Slide 1: Full Year Presentation
Full Year Presentation 31 July 2006
Slide 2: This presentation relates to the Freightways Limited NZX announcement and media release of 31
This presentation relates to the Freightways Limited NZX announcement and media release of 31 July 2006. As such it should be read in conjunction with, and is subject to, the explanations and views contained in those releases.
Slide 3: Presentation
Presentation 2006 highlights Operating performance Business strategy Outlook
Slide 4: Freightways
Freightways
Slide 5: 2006 Highlights
2006 Highlights
Slide 6: General Highlights
General Highlights • All subsidiaries have performed soundly in a challenging operating environment • Strategies have realised profitable growth in both ‘Core’ Express Package and ‘Emerging’ Business Mail and Information Management markets • Kiwi Express acquisition has performed fully to expectatio
Slide 7: Financial Highlights
Financial Highlights 2006 2005 variance $000 $000 % Operating revenue 256,689 233,725 10% EBITDA 58,318 54,996 6% EBITA 53,360 50,539 6% NPAT 24,306 21,991 11% NPATA 29,276 26,948 9% Earnings per share (NPAT) 19 cents 17 cents 11%
Slide 8: Operating Performance
Operating Performance
Slide 9: Operating Revenue
Operating Revenue 300 250 200 $M 150 2nd Half 100 1st Half 50 - Jun99 Jun00 Jun01 Jun02 Jun03 Jun04 Jun05 Jun06 Year Ended • 10% revenue growth compared to 2005 • 5-year compound average annual revenue growth of 8%
Slide 10: Where Revenue Growth Has Come From
Where Revenue Growth Has Come From 280 270 260 3% 1% 257 250 4% 2% 240 234 230 $M 220 210 200 190 180 2005 Organic Pricing New Business Acquisition 2006 Growth drivers
Slide 11: EBITA
EBITA 60 50 40 2nd Half $M 30 20 1st Half 10 - Jun99 Jun00 Jun01 Jun02 Jun03 Jun04 Jun05 Jun06 Year Ended • 6% EBITA growth compared to 2005 • 5-year compound average annual EBITA growth of 17%
Slide 12: Drivers of EBITA Growth
Drivers of EBITA Growth • Business mix • Margin integrity • Cost control • Incremental investment
Slide 13: Balance Sheet
Balance Sheet • Negative working capital position continues • Increase in fixed assets of $2.5m (net of depreciation) • Increase in bank borrowings of $1m • Goodwill amortised over 20 years
Slide 14: Cash Flows
Cash Flows • Cash generated from operations of $53m • Capital expenditure at expectation of $7.5m • Payments for acquisitions of $4m • Borrowings increased by $1m during the year
Slide 15: Dividends
Dividends Jun-06 Dec-05 Jun-05 Dec-04 Dividend declared $11.2m $10.9m $10.7m $9.5m Cents per share 8.75 8.50 8.50 7.50 Full year (cps) 17.25 16.00 Key points: • Increase of 8% compared to 2005 • Fully Imputed • Record date 15 September 2006 • Payable 30 September 2006
Slide 16: Finance Facilities
Finance Facilities • Debt drawn to $128m at 30 June 2006 • Interest savings of approximately $500k realised • Subsequent to balance date, debt increased by $15m to initiate the acquisition of DataBank • Additional finance facilities obtained to facilitate purchase of DataBank
Slide 17: Business Strategy
Freightways Business Strategy Hubs Shuttle Links Courier "Spoke" to/from area Geographic Area
Slide 18: Business strategy
Business strategy • Continued development of growth opportunities in Freightways’ existing three markets • Positioning, People, Performance, Profit • Explore complementary growth opportunities • Invest in IT and infrastructure
Slide 19: Business strategy - Australia
Business strategy - Australia Features of the DataBank acquisition - No.2 operator in data storage niche of Information Management market - Information Management market is under-developed - Experienced and capable management team - Similar service-oriented operating culture to FRE - Earn-out purcha
Slide 20: Business strategy - Australia (continued)
Business strategy - Australia (continued) Features of the DataBank acquisition (continued) - Immediately EPS positive - Diversifies FRE earnings geographically and deeper into the Information Management market - Catalyst for further growth
Slide 21: Outlook
Freightways Outlook
Slide 22: Capital expenditure
Capital expenditure 2007 2006 Forecast Actual Capital expenditure $8.9m $7.5m Depreciation $6.7m $5.0m • 2006/07 includes stepped investment in core IT infrastructure and impact of DataBank acquisition
Slide 23: Outlook
Outlook • Near-term performance will be influenced by NZ economic conditions • Investment in people, infrastructure and customer service initiatives (competitive advantage) will continue • Characteristics of competitive environment expected to remain unchanged • Consistent application of proven mark
Slide 24: Summary
Summary Strong successful business Positioned to deliver continuing earnings growth Delivering an attractive dividend yield