YEAR IN REVIEW Welcome The average working capital cycle of the sampled companies increased by 0.7 days in 2016. The increase was primarily driven by an increase in the Food & Beverage sector’s average inventory cycle, in particular wineries. Excluding Food & Beverage, the average working capital cycle reduced in 2016 by 1.4 days.
Welcome to the McGrathNicol New Zealand Working Capital Report 2016. This report profiles the working capital performance of a sample of 155 New Zealand domiciled companies (including 41 listed) across the Building Products, Construction & Engineering, Food & Beverage, Leisure, Mining & Resources, Retail, Transport & Distribution and Utilities sectors. The combined revenues of the companies included in this report is $95.7 billion. The information is based on the companies’ most recent results compared to the results for the same period in the two prior years. Overall working capital days increased by 0.7 days compared to 2015, primarily due to an increase in inventory days, partially offset by an increase in creditor days. However, there were varying results across companies within sectors. Across sectors the results were also mixed, with five of the eight sectors we analysed showing a decrease in working capital days. The following pages include our analysis for each sector, comparing the trends in New Zealand to those reported by McGrathNicol Australia. We focus on assisting businesses to increase cash flow by implementing practical and effective procedures to forecast, track, save and generate cash. We help businesses to improve their working capital cycles and give them the tools to sustain improvements. To discuss this report or how we can help your business, please contact a member of our team.
Contacts Andrew Grenfell* Conor McElhinney* Partner Partner +64 9 926 5115 +64 9 926 5105 [email protected] [email protected]
William Black Kare Johnstone Partner Partner +64 9 926 5106 +64 9 926 5125 [email protected] [email protected]
Leanne de Seymour Mark Brooks* Director Senior Manager +64 9 926 5104 +64 9 926 5114 [email protected] [email protected]
*Authors of this report Summary
Overall worsening in average DWC was primarily driven by higher inventory days, partially offset by higher creditor days. The Retail and Mining & Resources sectors saw the largest improvements (lower DWC) while Construction & Engineering, Food & Beverage and Leisure showed an increase in average DWC.
Average Days Working Capital (DWC) & Engineering, Food & Beverage and In Australia the DWC of sampled in 2016 was 52.5 days, representing Leisure sectors showed an increase in companies decreased 0.3 days to a 0.7 day increase from 2015. average DWC. 51.0 days, releasing c.A$370 million As shown in the table below, the Whilst there was an overall increase in net of cash. However, there were marked worsening in average DWC was primarily working capital days, underlying results differences on a sector-by-sector basis, driven by a 3.1 day increase in inventory were mixed with 53.6% of the profiled particularly Transport & Distribution, days (DIO), partially offset by a 0.5 companies reporting a decrease in DWC. which showed larger improvements in day increase in creditor days (DPO). Achieving an improvement in working Australia than New Zealand. Debtor days increased marginally, by capital is not only desirable to “keep up” Similarities included Construction & 0.1 days. This means that, on average, with competitors, but also presents an Engineering, Food & Beverage and management teams were taking longer opportunity for material competitive Leisure showing increases in DWC across to realise inventory but were able to advantage over much of the market. both countries (Media, not included as defer cash outflows to suppliers by either Within some sectors this opportunity was a sector in New Zealand due to too few negotiating more favourable extended even more marked with the gap between companies to sample, also increased in terms or simply deferring payments. the “best” and “worst” often 100+ days Australia). The biggest improvements were (five out of the eight categories). The following pages provide a breakdown achieved in the Retail and Mining & by sector relative to the prior years, Resources sectors. The Construction including comparisons to Australia.
Average DWC by sector
100
80 83.4
71.3 60 s y
D a 52.1 52.5 45.1 40 42.8
30.0 20 18.4 13.2 0 Building Construction & Food & Leisure Mining & Retail Transport & Utilities Full sample Products Engineering Beverage Resources Distribution
DWC at 30 June (or latest available)
2014 2015 2016
Summary sample Days 2014 2015 2016 Change DSO = Days sales outstanding (debtors) DSO 39.8 40.9 41.0 0.1 DIO = Days inventory outstanding (inventory held) DPO = Days purchases outstanding (creditors) DIO 64.0 62.7 65.7 3.1 DWC = Days working capital (net working capital) DPO 47.0 48.7 49.2 0.5 For details of the basis of preparation and calculations, see pages 10 and 11. DWC 51.6 51.8 52.5 0.7
New Zealand Working Capital Report 1 Building Products
Extending creditor days provided cash for increased debtor and inventory days.
“The improvement in working The Building Products sector benefited Inventory management is a differentiator capital, notwithstanding continued from an increase in construction activity in this sector and we noted that a number with the value of building work in place of companies provided commentary investment in residential land, increasing by 12.8% in the year ended around improving inventory management reflected the success of specific 30 June 2016, including a 14.9% increase (including Fletcher Building, Tenon and inventory and debtor management in residential building work. This resulted Methven), which was perhaps in response initiatives during the year.” in revenue for the sector increasing by to increased inventory levels in 2015. 3.7%, however EBITDA was down 2.7%, Overall, however, average inventory levels Fletcher Building Limited indicating competitive pressures on increased by 0.1 days to 88.9 days. Board of Directors pricing. With building consents at the The Building Products sector benefited FY16 Annual Report end of August 2016 at their highest level from extending creditors and presumably since mid-2004, continued revenue credit terms which, on average, resulted growth looks likely. in a 4.7 day improvement in DPO to 52.8 Building Products Businesses in this sector tend to require days. Days 2014 2015 2016 Change a high investment in working capital In Australia, like New Zealand, this (mainly inventory) to manage the DSO 44.1 43.3 45.2 1.9 sector is being boosted by high levels of demands of the large construction residential housing construction. Average DIO 87.4 88.8 88.9 0.1 companies and developers, and to ensure Australian DWC decreased by 0.2 days to DPO 45.9 48.2 52.8 4.7 immediate availability of inventory for 78.0 days, driven primarily by a reduction DWC 74.1 72.5 71.3 (1.2) a broad trade and DIY customer base. in DSO, partially offset by a decrease in Accordingly, of the sectors included in DPO. our research (excluding Alcoholic Beverages within Food & Beverages), Best & Worst Building Products had the highest Days Best Worst Spread average DWC in 2016 at 71.3 days. DSO 16.1 76.5 60.4 DIO 22.5 186.7 164.2 DPO 102.9 23.6 79.3 Selection of companies - Building Products
DWC 24.6 145.8 121.2 160
140
Fletcher Building Limited 120 129.1
Days 2014 2015 2016 Change 100
DSO 60.9 64.6 55.3 (9.2) 80 90.5
Days 77.0 DIO 79.0 83.9 79.8 (4.1) 71.3 60 65.4 DPO 49.7 50.7 50.9 0.2 40 48.5 DWC 82.8 89.6 77.0 (12.6) 20
0 Fletcher Building Tenon Methven Tasman Steel Steel & Tube Peer group Limited Limited Limited Holdings Holdings average Limited Limited
DWC at 30 June (or latest available)
2014 2015 2016
2 New Zealand Working Capital Report Construction & Engineering
One of three sectors to deteriorate: Reduced inventory days were insufficient to offset worsening debtor and creditor days as revenue contracted by 6.6%.
