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Growth Drives Record Freightways Performance

06 August 2002

Growth Drives Record Freightways Performance

Strong growth within its established markets has enabled New Zealand courier and express freight leader, Freightways Express Limited (Freightways), to deliver record revenue and profit figures for the year ending 30 June 2002.

Managing Director, Dean Bracewell, reports that operating revenue for the financial year (30 June), reached $186.2 million, up 6% on the previous 12 months. During the same period earnings before interest, tax and amortisation (EBITA) were $27.7 million - up 15% on last year.

Key drivers underpinning this growth, according to Mr Bracewell, were increased market share and the positive New Zealand economy which has translated into increased courier and parcel deliveries.

Profit after tax of $13.1 million was 33% above the previous year, which more than covered the higher preference share dividend resulting from the issue of further preference shares in May 2001. During the year Freightways paid dividends of 6.8 cents per share (fully imputed) to the respective preference shareholders. Contributing to this outcome were lower interest and finance costs as bank debt was further reduced, interest rates remained generally low and the full year’s benefit was gained from previous debt reduction in May 2001 when the further preference shares were issued.

According to Chairman Michael Butler, Freightways’ directors considered the funding of the company for the medium term and elected not to redeem any preference shares in October 2002. The next available redemption date will be 31 October 2003.

Revenue of $170.7 million was generated by the courier/express freight and business mail divisions; an increase of 7% over the prior year. Mr Bracewell says these businesses leveraged off their respective market positionings to win increasing market share. “Although the market is highly competitive, particularly at the economy end, Freightways’ businesses have improved margins through their attention to service quality, ongoing commitment to disciplined cost management and further developing economies of scale”, he says.

“The demands of the courier/express freight market are well serviced by New Zealand Couriers, Post Haste Couriers, Castle Parcels, SUB60 and Security Express. These brands are all uniquely positioned to provide customers with a choice differentiated by service offer, price and range of solutions. Each brand has experienced growth this year as a result of its respective marketing strategies.”

While the smaller businesses in the information management and logistics markets recorded a poor year, with EBITA down 20% on the prior year, the information management brands of Document Destruction Services, Data Security Services and Online Records Management continue to experience profitable growth, when excluding the impact of lower paper prices.

The logistics business, Stocklink, continues to operate in a highly competitive and fragmented market. Strategic initiatives to improve business performance have included the merge of fetch and rationalisation of its operating sites.

Freightways has been the subject of extensive due diligence since last Christmas by various potential bidders as part of the ongoing sale process of its parent company, AUSDOC Group Limited. An offer for the shares of AUSDOC (ownership of which provides control of Freightways), by ABN AMRO Capital Australia Pty Ltd, has been recommended to AUSDOC shareholders by the AUSDOC directors.

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