fliway group limited · fliway group for the year ended 30 june 2015. this report discusses the...

FLIWAY GROUP LIMITEDANNUAL REPORTFOR THE YEAR ENDED 30 JUNE 2015

TABLE OF CONTENTS

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ONE HIGHLIGHTS............................................................................5

TWO GROUPPROFILE.....................................................................7

THREE GROUPFINANCIALS.............................................................11

FOUR REPORTFROMTHECHAIRMAN

ANDMANAGINGDIRECTOR.................................................13

FIVE LEADERSHIPPROFILES.......................................................19

SIX FINANCIALSTATEMENTS....................................................23

SEVEN STATUTORYINFORMATION..................................................69

EIGHT CORPORATEGOVERNANCE.................................................77

NINE DIRECTORY............................................................................83

TABLE OF CONTENTS

HIGHLIGHTSONESECTION

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$000’s, AUDITED FY15 ACTUAL FY15 PFI3 VARIANCE % FY14 ACTUAL VARIANCE %

SalesRevenue 84,169 85,265 (1.3)% 81,511 3.3%

OperatingProfit 3,459 3,007 15.0% 6,033 (42.7)%

NetProfitafterTax 2,190 1,646 33.0% 4,786 (54.2)%

Pro-FormaEBIT1 6,870 6,620 3.8% 6,835 0.5%

Pro-FormaEBITDA2 8,909 8,692 2.5% 8,289 7.5%

1. EBITisearningsbeforeinterestandtaxandisanon-GAAPmeasureandisreconciledonpage112. EBITDAisearningsbeforeinterest,tax,depreciationandamortisationandisanon-GAAPmeasureandisreconciledonpage113. PFIistheprospectivefinancialinformationincludedintheProspectusdated6March2015(asamendedon19March2015)

HIGHLIGHTSSECTION ONE

FY15 EARNINGS EXCEEDED FY15 PFI FORECASTS NPAT UP 33.0%

SOLID REVENUE PROGRESSION, UP 3.3% FROM FY14

IMPROVED CAPACITY MANAGEMENT IN THE DOMESTIC BUSINESS UNIT

WAREHOUSING SITE MOVE IN AUCKLAND TO ACCOMMODATE GROWTH

SUCCESSFUL CAPITAL RAISE OF $25M

LISTING ON NZX MAIN BOARD

CORE FINANCIAL OBJECTIVES ACHIEVED

WELLINGTON SHED CAPACITY FILLED

DIVIDEND OF 1.9 CENTS PER SHARE IN LINE WITH PFI FORECAST

SPECIAL DIVIDEND OF 0.5 CENTS PER SHARE REFLECTING LOWER LISTING COSTS

GROUP PROFILE

TWOSECTION

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GROUP PROFILESECTION TWO

FliwayisoneofNewZealand’slargerindependentandlocallyownedspecialisedtransportandlogisticscompanieswithanationwidepresenceandstrongglobalfreightforwardingrelationships.

Fliway’sactivitiesincludetransportingandwarehousingfreightinNewZealandandco-ordinatingthemovementoffreightinternationally,includingarrangingcustomsclearanceandassociatedborderclearanceactivities.

Fliwayhasa50/50jointventure(UPS-Fliway)forexpresspackagedeliverywithUnitedParcelServices(UPS),oneoftheworld’slargestpackagedeliverycompanies.

Domestically,Fliwaydeliversover2millionpiecesoffreightperannumandprocesses,onaverage,over25,000unitsoffreightperdayacross31,000squaremetresofwarehousingfacilities.Fliwayalsohandlesapproximately9,500internationalshipmentsand100,000customsclearancesperannum.

Fromtheseservices,FliwaygeneratedrevenueandProFormaEBITDAof$84.2millionand$8.9millionrespectivelyforthe12monthsended30June2015.

Fliwayservicesover1,000customersacrossspecialiseddomestictransport,warehousingandinternationalfreightforwarding.Theseservicesareprovidedbyover400teammembers,afleetofover170vehiclesandafootprintof11branchesand5warehousesacrossthecountry.

Fliwayoperatesundertwomaindivisions:

• FliwayDomestic(Domestic)–thewarehousingandtransportationoffreightinNewZealand;and

• FliwayInternational(International)–theorganisingoftransportationandborderclearanceforinternationalfreight.

Fliwayalsoholdsa50%shareinUPS-Fliway.UPS-Fliwaydelivers,orarrangesthedeliveryof,expresspackagesinternationally.

WHANGAREI

AUCKLAND

WELLINGTON

CHRISTCHURCH

TAURANGA

HAMILTON

NEW PLYMOUTH

NAPIER

PALMERSTON NORTH

BLENHEIM

DUNEDIN

FLIWAY DOMESTIC DIVISION

FliwayDomesticoperatesthroughtwobusinessunits:FliwayTransport,whichinvolvesthetransportationoffreightnationwide;andFliwayLogistics,whichprovideswarehousinganddistributionservices.Domesticfreightistypicallytransportedinter-city(Line-Haul)overnightusingFliway’struckandtrailerfleet,withdailydeliveriesofsmallerconsignmentsusingFliway’sfleetofsmallervehicles(Metro).

FliwayLogisticsalsoprovideswarehousinganddistributionservices,including:

• rackedandbulkstorage;

• “reverselogistics”whereFliwaymanagesproductreturnsfromretaillocationsbacktoFliway’swarehouse,includingfaultverification;

• “pickandpack”splitcase;and

• “sparepartslogistics”whereFliwaymanagesorganisations’sparepartsfunction.

FliwayLogisticsoperatesfromfivefacilitiesinAuckland(3),WellingtonandChristchurch.

TheserviceofferingsofFliwayLogisticsandFliwayTransportarecomplementary,affordingopportunitiesforFliwaytoprovideoneunit’sservicestotheotherunit’scustomers.Thissupportsthegrowthofbothunitsandtheretentionofcustomers.

GROUP PROFILE (CONTINUED)

SECTION TWO

FLIWAY INTERNATIONAL DIVISION

FliwayInternationalprovidesinbound,outboundand“cross-trade”1internationaltransportandborderclearanceservicestocustomers.Goodsaretransportedeitherbyseaorair.

FliwayInternationalarrangesthetransportationoffreightdomesticallyandinternationally,usingacombinationofexternalfreightprovidersand/orFliway’sdomestictransportationfleet.FliwaydoesnotdeliverfreightoutsideNewZealand,buthasarrangementswithanumberofinternationalpartiestofulfilltheseservicesonbehalfofFliway’scustomers.Fliway’srelationshipsalsoallowittomanagecross-trade1FreightForwardingforitscustomers.

FliwayInternationalhasstronginternationalagencyrelationshipsinallkeytraderoutes.Asanindependentagency,Fliwayisnotrestrictedtoanyparticularglobalnetwork,whichallowsittofocussolelyonsecuringthebestoutcomeforitscustomers,basedonpriceandthetypeofserviceanagentoffers.FliwayInternationalisoneofNewZealand’slargestcustomsbrokers.Itisconsistentlyrankedamongstthetopcustomslodgersofentriesbyvolume,performingapproximately100,000clearancesperannum.FliwayInternational’sbrokerageoperationworkssixdaysperweekand52weeksperyear.

UPS-FLIWAY

FliwaycommencedanagencyrelationshipwithUPSin1988.Almost10yearslater,in1998,FliwayandUPSformedUPS-Fliway.UPSisoneoftheworld’slargestpackagedeliverycompanies,delivering4.3billionpackagesanddocumentsin2013.UPSprovidesservicesto9.4millioncustomersadayacrossmorethan220countriesandterritories.UPS-Fliwayisaseparateentityowned50/50byFliwayandUPS.UPS-Fliwayemploysapproximately30staff.FliwayandUPShaveequalboardrepresentationandday-to-dayoperationsareoverseenbyUPSmanagement.FliwayTransportprovidesdomesticdeliveriesandpickupsforUPS-Fliway,andFliwayInternationalprovidescustomsbrokerageservices.

INFORMATION TECHNOLOGY

Fliwayinvestsininformationtechnologyapplications,selectedtomeettheneedsofeachdivision.AcrosstheGroup,FliwayhasintegratedITsystemswhichcanlinkwithcustomers’systemsthroughEDIinterfaces.FliwayhasextensiveEDIimplementationexpertiseandhaspersonnelwhomonitorandmanagethis,supportedbyexternalpartners.

Fliway’sEDIinterfacesenablecustomerstoaccessreal-timetrackandtraceandorderstatus.Thereisthecapabilityfortheseinterfacestobecustomisedforindividualcustomerstogivethemincreasedsupplychainvisibility,whichshouldmeanbetterplanning,improvedefficiencyandlowercostsforthem.

• 1,900+Registeredwebusers

• Over180handhelddeviceswithover70,000scansperday

• 300,000databasetransactionsperhour

• Over450users

1.“Cross-trade”isarrangingthetransportofgoodswhereNewZealandisneitherthecountryoforiginordestination,forexamplebetweenChinaandAustralia.

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GROUP PROFILE (CONTINUED)

SECTION TWO

GROWTH AND STRATEGY

Fliway’svisionistobuildasignificanttransportandlogisticsbusinessoperatinginNewZealand,basedonitsspecialisedserviceoffering,infrastructureandexpertisetotargetsectorswherethereareopportunitiesforFliwaytoprovideadistinctiveserviceanddeliverincreasedearnings.

Fliwayfocusesonthreespecificavenuesofgrowth:

OPTIMISING CAPACITYContinuingtomaximiseoperatingleverage,includingthroughusingitscapacityefficientlyandgainingefficienciesfromtheuseoftechnology.

ENTERING NEW MARKETS

Fliwayhasspecialistequipment,facilitiesandexpertisewhichisdistinctfromitscompetitors.Fliwayintendstoleveragethisequipmentandexpertisetotargetsectorswhichthebusinessdoesnotcurrentlyoperatein.Forexample,Fliwaycouldtransportorwarehouseothertypesofgoodswhichrequirespecialisthandlingequipmentorfacilitiesoracquirecompanieswhichcurrentlytransportorwarehousesuchgoods.Fliwaywillalsoevaluateopportunitiestoenternewmarketsthroughacquisitions.

GROWING EXISTING BUSINESS

Fliwayisaleadingproviderofspecialisedtransportandwarehousinginanumberofsectors.Fliwayplanstocontinuetoinvestinbusinessdevelopmentinitiativestotargetincreasedcustomerandmarketpenetrationintheseexistingsectors,includinginternationalairandoceanfreight.Fliwaywilllooktogrowbothorganicallyandthroughacquisition.

GROUP FINANCIALS

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GROUP FINANCIALSSECTION THREE

EARNINGS RECONCILIATION $000’s

FY14 ACTUAL

FY15 ACTUAL

FY15 PFI VAR % 12M DEC 15F

Revenue 81,511 84,169 85,265 -1.3% 85,642

Disbursementcosts -22,489 -22,515 -23,013 2.2% -23,344

Depreciation -1,445 -2,030 -2,055 -1.2% -2,383

Freightcosts -3,780 -4,530 -4,843 6.9% -4,455

Rentalandleasingcharges -6,717 -6,997 -7,054 0.8% -6,795

Personnelcosts -27,497 -28,876 -29,053 0.6% -29,498

Vehicleexpenses -7,099 -6,552 -6,894 5.2% -6,842

Otheroperatingexpenses -6,451 -9,210 -9,346 1.5% -9,007

Reported Operating Profit 6,033 3,459 3,007 15.0% 3,318

Reconciliation to Pro-Forma EBITDA & EBIT

Adjust for:

UPS-FliwayEBIT(50%) 1,272 1,584 1,399 13.2% 1,282

Lossonsale 30 112 29 286.2% 72

PublicCompanyCosts -500 -320 -320 0.0% -70

IPOCosts - 2,035 2,505 -18.8% 2,505

Pro-Forma EBIT 6,835 6,870 6,620 3.8% 7,107

Depreciation(includingshareofJV) 1,454 2,039 2,072 -1.6% 2,407

Pro-Forma EBITDA 8,289 8,909 8,692 2.5% 9,514

Reported Operating Profit 6,033 3,459 3,007 15.0% 3,318

UPS-FliwayNPAT(50%) 925 1,147 1,013 13.2% 926

Netinterestcost -741 -857 -907 -5.5% -764

(Gain)/LossonDerivatives 89 -344 -182 89.0% -43

Incometaxexpense -1,520 -1,215 -1,285 -5.4% -1,428

Reported NPAT 4,786 2,190 1,646 33.0% 2,009

Fliwaymonitorsitsprofitabilityusingthenon-GAAPfinancialmeasuresofEBITandEBITDA.TheuseofEBITremovestheeffectsoftheFliwayGroup’scapitalstructureandtaxpositionandtheimpactofcertainnon-cashitems(fairvaluemovementsinfinancialinstrumentsandothergainsorlossesonthesaleofassets).TheuseofEBITDAalsofurtherremovestheeffectofdepreciationandamortisation.

AreconciliationbetweenEBIT,EBITDAandNPATispresentedabove.ThemeasuresarenotdefinedbyNZGAAP,IFRS,oranyotherbodyofaccountingstandardsandthereforeFliway’s

calculationofthesemeasuresmaydifferfromthesimilarlytitledmeasurespresentedbyothercompanies.ThesemeasuresareintendedtosupplementtheNZGAAPmeasurespresentedinFliway’sfinancialinformation.TheyshouldnotbeconsideredinisolationandarenotasubstituteforNZGAAPmeasures.

ProFormaEBITDAandProFormaEBITarenon-GAAPprofitmeasureswhichreflectanumberofhistoricalandprospectiveProFormaadjustments.

REPORT FROM THE CHAIRMAN AND MANAGING DIRECTOR

FOURSECTION

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TheDirectorspresenttheconsolidatedfinancialresultoftheFliwayGroupfortheyearended30June2015.ThisreportdiscussesthefullyearresultandtheperformanceagainsttheProspectiveFinancialInformation(PFI)includedintheProspectusissuedinMarch2015.

OPERATING PERFORMANCE

Grouprevenueof$84.2millionfortheyearwasaheadofFY14by3.3%andpro-formaEBITDAof$8.9millionfortheyearwasupby7.5%.Asforecast,ReportedNetProfitafterTax(NPAT)of$2.2millionwaslowerthantheprioryearduetooneoffcostsrelatedtolistingontheNZXandanumberofnon-cashIFRSadjustments.

ComparingperformanceagainstPFI,reportedNPATfortheyearwas33.0%abovetheforecasted$1.7million.Thiswasprincipallyasaresultofoffercostsbeing$0.5millionlowerthanallowedforinthePFI.Pro-formaEBITDAwas2.5%aheadofthecompany’sPFIforecastof$8.7millionwithresultsfromthedomesticdivisionandthejointventuredeliveringaheadofforecast.Revenueswere1.3%lowerthanthePFIforecastof$85.3millionasaresultofareducedfueladjustmentfactorinthedomesticbusinessandlowershippingratesintheinternationalfreightforwardingmarket.

DIVIDEND

ConsistentwithPFIandrelatingonlytotheearningsperiodfromthe9thofApril2015(theIPOdate)to30June2015,Fliway’sDirectorshaveapprovedthepaymentofamaidendividendof1.9centspersharewithrespecttoongoingearningsandaspecialdividendof0.5centspersharereflectingthelowercostsinvolvedintheIPOofthebusiness(fullyimputedforNewZealandshareholders).Thedividendswillbepayableon20October2015toshareholdersrecordedontheshareregisterasat5.00pm(NewZealandtime)on30September2015.

REVIEW OF OPERATIONS: HEALTH AND SAFETY

Fliwayhassignificantlyincreasedfocusandattentiononsafetyandsafebehavioursintheworkplaceoverthelast12months.Theincreasedfocuscommencedwithabacktobasicsapproachoftrainingandre-trainingallofourpeoplenationallyaboutsafetyandallofourresponsibilitiesintheworkplace.

InJanuary2015,welaunchedanewHealth&Safety(H&S)visionbasedon“100%HomeSafely”totargetanenvironmentwithzerofatalities,injuriesandvehicleaccidents.ThisnewvisionhasbeenteamedwithasimplifiedH&Ssystem,newmetricsandreporting,anupdatedhazardandriskregisterandstrongerfocusonmanagingthekeysafetyriskswithinthebusiness.Inadditiontothiswehaveincreaseddrugandalcoholtestingmeasuresandhavenew,increasedcommunicationinitiativesatbothlocalbranchandnationallevels.

Therewerefivekeyareasoffocusinourroadmapofthelastyear,andwewillcontinuebuildingonthissameplatforminFY16withfurthertraining,interventionsandinitiativesaroundsafety,healthandwellbeing:

• Increaseawarenessandengagement

• Visitorandcontractormanagement

• ReportingandreductioninLostTimeInjuries

• Reductionoffrequencyandseverityofmanualhandlinginjuries

• Effectivenessofsharinginformation

REPORT FROM THE CHAIRMAN AND MANAGING DIRECTORSECTION FOUR

REPORT FROM THE CHAIRMAN AND MANAGING DIRECTOR (CONTINUED)

SECTION FOUR

FY2014 FY2015 12M DEC 15F

FINANCIAL PERFORMANCE ($’000) ACT PFI VAR PFI

Revenue 52.608 55.810 56.448 -1.1% 56.467

ProFormaEBITDA 8.007 8.390 8.079 3.8% 9.170

EBITDA% 15.2% 15.0% 14.3% 0.7% 16.2%

ProFormaEBIT 6.811 6.618 6.315 4.8% 7.133

PEOPLE

Ourpeopleroadmapisdesignedtosupportourcurrentdaytodayoperationsalongwithourgrowthaspirations.Thereare4pillarsoffocus:

• Leadershipimpact

• Teamengagement

• Developingtalent

• Gettingthefundamentalsright,firsttime,everytime

Thispeoplestrategycommencedduringthelastfinancialyearandwillcontinuetobedeliveredoverthenext12months.Initially,themajorityofactionsfocusedon‘thebasics’–gettingthefundamentalsright.

Thisincludedsuchactionsasdesigningnewemploymenthandbooks,demonstratingwaysofworking,trainingvideos,standardtemplatesandinternalpeoplemanagementsystemsforourpeoplemanagers.InJanuary2015,weconductedourfirstinternalengagementsurveyandhaveimplementednumerouslocalandnationalinitiativesacrosseachoftheunitsandnationallytoimproveourteamengagement.Furtherleadershipandtalentdevelopmentinitiativesareplannedinthenext12months.

Fliwaystaffturnoverimprovedby12%onthepreviousfinancialyear.Currently20%ofpositionsbeingrecruitedwerefilledfromwithinthebusinessthroughalateralmoveorinternalpromotion.Ourmid-termgoalisfor50%ofourrolestobefilledbyourinternaltalent,withfurtheractionsplannedtodeveloptalentwithinFliway.

FLIWAY DOMESTIC

Operatingrevenueof$55.810millionfortheyearwas1.1%lowerthanPFI,asaresultofalowerfuelrecovery.ProFormaEBITDAwas$8.390millionfortheyear,3.8%aheadofPFI.

WithintheDomesticbusinessunit,inthesecondsixmonthsofFY15,theTransportdivisionimproveditsoperatingcostsasaresultofthecapitalinvestmentofthepasttwoyearsandcontinuingtopursuethestrategyofsellingtocapacityinthenetwork.

IntheLogisticsdivision,asitemovetolargerwarehousepremiseswasrequiredinAucklandtofacilitategrowthfromexistingcustomersandtheacquisitionofanewcustomer.InWellington,wheretheFliwaywarehousewaspreviouslyoperatingbelowcapacity,anewcustomerwassignedupresultinginthatwarehousenowbeingfullyutilised.

Inafurtherpropertytransaction,anagreementtoleasewasexecutedinJuneforanewsiteinChristchurchthatwilldeliveralarger,moreefficienttransportdockandprovide

additionalwarehousingcapacityinFY16.ThenewsitewillallowthecompanytofacilitatethegrowthincustomerwarehousingrequirementswithintheChristchurchmarket.

