derivative financial instruments-3,338-3,338
Total assets-3,338-3,338
Liabilities
USPP-128,909-128,909
Contingent consideration in a
business combination--4,8354,835
Total liabilities-128,9094,835133,744
2022
Assets
Derivative financial instruments-3,024-3,024
Total assets-3,024-3,024
Liabilities
USPP-72,738-72,738
Contingent consideration in a
business combination--59,89259,892
Total liabilities-72,73859,892132,630
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;
• In respect of USPP, the fair value is calculated on a discounted cash flow basis using the USD Bloomberg curve and applying discount
factors to the future USD interest payment and principal payment cash flows; 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 amounts below are for the derivative financial instruments, USPP and contingent consideration in a business combination. There were no transfers
between levels during the year.
Notes to the financial statements
For the year ended 30 June 2023
Freightways Group Limited and its subsidiaries144Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz145
The following table shows the valuation technique used in measuring Level 3 contingent consideration in a business combination and estimated purchase
price adjustments:
DescriptionFair value as at 30
June 2023
Fair value as at 30
June 2022
Unobservable
Input
Range of inputs
2023
Range of inputs
2022
Relationship of
unobservable inputs to
fair value (sensitivity)
Contingent
Consideration
4,83559,892
Achievement of
Annual Budget
92.5% - 107.5%92.5% - 107.5%
A change in the
achievement of the
annual budget by 250
bps would increase /
decrease the FV of
the consideration
by $0.1 million
(2022: $0.1 million)
Probability
weighted
average of
achieving
Annual Budget
99%99%
A change in the
achievement of the
annual budget by 250
bps would increase /
decrease the FV of
the consideration
by $0.1 million
(2022: $0.1 million)
Discount Rate
4.0%4.0%
A change in the
discount rate by 100
bps would increase /
decrease the FV of
the consideration
by $0.1 million
(2022: $0.1 million)
Notes to the financial statements
For the year ended 30 June 2023
Contingent consideration in a business combination
2023
$000
2022
$000
Opening balance
59,89251,305
Acquisition of businesses
1,1263,709
Settlement
(a)(56,183)(54)
Purchase price adjustment
--
Change in fair value of contingent consideration
-3,700
Unwinding of discount on contingent consideration
-1,232
Closing balance
4,83559,892
Total losses for the year included in the income statement
for liabilities held at the end of the reporting period, under:
- Change in fair value of contingent consideration
– Big Chill Distribution Limited
-3,700
- Net interest and finance costs
-1,232
-4,932
a. Payment of contingent consideration for the acquisition of Big Chill Distribution Limited (BCD).
28.2 Capital risk management
Group capital (Shareholders Funds) consists of share capital, other reserves and retained earnings. To maintain or alter the capital structure, the Group has the
ability to vary the level of dividends paid to shareholders, return capital to shareholders or issue new shares, reduce or increase bank borrowings or sell assets.
The Group does not have any externally imposed capital requirements.
The Group’s long term debt facilities impose a number of banking covenants. These covenants are calculated monthly and are reported to the banks half-
yearly on a rolling 12-months basis. The most significant covenant relating to capital management is a requirement for the Group to maintain its operating
leverage (net debt divided by profit before interest, tax, depreciation and amortisation) below a maximum level. There have been no breaches of banking
covenants or events of review during the current or prior year.
Notes to the financial statements
For the year ended 30 June 2023
The following table presents the changes in Level 3 instruments, which are carried at fair value through profit or loss.