“Auckland was still strong, though The Construction & Engineering The sampled companies paid suppliers Christchurch work was expected to sector’s performance typifies the “two in nearly half the time they collected track” economic conditions prevalent from debtors. This metric means billing taper off as the Stronger Christchurch in New Zealand in 2015 and 2016: and collections processes must be very Infrastructure Rebuild Team (Scirt) Strength in Auckland and Christchurch efficient or market participants can work winds down, and last year’s slump on the back of increased infrastructure come under funding pressure. Liquidity in dairy prices was still weighing on and residential building (primarily due can often be an issue, particularly regional work.” to record levels of immigration and in a growth environment. In the last the earthquake rebuild respectively, year a number of residential home with the latter now appearing to have construction companies have collapsed Fulton Hogan Limited peaked), and weakness in the remainder including Stonewood Homes, Goodlife Nick Miller, Managing Director of the country, particularly rural areas Homes and H&R Garlick. Media comments on FY16 results where low dairy prices have impacted In Australia, Construction & Engineering spending. DWC also increased, but by only 1.1 In 2016, DWC increased by 3.6 days days to 67.3 days. As in 2015, Australia to 52.1 days, driven by a 2.2 day increase experienced relatively tough trading in DSO and 1.9 day decrease in DPO, conditions, impacted primarily by low partially offset by a 0.5 day decrease commodity prices, and consequent in DIO. reduced demand for mining, civil and Construction has been described as consulting services. This was offset a “challenging environment” where by increased work on infrastructure multi-national rivals have been attracted projects. However, revenue for the to New Zealand and Australia, whose sector in Australia contracted by 11.1% Construction & Engineering governments have provided a “certainty from 2015. Days 2014 2015 2016 Change of pipeline for infrastructure spend” at a DSO 51.9 59.9 62.1 2.2 time when infrastructure investment in DIO 17.7 19.3 18.9 (0.5) Europe has subsided. DPO 28.1 36.9 35.0 (1.9) DWC 43.8 48.5 52.1 3.6 Selection of companies - Construction & Engineering
100 Best & Worst 80 Days Best Worst Spread
DSO 9.3 116.2 106.9 60 68.6 57.4 DIO - 55.4 55.4 52.1 40 DPO 77.1 5.7 71.4 39.8 30.9 DWC (17.4) 115.9 133.3 Days 20 25.9
0 Fulton Hogan Limited (20) Days 2014 2015 2016 Change Fulton Hogan Transfield Downer Opus GEA Process Peer group (40) DSO 47.2 46.3 47.1 0.8 Limited Services New Zealand International Engineering average DIO 22.4 22.5 29.3 6.9 New Zealand Limited Consultants Limited Limited Limited DPO 50.3 55.6 64.9 9.3
DWC 28.6 24.8 25.9 1.1 DWC at 30 June (or latest available)
2014 2015 2016
New Zealand Working Capital Report 3 Food & Beverage
Overall increase in DWC driven by increased inventory days, primarily from viticulture.
“Working capital throughout the year We have split this sector into two sub- supplier terms from 30 to 90 days in late was driven lower by our focus across sectors: Alcoholic Beverages and Food 2015 (DPO increased 22.8 days). & Non-Alcoholic Beverages. This was all areas, including strong sales and Alcoholic Beverages’ revenue was flat necessary as Alcoholic Beverages have supply chain efficiency, which reduced in 2016, however margins and EBITDA a much longer DIO as products typically improved by 3.8% and 17.6% respectively. the amount of inventory we carry need to ferment or mature. With vineyard yields improving back to throughout the year.” Dairy is the single largest contributor similar levels to 2014 (and the consequent by revenue to the Food & Non-Alcoholic fair value gain adjustments to cost of Fonterra Limited Beverages sub-sector, contributing sales on harvest), DIO increased markedly FY16 Annual Report 57.7% of revenue. Depressed global dairy for wineries (as cost of sales is the prices and volumes contributed to a fall denominator in the formula). With five out in dairy revenue of 8.1%, which drove the of nine entities in the Alcoholic Beverages Food & Beverage overall Food & Non-Alcoholic Beverage sub-sector being wineries, this had a Days 2014 2015 2016 Change sector revenue down by 2.7% from marked effect on DIO as shown in the $35.1 billion in 2015 to $34.2 billion in graph below, with a 9.5 day deterioration. DSO 46.3 45.9 46.7 0.8 2016. Excluding Dairy, revenue for the Pleasingly, despite a decline in revenue DIO 99.0 91.9 106.5 14.6 remaining companies in the sub-sector (primarily driven by dairy), EBITDA for the DPO 47.7 46.6 48.2 1.6 increased by 5.8%. overall sector increased by 31.8% from DWC 80.0 78.1 83.4 5.3 Fonterra, New Zealand’s largest $2.4 billion to $3.2 billion. corporate, placed renewed focus on In Australia, Food & Beverage DWC working capital efficiencies, which was increased by 5.4 days to 81.4 days. Like Best & Worst achieved with improvements across New Zealand, this was primarily due to the board, with nearly $2 billion of cash Days Best Worst Spread FOOD BEV an increase in DIO. Australian companies released as a consequence. This was DSO 7.1 85.7 78.6 sampled also improved profitability, with partially achieved through its controversial EBITDA up 24%. DIO 6.6 659.8 653.2 unilateral extension of its non-farmer DPO 125.5 5.9 119.5 DWC (20.6) 432.4 453.0 Selection of companies - Food & Beverage
250 Fonterra Co-Operative Group Limited
Days 2014 2015 2016 Change 200 218.4 DSO 29.4 39.4 27.6 (11.8) 182.9 DIO 68.2 71.2 64.6 (6.6) 150 DPO 57.4 41.1 63.9 22.8 Days DWC 39.0 64.1 28.1 (36.0) 100
83.4 66.4 50 57.8
28.1 0 Delegat Group Alcoholic Fonterra Synlait Milk Food & Peer group Limited Beverages Co-Operative Limited Non-Alcoholic average Group Limited Beverages
DWC at 30 June (or latest available)
2014 2015 2016
4 New Zealand Working Capital Report Leisure
Worsening working capital days were offset by improved revenue and profits driven by record tourism numbers.