Thebusinessdevelopmentteamover-deliveredonitsnewrevenuetargetsforFY15withsignificantwinsinareaswhereFliwayhadavailablecapacity.ExamplesofthiswerenewcustomerswithfreightoriginatinginNewPlymouthandWellington.SellingtocapacityinbothwarehouseandtransportoperationswasakeyobjectiveforFY15andremainsakeyfocusforFY16.Inaddition,weworkedwithspecificwarehousingcustomerstosplitinventoryacrossmultiplegeographicallocationstoprovidebenefittobothFliwayandthecustomer.

MaximisingutilisationwasaclearfocusforFY15withcustomerpricereviewsbeingundertakenasanoutcomeofthisongoingproject.

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SECTION FOUR

FY2014 FY2015 12M DEC 15F


Revenue 28.903 28.359 28.817 -1.6% 29.177

ProFormaEBITDA 3.765 3.873 3.964 -2.3% 3.832

EBITDA% 13.0% 13.7% 13.8% -0.1% 13.1%

ProFormaEBIT 3.636 3.774 3.842 -1.8% 3.685

FLIWAY INTERNATIONAL OPERATING METRICS FY2014 FY2015

TotalNumberofShipmentsviaSEA 5,180 5,028

TotalNumberofShipmentsviaAIR 4,010 4,606

Total Number of Shipments 9,190 9,634

Brokerage clearances 98,246 99,563

Operatingrevenueof$28.359millionfortheyearwas1.6%lowerthanPFIasaresultofloweroceanimportandexportfreightrates.ProFormaEBITDAwas$3.873millionfortheyear,2.3%belowPFI.ProFormaEBITDAwas2.9%higherthanthePriorComparablePeriod(PCP),andwasthefifthconsecutiveyearofrecordprofitabilityforInternational.

TheFliwayInternationalbusinessunithasseenlowerrevenuethanforecastasaresultofthereducedshippingrates,andsomecustomerchurn.Thevolatilepricingonshippingrates(somelanesasmuchas60%),combinedwithlowervolumesmeanttheInternationalbusinessunitexperiencedsofterrevenueduringthelastquarterofFY15,andthiswilllikely

continueinFY16.Thebusinessunitremainsfocusedondeliveringexceptionalservicetocustomers,bringingonnewrevenueandensuringitscostbaseisoptimised.

FliwayInternationalisalsofocusedoncontinuingtogainefficienciesandcustomerbenefitfromitsITplatformaswellaskeepingpacewiththecontinuingchallengesandcostthatbothborderprotectionandtheregulatoryframeworkspresent.

FliwayInternational’skeyobjectivesforFY16aretogrowitscustomerbase,maintaincostdisciplinesandcontinuetoalignitsbusinessofferingalongsidetheotheroperatingdivisionsoftheFliwayGroup.

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FLIWAY INTERNATIONAL

UPS-FLIWAY

FY2014 FY2015 12M DEC 15F


EBITDA(50%) 1.282 1.593 1.416 12.5% 1.306

NPAT(50%) 0.925 1.147 1.013 13.2% 0.926

DIVIDEND 0.899 0.950 0.900 5.6% 0.900

TheUPS-FliwayjointventurebusinessunitdeliveredastrongcontributiontotheGroupresultwithgrowthinrevenueaheadofforecast.Thebusinessunitcostcontroldisciplinecontinuestoensurethatrevenuegainsaremaximised.


SECTION FOUR

HEAD OFFICE

FY2014 FY2015 12M DEC 15F


EBITDA -4.765 -4.772 -4.767 -0.1% -4.712

Disputedeminimis - -0.175 - -

ProFormaEBITDA -4.765 -4.947 -4.767 -3.8% -4.712

ProFormaEBIT -4.885 -5.106 -4.937 3.4% -4.910

FY2014 FY2015 12M DEC 15F


Trucks&Vans 1.459 1.543 1.708 -9.7% 1.112

Truck&Trailer 1.378 2.262 2.251 0.5% -

IT 0.527 0.299 0.317 -5.7% 0.825

Other 0.350 0.501 0.106 372.6% -

Disposals -0.297 -0.264 -0.385 -31.4% -

Total Net Capex 3.417 4.341 3.997 8.6% 1.937

FY2014 FY2015 12M DEC 15F


Cash 8.090 6.837 1.773 285.6% 3.607

Debt -19.292 -15.000 -12.500 20.0% -12.500

Shareholderloan -2.969 - - - -

Net Debt -14.171 -8.163 -10.727 -23.9% -8.893

TotalHeadOfficecostsfortheyearwere$5.106million,whichwas3.4%higherthanPFI.AsnotedintheProspectusissuedinMarch2015,Fliwayisinadisputewithapastcustomer.ThedisputeoutcomeiscoveredbytheindemnitygivenbythesellingshareholdersenteredintoatthetimeoftheIPO,howeverthisindemnitydoeshavea$0.250milliondeminimisprovisioninit,whichFliwayhavetakenupasaprovisionintheeventtheclaimsettlesfor$0.250millionorless.$0.075millionwasallowedforinFY14andafurther$0.175millionwastakenupinFY15totaketheprovisionto$0.250million.

CapexforFY15was$4.341million,$0.344millionhigherthantheforecastof$3.997million.Thiswasprincipallydrivenbythe$0.275millionsetupcostsofthelargerAucklandwarehouse,whichwasnotforeseenatthetimeoftheforecast.

CAPITAL EXPENDITURE

NET DEBT

NetDebtwas$8.163million,23.9%lowerthanthePFI,asaresultofimprovedcashoperatingresults,lowerworkingcapitalandlowerthananticipatedoffercostsarisingonlisting.

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SECTION FOUR

CONCLUSION

Fliwayhasdeliveredasatisfactoryresult,achievingrecordunderlyingEBITDAinFY15,completingitsInitialPublicOffering,andmeetingitsPFIforecastsandobjectivesthroughtoJune2015.Therearestillareasofthebusinesswherewecandobetter,andmanagementisfocusedondeliveringthoseimprovements.

OurDomesticdivisionhasproducedasolidresultacrossitsbranchesandwarehouses,withclearopportunitiestodeliverimprovedoperationalandfinancialperformanceinspecificareas.TheInternationalbusinessishavingtorespondtochallengingdynamicswithlowershippingratesandvolatilevolumes,whichmeanttheInternationalresultwhilststillaheadoflastyear,waslowerthanexpected.OurInternationalteamhasrespondedwelltothesechallengesandisfocusedonbuildingsalesmomentumandcontinuingtooffercustomersexceptionalserviceaswemoveforward,whilstensuringthecostbaseisoptimised.

TheDirectorswouldliketothankeachandeveryteammemberacrosstheFliwayGroupforwhathasbeenamilestoneyearforthecompany,wewouldalsoliketoacknowledgeandthankthecontinuingsupportofourcustomersandourjointventurepartnerUPS.

Fliwaywillcontinuetoinvestinpeople,facilities,andtechnologytomeetthechangingneedsofourcustomers,andgrowthebusiness.Wewillcontinuetoseektoincreaseourpenetrationwithexistingcustomersaswellaspursuingproposalsforworkinnewsectors,andlookingtogrowstrategicallythroughacquisitions.

WeconfirmtheDecember2015IPOearningsforecast.WhilstweexpectrevenuewillbesofterthanPFIforecastfor1H16,ourcostpositionisstrengtheningandmanagementisfocusedondeliveringthebottomlineresult.

Wehaveastrongplatform,andagreatteamwhoareenergisedaboutthefutureopportunitiesforFliway.

CHAIRMAN MANAGING DIRECTORCraigStobo DuncanHawkesby

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LEADERSHIP PROFILES

FIVESECTION

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Craig Stobo

Chairman and Independent Director

Craighasworkedasadiplomat,economist,investmentbankerandasaCEO.Heisaprofessionalindependentdirector.InadditiontochairingFliway,heisChairmanofPrecinctPropertiesNZ,AIGInsuranceNZ,andtheNewZealandLocalGovernmentFundingAgency(LGFA).CraigisalsoashareholderandChairmanofSaturnPortfolioManagement,ElevationCapitalManagement,AppelloServicesandBiomarineGroup.

Alan Isaac

Independent Non-executive Director

AlanhasanextensivebackgroundinaccountingandfinanceandisaformernationalChairmanofKPMG.HewasmadeaCompanionoftheNewZealandOrderofMeritin2013forservicestocricketandbusiness.AlanwasthePresidentoftheInternationalCricketCouncilfortwoyearsuntilJune2014andiscurrentlyChairmanofMcGrathNicolandPartnersandAcurityHealthGroup.Inaddition,AlanisadirectoroflistedcompaniesOpusInternationalConsultantsandScalesCorporationaswellasanumberofprivatecompanies.HeisalsoChairmanoftheNewZealandCommunityTrust.

Duncan Hawkesby

Managing Director

DuncanHawkesbyhasbeenManagingDirectorofFliwaysinceacquiringthebusinessin2006.InthisroleDuncanhasledFliwayinitsgrowthasalargescale,quality,andspecialisedfreighttransport,logisticsandwarehousingprovider.Duncannowhasovereightyears’experienceworkingintheNewZealandtransportsector.

PriortohisrolewithFliway,DuncanwasChiefExecutiveOfficeratNature’sOven,asmallfoodmanufacturingbusiness,andbeforethatheheldvariousrolesattheLionNathangroup.

DuncanHawkesbyhasbeenadirectoroftheCompanysincehe(astrusteeofTheD&GHawkesbyTrust)acquiredFliwayin2006.CraigStoboandAlanIsaacwereappointedtotheBoardshortlybeforetheNZXlisting.

Beforetheirformalappointmentsasdirectors,eachofCraigandAlanhadspentaperiodoftimedevelopinganunderstandingofFliway’sbusiness,includingwithDuncanandtheothermembersoftheFliwayseniormanagementteam.TheBoardhasbeenmeetingasanoperatingboardofdirectorssincelate2014notwithstandingthefactthatCraigandAlanhadnotbeenformallyappointed.

LEADERSHIP PROFILESSECTION FIVE

FLIWAY BOARD OF DIRECTORS

Fliway’sBoardhasadiverserangeofskillsandexperiences,includinginexecutiveandgovernancerolesatpubliclylistedcompaniesandothersignificantentities.TheFliwayBoardcomprisesanindependentnon-executiveChairman(CraigStobo),anindependentnon-executivedirector(AlanIsaac)andanexecutivedirector(DuncanHawkesby).

LEADERSHIP PROFILES (CONTINUED)

SECTION FIVE

FLIWAY SENIOR MANAGEMENT TEAM

TheseniormanagementteamhasextensiveindustryexperienceandhasbeenanintegralpartofFliway’shistory.ItisledbyManagingDirectorDuncanHawkesby.

Duncan Hawkesby

Managing Director

SeeSectionaboveFliwayBoard.

Jim Sybertsma

Chief Financial Officer

JimwasappointedasChiefFinancialOfficerofFliwayin2008.Priortohisappointment,JimwasChiefExecutiveOfficeratParadiseFoodIndustries(Australia).PreviouslyhehasbeenChiefFinancialOfficeratNewZealandDairyFoodsandFonterraBrands(NewZealand)andtheGeneralManagerofFinanceandAdministrationatDBGroup(liquordivision).

JimisaCharteredAccountantandholdsaBachelorsdegreeinManagementStudiesfromtheUniversityofWaikato.

Cameron McKeown

General Manager Domestic

CameronjoinedFliwayin1993andhasmorethan16years’experienceinvariousmanagementrolesatFliway,havingworkedwithinallofFliway’smajordivisions.CameronwasappointedasGeneralManagerofFliwayLogisticsin2006andin2008becameGeneralManagerofFliwayDomestic.

Cameronhas24years’experienceinthelogisticsindustry.

Gavin Satchell

General Manager International

GavinstartedasanOperationsjuniorforFliwayin1985.SincethenhehasworkedacrossdifferentmanagementroleswithintheFliwaygroupandin2006wasappointedasGeneralManagerofFliwayInternational.

Gavinhas29years’experienceinthecustomsclearance,transportandinternationalFreightForwardingindustries.

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LEADERSHIP PROFILES (CONTINUED)

SECTION FIVE

From left to right:GavinSatchell(GeneralManagerInternational),PeterSapiatzer(ChiefInformationOfficer),JimSybertsma(ChiefFinancialOfficer),KateBacchus(HumanResourcesManager),CameronMcKeown(GeneralManagerDomestic)andDuncanHawkesby(ManagingDirector)

Peter Sapiatzer

Chief Information Officer

PeterjoinedFliwayinJuly2013asanITProfessionalwithnearly30yearsofindustryexperience.DuringhiscareerhehasheldtherolesofAnalystProgrammer,ITProjectManager,PrincipalERPConsultant,GlobalFunctionalArchitectandITDirectorforseverallargeinternationalcompanies,bothinNewZealandandoverseas.

Kate Bacchus

HR Manager

KatejoinedtheteaminSeptember2014inthepositionofNationalHRManager.Priortoherappointment,KateheldvariousHRpositionsatPernodRicardNZ,TransfieldServicesNZ,MercerHRConsulting,Deloitte,andHyattInternationalbothinNewZealandandoverseas.

KateisaProfessionalMemberoftheHumanResourcesInstituteofNewZealand,andholdsaPostGraduateDiplomainBusiness,majoringinHumanResourcesManagementfromtheUniversityofAuckland.

FINANCIAL STATEMENTS

SIXSECTION

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DIRECTORS’STATEMENT..................................................................................24

AUDITOR’SREPORT...........................................................................................25

CONSOLIDATEDSTATEMENTOFCOMPREHENSIVEINCOME........................26

CONSOLIDATEDSTATEMENTOFCHANGESINEQUITY..................................27

CONSOLIDATEDSTATEMENTOFFINANCIALPOSITION.................................28

CONSOLIDATEDSTATEMENTOFCASHFLOWS...............................................29

NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTS............................30

FINANCIAL STATEMENTSSECTION SIX

The accompanying notes form an integral part of these financial statements and should be read in conjunction with them.

FOR THE YEAR ENDED 30 JUNE 2015

DIRECTORS’ STATEMENT

DISCLOSURE TO SHAREHOLDERS

TheDirectorspresenttheconsolidatedfinancialstatementsofFliwayGroupLimitedfortheyearended30June2015.

TheDirectorsareresponsibleforthepreparationoftheconsolidatedfinancialstatementsinaccordancewithNewZealandlawandgenerallyacceptedaccountingpractice,whichpresentfairlythefinancialpositionoftheGroupasat30June2015andtheresultsoftheiroperationsandcashflowsfortheyearended30June2015.

TheDirectorsconsidertheconsolidatedfinancialstatementsoftheGrouphavebeenpreparedusingaccountingpoliciesappropriatetotheGroups’circumstances.Thesepolicieshavebeenconsistentlyappliedandsupportedbyreasonableandprudentjudgmentsandestimates,andallapplicableNewZealandequivalentstoInternationalFinancialReportingStandardsandInternationalFinancialReportingStandardshavebeenfollowed.

TheDirectorshaveresponsibilityforensuringthatproperaccountingrecordshavebeenkeptwhichenable,withreasonableaccuracy,thedeterminationofthefinancialpositionoftheGroupandenablethemtoensurethattheconsolidatedfinancialstatementscomplywiththeFinancialReportingAct2013andtheFinancialMarketsConductAct2013.

TheDirectorshavetheresponsibilityforthemaintenanceofasystemofinternalcontroldesignedtoprovidereasonableassuranceastotheintegrityandreliabilityoffinancialreporting.TheDirectorsconsiderthatadequatestepshavebeentakentosafeguardtheassetsoftheGroupandtopreventanddetectfraudandotherirregularities.

Thisannualreportisdated27August2015andsignedinaccordancewitharesolutionoftheDirectorsmadepursuanttosection211(1)(k)oftheCompaniesAct1993.

ForandonbehalfoftheDirectors

MANAGING DIRECTOR DIRECTORDuncanHawkesby AlanIsaac

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AUDITOR’S REPORT

INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF FLIWAY GROUP LIMITED

Report on the Consolidated Financial Statements

WehaveauditedtheaccompanyingconsolidatedfinancialstatementsofFliwayGroupLimitedanditssubsidiaries(‘theGroup’)onpages26to67,whichcomprisetheconsolidatedstatementoffinancialpositionasat30June2015,andtheconsolidatedstatementofcomprehensiveincome,statementofchangesinequityandstatementofcashflowsfortheyearthenended,andasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation.

Thisreportismadesolelytothecompany’sshareholders,asabody.Ouraudithasbeenundertakensothatwemightstatetothecompany’sshareholdersthosematterswearerequiredtostatetotheminanauditor’sreportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthanthecompany’sshareholdersasabody,forourauditwork,forthisreport,orfortheopinionswehaveformed.

Board of Directors’ Responsibility for the Consolidated Financial Statements

TheBoardofDirectorsisresponsibleforthepreparationandfairpresentationoftheseconsolidatedfinancialstatements,inaccordancewithNewZealandEquivalentstoInternationalFinancialReportingStandards,InternationalFinancialReportingStandardsandgenerallyacceptedaccountingpracticeinNewZealand,andforsuchinternalcontrolastheBoardofDirectorsdeterminesisnecessarytoenablethepreparationofconsolidatedfinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Auditor’s Responsibilities

Ourresponsibilityistoexpressanopinionontheseconsolidatedfinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithInternationalStandardsonAuditingandInternationalStandardsonAuditing(NewZealand).Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhethertheconsolidatedfinancialstatementsarefreefrommaterialmisstatement.

Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresintheconsolidatedfinancialstatements.Theproceduresselecteddependontheauditor’sjudgment,includingtheassessmentoftherisksofmaterialmisstatementoftheconsolidatedfinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheentity’spreparationandfairpresentationoftheconsolidatedfinancialstatementsinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessoftheaccountingpoliciesusedandthereasonablenessofaccountingestimates,aswellastheoverallpresentationoftheconsolidatedfinancialstatements.

Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.

Otherthaninourcapacityasauditor,theprovisionofinitialpublicofferingservicesasinvestigatingaccountant,duediligenceservicesandtheprovisionoftaxationadvice,wehavenorelationshipwithorinterestsinFliwayGroupLimitedoranyofitssubsidiaries.TheseserviceshavenotimpairedourindependenceasauditoroftheCompanyandGroup.

Opinion

Inouropinion,theconsolidatedfinancialstatementsonpages26to67presentfairly,inallmaterialrespects,thefinancialpositionofFliwayGroupLimitedanditssubsidiariesasat30June2015,andtheirfinancialperformanceandcashflowsfortheyearthenendedinaccordancewithNewZealandEquivalentstoInternationalFinancialReportingStandards,InternationalFinancialReportingStandardsandgenerallyacceptedaccountingpracticeinNewZealand.