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Financial assets at
amortised cost
Derivatives used
for hedging
Total
2023
$000
2022
$000
2023
$000
2022
$000
2023
$000
2022
$000
Group
Trade and other receivables
(excluding prepayments)137,510115,225- - 137,510115,225
Cash and cash equivalents44,48524,137- - 44,48524,137
Derivative financial instruments--3,3383,0243,3383,024
Total181,995139,3623,3383,024185,333142,386
Derivatives used for
hedging
Other financial liabilities
at amortised cost
Other financial liabilities
held at fair value
Total
2023
$000
2022
$000
2023
$000
2022
$000
2023
$000
2022
$000
2023
$000
2022
$000
Group
Borrowings (excluding
lease liabilities)--297,194176,210--297,194176,210
Lease liabilities--358,273310,125--358,273310,125
Trade and other payables --100,66784,7834,83559,892105,502144,675
Total--756,134571,1184,83559,892760,969631,010
(b) Liabilities, as per balance sheet
Notes to the financial statements
For the year ended 30 June 2023
NOTE 29. FINANCIAL INSTRUMENTS BY CATEGORY
(a) Assets, as per balance sheet
Purchase consideration
Preliminary
$000
Cash paid during the year88,070
Issue of Freightways shares112,066
Promissory note14,472
Completion adjustment681
Total purchase consideration215,289
Fair value of assets and liabilities arising from the acquisition
Cash and cash equivalents18,512
Trade and other receivables24,414
Intercompany receivable14,472
Plant and equipment8,644
Right-of-use assets12,791
Software2,167
Brand name30,654
Customer relationships54,739
Non-compete agreement3,141
Goodwill104,553
Trade and other payables(18,319)
Income tax payable(2,053)
Deferred tax liability(25,635)
Lease liabilities(12,791)
215,289
Notes to the financial statements
For the year ended 30 June 2023
NOTE 30. BUSINESS COMBINATIONS
Acquisition of Allied Express Transport Pty Limited (AEX)
Effective 30 September 2022, the Group acquired 100% of AEX, a company operating in Australia in the courier and express freight market for total
consideration of $215 . 3 million. The consideration comprises of cash payment of $88 . 1 million, issue of Freightways shares of $112 . 1 million, promissory note of
$14 . 5 million and a completion adjustment of $0.7 million. A$50 million of the shares issued to the vendors are subject to an escrow on sale for a period of 12
months from 30 September 2022 and A$25 million of those shares will then remain subject to an escrow on sale for a further period of 12 months thereafter.
Included in AEX at the time of the acquisition was a shareholder loan of $14 . 5 million receivable by AEX from the vendor. Concurrent with the acquisition, this
receivable of $14 . 5 million in AEX was satisfied through the issue of a promissory note (non-cash) from IMS Group Australia Pty Limited (IMS), a Freightways
subsidiary, to AEX. This obligation is now within the Freightways Group and is reflected in the respective Group legal entities of AEX and IMS. The receivable
and promissory note are eliminated in the consolidated financial statements of Freightways.
AEX operates within the Group’s express package & business mail division.
The contribution of AEX to the Group results for the year ended 30 June 2023 was revenue of $187.2 million and net profit after tax of $13 . 2 million. If this
acquisition had occurred at the beginning of the year, the contribution to revenue and net profit after tax for the period is estimated at $249 . 2 million and
$18 . 2 million, respectively.
The following table summarises the amounts determined for purchase consideration and the provisional fair value of assets acquired and liabilities assumed:
Freightways Group Limited and its subsidiaries148Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz149
The goodwill of $104 . 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 Australian courier and express freight market.
The fair value of certain assets and liabilities arising from the acquisition have been determined on a provisional basis as the completion adjustment is currently
being finalised. Plant and equipment, software, customer relationships, brand name, non-compete agreement, other payables and income tax payable have
been measured provisionally, pending confirmation of certain determinants and finalisation of independent valuations. The fair value of these assets will be
finalised within 12 months from the acquisition date.
Other acquisition
During the year, the Group acquired a small IT asset disposal and recycling services business in Australia for $2 . 7 million. This business operates with the
Group’s information management division.
Prior period acquisition – ProducePronto (“PP”)
Effective 1 November 2021, the Group acquired the business and assets of PP for an initial consideration of approximately $12 . 1 million and future earn-out of up
to $3 . 8 million over 3 years. PP operates fourth party logistics (4PL) services with 365 day per year, same-day fresh and frozen delivery to convenience outlets
in New Zealand and businesses across Auckland. This acquired business operates within the Group’s express package & business mail operating segment.
