Mainfreight Limited — Interim / Quarterly Report 2021

Nov 10, 2020

PRELIMINARY HALF YEAR REPORT ANNOUNCEMENT

Mainfreight Limited For Half Year Ended 30 September 2020

Preliminary half year report on consolidated results (including the results for the previous corresponding half year). Interim Financial Reporting and fairly presents the matters to which the report relates and is based on unaudited financial statements. The Listed Issuer has a formally constituted Audit Committee of the Board of Directors.

Income Statement for the Six Months Ended 30 September 2020

Note Operating Revenue Interest Income Total Revenue Transport Costs Labour Expenses Other Expenses	30 Sept 30 Sept 31 March 2020 2019 2020 $000 $000 $000 1,608,861 1,500,466 3,094,736 - - 658
	1,608,861 1,500,466 3,095,394 (953,205) (883,029) (1,803,460) (350,132) (342,792) (670,103) (100,772) (98,188) (222,502)
Depreciation of Right of Use Assets Finance Costs Relating to Lease Liabilities	(60,749) (53,435) (111,877) (8,394) (8,226) (17,021)
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	(30,602) (28,542) (57,852) (2,742) (3,406) (6,326)
	102,265 82,848 206,253 (29,348) (23,719) (58,278)
	72,917 59,129 147,975 - - (4,783) - - 1,309
Abnormal Tax Item - Reversal of deferred tax liability on buildings 4	14,700
Abnormal Items After Taxation 4	- - 11,226
Profit Before Taxation for the Year Income Tax Expense Net Profit for the Year	102,265 82,848 201,470 (29,348) (23,719) (42,269)
	72,917 59,129 159,201
Earnings per share for profit attributable to the ordinary equity holders of the company are:
Basic and Diluted Earnings Per Share: Total Operations	Cents Cents Cents 72.41 58.72 158.10
Statement of Comprehensive Income for the Six Months Ended 30 September 2020
Net Profit for the Year	72,917 59,129 159,201
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	(8,555) 17,827 23,850 (1,078) 1,487 3,323
Net Other comprehensive income to be reclassified to profit (loss) in subsequent periods	(9,633) 19,314 27,173
Other comprehensive income not to be reclassified to profit or loss in subsequent periods: Revaluation of Land including Foreign Exchange Movements Income Tax effect	109 663 1,233 - - -
Net Other comprehensive income not to be reclassified to profit (loss) in subsequent periods	109 663 1,233
Other comprehensive income not to be reclassified to profit or loss in subsequent periods: Defined Benefit Pension Provision Income Tax effect	15 (15) (228) - - 57
Net Other comprehensive income not to be reclassified to profit (loss) in subsequent periods	15 (15) (171)
Other Comprehensive Income for the Year, Net of Tax Total Comprehensive Income for the Year, Net of Tax	(9,509) 19,962 28,235 63,408 79,091 187,436

Balance Sheet as at 30 September 2020

Balance Sheet as at 30 September 2020
Note	30 Sept 30 Sept 31 March
Current Assets	2020 2019 2020 $000 $000 $000
Bank	128,206 102,334 116,140
Trade Debtors Income Tax Receivable Other Debtors Non-current Assets Property, Plant & Equipment	388,783 420,659 420,839 1,594 - 2,937 62,665 64,511 73,129
	581,248 587,504 613,045 808,353 741,549 776,575
Right of Use Assets 2	577,060 587,593 615,250
Software	52,507 51,988 53,542
Goodwill Brand Names Other Intangible Assets	217,580 218,545 226,566 - 3,991 - 3,012 5,656 4,578
Deferred Tax Asset TOTAL ASSETS 2	15,389 6,405 15,038
	1,673,901 1,615,727 1,691,549
	2,255,149 $ 2,203,231 $ 2,304,594 $
Current Liabilities
Bank	- - 6
Trade Creditors & Accruals Employee Entitlements Provision for Taxation	341,318 347,125 339,562 66,902 65,168 69,565 4,782 3,964 19,207
Lease Liability for Right of Use Assets 2 Finance Lease Liability Non-current Liabilities Bank Term Loan Employee Entitlements Deferred Tax Liability Lease Liability for Right of Use Assets 2 Finance Lease Liability	123,221 110,166 124,128 2,056 2,266 2,732
	538,279 528,689 555,200 239,475 283,648 267,698 3,288 3,122 2,887 6,589 18,600 6,654 469,856 481,853 502,734 2,152 4,150 3,082
Shareholders' Equity Share Capital 3 Accumulated Surplus
	721,360 791,373 783,055 85,821 85,821 85,821 812,400 698,823 773,720
Revaluation Reserve	90,713 90,034 90,604
Foreign Currency Translation Reserve	7,034 8,808 16,667
Defined Benefit Pension Reserve TOTAL EQUITY 2	(458) (317) (473)
	995,510 883,169 966,339
TOTAL LIABILITIES AND EQUITY 2	2,255,149 $ 2,203,231 $ 2,304,594 $

