Freightways

Trading Update

26th October 2006

An update on unaudited trading performance for the three months ended 30 September 2006 is provided below.

For the first three months of the current financial year, Freightways has delivered a positive result compared with the corresponding period in the prior year. As expected, this result does however reflect the slower economic environment in New Zealand. Revenue and earnings from the recent acquisition of DataBank have assisted this result and this demonstrates the continuing importance of Freightways’ strategy of exploring complementary growth opportunities for its core businesses. July and August were relatively quiet months in our New Zealand express package businesses, however September improved and was encouraging. Top line growth has been achieved as a result of sustained support from existing customers, higher than normal pricing gains geared to offset the still high cost of fuel, some market share gains and new revenue from the DataBank acquisition. This revenue growth has been essential to offset increased operating costs. Given the slower economic environment it is operating in, Freightways is pleased to deliver a trading update that demonstrates the resilience of its strategy in these quieter times.

During the quarter, and as previously announced, Freightways completed the acquisition of the Australian information management company, DataBank Technologies Pty Ltd (DataBank). DataBank is the number two operator by market share in the offsite data storage niche of the information management market. This acquisition is a well considered and important step in the development and growth of Freightways. It diversifies Freightways’ interests geographically and also deeper into the information management market. DataBank’s performance in its initial three months under Freightways’ ownership is tracking to expectation.

For the three months ended 30 September 2006, Freightways’ revenue totalled $70 million and Earnings Before Interest Tax and Amortisation (EBITA) amounted to approximately $14 million. Compared to the prior corresponding period, this performance represents an increase in earnings of 6% and results in an increase in net profit after tax of 3%.

Results for the three (3) months ended 30 September (unaudited)

Three months ended: 30 September 30 September %
  2006 ($000) 2005 ($000) increase
Revenue 70,050 62,445 12%
EBITA 13,973 13,236 6%
Net profit after tax 6,288 6,109 3%

These latest results continue the strong historic performance of Freightways, as shown in the following graphs in relation to the last eight years’ financial performance (NB. Historic EBITA amounts for the years ended 30 June 1999 to 2003 have been presented on a pro-forma basis consistent with the Freightways Statement and Prospectus issues in August 2003).

 
Freightways Operating Revenue
 
Freightways EBITA
 
 
 

Outlook

Encouragingly we have seen some recent improvement in trading activity. Although it is too early to celebrate this improvement, Freightways is very well placed to benefit from any improvement in its marketplace, if it is sustained, with all subsidiaries positioned to accommodate growth. In addition, we do expect to see some moderation in the level of cost increases throughout the rest of the financial year. Our recent Australian acquisition also opens up a new and larger market, that in time will also contribute to Freightways’ growth. Freightways’ future will in the short term be influenced by the performance of the New Zealand economy. Medium to longer term, and subject to business factors beyond its control, Freightways is exceptionally well positioned in all aspects of its business to continue to deliver positive performance for its shareholders and all other stakeholders.

For further information please contact:

DEAN BRACEWELL
Managing Director
Freightways Limited
Ph: (09) 571 9670
Fax: (09) 571 9671