As at 30 June 2023, the estimated discounted future earn-out payment for the acquisition of PP was $3 . 7 million (30 June 2022: $3 .7 million). This represents no
change in the estimated undiscounted future earn-out payment from the last balance date. The Group has forecast several scenarios and probability-weighted
each to determine an updated fair value for this contingent payment arrangement. The liability is presented within non-current trade and other payables in the
balance sheet.
Prior period acquisition – Big Chill Distribution Limited (“BCD”)
On 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 $114 . 6 million and future contingent consideration representing approximately 20% of BCD Enterprise Value as at 30 June 2022.
At 30 June 2022 the estimated discounted future contingent consideration for the acquisition of BCD was $56 . 2 million and this was paid in August 2022.
Reconciliation of payments for businesses acquired$000
Cash paid for the acquisition of AEX 88,070
Cash paid for contingent consideration for the acquisition of BCD56,162
Cash paid for other acquisitions during the year2,752
Cash acquired from acquisition of AEX(18,512)
Payments for businesses acquired (net of cash acquired)128,472
Notes to the financial statements
For the year ended 30 June 2023
NOTE 31. SIGNIFICANT EVENTS AFTER BALANCE DATE
Dividend declared
On 21 August 2023, the Directors declared a fully imputed final dividend of 19 cents per share (approximately $33 . 7 million) in respect of the year ended
30 June 2023. The dividend will be paid on 2 October 2023. The record date for determination of entitlements to the dividend is 15 September 2023.
The Freightways Dividend Reinvestment Plan will be offered for this dividend.
At the date of this report, there have been no other significant events subsequent to the reporting date.
Notes to the financial statements
For the year ended 30 June 2023
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Shareholder information
Number
of holders
Number
of shares held
% of issued
capital
Size of shareholding
1 to 1,9994,0773,571,2192.01
2,000 to 4,9992,4157,242,2464.08
5,000 to 9,9991,1367,459,4474.20
10,000 to 49,99973712,635,3457.12
50,000 to 99,999301,846,4471.04
100,000 to 499,999326,483,8303.66
500,000 to 999,99986,207,2623.50
1,000,000 and over26131,985,56274.39
Total shareholders8,461177,431,358100.00
Geographic distribution
New Zealand8,077144,863,78081.65
Australia31432,315,76218.21
Other70251,8160.14
8,461177,431,358100.00
Substantial product holders as at 31 July 2023
Based upon notices received, the following persons are deemed to be substantial product holders in accordance with Section 293 of the Financial Markets
Conduct Act 2013:
Voting securities
Number
%
Colin McDowell11,282,3826.80
ANZ New Zealand Investments Limited,
ANZ Bank New Zealand Limited
and ANZ Custodial Services New Zealand Limited9,053,0235.46
The total number of issued voting securities of the Company as at 31 July 2023 was 177,431,358.
Stock exchange listing
The Company’s fully paid ordinary shares are listed on NZSX (the New Zealand Stock Exchange).