Chartered Accountants27August2015Auckland,NewZealand



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

NOTE 2015 ($’000) 2014 ($’000)

Revenuefromoperatingactivities 84,169 81,511

Total operating revenue 84,169 81,511

Disbursementcosts (22,515) (22,489)

Freightcosts (4,530) (3,780)

Depreciationandamortisation (9)(10) (2,030) (1,445)

Rentalandleasingcharges (6,997) (6,717)

Personnelcosts (2) (28,876) (27,497)

Vehicleexpenses (6,552) (7,099)

Otheroperatingexpenses (3) (9,210) (6,451)

Operating profit before financing expenses 3,459 6,033

Netfinancingexpenses (6) (1,201) (652)

Shareofjointventureprofit (21) 1,147 925

Profit before income tax 3,405 6,306

Income tax expense (5) (1,215) (1,520)

Net profit and total comprehensive income for the year, net of tax

2,190 4,786

Earnings per share

Basicanddilutedearnings(incents) (18) 5.5 12.6

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Theaccompanyingnotesformanintegralpartofthesefinancialstatementsandshouldbereadinconjunctionwiththem.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

ISSUED CAPITAL ($’000)

RETAINED EARNINGS ($’000)

TOTAL ($’000)

Balanceat1Jul13 5,000 14,005 19,005

Netprofitandtotalcomprehensiveincome - 4,786 4,786

Balance at 30 Jun 14 5,000 18,791 23,791

Repaymentofredeemablepreferenceshares (5,000) - (5,000)

EquityraisedfromIPO 9,040 - 9,040

Issuecostsassociatedwithnewshares (271) - (271)

Netprofitandtotalcomprehensiveincome - 2,190 2,190

Balance at 30 Jun 15 8,769 20,981 29,750


AS AT 30 JUNE 2015

NOTE 2015 ($’000) 2014 ($’000)

Current assets

Cashatbankandonhand 6,837 8,090

Accountsreceivable (7) 9,208 10,734

Relatedpartyreceivables (19) 577 492

Prepaidexpenses 468 362

Derivativefinancialinstruments (27) - 34

Total current assets 17,090 19,712

Non-current assets

Deferredtaxationasset (8) 557 388

Property,plantandequipment (9) 10,438 8,045

Intangibles (10) 334 529

Investmentinjointventure (21) 1,658 1,461

Goodwill (11) 23,046 23,046

Total non-current assets 36,033 33,469

Total assets 53,123 53,181

Current liabilities

Accountspayable&accruedexpenses (12) 5,757 5,078

Provisions (13) 727 554

Relatedpartypayables (19) 14 35

Employeebenefits 1,158 1,047

Taxationpayable 448 415

Derivativefinancialinstruments (27) 269 -

Interest-bearingloans (15) - 19,292

Unsecuredloan(DHawkesby) (19) - 2,436

Unsecuredloan(D&GHawkesbyTrust) (19) - 533

Total Current liabilities 8,373 29,390

Non-current liabilities

Interest-bearingloans (15) 15,000 -

Total non-current liabilities 15,000 -

Total liabilities 23,373 29,390

Net assets 29,750 23,791

Equity

Issuedcapital (14) 8,769 5,000

Retainedearnings (25) 20,981 18,791

Total equity 29,750 23,791

Net tangible assets per ordinary share ($’s) 0.14 2,117.65

Ordinary shares issued at the end of the year 45,437,910 102

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

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Cash flows from operating activities

Receiptsfromcustomers 86,368 82,133

Interestreceived 98 197

Receiptsfromjointventure 5,867 13,678

Paymentstosuppliersandemployees (84,398) (88,425)

Interestpaid (955) (938)

Incometaxespaid (1,319) (1,384)

Net cash generated by operating activities (4) 5,661 5,261

Cash flows from investing activities

Dividendreceivedfromjointventure 919 837

Saleofproperty,plantandequipmentandintangibleassets

264 297

Paymentsforproperty,plantandequipmentandintangibleassets

(4,605) (3,714)

Net cash used in / provided by investing activities (3,422) (2,580)

Cash flows from financing activities

Repaymentofrelatedpartyborrowings (2,969) (400)

Repaymentofredeemablepreferenceshares (5,000) -

EquityraisedfromIPO 9,040 -

Issuecostsassociatedwithnewshares (271) -

Repaymentofborrowings (4,292) -

Net cash used in financing activities (3,492) (400)

Net increase (decrease) in cash and cash equivalents (1,253) 2,281

Cashandcashequivalentsatthebeginningoftheyear 8,090 5,809

Cash and cash equivalents at the end of the year 6,837 8,090

CONSOLIDATED STATEMENT OF CASH FLOWS

NOTE 2015 ($’000) 2014 ($’000)



STATEMENT OF COMPLIANCE

FliwayGroupLimited(the“Company”)isaprofitorientedcompanyregisteredundertheCompaniesAct1993anddomiciledandincorporatedinNewZealand.Itsprincipalactivitiesaretransportationofgoods,customerlogisticssolutionsandfreightforwarding.TheCompanylistedontheNewZealandStockExchangeon9April2015andisanFMCReportingEntityundertheFinancialMarketConductAct2013andFinancialReportingAct2013.

TheconsolidatedfinancialstatementsarepresentedfortheCompanyanditssubsidiariesandjointventurecompany(togetherthe“Group”)fortheyearended30June2015.ThefinancialstatementswereauthorisedforissuebytheDirectorson27August2015.

BASIS OF PREPARATION

TheconsolidatedfinancialstatementshavebeenpreparedinaccordancewithNewZealandGenerallyAcceptedAccountingPractice(NZGAAP).TheycomplywithNewZealandequivalentstoInternationalFinancialReportingStandards(NZIFRS)andotherapplicableNewZealandFinancialReportingStandardsasappropriateforprofit-orientedentities.ThefinancialstatementsalsocomplywithInternationalFinancialReportingStandards(IFRS).TheCompanyisaFMCreportingentityunderFinancialMarketConductAct2013andisaTier1for-profitentityasdefinedintheExternalReportingBoard(XRB)StandardA1.

ThepreparationoffinancialstatementsinconformitywithNewZealandequivalentstoInternationalFinancialReportingStandardsrequirestheDirectorsandmanagementtomakejudgments,estimatesandassumptionsthataffecttheapplicationofpoliciesandreportedamountsofassets,liabilities,revenueandexpenses.Theseestimatesandassociatedassumptionsarebasedonmarketdata,historicalexperienceandvariousotherfactorsthatarebelievedtobereasonableunderthecircumstances,theresultsofwhichformthebasisofmakingthejudgmentsaboutcarryingvaluesofassetsandliabilitiesthatarenotreadilyavailablefromothersources.Actualresultsmaydifferfromthoseestimates.

Estimatesandassumptionsarereviewedonanongoingbasis.Revisionsofaccountingestimatesarerecognisedintheperiodinwhichtheestimateisrevisedandinanyfutureperiodsaffected.Informationaboutsignificantareasofuncertaintyandcriticaljudgmentsinapplyingaccountingpoliciesthathavethemostsignificanteffectontheamountsrecognisedinthefinancialstatementsaredescribedinnote1.

Theconsolidatedfinancialstatementshavebeenpreparedonahistoricalbasisexceptforderivativefinancialinstrumentsthataremeasuredatfairvaluesattheendofeachreportingperiod.

ThefunctionalandpresentationcurrencyisNewZealanddollars(NZD).Numbersintheconsolidatedfinancialstatementsarepresentedinthousandsofdollars(000’s)unlessotherwisestated.

GOING CONCERN

Thefinancialstatementshavebeenpreparedonagoingconcernbasis.TheBoardbelievesthepreparationofthefinancialstatementsusingthegoingconcernassumption,whichdependsonongoingaccesstosufficientfundingtomeettheGroup’srequirements,isappropriate.Inaddition,theyhaveconsideredthecircumstanceswhicharelikelytoaffecttheGroupduringtheperiodofoneyearfromthedatethesefinancialstatementsareapproved,andtocircumstanceswhichtheybelievewilloccurafterthatdatewhichcouldaffectthevalidityofthegoingconcernassumption.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS’S)

Thefollowingstandardsandamendmentswereadoptedbythegroupinthepreparationofthesefinancialstatements:

• AnnualImprovementstoNZIFRSs2010-2012Cycle;


• AmendmentstoNZIAS32OffsettingFinancialAssetsandFinancialLiabilities;and

• AmendmentstoFRS-42ProspectiveFinancialStatements.

TheadoptionofthesestandardsdidnothaveamaterialeffectontheGroup’sfinancialstatements.

Standardsandamendments,whichareavailableforearlyadoptionandmayimpactthefinancialstatementsoftheGroupinfutureperiodsbutthathavenotbeenappliedbytheGroupinthepreparationofthesefinancialstatementsinclude:

• NZIFRS9FinancialInstruments;

• NZIFRS15RevenuefromContractswithCustomers;

• EquityMethodinSeparateFinancialStatements(AmendmentstoNZIAS27);

• 2014OmnibusAmendmentstoNZIFRSs;


• DisclosureInitiative(AmendmentstoNZIAS1);

• AmendmentstoNZIFRS11-AccountingforAcquisitionsofInterestsinJointOperations;and

• AmendmentstoNZIAS16andNZIAS38ClarificationofAcceptableMethodsofDepreciationandAmortisation.

TheGrouphavenotyetperformedadetailedanalysistodeterminetheimpactonthefinancialstatementsofadoptingthesestandards.

AllotherstandardsandamendmentswhicharenotyetmandatoryforadoptionarenotexpectedtohaveanysignificantimpactonthefinancialstatementsoftheGroup.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Theprincipalaccountingpoliciesadoptedinthepreparationofthefinancialstatementsaresetoutbelow:

(a) Consistency of application

TheaccountingpolicieshavebeenappliedconsistentlythroughouttheGroupandthroughouttheyearforthepurposesofthisfinancialreport.

(b) Consolidation of subsidiaries

SubsidiariesarethoseentitiesthatarecontrolledbytheCompany.ControlisachievedwhentheCompany;

• haspowerovertheinvestee;

• isexposed,orhasrights,tovariablereturnsfromitsinvolvementwiththeinvestee;and

• hastheabilitytouseitspowertoaffectitsreturns.

TheCompanyreassesseswhetherornotitcontrolsaninvesteeiffactsandcircumstancesindicatethattherearechangestooneormoreofthethreeelementsofcontrollistedabove.

TheGroup’sfinancialstatementsincorporatethefinancialstatementsoftheCompanyanditssubsidiaries,whichhavebeenconsolidatedusingthepurchasemethod.Refertopolicy(c)BusinessCombinations.

ConsolidationofasubsidiarybeginswhentheCompanyobtainscontroloverthesubsidiaryandceaseswhentheCompanylosescontroloverthesubsidiary.Specifically,incomeandexpensesofasubsidiaryacquiredordisposedofduringtheyearareincludedintheconsolidatedstatementofprofitorlossandothercomprehensiveincomefromthedatetheCompanygainscontroluntilthedatetheCompanyceasestocontrolthesubsidiary.

Allintercompanytransactions,balancesandunrealisedprofitsareeliminatedonconsolidation.

(c) Business combinations

Acquisitionsofbusinessesareaccountedforusingtheacquisitionmethod.Theconsiderationtransferredinabusinesscombinationismeasuredatfairvalue,whichiscalculatedasthesumoftheacquisition-datefairvaluesoftheassetstransferredbytheGrouptotheformerownersoftheacquireeandtheequityinterestsissuedbytheGroupinexchangeforcontroloftheacquiree.Acquisitionrelatedcostsaregenerallyrecognisedintheprofitorlossasincurred.

Attheacquisitiondate,theidentifiableassetsacquiredandtheliabilitiesassumedarerecognisedatthefairvalue,exceptthat:

• deferredtaxassetsorliabilitiesandassetsorliabilitiesrelatedtoemployeebenefitarrangementsarerecognisedandmeasuredinaccordancewithNZIAS12IncomeTaxesandNZIAS19EmployeeBenefitsrespectively.

Goodwillismeasuredastheexcessofthesumoftheconsiderationtransferred,theamountofanynon-controllinginterestsintheacquiree,andthefairvalueoftheacquirer’spreviouslyheldequityinterestintheacquiree(ifany)overthenetoftheacquisition-dateamountsoftheidentifiableassetsacquiredandtheliabilitiesassumed.If,afterreassessment,thenetoftheacquisition-dateamountsoftheidentifiableassetsacquiredandliabilitiesassumedexceedsthesumoftheconsiderationtransferred,theamountofanynon-controllinginterestsintheacquireeandthefairvalueoftheacquirer’spreviouslyheldinterestintheacquiree(ifany),theexcessisrecognisedimmediatelyinprofitorlossasanacquisitiongain.


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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)

(d) Investments in associates and joint ventures

AnassociateisanentityoverwhichtheGrouphassignificantinfluence.Significantinfluenceisthepowertoparticipateinthefinancialandoperatingpolicydecisionsoftheinvesteebutisnotcontrolorjointcontroloverthosepolicies.

Ajointventureisajointarrangementwherebyallpartiesthathavejointcontroloverthearrangementhaverightstothenetassetsofthejointarrangement.Jointcontrolisthecontractuallyagreedsharingofcontrolofanarrangement,whichexistsonlywhendecisionsabouttherelevantactivitiesrequireunanimousconsentofthepartiessharingcontrol.

Theresultsandassetsandliabilitiesofassociatesorjointventuresareincorporatedintheseconsolidatedfinancialstatementsusingtheequitymethodofaccounting,exceptwhentheinvestment,oraportionthereof,isclassifiedasheldforsale,inwhichcaseitisaccountedforinaccordancewithNZIFRS5Assetsheldforsaleanddiscontinuedoperations.Undertheequitymethod,aninvestmentinanassociateorjointventureisinitiallyrecognisedintheconsolidatedstatementoffinancialpositionatcostandadjustedthereaftertorecognisetheGroup’sshareoftheprofitorlossandtheothercomprehensiveincomeoftheassociateorjointventure.WhentheGroup’sshareoflossesofanassociateorjointventureexceedstheGroup’sinterestinthatassociateorjointventure(whichincludesanylong-termintereststhat,insubstance,formpartoftheGroup’snetinvestmentintheassociateorjointventure),theGroupdiscontinuesrecognisingitsshareoffurtherlosses.AdditionallossesarerecognisedonlytotheextentthattheGrouphasincurredlegalorconstructiveobligationsormadepaymentsonbehalfoftheassociateorjointventure.

Aninvestmentinanassociateorjointventureisaccountedforusingtheequitymethodfromthedateonwhichtheinvesteebecomesanassociateorajointventure.Onacquisitionoftheinvestmentinanassociateorajointventure,anyexcessofthecostoftheinvestmentovertheGroup’sshareofthenetfairvalueoftheidentifiableassetsandliabilitiesoftheinvesteeisrecognisedasgoodwill,whichisincludedwithinthecarryingamountoftheinvestment.AnyexcessoftheGroup’sshareofthenetfairvalueoftheidentifiableassetsandliabilitiesoverthecostoftheinvestment,afterreassessment,isrecognisedimmediatelyintheprofitorlossintheperiodinwhichtheinvestmentisacquired.

TherequirementsofNZIAS39FinancialInstruments:RecognitionandMeasurementareappliedtodeterminewhetheritisnecessarytorecogniseanyimpairmentlosswithrespecttotheGroup’sinvestmentinanassociateorajointventure.Whennecessary,theentirecarryingamountoftheinvestment(includinggoodwill)istestedforimpairmentinaccordancewithNZIAS36ImpairmentofAssetsasasingleassetbycomparingitsrecoverableamount(higherofvalueinuseandfairvaluelesscoststosell)withitscarryingamount.Anyimpairmentlossrecognisedformspartofthecarryingamountoftheinvestment.AnyreversalofthatimpairmentlossisrecognisedinaccordancewithNZIAS36totheextentthattherecoverableamountoftheinvestmentsubsequentlyincreases.

TheGroupdiscontinuestheuseoftheequitymethodfromthedatewhentheinvestmentceasestobeanassociateorajointventure,orwhentheinvestmentisclassifiedasheldforsale.WhentheGroupretainsaninterestintheformerassociateorjointventureandtheretainedinterestisafinancialasset,theGroupmeasurestheretainedinterestatfairvalueatthatdateandthefairvalueisregardedasitsfairvalueoninitialrecognitioninaccordancewithNZIAS39.Thedifferencebetweenthecarryingamountoftheassociateorjointventureatthedatetheequitymethodwasdiscontinued,andthefairvalueofanyretainedinterestandanyproceedsfromdisposingofapartinterestintheassociateorjointventureisincludedinthedeterminationofthegainorlossondisposaloftheassociateorjointventure.Inaddition,theGroupaccountsforallamountspreviouslyrecognisedinothercomprehensiveincomeinrelationtothatassociateorjointventureonthesamebasisaswouldberequiredifthatassociateorjointventurehaddirectlydisposedoftherelatedassetsorliabilities.Therefore,ifagainorlosspreviouslyrecognisedinothercomprehensiveincomebythatassociateorjointventurewouldbereclassifiedtoprofitorlossonthedisposaloftherelatedassetsorliabilities,theGroupreclassifiesthegainorlossfromequitytoprofitorloss(asareclassificationadjustment)whentheequitymethodisdiscontinued.




(d) Investments in associates and joint ventures (cont.)

TheGroupcontinuestousetheequitymethodwhenaninvestmentinanassociatebecomesaninvestmentinajointventureoraninvestmentinajointventurebecomesaninvestmentinanassociate.Thereisnoremeasurementtofairvalueuponsuchchangesinownershipinterests.

WhentheGroupreducesitsownershipinterestinanassociateorajointventurebuttheGroupcontinuestousetheequitymethod,theGroupreclassifiestoprofitorlosstheproportionofthegainorlossthathadpreviouslybeenrecognisedinothercomprehensiveincomerelatingtothatreductioninownershipinterestifthatgainorlosswouldbereclassifiedtoprofitandlossonthedisposaloftherelatedassetsorliabilities.

WhenaGroupentitytransactswithanassociateorajointventureoftheGroup,profitsandlossesresultingfromthetransactionswiththeassociateorjointventurearerecognisedintheGroup’sconsolidatedfinancialstatementsonlytotheextentofinterestsintheassociateorjointventurethatarenotrelatedtotheGroup.

TheGroup’sjointventureisUnitedParcelService-Fliway(NZ)Limited.

(e) Goodwill on acquisition

GoodwillarisingontheacquisitionofabusinessrepresentstheexcessofthecostofacquisitionovertheGroup’sinterestinthenetfairvalueoftheidentifiableassets,liabilitiesandcontingentliabilitiesofthebusinessrecognisedatthedateofacquisition.Goodwillisinitiallyrecognisedasanassetatcostandissubsequentlymeasuredatcostlessanyaccumulatedimpairmentlosses.

Forthepurposeofimpairmenttesting,goodwillisallocatedtoeachoftheGroup’scash-generatingunitsexpectedtobenefitfromthesynergiesofthecombination.Cash-generatingunitstowhichgoodwillhasbeenallocatedaretestedforimpairmentannually,ormorefrequentlywhenthereisanindicationthattheunitmaybeimpaired.Therecoverableamountisthehigheroffairvaluelesscosttosellandvalueinuse.Iftherecoverableamountofthecash-generatingunitislessthanthecarryingamountoftheunit,theimpairmentlossisallocatedfirsttoreducethecarryingamountofanygoodwillallocatedtotheunitandthentotheotherassetsoftheunitpro-rataonthebasisofthecarryingamountofeachassetintheunit.Anyimpairmentlossrelatingtogoodwillisrecognisedimmediatelyinprofitorlossandisnotreversedinasubsequentperiod.

Ondisposalofacash-generatingunittheattributableamountofgoodwillisincludedinthedeterminationoftheprofitorlossondisposal.

(f) Statement of comprehensive income

RevenueRevenueisrecognisedandmeasuredatthefairvalueoftheconsiderationreceivedorreceivabletotheextentitisprobablethattheeconomicbenefitswillflowtotheGroupandtherevenuecanbereliablymeasured.Specificrecognitioncriteriamustalsobemetasfollows:

Renderingofservices:

• Revenuefordomesticcontracteddeliveriesisrecognisedbasedonthestageofservicecompleteatbalancedate.Revenuesderivedfrominternationalfreightforwardingarerecognisedforexportsonfreightdepartureandforimportsonfreightarrival.Feesforwarehousingarerecognisedasservicesareprovidedtothecustomer.

InterestReceivedInterestincomeisaccruedonatimebasis,byreferencetotheprincipaloutstandingattheeffectiveinterestrateapplicable,whichistheratethatexactlydiscountsestimatedfuturecashreceiptsthroughtheexpectedlifeofthefinancialassettothatasset’snetcarryingvalue.

InterestExpense

Interestexpenseisrecognisedusingtheeffectiveinterestmethod.

(g) Financial assets

Financialassetsareclassifiedintothefollowingspecifiedcategories:financialassetsat‘fairvaluethroughprofitorloss’and‘loansandreceivables’.Theclassificationdependsonthenatureandpurposeofthefinancialassetsandisdeterminedatthetimeofinitialrecognition.

FinancialassetsatfairvaluethroughprofitorlossFinancialassetsinthiscategoryareeitherfinancialassetsheldfortradingorfinancialassetsdesignatedasatfairvaluethroughprofitorloss.

Afinancialassetisclassifiedasheldfortradingif:

i. ithasbeenacquiredprincipallyforthepurposeofselling inthenearfuture;or

ii. itisapartofanidentifiedportfoliooffinancialinstrumentsthattheGroupmanagestogetherandhasarecentactualpatternofshort-termprofit-taking;or

iii. itisaderivativethatisnotdesignatedandeffectiveas ahedginginstrument.


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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.) (g) Financial assets (cont.)

TheGroupdoesnotapplyhedgeaccounting.

