2024 Annual Report

The

Moving you to a better place is about never standing still

power of movement

Image:

Some of the awesome Big Chill Ruakura team

We're committed to being forward-looking and forward- acting in everything we do. In a challenging year, that drive, and our diversified portfolio helped absorb a lot of the downward pressure on the sectors and economies

in which we operate.

Our people power our progress through our culture. We work hard to engage everyone in their work and to offer them training and opportunities across our brands.

In particular, we pride ourselves on ensuring that employees and contractors are fairly paid for and have opportunities to be recognised for their efforts, skills, knowledge

and experience.

This year, we got on with picking up, processing, and delivering to help our customers. And our teams went above and beyond to remind businesses and households that they can trust us to do right by them. Those processes, will, in turn reassure our shareholders that we remain a strong investment choice with good prospects for future growth.

Our commitment to communities also remains strong. From grassroots causes to our ongoing partnerships with KidsCan, RSPCA Queensland, Westpac Rescue Helicopter and more to exploring ways to reduce our emissions in the future as viable alternative cell technology emerges, we are determined to do right by communities and to offer our support, especially in these times of greater need.

Our businesses have been resilient in current economic conditions, and we are optimistic about the future. In particular, we are confident that we have made good use of the last two years to invest wisely in our infrastructure, road and air networks, systems, processes and, of course, our people. We're better placed as a result.

Good growth awaits.

UTILISATION OF BIG CHILL 3PL SITE AT RUAKURA INLINE WITH EXPECTATION BY YEAR END

Our family of brands

Our market-leading brands combine shared infrastructure within New Zealand and Australia respectively, with specialist knowledge in each niche.

EXPRESS PACK AG E

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. It enables us to win a niche with a specialist focus - but also leverage the combined infrastructure across each segment. Our New Zealand Express Package operations share branch networks, air and road linehaul, and IT. These brands include New Zealand Couriers, Post Haste, Castle Parcels, NOW

TEMPER ATURE

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 and 4PL under one responsive umbrella utilising the Big Chill depots nationwide.

INFORMATION

MANAG EMENT

W A S T E

R

E

N

E W A

L

Medical

Waste

Product Destruction

& Renewal

Document & eDestruction

Aviation

Same Day

National

Delivery

Third Party

Logistics

T

E M P E R A T U R E

C

O

N

T

R

O

L

L

E

D

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.

Couriers, SUB60, Security Express, Kiwi Express, STUCK, Kiwi Oversize, Freightways Global, 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 3rd Party Logistics (3PL) courier services.

DX Mail is New Zealand's only dedicated business mail specialist offering time-sensitive physical postal services. It leverages the Express Package network ensuring it can operate in a lean manner.

Dataprint offers mailhouse-print services and digital mail presentation platforms across New Zealand. Our technology and solutions transform data into effective communications for customers.

The Information Management Group (TIMG) helps businesses in New Zealand and Australia 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. Last year we increased the utilisation of our

New Zealand storage facilities by starting an eCommerce 3PL service called Stocka.

WASTE

RENEWAL

Shred-X offers document destruction, eDestruction and product destruction services in Australia. 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.

CHAIR & CEO'S REPORT

Going the extra mile pays off

In what was a challenging year for many businesses, as both the New Zealand and Australian economies slowed down,

we are pleased with a resilient result despite lower customer activity - particularly across Express Package and Temperature Controlled transport.

The reality is that it has been a tough year for our customers. The declining macroeconomic environment meant consumers bought less on the back of higher interest rates and living costs.

However, our ability to win market

share from strong service levels has been a critical factor in mitigating the recession we experienced in New Zealand, which means our businesses have performed well in these tough times.

Our diversification also helped. Being less reliant on solely the New Zealand economy and with specialised logistics services spanning several different sectors, including Waste Renewal and Information Management, gave us resilience and opportunities to grow.

Overall, operating revenue showed good growth, increasing by 7.8% from last year on the back of solid performances from Allied Express and New Zealand Couriers. Earnings before interest and tax was up 1.8%, with net profit after tax down by 5.8% principally because of a higher interest expense.

One macroeconomic factor we were pleased to see reverse was the availability of quality labour in both markets. In recent years, the tight market has made it challenging to recover the total increase in labour costs. But since the later half of 2023, we've seen more job applicants and a lower turnover rate in our depots and drivers' network. This trend will help us better manage our margins with less pressure on wage rates.

7.8% Increase in overall operating revenue for the Group

5.8% Decrease in net profit after tax, due to higher interest expense

1.8% Increase in earnings before interest and tax increase

CHAIR & CEO'S REPORT

Keeping our customers moving to a better place

The year saw activity from our existing customers reduce by 5% in New Zealand and a slightly higher rate in Temperature Controlled transport. However, we were able to mitigate a significant amount of that loss through new business gained by our sales and account management teams. Winning new customers through strong service levels and relationships that customers valued made a considerable difference and strengthened our positions in various niches in which we operate. These wins enabled us to keep our overall volume at a similar level to last year and mitigate the worst impacts of the New Zealand recession.