Distribution of shareholders and shareholdings as at 31 July 2023
Shareholder information
Number of
Shares held
% of issued
capital
Custodial Services Limited <A/C 4> 23,290,157 13.13
Colin McDowell <Account low cost base> 10,989,294 6.19
FNZ Custodians Limited 10,239,753 5.77
BNP Paribas Nominees (NZ) Limited <BPSS40> * 8,932,409 5.03
Forsyth Barr Custodians Limited <1-Custody> 8,536,960 4.81
TEA Custodians Limited <TEAC40> * 6,860,100 3.87
JPMorgan Chase Bank <CHAM24> * 6,585,066 3.71
Citibank Nominees (New Zealand) Limited <CNOM90> * 6,528,659 3.68
ANZ Custodial Services New Zealand Limited <PBNK90> * 5,031,704 2.84
HSBC Nominees (New Zealand) Limited <HKBN90> * 4,965,276 2.80
HSBC Nominees A/C NZ Superannuation Fund Nominees Limited <SUPR40> * 4,654,117 2.62
Accident Compensation Corporation <ACCI40> * 4,328,523 2.44
ANZ Wholesale Australasian Share Fund <PNAS90> * 3,914,421 2.21
HSBC Nominees (New Zealand) Limited <HKBN45> * 3,858,216 2.17
New Zealand Depository Nominee Limited <A/C 1 Cash Account> 3,610,087 2.03
JBWere (NZ) Nominees Limited <NZ Resident A/C> 3,551,861 2.00
PTJR Pty Limited 2,989,054 1.68
Generate Kiwisaver Public Trust Nominees Limited <NZPT44> * 1,895,807 1.07
Dean John Bracewell & Phillipa Anne Bracewell & Bracewell Trustee Company Limited
<Bracewell Family A/C> 1,753,733 0.99
FNZ Custodians Limited <DTA Non Resident A/C> 1,520,683 0.86
124,035,88069.90
*Held through NZ Central Securities Depository Limited
Top twenty registered shareholders of listed shares as at 31 July 2023
Freightways Group Limited and its subsidiaries152Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz153
Corporate Governance Statement
This statement is an overview of the Group’s main corporate governance policies, practices and processes adopted or followed by the Board of Directors
of Freightways Group Limited (the Board). The Group’s corporate governance processes do not materially differ from the principles set out in the NZX
Corporate Governance Code, except as set out within this statement. In preparing this statement, Freightways has elected to report against the NZX Corporate
Governance Code dated 17 June 2022.
This statement has been approved by the Board and is current as at 30 June 2023.
The role of the Board of Directors
The Board is committed to the highest standards of corporate governance and ethical behaviour, both in form and substance, amongst its Directors and
the people of the Company and its subsidiaries (Freightways).
Board responsibilities
The Board’s corporate governance responsibilities include overseeing the management of Freightways to ensure proper direction and control of
Freightways’ activities.
In particular, the Board will establish corporate objectives and monitor management’s implementation of strategies to achieve those objectives. It will approve
budgets and monitor performance against budget (including Financial Reporting and any applicable Non-Financial Reporting). The Board will ensure
adequate risk management strategies are in place and monitor the integrity of management information and the timeliness of reporting to shareholders and
other stakeholder groups.
The Board will follow the NZX Corporate Governance Code and Directors will act in accordance with their fiduciary duties in the best interests of the Company.
A formal Board Charter, which can be found at https://www.freightways.co.nz/about/corporate-governance/, has been adopted by the Board that elaborates
on Directors’ responsibilities. The Board will internally evaluate its performance and the performance of its committees annually. Any recommendations flowing
from this review will be implemented promptly. The Board will review its Corporate Governance practice against current best practice and continue to develop
company policies and procedures, as deemed necessary.
Board composition, appointment and performance
In accordance with the NZX Listing Rules, the Board will comprise not less than three Directors. The Board will be comprised of a mix of persons with
complementary skills appropriate to the Company’s objectives and strategies, having regard to the Diversity & Inclusion Policy and any measurable objectives
set by the Board. The Board must include not less than two persons (or if there are eight or more Directors, three persons or one third rounded down to the
nearest whole number of Directors) who are deemed to be independent. The majority of the Board must be independent Directors, including the Chairman.
The Chairman and the CEO must be different people.
Freightways’ Board currently comprises six Directors: the non-executive Chairman and five non-executive Directors. All Freightways’ Directors are independent.
Key executives attend board meetings by invitation.
Each Director must enter into a written agreement with the Company on appointment that outlines the terms of the Director’s appointment.
The Directors all undertake appropriate training to remain current on how to best perform their duties as Directors of the Company.
Please see Director’s Report section of this Annual Report for further disclosures relating to the Board.