Financialassetsclassifiedasfairvaluethroughprofitorlossuponinitialrecognitionarestatedatfairvalue,withanyresultantgainorlossrecognisedinprofitorloss.Thenetgainorlossrecognisedinprofitorlossincludesanyinterestearnedonthefinancialasset.

LoansandreceivablesTradereceivables,loans,andotherreceivablesthathavefixedordeterminablepaymentsthatarenotquotedinanactivemarketareclassifiedasloansandreceivables.Loansandreceivablesaremeasuredatamortisedcostusingtheeffectiveinterestmethodlessanyimpairment.

ImpairmentoffinancialassetsFinancialassets,otherthanthoseatfairvaluethroughprofitorloss,areassessedforindicatorsofimpairmentateachbalancesheetdate.Financialassetsareimpairedwherethereisobjectiveevidencethat,asaresultofoneormoreeventsthatoccurredaftertheinitialrecognitionofthefinancialasset,theestimatedfuturecashflowsoftheinvestmenthavebeenimpacted.

Forfinancialassetscarriedatamortisedcost,theamountoftheimpairmentisthedifferencebetweentheasset’scarryingamountandthepresentvalueoftheestimatedfuturecashflows,discountedattheoriginaleffectiveinterestrate.

Thecarryingamountofthefinancialassetisreducedbytheimpairmentlossdirectlyforallfinancialassets,withtheexceptionoftradereceivableswherethecarryingamountisreducedthroughtheuseofanallowanceaccount.Whenatradereceivableisuncollectible,itiswrittenoffagainsttheallowanceaccount.AtradereceivableisdeemedtobeuncollectibleuponnotificationofinsolvencyofthedebtororuponreceiptofsimilarevidencethattheGroupwillbeunabletocollectthetradereceivable.Changesinthecarryingamountoftheallowanceaccountarerecognisedinprofitorloss.

(h) Financial instruments issued by the company

DebtandequityinstrumentsDebtandequityinstrumentsareclassifiedaseitherfinancialliabilitiesorasequityinaccordancewiththesubstanceofthecontractualarrangement.

DebtisclassifiedascurrentunlesstheGrouphastheunconditionalrighttodefersettlementofthedebtforatleast12monthsafterthebalancesheetdate.

InterestbearingborrowingsInterestbearingborrowingsarerecognisedinitiallyatfairvaluelessattributabletransactioncosts.Subsequenttoinitialrecognition,interestbearingborrowingsarestatedatamortisedcostwithanydifferencebetweencostandredemptionvaluebeingrecognisedinprofitorlossovertheperiodoftheborrowingsonaneffectiveinterestbasis.Theeffectiveinterestrateistheratethatexactlydiscountsestimatedfuturecashpaymentsthroughtheexpectedlifeoftheborrowings,orwhereappropriate,ashorterperiod,tothenetcarryingamountoftheborrowings.

InterestanddividendsInterestanddividendsareclassifiedasexpensesorasdistributionsofprofitconsistentwiththebalancesheetclassificationoftherelateddebtorequityinstruments.

(i) Property, plant and equipment

CarryingAmountProperty,plantandequipmentisstatedatcostlessaccumulateddepreciationandimpairmentlossestodate.Wherethecarryingamountisassessedtobegreaterthanitsrecoverableamount,theitemiswrittendowntoitsrecoverableamount.Thewritedownisrecognisedintheprofitorloss.

DepreciationDepreciationischargedsoastowriteoffthecostorvaluationofassets,otherthanpropertiesunderconstruction,byusingthediminishingbalancemethod.Underthediminishingbalancemethod,apre-defineddepreciationrateisappliedtotheopeningnetbookvalueoftheassettocalculatetheamountofdepreciationfortheyear.Depreciationischargedtotheprofitorloss.Thefollowingrateshavebeenused:

Plantandequipment1.0-67.0%

Furnitureandfittings9.0-60.0%

Vehicles9.5-39.6%

Officeequipment14.4-60.0%

Thedepreciationmethodandthedepreciationratesarereviewedattheendofeachreportingperiod.Ifthereisasignificantchangeintheexpectedpatternofconsumptionofthefutureeconomicbenefitsembodiedintheasset,theeffectofanychangesinestimateisaccountedforonaprospectivebasis.




(j) Intangible assets acquired separately

Intangibleassetswithfinitelivesthatareacquiredseparatelyarecarriedatcostlessaccumulatedamortisationandaccumulatedimpairmentlosses.Amortisationisrecognisedusingthediminishingbalancemethod.Underthediminishingbalancemethod,apre-definedamortisationrateisappliedtotheopeningnetbookvalueoftheassettocalculatetheamountofamortisationfortheyear.Amortisationischargedtotheprofitorloss.Thefollowingrateshavebeenused:

Computersoftwareandlicences20.0-60.0%

Theamortisationmethodandtheamortisationratesarereviewedattheendofeachreportingperiodandifthereisasignificantchangeintheexpectedpatternofconsumptionofthefutureeconomicbenefitsembodiedintheasset,theeffectofanychangesinestimateisaccountedforonaprospectivebasis.

(k) Taxation

IncometaxexpenseIncometaxexpenserepresentsthesumofcurrenttaxanddeferredtax.

CurrenttaxCurrenttaxisbasedontaxableprofitfortheyear.TaxableprofitdiffersfromprofitasreportedintheStatementofComprehensiveIncomebecauseitexcludesitemsofincomeorexpensethataredeductibleinotheryearsanditfurtherexcludesitemsthatarenevertaxableordeductible.TheGroup’sliabilityforcurrenttaxiscalculatedusingtaxratesthathavebeenenactedorsubstantivelyenactedbythebalancesheetdate.

DeferredtaxDeferredtaxisrecognisedondifferencesbetweenthecarryingamountofassetsandliabilitiesinthefinancialstatementsandthecorrespondingtaxbaseusedinthecomputationoftaxableprofit,andisaccountedforusingthebalancesheetliabilitymethod.Deferredtaxliabilitiesaregenerallyrecognisedforalltaxabletemporarydifferences,anddeferredtaxassetsarerecognisedtotheextentthatitisprobablethatsufficienttaxableamountswillbeavailableagainstwhichdeductibletemporarydifferencescanbeutilised.

Suchassetsandliabilitiesarenotrecognisedifthetemporarydifferencesarisefromgoodwillorfromtheinitialrecognition(otherthanasaresultofabusinesscombination)ofotherassetsandliabilitiesinatransactionthataffectsneithertaxableprofitnoraccountingprofit.

Deferredtaxliabilitiesarerecognisedfortaxabletemporarydifferencesarisingoninvestmentsinsubsidiaries,associatesandjointventuresexceptwheretheGroupisabletocontrolthereversalofthetemporarydifferencesanditisprobablethatthetemporarydifferenceswillnotreverseintheforeseeablefuture.

Thecarryingamountofdeferredtaxassetsisreviewedateachbalancesheetdateandreducedtotheextentthatitisnolongerprobablethatsufficienttaxableprofitswillbeavailabletoallowallorpartoftheassettoberecovered.

Deferredtaxiscalculatedatthetaxratesthatareexpectedtoapplytotheperiod(s)whentheliabilityissettledortheassetrealised.Deferredtaxischargedorcreditedtotheprofitorloss,exceptwhenitrelatestoitemschargedorcreditedtoothercomprehensiveincomeordirectlytoequity,inwhichcasethedeferredtaxisalsodealtwithinothercomprehensiveincomeorequity.

Deferredtaxassetsandliabilitiesareoffsetwhenthereisalegallyenforceablerighttosetoffcurrenttaxassetsagainstcurrenttaxliabilities,whentheyrelatetoincometaxesleviedbythesametaxationauthority,andtheGroupintendstosettleitscurrenttaxassetsandliabilitiesonanetbasis.

(l) Accounts payable

TradepayablesandotheraccountspayablearerecognisedwhentheGroupbecomesobligedtomakefuturepaymentsresultingfromthepurchaseofgoodsandservices.

(m) Provisions

ProvisionsarerecognisedwhentheGrouphasapresentlegalorconstructiveobligationasaresultofapastevent,anditisprobablethattheGroupwillberequiredtosettlethatobligation.Provisionsaremeasuredatthebestestimateoftheexpenditurerequiredtosettletheobligationatbalancedate,andarediscountedtopresentvaluewheretheeffectismaterial.


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(n) Employee benefits

Provisionismadeforbenefitsaccruingtoemployeesinrespectofwagesandsalaries,annualleave,longserviceleave,andsickleavewhenitisprobablethatsettlementwillberequiredandtheyarecapableofbeingmeasuredreliably.

Provisionsmadeinrespectofemployeebenefitsthatareexpectedtobesettledwithin12monthsaremeasuredattheirnominalvaluesusingthecurrentremunerationrate.

Provisionsmadeinrespectofemployeebenefitsareallexpectedtobesettledwithin12months.

(o) Goods and services tax

Revenues,expensesandassetsarerecognisednetoftheamountofgoodsandservicestax(GST),except:

i. wheretheamountofGSTincurredisnotrecoverablefromthetaxationauthority,itisrecognisedaspartofthecostofacquisitionofanassetoraspartofanitemofexpense;or

ii. orreceivablesandpayableswhicharerecognisedinclusive ofGST.

ThenetamountofGSTrecoverablefrom,orpayableto,thetaxationauthorityisincludedaspartofreceivablesorpayables.

(p) Leases

OperatingleasesRentalspayableunderoperatingleasesarechargedtoprofitorlossonastraight-linebasisoverthetermofthelease.Benefitsreceivedasanincentivetoenterintoanoperatingleasearealsospreadonastraight-linebasisovertheleaseterm.

(q) Derivative financial instruments

TheGroupentersintointerestrateswapandoptioncontractstomanageitsexposuretointerestratemovementsonitstermloans,refernote22(ii).

Derivativesareinitiallyrecognisedatfairvalueonthedateaderivativecontractisenteredintoandaresubsequentlyre-measuredtofairvalueateachreportingdate.Theresultinggainorlossisrecognisedinprofitorlossimmediately.TheGrouphasnotadoptedhedgeaccounting.

(r) Impairment of tangible and intangible assets other than goodwill

Ateachfinancialyearend,theGroupreviewsthecarryingamountsofitstangibleandintangibleassetstodeterminewhetherthereisanyindicationthatthoseassetshavesufferedanimpairmentloss.Ifanysuchindicationexists,therecoverableamountoftheassetisestimatedinordertodeterminetheextentoftheimpairmentloss(ifany).Whereitisnotpossibletoestimatetherecoverableamountofanindividualasset,theGroupestimatestherecoverableamountofthecash-generatingunittowhichtheassetbelongs.

Recoverableamountisthehigheroffairvaluelesscoststosellandvalueinuse.Inassessingvalueinuse,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheasset.

Iftherecoverableamountofanasset(orcash-generatingunit)isestimatedtobelessthanitscarryingamount,thecarryingamountoftheasset(orcash-generatingunit)isreducedtoitsrecoverableamount.Animpairmentlossisrecognisedimmediatelyinprofitorloss,unlesstherelevantassetiscarriedatarevaluedamount,inwhichcasetheimpairmentlossistreatedasarevaluationdecrease.

Whereanimpairmentlosssubsequentlyreverses,thecarryingamountoftheasset(orcash-generatingunit)isincreasedtotherevisedestimateofitsrecoverableamount,butsothattheincreasedcarryingvaluedoesnotexceedthecarryingamountthatwouldhavebeendeterminedhadnoimpairmentlossbeenrecognisedfortheasset(orcash-generatingunit)inprioryears.Areversalofanimpairmentlossisrecognisedimmediatelyinprofitorloss,unlesstherelevantassetiscarriedatarevaluedamount,inwhichcasethereversaloftheimpairmentlossistreatedasarevaluationincrease.




(s) Segmental Reporting

ThedeterminationoftheGroup’soperatingsegmentsandtheinformationreportedfortheoperatingsegmentsisbasedonthemanagementapproachassetoutinNZIFRS8OperatingSegments.TheGroup’sManagingDirectorhasbeenidentifiedastheGroup’schiefoperatingdecisionmakerforthepurposeofapplyingNZIFRS8.

(t) Cash flow

ThefollowingarethedefinitionsoftermsusedintheStatementofCashFlows:

• cashiscashonhand,currentaccountsinbanksandshorttermdepositswithamaturityperiodofupto3months;

• investingactivitiesarethoseactivitiesrelatingtoacquisition,holdinganddisposalofproperty,plantandequipmentandofinvestmentsnotfallingwithinthedefinitionofcash,andincludethepurchaseandsaleofinterestsinotherentities;

• financingactivitiesarethoseactivitieswhichresultinchangesinthesizeandthecompositionofthecapitalstructure.Thisincludesbothequityanddebt;and

• operatingactivitiesincludealltransactionsandothereventsthatarenotinvestingorfinancingactivities.

(u) Share capital

Ordinarysharesandpreferencesharesareclassifiedasequity.Anequityinstrumentisanycontractthatevidencesaresidualinterestintheassetsofanentityafterdeductingallofitsliabilities.Sharecapitalisrecognisedatthefairvalueoftheconsiderationreceivedfortheissueofshares,netofdirectissuecosts.Incrementalcostsdirectlyattributabletotheissueofnewsharesoroptionsareshowninequityasadeduction,netoftax,fromtheproceeds.TransactioncostsrelatedtothelistingofnewsharesandthesimultaneouslistingofexistingsharesontheNZXareallocatedtothosesharesonaproportionatebasis.Incrementalcostsdirectlyattributabletothelistingofexistingsharesarenotconsideredcostsofanequityinstrumentasnoequityinstrumentisissuedandconsequentlycostsarerecognisedasanexpenseintheprofitorlosswhenincurred.Incrementalcostsdirectlyattributabletotheissueofnewsharecapitalarerecogniseddirectlyinequityasareductionoftheshareproceedsreceived.

(v) Borrowing costs

Borrowingcostsdirectlyattributabletotheacquisition,constructionorproductionofqualifyingassets,whichareassetsthatnecessarilytakeasubstantialperiodoftimetogetreadyfortheirintendeduseorsale,areaddedtothecostofthoseassets,untilsuchtimeastheassetsaresubstantiallyreadyfortheirintendeduseorsale.

Allotherborrowingcostsarerecognisedinprofitorlossintheperiodinwhichtheyareincurred.


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1. SIGNIFICANT ACCOUNTING JUDGMENTS AND KEY ESTIMATES AND ASSUMPTIONS

InapplyingtheGroup’saccountingpolicies,managementcontinuallyevaluatesjudgments,estimatesandassumptionsbasedonexperienceandotherfactors,includingexpectationsoffutureeventsthatmayhaveanimpactontheGroup.Alljudgments,estimatesandassumptionsmadearebelievedtobereasonablebasedonthemostcurrentsetofcircumstancesavailabletomanagement.Actualresultsmaydifferfromthejudgments,estimatesandassumptionsandthedifferencesmaybematerial.Areasinvolvingahigherdegreeofjudgmentorcomplexity,orareaswhereassumptionsandestimatesaresignificanttothefinancialstatementsaredisclosedbelow:

SIGNIFICANT ACCOUNTING JUDGMENTS

UnitedParcelService-Fliwayisalimitedliabilitycompanywhoselegalformconfersseparationbetweenthepartiestothejointarrangementandthecompanyitself.Furthermore,thereisnocontractualarrangementoranyfactsandcircumstancesthatindicatethatthepartiestothejointarrangementhaverightstotheassetsandobligationsfortheliabilitiesofthejointarrangement.Accordingly,UnitedParcelService-FliwayisclassifiedasajointventureoftheGroup.

KEY ESTIMATES AND ASSUMPTIONS

Estimatedimpairmentofnonfinancialassetsexcludinggoodwill

Non-financialassets(includingproperty,plantandequipment,intangibleassetsandinvestmentinjointventurecompany)arereviewedateachreportingdatetodeterminewhetherthereareanyindicatorsthatthecarryingamountmaynotberecoverable.

Impairmentofgoodwill

Determiningwhethergoodwillisimpairedrequiresanestimationofthevalueinuseofthecash-generatingunitstowhichgoodwillhasbeenallocated.ThevalueinusecalculationrequirestheDirectorstoestimatethefuturecashflowsexpectedtoarisefromthecash-generatingunitandasuitablediscountrateinordertocalculatepresentvalue.Thecarryingamountofgoodwillat30June2015was$23.046million(2014:$23.046million).Detailsoftheimpairmentlosstestingcalculationsareprovidedinnote11.

2015 ($’000) 2014 ($’000)

Salariesandwages 24,127 22,870

Definedcontributionplan 515 450

Otheremployeebenefits 4,199 4,177

Directors’fees 35 -

28,876 27,497

2. PERSONNEL EXPENSES



3. OTHER OPERATING EXPENSES

Otheroperatingexpensesincludethefollowingitems:

IPOoffercostsexcludingauditorsfees 1,445 -

Feespaidtoauditors-IPOinvestigatingandreview 590 -

Feespaidtoauditors-audit 91 74

Feespaidtoauditors-taxationadviceandtaxreturnassistance 27 26

Feespaidtoauditors-duediligenceservices 5 -

Lossondisposal-property/plant/equipment/intangibles 112 30

Impairmentlossonreceivables 86 7

Foreignexchange(gain) (87) (8)

Systemmaintenance 1,006 1,155

Otherexpenses 5,935 5,167

9,210 6,451

2015 ($’000) 2014 ($’000)

4. RECONCILIATION OF NET PROFIT AFTER TAX WITH CASH FLOWS FROM OPERATING ACTIVITIES

2015 ($’000) 2014 ($’000)

Netprofitaftertax 2,190 4,786

Lossonsaleordisposalofnoncurrentassets 112 30

Depreciationandamortisation 2,030 1,445

Shareofjointventurenetprofit (1,147) (925)

Decrease/(increase)indeferredtaxassets (169) 30

Increase/(decrease)ininterestbearingliabilities - 30

Changes in working capital

(Increase)/decreaseinassets:

Accountsreceivable 1,526 (503)

Prepaidexpenses (106) (39)

Relatedpartyreceivables (85) 933

Increase/(decrease)inliabilities:

Currentpayablesandaccruals 679 (765)

Currentprovisions 173 278

Currentemployeebenefits 111 36

Relatedpartypayables (21) 5

Derivativefinancialinstruments 303 (186)

Currenttax 33 43

Classifiedasinvestingactivities 32 63

Net cash generated by operating activities 5,661 5,261


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5. INCOME TAX EXPENSE

2015 ($’000) 2014 ($’000)

Tax expense / (benefit) comprises:

Currenttax 1,387 1,490

Deferredtax (170) 30

Under/(over)provisioninpreviousyears (2) -

Income tax expense for the year 1,215 1,520

Reconciliationofeffectivetaxrate

Profitbeforeincometax 3,405 6,306

Incometaxusingcompanytaxrate28% 953 1,765

Non-assessableincome (321) (257)

Non-deductibleexpenses 585 12

Under/(over)provisioninpreviousyears (2) -

1,215 1,520

Thetaxrateusedinthereconciliationaboveisthecorporatetaxrateof28%payablebyNewZealandcorporateentitiesontaxableprofitsunderNewZealandtaxlaw.

6. NET FINANCING EXPENSES

2015 ($’000) 2014 ($’000)

Financial expenses

Interestexpenseonbankborrowings (955) (938)

Netfairvalueunrealised(loss)/gainoninterestrateswap/options (303) 185

Netfairvaluerealised(loss)/gainoninterestrateswap/options (41) (96)

(1,299) (849)

Financial income

Interestincome 98 197

98 197

Net financing expenses (1,201) (652)

Interestispayablemonthlyinarrears,duringtheyeartheinterestraterangedbetween5.32%and5.60%perannum(2014:4.58%and5.32%)excludingtheimpactofanyinterestrateswaps/options.