“Continued strong growth at The Leisure sector is directly linked to customers on shorter terms than they SKYCITY Auckland, with the property consumer confidence, discretionary paid their suppliers. spending and inbound tourism. benefiting from recent investment, Average DWC across the sample supportive external factors and the Tourism especially has been very positive, increased by 4.9 days to 13.2 days in 2016. with international visitor arrivals into New This was driven by deteriorations in all new gaming concessions.” Zealand hitting a record 3.4 million in the three measures: DSO by 4.8 days, DIO by twelve months ended 30 September 1.5 days and DPO by 0.6 days. Whilst there Sky City Entertainment Group Limited 2016, up 11.4% on the corresponding was an overall deterioration, six out of the Chris Moller, Chairman and John prior period. This is reflected in eleven companies sampled in this sector Mortensen, Interim CEO accommodation and food and beverage managed to reduce their DWC. FY16 Annual Report retailers increasing their annual revenue In Australia, DWC increased by a similar by 8.2% and 7.4% respectively. amount (4.8 days). Like New Zealand, Reflecting the excellent trading the Leisure sector in Australia has seen Leisure environment, total revenue and EBITDA improvements in performance with Days 2014 2015 2016 Change for the companies sampled in the Leisure revenue and EBITDA increasing by 7.3% DSO 17.2 24.3 29.1 4.8 sector increased by 8.9% and 14.8% and 9.5% respectively. Our Australian DIO 15.7 21.7 23.2 1.5 respectively. colleagues also reported that 70% of sampled companies undertook merger DPO 58.5 83.3 82.7 (0.6) The companies sampled operate a range and acquisition activities in the period, DWC 5.1 8.4 13.2 4.9 of business models, however generally average DWC is lower than other sectors. which was not observed in our sampled MININGSix out of the eleven companies sampled New Zealand companies. in this sector collected from their Best & Worst Days Best Worst Spread DSO 4.6 79.3 74.7 Selection of companies - Leisure
DIO - 100.5 100.5 30 DPO 365.0 1.4 363.6 25 24.6 DWC (16.7) 39.3 56.0 20
15 16.0 13.2 10 Sky City Entertainment Group Limited 8.9 5 7.5 Days 2014 2015 2016 Change Days 0 DSO 8.4 6.6 13.4 6.7 (5)
DIO 8.3 8.1 7.2 (0.9) (10) DPO 23.1 19.4 22.1 2.7 (15) (16.7) DWC 2.1 1.9 7.5 5.5 (20)
Sky City Tourism Skyline Millennium & Flight Centre Peer group Entertainment Holdings Enterprises Copthorne Hotels New Zealand average Group Limited Limited Limited New Zealand Limited Limited
DWC at 30 June (or latest available)
2014 2015 2016
New Zealand Working Capital Report 5 Mining & Resources
Lower DSO and DIO drove a reduction in average DWC, with low commodity prices reducing profitability.
“It’s my pleasure to report on a year The overall performance of companies 62.6 days. Following the sale of its stake that has seen the company make in this sector has been worse than 2015, in the Kupe Field to Genesis Energy in primarily due to low commodity prices: November 2016, New Zealand Oil & considerable progress as it moved EBITDA for the sampled companies in Gas will have reduced operations going through a sharp downturn in oil prices the sector was down 31% from $866 forward. and enters the next market cycle with million to $597 million. Consequently, In Australia, Mining & Resources costs reduced, significantly positive the continued focus of a number of DWC decreased by 5.9 days to 45.8 cashflows.” companies has been on cost reduction days. This was primarily due to 1.4 initiatives and production efficiencies. day and 3.6 day improvements in New Zealand Oil & Gas Limited The average DWC of the sampled DSO and DPO respectively, partially Roger Finlay, Chairman companies reduced 7.2 days to 42.8 offset by an increase in DIO. Despite FY16 Annual Report days in 2016, driven by 14.2 and 5.0 day overall DIO increasing, only 45% of reductions in DSO and DIO respectively. companies reported an increase with This was offset by a fall in average DPO various commentary noting increased of 15.6 days to 40.3 days (sampled stockpiling (because of reduced sales), companiesMINING paid their suppliers earlier), accelerated mining (to take advantage continuing the trend from 2014 to 2015. of the current cost curve), and newly identified/acquired or better quality Six of the nine sampled companies reserves. Following a sustained period reduced their DWC in 2016. of low commodity prices, the sampled New Zealand Oil & Gas achieved a companies experienced falls in revenue reduction in DWC of 16.2 days primarily and EBITDA of 19.3% and 30.3% due to a reduction in DSO of 49.9 days, Mining & Resources respectively. partially offset by a decrease in DPO of Days 2014 2015 2016 Change DSO 60.4 55.2 41.1 (14.2) Selection of companies - Mining & Resources DIO 44.0 45.3 40.4 (5.0) DPO 70.1 55.9 40.3 (15.6) 100 DWC 44.7 50.0 42.8 (7.2) 95.6 80 60 58.1 40 53.3 Best & Worst Days 42.8 20 26.1 Days Best Worst Spread 0 DSO 7.5 87.6 80.1 (14.5) (20) DIO 9.1 77.1 68.0 New Zealand OMV New Zealand Methanex Oceana Gold Peer group DPO 77.9 11.6 66.3 Oil & Gas New Zealand Aluminium New Zealand New Zealand average Limited Limited Smelters Limited Limited Limited DWC (14.5) 95.6 110.2 DWC at 30 June (or latest available)
2014 2015 2016 New Zealand Oil & Gas Limited Days 2014 2015 2016 Change DSO 90.6 88.6 38.6 (49.9) DIO 53.0 42.2 34.4 (7.7) DPO 137.4 112.4 49.8 (62.6) DWC 51.7 42.3 26.1 (16.2)
6 New Zealand Working Capital Report Retail
DWC decreased by 4.5 days in a growing retail environment. However, competition is fierce, with a number of failures in 2016.
“Inventory levels decreased by Improved consumer confidence helped Inventory is usually the most significant $17.9m (15.8%), and by 14.1% on a underpin (seasonally adjusted) core working capital item on a retailer’s industries retail growth of 5.2% in 2016, balance sheet. Effective inventory per store basis (constant exchange outstripping GDP growth of 2.8%. This management is a key success factor in rates). Demand planning software was reflected in the overall performance the sector. Movements in DIO are a key implemented during FY2014 has of the companies in our sample: sales point of differentiation in 2016 with 68% enabled a reduction in inventory and EBITDA increased 5.1% and 7.3% of our sample improving DIO metrics. In a levels and reduced working capital respectively. number of cases this was directly tied to a requirements. Clearance stock units Despite a growing overall market, retail broader business strategy. continue to be closely managed and remains a very competitive industry. New Zealand retailers continued to delay are an ongoing focus.” This is illustrated by recent failures such payments to suppliers, or negotiate as Pumpkin Patch, Valleygirl/TEMT, Dick better terms, as DPO increased again Smith Electronics, Wild Pair, Identity, in 2016 to 45.4 days. This is contrary to Kathmandu Holdings Limited Nicholas Jermyn, Jean Jones and Laura trends in Australia, where lower DIO has Xavier Simonet, Managing Director and Ashley. Competition for local retailers is been used to reduce DPO. Chief Executive Officer expected to increase with the entrance of FY16 Annual Report In Australia, Retail DWC also decreased, overseas retailers such as Top Shop, H&M but by only 0.8 days to 49.5 days. Like and Zara, and the continued strength of New Zealand, DIO was the primary overseas online retailers (due partially to contributor to the improvement in DWC, high NZD and no GST on imports under decreasing by 6.9 days to 105.0 days, $400). with inventory management continuing The average DWC for the sampled to be the key differentiator. Revenue companies decreased by 4.5 days in in Australia also increased, by 3.6%. 2016 to 45.1 days, continuing the trend However, EBITDA decreased by 9.9%, from last year. This was driven primarily by indicating continued margin pressure. Retail a 5.5 day decrease in DIO but also by 0.4 Days 2014 2015 2016 Change day and 2.1 day improvements in DSO 21.0 19.6 19.2 (0.4) DSO and DPO respectively. DIO 109.3 109.5 104.0 (5.5) DPO 40.0 43.3 45.4 2.1 Selection of companies - Retail DWC 52.4 49.6 45.1 (4.5) 100 90 Best & Worst 80 70 Days Best Worst Spread 71.2 72.9 60 DSO - 137.7 137.7 50
Days 49.7 DIO 4.1 369.8 365.7 40 45.1 DPO 169.8 21.3 148.5 30 20 29.0 DWC (9.6) 127.9 137.5 10 0 6.5 Kathmandu Coles Group New Bunnings The Warehouse Briscoe Group Peer group Holdings Zealand Holdings Limited Group Limited Limited average Kathmandu Holdings Limited Limited Limited Days 2014 2015 2016 Change DWC at 30 June (or latest available) DSO 0.2 0.1 0.1 0.0 2014 2015 2016 DIO 261.7 262.5 218.8 (43.7) DPO 30.0 33.0 28.7 (4.3) DWC 85.6 88.4 71.2 (17.2)
New Zealand Working Capital Report 7 Transport & Distribution
Working capital days improved primarily due to increased DPO.
