Move Logistics Group Limited — AGM Information 2021

Nov 23, 2021

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MOVE 2021 ANNUAL MEETING OF SHAREHOLDERS

23 November 2021

CHAIR’S PRESENTATION: LORRAINE WITTEN

Management

I’m joined today by our Board of Directors and company leadership team.

From MOVE’s leadership team we have:

Chris Dunphy – our Executive Director. Chris joined MOVE in July this year and is a significant shareholder, as well as Executive Director. He has been leading our strategy refresh and most recently, with Lee Banks, has led the successful capital raise.

Lee Banks is our CFO. Lee has been with the company for over eight years and has a deep understanding of the business.

Charles Bolt is our Company Secretary & Legal Counsel, and oversees our regulatory functions.

Mario Di Leva - joined MOVE in June 2021 and is leading our cross-selling initiatives across Freight, Contract Logistics, Specialist & International activities. Mario is also a key input to the MOVE Oceans project, drawing upon his three decades of freight industry experience in New Zealand, with Mainfreight, Toll and on his own account.

James Watters is COO of our Contract Logistics division. James has recently joined us to run this division, which is about 50% of MOVE. He has a deep understanding of contracting, logistics and our industry and will drive operational excellence and delivery in Contract Logistics.

Chris Knuth is COO of our Freight division. Chris starts with us in a week and is relocating back to Auckland from Australia (when he can get an MIQ spot). Chris is a freight man with over 40 years of experience. He will put power behind the turnaround we’ve started in the Freight division.

Board of Directors

All our Board members are here today. Our Directors have a breadth of domestic and international business experience and. with the appointments this year of Chris Dunphy and Mark Newman. we have added considerable freight and logistics industry experience.

You will hear from them both later in the meeting, when we consider the resolutions to confirm their appointments to the Board.

On the board, as well as Chris Dunphy and myself we have:

• Danny Chan who has been on the Board since late 2017;

• Peter Dryden who heads our Governance and Remuneration committee;

• Mark Newman who joined us in late July 2021;

• Trevor Janes, who until recently was our Chairman, for the period since the company listed in late 2017; and

• Jim Ramsay, who was a founder of the original TIL Logistics Group and grew the company over 50 years, with his business partners.

Both Trevor and Jim are not seeking re-election, so retire after this meeting and I want to take this opportunity to acknowledge them both.

I have known Trevor for many years and have benefitted greatly from his wisdom which is given generously. I very much respect his passion for representing all shareholders and his commitment to diversity in governance, and promoting women as candidates in particular. Trevor is a highly respected New Zealand business person and a look through his CV will show many senior roles where his deep intelligence and leadership have driven New Zealand private and public organisations. MOVE relied on his experience to evolve from a private to a public company over the last 4 years and we acknowledge his contribution and thank him for his leadership in the role of Chairman.

Jim was a founding partner in the relaunch and expansion of what has today become one of New Zealand’s largest transport and logistics businesses. Today is an opportunity to recognise the pivotal role Jim has played in the creation of this business and in the transport industry over the past 50 years.

Tribute to Jim Ramsay

Born and bred in Taranaki, Jim left school at the age of 15, and undertook a variety of roles before starting work for Hookers in New Plymouth in 1968.

This was to be the beginning of Jim’s 53-year association with the New Zealand road transport industry.

Over the next 15 years, Jim extended his experience and in 1983 he was appointed General Manager of Hookers Bros. However, five years later after an ownership change, Hooker Bros was in danger of closure.

It was at this point that Jim brought together six individuals to form a partnership, buying the business which at the time consisted of 30 trucks (10 not running) and 40 staff. Thirty-three years later, the company has grown into one of New Zealand’s largest logistics companies, listed on the NZ stock exchange, with a network of sites extending from Whangarei to Invercargill, more than 1,400 employees and annual sales of around $350 million.

During this time, Jim oversaw the growth of the company, firstly as CEO and then as Chairman, and then as a Director on the Board once MOVE became publicly listed. He has been a significant contributor to the road transport association, was inducted into the Road Transport Hall of Fame in 2013 and in 2011 he was also awarded the Supreme Mayoral Award for Business Excellence by his home town of New Plymouth.

Jim’s passion for the industry, his dedication to the business, down to earth personality and can-do attitude have been essential ingredients in MOVE’s success today.

On behalf of all staff, past and present, directors, shareholders and members of the road transport industry, we acknowledge Jim’s contributions to making MOVE a leader in the logistics sector.