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

Statement of Changes in Equity for the Six Months Ended 30 September 2020

Six Months to 30 September 2020	Foreign Defined
	Asset Currency Benefit Ordinary Revaluation Translation Pension Retained TOTAL Shares Reserve Reserve Reserve Earnings $000
Balance at 1 April 2020	85,821 90,604 16,667 (473) 773,720 966,339
Profit for the Period	72,917 72,917
Other Comprehensive Income Total Comprehensive Income for the Period Transactions with Owners in Their Capacity as	109 (9,633) 15 (9,509)
	- 109 (9,633) 15 72,917 63,408 Owners:
Supplementary Dividends Dividends Paid Foreign Investor Tax Credit	(1,140) (1,140) (34,237) (34,237) 1,140 1,140
Balance at 30 September 2020	85,821 90,713 7,034 (458) 812,400 995,510
Six Months to 30 September 2019	Foreign Defined
	Asset Currency Benefit Ordinary Revaluation Translation Pension Retained TOTAL Shares Reserve Reserve Reserve Earnings $000
Balance at 1 April 2019	85,821 89,371 (10,506) (302) 673,931 838,315
Profit for the Period	59,129 59,129
Other Comprehensive Income Total Comprehensive Income for the Period Transactions with Owners in Their Capacity as	663 19,314 (15) 19,962
	- 663 19,314 (15) 59,129 79,091 Owners:
Supplementary Dividends Dividends Paid Foreign Investor Tax Credit	(1,394) (1,394) (34,237) (34,237) 1,394 1,394
Balance at 30 September 2019	85,821 90,034 8,808 (317) 698,823 883,169
Twelve Months to 31 March 2020	Foreign Defined
	Asset Currency Benefit Ordinary Revaluation Translation Pension Retained TOTAL Shares Reserve Reserve Reserve Earnings $000
Balance at 1 April 2019	85,821 89,371 (10,506) (302) 673,931 838,315
Profit for the Period	159,201 159,201
Other Comprehensive Income	1,233 27,173 (171) 28,235
Total Comprehensive Income for the Period Transactions with Owners in Their Capacity as	- 1,233 27,173 (171) 159,201 187,436 Owners:
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

Cash Flow Statement for the Six Months Ended 30 September 2020

Cash Flow Statement for the Six Months Ended 30 September 2020
Note 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 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 Dividend Paid to Shareholders Repayment of Loans	30 Sept 30 Sept 31 March 2020 2019 2020 $000 $000 $000 1,890,812 1,710,462 3,092,861 - - 658 (1,648,586) (1,535,622) (2,705,526) (8,394) (8,226) (17,021) (2,743) (3,406) (6,326) (42,580) (40,132) (63,846)
	188,509 123,076 300,800 2,386 1,202 4,930 - 38 52 2 6 - (49,719) (84,624) (143,286) (7,502) (7,147) (16,728) - - -
	(54,833) (90,525) (155,032) 30,000 42,391 40,554 (34,237) (34,237) (59,412) (58,462) (9,213) (32,421)
Lease Payments NZ IFRS16	(55,978) (49,117) (100,644)
NET CASH FLOWS FROM FINANCING ACTIVITIES NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS	(118,677) (50,176) (151,923) 14,999 (17,625) (6,155)
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	(2,927) 4,779 7,109 116,134 115,180 115,180
	128,206 102,334 116,134
	128,206 102,334 116,140 - - (6)
	128,206 102,334 116,134
The accompanying notes form an integral part of these financial statements.

1 Corporate Information

The preliminary half year report announcement of Mainfreight Limited ("the parent") and its subsidiaries ("the Group") for the six months ended 30 September 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 2020 financial statements.

3 Required NZX Disclosures	Parent
Movements in Ordinary Shares on Issue 30 Sept 2020	30 Sept 31 March 2019 2020
Shares Closing Balance 100,698,548 Net Tangible Assets ($000s) 707,022 Net Tangible Assets per Security (cps) 702.12	Shares Shares 100,698,548 100,698,548 596,584 666,615 592.45 661.99

Note : Intangibles now include software and deferred tax assets.