“The markets producing the two most Revenue for companies sampled in the collection timeframes as, on average, significant commodities that we carry Transport & Distribution sector in 2016 customer payment terms are longer than increased by 5.6%, however EBITDA only the terms offered by their suppliers. This - coal and milk – both faced challenging increased by 0.6%, perhaps indicating can be a tough industry with critical and conditions during the reporting period. pricing pressures. usually inflexible suppliers (fuel, contract Their lower volumes significantly Average DWC across our sample labour and warehousing) on one hand, impacted our revenue for bulk freight, decreased by 0.7 days to 30.0 days, and clients with high levels of bargaining resulting in revenue that was $13 million driven by a 1.6 day improvement in DPO, power (major retail, primary production) lower than the same period last year. partially offset by a 0.4 day increase in on the other. DIO. The sector also requires a high degree of Partially offsetting this was strong The outlook for the sector continues to up-front capex. Long term performance inbound tourism which contributed to be mixed as lower global prices for dairy can suffer if regular capex and increased volumes for both Interislander products continue to reduce volumes, maintenance programmes are deferred and Scenic Journeys. Interislander offset by strong demand for other export to boost short term cash flow. delivered a strong summer holiday cargoes, including meat and fruit. Import In Australia, Transport & Distribution season with the highest number of volumes are forecast to remain strong, DWC also decreased, but more markedly, passenger vehicles carried since backed by record net migration and by 5.7 days to 40.5 days. Revenue for tourism. the sampled Australian companies - headings competition began in 2003, and the TRANSPORT contracted by 1.7%, and all but two of highest-ever December revenue.” At a more macro level, Transport & Distribution is a sector where most the companies had lower EBITDA. The KiwiRail Holdings Limited operators require diligent focus on decline in activity was a flow on effect Peter Reidy, CEO managing billing and collections from the Construction & Engineering and FY16 Interim Report processes to minimise slippage in debtor Mining & Resources sectors.
Transport & Distribution Selection of companies - Transport & Distribution Days 2014 2015 2016 Change DSO 46.5 47.7 47.6 (0.1) 60 DIO 4.6 4.3 4.7 0.4 50
DPO 23.8 27.5 29.1 1.6 40 43.9 DWC 32.4 30.6 30.0 (0.7) 40.4 30 Days 30.0 20
Best & Worst 10 14.0 Days Best Worst Spread 4.9 0 3.7 DSO 29.6 68.8 39.2 KiwiRail DHL Supply Chain Freightways Mainfreight Toll Group Peer group DIO - 40.1 40.1 Holdings New Zealand Limited Limited New Zealand average Limited Limited Limited DPO 59.8 9.4 50.4 DWC at 30 June (or latest available) DWC 3.7 58.7 55.0 2014 2015 2016
KiwiRail Holdings Limited Days 2014 2015 2016 Change DSO 46.0 26.4 29.6 3.2 DIO 35.9 36.3 40.1 3.8 DPO 22.4 16.3 22.9 6.6 DWC 56.9 42.2 43.9 1.6
8 New Zealand Working Capital Report Utilities
Average DWC improved in what continues to be a highly competitive market.
“The positive cash flow from the Key themes for the Utilities sector in Average DWC across our sample increased use of stored gas rather 2016 included the continued high levels decreased by 1.8 days to 18.4 days, of competition and static prices despite driven by improvements in all three than contract gas in FY16 was offset reduced generation (on static demand) categories: DSO (0.1 days), DIO by unfavourable other working in the electricity market. (0.1 days) and DPO (2.0 days). capital movements.” As in 2015, there is continued Despite revenue for the sampled uncertainty about the future of two companies decreasing by 3.0%, EBITDA Contact Energy Limited major components of the New Zealand increased by 1.1%, indicating cost FY16 Results Presentation electricity market. Firstly, Huntly’s reductions. remaining coal power turbines (the In Australia, Utilities DWC also largest thermal generator in the decreased, by 1.3 days to 33.6 days, Utilities country), owned by Genesis Energy, but primarily driven by improved DSO. Days 2014 2015 2016 Change will close in the medium term unless Key themes in Australia include high market conditions change markedly. And DSO 34.8 37.7 37.6 (0.1) levels of competition in retail markets, secondly, Tiwai Point’s (New Zealand’s DIO 21.8 20.6 20.6 (0.1) margin pressure, regulatory scrutiny only aluminium smelter that uses c.15% and advancements in technology. Cost DPO 68.7 61.2 63.2 2.0 of national electricity generation) future savings initiatives, most of which were DWC 16.4 20.2 18.4 (1.8) remains uncertain given low aluminium first flagged in 2015, resulted in EBITDA commodity prices relative to the costs improving by 13.4% for the sampled of input in New Zealand (primarily companies. electricity). Best & Worst *The New Zealand Refining Company Days Best Worst Spread The threat of disruption to the electricity Limited was excluded from the analysis market, through residential solar DSO 10.4 73.5 63.2 because of its fluctuating sales and cost panel and battery installations, was a of sales (primarily due to market prices), DIO - 111.6 111.6 consistent theme across annual reports. resulting in fluctuations in DWC not DPO 131.0 29.7 101.3 So too was the opportunity provided by indicative of underlying working capital DWC (14.5) 66.6 81.0 increasing uptake of electric vehicles. trends.
UTILITIES Selection of companies - Utilities Contact Energy Limited 25 Days 2014 2015 2016 Change DSO 43.6 35.0 33.6 (1.4) 20 DIO 10.6 12.2 12.9 0.7 19.6 20.2 18.4 DPO 47.7 40.9 49.8 8.9 15 DWC 15.4 12.6 5.7 (6.8)
10 11.6 Days 5 5.7
0 (1.7)
(5)
(10) Contact Energy Mercury Trustpower Genesis Energy Meridian Peer group Limited New Zealand Limited Limited Energy Limited average Limited
DWC at 30 June (or latest available)
2014 2015 2016
New Zealand Working Capital Report 9 Basis of preparation
Data used in this survey has been Peer group sample GICS industries / sub-industries included sourced from the S&P Capital IQ platform and annual accounts. Building Products Building products Construction materials Household durables Peer group classification Paper and forest products The Building Products, Construction & Steel Engineering, Food & Beverage, Leisure, Trading companies and distributors Mining & Resources, Retail, Transport Construction & Engineering Aerospace and defence & Distribution and Utilities peer group Construction and engineering samples underpinning this report have Electrical equipment been selected according to the Global Machinery Industry Classification Standards Trading companies and distributors (“GICS”) listed in the table opposite. Food & Beverage Beverages Accounting periods Food and staples retailing Food products Financial information in this survey Personal products draws on the most recently published accounts as at 31 October 2016 Leisure Hotels, resorts and cruise lines (i.e. the most recently published Movies and entertainment financial information prior to this Casinos and gaming date has been used). Road and rail Mining & Resources Metals and mining Oil, gas and consumable fuels
Retail Food and staples retailing Multiline retail Restaurants Specialty retail Trading companies and distributors Transport & Distribution Air freight and logistics Road and rail Transportation infrastructure Utilities Construction and engineering Electric utilities Independent power and renewable electricity producers Multi-utilities Water utilities
The full peer group samples are included on pages 12 - 16.
