Mainfreight Limited — Annual Report 2020

May 26, 2020

PRELIMINARY FULL YEAR REPORT ANNOUNCEMENT

Mainfreight Limited For Full Year Ended 31 March 2020

Preliminary full year report on consolidated results (including the results for the previous corresponding full year).

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This report includes supplementary information in the Income Statement, Balance Sheet and Cash Flow Statement for the current period to show what the results would have looked like prior to adopting the NZ IFRS 16 Lease changes (labelled Non-GAAP). Management and the Board believe this is necessary to provide a better comparison with prior periods which have not been adjusted for the impact of NZ IFRS 16.

In other respects, 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 2020

Income Statement for the Year Ended 31 March 2020
Note	GAAP Non-GAAP GAAP 2020 2020 2019 $000 $000 $000
Operating Revenue Interest Income Total Revenue Transport Costs Labour Expenses Other Expenses Earnings before Interest, Tax, Depreciation, Amortisation, Abnormal Items and Lease Costs Lease Costs Depreciation of Right of Use Assets Finance Costs Relating to Lease Liabilities Other Depreciation and Amortisation Expenses Other Finance Costs Profit Before Abnormal Items and Taxation for the Year Income Tax on Profit Before Abnormal Items Net Profit Before Abnormal Items for the Year Abnormal Items 4 Income Tax on Abnormal Items 4 Abnormal Tax Item - Reversal of deferred tax liability on buildings 4 Abnormal Items After Taxation Profit Before Taxation for the Year Income Tax Expense Net Profit for the Year Earnings per share for profit attributable to the ordinary equity holders of the company are:	3,094,736 3,094,736 2,953,414 658 658 673
	3,095,394 3,095,394 2,954,087 (1,803,460) (1,803,460) (1,791,573) (670,103) (670,103) (612,641) (222,502) (222,502) (191,021)
	399,329 399,329 358,852 - (117,665) (101,130) (111,877) - - (17,021) - - (57,852) (57,852) (53,107) (6,326) (6,326) (7,541)
	206,253 217,486 197,074 (58,278) (61,382) (55,990)
	147,975 156,104 141,084 (4,783) (4,783) (4,965) 1,309 1,309 1,505 14,700 14,700 -
	11,226 11,226 (3,460) 201,470 212,703 192,109 (42,269) (45,373) (54,485)
	159,201 167,330 137,624 Cents Cents Cents
Basic and Diluted Earnings Per Share: Total Operations	158.10 166.17 136.67

Statement of Comprehensive Income for the Year Ended 31 March 2020

Note	GAAP Non-GAAP GAAP 2020 2020 2019 $000 $000 $000
Net Profit for the Year Other Comprehensive Income Other comprehensive income to be reclassified to profit or loss in subsequent periods: Exchange Differences on Translation of Foreign Operations Income Tax Effect Net Other comprehensive income to be reclassified to profit or loss in subsequent periods Other comprehensive income not to be reclassified to profit or loss in subsequent periods: Revaluation of Land including Foreign Exchange Movements Income Tax Effect Net Other comprehensive income not to be reclassified to profit or loss in subsequent periods Other comprehensive income not to be reclassified to profit or loss in subsequent periods: Defined Benefit Pension Provision Income Tax Effect Net Other comprehensive income not to be reclassified to profit or loss in subsequent periods Other Comprehensive Income for the Year, Net of Tax Total Comprehensive Income for the Year, Net of Tax	159,201 167,330 137,624 23,850 24,132 1,144 3,323 3,323 (1,006)
	27,173 27,455 138 1,233 1,233 43,506 - - (4,106)
	1,233 1,233 39,400 (228) (228) (93) 57 57 23
	(171) (171) (70) 28,235 28,517 39,468 187,436 195,847 177,092

