Mainfreight Limited — Annual Report 2019

May 27, 2019

PRELIMINARY FULL YEAR REPORT ANNOUNCEMENT

Mainfreight Limited For Full Year Ended 31 March 2019

Preliminary full year report on consolidated results (including the results for the previous corresponding full year). This report has been prepared in a manner which complies with generally accepted accounting practice and fairly presents the matters to which the report relates and is based on unaudited financial statements, which are in the process of being audited. The Listed Issuer has a formally constituted Audit Committee of the Board of Directors.

Income Statement for the Year Ended 31 March 2019

Income Statement for the Year Ended 31 March 2019
Note 2019 2018 $000 $000 Operating Revenue 2,953,414 2,616,189 Interest Income 673 511 Total Revenue 2,954,087 2,616,700 Transport Costs (1,791,573) (1,605,459) Labour Expenses Excluding Share Based Payments (612,641) (538,483) Occupancy Expenses (83,850) (73,192) Depreciation and Amortisation Expenses (53,107) (47,788) Other Expenses (208,301) (183,941) Finance Costs (7,541) (7,567) Profit Before Abnormal Items and Taxation for the Year 197,074 160,270 Income Tax on Profit Before Abnormal Items (55,990) (48,266) Net Profit Before Abnormal Items for the Year 141,084 112,004 Abnormal Items 4 (4,965) (7,224) Income Tax on Abnormal Items 4 1,505 2,898 Abnormal Items After Taxation 4 (3,460) (4,326) Profit Before Taxation for the Year 192,109 153,046 Income Tax Expense (54,485) (45,368) Net Profit for the Year 137,624 107,678 Earnings per share for profit attributable to the ordinary equity holders of the company are: Cents Cents Basic Earnings Per Share: Total Operations 136.67 106.93 Diluted Earnings Per Share: Total Operations 136.67 106.93 Statement of Comprehensive Income for the Year Ended 31 March 2019 Net Profit for the Year 137,624 107,678 Other Comprehensive Income Other comprehensive income to be reclassified to profit or loss in subsequent periods: Exchange Differences on Translation of Foreign Operations 1,144 (1,978) Income Tax effect (1,006) 3,371	2019 2018 $000 $000 2,953,414 2,616,189 673 511
	2,954,087 2,616,700 (1,791,573) (1,605,459) (612,641) (538,483) (83,850) (73,192) (53,107) (47,788) (208,301) (183,941) (7,541) (7,567)
	197,074 160,270 (55,990) (48,266)
	141,084 112,004 (4,965) (7,224) 1,505 2,898
	(3,460) (4,326) 192,109 153,046 (54,485) (45,368)
Net Other comprehensive income to be reclassified to profit (loss) in subsequent periods	138 1,393
Other comprehensive income not to be reclassified to profit or loss in subsequent periods: Revaluation of Land including Foreign Exchange Movements Income Tax effect	43,506 638 (4,106) -
Net Other comprehensive income not to be reclassified to profit (loss) in subsequent periods	39,400 638
Other comprehensive income not to be reclassified to profit or loss in subsequent periods: Defined Benefit Pension Provision Income Tax effect	(93) 325 23 (137)

Balance Sheet as at 31 March 2019

Note Current Assets Bank Trade Debtors Income Tax Receivable Properties Held for Sale Other Receivables Non-current Assets Property Plant & Equipment Software Goodwill Brand Names Other Intangible Assets Deferred Tax Asset TOTAL ASSETS Current Liabilities Bank Trade Creditors & Accruals Employee Entitlements Provision for Taxation Finance Lease Liability Non-current Liabilities Bank Term Loan Employee Entitlements Deferred Tax Liability Finance Lease Liability Shareholders' Equity Share Capital Retained Earnings Revaluation Reserve Foreign Currency Translation Reserve Defined Benefit Pension Reserve TOTAL EQUITY TOTAL LIABILITIES AND EQUITY	2019 2018 $000 $000 115,184 80,521 389,376 361,737 200 270 - 7,852 55,304 60,811
	560,064 511,191 547,641 483,488 118,988 98,822 51,052 49,374 208,522 207,919 3,807 7,863 6,581 9,164 6,234 8,882
	942,825 865,512
	1,502,889 1,376,703
	4 36 314,925 298,916 62,832 53,373 18,868 12,323 2,246 2,077
	398,875 366,725 238,653 270,753 2,815 3,634 19,473 21,526 4,758 4,507
	265,699 300,420 85,821 85,821 673,931 583,359 89,371 51,254 (10,506) (10,644) (302) (232)
	838,315 709,558
	1,502,889 1,376,703

The accompanying notes form an integral part of these financial statements.