Sectors summary (Revenue NZ$b) Building Products 130 Construction & Engineering 110 Food & Beverage 90 Leisure
C 37.1 70 12.5 Mining & Resources DW 50 6.6 4.1 15.1 Retail 30 4.8 13.8 Transport & Distribution 10 2.0 Utilities 0 (-10)
1.0x 1.5x 2.0x 2.5x 3.0x 3.5x 4.0x
Debt/EBITDA multiple 10 New Zealand Working Capital Report Basis of preparation
Source data Days purchases outstanding Days Purchases Outstanding (“DPO”) This publication contains high level Creditors include GST, whilst cost DPO is the number of days’ worth financial information sourced from of sales do not. To the extent that a of purchases represented by the the S&P Capital IQ database of the company acquires inventory or input outstanding creditors at the relevant latest available financial statements of services in New Zealand (or another calculation date. The calculation used in New Zealand domiciled entities. The jurisdiction that levies a consumption this survey is: information contained herein is based tax), results will vary. In addition, to on sources we believe reliable, but we the extent that there has been an Creditors do not guarantee its accuracy, and it accounting adjustment that has affected DPO = x 365 should be understood to be general a company’s sales, purchases, debtors, Cost of Sales information only. The information is inventory or creditors, this has not not intended to be taken as advice with been isolated in the analysis and will be A low DPO metric indicates that it takes respect to any specific organisation reflected as a change in working capital. fewer days for a company to pay its or situation and cannot be relied upon trade creditors. A high DPO is desirable as such. McGrathNicol accepts no from a cash flow and working capital responsibility for errors or omissions Calculation methodology management perspective, but can be an in financial information underpinning The working capital metrics referred to indicator of tight liquidity and the cause this publication, nor the loss of any in this report have been calculated, as of strained supplier relationships. person arising from use of or reliance follows: on information herein. All readers of Days Working Capital Outstanding this publication must make their own Days Sales Outstanding (“DSO”) (“DWC”) enquires or obtain professional advice in relation to any issue or matter referred DSO is the number of days’ worth of DWC is a relative measure of total to in this publication. sales represented by the outstanding working capital tied up in a company debtors at the relevant calculation date. relative to sales. The calculation used The calculation used in this survey is: in this survey is: Limitations Debtors McGrathNicol acknowledges that at the Debtors + Inventory DSO = x 365 level of detail applied, the analysis has - Creditors Sales limitations, some of which are noted DWC = x 365 Sales below. For this reason, the analysis A low DSO metric is desirable and focuses on performance relative to the indicates that it takes a relatively low A low DWC metric is favourable as it prior period, rather than in absolute number of days for a company to terms against peers. indicates a low level of working capital collect debtors. relative to the size of the business.
Days sales outstanding Days Inventory Outstanding (“DIO”) Debtors include GST, whilst sales do not. DIO is the number of days’ worth of To the extent that a company makes purchases represented by the inventory more or less of its sales in New Zealand balances at the relevant calculation date. (or another jurisdiction that levies a The calculation used in this survey is: consumption tax), results will vary. Inventory DIO = x 365 Days inventory outstanding Cost of Sales To the extent that a company has more or less labour included in its cost of sales, A low DIO metric is desirable and results will vary indicates a relatively high turnover of inventory.
New Zealand Working Capital Report 11 Findings
Building Products DSO DIO DPO DWC Company name 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 Alesco New Zealand Limited 45.5 43.2 42.4 59.9 81.9 70.3 55.4 49.6 53.3 48.4 61.5 51.9 Assa Abloy New Zealand Limited 52.1 48.4 76.5 56.9 54.5 58.9 26.4 32.0 38.7 71.6 63.0 89.5 Atlas Resources Limited 44.1 39.3 41.6 32.4 27.2 22.5 68.8 62.2 66.7 29.7 25.6 24.6 Avon Pacific Holdings Limited 38.2 26.4 38.0 112.4 113.8 113.0 34.5 48.5 55.6 101.2 78.4 83.1 CSR Building Products (NZ) Limited 47.0 60.5 65.2 109.5 97.9 82.3 54.8 56.5 58.1 83.9 90.8 82.2 Daiken New Zealand Limited 23.5 21.7 16.1 51.4 48.7 53.2 21.3 25.6 23.9 50.5 42.6 38.6 Dongwha New Zealand Limited 15.5 24.0 25.1 57.8 55.7 56.7 21.9 25.6 23.6 44.6 47.6 49.0 Fernhoff Limited 41.1 30.9 32.7 134.5 122.0 119.2 86.8 106.4 102.9 57.1 35.8 38.0 Fletcher