Balance Sheet as at 31 March 2020

Balance Sheet as at 31 March 2020
Current Assets	GAAP Non-GAAP GAAP 2020 2020 2019 $000 $000 $000
Bank	116,140 116,140 115,184
Trade Debtors Income Tax Receivable Other Receivables	420,839 420,839 389,376 2,937 2,937 200 73,129 73,129 55,304
Non-current Assets
	613,045 613,045 560,064
Property Plant & Equipment Right of Use Assets Software	652,639 652,639 547,641 123,936 123,936 118,988 615,250 - - 53,542 53,542 51,052
Goodwill Brand Names Other Intangible Assets	226,566 226,566 208,522 - - 3,807 4,578 4,578 6,581
Deferred Tax Asset	15,038 12,248 6,234
TOTAL ASSETS
	1,691,549 1,073,509 942,825
	2,304,594 1,686,554 1,502,889
Current Liabilities
Bank	6 6 4
Trade Creditors & Accruals Employee Entitlements Provision for Taxation	339,562 339,562 314,925 69,565 69,565 62,832 19,207 19,207 18,868
Lease Liability for Right of Use Assets	124,128 - -
Finance Lease Liability Non-current Liabilities Bank Term Loan Employee Entitlements Deferred Tax Liability	2,732 2,732 2,246
	555,200 431,072 398,875 267,698 267,698 238,653 2,887 2,887 2,815 6,654 7,065 19,473
Lease Liability for Right of Use Assets	502,734 - -
Finance Lease Liability	3,082 3,082 4,758
	783,055 280,732 265,699
Shareholders' Equity Share Capital Retained Earnings	85,821 85,821 85,821 773,720 781,849 673,931
Revaluation Reserve	90,604 90,604 89,371
Foreign Currency Translation Reserve	16,667 16,949 (10,506)
Defined Benefit Pension Reserve TOTAL EQUITY TOTAL LIABILITIES AND EQUITY	(473) (473) (302)
	966,339 974,750 838,315
	2,304,594 1,686,554 1,502,889

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

Statement of Changes in Equity for the Year Ended 31 March 2020

2020	Foreign Defined Asset Currency Benefit
$000 Ordinary Revaluation Translation Pension Retained Shares Reserve Reserve Reserve Earnings Total Balance at 1 April 2019 85,821 89,371 (10,506) (302) 673,931 838,315 Profit for the Year - - - - 159,201 159,201 Other Comprehensive Income - 1,233 27,173 (171) - 28,235 Total Comprehensive Income for the Year - 1,233 27,173 (171) 159,201 187,436 Transactions with Owners in Their Capacity as Owners:	Ordinary Revaluation Translation Pension Retained Shares Reserve Reserve Reserve Earnings Total 85,821 89,371 (10,506) (302) 673,931 838,315 - - - - 159,201 159,201 - 1,233 27,173 (171) - 28,235
Supplementary Dividends Dividends Paid Foreign Investor Tax Credit	- - - - (2,413) (2,413) - - - - (59,412) (59,412) - - - - 2,413 2,413
Balance at 31 March 2020	85,821 90,604 16,667 (473) 773,720 966,339
2019	Foreign Defined Asset Currency Benefit
$000 Balance at 1 April 2018 Profit for the Year	Ordinary Revaluation Translation Pension Retained Shares Reserve Reserve Reserve Earnings Total 85,821 51,254 (10,644) (232) 583,359 709,558 - - - - 137,624 137,624
Transfer of Revaluation Reserve for Land Sold	- (1,283) - - 1,283
Other Comprehensive Income - 39,400 138 (70) - 39,468 Total Comprehensive Income for the Year - 38,117 138 (70) 138,907 177,092 Transactions with Owners in Their Capacity as Owners:	- 39,400 138 (70) - 39,468
Supplementary Dividends Dividends Paid Foreign Investor Tax Credit	- - - - (1,879) (1,879) - - - - (48,335) (48,335) - - - - 1,879 1,879
Balance at 31 March 2019	85,821 89,371 (10,506) (302) 673,931 838,315