Statement of Changes in Equity for the Year Ended 31 March 2019

2019			Foreign	Defined
		Asset	Currency	Benefit
$000	Ordinary	Revaluation	Translation	Pension	Retained
	Shares	Reserve	Reserve	Reserve	Earnings	Total
Balance at 1 April 2018	85,821	51,254	(10,644)	(232)	583,359	709,558
Profit for the Year	-	-	-	-	137,624	137,624
Transfer of Revaluation Reserve fo	-	(1,283)	-	-	1,283	-
Other Comprehensive Income	-	39,400	138	(70)	-	39,468
Total Comprehensive	-	38,117	138	(70)	138,907	177,092
Income for the Year
Transactions with Owners in	Their Capacity as Owners:
Supplementary Dividends	-	-	-	-	(1,879)	(1,879)
Dividends Paid	-	-	-	-	(48,335)	(48,335)
Foreign Investor Tax Credit	-	-	-	-	1,879	1,879
Balance at 31 March 2019	85,821	89,371	(10,506)	(302)	673,931	838,315
2018			Foreign	Defined
		Asset	Currency	Benefit
$000	Ordinary	Revaluation	Translation	Pension	Retained
	Shares	Reserve	Reserve	Reserve	Earnings	Total
Balance at 1 April 2017	85,821	50,616	(12,037)	(420)	518,982	642,962
Profit for the Year	-	-	-	-	107,678	107,678
Other Comprehensive Income	-	638	1,393	188	-	2,219
Total Comprehensive	-	638	1,393	188	107,678	109,897
Income for the Year
Transactions with Owners in	Their Capacity as Owners:
Supplementary Dividends	-	-	-	-	(1,497)	(1,497)
Dividends Paid	-	-	-	-	(43,301)	(43,301)
Foreign Investor Tax Credit	-	-	-	-	1,497	1,497
Balance at 31 March 2018	85,821	51,254	(10,644)	(232)	583,359	709,558

Cash Flow Statement for the Year Ended 31 March 2019

Note Cash Flows From Operating Activities Receipts from Customers Interest Received Payments to Suppliers and Team Members Interest Paid Income Taxes Paid NET CASH FLOWS FROM OPERATING ACTIVITIES Cash Flows From Investing Activities Proceeds from Sale of Property, Plant & Equipment Proceeds from Sale of Software Repayments by Team Members Purchase of Property, Plant & Equipment Purchase of Software Advances to Team Members Establishment of Franchises and Acquisition of Subsidiaries NET CASH FLOWS FROM INVESTING ACTIVITIES Cash Flows From Financing Activities Proceeds of Long Term Loans	2019 2018 $000 $000 2,931,037 2,580,429 673 511 (2,674,532) (2,388,030) (7,541) (7,567) (52,214) (45,107)
	197,423 140,236 14,048 4,507 50 46 8 213 (87,673) (51,509) (15,603) (17,726) (3) (10) - (250)
	(89,173) (64,729) 320 1,974
Proceeds of Share Issues	- -
Dividend Paid to Shareholders Repayment of Loans NET CASH FLOWS FROM FINANCING ACTIVITIES NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS Net Foreign Exchange Differences CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS AT END OF PERIOD Comprised Bank and Short Term Deposits Bank Overdraft	(48,335) (43,300) (26,755) (28,441)
	(74,770) (69,767) 33,480 5,740 1,215 380 80,485 74,365
	115,180 80,485
	115,184 80,521 (4) (36)
	115,180 80,485

The accompanying notes form an integral part of these financial statements.

1 Corporate Information

The preliminary full year report announcement of Mainfreight Limited ("the parent") and its subsidiaries ("the Group") for the year ended 31 March 2019 were authorised for issue in accordance with a resolution of the Directors.

Mainfreight Limited is a company limited by shares incorporated in New Zealand whose shares are publicly traded on the NZX Main Board (New Zealand Stock Exchange).

2

Accounting Policies

Accounting policies remain consistent with the prior year financial statements, except for the adoption of new standards effective 1 April 2018, namely :

NZ IFRS 9 Financial Instruments: Classification and Measurement - the impact of this standard did not have a material impact on the financial statements.

NZ IFRS 15 - Revenue from Contracts with Customers - the 2018 year has been restated with a reduction of revenue of $2,160,000, profit before tax was reduced by $302,000 and after tax by $215,000. The impact upon opening (1 April 2017) net assets and equity of the Group is calculated as a reduction of equity of $2,640,000.