Thank you Jim for your energy, commitment and passion to our business over the last fifty plus years. I wish Jim and his family a well-deserved respite from all things business, and to make many more happy memories together. Thanks so much.

Rising to the Challenge

It’s fair to say that for all of us the last year has been a year of uncertainty and change, circumstances we’d not experienced before. I can’t help but acknowledge the difficult situation so many people around the globe have experienced personally. Closer to home I acknowledge our team members who, being essential services workers, have had to continue to work in this uncertain and potentially risky environment.

Some of us, such as myself could work from home, but many of our team were out around New Zealand making sure supply chains still delivered essential product, and I specifically acknowledge and thank them and their families for their commitment to making sure the freight and fuel still got through.

It will be no surprise that there has been and continues to be disruption to supply chains. Only 6% of ships arrived in Auckland on time in the last quarter, and prices have gone up substantially due to constraints in supply.

Although essential service transportation continues during lockdown, the fuel that would be consumed is a perishable demand and our fuels business has been impacted every lockdown. We’ve tried to keep our team fully employed over these times as we want to hold onto and support good people in our business. But this of course comes at a short-term cost.

Chris will speak more about the financial results for the last financial year in his review and presentation.

Our Journey

MOVE has a proud history founded in 1869, so we’re over 150 years old. The group has historically been a family of brands and companies, making a large logistics network right across New Zealand.

Since listing four years ago we’ve been building the internal processes that support the robustness required to be an NZX listed company. We have also been focused on bringing the various individual companies into a more integrated group. Our core strength is in hard to service locations and customers and our strong relationships, being based on customer intimacy - being relevant, being critical to our customers business.

However, we have not delivered on the financial returns this business should achieve.

Resetting the Business for Growth

Much has changed with MOVE since our last Shareholders’ meeting. We were TIL Logistics Group then, and in July this year we changed our group to a single brand name – MOVE Logistics Group. This change signals a transformation for our Group, a resetting of the business to deliver growth and results.

As part of resetting for growth, we have taken steps to address our capital structure.

An essential element of having a desirable stock, is to have liquidity in the shares on the market. In June, with the support of the founding shareholders, we undertook steps to bring more institutional and retail investors onto our share register, with the founding shareholders selling down a portion of their shares. This process brought Chris Dunphy in as a shareholder, along with others.

Chris was appointed to our Board in July 2021 and following the departure of our previous CEO, Alan Pearson, we asked Chris to lead the company as Executive Director. This is expected to be for a period of about a year as he drives the business changes from our updated strategy. He will speak more about this in his presentation.

With the uncertainty and change in the business environment, brought about by COVID-19, we were holding too much debt. We thought it prudent to lower our debt so in March this year we issued a Convertible Note and raised $8.2m, as an initial action to pay down debt. In July 2021, we refinanced our banking facilities back to ANZ, which is a bank that has a deep understanding of our sector, and we moved our fleet & asset financing to UDC.

In the last month, we have undertaken a capital raise of $40m. The offer was very well subscribed. Thank you to those who supported the Rights Issue and took up your rights, and to those who joined the register as new investors. We’re very pleased to have your investment and will be using at least half the funds to reduce debt, and the other half for strategy execution.

Our optimal capital structure is to have 1 to 1.5x EBITDA as debt ongoing, so we’ll sit around $35$40m in debt, more in line with our industry peers and more prudent during these uncertain times.

The Board did not declare a dividend for FY21, but it is our intention to return the company to paying a dividend once we have reshaped the business. The earliest this would be is FY2023 but will be dependent on the speed of turnaround and other investment activity.

There have been no increases in Directors fees since 2018, and we do not recommend an uplift at this time.

The other major change in MOVE over the last year has been the Board succession and changes in our leadership team. Right now, leadership is more important than ever, and we believe especially in the collaboration between Board and the leadership team. As well as the refresh of talent, we as a Board are working more closely with our leadership team, making the changes this business requires. To respond quickly, to create robust solutions, and to be entrepreneurial.

Positioning our business for a new course

We’ve already released a lot of the detail about the business changes underway, following the strategic review. As well as the changes I’ve outlined about shareholding, capital structure and leadership, there are three business strategy priorities.

The first is to Fix the Freight division. Our Freight division was 48% of revenue in FY21 but only 27% of the EBITDA and 7% of EBIT. This has to change as a priority.