Cash Flow Statement for the Year Ended 31 March 2020

Cash Flow Statement for the Year Ended 31 March 2020
	GAAP Non-GAAP GAAP 2020 2020 2019 $000 $000 $000
Cash Flows From Operating Activities Receipts from Customers Interest Received Payments to Suppliers and Team Members Notional Finance Charge on NZ IFRS 16 Leases Interest Paid Income Taxes Paid	3,092,861 3,092,861 2,931,037 658 658 673 (2,705,526) (2,823,191) (2,674,532) (17,021) - - (6,326) (6,326) (7,541) (63,846) (63,846) (52,214)
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 NET CASH FLOWS FROM INVESTING ACTIVITIES Cash Flows From Financing Activities Proceeds of Long Term Loans	300,800 200,156 197,423 4,930 4,930 14,048 52 52 50 - - 8 (143,286) (143,286) (87,673) (16,728) (16,728) (15,603) - - (3)
	(155,032) (155,032) (89,173) 40,554 40,554 320
Dividend Paid to Shareholders	(59,412) (59,412) (48,335)
Repayment of Loans Lease Payments NZ IFRS16	(32,421) (32,421) (26,755) (100,644) - -
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	(151,923) (51,279) (74,770) (6,155) (6,155) 33,480 7,109 7,109 1,215 115,180 115,180 80,485
	116,134 116,134 115,180
	116,140 116,140 115,184 (6) (6) (4)
	116,134 116,134 115,180

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 full year ended 31 March 2020 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 ended 31 March 2019 financial statements except for the adoption of NZ IFRS 16 Leases. (Please see Note 2 (f) of the Financial Statements in the March 2019 Annual Report for further information).

These March 2020 Financial Statements have shown results pre NZ IFRS 16 and post NZ IFRS 16.

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The impact on profit before tax was a reduction of $11,233,000 and after tax by $8,129,000 net in the year to 31 March 2020. The impact on EBITDA (adjusted) was an increase of $117,665,000. There is no impact on cash flows.

The impact on total assets was an increase of $618,040,000, an increase in total liabilities of $626,451,000 and a decrease in Shareholder's Equity of $8,411,000 (see below).

Total Assets as per 31 March 2020 Balance Sheet Less Right of Use Assets Change in Deferred Tax Asset Total Assets after removing NZ IFRS 16 Leases Impact Total Liabilities as per 31 March 2020 Balance Sheet Less Current Lease Liability for Right of Use Assets Less Non-current Lease Liability for Right of Use Assets Change in Deferred Tax Liability Total Liabilities after removing NZ IFRS 16 Leases Impact Total Shareholders' Equity as per 31 March 2020 Balance Sheet Add back NZ IFRS 16 Leases Impact on Profit for the Period (Accumulated Surplus) Add back Movement in Foreign Currency Translation Reserve Total Shareholder's Equity after removing NZ IFRS 16 Leases Impact	$000 2,304,594 (615,250) (2,790)
	1,686,554
	1,338,255 (124,128) (502,734) 411
	711,804
	966,339 8,129 282
	974,750

3 Required NZX Disclosures Movements in Ordinary Shares on Issue Closing Balance Average Balance During Year Net Tangible Assets Net Tangible Assets Net Tangible Assets per Security (cps) Net Tangible Assets includes Software and Deferred Tax Assets and Liabilities. Dividends Paid and Proposed Recognised Amounts Declared and Paid During the Year to Parent Shareholders Final Fully Imputed Dividend for 2019: 34.0 cents (2018: 26.0 cents) Interim Fully Imputed Dividend for 2020: 25.0 cents (2019: 22.0 cents) Unrecognised Amounts Final Fully Imputed Dividend for 2020: 34.0 cents (2019: 34.0 cents)

Parent 2020 2019 Shares Shares 100,698,548 100,698,548 100,698,548 100,698,548 2020 2019 $000 $000 735,195 619,405 730.09 615.11 2020 2019 $000 $000 34,237 26,182 25,175 22,153

59,412 48,335 34,238 34,238

After the balance date, the above unrecognised dividends were approved by directors' resolution dated 26 May 2020.

4 Abnormal Items

Abnormal items are determined in accordance with the principles of consistency, relevance and clarity. Transactions considered for classification as abnormal items include acquisition and disposal costs; impairment or reversal of impairment of assets; business integration; and transactions or events outside of the Group’s ongoing operations that have a significant impact on reported profits.

During the year the Group had $4,784,000 of abnormal expenses (2019 $4,965,000). The related after tax expense was $3,475,000 (2019 $3,460,000).

In the year the Group had no abnormal gains (2019 nil). The related after tax gain was $14,701,000 (2019 nil).