Diversity & Inclusion
The Company has a formal diversity & inclusion policy which can be found at https://www.freightways.co.nz/about/corporate-governance/. The Company
is committed to encouraging diversity throughout all levels of its operations and by ensuring all employees have an equal opportunity to realise their career
ambitions within Freightways. As required to be reported by the NZX Listing Rules, the Company advises that from a gender diversity perspective, as at 30
June 2023, the Board was comprised of 4 male Directors, 2 female Directors and no Directors who identify as gender diverse (2022: 4 male Directors, 2 female
Directors and no Directors who identify as gender diverse), and the officers of the Company were comprised of 5 male officers and no officers who identify as
gender diverse (2022: all 5 officers of the Company were male and no officers who identify as gender diverse).
The Company has committed to promoting diversity and inclusion in the workplace through the development and advancement of under-represented groups
in the Group with career opportunities, professional development courses and training. The Company has set an objective of having 40% of the Executive,
Leadership Teams and Freightways Board to be composed of representatives of currently under-represented groups (women, ethnic groups and employees
under 43 years-old) by 2030. As at 30 June 2023, these under-represented groups make up 43% of the Executive, Leadership Teams and Freightways Board,
exceeding the 40% objective.
Meetings HeldMeetings Attended
Director
Mark Cairns
88
Abby Foote
88
David Gibson
88
Peter Kean
88
Fiona Oliver
88
Mark Rushworth
86
Meetings HeldMeetings Attended
Director
Abby Foote
66
Mark Cairns
66
David Gibson
65
Board Committees
Standing committees have been established to assist in the execution of the Board’s responsibilities. These committees utilise their access to management
and external advisors at a suitably detailed level, as deemed necessary and report back to the full Board. Each of these committees has a charter outlining its
composition, responsibilities and objectives. The committees are as follows:
Audit & Risk Committee:
The Audit & Risk Committee is responsible for overseeing risk management, accounting and audit activities and reviewing the adequacy and effectiveness of
internal controls, meeting with and reviewing the performance of external auditors, reviewing the Annual Report and Half Year Results Release and making
recommendations on financial and accounting policies. The Company’s Audit & Risk Committee Charter can be found at https://www.freightways.co.nz/
about/corporate-governance/.
The Audit & Risk Committee oversees the Company’s engagement and communications with its external auditors, which includes meetings between
members of the Audit & Risk Committee and the external auditors (both with and without management present). Services provided by the external audit firm
to the Company outside of its statutory audit role are monitored by the Audit & Risk Committee to ensure that the independence of its auditors is maintained.
The Group has an established internal audit function for financial controls and draws on external expertise where required to perform complementary internal
audits of non-financial control related areas of the Group. The internal audit programme covers a broad spectrum of risks and findings are presented to the
Audit & Risk Committee.
The members are Abby Foote (Chair), Mark Cairns and David Gibson. All members are independent non-executive Directors. Meetings were held and
attended, as follows:
Corporate Governance Statement
Board Meetings
The following table outlines the number of board meetings attended by Directors during the course of the 2023 financial year:
Freightways Group Limited and its subsidiaries154Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz155
Meetings HeldMeetings Attended
Director
Mark Cairns11
Abby Foote11
David Gibson11
Peter Kean 11
Fiona Oliver11
Mark Rushworth11
Meetings HeldMeetings Attended
Director
Peter Kean44
Mark Cairns44
Fiona Oliver44
Mark Rushworth44
People & Remuneration Committee:
The People & Remuneration Committee is responsible for overseeing the Freightways human resource practices, providing for a remuneration policy for
Directors and executives, reviewing the remuneration and benefits of the senior management, reviewing and recommending the remuneration of Board
members, and making recommendations to the Board in respect of succession planning. The Company’s People & Remuneration Committee Charter and the
Company’s Remuneration Policy can be found at https://www.freightways.co.nz/about/corporate-governance/. The Company’s Remuneration Policy does not
prescribe specific relative weightings to remuneration and relevant performance criteria as the Board has determined that it is more appropriate for the People
& Remuneration Committee to consider and adopt relevant weightings and performance criteria on a case by case basis in respect of each applicable officer.