We are focusing back on core business, pricing appropriately and lifting operational excellence, to increase our margins.

Although we have a large freight network throughout New Zealand, it’s not all fit for purpose or aligned with customer demand. We will build stronger multi-modal capability and exit or reposition premises that are not appropriate.

Chris Knuth is joining the team to lead this change.

Having the right talent is key to delivering such a comprehensive transformation. So our second priority and the foundation of our strategy is bringing in and developing exceptional people, in the leadership team of the business, on the Board, and in the running of the business with a particular focus at branch and depot management level. We are building up a brains’ trust of experience and skills from the industry, balanced with savvy strategic and commercial skills.

We also intend to change the long term incentive, which was largely focused on the executive leadership, to be an incentive that cascades widely to ALL our team on a salary, and to our owner drivers, recognising that they are all an essential part of the team. The total cost is estimated to be the same as the current plan.

Modernising the fleet is our third immediate focus. Our asset base has been heavy on investment in fleet. This strategy relied on running and repairing trucks and tankers into old age and is no longer a good strategy for us. As well as the negative impact on the environment, we aren’t achieving the efficiencies that a modern fleet, fit to customer needs can deliver. Changing to a model of leasing fully maintained vehicles not only supports efficiency, but also allows us to expand our use of owner drivers.

Building a sustainable business

I finally want to touch on the impact our industry has on our environment, and how your team are thinking about our responsibilities for climate change.

There is much debate at the moment around what companies should target for their climate action plans, and I’m seeing plans being developed based on what can be measured. This approach pushes companies towards not being ambitious and not acknowledging the material issues and risks their businesses face.

In the transport industry we have to acknowledge that we use fossil fuels, and as an industry must play our part authentically in the transition to a non-fossil fuel future.

This requires us to be courageous. It’s a huge challenge, but if it is not us, the industry, who leads and engages on these issues, who is going to do it?

So, we are leaning in to bring forward a future where our fleet is carbon neutral. This will not happen overnight, it is a long term journey and not just a reporting journey. We are very aware that initially there may be higher costs, but the long term cost of ignoring the crisis is much higher, so we are taking considered but deliberate steps to change.

Hydrogen, Ready

We believe hydrogen fuel can play a positive role in decarbonising the transport sector.

New Zealand needs to build an ecosystem of hydrogen generation, a network of supply, and companies who use and transport the fuel like us, to make this future a reality. All of these elements are underway, and we will be part of driving the change. We have ordered our first two hydrogen fuelled vehicles for delivery mid next year, and will be one of the first transport businesses in New Zealand to have these hydrogen trucks in our fleet.

We will continue to look at other opportunities and expand our fleet in collaboration with likeminded suppliers, industry colleagues and customers. Our move to incorporate other modes of freight transports, such as shipping and rail as part of our customer solutions, will also help to reduce our impact and move heavy trucks off New Zealand’s roads.

It is time for our industry to take action, with a meaningful, impactful and authentic approach to the big climate related issues.

I’ll now hand over to our Executive Director, Chris Dunphy to review our FY21 financial performance and to outline the strategy for the next couple of years in more detail.

EXECUTIVE DIRECTOR, CHRIS DUNPHY

Ladies & Gentlemen.

My name is Chris Dunphy and alongside me here in Melbourne is Grant Devonport who is nominated to fill a director vacancy. Like Grant I am NZ born but have been living on this side of the ditch for the past two decades.

It is unfortunate that we have to conduct this first ASM as MOVE Logistics virtually. However COVID has thrown a lot of curve-balls and we simply need to adjust.

Indeed, it is "adjustment" that is required in your company and will be the focus of my address to you this morning.

Charting a new course

As Lorraine has outlined, we are part of a business with a rich legacy and origins dating well into the pioneering history of New Zealand road transport.

As a boy I was in awe of the truck fleets of Hookers, NZ Lumber & Transport Nelson, with photo albums in the back of some cupboard to prove it!

However as global companies like Kodak and Nokia have shown, if you do not MOVE with the times, adjust and innovate, you will be consigned to photo albums and history.

This is singularly what confronts our company today: to adjust and remain relevant in a carbonconscious world.

Road transport is a major contributor, not only to CO2 emissions, but also to particulate matters, such as Sulphur Dioxide and Nitrogen Dioxide, both known carcinogens.

It is imperative that as a responsible service provider, we make our customers aware of the FULL cost of moving their goods and strive to find ways to do in a responsible, sustainable and yes, profitable manner.