Building Limited 60.9 64.6 55.3 79.0 83.9 79.8 49.7 50.7 50.9 82.8 89.6 77.0 Methven Limited 59.3 58.0 62.8 127.6 156.2 114.1 75.0 65.0 65.9 89.5 108.0 90.5 Metro Performance Glass Limited 52.1 52.1 50.3 58.9 48.5 71.2 33.6 46.4 60.8 65.1 53.1 55.3 New Zealand Investment Holdings Limited 43.8 37.0 40.1 93.0 98.8 82.4 36.5 40.5 38.3 79.0 73.3 68.2 Rheem New Zealand Limited 46.3 47.1 40.1 110.3 95.6 106.5 49.0 42.8 48.4 84.7 79.4 75.6 S&T Stainless Limited 57.5 65.0 68.9 123.3 140.4 186.7 53.0 58.3 81.0 115.0 128.4 145.8 Steel & Tube Holdings Limited 72.1 61.0 60.9 118.6 105.8 120.4 35.5 24.2 30.7 137.6 124.1 129.1 Tasman Steel Holdings Limited 24.2 32.0 26.3 79.3 82.2 92.1 53.8 57.4 70.6 48.1 54.5 48.5 Tenon Limited 26.7 25.2 26.3 80.4 96.0 81.8 24.0 27.2 28.8 70.0 77.3 65.4 Peer group average 44.1 43.3 45.2 87.4 88.8 88.9 45.9 48.2 52.8 74.1 72.5 71.3
Construction & Engineering DSO DIO DPO DWC Company name 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 ABB Limited 42.9 50.8 47.8 67.1 61.7 51.5 31.7 40.2 36.2 69.8 67.1 58.9 Aurecon New Zealand Limited 70.1 92.1 93.5 17.6 12.0 12.6 3.6 3.7 7.3 79.3 97.6 97.1 Babcock (NZ) Limited 51.2 62.9 9.3 3.2 3.4 2.4 48.3 42.1 77.1 32.5 46.0 (17.4) BCS Group Limited - 75.7 50.8 - 5.9 9.2 - 78.1 64.6 - 30.4 17.6 Calibre Consulting Limited 49.3 54.0 54.4 4.0 9.2 5.6 7.8 17.0 8.0 46.0 48.2 52.5 Delta Utility Services Limited 105.0 92.5 97.6 63.5 49.5 55.4 36.6 34.1 34.3 115.6 99.3 106.6 Downer New Zealand Limited 45.2 53.6 54.7 6.5 5.9 5.4 24.4 28.0 31.5 29.4 33.8 30.9 Electrix Limited - 57.3 73.5 - 9.0 10.5 - 78.4 45.7 - 25.1 57.5 Fulton Hogan Limited 47.2 46.3 47.1 22.4 22.5 29.3 50.3 55.6 64.9 28.6 24.8 25.9 GEA Process Engineering Limited 44.1 27.8 56.3 18.0 37.1 33.2 102.1 86.0 52.8 (22.4) (13.1) 39.8 Opus International Consultants Limited 63.4 48.1 43.6 34.6 32.8 35.1 7.6 11.6 5.7 86.3 66.4 68.6 RCR Energy Limited 65.6 53.7 116.2 31.0 29.1 26.9 11.5 21.0 27.2 79.4 59.9 115.9 RCR Infrastructure (New Zealand) Limited 57.2 53.4 72.6 2.9 3.8 4.0 33.3 24.4 32.9 31.2 35.2 47.5 Transfield Services (New Zealand) Limited 77.0 88.9 79.1 2.9 2.4 2.2 54.7 30.8 27.4 35.4 66.1 57.4 UGL (NZ) Limited 71.7 64.3 53.5 10.2 25.0 18.9 10.9 27.7 30.2 71.1 61.9 42.1 Worleyparsons New Zealand Limited 40.2 36.9 43.9 - - - 26.1 12.2 13.7 18.7 27.4 33.2 Peer group average 51.9 59.9 62.1 17.7 19.3 18.9 28.1 36.9 35.0 43.8 48.5 52.1
12 New Zealand Working Capital Report Findings
Food & Beverage DSO DIO DPO DWC Company name 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 DB Breweries Limited 82.0 82.3 85.6 51.9 43.5 43.7 97.6 88.0 105.9 55.3 56.1 49.6 Delegat Group Limited 54.2 57.9 54.7 511.2 381.9 458.4 60.4 52.4 57.9 237.8 211.7 218.4 Foley Family Wines Limited 80.9 80.6 78.8 617.2 417.1 659.8 89.4 46.6 34.1 412.8 346.8 432.4 Independent Liquor (NZ) Limited 52.4 42.8 51.3 58.5 42.1 31.7 25.5 18.0 15.8 78.7 63.0 64.1 Lion - Beer, Spirits & Wine (NZ) Limited 59.0 65.8 73.6 180.1 212.4 218.8 44.5 82.6 82.7 142.5 146.1 157.6 Moa Group Limited 127.8 83.7 65.4 184.9 114.3 115.5 146.6 76.7 88.9 159.5 114.4 84.2 Nobilo Holdings 52.0 59.8 85.7 154.3 168.7 196.5 17.7 16.9 22.8 138.7 150.5 191.2 Pernod Ricard Winemakers New Zealand 51.8 48.7 53.4 354.4 424.1 369.8 72.6 127.3 125.5 260.2 247.7 232.1 Limited Treasury Wine Estates (Matua) Limited 14.5 15.4 44.9 208.3 217.4 188.2 25.5 15.8 11.6 179.9 223.9 216.0 Alcoholic beverages 63.8 59.7 65.9 257.9 224.6 253.6 64.4 58.2 60.6 185.1 173.4 182.9 Alliance Group Limited 25.9 28.3 36.4 34.7 35.6 35.0 14.3 14.1 16.3 45.5 48.8 54.3 Allied Foods (N.Z.) Limited 35.0 31.2 51.5 46.2 33.1 39.3 35.6 34.9 46.6 41.5 30.1 46.8 ANZCO Foods Limited 20.1 25.5 30.5 33.6 37.5 47.7 13.5 7.5 10.4 38.8 53.8 66.0 Aotearoa Fisheries Limited 23.6 26.2 23.9 41.1 45.4 48.7 16.5 19.3 12.1 42.8 47.3 53.2 Arnott's New Zealand Limited 77.3 51.4 46.4 46.5 34.9 57.2 92.0 83.4 108.3 42.0 15.8 10.7 Blue Sky Meats (NZ) Limited 61.3 62.2 43.6 79.6 93.3 45.7 38.4 33.1 23.2 97.6 115.5 64.6 Cerebos Gregg's Limited 49.3 56.2 54.9 104.0 112.5 112.7 20.3 33.0 36.7 101.6 105.7 104.6 Comvita Limited 58.9 59.8 37.2 180.8 209.6 383.5 46.5 64.5 28.0 122.8 133.4 211.9 Fonterra Co-Operative Group Limited 29.4 39.4 27.6 68.2 71.2 64.6 57.4 41.1 63.9 39.0 64.1 28.1 Frucor Beverages Limited 60.2 74.1 84.0 53.8 65.7 71.9 43.3 52.0 59.9 65.8 81.7 90.5 General Mills New Zealand Limited 80.5 57.6 85.5 41.5 49.0 51.9 102.2 95.5 77.9 35.5 23.6 66.8 Goodman Fielder New Zealand Limited 16.1 16.6 10.0 29.7 23.4 22.2 50.6 64.8 68.6 3.0 (11.4) (20.6) H.J. Heinz Company (New Zealand) Limited 50.1 37.5 30.9 90.9 83.5 69.8 46.3 60.3 74.1 84.1 54.6 27.7 Inghams Enterprises (NZ) Pty Limited 43.0 41.4 46.2 53.0 55.2 50.6 32.0 28.3 32.2 58.8 62.1 60.4 Kerry Ingredients (NZ) Limited 44.4 46.3 60.1 64.3 73.3 111.3 