These items comprised of:

	2020 Year		Pre-Tax Tax $000 $000	After Tax $000
	Brand Name Impairment ***		(3,949) 987	(2,962)
	Redundancies Building Depreciation Taxation ## 2019 Year		(835) 322 - 14,701	(513) 14,701 11,226 After Tax $000
			(4,784) 16,010
			Pre-Tax Tax $000 $000
	Brand Name Impairment ***		(3,912) 978	(2,934)
	Redundancies		(1,053) 527	(526) (3,460)
			(4,965) 1,505

• *** With the process of rebranding our European operations to Mainfreight largely completed it was decided to impair the purchased brand of Wim Bosman by one third in the 2020 financial year (2019 one third). This impairment entry has no cash impact. The brand has now been fully written off.

• In New Zealand, depreciation on buildings is now allowed as a tax deduction from the 1 April 2020. This law change has resulted in a change from a deferred tax liability to a deferred tax asset in the Consolidated Balance Sheet with a movement of $14,701,000. This resulted in a corresponding reduction in tax expense. This tax entry has no cash impact.

• 5 Annual Report and Annual Meeting

The annual report is expected to be available on 26 June 2020. The Annual Meeting is to be held at 4.00pm on Thursday 30 July 2020; venue to be advised.

5 Segmental Reporting

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 2020 and 31 March 2019.

Year Ended 31 March 2020	New Australia The Asia Europe Inter-	Total
Post NZ IFRS 16	Zealand Americas Segment	$000
Operating Revenue - Sales to customers outside the group - Inter-segment sales Total Revenue	752,913 796,545 761,950 94,786 689,200 - 396 20,352 48,421 73,489 38,133 (180,791) 753,309 816,897 810,371 168,275 727,333 (180,791)	3,095,394 - 3,095,394
EBITDA (adjusted) Depreciation & Amortisation Capital Expenditure Trade Receivables Non-current Assets Total Assets Total Liabilities	139,767 104,809 60,407 8,334 85,354 - 46,799 45,164 24,481 2,945 50,340 - 62,225 71,497 9,025 1,126 16,141 - 83,982 105,889 119,361 24,618 110,812 (23,823) 560,315 451,269 236,302 17,765 425,898 - 665,587 590,187 385,118 64,399 623,126 (23,823) 299,026 364,160 258,797 33,125 406,970 (23,823)	398,671 169,729 160,014 420,839 1,691,549 2,304,594 1,338,255
Year Ended 31 March 2020	New Australia The Asia Europe Inter-	Total
Pre NZ IFRS 16 Where Different	Zealand Americas Segment	$000
EBITDA (adjusted)	115,889 65,043 43,259 6,046 50,769 -	281,006
Depreciation & Amortisation	24,337 8,939 7,522 734 16,320 -	57,852
Non-current Assets Total Assets	463,822 253,980 103,789 12,277 239,641 - 569,096 392,898 252,604 58,911 436,868 (23,823)	1,073,509 1,686,554
Total Liabilities	200,602 164,775 123,442 27,469 219,339 (23,823)	711,804
Year Ended 31 March 2019	New Australia The Asia Europe Inter-	Total
Pre NZ IFRS 16	Zealand Americas Segment	$000
Operating Revenue - Sales to customers	718,791 760,844 725,200 109,321 639,931 -	2,954,087
outside the group - Inter-segment sales Total Revenue	(590) 18,646 54,544 77,409 37,578 (187,587) 718,201 779,490 779,744 186,730 677,509 (187,587)	- 2,954,087
EBITDA (adjusted) Depreciation & Amortisation	110,556 59,323 38,342 9,263 39,565 - 22,638 8,163 6,565 657 15,084 -	257,049 53,107
Capital Expenditure	48,595 20,767 9,112 1,325 23,477 -	103,276
Trade Receivables Non-current Assets Total Assets	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)	389,376 942,825 1,502,889
Total Liabilities	210,262 142,957 113,099 24,392 196,064 (22,200)	664,574

Division Segments

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

Year Ended 31 March 2020	Domestic	Warehousing	Air & Ocean	Total
	Transport		Forwarding	$000
Revenue	1,576,320	383,728	1,135,346	3,095,394
EBITDA (adjusted) Post NZ IFRS 16	223,534	101,961	73,176	398,671
EBITDA (adjusted) Pre NZ IFRS 16	171,308	50,526	59,172	281,006
Year Ended 31 March 2019	Domestic	Warehousing	Air & Ocean	Total
	Transport		Forwarding	$000
Revenue	1,450,942	346,567	1,156,578	2,954,087
EBITDA (adjusted)	156,681	37,282	63,086	257,049