7. ACCOUNTS RECEIVABLE

2015 ($’000) 2014 ($’000)

TradeReceivables 9,289 10,747

Allowancefordoubtfuldebts (81) (13)

9,208 10,734

Aging of past due but not impaired trade receivables

31-90days 184 429

91days+ 158 526

342 955

Allowance for doubtful debts

Openingbalance 13 16

Impairmentlossesrecognisedonreceivables 108 34

Amountswrittenoffduringtheyearasuncollectible (18) (10)

Amountsrecoveredduringtheyear 7 6

Impairmentlossesreversed (29) (33)

Balance at end of the year 81 13

Aging of impaired trade receivables

31-90days 44 4

91days+ 37 9

Total 81 13

Theallowancefordoubtfuldebtsinrelationtotradereceivablesisprovidedforbasedonestimatedirrecoverableamountsdeterminedbyreferencetocurrentcustomercircumstancesandpastdefaultexperience.Indeterminingtherecoverabilityofatradereceivable,theGroupconsidersanychangeinthecreditqualityofthetradereceivablefromthedatethecreditwasinitiallygranteduptothereportingdate.Tradereceivablespastdueareprovidedforbasedonestimatedirrecoverableamountsdeterminedbypastdefaultexperience.Inthecurrentyear,theGrouphasrecognisedalossof$86,000inrespectofbadanddoubtfuldebts(2014:loss$7,000).Thisisrecordedwithin‘otheroperatingexpenses’intheprofitorloss.


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8. DEFERRED TAX

OPENING BALANCE

($’000)

CHARGED TO INCOME

($’000)

CLOSING BALANCE

($’000)

2015 Temporary differences

Doubtfuldebts 9 14 23

Holidayliability 219 18 237

Provisions 160 137 297

388 169 557

2014 Temporary differences

Doubtfuldebts 5 4 9

Holidayliability 200 19 219

Provisions 213 (53) 160

418 (30) 388

9. PROPERTY, PLANT AND EQUIPMENT

AT COST ($’000)

ACCUMULATED DEPRECIATION

($’000)

NET BOOK VALUE ($’000)

DEPRECIATION ($’000)

2015

Officeequipment 1,741 (1,533) 208 98

Furnitureandfittings 2,220 (1,685) 535 78

Plantandequipment 2,453 (1,555) 898 142

Vehicles 16,782 (8,519) 8,263 1,511

Capitalworkinprogress 534 - 534 -

23,730 (13,292) 10,438 1,829

2014

Officeequipment 2,247 (2,045) 202 95

Furnitureandfittings 2,151 (1,607) 544 85

Plantandequipment 2,425 (1,478) 947 118

Vehicles 14,957 (8,737) 6,220 951

Capitalworkinprogress 132 - 132 -

21,912 (13,867) 8,045 1,249



9. PROPERTY, PLANT AND EQUIPMENT (CONT.)

OFFICE EQUIPMENT

($’000)

FURNITURE AND FITTINGS

($’000)

PLANT AND EQUIPMENT

($’000)VEHICLES

($’000)

CAPITAL WORK IN PROGRESS

($’000)TOTAL

($’000)

Cost or valuation

Openingbalance1July2013 2,272 2,186 2,248 13,821 - 20,527

Additions 101 42 195 2,847 132 3,317

Disposals (126) (77) (18) (1,711) - (1,932)

Balanceat30June2014 2,247 2,151 2,425 14,957 132 21,912

Additions 80 135 101 3,852 402 4,570

Disposals (586) (66) (73) (2,027) (2,752)

Balance at 30 June 2015 1,741 2,220 2,453 16,782 534 23,730

Accumulated depreciation and impairment

Openingbalance1July2013 (2,059) (1,613) (1,377) (9,229) - (14,278)

Eliminatedondisposalofassets 109 91 17 1,443 - 1,660

Depreciationexpense (95) (85) (118) (951) - (1,249)

Balanceat30June2014 (2,045) (1,607) (1,478) (8,737) - (13,867)

Eliminatedondisposalofassets 610 - 65 1,729 - 2,404

Depreciationexpense (98) (78) (142) (1,511) - (1,829)

Balance at 30 June 2015 (1,533) (1,685) (1,555) (8,519) - (13,292)

Assets pledged as security.

Vehicleswithacarryingvalueof$8.3masat30June2015(30June2014:$6.2m)havebeenpledgedtosecureborrowingsoftheGroup,refertonote15.TheGroupcanselltheseassetsaspartofitsreplacementand/orinvestmentplan,withnotificationtothebankrequiredandsubjecttoitscovenantcommitmentsregardingbudgetedcapitalexpenditure.


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10. INTANGIBLES

AT COST ($’000)

ACCUMULATED AMORTISATION

($’000)

NET BOOK VALUE ($’000)

AMORTISATION ($’000)

2015

Computersoftwareandlicences 1,775 (1,441) 334 201

1,775 (1,441) 334 201

2014

Computersoftwareandlicences 2,118 (1,656) 462 196

Customerlist-LogicDistributionLtd 67 - 67 -

2,185 (1,656) 529 196

Cost or valuation

Openingbalance1July2013 2,342 67 2,409

Additions 344 - 344

Disposals (568) - (568)

Balanceat30June2014 2,118 67 2,185

Additions 88 - 88

Disposals (431) (67) (498)

Balance at 30 June 2015 1,775 - 1,775

Accumulated amortisation and impairment

Openingbalance1July2013 (2,025) - (2,025)

Eliminatedondisposalofassets 565 - 565

Amortisationexpense (196) - (196)

Balanceat30June2014 (1,656) - (1,656)

Eliminatedondisposalofassets 416 - 416

Amortisationexpense (201) - (201)

Balance at 30 June 2015 (1,441) - (1,441)

COMPUTER SOFTWARE

AND LICENCES ($’000)

CUSTOMER LIST

($’000)TOTAL

($’000)



11. GOODWILL

2015 ($’000) 2014 ($’000)

Cost 23,046 23,046

Accumulatedimpairmentlosses - -

23,046 23,046

Cost

Balanceatbeginningofyear 23,046 23,046

Movementsduringtheyear - -

Balance at end of year 23,046 23,046

Accumulated impairment losses

Balanceatbeginningofyear - -

Movementsduringtheyear - -

Balance at end of year - -

Allocation of goodwill to cash-generating units

Goodwillhasbeenallocatedforimpairmenttestingpurposestothefollowingcash-generatingunits:

• Domestic-movingandstoringfreightwithinNewZealand

• International-movingfreightbetweencountries

Beforerecognitionofimpairmentlosses,thecarryingamountofgoodwillwasallocatedtocash-generatingunitsbasedonEBITDAsplitatthetimethebusinesswasacquiredinOctober2006,asfollows:

Domestic 19,426 19,426

International 3,620 3,620

23,046 23,046

2015 ($’000) 2014 ($’000)

DomesticTherecoverableamountofthiscash-generatingunitisdeterminedbasedonavalueinusecalculationwhichusescashflowprojectionsbasedonfinancialyear2016financialforecastsapprovedbytheDirectors,grownannuallybya2%growthrateperannumforafive-yearforecastperiod.Adiscountrateof10%perannum(2014:10%perannum)wasused.

Cashflowprojectionsduringthefive-yearforecastperiodarebasedonsimilargrossmarginsandcostpriceinflationthroughout.Thecashflowsbeyondthatfive-yearperiodhavebeenextrapolatedusingasteady2%(2014:2%)perannumgrowthrate.TheDirectorsbelievethatanyreasonablypossiblechangeinthekeyassumptionsonwhichtherecoverableamountisbasedwouldnotcausetheaggregatecarryingamounttoexceedtheaggregaterecoverableamountofthecashgeneratingunit.

InternationalTherecoverableamountofthiscash-generatingunitisdeterminedbasedonavalueinusecalculationwhichusescashflowprojectionsbasedonfinancialyear2016financialforecastsapprovedbytheDirectors,grownannuallybya2%growthrateperannumforafive-yearforecastperiod.Adiscountrateof10%perannum(2014:10%perannum)wasused.

Cashflowprojectionsduringthefive-yearforecastperiodarebasedonsimilargrossmarginsandcostpriceinflationthroughout.Thecashflowsbeyondthatfive-yearperiodhavebeenextrapolatedusingasteady2%(2014:2%)perannumgrowthrate.TheDirectorsbelievethatanyreasonablypossiblechangeinthekeyassumptionsonwhichtherecoverableamountisbasedwouldnotcausetheaggregatecarryingamounttoexceedtheaggregaterecoverableamountofthecashgeneratingunit.


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11. GOODWILL (CONT.)

ThekeyassumptionsusedinthevalueinusecalculationsforDomesticandInternationalcash-generatingunitsareasfollows:

Forecastrevenue Basedonforecastrevenueforthefirstyearthena2%perannumgrowth.ThevaluesassignedtotheassumptionreflectpastexperienceandtheDirectorsbelievethegrowthrateperyearforthenextfiveyearsisreasonablyachievable.

Forecastgrossmargin Averagegrossmarginsachievedinthelastperiodhavebeenused.ThisreflectspastexperienceandtheDirectorsbelievethemtobereasonablyachievable.

Forecastpriceinflation Basedonforecastcostsforthefirstyear,thenconsumerpriceindices2yearaverageusedinfutureperiods.Thevaluesassignedtothekeyassumptionareconsistentwithexternalsourcesofinformation.

12. ACCOUNTS PAYABLE

Tradepayables 2,208 2,644

Accruedexpenses 3,135 2,136

Goodsandservicestax(GST)payable 414 298

5,757 5,078

TheGrouphasfinancialriskmanagementpoliciesinplacetoensurethatallpayablesarepaidwithinthecredittimeframe.Theaveragecreditperiodonpurchasesis42days(41daysasat30June2014).

2015 ($’000) 2014 ($’000)

2015 ($’000) 2014 ($’000)

13. PROVISIONS

OpeningBalance 554 276

Releaseofpreviousyearprovisions (245) (133)

Provisionsrecognisedduringfinancialyear 1,915 1,190

Provisionssatisfiedduringfinancialyear (1,497) (779)

727 554

AllprovisionsrepresenttheDirectors’bestestimateofthefuturesacrificeofeconomicbenefitsrequiredundertheGroup’soperationalpoliciesandprocedures.Theseestimateshavebeenmadeonthebasisofhistoricaldatatrends.Allamountsareexpectedtobesettledwithinthenext12months.



14. ISSUED CAPITAL

ISSUED CAPITAL 2015

(SHARES)

ISSUED CAPITAL 2015

($’000)

ISSUED CAPITAL 2014

(SHARES)

ISSUED CAPITAL 2014

($’000)

Redeemable preference shares

Balanceatbeginningoftheyear 5,000,000 5,000 5,000,000 5,000

Repaymentofredeemablepreferenceshareson6October2014

(5,000,000) (5,000) - -

Balance at end of the year - - 5,000,000 5,000

Ordinary shares

Balanceatbeginningoftheyear 102 - 102 -

Conversionofexistingshareson7April2015 37,904,475 - - -

Newsharesissuedon8April2015 7,533,333 9,040 - -

Issuecostsassociatedwithnewshares - (271) - -

Balance at end of the year 45,437,910 8,769 102 -

Fullypaidordinarysharescarryonevotepershareandcarrytherighttodividendsandnetassetsuponwindingup.Theshareshavenoparvalue.

15. INTEREST-BEARING LOANS

2015 ($’000) 2014 ($’000)

Current - secured

ANZloan - 19,292

Non-current - secured

ANZloan 15,000 -

Flexibleinterestratetermfacilitymaturedon6October2014andwasextendedforanother3yearterm,refertonote22(iii).TheANZholdssecurityoverallvehiclesoftheGroup,refertonote9.

16. IMPUTATION CREDITS

2015 ($’000) 2014 ($’000)

ImputationcreditsavailabledirectlyandindirectlytoshareholdersoftheGroup 811 7,825

ImputationcreditaccountsareonlyavailabletocarryforwardifshareholderscontinuityismaintainedandaresubjecttoInlandRevenueDepartmentapproval.Duetothepubliclistingandresultingsignificantshareholdingchangeon9April2015imputationcreditsof$8.716mwereforegone.


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17. COMMITMENTS

Operating leases

Obligationspayableafterbalancedateonnon-cancellableleasesareasfollows:

Withinoneyear 7,038 6,670

1-5years 9,422 9,038

5+years 7,230 222

23,690 15,930

Themajorityofoperatingleasesrelatetopropertyleases,non-freightvehiclesandequipmentleases.Leasetermsarebetween1to10yearsforpropertyleases.Operatingleasesforpropertycontainannualrentalreviewclauses.TheGroupdoesnothaveanoptiontopurchaseanyofthepropertiesornon-freightvehiclesattheexpiryofanyofthecontracts.

2015 ($’000) 2014 ($’000)

2015 ($’000) 2014 ($’000)

Capital

Maxicubedryfreightfulltrailer 135 -

WarehousingSCE10implementation 283 -

418 -

18. EARNINGS PER SHARE

Basicearningspershareiscalculatedbydividingtheprofitaftertaxofthegroupbytheweightedaveragenumberofordinarysharesoutstandingduringtheyear.

2015 ($’000) 2014 ($’000)

Profitaftertax($’000) 2,190 4,786

Weightedaveragenumberofordinaryshares 39,617,636 37,904,577

Basic and diluted earnings per share (in cents) 5.5 12.6

Theshareholdingconversionduringtheyearhasbeenappliedretrospectivelyto2014.Therestatementensurescurrentandpriorperiodsarecomparable,asiftheconversionwasalwaysinplace.

Dilutedearningspershareiscalculatedbyadjustingtheweightedaveragenumberofordinarysharesoutstandingtoassumeconversionofalldilutivepotentialordinaryshares.Therewerenopotentialordinaryshareswithadilutiveeffectduringtheyearended30June2015(2014:nil).



19. RELATED PARTIES

RelatedpartiesincludesubsidiariesintheGroup,thejointventureentityandtheDirectors.

Transactions received / (paid) and outstanding balances receivable / (payable) between the Group and related parties:

Transactions

UnitedParcelService-Fliway(NZ)Limited

Freightandlogisticsservicesprovided

JointVenture 4,155 3,671


Freightservicesreceived JointVenture (139) (2)


Rechargeexpenses JointVenture 952 893


IATAandCustomsexpenses JointVenture 1,005 8,177


Grossdividendpayment JointVenture 950 899

DuncanHawkesby Unsecuredloanrepayment ManagingDirector (2,436) (400)

TheD&GHawkesbyTrust Unsecuredloanrepayment Shareholder (533) -

DuncanHawkesby Remunerationandbenefits ManagingDirector (123) (120)

CraigStobo Remuneration Director (53) -

AlanIssac Remuneration Director (34) -

Outstanding balances


Tradereceivables JointVenture 577 493


Tradepayables JointVenture (14) (35)

DuncanHawkesby Unsecuredloan ManagingDirector - 2,436

TheD&GHawkesbyTrust Unsecuredloan Shareholder - 533

TheunsecuredloansfromDHawkesbyandTheD&GHawkesbyTrustwererepaid,accruednointerest,andastheloansweresubordinatedtotheANZloanfacilitythebankapprovedtherepayment.

Alljointventuretradetransactionsareonafullycommercialbasis,onendofmonthfollowinginvoicepaymentterms.Rechargeexpenses,IATA(InternationalAirTransportAuthority)andCustomsexpensesareatcostandpaymenttermsarenolaterthanendofmonthfollowinginvoice.ThereisnointerestchargedonanyoutstandingbalancesbetweenthejointventureandFliwayGroupLimited.

RELATED PARTY NATURE OF TRANSACTION RELATIONSHIP 2015 ($’000) 2014 ($’000)

20. INVESTMENT IN SUBSIDIARIES

RelatedpartiesincludesubsidiariesintheGroup,thejointventureentityandtheDirectors.Ownership + voting interest

NAME PRINCIPAL ACTIVITIES 2015 2014

FliwayHoldingsLimited HoldingCompany-nontrading 100% 100%

FliwayTransportLimited TransportServices 100% 100%

FliwayInternationalLimited FreightForwarding 100% 100%

FliwayLogisticsLimited ThirdPartyLogistics 100% 100%

AllsubsidiariesareincorporatedinNewZealand,andhavethesamebalancedateof30June.


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21. INVESTMENT IN JOINT VENTUREOwnership + voting interest

NAME PRINCIPAL ACTIVITIES 2015 2014

UnitedParcelService-Fliway(NZ)Limited InternationalParcelService 50% 50%

ThereportingdateofUnitedParcelService-Fliway(NZ)Limitedis31December,matchingtheUPSGroup.Forthepurposeofapplyingtheequitymethodofaccounting,thefinancialreportsasat30June2015ofUnitedParcelService-Fliway(NZ)Limitedhavebeenused.NewZealandistheprincipalplaceofbusinessforthejointventure.

2015 ($’000) 2014 ($’000)

Carryingvalueofjointventure:

Carryingvalueatbeginningofperiod 1,461 1,435

Shareofprofit 1,147 925

Dividendsreceived (950) (899)

Carrying value at end of period 1,658 1,461

Thecarryingvaluecomprises

Cost 182 182

Shareofjointventurepost-acquisitionreserves 1,476 1,279

1,658 1,461

Jointventureshareofnetsurplus:

Shareofprofitbeforetaxation 1,593 1,284

Shareoftaxationexpense (446) (359)

Share of profit or loss and total comprehensive income 1,147 925

Jointventureaggregateamounts:

Currentassets-cash 633 1,542

Currentassets-tradedebtorsandrelatedpartyreceivables 4,650 2,996

Non-currentassets 152 106


Currentliabilities-tradepayablesandaccruals 2,049 1,544

Currentliabilities-taxprovision 71 131

Long-termliabilities - -


Revenue 16,677 17,115

Interestincome 19 22

Expenses (13,492) (14,552)

Depreciationandamortisation (18) (18)

Taxexpense (892) (717)

Profit or loss and total comprehensive income 2,294 1,850



2015 ($’000) 2014 ($’000)

Netassetsofthejointventure 3,315 2,969

Ownershipinterest 50% 50%

1,658 1,485

Otheradjustments-prioryearinterestandtaxadjustmentsnotyetreflectedbytheGroup - (24)

Carrying amount of the Group's interest in the joint venture 1,658 1,461

Thejointventurehasnocommitmentsorcontingentliabilitiesasat30June2015(2014:nil).

22. FINANCIAL INSTRUMENTS

Financial risk management objectives

TheDirectorshaveidentifiedinterestraterisk,creditriskandliquidityriskasthekeyrisksfacedbytheGroup.

TheGroupseekstominimisetheeffectsofinterestrateriskbyusingderivativefinancialinstrumentstohedgeriskexposures.TheGroupdoesnotenterintoortradefinancialinstruments,includingderivativefinancialinstruments,forspeculativepurposes.

(i) Fair value of financial instruments

AllfinancialassetsandliabilitiesrecognisedintheStatementofFinancialPosition,whethertheyarecarriedatcostoratfairvaluearerecognisedatamountsthatrepresentareasonableapproximationoffairvalueunlessotherwisestated.

Fairvalueisthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarketparticipantsatthemeasurementdate,regardlessofwhetherthatpriceisdirectlyobservableorestimatedusinganothervaluationtechnique.Inestimatingthefairvalueofanassetoraliability,theGrouptakesintoaccountthecharacteristicsoftheassetorliabilityifmarketparticipantswouldtakethosecharacteristicsintoaccountwhenpricingtheassetorliabilityatthemeasurementdate.Fairvalueformeasurementand/ordisclosurepurposesintheseconsolidatedfinancialstatementsisdeterminedonsuchabasis,exceptformeasurementsthathavesomesimilaritiestofairvaluebutarenotfairvaluesuchasvalueinuseinNZIAS36.

Inaddition,forfinancialreportingpurposes,fairvaluemeasurementsarecategorisedintolevel1,2or3basedonthedegreetowhichtheinputstothefairvaluemeasurementsareobservableandthesignificanceoftheinputstothefairvaluemeasurementinitsentirety,whicharedescribedbelow:

• level1inputsarequotedprices(unadjusted)inactivemarketsforidenticalassetsandliabilitiesthattheentitycanaccessatthemeasurementdate;

• level2inputsareinputs,otherthanquotedpricesincludedwithinlevel1,thatareobservablefortheassetorliability,eitherdirectlyorindirectly;

• level3inputsareunobservableinputsfortheassetorliability.

