Transcript Document
Half Year Presentation
7 February 2006
This presentation relates to the Freightways Limited
NZX announcement and media release of 7
February 2006.
As such it should be read in conjunction with, and
is subject to the explanations and views contained
in, those releases.
Presentation
2006 Half year highlights
Operating performance
Business strategy
Outlook
2006 Half Year Highlights
General Highlights
• All subsidiaries delivered improved year on year
performance
• Strategies continue to realise profitable growth in
both ‘Core’ Express Package and ‘Emerging’
Business Mail and Information Management
markets
• Kiwi Express has performed fully to expectation
since acquisition in October 2005
Financial Highlights
Dec-05
Dec-04
$000
$000
129,796
117,226
11%
EBITDA
31,043
28,212
10%
EBITA
28,668
26,000
10%
NPAT
13,536
11,238
20%
NPATA
16,006
13,785
16%
11 cents
9 cents
20%
Operating revenue
Earnings per share (NPAT)
variance
%
Operating Performance
Operating Revenue
250
200
150
$M
2nd Half
100
1st Half
50
Jun99
Jun00
Jun01
Jun02
Jun03
Jun04
Jun05
Jun06
Year Ended
• 11% revenue growth compared to Dec 2004
• 5-year compound average annual revenue growth of 8%
Where Revenue Growth Has Come From
135
5%
130
130
4%
125
120
1%
117
1%
$M 115
110
105
100
2005
Org a nic
P ric ing
N e w b us ine s s
Growth drivers
A c q uis it io n
2006
EBITA
50
40
$M
30
2nd Half
20
1st Half
10
Jun99
Jun00
Jun01
Jun02
Jun03
Jun04
Jun05
Jun06
Year Ended
• 10% EBITA growth compared to Dec 2004
• 5-year compound average annual EBITA growth of 18%
Drivers of EBITA Growth
• Successful implementation of growth strategies
• Disciplined margin focus relating to new business
• Successful implementation of pricing strategies to lessen
the impact of increased costs
Balance Sheet
• Continuation of negative working capital position
• Increase in intangibles of $1m (net of amortisation), due to
Kiwi Express acquisition for $3.5m
• Goodwill amortised over 20 years ($2.5m half year charge)
• Net bank borrowings increased by $2m only
Cash Flows
• Cash generated from operations of $27m reflects strong
trading result
• Interest paid at expectation and below last year
• Capital expenditure at expectation of $4m for the half
year
• Acquisitions for the half year were $3.6m in total
Dividends
Dividend declared
Cents per share
Dec-05
Dec-04
Dec-03
$10.90m
$9.45m
$7.25m
8.50
7.50
5.85
Key points:
• Increase of 13% compared to 2004
• Fully Imputed
• Record date 17 March 2006
• Payable 31 March 2006
Finance Facilities
• Finance facilities include $140m core debt facility
and $15m acquisition facility
• Net debt of $126m at 31 December 2005
• Acquisition of Kiwi Express funded using core
debt facility
Business Strategy
Business strategy
• Continued development of growth opportunities in
Freightways’ existing three core markets
• Positioning, People, Performance, Profit
• Explore complementary growth opportunities
Outlook
Capital expenditure
2006
Half Year
Actual
Full Year
Forecast
Capital expenditure
$4.0m
$7.8m
Depreciation
$2.4m
$4.8m
• 2005/06 includes stepped investment in core IT
infrastructure
Outlook
• Existing customers are expected to continue to grow at a lower
rate than the previous year
• Investment in people and infrastructure to drive/support growth
• Characteristics of competitive environment expected to remain
unchanged
• FRE competitive advantage will be further enhanced through
additional customer-oriented technology solutions
• Consistent application of proven market strategies
Summary
Strong successful business
Positioned to deliver continuing earnings growth
Delivering an attractive dividend yield