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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.

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Full Year Presentation 31 July 2006

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  1. Full Year Presentation 31 July 2006

  2. 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.

  3. Presentation • 2006 highlights • Operating performance • Business strategy • Outlook

  4. 2006 Highlights

  5. 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 Expressacquisition has performed fully to expectation

  6. Financial Highlights

  7. Operating Performance

  8. 2nd Half 1st Half Operating Revenue • 10% revenue growth compared to 2005 • 5-year compound average annual revenue growth of 8%

  9. Where Revenue Growth Has Come From

  10. 2nd Half 1st Half EBITA • 6% EBITA growth compared to 2005 • 5-year compound average annual EBITA growth of 17%

  11. Drivers of EBITA Growth • Business mix • Margin integrity • Cost control • Incremental investment

  12. 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

  13. 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

  14. Dividends • Key points: • Increase of 8% compared to 2005 • Fully Imputed • Record date 15 September 2006 • Payable 30 September 2006

  15. 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

  16. Business Strategy

  17. 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

  18. 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

  19. 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

  20. Outlook

  21. Capital expenditure 2007 2006 Forecast 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

  22. 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

  23. Summary • Strong successful business • Positioned to deliver continuing earnings growth • Delivering an attractive dividend yield

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