50.7 57.2 40.4 52.9 56.3 99.0 Kura Limited 57.5 68.1 67.5 82.2 91.8 101.4 59.0 64.5 70.1 76.9 88.7 92.1 Market Gardeners Limited 35.1 28.7 30.7 9.3 6.7 6.6 62.0 55.2 62.4 (10.5) (14.0) (17.9) Mars New Zealand Limited 46.2 41.1 42.5 55.2 58.8 52.9 61.6 58.5 71.1 42.5 41.2 32.2 Nestlé New Zealand Limited 32.7 36.9 36.5 55.5 53.3 62.6 70.2 71.7 93.2 25.5 28.3 22.0 New Zealand King Salmon Investments Limited 28.1 28.4 29.1 45.5 42.0 54.9 44.0 29.9 38.7 29.2 41.1 45.4 New Zealand Sugar Company Limited 35.7 56.0 61.6 42.3 71.9 80.7 23.9 28.6 31.3 50.2 88.8 99.1 Open Country Dairy Limited 4.6 22.3 24.2 97.4 53.1 93.7 52.6 35.2 42.8 46.7 39.3 70.1 PepsiCo New Zealand Holdings 62.5 62.4 81.8 50.3 54.5 44.1 96.7 112.0 123.7 32.7 25.0 25.6 Sanford Limited 39.5 49.7 42.1 41.0 51.4 54.5 10.2 12.2 5.9 65.4 79.7 77.9 Scales Corporation Limited 13.9 15.5 15.0 21.3 28.1 26.9 19.1 23.5 24.4 15.4 18.7 16.6 Silver Fern Farms Limited 26.7 25.2 21.7 58.4 34.3 15.9 18.9 13.4 12.0 54.0 40.1 24.5 Speirs Group Limited 33.3 30.7 35.9 14.6 15.9 14.6 54.6 71.0 46.5 7.4 (4.6) 14.9 Synlait Milk Limited 53.8 55.1 24.4 52.1 59.2 60.3 50.8 27.8 9.0 54.9 82.7 66.4 T&G Global Limited 41.2 45.6 46.6 27.7 34.2 39.5 33.0 39.5 36.8 37.0 41.6 48.5 Tegel Group Holdings Limited 49.5 46.7 47.2 85.6 76.3 95.6 56.1 43.1 48.4 72.6 72.1 82.4 The a2 Milk Company Limited 81.8 85.1 46.2 28.8 17.6 95.3 43.3 55.3 60.7 72.6 60.7 66.0
New Zealand Working Capital Report 13 Findings
Food & Beverage (continued) DSO DIO DPO DWC Company name 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 The Tatua Co-operative Dairy Company 58.2 40.8 41.6 72.1 90.2 76.2 37.3 35.7 33.6 88.2 89.4 78.5 Limited Westland Co-Operative Dairy Company 44.1 36.8 42.8 96.5 54.9 86.2 15.4 9.3 19.3 105.4 74.7 90.3 Limited Weyville Holdings Limited 36.4 46.3 46.5 125.9 97.3 117.2 39.8 42.5 37.3 111.8 94.9 115.0 Zespri Group Limited 7.5 6.7 7.1 6.6 6.5 10.3 9.9 9.2 9.0 5.0 4.7 8.0 Food & non-alcoholic beverages 41.8 42.3 41.7 58.2 57.7 68.6 43.4 43.6 45.0 53.0 53.6 57.8 Peer group average 46.3 45.9 46.7 99.0 91.9 106.5 47.7 46.6 48.2 80.0 78.1 83.4
Leisure DSO DIO DPO DWC Company name 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 CDL Hotels Holdings New Zealand 13.6 16.9 16.3 9.4 7.8 7.8 10.4 7.8 8.4 13.2 16.9 16.0 Limited Dynasty Hotel Group Limited - 25.7 23.3 - 7.5 8.2 - 22.5 17.4 - 20.3 20.0 Flight Centre (NZ) Limited 65.9 60.1 71.6 - - - 63.0 60.8 73.6 18.8 12.8 24.6 I D Tours New Zealand Limited 11.3 6.3 4.6 - - - 7.1 2.2 1.4 5.4 4.5 3.3 Millennium & Copthorne Hotels 13.7 16.9 16.3 9.5 7.9 7.9 10.4 7.8 8.4 13.3 16.9 16.0 New Zealand Limited Roadshow Entertainment (NZ) Limited - 52.9 79.3 - 77.0 85.2 - 250.5 216.4 - 12.6 39.3 Sky City Entertainment Group Limited 8.4 6.6 13.4 8.3 8.1 7.2 23.1 19.4 22.1 2.1 1.9 7.5 Skyline Enterprises Limited 9.7 9.8 10.3 34.3 30.4 36.0 349.0 323.2 365.0 (14.1) (13.7) (16.7) Southern Travel Holdings Limited 39.0 34.9 50.7 - - - 85.2 52.1 57.4 (10.4) 5.7 19.6 Stamford Hotels (NZ) Limited 15.9 20.4 19.2 3.5 3.3 2.6 10.7 12.3 17.9 9.5 13.0 7.2 Tourism Holdings Limited 12.1 16.7 14.9 107.6 96.8 100.5 85.2 158.0 121.7 17.9 1.1 8.9 Peer group average 17.2 24.3 29.1 15.7 21.7 23.2 58.5 83.3 82.7 5.1 8.4 13.2
Mining & Resources DSO DIO DPO DWC Company name 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 Bathurst Resources Limited 18.5 27.6 18.3 8.2 9.9 17.2 24.6 21.6 22.4 1.8 17.6 14.1 Methanex New Zealand Limited 98.6 74.6 84.7 37.3 26.3 25.3 90.1 55.1 56.9 58.6 52.3 58.1 New Zealand Aluminium Smelters Limited 74.1 81.3 87.6 53.2 53.8 51.8 32.8 38.6 40.5 89.1 92.3 95.6 New Zealand Oil & Gas Limited 90.6 88.6 38.6 53.0 42.2 34.4 137.4 112.4 49.8 51.7 42.3 26.1 Oceana Gold (New Zealand) Limited 8.6 6.5 7.5 66.0 67.8 77.1 32.5 28.5 33.0 35.9 41.7 53.3 OMV New Zealand Limited 68.2 34.3 39.4 25.4 33.4 9.1 115.6 69.0 77.9 18.7 13.7 (14.5) Pacific Aluminium (New Zealand) Limited 104.1 107.2 36.2 70.9 79.7 65.4 129.3 127.9 37.4 53.1 70.3 57.9 Simsmetal Industries Limited 33.4 35.4 16.6 26.2 38.1 32.0 18.5 10.2 11.6 40.4 60.6 35.2 Solid Energy New Zealand Limited 47.3 41.4 40.6 55.7 56.8 51.0 50.3 39.7 33.2 52.5 59.6 59.1 Peer group average 60.4 55.2 41.1 44.0 45.3 40.4 70.1 55.9 40.3 44.7 50.0 42.8
14 New Zealand Working Capital Report Findings