Resilience in a quieter market

In quieter times, the key to the Express Package businesses is to maintain a largely variable cost structure. A number of our costs flex up or down with an increase or decrease in customer activity. This makes our network courier and linehaul business resilient in challenging times and, in the context of our portfolio of businesses, helps us effectively balance our risks and exposures.

The hard yards we have put in over recent years to build courier remuneration meant our contractors were well paid for their work, and we were insulated against falling volumes. As it happened, item volumes remained largely constant, and our fleet size remained similar to last year with high service levels. In fact, New Zealand Couriers recorded their highest-ever Net Promoter Score this year.

In Australia, our Allied Express business's second

year was again characterised by healthy revenue growth. The automation sortation systems we have implemented in NSW and Victoria, mean we now have one of the best freight sorting automation in the country for big and bulky freight, backed by loyal business relationships. These new facilities in Sydney and Melbourne will enable Allied Express to pick-up, process, and deliver greater quantities

with better efficiency. We can now move freight through the depots much more quickly, weighing, cubing and measuring every single item, reducing manual handling and the likelihood of damage.

We've also increased the capacity for growth across Allied Express through larger depots that give us high-quality facilities across the five Australian states. We've complemented that increase in capacity by introducing sales capability in Australia to maximise the opportunities from Allied's service proposition.

Business Mail

Despite structural decline in the wider

physical mail market in New Zealand, DX Mail have continued to expand their network in FY24 by adding new postie runs in Auckland, Waikato and Wellington to meet the increase in volume experienced during the year. This additional volume combined with cost efficiencies achieved through the new automated letter sortation systems resulted in a strong year- on-year improvement for DX Mail.

PHIL CLARKE

General Manager

Big Chill Distribution

CHAIR & CEO'S REPORT

Temperature Controlled was subdued

It's been a tougher year for the temperature- controlled market as consumers switched down their food choices, affecting demand for higher-grade, chilled, and frozen food.

Same-customer volumes were down about 8%.

The Big Chill network is intrinsically fixed cost because the business owns the trucks, leases the facilities, and employs the team - meaning the impacts are higher when volumes drop. Conversely, we can leverage that model quickly and restore margins when volumes return.

In the meantime, we have continued to invest. Our Big Chill facility in Ruakura is now open, offering us new capacity to meet the demand for temperature-controlled logistics and expand our nationwide delivery capability. The 13,000sqm 3PL cold store facility brings to ten the number of depots in the nationwide network, increasing our links to the Port of Tauranga, the Waikato and the Bay of Plenty, and our same-day and overnight services to Auckland.

8% Decrease in same- customer volume due to lower consumer demand

Despite the sector challenges, utilisation at Ruakura has built up nicely, enabling us to achieve break-even by the end of the year. While the pick/ pack activity level is down from what we anticipated because of consumer demand, we are ahead of our forecasts in storage. We're confident inventory turnover will pick up when the economy rebounds.

Meanwhile, our new ProducePronto facility in Auckland enables us to grow our temperature-controlled,same-day and 4PL offering in the convenience food markets. We've also increased capacity in Wellington and Christchurch to make space for growth. ProducePronto focuses on convenience stores at the moment, but we are also looking at other opportunities for time-sensitive delivery of frozen and chilled food, at places that need on-time, reliable deliveries each day, such as fast food chains and cafes.

16

CHAIR & CEO'S REPORT

Good growth in our horizons

$3 Stocka revenue m for FY24

Our Information Management business is a steady and consistent asset to own in tough times.

Earnings and revenue streams remain resilient because, by document storage's very nature, things remain stable. This year we've also seen good digital growth again, with revenue up 17% in Australia on the back of greater demand for scanning, lifting and reforming data. The team have strong forward future commitments which will ensure this growth continues into next year and beyond.

Stocka is one of our third horizon businesses that has gone from strength to strength this year. Targeted at an under-served niche, this brand works to supply storage and pick/ pack services to small and mid-sized eCommerce businesses with small packages to ship into our courier network. While only small at this stage, we expect to be able to use any spare document storage capacity to provide this service to customers in New Zealand and, in the future, Australia.

A mixed year for Waste Renewal

14% Document destruction revenue growth

Good market share and an ongoing investment in the right equipment has seen our Waste Renewal businesses continue to do well, particularly with document destruction.

While we have supposedly been moving towards an increasingly paperless world since the late 1970s, our teams have been gaining market share year-on-year for the last decade.

By contrast, our Med-X team, who handle medical waste, had a tough year as we suffered delays in getting regulatory approval for our Victoria waste treatment facility. Now that we have received it, we are confident we can improve our processing efficiency and grow our customer base.

Waste Renewal is an area of the Group where we have a lot of third horizon activity, and our teams have worked hard all year to find new products that align with our pick-up, process and deliver philosophy. Textile recycling and e-destruction have performed well this year, enabling us to keep fabrics and computer parts out of landfill. Our saveBOARD operations are also running in Sydney and New Zealand and slowly building momentum.