(ii) Interest rate risk management

TheGroupisexposedtointerestrateriskasitborrowsatfloatinginterestrates.TomanageinterestrateriskandvolatilitytheGroupprovidesforinterestrateswaps/optionstobeused,wheretheGroupagreestoexchangeatspecificintervalsthedifferencebetweenfixedandvariablerateinterestamountscalculatedbyreferencetoaspecifiednotionalprincipalamount.TheGroupregularlyanalysesitsinterestrateriskexposure.Withinthisanalysisconsiderationisgiventopotentialrenewalsofexistingpositions,alternativefinancingandthemixoffixedandvariableinterestrates.Asat30June2015thecurrentbanktermloaninterestratewas5.36%(2014:5.32%).Theinterestrateonbankdebtisresetquarterly.At30June201567%(2014:52%)ofGroupinterestbearingborrowingsareonfixedratesofinterestthroughtheuseofinterestratederivatives.Allinterestrateswaps/optionsexpire2September2018.Termsoftheinterestrateswapsareincludedinthetablebelow.

Includedincashandcashequivalentsarebanktermdepositswithatotalbalanceof$3m(2014:$6m)asat30June2015.TheGroupholdstermdepositsforupto3monthsearninganaverageinterestrateasat30June2015of4.17%(2014:3.86%),andcandrawonthesefundsatanytime.

ThefollowingtabledetailstheGroup’sexposuretointerestrateriskatbalancesheetdate.

21. INVESTMENT IN JOINT VENTURE (CONT.)

Reconciliationofthesummarisedfinancialinformationtothecarryingamountofinterestinthejointventurerecognisedintheconsolidatedfinancialstatements:


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TOTAL ($’000)

LESS THAN 1 MONTH

($’000)1-3 MONTHS

($’000)

3MONTHS - 1 YEAR

($’000)1-2 YEARS

($’000)

As at 30 June 2015

CashandCashEquivalents 6,837 6,837 - - -

Interest-bearingloans (15,000) - - (15,000) -

As at 30 June 2014

CashandCashEquivalents 8,090 8,090 - - -

Interest-bearingloans (19,292) - - (19,292) -

22. FINANCIAL INSTRUMENTS (CONT.)

Financial risk management objectives (cont.)

2015 %

2014 %

Interest-bearingloans 5.21% 4.86%

Cashandcashequivalents 1.97% 2.83%

ThefollowingtabledetailstheweightedaverageeffectiveinterestrateoftheGroup’sfinancialassetsandliabilitiesduringtheyear:

Interestratesensitivity:

Thesensitivityanalysisbelowhasbeendeterminedbasedontheexposuretointerestratesfornon-derivativeandderivativefinancialinstrumentsattheendofthereportingperiod.

Forfloatingratenon-derivativeinstruments,theanalysisispreparedassumingtheamountsoftheassetsandliabilitiesoutstandingattheendofthereportingperiodwereoutstandingforthewholeyear.A1%increaseordecreaserepresentsmanagement’sassessmentofthereasonablypossiblechangeininterestrates.

Ifinterestrateshadbeen1%higherorlowerandallothervariableswereheldconstant,theGroup’sprofitfortheyearended30June2015woulddecrease/increaseby$82,000(2014:$112,000decrease/increase).ThisismainlyattributabletotheGroup’sexposuretointerestratesonitsvariablerateinstrumentswhichincludeshorttermdeposits(includedincashandcashequivalents)andinterestbearingloans.

Forfixedratederivativeinstruments,theanalysisispreparedassumingtheamountsofnotionalprincipalvalueattheendofthereportingperiodexistedforthewholeyear.A1%increaseordecreaserepresentsmanagement’sassessmentofthereasonablypossiblechangeininterestrates.

Ifinterestrateshadbeen1%higherandallothervariableswereheldconstant,theGroup’sprofitfortheyearended30June2015wouldincreaseby$304,000(2014:$244,000increase).Ifinterestrateshadbeen1%lowerandallothervariableswereheldconstant,theGroup’sprofitfortheyearended30June2015woulddecreaseby$364,000(2014:$302,000decrease).ThisisattributabletotheGroup’sexposuretointerestratesonitsinterestrateswap/optionsderivatives.

Interestrateswapcontracts

Underinterestrateswapcontracts,theGroupagreestoexchangethedifferencebetweenfixedandfloatingrateinterestamountscalculatedonagreednotionalamounts.SuchcontractsenabletheGrouptomitigatetheriskofchanginginterestratesonthecashflowexposuresontheissuedvariableratedebt.Thefairvalueofinterestrateswapsattheendofthereportingperiodisdeterminedbydiscountingthefuturecashflowsusingtheyieldcurvesattheendofthereportingperiodandthecreditriskinherentinthecontract.Theaverageinterestrateisbasedontheoutstandingbalancesattheendofthereportingperiod.

Thefollowingtabledetailsthenotionalprincipalamountsandremainingtermsofinterestrateswapcontractsoutstandingattheendofthereportingperiod.

AVERAGE CONTRACTED FIXED RATE NOTIONAL PRINCIPAL VALUE FAIR VALUE ASSETS (LIABILITIES)

2015 %

2014 %

2015 ($’000)

2014 ($’000)

2015 ($’000)

2014 ($’000)

2-5years 4.57% 4.57% 10,000 10,000 (269) 34




Financial risk management objectives (cont.)

Theinterestrateswapssettleonaquarterlybasis.Thefloatingrateontheinterestrateswapsisthewholesalebankbillrateplusamargin.TheGroupwillsettlethedifferencebetweenthefixedandfloatinginterestrateonanetbasiswiththebank.

ThetermsoftheinterestrateswapsreflecttheGroup’sexpectationoftheGroup’sinterestrateexposures.IndecidingthedurationoftheswapstheGrouptakesintoconsiderationthelikelycapitalstructuremakeupinthenearfutureandtheGroup’sexpectationofinterestratemovementsinthemarket.Onthatbasis,theGroupdeterminedamaturitydateofSeptember2018fortheinterestrateswapswasappropriate.

Netgains/lossesinrelationtomovementsinthevaluesoftheinterestrateswapsaredisclosedinnote6.TheGrouprecognised$41,000ofrealisedlosses(2014:$96,000)and$303,000ofunrealisedlosses(2014:$185,000unrealisedgains)ontheinterestrateswapsduringthereportingperiod.TheGroupdoesnotapplyhedgeaccounting.

(iii) Liquidity risk management

LiquidityriskrepresentstheGroup’sabilitytomeetitscontractualobligations.TheGroup’sobjectiveistomaintainanadequatelevelofcash,bankoverdraftfacilities,andbankloanfacilities.TheGroupalsomanagesliquidityriskbycontinuouslymonitoringforecastandactualcashflowsandmatchingmaturityprofilesoffinancialassetsandfinancialliabilities.

Financial liabilities undiscounted contractual cash flows

CashflowsattributedtopayablesarebasedontheearliestdateatwhichtheGroupisrequiredtopay.

Forinterestbearingloans,theGroup’sremainingcontractualmaturitywithagreedrepaymentperiodsispresented.

UnsecuredloansfromrelatedpartiesbelowrefertoDHawkesbyandTheD&GHawkesbyTrustloans.

Thetablebelowincludesbothinterestandcapitalcashflowsfromfinancialinstruments.

WEIGHTED AVERAGE

EFFECTIVE INTEREST

RATE %

BALANCE SHEET ($’000)

CONTRACTUAL CASH FLOW

($’000)

LESS THAN 1 MONTH

($’000)1-3 MONTHS

($’000)

3 MONTHS - 1 YEAR

($’000)1-5 YEARS

($’000)

As at 30 June 2015

AccountsPayable - 5,343 5,343 5,343 - - -

Relatedpartypayable - 14 14 14 - - -

Interest-bearingloan 5.21% 15,000 16,834 65 130 587 16,052

Derivativefinancialinstruments - 269 269 4 12 73 180

As at 30 June 2014

AccountsPayable - 4,780 4,780 4,780 - - -

Relatedpartypayable - 35 35 35 - - -

Interest-bearingloan 4.86% 19,292 19,657 79 174 19,404 -

Unsecuredloansfromrelatedparties - 2,969 2,969 - - 2,969 -


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2015 ($’000) 2014 ($’000)

Bank overdraft facility:

Amountused - -

Amountunused 1,500 1,500

1,500 1,500

Flexible credit facility:

Amountused - -


1,500 4,000

Term loan facility:

Amountused 15,000 19,300

Amountunused - -

15,000 19,300

Total funding available:

Amountused 15,000 19,300


18,000 24,800


Financial risk management objectives (cont).

Financing facilities

Anewfacilityagreementwassignedduringtheyearwithafacilityof$20.025m,including$15.000millionoftermfacility,$1.500millionofrevolvingcreditfacility,$1.500millionoverdraftfacility,$1.475millionfinancialguaranteefacility,$0.300millioncreditcardfacilityand$0.250millioncleancreditfacility.Thenewtermfacilitywithatermof3yearswasdrawndownon5November2014.



2015 ($’000) 2014 ($’000)

Tradereceivables 9,208 10,734


Derivativefinancialassets - 34

Relatedpartyreceivables 577 492

16,622 19,350

(v) Foreign currency risk management

ForeigncurrencyriskistheriskthatthevalueoftheGroup’sassets,liabilitiesandfinancialperformancewillfluctuateduetochangesinforeigncurrencyrates.TheGroupminimisesitsforeigncurrencyriskbyinvoicingcustomers,wherepossible,inforeigncurrencytooffsetanyforeigncurrencypayables.TheGroup’sforeigncurrencyisnothedgedforthisreason,withanynetforeign

exchangegains/lossestakentotheprofitorloss.DuringtheyearAUDwerepurchasedinadvanceofamajorsoftwareupgrade.Netforeignexchangegainfor2015is$87,000(2014:$8,000gain).ThesensitivityoftheGroup’sprofitorlossandequitytofluctuationsinforeigncurrenciesisnotexpectedtobematerial.

Thetablebelowillustratestheforeigncurrencymake-upoftheGroup’sreceivablesandpayablesbalances.

2015 ($’000) 2014 ($’000)

Foreign currency receivables as at 30 June:

USD 235 238

AUD 133 67

Foreign currency payables and accrued expenses as at 30 June:

USD (112) (295)

AUD (133) (146)

Other(inNZD) (30) (22)



(iv) Credit risk management

CreditriskreferstotheriskthatacounterpartywilldefaultonitscontractualobligationsresultinginafinanciallosstotheGroup.FinancialinstrumentsthatpotentiallyexposetheGrouptocreditriskconsistprimarilyofaccountsreceivable.Thecreditriskoncashandcashequivalentsandderivativefinancialinstrumentsislimitedbecausethecounterpartiesarebankswithhighcreditratings.

ItistheGroup’spolicythatallcustomerswhowishtotradeoncredittermsaresubjecttocreditverificationproceduresincluding

industryreferencesandcreditworthiness,companyenquiriesandpastexperience.Creditrisklimitsandtermsaresetforeachcustomer.Accountsreceivablebalancesaremonitoredonanongoingbasis.

ThejointventureisaprofitablebusinessthatissolventandtheDirectorsbelievethereisnosignificantcreditrisk.

Thecarryingamountoffinancialassetsrecordedinthefinancialstatements,netofanyallowancesforlosses,representstheGroup’smaximumexposuretocreditrisk.

Themaximumexposuretocreditriskatbalancedateisasfollows:


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(vi) Capital management

TheGroupmanagesitscapitaltoensurethattheentitiesintheGroupwillbeabletocontinueasagoingconcernwhilemaximisingthereturntoshareholdersthroughtheoptimisationofthedebtandequitybalance.

ThecapitalstructureoftheGroupconsistsofdebt,whichincludestheborrowingsdisclosedinnote15,inter-companyreceivablesandpayablesasdisclosedinnote19,cashandcashequivalents,andequity,comprisingissuedcapitalandretainedearningsasdisclosedinnotes14and25.

CapitalrequirementsareimposedontheGroupbythebank.WhentheGroupdoesnotcomplywiththeserequirements,thebankmaycancelthefacilityimmediatelywithallamountsdueandpayableupondemand.Duringtheyear,theGroupcompliedwithitscapitalrequirements.Keycapitalrequirementsareasfollows:

• Interestcoverratiogreaterthan3.5

• Leverageratiolessthan3

• Capitalexpenditurewithinthecurrentyearbudgetapprovedbythebank

TheDirectorsreviewthecapitalstructureonaregularbasis.AspartofthisreviewtheDirectorsconsiderthecostofcapitalandtherisksassociatedwitheachclassofcapital.TheDirectorswillbalancetheoverallcapitalstructurethroughthepaymentofdividends,newshareissues,andtheissueofnewdebtortheredemptionofexistingdebt.

TheGroup’soverallstrategyremainsunchangedfrom2014.

(vii) Financial instruments at fair value

Thefollowingtableprovidesananalysisoffinancialinstrumentsthataremeasuredatfairvaluesubsequenttoinitialrecognition,groupedintolevelsonetothreedependingonthedegreetowhichfairvalueisobservable.

Refertonote22(ii)forinformationonvaluationmethodologyforlevel2financialinstruments.

LEVEL 1 ($’000)

LEVEL 2 ($’000)

LEVEL 3 ($’000)

TOTAL ($’000)

2015

Derivativesclassifiedasfairvaluethroughprofitorloss - (269) - (269)

Total liabilities at fair value - (269) - (269)

2014

Derivativesclassifiedasfairvaluethroughprofitorloss - 34 - 34

Total liabilities at fair value - 34 - 34





(viii) Categories of financial assets and financial liabilities

LOANS AND RECEIVABLES

($’000)

DERIVATIVES CLASSIFIED

AS FAIR VALUE THROUGH PROFIT

OR LOSS ($’000)

FINANCIAL LIABILITIES AT

AMORTISED COST ($’000)

TOTAL ($’000)

As at 30 June 2015

Assets

Cashandcashequivalents 6,837 - - 6,837

Tradereceivables 9,208 - - 9,208

Relatedpartyreceivables 577 - - 577

Total financial assets 16,622 - - 16,622

Liabilities

Accountspayable&accruedexpenses - - 5,343 5,343

Relatedpartypayables - - 14 14

Interest-bearingloans - - 15,000 15,000

Derivativefinancialinstruments - 269 - 269

Total financial liabilities - 269 20,357 20,626

LOANS AND RECEIVABLES

($’000)

DERIVATIVES CLASSIFIED

AS FAIR VALUE THROUGH PROFIT

OR LOSS ($’000)

FINANCIAL LIABILITIES AT

AMORTISED COST ($’000)

TOTAL ($’000)

As at 30 June 2014

Assets

Cashandcashequivalents 8,090 - - 8,090

Tradereceivables 10,734 - - 10,734

Relatedpartyreceivables 492 - - 492

Derivativefinancialinstruments - 34 - 34

Total financial assets 19,316 34 - 19,350

Liabilities

Accountspayable&accruedexpenses - - 4,780 4,780

Relatedpartypayables - - 35 35

Interest-bearingloans - - 19,292 19,292

Unsecuredloans - - 2,969 2,969

Total financial liabilities - - 27,076 27,076


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23. SUBSEQUENT EVENTSAfinaldividendof1.9centspershareandaspecialdividend0.5centspersharewasdeclaredon27August2015,totalling$1,090,510.

24. CONTINGENT LIABILITIES AND ASSETSAsat30June2015thereremainsacontingentliabilityinrelationtoalogisticsclaim,of$778,872plusinterest.TheformercustomerhasindicateditsintentiontopursueaclaimunderthedisputeresolutiontermsofitscontractswithFliwaywhichprovideformediationand/orarbitration.Fliwayisdefendingtheclaim.Fliwayhasmadeaprovisionforthemaximumpotentialliabilitythatmayresultuponsettlingtheclaim.

Asat30June2015ANZbankhadissuedFliwayGroupLimiteda$900,000bondinfavourofMacquarieGoodmaninrelationtotheleaseof66WestneyRoad,Aucklandexpiring30/08/2018,a$39,000bondtoIATA(InternationalAirTransportAssociation),anda$75,000bondtotheNZXwhilethecompanyremainspubliclylisted.

AspartofthepublicofferingthesellingshareholdersenteredintoadeedofindemnityinfavourofFliway(theSellingShareholderIndemnity)dated5March2015.UndertheSellingShareholderIndemnity,theshareholdersagreedtoindemnifyFliwayagainstanylossofearningsasaresultofathirdpartyclaimrelatingtoaneventthatoccurredbeforeallotmentofshares.However,claimsagainstFliwaythatariseintheordinarycourseofitsday-to-dayactivitiesasaresultofthelossordamagetogoodsorinventoryareexcludedfromtheSellingShareholderIndemnity.AclaimisalsoexcludedtotheextentFliwayrecoversproceedsunderitsinsurancepolicies.FliwaymustnotmakeaclaimundertheSellingShareholderIndemnityunlesstheamountoftheclaimexceeds$250,000.TheSellingShareholders’liabilityundertheSellingShareholderIndemnityislimitedtoanaggregatemaximumamountof$4million.Thelimitreducesannuallyto$nilby2020.AtthebalancedatenosuchclaimhasbeenmadeundertheSellingShareholderIndemnity.

2015 ($’000) 2014 ($’000)

2015 ($’000) 2014 ($’000)

Balanceatbeginningoftheyear 18,791 14,005

Totalnetprofitfortheyear 2,190 4,786

Balance at end of the year 20,981 18,791

Short-termbenefits 1,549 1,433

Otherlong-termbenefits - 3

TerminationBenefits - 15

1,549 1,451

25. RETAINED EARNINGS

26. COMPENSATION OF KEY MANAGEMENT PERSONNELTheremunerationofDirector’sandothermembersofkeymanagementpersonnelduringtheyearwasasfollows:

2015 ($’000) 2014 ($’000)

Interestrateswaps (174) 28

Interestrateoptions (95) 6

(269) 34

TheGrouphaveenteredintointerestrateswapsandoptionstohedgeagainsttheinterestexposureonthetermloans.Interestrateswapsandoptionsareclassifiedaslevel2financialinstrumentsmeasuredatfairvalueafterinitialrecognition,refertonote22(vii).

27. DERIVATIVE FINANCIAL INSTRUMENTS - FAIR VALUE



28. SEGMENT REPORTINGNZIFRS8requiresoperatingsegmentstobeidentifiedonthebasisofinternalreportsaboutcomponentsoftheGroupthatareregularlyreviewedbythechiefoperatingdecisionmakerinordertoallocateresourcestothesegmentandtoassessitsperformance.

TheGroupoperatesinthedomesticsupplychainandinternationalairandoceanfreight.TheGroup’soperationscanbebrokendownintothefollowingoperatingsegments.

Domestic–revenueearnedfromprovidinggoodstransportandstorageserviceswithinNewZealand.

International–revenueearnedfrommovingfreightbetweeninternationalcountriesincludingNewZealand.

Head Office-comprisesfinancingandadministrativesupporttootheroperatingsegments.

Joint Venture–representsequitymethodaccountedjointventurebetweentheGroupandUPS.

TheoperatingsegmentsidentifiedabovealsorepresenttheGroup’sreportablesegments.Thereportablesegmentsreflectthestructureandinternalreportingusedbythemanagingdirectorasthechiefdecisionmakertoassiststrategicdecisionmakingandresourceallocation.