The members of the People & Remuneration Committee are Peter Kean (Chair), Mark Cairns, Fiona Oliver and Mark Rushworth.
All members are independent non-executive Directors. Meetings were held and attended, as follows:
Nominations Committee:
The Nominations Committee is responsible for ensuring the Board is composed of Directors who contribute to the successful management of the Company,
reviewing the suitability of a Director nominee in respect of that nominee’s proposed appointment, ensuring formal review of the performance of the Board,
individual Directors and the Board’s committees, ensuring effective induction programmes are in place for the Directors and confirming the status of Directors’
independence for external reporting purposes. The Company’s Nominations Committee Charter can be found at https://www.freightways.co.nz/about/
corporate-governance/.
The members of the Nominations Committee are Mark Cairns (Chair), Abby Foote, David Gibson, Peter Kean, Fiona Oliver and Mark Rushworth.
All members are independent non-executive Directors. Meetings were held and attended, as follows:
Code of ethics
Freightways expects its Directors and employees to maintain high ethical standards that are consistent with Freightways’ core values, business objectives
and legal and policy obligations. A formal Code of Ethics has been adopted by the Board and can be found at
https://www.freightways.co.nz/about/corporate-governance/. Freightways’ people are expected to continue to lead according to this Code.
New and existing employees are required to complete training on the Code of Ethics. The Code deals specifically with conflicts of interest, proper use of
information, proper use of assets and property, conduct and compliance with applicable laws, regulations, rules and policies and the other matters set out in
recommendation 1.1 of the NZX Corporate Governance Code.
Breaches of the Code of Ethics are required to be notified in accordance with the Company’s Protected Disclosures (Whistleblower) Policy.
Corporate Governance Statement
Protected disclosures (whistleblower)
The Company is committed to encouraging, supporting and respecting open and honest accountable work practices. The Company believes all employees
have a responsibility to eliminate serious wrongdoing in the workplace and has adopted a formal whistleblowing policy that provides employees with access
to a confidential third-party agency. The Company’s Protected Disclosures (Whistleblower) Policy can be found at https://www.freightways.co.nz/about/
corporate-governance/.
Delegation of authority
The Board delegates its authority where appropriate to the Chief Executive Officer for the day-to-day affairs of Freightways. Formal policies and procedures
exist that detail the parameters that the Chief Executive Officer and in turn his direct reports are able to operate within.
Share trading by directors and management
The Board has adopted a policy that ensures compliance with applicable securities trading laws. This policy requires prior consent by the Chief Financial
Officer and General Counsel in relation to any trading by executive management, and in the case of Directors of the Company and its subsidiaries,
prior consent by the Chairman of the Board, Chief Financial Officer and General Counsel. Any trading by the Chairman of the Board requires prior consent
by the Chair of the Audit & Risk Committee, Chief Financial Officer and General Counsel. The Company’s Securities Trading Policy can be found at
https://www.freightways.co.nz/about/corporate-governance/.
Treasury policy
Exposure to foreign exchange and interest rate risks is managed in accordance with the Group’s Treasury Policy that sets limits of management authority.
Derivative financial instruments are used by the Group to manage its business risks; they are not used for speculative purposes.
Reporting and disclosure
The Company is committed to promoting investor confidence by providing timely, accurate and full disclosure of information in accordance with the NZX
Listing Rules. The Company has appointed its Chief Financial Officer as its Disclosure Officer. The Disclosure Officer is responsible for monitoring Freightways’
business to ensure it complies with its disclosure obligations. The Disclosure Officer has access to all necessary information provided by the direct reports of
Freightways’ Chief Executive Officer in respect of their areas of responsibility. The Disclosure Officer will regularly request certification from the Chief Executive
Officer’s direct reports that all reasonable enquiries have been made to ensure all relevant material information has been disclosed to the Disclosure Officer.