Dividends Paid and Proposed

Recognised Amounts Declared and Paid During the Year to Parent Shareholders Final Fully Imputed Dividend for 2020: 34.0 cents (2019: 34.0 cents) Unrecognised Amounts Interim Fully Imputed Dividend for 2021: 30.0 cents (2020: 25.0 cents)	Group 30 Sept 30 Sept 2020 2019 $000 $000 34,237 34,237
	34,237 34,237 30,210 25,175

After the balance date, the above unrecognised dividends were approved by directors' resolution dated 11 November 2020 These amounts have not been recognised as a liability as at 30 September 2020 but will be brought to account in the full year to 31 March 2021.

4 Abnormal Items

During the six months the Group had no abnormal expenses (September 2019 nil). The related after tax expense was nil (September 2019 nil).

These items comprised of:

September 2020 Six Months Redundancies September 2019 Six Months Redundancies		Pre-Tax Tax $000 $000 - -	Group After Tax
			$000 -
		- -	-
		Pre-Tax Tax $000 $000 - -	Group After Tax
			$000 -
		- -	-

Segmental Reporting

5

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 six months ended 30 September 2020 and 30 September 2019. Inter segment transactions are entered into on a fully commercial basis. With the introduction of NZ IFRS 16 it was determined that EBITDA (adjusted) was no longer appropriate to use as a segment measure and to replace it with Profit Before Tax and Abnormals (PBT).

Operating Revenue - Sales to customers outside the group - Inter-segment sales Total Revenue PBT Net Interest Expense Depreciation & Amortisation Capital Expenditure Trade Receivables Non-current Assets Total Assets Total Liabilities	New Australia The Asia Europe Inter- Zealand Americas Segment 378,895 432,211 387,041 67,013 343,701 - 750 11,677 22,964 58,821 21,421 (115,633) 379,645 443,888 410,005 125,834 365,122 (115,633) 37,500 32,757 13,264 6,205 12,539 - 2,099 4,627 2,559 72 1,779 - 23,770 22,899 13,639 1,604 29,439 - 29,546 13,324 4,646 911 6,408 - 82,757 93,778 105,216 34,629 96,226 (23,823) 578,318 467,232 213,923 18,652 395,776 - 661,776 603,154 364,719 78,914 570,409 (23,823) 281,511 358,822 238,456 46,035 358,638 (23,823)	2020 $000 1,608,861 - 1,608,861 102,265 11,136 91,351 54,835 388,783 1,673,901 2,255,149 1,259,639
Operating Revenue - Sales to customers outside the group - Inter-segment sales Total Revenue PBT Net Interest Expense Depreciation & Amortisation Capital Expenditure Trade Receivables Non-current Assets Total Assets Total Liabilities	New Australia The Asia Europe Inter- Zealand Americas Segment 362,571 380,635 372,068 54,872 330,320 - (108) 9,364 24,441 33,695 18,645 (86,037) 362,463 389,999 396,509 88,567 348,965 (86,037) 34,266 16,165 14,894 3,807 13,716 - 1,713 5,289 2,420 50 2,160 - 22,402 22,148 11,353 1,545 24,529 - 24,566 54,905 2,846 288 7,926 - 92,004 115,219 118,512 26,116 91,008 (22,200) 540,643 466,396 198,161 17,245 393,282 - 636,459 614,936 350,370 68,142 555,524 (22,200) 318,269 391,409 235,840 37,859 358,885 (22,200)	2019 $000 1,500,466 - 1,500,466 82,848 11,632 81,977 90,531 420,659 1,615,727 2,203,231 1,320,062

Product Segments

The following table represents Revenue and PBT regarding the three main types of services for the six months ended 30 September 2020 and 30 September 2019.

Domestic Warehousing Air & Ocean Transport Forwarding		2020 $000
Revenue 746,578 214,503 647,780 PBT 57,446 16,124 28,695		1,608,861 102,265
Domestic Warehousing Air & Ocean Transport Forwarding		2019 $000
Revenue 746,241 192,457 561,768 PBT 45,673 12,692 24,483		1,500,466 82,848
Reconciliation between non-GAAP and the Income Statement Profit Before Taxation for the Year Abnormal Items	2020 $000 102,265 -	2019 $000 82,848 -
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)	102,265 - 8,394 2,742 113,401 60,749 30,602 204,752	82,848 - 8,226 3,406 94,480 53,435 28,542 176,457

EBITDA (adjusted) is defined as earnings before net interest expense, tax, depreciation, amortisation and abnormal items. 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.