ANNUAL REPORT 2016 - freightways.co.nz

1 ANNUAL REPORT 2016DX Mail Express The Parcel Haste Couriers Zealand Couriers Freight NZFreightways Information ServicesFieldair Engineering ExpressDatabank Express Couriers Express Security Services Information Management Group Destruction Service Security Parcels Couriers inquiries in relation to Freightways services and products contact the offices listed below or refer to Freightways website at Services LimitedNew Zealand Document Exchange Limited32 Botha Road20 Fairfax AvenuePenrosePenroseDX EX10911DX CR59901 AUCKLAND AUCKLAND Telephone: 09 526 3680 Telephone: 09 526 Zealand Couriers LimitedThe Information Management Group (NZ) Limited32 Botha Road33 Botha RoadPenrosePenroseDX CX10119DX EX10975 AUCKLANDAUCKLANDT elephone: 09 571 9600 Telephone: 09 580 Haste LimitedFieldair Holdings Limited32 Botha RoadPalmerston North International AirportPenrosePalmerston NorthDX EX10978DX PX10029 AUCKLANDPALMERSTON NORTHT elephone: 09 579 5650 Telephone.

2 06 357 Castle Parcels LimitedNOW Couriers Limited163 Station Road 161 Station Road PenrosePenroseDX CX10245 AUCKLANDAUCKLANDT elephone: 09 526 9170 Telephone: 09 525 Pty LimitedThe Information Management Group Pty LimitedPO Box 1184PO Box 984 OxenfordChatswoodQueensland 4215 New South Wales 2057 AUSTRALIAAUSTRALIA Telephone: +61 1 300 747 339 Telephone: +61 2 9882 Limited and its subsidiaries1 Freightways Limited and its subsidiaries1 BOARD OF DIRECTORSSue Sheldon (Chairman)Dean Bracewell (Managing Director)Roger CorcoranKim EllisPeter KeanMark RushworthMark VerbiestREGISTERED OFFICE32 Botha RoadPenrose DX CX10120 Telephone: (09) 571 9670 Facsimile.

3 (09) 571 Quay StreetAuckland DX CP24073 SHARE REGISTRARC omputershare Investor Services Limited159 Hurstmere RoadTakapunaAuckland 0622DX CX10247 STOCK EXCHANGEThe fully paid ordinary shares of Freightways Limited are listed on the NZX (the New Zealand Stock Exchange).COMPANY PARTICULARSAs pioneers of New Zealand s express package industry, we trace our origins back to Limited and its subsidiaries3 Freightways Limited and its subsidiaries3 Company Particulars 1 Group Profile 4 Financial Summary 5 REPORT from the Chairman and Managing Director 7 Directors REPORT 11 Independent Auditors REPORT 16 FINANCIAL STATEMENTSI ncome Statement 17 Statement of Comprehensive Income 18 Statement of Changes in Equity 19 Balance Sheet 20 Statement of Cash Flows 21 Notes to the Financial Statements 22 Shareholder Information 64 Corporate Governance Statement 66 Directory

4 69 TABLE OF CONTENTS4 Freightways Limited and its subsidiariesFREIGHTWAYS' STRATEGYF reightways business strategy is to develop organic growth opportunities that exist in the express package, business mail and information management industries, diversify its operations further into the information management industry, including geographically, and execute acquisition and alliance opportunities in areas that complement its existing package & business mailFreightways delivers approximately 200,000 items each business day and approximately 50 million items each year.

5 In addition to its extensive nationwide network, Freightways offers a worldwide delivery service through alliances with international express package employs a multi-brand strategy within the network courier segment of the Express Package market via New Zealand Couriers, Post Haste Couriers, Castle Parcels and NOW Couriers. This strategy allows Freightways to successfully segment the market by meeting varying customer service and price services the point-to-point segment through its SUB60, Kiwi Express and STUCK brands, and provides a secure service for valuables through Security Express.

6 DX Mail operates in the New Zealand postal services market. It provides a full range of domestic and international mail solutions to business customers. DX Mail is represented in all towns and cities throughout New Zealand. Its services include the processing of letters and parcels for box-to-box and street delivery. It also offers a full suite of mailhouse services for both physical and electronic transactional mail through its Dataprint managementFreightways information management division offers a complete range of archive management services for documents, computer media and document destruction throughout New Zealand and Australia.

7 It also provides both digital conversion and online back-up services to complement the physical storage and protection of documents and other media. In New Zealand, The Information Management Group provides a nationwide service from its locations in Auckland, Hamilton, Palmerston North, Wellington and Christchurch. It operates the brands of Archive Security, Document Destruction Services and Data Security Services. In Australia, The Information Management Group operates in all states and territories, through the brands of Archive Security, Filesaver, DataBank, LitSupport and Shred-X.

8 Internal service providersFreightways manages its road and air linehaul requirements through the Parceline Express and Fieldair businesses, and its Parcelair joint venture. Fieldair also provides a wide range of avionics and engineering services to the NZ aviation industry. Information technology systems are provided to Freightways various businesses via Freightways Information PROFILEF reightways Limited and its subsidiaries5 FINANCIAL SUMMARYFOR THE YEAR ENDED 30 JUNE 2016 2016 2015 PERCENTAGE NOTE $000 $000 VARIANCE (Restated) Operating revenue 505,360 479,458 (i) 81,361 73,821 (ii)

9 49,774 43,840 , excluding non-recurring items 87,698 82,796 , excluding non-recurring items, net of tax 54,337 50,289 items: - write-down of aircraft (4,944) (5,633) - write-down of aircraft-related inventory (1,393) (1,997) - aircraft lease exit costs - (700) - premises lease exit costs - (645) Total (6,337) (8,975) Tax expense applicable to non-recurring items 1,774 2,526 Non-recurring items, net of tax (4,563) (6,449) Note:(i) Operating profit before interest, income tax and amortisation of intangibles(ii)

10 Profit for the year attributable to the shareholdersThe Directors believe that the non-recurring items detailed above should not be included when assessing the underlying trading performance of the Limited and its subsidiaries FINANCIAL SUMMARYFOR THE YEAR ENDED 30 JUNE 2016 1st half 2nd half* This EBITA graph represents the operating results of the company, exclusive of any non-recurring ended 30 JuneFREIGHTWAYS OPERATING REVENUE Year ended 30 JuneFREIGHTWAYS EBITA* 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 201660050040030020010 0-$M908070605040302010-$MFreightways Limited and its subsidiaries7 REPORT FROM THE CHAIRMAN AND MANAGING DIRECTORThe Directors are pleased to present the consolidated financial result of Freightways Limited (Freightways)