So let's have a look at the year in review and then talk about the journey ahead.

The business that was TIL, with circa 1400 team members (formerly known as staff), around 800 company trucks and 60 depots, made an underwhelming return to shareholders in fiscal 2021.

FY21 Financial Performance

The main features of last year's result can be summarised as follows:

• A strong contribution from our warehousing business (MOVE);

• A good contribution from our international businesses (TNL International & Alpha);

• An expected contribution from our fuels business (Pacific FuelHaul);

• A reasonable contribution from our specialist lifting businesses (Trans-Carr);

• A marginal contribution from our full-truckload Freight brands (notably NZL); &

• A loss making contribution from our depot Freight brands (ATL, TNL & Hookers)

Indeed, it is clear that the Freight part of our business needs urgent improvement.

There's really little else to say about last year: it's done and the legacy brands under TIL now form part of MOVE's tapestry, but we now look forward.

Our Goals and Objectives

Prior to joining the MOVE board in July, I had a number of conversations with Jim Ramsay about what needed to occur in order to lift returns in the group. Jim concurred with the strategy proposed and we have set about resetting the capital structure of the business.

Lorraine has spoken about our recent capital raise. This is a watershed event in that it allows MOVE to reset its balance sheet and confidently invest in its operations to propel organic growth.

On a personal note, I am fully invested and committed to this business, taking up my rights entitlement alongside many friends and family, including my 79 year old Mum who now holds >50,000 MOV shares.

Your new directors, Mark, Grant and I have all made significant investments in MOVE and ardently believe that directors interests must be aligned with shareholders.

The capital raise has seen a number of institutional shareholders join our register, including some of the most progressive Australian funds.

We welcome this interest and are preparing for further growth in both New Zealand and the Australian market.

Strong Leadership

In taking on the Executive Director mantle, the strategy has become a lot more personal. We have identified key areas of weakness and opportunity in the MOVE operations. Recruiting leaders has been a key priority.

Having been part of the Mainfreight journey in its formative years, I have considerable respect for its founders and their ethos.

We can take many good learnings from our competition and have been fortunate to attract quality people from within the NZ freight industry.

Equally it has been heartening to find a number of highly skilled people within the MOVE ranks that have been crying out for leadership.

Your company now has an abundance of logistics talent in its senior ranks - and there is more to come!

FY22 Market Update

The second half of this current year will continue to be a slog; the Auckland COVID closures has impacted our business - and we signalled this early to the market - but elsewhere the volumes are trading at or above expectation.

The current year will produce a flat result; we will keep shareholders regularly updated and will meet our disclosure obligations.

Outlook

In terms of outlook, our stance is clear. We are fixing the Freight division and expect it to be capable of making a dramatic improvement in the coming 12 months.

We are growing Contract Logistics and can see significant scope to sweat these assets harder for better returns.

I'm sure there will be a question asked about possible acquisitions: the answer is that we are fully focussed on the Freight division turnaround and the abundance of organic growth opportunities.

However, our DNA is to be brave and to look at purchases through a clear lens of " make versus buy " ... cheap doesn't necessarily mean best, nor does available equal appetite.

We are now at the end of the beginning for MOVE.

We are confident in our strategy and excited to embark on a journey with a talented and passionate team.

Comprehensive Business Review

We have completed our 90 day review of the group. Immediate changes have been the removal of silos and an active engagement with our people.

Our mantra “ we MOVE as one ” is now being put to work, in 60 locations around New Zealand, every working day – as recently exemplified by Rochelle Scott, of MOVE Freight in Tauranga …

Video: Rochelle Scott

Launch of Inter-Island cargo service

MOVE Freight has been utilizing the MV Anatoki ex-Whanganui to the South Island for several months.

Every time we load this ship, it’s the equivalent of taking five Class 5 truck combinations off the road.

Next month we intend to complement this service with a small Roll-On, Roll-Off vessel as depicted in the next slide.

Roll-on, Roll-off Vessel

This vessel can take up to 15 trailers (more than double the Anatoki) and we intend to operate her between Nelson and New Plymouth / Whanganui

To paraphrase a line from Thomas the Tank engine: she was a handy little coaster …

Despite her small stature, this ship (as yet un-named) signals where we are taking our business.

To conclude:

I thank you for your continuing commitment to the business as shareholders and look forward to updating you on our progress in the coming months.

Ka Kite Ano

ENDS