Trading Update

An update on the unaudited trading performance of Freightways Limited (Freightways) for the three months ended 30 September 2017 is provided below. Freightways' 1st quarter result (unaudited): Quarter ended: Sep-17 $000; Sep-16 $000; Variance Operating revenue 143,236; 133,868; 7.0% EBITDA* (i): 26,938; 24,917; 8.1% EBITA* (ii): 23,561; 22,137; 6.4% NPATA* (iii): 15,515; 14,566; 6.5% NPAT* (iv): 15,051; 14,148; 6.4% Notes: (i) Operating profit before interest, tax, depreciation and amortisation. (ii) Operating profit before interest, tax and amortisation. (iii) Net profit after tax (NPAT), before amortisation. (iv) Profit for the period attributable to shareholders. * To enable an accurate comparison of the underlying operating performance of the company, the 2016 EBITDA and EBITA results are presented exclusive of a net $542k benefit, being the difference between a $934k non-cash benefit relating to earn-out payments not required to be paid and $392k of one-off costs relating to the relocation of our Sydney businesses. The net benefit after tax excluded from the 2016 NPATA and NPAT is $660k. This first quarter result represents a sound start to the financial year, the highlights being; the strong revenue growth in the express package & business mail division, the completion of our transition to new premises in Christchurch and the stepped earnings improvement in the information management division. Express Package & Business Mail division This division's unaudited result is as follows: Quarter ended: Sep-17 $000; Sep-16 $000; Variance Operating revenue 105,340; 98,218; 7.3% EBITDA 18,185; 17,317; 5.0% EBITA 16,537; 16,159; 2.3% EBITA Margin 15.7%; 16.5% Revenue growth in this first quarter has increased above the positive growth experienced throughout the prior comparative period (pcp). Operating costs include the higher cost of recent investment in additional airfreight capacity and premises, including related one-off transition costs during the quarter to complete the merger of the operations of four of our businesses in Christchurch into a single operating team. When compared to the pcp, there has been an increase of approximately $0.3m in depreciation relating to our newly-commissioned automation equipment and related IT. The EBITDA and EBITA increases above the pcp reflect a sound first quarter start to the 2018 financial year. Information Management division This division's unaudited result is as follows: Quarter ended: Sep-17 $000; Sep-16 $000; Variance Operating revenue 38,379; 35,937; 6.8% EBITDA* 9,245; 7,995; 15.6% EBITA* 7,923; 6,783; 16.8% EBITA Margin* 20.6%; 18.9% * The 2016 earnings results above have been adjusted, as discussed in the aforementioned consolidated result. Sound revenue growth and improved performance at TIMG AU, including from its subsidiary business of LitSupport, contributed to this strong earnings result. Also included in this quarter's result is the first month's trading from our new Medical Waste business that was acquired effective from 1 September and which is trading to expectation. Corporate Corporate costs continue to be well-contained and first quarter capital expenditure is within budgeted expectations. Outlook The markets in which Freightways operates in both New Zealand and Australia remain positive. The increased volume and activity, compared to the pcp, that is evident in this trading update has provided a sound start to the 2018 financial year. Accordingly, Freightways continues to target year-on-year earnings growth. Within the express package & business mail division, investment has been made in capacity for both airfreight and larger premises on Auckland's North Shore. New Zealand Couriers will relocate there during October 2017, followed by Post Haste and Castle Parcels in July 2018. This capacity, which is initially not fully-utilised, comes at some cost, but enables us to better service current volumes and projected growth. Within the information management division, the better results currently being achieved at TIMG Australia, compared to the pcp, are expected to continue to contribute to the overall positive performance of this division. Overall capital expenditure for the 2018 financial year is now expected to be approximately $14 million. Operating cash flows are expected to remain strong throughout the 2018 financial year. Strategic growth opportunities, including acquisitions and alliances that complement existing capabilities, will be executed where they make commercial sense. ENDS For further information please contact Dean Bracewell Managing Director Freightways Limited +64 274 528 327 End CA:00309255 For:FRE Type:MKTUPDTE Time:2017-10-26 09:57:08