The Company’s Disclosure & Communications Policy can be found at https://www.freightways.co.nz/about/corporate-governance/.
Copies of other key governance documents, including the Code of Ethics, Insider Trading Policy and Guidelines, Board and Committee Charters, Diversity and
Inclusion Policy and Remuneration Policy, and are all available on the Company’s website at https://www.freightways.co.nz/about/corporate-governance/.
Copies of the Company’s Annual Report from prior years can be found at https://www.freightways.co.nz/investor-relations/annual-reports/.
In accordance with the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021, Freightways will be required to meet climate-
related disclosure obligations set out in the External Reporting Board’s reporting standards in respect of its financial reporting period commencing on 1 July
2023. Work is under way to ensure compliance with the standards.
Risk management
The Company operates in an environment that contains a number of operational and strategic risks. It actively manages risk to ensure it operates a safe
workplace and is able to sustain the achievement of its business objectives. Risk management techniques and capability assist managers to focus on
uncertainties and vulnerabilities associated with the future, thereby improving the likelihood of meeting business objectives.
The management of risk is a core management responsibility. All managers and employees are accountable to employ risk management processes within
their area of control to aid in the achievement of business objectives. A process to ensure risk has been adequately identified, considered and can be
managed, is evident in all key decision-making processes. The Chief Executive Officer, Chief Financial Officer and subsidiary management ensure that risks
to the business are identified, evaluated and, where necessary, reported to the Board, that effective responses and control activities are developed and that
appropriate monitoring and timely re-evaluation is conducted. The Company reports externally on key risks which it considers are relevant to shareholders and
other external stakeholders, including climate related risks and health and safety risks, but does not report generally on all material risks which may apply to
the Group. All risks to the Group are included within a detailed internal risk reporting regime where risks relevant to specific business units are identified and
mitigating actions are recorded.
Corporate Governance Statement
Key% –OURSTAEeGYNAP%I%OyLARDLA%OTATYMT%L%Re%yT156Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz157
Corporate Governance Statement
The Board and its Audit & Risk Committee are responsible for setting policy, assessing and monitoring strategic risks and ensuring management maintains an
effective risk management framework.
The Company draws on external expertise where required to perform internal audit on areas assessed to be highest risk for the business and these areas are
reviewed on a regular basis, including IT project management, payroll processing and managing business continuity.
The Company’s Risk Management Policy can be found at https://www.freightways.co.nz/about/corporate-governance/.
Donations
In accordance with section 211(1)(h) of the Companies Act 1993, the Freightways Group made donations totalling $0.3 million during the year.
No political contributions were made during the year.
Health, safety & wellbeing risks
Under the Board’s oversight, the Company’s management team and Health & Safety Committee are responsible for oversight of the Company’s health,
safety and wellbeing risks. The prevention of accidents and injuries is of vital importance and no task is regarded to be so important that it may be done in an
unsafe manner. The Company has developed and maintains a Health & Safety Manual that details the procedures required of all managers, employees and
contractors to maintain a healthy and safe working environment.
The Company is subject to internal and external audit and review, including external audit as part of the Accident Compensation Corporation’s Accredited
Employers Programme and also New Zealand’s Civil Aviation Authority audit of the Group’s Fieldair operations.
The Company has a mental health and wellbeing programme that includes Freightways’ The Movement online portal available to all employees to
provide them with support and information. Employees can also access EAP (Employee Assistance Programme) which is an external professional
counselling helpline.
The Board monitors, supports and completes its own due diligence on the health, safety and wellbeing practices of the Company. Health, safety and wellbeing
is a standing Board agenda item that is discussed at all scheduled Board meetings.
Takeover response plan
The Board has adopted a Takeover Response Plan to assist the Directors and management with the response to unexpected takeover activity. The Plan
summarises key aspects of takeover preparation, and sets out, governance, conflict and communications protocols for takeover response. This Plan provides
that in the event of a takeover offer, the Board would establish an Independent Takeover Response committee to manage its takeover response obligations.
