Annual Report 2019 - Mainfreight

Annual Report 2019

Our intensity has never been greater

We have never been more passionate, motivated or excited about our journey, and the word that sums that up, is INTENSITY.

The intensity of our people

Whether they're in Masterton, Milan or Melbourne, we see intensity in the way our people work. They're making quick decisions close to our customers. They share our purpose and have the drive to keep us moving forward.

The intensity of our network

Every expansion into a new place, big and small, adds another link to our network, exponentially increasing the connectivity, sparking new opportunities and accelerating growth.

The intensity of momentum

On this 100-year journey, the determination of our people, the strength of our culture and the pace that we are delivering on our goals, is exhilarating.

It's a hell of a ride!

SAI SALELESI ? Epping, Australia

NOTICE OF MEETING Notice is given that the annual meeting of shareholders of Mainfreight Limited will be held at 4.00pm on Tuesday 30 July 2019 at the Barrel Hall, Villa Maria Estate, 118 Montgomerie Road, Mangere, Auckland. Full details, including the Meeting Agenda, are contained in the separate Notice of Meeting and Explanatory Notes accompanying this report, and are also available on the Company's website, or by scanning the QR code to the left.

Contents

6

PERFORMANCE

Key Achievements

22

Targets, Performance & Achievements

26

OUR BUSINESS Our Global Network

32

Network Intensification

8

Chairman's Report

10

Group Managing Director's Report

24

10-Year Snapshot of Growth

28 30 Q + A with Don Braid

Operating Statistics

34 Technology

36

100 Years From Now

38

Capital Expenditure

40 60 72

PEOPLE AND COMMUNITIES Our People

GOVERNANCE AND LEADERSHIP Corporate Governance Statement

Our Board of Directors

56 Environment

58

Mainfreight in the Community

64 70 Our Leadership Team

Directors' Report

77

FINANCIAL Income Statement

80

Cash Flow Statement

111 Statutory Information

78

Balance Sheet

81

Notes To Financial Statements

114 Interests Register

79

Statement Of Changes In Equity

107 Auditor's Report

115 Five Year Review

116 Glossary

117 Directory

6

PERFORMANCE Key Achievements: 2019

FINANCIAL

Group Operating Revenue

$2.95b

12.9%

Group EBITDA

$257.1m

19.5%

Group Net Profit Before Abnormals

$141.1m

26.0%

Total Assets

$1.50b

BUSINESS AND PEOPLE

Team Members

8079 506

Branches

260 13

Countries

24 2

Discretionary Bonus Paid to Team Members ($m)

27.2 6.5

Top 500 customers using multiple divisions*

31% 28%

42% 40% 27% 32%

50

40

30

20

10

0 3 Divisions

2019 2018

2 Divisions 2019 2018

1 Division 2019 2018

* Transport / Warehousing / Air & Ocean

7

RETURNS AND RATIOS

Total Dividend

56cps

Adjusted Earnings Per Share

140cps

Average Annual Return on Investment

LAST 10 YEARS

27.9%

Gearing Ratio

13.5%

FINANCIAL SEGMENTS

Revenue by Division NZ$m

1500 1200 900 600 300

0

Transport 2019 2018

Air & Ocean 2019 2018

Warehousing 2019 2018

EBITDA by Division NZ$m

200 150 100 50

0 Transport

2019 2018

Air & Ocean 2019 2018

Warehousing 2019 2018

Net Profit NZ vs Offshore

Offshore 56.6%

Offshore 52.4%

2019

NZ 43.4%

2018

NZ 47.6%

8

PERFORMANCE Chairman's Report

Mainfreight has been a stalwart of our investment portfolios for years, and we don't see that changing any time soon. The company has an excellent track record of consistent earnings and dividend growth, while there is no shortage of future potential. Mainfreight has proven to be an innovative, strategically astute, well-managed company with a very strong culture.

From Craig's Investment Partners ? News & Views ? April 2019.

Our push to globalisation began in 1989 in Sydney, followed by Melbourne in 1990 and Brisbane in 1991. Since that time we have grown into a global business, operating in 24 countries, with 260 branches and a combined team of 8,079 people.

Some important numbers that are worthy of comment:

> Our global sales were just under

$3 billion. Looking back, we first achieved $1 billion sales in 2009, six years later in 2015 we achieved $2 billion, and now four years later in 2019, we have all but achieved $3 billion. That represents weekly global sales of $56.8 million ($50.3 million in 2018).

> Our income tax payable for the year

is $54.5 million ($45.4 million in 2018).

> Another interesting number is the

increase in EBITDA for the year, of $42 million. Of this increase, $30 million was generated by our offshore businesses, and only $12 million from within New Zealand. It is easy to see that our strategy of global growth will progressively bring rewards as we

mature, and gain more acceptance in those countries beyond New Zealand.

One of the modern problems of the Western World is the perceived increase in inequality and low wages growth, leading to a belief that the capitalist system is failing.

Could one of the solutions to these perceptions be in the hands of the business community?

It is a basic premise of capitalism to have the lowest possible input costs, but there is no particular premise that the enterprise, if successful with its strategy, must hold on to all the profits. This may be a flaw in the interpretation of the capitalist model that is contributing to inequality.

Could it be that a sharing of a percentage of the profits, amongst the people who helped create them, should be an essential part of capitalism?

Mainfreight believes that a significant factor in its financial success has come about through a profit sharing formula with the people who have helped create that success. Our discretionary annual bonus, payable to qualifying

team members in all branches, is $27.2 million ($20.7 million in 2018).

This year our favourite charity, "Duffy Books in Homes", will celebrate 25 years of giving books to children in lower decile schools, and early education centres. This year will see Duffy Books in New Zealand give the 13-millionth book to a lucky child.

Duffy Books in Homes works out of Mainfreight premises in New Zealand, Australia and the USA. We are always seeking new sponsors and if you, like me, believe that education is the solution to most of our ills, please contact them (details are provided on page 58).

To our Mainfreight teams around the world in 24 countries and 260 branches, thank you for our success and your superior performance. Know that the job you do and the life you lead is important. Care for each other, and enjoy the journey.

Kia Kaha Aroha Nui

Bruce Plested JUNE 2019

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download