3 Required NZX Disclosures

Movements in Ordinary Shares on Issue

Movements in Ordinary Shares on Issue
	2019	2018
	Shares	Shares
Closing Balance	100,698,548	100,698,548
Average Balance During Year	100,698,548	100,698,548
Net Tangible Assets
	2019	2018
	$000	$000
Net Tangible Assets	619,405	484,612
Net Tangible Assets per Security (cps)	615.11	481.25
Net Tangible Assets includes Software and Deferred Tax Assets and Liabilities.
Dividends Paid and Proposed
	2019	2018
	$000	$000
Recognised Amounts
Declared and Paid During the Year to Parent Shareholders
Final Fully Imputed Dividend for 2018: 26.0 cents (2017: 24.0 cents)	26,182	24,168
Interim Fully Imputed Dividend for 2019: 22.0 cents (2018: 19.0 cents)	22,153	19,133
	48,335	43,301
Unrecognised Amounts
Final Fully Imputed Dividend for 2019: 34.0 cents (2018: 26.0 cents)	34,238	26,182

After the balance date, the above unrecognised dividends were approved by directors' resolution dated 27 May 2019. These amounts have not been recognised as a liability in 2019 but will be brought to account in 2020.

Segmental Reporting

6

An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses whose operating results are regularly reviewed by the entity’s chief operating decision maker and for which discrete financial information is available.

The Group operates in the domestic supply chain (i.e. moving and storing freight within countries) and air and ocean freight industries (i.e. moving freight between countries).

New Zealand, Australia, The Americas and Europe are each reported to management as one segment as the businesses there perform both domestic and air and ocean services.

The accounting policies of the operating segments are the same as those described in the notes in note 2 with the exception of deferred tax and the fair value of derivative financial instruments which are not reported on a monthly basis. The segmental results from operations are disclosed below.

Geographical Segments

The following table represents revenue, margin and certain asset information regarding geographical segments for the years ended 31 March 2019 and 31 March 2018.

Operating Revenue - Sales to customers outside the group - Inter-segment sales Total Revenue EBITDA Depreciation & Amortisation Capital Expenditure Trade Receivables Non-current Assets Total Assets Total Liabilities Operating Revenue - Sales to customers outside the group - Inter-segment sales Total Revenue EBITDA Depreciation & Amortisation Capital Expenditure Trade Receivables Non-current Assets Total Assets Total Liabilities	New Australia The Asia Europe Inter- Zealand Americas Segment 718,791 760,844 725,200 109,321 639,931 - (590) 18,646 54,544 77,409 37,578 (187,587) 718,201 779,490 779,744 186,730 677,509 (187,587) 110,556 59,323 38,342 9,263 39,565 - 22,638 8,163 6,565 657 15,084 - 48,595 20,767 9,112 1,325 23,477 - 89,966 98,431 103,439 17,571 102,169 (22,200) 423,238 193,231 91,048 11,802 223,506 - 548,788 322,949 218,750 52,762 381,840 (22,200) 210,262 142,957 113,099 24,392 196,064 (22,200) New Australia The Asia Europe Inter- Zealand Americas Segment 666,039 674,679 608,846 117,308 549,828 - 294 18,631 40,811 64,084 30,228 (154,048) 666,333 693,310 649,657 181,392 580,056 (154,048) 98,531 54,002 26,621 6,883 29,077 - 21,174 7,173 5,786 644 13,011 - 33,463 7,860 6,495 240 21,173 - 85,475 92,321 94,181 15,212 93,488 (18,940) 372,010 175,197 83,823 11,094 223,388 - 473,466 299,529 200,561 50,897 371,190 (18,940) 202,686 146,995 114,872 22,245 199,287 (18,940)	2019 $000 2,954,087 -
		2,954,087
		257,049 53,107
		103,276 389,376 942,825 1,502,889 664,574
		2018 $000 2,616,700 -
		2,616,700
		215,114 47,788
		69,231 361,737 865,512 1,376,703 667,145

Product Segments

The following table represents revenue and EBITDA regarding the three main types of services for the years ended 31 March 2019 and 31 March 2018.

Domestic Warehousing Air & Ocean Transport Forwarding Revenue 1,450,942 346,567 1,156,578 EBITDA 156,681 37,282 63,086 Domestic Warehousing Air & Ocean Transport Forwarding Revenue 1,297,013 289,080 1,030,607 EBITDA 128,382 33,142 53,590 Reconciliation between Segment EBITDA and the Income Statement Profit from Operations Before Abnormal Items and Taxation for the Year Interest Income Derivative Fair Value Movement Non-cash Share Based Payment Expense Finance Costs Depreciation & Amortisation EBITDA	2019 $000 197,074 (673) - - 7,541 53,107 257,049	2019 $000 2,954,087 257,049 2018 $000 2,616,700 215,114 2018 $000 160,270 (511) - - 7,567 47,788
		215,114

EBITDA is defined as earnings before net interest expense, tax, depreciation, amortisation, abnormal items, royalties, share based payment expense, minority interests and associates.

There are no customers in any segment that comprise more than 10% of that segment's revenue.

Bank term loan is allocated based on segment net assets excluding bank term loan.

The geographical segments are determined based on the location of the Group's assets.

