Half Year Results to 31 December 2024 and Interim Dividend

HALF YEAR REVIEW From the Chairman and Chief Executive Officer Despite the markets in which Freightways operate remaining challenging over the first half of FY25, the company recorded positive revenue and earnings growth. In NZ, the depressed economic environment meant same-customer volumes have continued to decline, impacting both our express courier and temperature-controlled businesses. Australia was more positive but still well short of the type of organic growth we have seen in better times. Our consistently high service levels and the ability of all of our businesses to leverage their strong market positioning allowed us to win new customers which has helped offset the severity of the recession experienced over the half year (and indeed the last few years). Total company revenue was up by 6.7% on the pcp, with EBITA increasing by 6.5% and NPAT by 9.5%. Lower same customer volumes in express have been offset by pricing improvements and market share gains, while costs were well contained and labour costs in particular steadied compared to the escalation that we incurred during periods of very tight labour markets. A slightly lower level of debt allowed us to reduce the interest spend, supporting a strong NPAT growth. Divisional performance Express Package and Business Mail The result for the Express Package and Business Mail (EPBM) division was particularly pleasing, with revenue growing by 5.8% and EBITA by 12% over the pcp. Service performance was strong from all businesses and benchmarked favourably against our competition which assisted with new customer acquisition. In NZ, both average pricing per item and Pricing for Effort B2C charges were up on the pcp. In Australia, Allied Express continued their momentum with a meaningful 8% increase in volume and with extra items they also experienced the efficiency benefits of the new automation in both Sydney and Melbourne. Big Chill, while still somewhat hampered by lower same-customer volume, also achieved market share improvements and pushed utilisation of their new 3PL facility at Ruakura up to 76% by December. DX Mail delivered strong performance on pcp, supported by improved pricing, market share gains and operational efficiencies. The one brand hit especially hard by the current environment was SUB60 (our smaller premium point-to-point business), which is usually more heavily impacted by a recession with lower volume as customers seek cheaper alternatives. Margins in EPBM were up by 80bp over the pcp. Information Management and Waste Renewal The Information Management and Waste Renewal division recorded much stronger revenue, up 11.3% on the pcp but with flat earnings for the half. We incurred a one-off NZ$1.2m Workers Compensation back-payment during the half year related to a prior period, which reduced profitability. Storage revenue was positive compared to the pcp and digital services continued their strong growth. Our Medical waste revenue stream also grew by 20% despite the delayed outcome of a large tender, now expected in H2. Margins were down on the pcp by 140bp partially as a result of the one-off costs and slightly lower than expected Medical Waste revenue. Strategy We continue to drive growth and efficiency through our core (horizon one) services while working to grow horizon two more quickly as those markets evolve. We will also invest for longer term growth in our emerging horizon 3 services (oversize deliveries, same-day chilled delivery, high-value waste services and eCommerce 3rd party logistics). We are working on the plan to upgrade the fleet of aircraft that service the NZ domestic overnight market. Over time, we will continue to modernise our current aircraft fleet, replacing four aircraft (three 737-400s and one 737-800) with three 737-800s that have higher carrying capacity and are more fuel efficient. This transformation could occur either as current leases expire, or sooner if contractual commitments allow. We expect this will create one-off costs at the point of transition expected to be no more than $2m, but will generate long term efficiencies. For now, we are closely monitoring the situation with our partner Airwork. Freightways is well positioned to take advantage of the opportunities that are in front of us with loyal customers, high-performing businesses, disciplined balance sheet management as well as experienced and adaptable customer-focused teams. Our focus will continue to be on restoring margins in FY25 and FY26 as expected modest organic growth returns. The Directors have declared an interim dividend of 19 cents per share, fully imputed in New Zealand at a tax rate of 28%, up 6% on the pcp interim dividend. This represents a payout of approximately $34 million. The dividend will be paid on 1 April 2025. The record date for determination of entitlements to the dividend is 7 March 2025. Disciplined Balance Sheet management Capital expenditure for FY25 is forecast to be approximately $35m for the year as previously advised. We remain committed to a solid investment-grade credit profile and will continue to manage our balance sheet accordingly. Our gearing is expected to remain in the top half of our target range by the end of the year. Outlook Whilst interest rates are beginning to fall in NZ and business confidence is slowly returning, we remain cautious about any rapid recovery in NZ and to a lesser extent Australia. • Volume in the HY was as expected and we expect that it will be a slow grind for the economy to provide some organic growth in NZ in H2 • The AU economy is slightly more buoyant • Our focus remains on restoring margins for both divisions in FY25 and FY26 as modest organic growth occurs and market share gains are realised • Big Chill’s Ruakura facility is contributing positively to earnings although in FY25 we expect only modest organic growth in Temperature Controlled transport • We now expect additional Medical Waste revenue to be delayed to Q4 • Labour cost increases are controlled and will be circa 3% for the year • Continuous focus on the transition of our airfleet, particularly given Airwork’s challenges • We have invested c. $1m (opex) in a new pricing / billing and courier pay system in H1, with another $4m expected in H2 • We are assessing M&A opportunities to leverage our presence in AU Fatality We were deeply saddened by the sudden death of a member of the Shred-X team in Victoria Australia in December of 2024. Our thoughts and sympathy are with family and colleagues impacted. While we continue to investigate the cause of the accident, it reminds us that our team’s safety is our most important priority. We will continue to be focused on our health and safety practices and the well-being of our teams. The Directors would like to thank the Freightways’ teams right across New Zealand and Australia for their efforts in providing reliable and high-quality service to our customers. Note: EBITA is a non-GAAP (Generally Accepted Accounting Principles) measure. Refer to the Income Statement and Note 3 within the financial statements for a reconciliation from EBITA to NPAT. NPAT is GAAP compliant.