half year presentation 7 february 2006. this presentation relates to the freightways limited nzx...
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Half Year Presentation
7 February 2006
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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.
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Presentation
2006 Half year highlights
Operating performance
Business strategy
Outlook
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2006 Half Year Highlights
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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
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Financial Highlights
Dec-05 Dec-04 variance$000 $000 %
Operating revenue 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%
Earnings per share (NPAT) 11 cents 9 cents 20%
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Operating Performance
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• 11% revenue growth compared to Dec 2004
• 5-year compound average annual revenue growth of 8%
Operating Revenue
-
50
100
150
200
250
Jun99 Jun00 Jun01 Jun02 Jun03 Jun04 Jun05 Jun06
Year Ended
$M 2nd Half
1st Half
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Where Revenue Growth Has Come From
100
105
110
115
120
125
130
135
2005 Organic Pricing New business Acquisition 2006
Growth drivers
$M
117 1%
4%
5% 1% 130
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EBITA
• 10% EBITA growth compared to Dec 2004
• 5-year compound average annual EBITA growth of 18%
-
10
20
30
40
50
Jun99 Jun00 Jun01 Jun02 Jun03 Jun04 Jun05 Jun06
Year Ended
$M2nd Half
1st Half
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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
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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
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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
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Dividends
Dec-05 Dec-04 Dec-03
Dividend declared $10.90m $9.45m $7.25m
Cents per share 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
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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
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Business Strategy
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Business strategy
• Continued development of growth opportunities in Freightways’ existing three core markets
• Positioning, People, Performance, Profit
• Explore complementary growth opportunities
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Outlook
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Capital expenditure
2006Half Year Full
Year Actual Forecast
Capital expenditure $4.0m $7.8m
Depreciation $2.4m $4.8m
• 2005/06 includes stepped investment in core IT infrastructure
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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
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Summary
Strong successful business
Positioned to deliver continuing earnings growth
Delivering an attractive dividend yield