	Post NZ Pre NZ Pre NZ IFRS 16 IFRS 16 IFRS 16
Reconciliation between non-GAAP and the Income Statement	2020 2020 2019 $000 $000 $000
Profit Before Taxation for the Year Abnormal Items	201,470 212,703 192,109 4,783 4,783 4,965
Profit Before Abnormal Items and Taxation for the Year Interest Income Finance Costs Relating to Lease Liabilities Other Finance Costs EBITA Depreciation of Right of Use Assets Other Depreciation and Amortisation Expenses EBITDA (adjusted)	206,253 217,486 197,074 (658) (658) (673) 17,021 - - 6,326 6,326 7,541 228,942 223,154 203,942 111,877 - - 57,852 57,852 53,107 398,671 281,006 257,049
EBITDA (adjusted) is defined as earnings before net interest expense, tax, depreciation, amortisation, ab royalties (segment only; not group).	normal items and

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.

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Distribution Notice (for Equity Security issuer/Equity and Debt Security issuer)

Section 1: Issuer Information
Name of Issuer	Mainfreight Limited
Financial product name/description	Ordinary Shares
NZX ticker code	MFT
ISIN	NZMFTE0001S9
Type of distribution (Please mark with an X in the relevant box/es)	Full Year	X	Quarterly
	Half Year		Special
	DRP Applies
Record date	10/07/2020
Ex-Date (one business day before the Record Date)	9/07/2020
Payment date (and allotment date for DRP)	17/07/2020
Total monies associated with the distribution	$34,237,506
Source of distribution (for example, retained earnings)	Retained earnings
Currency	NZD
Section 2: Distribution Amounts per Financial Product
Gross Distribution	$0.47222222
Total Cash Distribution	$0.34000000
Excluded Amount (applicable to listed PIEs)
Supplementary Distribution Amount	$0.06000000
Section 3: Imputation Credits and Resident Withholding Tax
Is the Distribution imputed?	Yes
If fully or partially imputed, please state imputation rate as % applied	100%
Imputation tax credits per financial product	$0.13222222
Resident Withholding Tax per financial product	$0.02361111
Section 4: Distribution Re-investment Plan (not applicable)
Authority for this Announcement
Name of person authorised to make this announcement	Tim Williams, Chief Financial Officer
Contactperson for this announcement	Tim Williams
Contactphone number	+64 9 259 5510
Contact email address	tim@mainfreight.com
Date of release through MAP	27/05/2020

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Results announcement (for Equity Security issuer/Equity and Debt Security issuer)

Results for announcement to the market	Results for announcement to the market	Results for announcement to the market
Name of Issuer	Mainfreight Limited
Reporting Period	12 months to 31 March 2020
Previous Reporting Period	12 months to 31 March 2019
Currency	NZD
	Amount (000s)	Percentage Change
Revenue from Continuing Operations	$3,095,394	4.8%
Total Revenue	$3,095,394	4.8%
Net Profit/(Loss) from Continuing Operations	$159,201	15.7%
Total Net Profit/(Loss)	$159,201	15.7%
Interim/Final Dividend
Amount per Quoted Equity Security	$0.34000000
Imputed Amount per Quoted Equity Security	$0.06000000
Record Date	10/07/2020
Dividend Payment Date	17/07/2020
	Current Period	Prior Comparable Period
Net tangible assetsperQuoted EquitySecurity	$7.3009	$6.1511
A brief explanation of any of the figures above necessary to enable the figures to be understood	Current period includes impact of NZ IFRS16 Leases but prior period does not. Excluding the impact of NZ IFRS16 the Net Profit % change would have been a 21.6% increase with Total Net Profit being $167,330. The NTA per share would have been $7.3845.
Authority for this Announcement
Name of person authorised to make this announcement	Tim Williams, Chief Financial Officer
Contact person for this announcement	Tim Williams
Contact phone number	+64 9 259 5510
Contact email address	tim@mainfreight.com
Date of release through MAP	27/05/2020

Unaudited financial statements accompany this announcement.