Full Year Presentation 31 July 2006
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Transcript of Full Year Presentation 31 July 2006
Full Year Presentation
31 July 2006
This presentation relates to the Freightways Limited NZX announcement and media release of 31 July 2006.
As such it should be read in conjunction with, and is subject to, the explanations and views contained in those releases.
Presentation
2006 highlights
Operating performance
Business strategy
Outlook
2006 Highlights
General Highlights
• All subsidiaries have performed soundly in a challenging operating environment
• Strategies have realised profitable growth in both ‘Core’ Express Package and ‘Emerging’ Business Mail and Information Management markets
• Kiwi Express acquisition has performed fully to expectation
Financial Highlights
2006 2005 variance$000 $000 %
Operating revenue 256,689 233,725 10%
EBITDA 58,318 54,996 6%
EBITA 53,360 50,539 6%
NPAT 24,306 21,991 11%
NPATA 29,276 26,948 9%
Earnings per share (NPAT) 19 cents 17 cents 11%
Operating Performance
• 10% revenue growth compared to 2005
• 5-year compound average annual revenue growth of 8%
Operating Revenue
-
50
100
150
200
250
300
Jun99 Jun00 Jun01 Jun02 Jun03 Jun04 Jun05 Jun06
Year Ended
$M 2nd Half
1st Half
Where Revenue Growth Has Come From
180190
200210
220230
240250
260270
280
2005 Organic Pricing New Business Acquisition 2006
Growth drivers
$M
2342%
4%3% 1% 257
EBITA
• 6% EBITA growth compared to 2005
• 5-year compound average annual EBITA growth of 17%
-
10
20
30
40
50
60
Jun99 Jun00 Jun01 Jun02 Jun03 Jun04 Jun05 Jun06
Year Ended
$M2nd Half
1st Half
Drivers of EBITA Growth
• Business mix
• Margin integrity
• Cost control
• Incremental investment
Balance Sheet
• Negative working capital position continues
• Increase in fixed assets of $2.5m (net of depreciation)
• Increase in bank borrowings of $1m
• Goodwill amortised over 20 years
Cash Flows
• Cash generated from operations of $53m
• Capital expenditure at expectation of $7.5m
• Payments for acquisitions of $4m
• Borrowings increased by $1m during the year
Dividends
Jun-06 Dec-05 Jun-05 Dec-04
Dividend declared $11.2m $10.9m $10.7m $9.5m
Cents per share 8.75 8.50 8.50 7.50
Full year (cps) 17.25 16.00
Key points:• Increase of 8% compared to 2005• Fully Imputed• Record date 15 September 2006• Payable 30 September 2006
Finance Facilities
• Debt drawn to $128m at 30 June 2006
• Interest savings of approximately $500k realised
• Subsequent to balance date, debt increased by $15m to initiate the acquisition of DataBank
• Additional finance facilities obtained to facilitate purchase of DataBank
Business Strategy
Business strategy
• Continued development of growth opportunities in Freightways’ existing three markets
• Positioning, People, Performance, Profit
• Explore complementary growth opportunities
• Invest in IT and infrastructure
Business strategy - Australia
Features of the DataBank acquisition
- No.2 operator in data storage niche of Information Management market
- Information Management market is under-developed
- Experienced and capable management team
- Similar service-oriented operating culture to FRE
- Earn-out purchase structure aligns vendors’ interests with those of FRE shareholders
Business strategy - Australia (continued)
Features of the DataBank acquisition (continued)
- Immediately EPS positive
- Diversifies FRE earnings geographically and deeper into the Information Management market
- Catalyst for further growth
Outlook
Capital expenditure
2007 2006Forecast Actual
Capital expenditure $8.9m $7.5m
Depreciation $6.7m $5.0m
• 2006/07 includes stepped investment in core IT infrastructure and impact of DataBank acquisition
Outlook
• Near-term performance will be influenced by NZ economic conditions
• Investment in people, infrastructure and customer service initiatives (competitive advantage) will continue
• Characteristics of competitive environment expected to remain unchanged
• Consistent application of proven market strategies
• All subsidiaries well positioned to accommodate growth
• Recent Australian acquisition will assist FRE platform for growth and is immediately EPS positive
Summary
Strong successful business
Positioned to deliver continuing earnings growth
Delivering an attractive dividend yield