Slide 1: Full Year Results
FULL YEAR RESULTS 13 AUGUST 2018
Slide 2: Agenda
AGENDA • Highlights • Operating Performance • Final Dividend • Business Strategy • Outlook • Conclusion
Slide 3: Highlights
“G- ma HIGHLIGHTS e y A fi Freightways
Slide 4: General Highlights
GENERAL HIGHLIGHTS • Year on year revenue, earnings and dividend growth • Investment in capacity for the air network and critical Auckland and Christchurch facilities • The move to Agile IT deployment • The successful completion of a major data transformation project • A successful first year in the
Slide 5: Financial Highlights
FINANCIAL HIGHLIGHTS Jun-18 Jun-17 Increase Note $M $M % Revenue 580.9 545.3 6.5 EBITA (before non-recurring items) (i) 93.7 89.3 4.9 Non-recurring items 2.6 3.7 EBITA (ii) 96.3 93.0 3.5 NPAT (before non-recurring items) (iii) 59.6 56.6 5.3 Non-recurring items after tax 2.6 4.3 NPAT (iv) 62.2 60.9 2
Slide 6: Non-Recurring Items
NON-RECURRING ITEMS 2018: Non-recurring benefits before tax of $2.6m in total (no tax applicable) in respect of reversing $1.6m of a previously accrued final acquisition payable that is no longer expected to be required and a $1m gain upon recording the replacement of earthquake-related damaged rack
Slide 7: Operating Performance
OPERATING = PERFORMANCE Freightways \
Slide 8: Operating Revenue
OPERATING REVENUE 700 1H 600 2H 500 400 $M 300 200 100 - 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Year Ended 30 June 2018
Slide 9: EBITA
EBITA 100 1H 90 2H 80 70 60 $M 50 40 30 20 10 - 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Year Ended 30 June 2018 NOTES This graph represents the operating profit before interest, tax and amortisation of intangibles, exclusive of any non-recurring items
Slide 10: Divisional Operating Performance
DIVISIONAL OPERATING PERFORMANCE (Year ended 30 June 2018) EP & BM IM Revenue EBITA* 26% 30% 70% 74% NOTES * Excluding non-recurring items
Slide 11: Express Package & Business Mail
EXPRESS PACKAGE & BUSINESS MAIL Jun-18 Jun-17 Change $M $M Operating Revenue 428.8 402.6 6.5% EBITDA 74.8 70.4 6.4% EBITA 67.9 65.3 4.0% EBITA Margin 15.8% 16.2%
Slide 12: Information Management
INFORMATION MANAGEMENT Jun-18* Jun-17* Change $M $M Operating Revenue 153.8 144.2 6.6% EBITDA 35.4 32.7 8.1% EBITA 29.8 27.7 7.8% EBITA Margin 19.4% 19.2% NOTES * Excluding non-recurring items
Slide 13: Balance Sheet - Key Points
BALANCE SHEET - KEY POINTS • Total Assets have increased since FY17 by $21m, including $11m of intangible assets in respect of the acquisitions of three small businesses in Australia. Higher trade and other receivables due to increased activity ($5m) also contributed to higher recorded assets • Tota
Slide 14: Cash Flow - Key Points
CASH FLOW - KEY POINTS • Cash generated from operations of $105m was $5m above the PCP. Net cash inflows from operating activities (i.e. after deducting interest and tax payments) were $10m above the PCP at $76m, reflecting comparatively lower tax payments for the period (partly timing and also a ta
Slide 15: Capital Expenditure & Depreciation
CAPITAL EXPENDITURE & DEPRECIATION 2018 2019 Full Year Full Year Actual Forecast $M $M Capital Expenditure 17 20 - 22 Depreciation 14 16
Slide 16: Final Dividend
FINAL DIVIDEND
Slide 17: Final Dividend
FINAL DIVIDEND • Final dividend: 15.25 cps • Imputation credits: 5.9306 cps (at 28% tax rate) • Supplementary dividend: 2.6912 cps • Record date: 14 September 2018 • Payment date: 2 October 2018 • No DRP was offered in respect of this dividend
Slide 18: Business Strategy
BUSINESS ee as ~-STRATEGY Freightways
Slide 19: Business Strategy
BUSINESS STRATEGY Express Package & Business Mail • Continued focus on growing B2B market share • Execute B2C strategies which are focussed on; a better customer experience, greater efficiency and improved returns Information Management • Improve utilisation of the Australian footprint • Scale-up di
Slide 20: B2C Strategy
B2C STRATEGY Segmentation and pricing Marketing Data and analytics education B2C Integrated Customer front-end experience software Delivery & collection options and efficiencies
Slide 21: Data Analytics
DATA ANALYTICS • 90+% of NZ geo-mapped • Data quality adequate for: – Analysis of customer margin – Identification of residential courier runs – Defining service standards • Requires refinement for automated charging: Targeting 2019 • Intend to administer courier pay through definition of areas: 201
Slide 22: Data Analytics
DATA ANALYTICS TN Tos . yO he Oe Neb” Freightways
Slide 23: Customer Experience
CUSTOMER EXPERIENCE • New scanner software and equipment - pilot underway • Provides: • Improved visibility • Productivity tools (Authority to leave options) • Two-way communication • Reduces costs to contractors • Full roll out by end of June 2019
Slide 24: Delivery Efficiency
DELIVERY EFFICIENCY • Run intensification - single courier delivery of multi brand residential items • Create smaller / denser areas for couriers • Increased productivity target ~10% • Use of Artificial Intelligence for route optimisation • 250 pure residential areas under review • 30 runs restructu
Slide 25: Segmentation & Pricing
SEGMENTATION & PRICING • Differentiate pricing for Business / Residential / Non Urban areas across NZ • Provide address checker tools for customers • Assess margins across B2C customers • Implement new B2C pricing immediately for new business and phase in for existing customers
Slide 26: Information Management
INFORMATION MANAGEMENT Manage Transform Destroy Archive Security Imaging & document capture Secure destruction DataBank & Data Security Automated accounts payable eDestruction FileSaver Workflow Solutions Product destruction Secure Distribution Services Digital mailroom Paper recycling LitSupport –
Slide 27: Facility Utilisation
FACILITY UTILISATION • Only incremental footprint to be added in 2019 • Target utilisation 70% in AU, 85% in NZ • Mix of organic, market share gains and conversion from self-service customers • Continue to assess bolt-on acquisitions in AU
Slide 28: Digital Services
DIGITAL SERVICES • 2018 completed major data transformation project for Statistics NZ • Strengthened our reputation in digital with Government / corporates • Investment in sales and marketing resource • Assess Digital acquisitions / partnering opportunities
Slide 29: Secure Destruction
SECURE DESTRUCTION • Expansion of WA business through the acquisition of SSS, – Larger facility – Access to Government contracts • Medical Waste: – SWS rebranded as Med-X – Acquired Medico (VIC) in June 2018 – Established small QLD start-up • Continue to explore complementary opportunities
Slide 30: Outlook
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Slide 31: Outlook
OUTLOOK • The markets in which Freightways operates remain positive albeit we are cautious about declining business confidence • Freightways is again targeting year-on-year earnings growth in 2019 • Strategic growth opportunities, including acquisitions and alliances, will be executed where they mak
Slide 32: Conclusion
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Slide 33: Conclusion
CONCLUSION • Freightways has, and will continue to, invest in the future of its businesses • There are opportunities in all lines of business to continue to grow and evolve services to meet customer demand • Freightways remains entrepreneurial and resilient in the face of external factors • Each bra
Slide 34: Full Year Results
FULL YEAR RESULTS 13 AUGUST 2018