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Half Year Presentation 7 February 2006

Half Year Presentation 7 February 2006. 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. Presentation.

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Half Year Presentation 7 February 2006

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  1. Half Year Presentation 7 February 2006

  2. 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.

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

  4. 2006 Half Year Highlights

  5. 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

  6. Financial Highlights

  7. Operating Performance

  8. 2nd Half 1st Half Operating Revenue • 11% revenue growth compared to Dec 2004 • 5-year compound average annual revenue growth of 8%

  9. Where Revenue Growth Has Come From

  10. 2nd Half 1st Half EBITA • 10% EBITA growth compared to Dec 2004 • 5-year compound average annualEBITA growth of 18%

  11. 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

  12. 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

  13. 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

  14. Dividends • Key points: • Increase of 13% compared to 2004 • Fully Imputed • Record date 17 March 2006 • Payable 31 March 2006

  15. 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

  16. Business Strategy

  17. Business strategy • Continued development of growth opportunities in Freightways’ existing three core markets • Positioning, People, Performance, Profit • Explore complementary growth opportunities

  18. Outlook

  19. Capital expenditure 2006 Half 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

  20. 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

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

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