YEAR ENDED 30 JUNE 2015DOMESTIC

($’000)INTERNATIONAL

($’000)JOINT VENTURE

($’000)HEAD OFFICE

($’000) INTER-SEGMENT

($’000)GROUP ($’000)

Operating Revenue

SalestocustomersoutsidetheGroup

55,810 28,359 - - - 84,169

Inter-segmentsales 174 15 - - (189) -

Total Revenue 55,984 28,374 - - (189) 84,169

Segment profit / (loss) 8,390 3,873 1,593 (6,662) - 7,194

Other Segment Information

Depreciation&Amortisation* (1,772) (99) - (160) - (2,030)

Shareofjointventureprofit - - 1,147 - - 1,147

Shareofjointventureinterest,depreciation,tax

- - (446) - - (446)

Disbursementcosts (2,836) (19,868) - - 189 (22,515)

Personnelcosts (22,439) (3,500) - (2,937) - (28,876)

Systemmaintenance (136) (159) - (711) - (1,006)

Interestreceived* - - - 98 - 98

Interestpaid* - - - (955) - (955)

Property,plant,equipmentandcomputersoftwareadditions*

(4,559) (46) - (53) - (4,658)


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YEAR ENDED 30 JUNE 2014DOMESTIC

($’000)INTERNATIONAL

($’000)JOINT VENTURE

($’000)HEAD OFFICE

($’000) INTER-SEGMENT

($’000)GROUP ($’000)

Operating Revenue

SalestocustomersoutsidetheGroup

52,608 28,903 - - - 81,511

Inter-segmentsales 197 15 - - (212) -

Total Revenue 52,805 28,918 - - (212) 81,511

Segment profit / (loss) 8,007 3,765 1,282 (4,264) - 8,790

Other Segment Information

Depreciation&Amortisation* (1,196) (129) - (120) - (1,445)

Shareofjointventureprofit - - 925 - - 925

Shareofjointventureinterest,depreciation,tax

- - (357) - - (357)

Disbursementcosts (2,157) (20,332) - - 212 (22,277)

Personnelcosts (21,418) (3,484) - (2,595) - (27,497)

Systemmaintenance (143) (142) - (870) - (1,155)

Interestreceived* - - - 197 - 197

Interestpaid* - - - (938) - (938)

Property,plant,equipmentandcomputersoftwareadditions*

(3,177) (23) - (461) - (3,661)

*Excludedfromsegmentprofit

Statement of financial position as at 30 June 2015

SegmentAssets 35,802 7,619 2,235 7,467 - 53,123

SegmentLiabilities 5,767 2,589 14 15,003 - 23,373

Statement of financial position as at 30 June 2014

SegmentAssets 34,375 8,353 1,953 8,500 - 53,181

SegmentLiabilities 6,297 2,075 35 20,983 - 29,390

28. SEGMENT REPORTING (CONT.)



2015 ($’000) 2014 ($’000)

2015 ($’000) 2014 ($’000)

Segment profit 7,194 8,790

Shareofjointventureprofit (1,147) (925)

Grossup50%jointventureinterest,tax,depreciation** (446) (357)

Lossondisposalproperty/plant/equipment/intangibles (112) (30)

Depreciationandamortisation (2,030) (1,445)


Interestincome (19) (22)

Depreciationandamortisation 18 18

Taxexpense 893 717

Totaljointventuregrossup 892 713

FliwayGroupshare50% 446 357

28. SEGMENT REPORTING (CONT.)ReconciliationbetweensegmentprofitandtheStatementofComprehensiveIncome

TheGroupchangeditsbasisofaccountingfornoninterestfinancechargesandnon-recurringcosts,whicharenowincludedin2015segmentprofit.Theimpacton2014isareductionof$111,000segmentprofitinHeadOffice.

TheGroupusessegmentprofittoevaluatetheoperatingperformanceofthebusinessovertime.Inevaluatingsegmentprofitmanagementmakesadjustmentsfortheimpactofassetdisposalsanddepreciation/amortisationandtaxposition.AdjustmentisalsomadetobackouttheGroup’sshareofthejointventure’sprofitand50%shareofthejointventure’sinterestincome,depreciation/amortisationandtaxexpense.

AllsegmentsassetsaregeographicallybasedinNewZealand,andallservicesprovidedarecentralisedinNewZealand.

Transactionsbetweensegmentsareenteredintoonafullycommercialbasis.Segmentassetsandliabilitiesaredisclosednetofinter-companybalances.

TheGroup’stop5customerscontribute31%(2014:31%)ofGrouprevenue,thetotalrevenueofthesecustomersis$26m(2014:$25m),thisisincludedintheDomesticandInternationalsegmentsabove.

**Grossup50%jointventureinterest,tax,depreciationderivedasfollows:


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29. COMPARISON WITH PROSPECTIVE FINANCIAL INFORMATION

(i) Prospective Consolidated Statement of Comprehensive Income

(ii) Prospective Consolidated Statement of Changes in Equity

Explanation of variances:

Totalequityat30June2015is$409,000higherthanforecast.ThisistheresultoftheincreaseincomprehensiveincomebeingpartiallyoffsetbylowerequityraisedfromIPO.

Whennecessary,currentyearactualshavebeenregroupedtoconformwiththeclassificationoftheprospectivefinancialinformation.


Totalcomprehensiveincomeat$2,190,000is$544,000higherthanforecast.Thisisdueto:

• strongmarginsandgoodcostmanagementoffsettinglowerthanforecastrevenue:and

• IPOoffercostswere19%lessthanforecastreflectingthelowershareuptakeandlowerbrokeragerate.

2015 ($’000)

ACTUAL

2015 ($’000)

PROSPECTUS

2015 ($’000)

ACTUAL

2015 ($’000)

PROSPECTUS

Revenuefromoperatingactivities 84,169 85,265

Total operating revenue 84,169 85,265

Disbursementcosts (22,515) (23,013)

Freightcosts (4,530) (4,843)

Depreciationandamortisation (2,030) (2,055)

Rentalandleasingcharges (6,997) (7,054)

Personnelcosts (28,876) (29,053)

Vehicleexpenses (6,552) (6,894)

Otheroperatingexpenses (9,210) (9,346)


Netfinancingexpenses (1,201) (1,089)

Shareofjointventureprofit 1,147 1,013

Profit before income tax 3,405 2,931

Incometaxexpense (1,215) (1,285)

Net profit and total comprehensive income for the year, net of tax 2,190 1,646

Balanceat1Jul14 23,791 23,791

Repaymentofredeemablepreferenceshares (5,000) (5,000)

EquityraisedfromIPO 9,040 9,300

Issuecostsassociatedwithnewshares (271) (396)

Netprofitandtotalcomprehensiveincome 2,190 1,646

Balance at 30 Jun 15 29,750 29,341



29. COMPARISON WITH PROSPECTIVE FINANCIAL INFORMATION (CONT.)

(iii) Prospective Consolidated Statement of Financial Position

2015 ($’000)

ACTUAL

2015 ($’000)

PROSPECTUS

Current assets


Accountsreceivable 9,208 11,216

Relatedpartyreceivables 577 520

Prepaidexpenses 468 421

Total current assets 17,090 13,930

Non-current assets

Deferredtaxationasset 557 379

Property,plantandequipment 10,438 10,132

Intangibles 334 353

Investmentinjointventure 1,658 1,574

Goodwill 23,046 23,046

Total non-current assets 36,033 35,484


Current liabilities

Accountspayable&accruedexpenses 5,757 5,479

Provisions 727 480

Relatedpartypayables 14 40

Employeebenefits 1,158 1,078

Taxationpayable 448 388

Derivativefinancialinstruments 269 108

Total Current liabilities 8,373 7,573

Non-current liabilities

Interest-bearingloans 15,000 12,500

Total non-current liabilities 15,000 12,500


Net assets 29,750 29,341

Equity

Issuedcapital 8,769 8,904

Retainedearnings 20,981 20,437

Total equity 29,750 29,341


Themoresignificantchangesintheconsolidatedstatementoffinancialpositionweretheincreaseincurrentassetsandnon-currentliabilities.

TheincreaseincurrentassetswasmainlyduetoincreasedcashholdingfromlowerthanforecastdebtrepaymentfollowingtheIPO.Accountsreceivablereductionfromstrongercollectionsalsoconvertedintocashpartlyoffsetbyadditionalcapitalexpenditure.

Theincreaseinnon-currentliabilitieswasduetoretainingfinancingflexibilitywhilemeetingminimumbankdebtrepaymentrequirements.


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(iv) Prospective Consolidated Statement of Cash Flows

2015 ($’000)

ACTUAL

2015 ($’000)

PROSPECTUS

Cash flows from operating activities

Receiptsfromcustomers 86,368 86,751

Interestreceived 98 69

Receiptsfromjointventure 5,867 5,894

Paymentstosuppliersandemployees (84,398) (87,791)

Interestpaid (955) (976)

Incometaxespaid (1,319) (1,272)

Net cash generated by operating activities 5,661 2,675

Cash flows from investing activities

Dividendreceivedfromjointventure 919 869

Saleofproperty,plantandequipmentandintangibleassets 264 -

Paymentsforproperty,plantandequipmentandintangibleassets (4,605) (3,997)

Net cash used in / provided by investing activities (3,422) (3,128)

Cash flows from financing activities

Repaymentofrelatedpartyborrowings (2,969) (2,969)

Repaymentofredeemablepreferenceshares (5,000) (5,000)

EquityraisedfromIPO 9,040 9,300

Issuecostsassociatedwithnewshares (271) (396)

Repaymentofborrowings (4,292) (6,800)

Net cash used in financing activities (3,492) (5,865)

Net increase (decrease) in cash and cash equivalents (1,253) (6,318)

Cashandcashequivalentsatthebeginningoftheyear 8,090 8,090

Cash and cash equivalents at the end of the year 6,837 1,773


Theimprovementinthecashandcashequivalentsat30June2015resultedfromtheincreaseincashgeneratedfromoperatingactivities,asaresultofimprovedworkingcapital,andtheincreasedborrowingspartlyoffsetbyhighercapitalexpenditure.




(v) Prospective Financial Performance by Segment

2015 ($’000)

ACTUAL

2015 ($’000)

PROSPECTUS($’000)

VARIANCE

Domestic

Totalrevenue 55,984 56,534 (550)

Segmentprofit 8,390 7,907 483

Less:

Depreciation&amortisation (1,772) (1,764) (8)

Loss/(gain)ondisposal-property/plant/equipment/intangibles (40) 39 (79)

Operating profit before financing expenses 6,578 6,182 396


Theincreaseof$396,000inDomesticoperatingprofitresultedfrombetterthanforecastwarehousingperformanceandlowerthanforecasttransportcostsoffsettinglowerthanforecasttransportrevenue.

International

Totalrevenue 28,374 28,822 (448)

Segmentprofit 3,873 3,946 (73)

Less:

Depreciation&amortisation (99) (121) 22

Operating profit before financing expenses 3,774 3,825 (51)


Thedecreaseof$51,000inInternationaloperatingprofitwasduetolowerthanforecastrevenueresultingfromlowerfreightcostsandvolumes.

Joint Venture

Segmentprofit 1,593 1,416 177

Less:

Grossup50%jointventureinterest,tax,depreciation (446) (403) (43)

Share of joint venture profit 1,147 1,013 134


Theincreaseof$134,000intheJointVentureoperatingprofitwasduetohigherthanexpectedexportrevenueleadingtoabetterresultofthejointventure.

Head Office

Segmentprofit/(loss) (6,662) (6,762) 100

Less:

Depreciation&amortisation (160) (170) 10

Loss/(gain)ondisposal-property/plant/equipment/intangibles (72) (68) (4)

Operating profit before financing expenses (6,894) (7,000) 106


Thedecreasedlossof$106,000inHeadOfficeresultedfromlowerthanforecastIPOoffercosts,partlyoffsetwithadditionalcontingentliabilityprovision,andotheroverheads.


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(v) Prospective Financial Performance by Segment (cont.)

2015 ($’000)

ACTUAL

2015 ($’000)

PROSPECTUS($’000)

VARIANCE

Group

Totalrevenue 84,358 85,356 (998)

Inter-segmentsales (189) (91) (98)

TotalrevenuefromcustomersoutsidetheGroup 84,169 85,265 (1,096)

SegmentProfit 7,194 6,507 687

Less:

Depreciation&amortisation (2,030) (2,055) 25

Shareofjointventureprofit (1,147) (1,013) (134)

Grossup50%jointventureinterest,tax,depreciation (446) (403) (43)

Loss/(gain)ondisposal-property/plant/equipment/intangibles (112) (29) (83)

Operating profit before financing expenses 3,459 3,007 452

Reconciliation to Prospectus:

Shareofjointventureprofit 1,147 1,013 134

Netfairvalue(loss)/gainoninterestrateswap/options (344) (182) (162)

Operating profit before financing costs 4,262 3,838 424

TheGroupoperatingprofitbeforefinancingexpensesshownaboveexcludesshareofjointventureprofit$1,013,000andderivativeslossof$182,000.Thesewerebothshowninoperatingprofitbeforefinancecostsintheprospectus,buthavebeenadjustedtobeconsistentwith2015actuals.

STATUTORY INFORMATION

SEVENSECTION

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STATUTORY INFORMATIONSECTION SEVEN

DIRECTORS

ThefollowingpersonswereDirectorsofFliwayanditssubsidiariesduringtheyearended30June2015:

Fliway Group Limited

CraigStobo IndependentDirectorAlanIsaac IndependentDirectorDuncanHawkesby Non-IndependentDirector

CraigStoboandAlanIsaacwereappointedDirectorson26February2015.

Fliway Holdings Limited

DuncanHawkesby

Fliway Transport Limited

DuncanHawkesby

Fliway International Limited

DuncanHawkesby

Fliway Logistics Limited

DuncanHawkesby

JOINT VENTURE DIRECTORS

ThefollowingpersonswereDirectorsofthejointventurewithUPSasrepresentativesofFliwayGroupLimitedduringtheyearended30June2015:

UPS-Fliway (NZ) Limited

DuncanHawkesbyJimSybertsmaCraigMagee

INTERESTS REGISTER

ThefollowingentriesweremadeintheinterestsregisterofFliwayanditssubsidiariesduringtheperiod1July2014to30June2015:

Indemnification and Insurance of Directors

TheGrouphasarranged,asprovidedforunderitsConstitutionandinaccordancewithsection162oftheCompaniesAct1993,policiesofdirectors’andofficers’liabilityinsurancewhich,withaDeedofIndemnity,enteredintowithallDirectors,ensuresthattotheextentpermittedbylaw,DirectorswillincurnomonetarylossasaresultofactionsundertakenbythemasDirectors.Certainactionsarespecificallyexcluded,forexample,theincurringofpenaltiesandfines,whichmaybeimposedinrespectofbreachesofthelaw.

STATUTORY INFORMATION (CONTINUED)

SECTION SEVEN

Share Dealings by Directors

DealingsbyDirectorsinrelevantinterestsinFliway’sordinarysharesduringtheperiodended30June2015asenteredintheInterestsRegisterofFliway:

No. of Shares Nature of Relevant Interest Acquisition/Disposal Consideration Date of Transaction

20,000 Beneficialowner Acquisition $1.20pershare 9thApril2015


20,000 Beneficialowner Acquisition $1.20pershare 9thApril2015


13,308,334 PowertocontrolacquisitionanddisposalthroughTheD&GHawkesbyTrust

Disposal $1.20pershare 9thApril2015

Craig Stobo

Alan Isaac

Duncan Hawkesby

Escrow Arrangements

SharesheldbyDuncanJohnHawkesbyandGretchenSarahHawkesby(astrusteesofTheD&GHawkesbyTrust)aresubjecttotheescrowundertakingsdescribedbelow.UnderthetermsoftheEscrowDeed,DuncanJohnHawkesbyandGretchenSarahHawkesby(astrusteesofTheD&GHawkesbyTrust)haveagreednottosell,transferorotherwisedisposeofanyoftheirshareholding,untilatleastthefirstdayafterthedateonwhichFliwayreleasestoNZXitspreliminaryannouncementofitsfinancialresultsforthesixmonthperiodending31December2015.

TherestrictionssetoutintheEscrowArrangementsdonotapplyinthefollowingcircumstances:

• ifafullorpartialofferismadeundertheTakeoversCodeforSharesorifaschemeofarrangement(orotherarrangementhavingasubstantiallysimilareffecttoaTakeoverOffer)withrespecttotheSharesisproposed;

• TheD&GHawkesbyTrustmaygrantasecurityinterestoveralloranyoftheirSharesthataresubjecttotheEscrowArrangementsinfavourofaregisteredbankorothersimilarrecognisedlendinginstitution,providedthatthebankorinstitutionhasagreedtobeboundbytheEscrowArrangements;

• TheD&GHawkesbyTrustmaytransferanyoftheirSharesthataresubjecttotheEscrowArrangementstoaneworreplacementtrusteeofTheD&GHawkesbyTrust,providedthattheneworreplacementtrusteeaccedestotheEscrowArrangementsonthesameterms;and

• TheD&GHawkesbyTrustmaytransferanyoftheirSharesthataresubjecttotheEscrowArrangementstoanAssociatedPersonwiththepriorwrittenapprovalofthenon-interestedDirectors(asthattermisdefinedintheCompaniesAct),providedthattheAssociatedPersonaccedestotheEscrowArrangementsonthesametermsandagreestotransferbackanySharesiftheyceasetobeanAssociatedPersonofTheD&GHawkesbyTrust.

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Indemnity from Selling Shareholders

DuncanJohnHawkesbyandGretchenSarahHawkesby(astrusteesofTheD&GHawkesbyTrust)haveenteredintoadeedofindemnityinfavourofFliway(the Selling Shareholder Indemnity)dated5March2015.UndertheSellingShareholderIndemnity,theSellingShareholdersagreedtoindemnifyFliwayagainstanylossofearningsasaresultofathirdpartyclaimrelatingtoaneventthatoccurredbeforeoron8April2015.However,claimsagainstFliwaythatariseinthe

ordinarycourseofitsday-to-dayactivitiesasaresultofthelossordamagetogoodsorinventoryareexcludedfromtheSellingShareholderIndemnity.AclaimisalsoexcludedtotheextentFliwayrecoversproceedsunderitsinsurancepolicies.FliwaymustnotmakeaclaimundertheSellingShareholderIndemnityunlesstheamountoftheclaimexceeds$250,000.TheSellingShareholders’liabilityundertheSellingShareholderIndemnityislimitedtoanaggregatemaximumamountthatreducesovertimeonthebasissetoutbelow:

PERIOD IN WHICH NOTICE OF CLAIM IS GIVEN BY FLIWAY AGGREGATE MAXIMUM AMOUNT (NZ$)

Beforeoron8April2016 4,000,000

9April2016–8April2017 3,000,000

9April2017–8April2018 2,000,000

9April2018–8April2019 1,000,000

9April2019to8April2020 500,000

After4pmon8April2020 0

TheSellingShareholdershaveagreedtoobtainastandbyletterofcreditfromANZBankNewZealandLimitedinfavourofFliwaytosupporttheperformanceoftheirobligationsundertheSellingShareholderIndemnity.TheSellingShareholderIndemnitywillterminateifFliwayceasestobelistedontheNZXMainBoardasaresultof:

• apersonorgroupofassociatedpersonsexercisingcompulsoryacquisitionrightsandacquiringownershipofallofFliway’sShares;

• theimplementationofaschemeofarrangementunderwhichFliwayisnotthesurvivingentity;or

• anyothersimilarcontroltransaction.


SECTION SEVEN

AIGInsuranceNewZealandLimited Chairman

AppelloServicesLimited Chairman

BiomarineGroupLimited Chairman

BiomarineHoldingsLimited Director

BiomarineLimited Director

BiomarinePropertiesLimited Director

ElevationCapitalManagementLimited Chairman

LegendTerraceLimited Director

NZLocalGovernmentFundingAgencyLimited Chairman

PrecinctPropertiesNewZealandLimited Chairman

SaturnInvestNewZealandLimited Director

SaturnPortfolioManagementLimited Chairman

SouthwestTrusteesLimited Director

StoboGroupLimited Director

FLIWAY GROUP LIMITED

Craig Stobo

AcurityHealthGroupLimited Chairman

AKAInvestmentsLimited Director

DepartmentofCorrections(Audit&RiskCommittee) Chairman

IsaacAdvisoryServicesLimited Director

McGrathNicol&Partners Chairman

MurrayCapitalGeneralPartnerLimited Director

NewZealandCommunityTrust Chairman

NewZealandVaultLimited Director

OpusInternationalConsultantsLimited Director

OpusPartners’TrustLimited Director

RakaiaFinanceLimited Director

RakaiaFundInvestmentsLimited Director

ScalesCorporationLimited Director

SCLLimited Director

SelacsInsuranceLimited Director

WellingtonFreeAmbulance BoardMember

Alan Isaac

General Notice of Disclosure of Interest in the Interests Register

DetailsofDirectors’generaldisclosuresenteredintherelevantinterestregisterforFliwayoritssubsidiariesduringtheperiod1July2014to30June2015areasfollows:

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SECTION SEVEN

FiveRulesHoldingsLimited Director

FiveRulesHoldingsProperty1Limited Director

RELEVANT INTERESTS

SetoutbelowinthetablearetheFliwayordinarysharesinwhicheachDirectorofFliwayhadarelevantinterestasat30June2015.

USE OF COMPANY INFORMATION BY DIRECTORS

NonoticeswerereceivedfromDirectorspursuanttosection145oftheCompaniesAct1993tousecompanyinformation,receivedintheircapacityasDirectors,whichwouldotherwisenothavebeenavailabletothem.

