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Operating Efficiencies Underpin NZ Post Profit

For immediate release 20 September 2001


Operating Efficiencies Underpin New Zealand Post Profit

New Zealand Post announced today an after tax profit of $21.0 million for the 12 months to 30 June, the first full-year result since the company changed its reporting from a March to June balance date last year.

This compares to $30.2 million for the year to 31 March 2000 and $21.9 million for the unaudited 12-month period to 30 June 2000.

Chairman Dr Ross Armstrong said the result was a creditable performance given increased volatility in mail volumes and higher fuel costs.

“In a challenging commercial environment, New Zealand Post continues to provide a world-class mail service, pay a dividend and build long-term value for its owners, the people of New Zealand,” Dr Armstrong said.

Highlights of the year included strong service performance with an independent survey reporting 95.7 per cent of Standard and Fast Post mail delivered on time, government approval for the new bank, and a strong performance from the core letters business.

Chief Executive Elmar Toime said the result was underpinned by significant changes to New Zealand Post’s operating network that had contained costs and delivered efficiency and productivity gains.

“When we released our last 12-month annual report, we anticipated a challenging year ahead with reduced profits and increased pressure on mail volumes as a result of electronic substitution, competition and low population growth.

“New Zealand Post is successfully adapting to meet those challenges, generating a sound result despite a 1.6 per cent decline in domestic mail volumes.

“We have refined our business model to accommodate the volatile letters market and are now looking to other areas of our business for good returns.

“In the year ahead, we will implement marketing strategies that promote mail as a business communications tool to stimulate letter, parcel and unaddressed mail volumes.

“New Zealand Post will introduce new services, including banking, to better utilise its retail network. We will also continue to develop new capabilities to meet the demand from our customers for electronic services related to physical delivery and messaging.”

Operating revenue was up 5.1 per cent at $981.9 million on the unaudited period to 30 June 2000 ($934.2 million), reflecting growth in international parcels and the purchase of Australian courier company Couriers Please.

Operating expenses were up slightly to $926.3 million (4.7 per cent) due to the acquisition of Couriers Please and investment in developing the proposal for the new retail bank.

Government approval for the provision of $78.2 million to establish banking services within the New Zealand Post retail network was a major highlight for the year.

This figure included $6.0 million in foregone dividends, leaving a dividend payment to the Shareholder of $7.4 million.

Mr Toime said New Zealand Post would continue to meet its social obligations under the Deed of Understanding with the Government and had no plans to raise the standard postage rate of 40 cents, one of the lowest in the OECD.

Financial Performance * Twelve months ended 30 June 2001 Twelve months ended
30 June 2000 (unaudited)
Twelve months ended 31 March 2000
Operating revenue $981.9m $934.2m $914.9m
Operating expenditure $926.3m $884.6m $852.2m
Net earnings $21.0m $21.9m $30.2m
Dividend $7.4m** $18.1m $18.1m
-cents per share 6.2 cents 15.1 cents
Issued and paid-up capital $120.0m $120.0m
Shareholders’ funds $209.5m $197.2m $200.9m

*The table represents the first financial year with a balance date of June 2001 and includes for comparison the previous unaudited financial year of 1 July 1999 to 30 June 2000, and the previous audited year 1 April 1999 to 31 March 2000.

** The Government decision to approve equity for the establishment of banking services included $6.0 million in foregone dividends.

ENDS


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