4 Abnormal Items

During the year the Group had $4,965,000 of abnormal expenses (2018 $7,224,000). The related after tax expense was $3,460,000 (2018 $5,048,000).

In the year the Group had no abnormal gains (2018 nil). The related after tax gain was nil (2018 $722,000).

These items comprised of:

	2019 Year		Pre-Tax Tax $000 $000	After Tax $000
	Brand Name Impairment ***		(3,912) 978	(2,934)
	Redundancies 2018 Year		(1,053) 527	(526) (3,460) After Tax $000
			(4,965) 1,505
			Pre-Tax Tax $000 $000
	Brand Name Impairment ***		(3,763) 941	(2,822)
	Redundancies Tax Rate Changes		(3,461) 1,235 - 722	(2,226) 722 (4,326)
			(7,224) 2,898

• *** With the process of rebranding our European operations to Mainfreight underway it was decided to impair the purchased brand of Wim Bosman by one third in the 2019 financial year (2018 one third). This impairment entry has no cash impact.

5 Annual Report and Annual Meeting

The annual report is expected to be available on 26 June 2019.

The Annual Meeting is to be held at the Barrel Hall, Villa Maria Estate, 118 Montgomerie Road, Mangere, Auckland at 4.00pm on Thursday 30 July 2019.

APPENDIX 7 – NZSX Listing Rules

EMAIL: announce@nzx.com

Notice of event affecting securities

NZSX Listing Rule 7.12.2. For rights, NZSX Listing Rules 7.10.9 and 7.10.10 For change to allotment, NZSX Listing Rule 7.12.1, a separate advice is required

Number of pages including this one (Please provide any other relevant details on additional pages)

Full name of Issuer	Full name of Issuer	Mainfreight Limited	Mainfreight Limited	Mainfreight Limited	Mainfreight Limited	Mainfreight Limited
Name of officer make this notice		authoris	ed to							Authority for e.g. Directors				event, ' resolution
							Tim Williams										Directors Resolution
Contact phone number			(09)	259 5500						(09) 270 7402						e			27 5		2019
Nature of ev Tick as appropr		ent iate		Bonus Issue Rights Issue non-renouncable			If ticked, state whether: Capital Ca change	Taxable ll Dividend X		/ Non Taxable If ticked, state whether: In			Conv F terim Y	ersion ull ear X		S	pec	In ial	Rights Issue terest Renouncable DRP Applies
EXISTING se Description of th class of securiti		curitie e es	s affe	cted by this				If more than on		e security is affecte			d by the event, u	se a separate fo ISIN		rm
				Ordinary Shares															NZMFTE0001S9
																			If unknown, contact NZX
Details of se		curitie	s issu	ed pursuant t	o t	his even		If		more	than one clas		s of security is to	be issued, use ISIN		a s	ep	ara	te form for each class
Description of the class of securities Number of Securities to be issued following eve			nt
													Minimum Entitlement						If unknown, contact NZX Ratio, e.g 1 for 2 for
Conversion, Maturity, Call Payable or Exercise Date Strike price per security for any Strike Price available.				issue in lieu or	dat					Tick pari	if passu		Treatment of Fractions provide an OR explanation of the ranking
						e Enter N/A if not applicable
M	onies Associated with			Event In dollars	an	Dividen d cents		d payable, Call payable, Ex S P			ercise price, C ource of ayment		onversion price, Redemption pri			ce,	A	ppli	cation money.
																		Revenue
	Amount per security (does not include any exc			luded income)	$0.34000000
	Excluded income per security (only applicable to listed PIEs)
	Currency Total monies				NZ $						Suppleme di de NZSX List		ntary Amount per security vidend in dollars and cents tails - ing Rule 7.12.7 Date Payable							$0.06000000
					$34,237,506															19 July, 2019
T In is	axation the case of a taxable bonus sue state strike price										Amo		untper Security in Dollars and c			ents to six deci				malplaces
							$		Resident Withholding Tax		0.02361111				Imp (Giv	utation Credits e details)				0.13222222
									Foreign Withholding Tax		FW (Giv $					P Credits e details)
Timing (Refer Appendix 8 in th Record Date 5pm For calculation of entitlements - Notice Date Entitlement letters, call notices,					e NZ		SX Listing Rules)				Application Date Also, Call Payable, Dividend / Interest Payable, Exercise Date, Conversion Date. In the case of applications this must be the last business day of the week. Allotment Date For the issue of new securities.
							12 July, 2019									19 July, 2019
conversion notices mailed												Must be within 5 business days of application closing date.

OFFICE USE ONLY

Ex Date: Commence Quoting Rights: Cease Quoting Rights 5pm: Commence Quoting New Securities: Cease Quoting Old Security 5pm:

Security Code:

Security Code:

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