Duncan Hawkesby

DIRECTOR NUMBER OF ORDINARY SHARES – BENEFICIAL NUMBER OF ORDINARY SHARES – NON-BENEFICIAL

CraigStobo 20,000 Nil

AlanIsaac 20,000 Nil

DuncanHawkesby 24,604,576 25,000

REMUNERATION

Directors Remuneration

TheDirectors’remunerationispaidintheformoffees.Additionalfeesarepayableinrespectofworkcarriedoutonboardcommittees.ThetotalpooloffeespayabletoDirectorsissubjecttoshareholderapproval.Thecurrentpool,seton5March2015,is$300,000.Thefollowingtotalremunerationandvalueofotherbenefitsreceivedbyeachnon-executiveDirectorwhoheldofficeasaDirectorofFliwayanditssubsidiariesduringtheperiod1July2014to30June2015wasasfollows:

CraigStobo $52,542

AlanIsaac $33,500

Inaddition,Directorsareentitledtobereimbursedforcostsassociatedwithcarryingouttheirduties.

Remuneration and other benefits from Fliway and its subsidiaries to Executive Directors

ThetotalremunerationandvalueofotherbenefitspaidtoDuncanHawkesbywas$123,049,duringtheperiod1July2014to30June2015.


SECTION SEVEN

AMOUNT OF REMUNERATION # EMPLOYEES

$100,000-$110,000 8

$110,001-$120,000 2

$120,001-$130,000 3

$130,001-$140,000 4

$140,001-$150,000 4

$150,001-$160,000 2

$160,001-$170,000 1

$180,001-$190,000 1

$240,001-$250,000 1

$290,001-$300,000 1

$420,001-$430,000 1

$480,001-$490,000 1

Executives’ Remunerations

ThenumberofemployeesoftheGroup(includingformeremployees),notbeingadirector,whoreceivedremunerationandotherbenefitsinexcessof$100,000fortheperiod1July2014to30June2015issetoutintheremunerationbandsdetailedbelow:

Auditor’s Fees

DeloittehascontinuedtoactasauditorofFliwayanditssubsidiaries.TheamountpayablebyFliwayanditssubsidiariestoDeloitteasauditfeesduringtheyearended30June2015was$91,000.TheamountoffeespayabletoDeloittefornon-auditworkduringtheyearended30June2015was$622,000.Afullbreakdownoffeespayabletotheauditorisprovidedonpage40.

SIZE OF HOLDING NUMBER OF SHAREHOLDERS NUMBER OF SHARES HELD % SHARES HELD

1-1,000 48 33,161 0.1

1,001-5,000 448 1,532,780 3.4

5,001-10,000 258 2,267,024 5.0

10,001-50,000 211 5,241,896 11.5

50,001-100,000 13 960,674 2.1

Greater than 100,000 27 35,402,375 77.9

SHAREHOLDER INFORMATION

Spread of Shares

SetoutbelowaredetailsofthespreadofshareholdersofFliwayasat1September2015:

Substantial Product Holders

SetoutbelowaredetailsofthesubstantialproductholdersofFliwayasadvisedbynoticetoFliwayon30June2015.

ThetotalnumberofFliwayGroupLimitedordinarysharesonissueat30June2015was45,437,910.

NAME NUMBER OF SHARES HELD CLASS OF SHARES

DuncanJohnHawkesby 24,629,576 Ordinary

GretchenSarahHawkesby 24,604,576 Ordinary

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20 Largest Shareholders

Setoutbelowaredetailsofthe20largestshareholdersofFliwayasat1September2015:

RANK INVESTOR NAME NUMBER OF SHARES HELD % SHARES HELD

1 DuncanJohnHawkesby&GretchenSarahHawkesby 24,604,576 54.15

2 BTNZUnitTrustNomineesLtd 1,479,723 3.26

3 FNZCustodiansLimited 1,298,068 2.86

4 CustodialServicesLimited 803,749 1.77

5 ForsythBarrCustodiansLimited 800,000 1.76

6 YongZhong 650,000 1.43

6 LiHuaChen 650,000 1.43


8 AceFinanceLimited 500,000 1.10

8 CogentNomineesLimited 500,000 1.10

9 ChinHwaWuYu 300,000 0.66

9 HsiaoPauYu&ChinHwaYu 300,000 0.66



12 JiangLin 250,000 0.55




16 InvestmentCustodialServicesLimited 162,000 0.36


18 ParadiseFinanceLimited 150,000 0.33


20 GeoffreyStewartWilkinson 140,000 0.31

OTHER INFORMATION

NZX Waivers

FliwaydidnotrelyuponanywaiversgrantedbyNZXLimitedduringtheyearended30June2015.

Exercise of NZX Disciplinary powers

NZXLimiteddidnotexerciseanyofitspowersunderListingRule5.4.2inrelationtoFliwayduringtheyearended30June2015.

Donations

FliwayGroupmade$2,500indonationsduringtheyearended30June2015.

CORPORATE GOVERNANCE

EIGHTSECTION

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CORPORATE GOVERNANCESECTION EIGHT

TheBoardofFliwayGroupLimited(‘Fliway’)iscommittedtoensuringthatthecompanymeetsbestpracticegovernanceprinciplesandmaintainsthehighestethicalstandards.TheBoardhasagreedtoregularlyreviewandassessFliway’sgovernancestructurestoensurethattheyareconsistentwithbestpractice.

FliwaycomplieswiththecorporategovernanceprinciplessetoutintheNZXCorporateGovernanceBestPracticeCode.

ThefullcontentofFliway’scorporategovernancepolicies,practicesandprocedurescanbefoundinthecompany’sCorporateGovernanceManual,whichisavailableinthe“CorporateGovernance”sectionofthecompany’swebsite,www.fliway.com.ThecodewasadoptedinApril2015andisreviewedannually.

RESPONSIBILITIES OF THE BOARD

TheBoardhasoverallresponsibilityforalldecisionmakingwithinFliway.InthisregardtheBoardisresponsibleforlayingsolidfoundationsforthedirection,managementandoversightofthecompanyinthesupportofitsobjectivetogenerategrowth,corporateprofitandshareholdergain.IthasdelegateddaytodaymanagementofthecompanytotheManagingDirector.

ThemainfunctionsoftheBoardinclude:

• Reviewandapprovethestrategic,businessandfinancialplanspreparedbymanagement.

• Monitorperformanceagainstthestrategic,businessandfinancialplans.

• Appoint,providecounseltoandreviewtheperformanceoftheManagingDirector.

• Approvemajorinvestmentsanddivestments.

• Ensureethicalbehaviourbythecompany,Boardandmanagementandemployees.

• Assessitsowneffectivenessincarryingoutitsfunctions.

TheBoardmonitorsthesemattersbyreceivingreportsandplansfrommanagement,maintaininganactiveprogrammeofdivisionalvisitsandthroughitsannualworkprogramme.

TheBoardusescommitteestoaddresscertainissuesthatrequiredetailedconsiderationbymembersoftheBoardwhohavespecialistknowledgeandexperience.TheBoardretainsultimateresponsibilityforthefunctionsofitscommitteesanddeterminestheirresponsibilities.

TheBoardhasastatutoryobligationtoreservetoitselfresponsibilityforcertainmatters.Italsodealsdirectlywithissuesrelatingtothecompany’smission,appointmentstotheBoard,strategy,businessandfinancialplans.

DetailsoftheBoard’srole,composition,responsibilities,operation,policiesandcommitteesareprovidedinFliway’sCorporateGovernanceManual,whichisavailableinthe“CorporateGovernance”sectionofthecompany’swebsite.

BOARD OF DIRECTORS

TheBoardisstructuredtoaddvalue.AprofileofeachoftheDirectorsisonpage19ofthisreport.Theprofilesincludeinformationontheyearofappointment,skills,experienceandbackgroundofeachDirector.

TherolesofChairmanandManagingDirectorareseparated.CraigStoboistheindependentChairmanofFliwayandAlanIsaacisanIndependentDirector.DuncanHawkesbyisManagingDirectorofFliwayandisassociatedwithTheD&GHawkesbyTrust,holderofa54.15%shareholdinginthecompany.

ThecurrentmixofskillsandexperienceisconsideredappropriatefortheresponsibilitiesandrequirementsofgoverningFliway.

Directorindependenceisconsideredonacasebycasebasisandismonitoredonanongoingbasis.

BOARD COMMITTEES

TheBoardhasestablishedanAuditandRiskCommittee,butbecauseoftheCompany’ssmallsize,theBoardactsastheNominationsandRemunerationCommitteescontemplatedbytheListingRules.

CORPORATE GOVERNANCE (CONTINUED)

SECTION EIGHT

Audit and Risk Management Committee

Thecommitteehasacharterthatsetsoutitsmandate.Thechartercanbefoundwithinthecompany’sCorporateGovernancemanual(Part3).TheprimaryfunctionsoftheAuditandRiskManagementCommitteeare:

• Tooverseethefinancialreportingprocesstoensurethattheinterestsofshareholdersareproperlyprotectedinrelationtofinancialreportingandinternalcontrol.

• ToprovidetheBoardwithanindependentassessmentofthecompany’sfinancialpositionandaccountingaffairs.

• Tokeepunderreviewtheeffectivenessofthecompany’sproceduresfortheidentification,assessmentandreportingofmaterialrisks.

MembersofthecommitteeareappointedbytheBoardandmustcompriseamajorityofindependentDirectors.ThecurrentmembersofthecommitteeareAlanIsaac(Chairman),CraigStoboandDuncanHawkesby.AlanIsaacisaformernationalChairmanofKPMG.TherolesofChairmanoftheBoardandtheChairmanoftheAuditandRiskCommitteeareseparated.

Attendance at Meetings

Duringtheyearended30June2015,theBoardheld7meetingsandtheAuditandRiskManagementCommitteeheldnomeetingsgiventheextensiveduediligencemeetingsinvolvedintheIPOprocess.ThefollowingtablesetsoutattendanceatmeetingsforallDirectors.

BOARD AUDIT AND RISK MANAGEMENT COMMITTEE

NAME ELIGIBLE TO ATTEND ATTENDED ELIGIBLE TO ATTEND ATTENDED

CraigStobo 7 7 - -

DuncanHawkesby 7 7 - -

AlanIsaac 6 6 - -

CODE OF ETHICS

Fliway’sBoardsetsaframeworkofethicalstandardsforthecompanyviaitsCode of Ethics,whichiscontainedinthecompany’sCorporateGovernancemanual.ThesestandardsareexpectedofDirectorsandemployeesofFliwayanditssubsidiaries.

TheCode of Ethicscoversawiderangeofareasincludingthefollowingstandardsofbehaviour;conflictsofinterest;properuseofcompanyinformationandassets;gifts;delegatedauthorities;compliancewithlawsandpolicies;reportingconcerns;andcorporateopportunities.

ThecodeissubjecttoannualreviewbytheBoard.

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SECTION EIGHT

AUDITOR INDEPENDENCE

Oversightofthecompany’sexternalauditarrangementstosafeguardtheintegrityoffinancialreportingistheresponsibilityoftheAuditandRiskManagementCommittee.FliwaymaintainsanExternal Auditor Independence Policytoensurethatauditindependenceismaintained,bothinfactandappearance.

Thepolicycoversthefollowingareas:

• Approvaloftheexternalauditor.

• Provisionofotherassuranceservicesbytheexternalauditor.

• Pre-approvalprocessfortheprovisionofotherassuranceservices.

• Externalauditorrotation.

• Hiringofstafffromtheexternalauditor.

• Relationshipsbetweentheexternalauditorandthecompany.

TheroleoftheexternalauditoristoauditthefinancialstatementsofthecompanyinaccordancewithgenerallyacceptedauditingstandardsinNewZealandandtoreportonitsfindingstotheBoardandshareholdersofthecompany.

Allservicesprovidedbythecompany’sexternalauditorareconsideredonacasebycasebasisbymanagementandtheAuditandRiskManagementCommitteetoensurethereisnoactualorperceivedthreattoindependenceinaccordancewiththepolicy.

Theeffectiveness,performanceandindependenceoftheexternalauditorsarereviewedbytheAuditandRiskManagementCommittee.

TheExternal Auditor Independence Policyiscontainedinthecompany’sCorporateGovernanceManualavailableinthe“CorporateGovernance”sectionofthecompany’swebsite.

BOARD PERFORMANCE EVALUATION

TheBoardisrequiredtoassessannuallyitseffectivenessincarryingoutitsfunctionsandresponsibilities.

TheChairmanoftheBoardistaskedwithensuringthatrigorous,formalprocessesareinplaceforevaluatingtheperformanceoftheBoard,boardcommitteesandindividualDirectors.

DIRECTORS’ REMUNERATION

Directors’remunerationlevelsaresetastobefairandreasonableinacompetitivemarketfortheskills,knowledgeandexperiencerequiredbythecompany.

TheBoarddeterminesthelevelofremunerationpaidtoindividualDirectorsfromtheshareholderapprovedpooloffees.RemunerationisreviewedannuallybytheBoard.FeesarereviewedagainstcomparablepeergroupsandtakeintoaccountthesizeandcomplexityofFliway’sbusiness.

FeespaidtoDirectorsaredisclosedonpage73.


SECTION EIGHT

MARKET DISCLOSURE AND SHAREHOLDER COMMUNICATIONS

Fliwayiscommittedtomakingtimelyandbalanceddisclosuresandrespectingtherightsofshareholders.Itachievesthesecommitments,andthepromotionofinvestorconfidence,byensuringthattradinginitssharestakesplaceinanefficient,competitiveandinformedmarket.

ThecompanyhasinplaceproceduresdesignedtoensuredisclosureismadeinatimelyandbalancedmannerandthatthereiscompliancewiththeNZXListingRulessuchthat:

• Allinvestorshaveequalandtimelyaccesstomaterialinformationconcerningthecompany,includingitsfinancialsituation,performance,ownershipandgovernance.

• Companyannouncementsarefactualandpresentedinaclearandbalancedway.

ThefullproceduresareoutlinedintheMarket Disclosure Policy,whichiscontainedinthecompany’sCorporateGovernanceManual.AccountabilityforcompliancewithdisclosureobligationsiswiththeManagingDirectorandChiefFinancialOfficer.Significantmarketannouncements,includingthepreliminaryannouncementofthehalfyearandfullyearresults,theaccountsforthoseperiodsandanyadviceofachangeinearningsforecastareapprovedbytheBoard.

DirectorsconsiderateachBoardmeetingwhetherthereisanymaterialinformationwhichshouldbedisclosedtothemarket.

Aprogrammeofclear,meaningful,timelyandeffectivecommunicationswithshareholdersiscentredaroundacomprehensivesetofinformationregardingFliway’soperationsandresultsbeingavailableonthecompany’swebsitetogetherwiththecontentofshareholderreports.

Shareholdermeetingswillbeheldatatimeandlocationtoencourageparticipationbyshareholders.AnnualmeetingswillbeheldinAuckland,reflectingtheheadofficelocationforthecompany,andtheshareholderbase.

TRADING BY COMPANY DIRECTORS AND OFFICERS

TheBoardhasimplementedformalprocedurestohandletradinginthecompany’ssecuritiesbyDirectors,employeesandadvisorsofthecompanywiththeapprovaloftheChiefFinancialOfficerbeingrequiredbeforetradingcanoccur.ThefullproceduresareoutlinedintheShare Trading Policy,whichiscontainedinthecompany’sCorporateGovernanceManual.

Thefundamentalruleinthepolicyisthatinsidertradingisprohibitedatalltimes.Therequirementsofthepolicyareseparatefrom,andinadditionto,thelegalprohibitionsoninsidertradinginNewZealand.

RISK MANAGEMENT

TheBoardisresponsibleforensuringthatkeybusinessandfinancialrisksareidentifiedandthatappropriatecontrolsandproceduresareinplacetoeffectivelymanagethoserisks.

TheBoardhasdelegatedresponsibilitytotheAuditandRiskManagementCommitteetoestablishandregularlyreviewthecompany’sriskmanagementframework.Aspartofthisframeworkthecommitteeistaskedwithidentifyingsituationsandcircumstancesinwhichthecompanymaybemateriallyatrisk,andinitiatingappropriateactionthroughtheBoardorManagingDirector.

Inmanagingthecompany’sbusinessrisks,theBoardapprovesandmonitorspolicyandproceduresinareassuchastreasurymanagement,financialperformance,taxationanddelegatedauthorities.

Fliwayhasinsurancepoliciesinplacecoveringmostareasofrisktoitsassetsandbusiness.

TheManagingDirectorandChiefFinancialOfficerhaveprovidedtheBoard,throughtheAuditandRiskManagementCommittee,withassurancesinconnectionwiththefinancialstatements,includingthattheyhavebeenfoundedonasoundsystemofinternalcontrolsandriskmanagementandthatthesystemisoperatingeffectivelyinallmaterialrespectsinrelationtofinancialreportingrisks.

FliwayiscurrentlyworkingtoalignitsHealth&Safetypoliciestoembedabestpracticecultureacrossthegroup.

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SECTION EIGHT

INDEPENDENT PROFESSIONAL ADVICE

WiththeapprovaloftheAuditandRiskManagementCommittee,Directorsareentitledtoseekindependentprofessionaladviceonanyissuerelatedtothefulfillmentofhisorherduties,atthecompany’sexpense.

INTERESTS REGISTER

TheBoardmaintainsanInterestsRegister.AnyDirectorwhoisinterestedinatransactionwiththecompanymustimmediatelydisclosetotheBoardthenature,monetaryvalueandextentoftheinterest.ADirectorwhoisinterestedinatransactionmayattendandparticipateataBoardmeetingatwhichthetransactionisdiscussed,butmaynotvoteinrespectofthetransaction.

ParticularsofentriesmadeintheInterestsRegisterfortheyearended30June2015areincludedintheStatutoryInformationsection.

DIRECTORS’ AND OFFICERS’ INSURANCE

Fliwayhasarranged,asprovidedforunderitsConstitutionandinaccordancewithSection162oftheCompaniesAct1993,policiesofDirectors’andOfficers’LiabilityInsurancewhich,withaDeedofIndemnity,enteredintowithallDirectors,ensuresthattotheextentpermittedbylaw,DirectorswillincurnomonetarylossasaresultofactionsundertakenbythemasDirectors.Certainactionsarespecificallyexcluded,forexample,theincurringofpenaltiesandfines,whichmaybeimposedinrespectofbreachesofthelaw.

DIVERSITY

Fliwayvaluesindividuals’differencesandseekstoensurethattheBoardandworkforcebothcomprisemembersreflectingdiversity.

Fliwayrecruits,promotesandcompensatesonthebasisofmerit,regardlessofgender,ethnicity,religion,age,nationality,sexualorientation,unionmembershiporpoliticalopinion.Fliwayrequiresthatpeopleintheworkplacearetreatedwithrespectinaccordancewiththecompany’sphilosophyofequalemploymentopportunities,withprotectionprovidedthroughanti-harassmentanddiscriminationpolicies.

ThegendercompositionofFliwayDirectorsandOfficersasat30June2015wasasfollows:

POSITION FEMALE MALE

2015

Director 0(0%) 3(100%)

SeniorManager 1(20%) 4(80%)

2014

Director 0(0%) 1(100%)

SeniorManager 0(0%) 5(100%)

DIRECTORYNINESECTION

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Board of Directors

CraigStobo(Chairman)AlanIsaacDuncanHawkesby

Audit and Risk Committee

AlanIsaac(Chairman)CraigStoboDuncanHawkesby

Auditors

DeloitteDeloitteCentre80QueenStreetAuckland1010

Bankers

ANZBankNewZealandLimitedANZCentre23-29AlbertStreetAuckland1141

Solicitors

BellGullyVeroCentre48ShortlandStreetAuckland1140

Registered Office

66WestneyRoadWestneyindustrialParkMangereNewZealand

Postal Address

POBox73-011AucklandInternationalAirportAuckland2150NewZealand

Telephone

+64-9-255-4600

Website

www.fliway.com

Share Registry

LinkMarketServicesLevel7,ZurichHouse21QueenStreetAuckland

DIRECTORYSECTION NINE

fliway group limited · fliway group for the year ended 30 june 2015. this report discusses the...

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