Freightways Group Limited and its subsidiariesfreightways.co.nz159158Freightways Annual Report | Financial Year ended 30 June 2023
Allied Express Transport
Pty Limited
3 Murray Jones Drive
Bankstown Aerodrome
New South Wales 2200
Australia
Telephone: +61 13 13 73
www.alliedexpress.com.au
Big Chill Distribution Limited
28 Pukekiwiriki Place
Highbrook
Auckland
Telephone: +64 9 272 7440
www.bigchill.co.nz
Castle Parcels Limited
163 Station Road
Penrose
DX CX10245
Auckland
Telephone: +64 9 525 5999
www.castleparcels.co.nz
Fieldair Holdings Limited
Palmerston North International Airport
Palmerston North
DX PX10029
Palmerston North
Telephone: +64 6 357 1149
www.fieldair.co.nz
Messenger Services Limited
32 Botha Road
Penrose
DX EX10911
Auckland
Telephone: +64 9 526 3680
www.sub60.co.nz
www.kiwiexpress.co.nz
www.stuck.co.nz
www.securityexpress.co.nz
New Zealand Couriers Limited
32 Botha Road
Penrose
DX CX10119
Auckland
Telephone: +64 9 571 9600
www.nzcouriers.co.nz
New Zealand Document
Exchange Limited
20 Fairfax Avenue
Penrose
DX CR59901
Auckland
Telephone: +64 9 526 3150
www.dxmail.co.nz
www.dataprint.co.nz
NOW Couriers Limited
161 Station Road
Penrose
Auckland
Telephone: +64 9 526 9170
www.nowcouriers.co.nz
Post Haste Limited
32 Botha Road
Penrose
DX EX10978
Auckland
Telephone: +64 9 579 5650
www.posthaste.co.nz
www.passtheparcel.co.nz
ProducePronto
10 Te Apunga Place
Mt Wellington
Auckland
Telephone: +64 800 12 34 55
www.producepronto.co.nz
Shred-X Pty Limited
PO Box 1184
Oxenford
Queensland 4210
AUSTRALIA
Telephone: +61 1 300 747 339
www.shred-x.com.au
www.med-xsolutions.com.au
The Information Management
Group (NZ) Limited
33 Botha Road
Penrose
DX EX10975
Auckland
Telephone: +64 9 580 4360
www.timg.co.nz
The Information Management
Group Pty Limited
PO Box 21
Enfield
New South Wales 2136
Australia
Telephone: +61 2 9882 0600
www.timg.com
www.filesaver.com.au
www.litsupport.com.au
FOR INQUIRIES IN RELATION TO FREIGHTWAYS’ SERVICES AND PRODUCTS CONTACT THE OFFICES LISTED ABOVE OR
REFER TO FREIGHTWAYS’ WEBSITE AT WWW.FREIGHTWAYS.CO.NZ
BOARD OF DIRECTORS
Mark Cairns (Chairman)
Abby Foote
David Gibson
Peter Kean
Fiona Oliver
Mark Rushworth
REGISTERED OFFICE
32 Botha Road
Penrose
DX CX10120
Auckland
Telephone: (09) 571 9670
www.freightways.co.nz
AUDITORS
PricewaterhouseCoopers
15 Customs Street West
Auckland CBD
Auckland 1010
SHARE REGISTRAR
Computershare Investor
Services Limited
159 Hurstmere Road
Takapuna
North Shore City 0622
DX CX10247
STOCK EXCHANGE
The fully paid ordinary shares
of Freightways Group Limited
are listed on NZX Limited
(the New Zealand Stock Exchange).
FREIGHTWAYS GROUP LIMITED AND ITS SUBSIDIARIES
DirectoryCompany particulars
Freightways Group Limited and its subsidiaries160Freightways Annual Report | Financial Year ended 30 June 2023freightways.co.nz161
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Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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