Retail DSO DIO DPO DWC Company name 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 Amazon (New Zealand) Pty Limited 1.6 0.0 0.1 172.0 150.1 150.1 37.4 19.0 34.2 73.6 72.8 64.7 Briscoe Group Limited 1.4 1.4 0.3 85.1 86.6 89.0 54.1 56.0 40.8 20.5 20.1 29.0 Bunnings Limited 24.2 24.6 23.9 122.2 110.8 103.9 27.1 28.7 33.4 89.7 82.2 72.9 Burger Fuel Worldwide Limited 84.7 51.8 44.3 17.4 26.6 22.9 27.9 25.5 21.3 74.8 52.8 45.9 Coles Group New Zealand Holdings 2.4 0.5 0.2 117.4 95.1 86.3 66.3 55.3 74.7 30.9 22.3 6.5 Limited DFS New Zealand Limited 4.9 3.5 2.5 105.2 121.4 78.1 20.1 22.9 44.6 42.4 40.3 18.2 Freedom Furniture NZ Limited 25.8 22.0 25.3 100.7 107.8 108.9 28.2 22.0 22.9 67.5 68.7 71.5 Green Cross Health Limited 6.8 13.5 15.2 59.5 32.8 29.0 47.5 30.1 27.1 13.6 15.7 17.0 Hallenstein Glasson Holdings Limited 0.8 0.7 1.8 84.7 80.1 75.3 33.2 41.7 29.8 22.0 16.3 21.5 Kathmandu Holdings Limited 0.2 0.1 0.1 261.7 262.5 218.8 30.0 33.0 28.7 85.6 88.4 71.2 Kimbyr Investments Limited - - - 100.6 120.1 138.3 33.6 29.6 36.0 28.3 37.0 41.9 Lion Liquor Retail Limited 4.8 5.1 5.3 87.6 101.8 98.6 38.1 40.7 43.9 43.3 52.0 47.4
Louis Vuitton New Zealand Limited 1.3 1.5 1.4 160.2 165.0 107.4 33.1 58.6 68.5 72.5 62.7 25.9
Luxottica Retail New Zealand Limited 25.2 23.6 17.5 127.1 143.8 144.3 30.2 27.5 23.8 54.1 54.6 49.6
McDonald's Restaurants 19.7 17.7 19.6 4.1 3.8 4.1 30.5 49.6 52.9 7.6 (3.2) (3.2) (New Zealand) Limited Michael Hill International Limited 11.4 11.3 11.2 377.1 367.3 369.8 48.2 49.3 43.9 129.3 125.7 127.9
Mitre 10 (New Zealand) Limited 35.0 31.1 33.2 20.9 25.7 7.3 58.9 57.5 53.4 2.4 4.1 (6.6)
NZPM Group Limited - 41.6 45.8 - 85.4 82.9 - 40.5 48.9 - 73.7 69.9
Paper Plus New Zealand Limited 162.3 143.6 137.7 38.3 44.5 42.7 136.1 157.6 169.8 86.7 66.6 51.1
Pumpkin Patch Limited 19.2 10.0 2.0 195.4 129.7 164.5 36.5 35.9 40.0 98.5 55.6 66.3
Restaurant Brands New Zealand - 0.4 0.5 2.1 11.4 9.5 15.9 25.7 21.3 (11.4) (11.7) (9.6) Limited Smiths City Group Limited 80.1 74.5 75.2 102.2 101.0 95.4 44.9 43.0 46.5 120.1 114.6 109.2
Spotlight Limited 1.8 0.8 0.4 260.2 230.0 247.0 49.9 47.6 42.9 107.2 87.3 96.7
The Warehouse Group Limited 8.5 7.5 14.3 101.2 100.5 93.1 42.4 40.5 40.6 47.9 47.6 49.7
Woolworths New Zealand Group 2.6 2.0 1.6 29.5 34.2 33.5 29.0 44.0 44.4 2.9 (5.4) (6.6) Limited Peer group average 21.0 19.6 19.2 109.3 109.5 104.0 40.0 43.3 45.4 52.4 49.6 45.1
New Zealand Working Capital Report 15 Findings
Transport & Distribution DSO DIO DPO DWC Company name 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 Crown Worldwide (NZ) Limited 68.7 65.6 68.8 5.0 5.8 5.2 22.5 19.8 20.6 57.1 56.1 58.7 DHL Express (New Zealand) Limited 53.5 53.9 59.3 - - - 33.3 34.1 38.7 38.9 38.3 39.7 DHL Supply Chain (New Zealand) 53.1 70.4 59.0 - - - 16.6 22.0 24.0 40.7 53.7 40.4 Limited Fliway Group Limited 50.2 41.0 40.6 - - - 14.2 11.5 12.1 38.2 31.4 30.5 Freightways Limited 45.8 54.2 49.8 11.1 6.8 5.7 35.8 66.2 59.8 29.4 15.0 14.0 Hellmann Worldwide Logistics Limited 46.8 53.4 43.0 0.7 0.7 0.3 9.1 11.5 9.4 40.1 44.6 35.8 KiwiRail Holdings Limited 46.0 26.4 29.6 35.9 36.3 40.1 22.4 16.3 22.9 56.9 42.2 43.9 Kuehne + Nagel Limited 36.5 39.6 51.3 2.3 3.5 7.5 38.3 38.3 38.7 9.9 13.1 27.0 Mainfreight Limited 43.8 46.4 46.9 - - - 43.7 48.1 49.2 6.6 5.5 4.9 Quayside Holdings Limited 46.1 41.6 48.4 2.7 1.8 1.0 13.7 19.4 34.0 40.5 32.6 32.5 Schenker (NZ) Limited 47.5 59.7 50.9 - - - 22.8 19.0 17.1 26.9 42.4 35.5 TNT Express Worldwide (NZ) Limited 26.7 27.0 33.3 1.0 1.2 1.1 6.9 9.2 13.1 21.7 20.0 22.9 Toll Group (NZ) Limited 40.3 40.5 37.9 0.4 0.4 0.4 30.0 42.3 39.2 13.8 3.3 3.7 Peer group average 46.5 47.7 47.6 4.6 4.3 4.7 23.8 27.5 29.1 32.4 30.6 30.0
Utilities DSO DIO DPO DWC Company name 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 Contact Energy Limited 43.6 35.0 33.6 10.6 12.2 12.9 47.7 40.9 49.8 15.4 12.6 5.7 Counties Power Limited 40.9 41.9 34.0 11.3 4.6 2.3 107.7 78.8 96.6 19.1 24.8 15.6 Eastland Group Limited 34.2 37.3 35.2 3.0 4.9 1.6 88.2 76.9 81.0 14.0 21.7 17.8 Electricity Ashburton Limited 52.5 52.2 55.1 107.4 99.1 92.6 58.8 63.0 66.9 70.7 67.7 66.6 Genesis Energy Limited 39.6 35.5 35.0 25.0 19.9 20.9 49.8 37.4 42.1 22.6 23.2 20.2 Horizon Energy Distribution Limited - 57.2 73.5 - 29.7 17.3 - 45.8 64.7 - 46.7 42.3 King Country Energy Limited 9.6 17.6 13.9 - 0.0 0.0 33.6 22.0 48.3 (7.9) 6.8 (11.0) Marlborough Lines Limited 28.3 30.4 29.3 74.0 66.3 64.6 66.8 49.0 52.0 31.4 38.5 35.2 Meridian Energy Limited 26.6 29.0 29.8 - - - 42.0 39.4 43.5 (5.5) (0.2) (1.7) Mercury NZ Limited 46.7 39.2 43.9 7.3 9.2 15.3 50.8 47.0 50.8 16.1 12.2 19.6 Northpower Limited 72.8 69.5 71.7 25.7 21.9 20.4 73.2 39.5 47.2 50.2 61.0 58.8 Orion New Zealand Limited 14.6 12.8 10.4 16.3 15.6 17.1 72.0 64.7 58.9 (18.3) (12.8) (12.6) Powerco Limited 29.5 29.6 28.3 - - - 65.5 69.2 73.0 (0.2) (1.0) (4.2) Top Energy Limited 38.4 39.5 39.0 12.8 3.6 5.4 42.3 81.9 35.9 24.8 3.6 25.0 Transpower New Zealand Limited 37.3 32.7 35.0 16.6 3.2 4.0 240.2 159.3 113.2 6.9 (7.1) 6.4 Trustpower Limited 35.3 33.0 28.3 - - - 33.6 27.6 29.7 16.4 17.2 11.6 Unison Networks Limited 34.6 36.9 38.1 105.7 103.9 111.6 59.9 61.8 66.9 51.4 51.7 53.5 Vector Limited 42.6 53.1 52.9 2.9 3.6 3.2 106.5 120.7 131.0 (2.5) 0.3 (1.6) Watercare Services Limited 39.7 40.5 38.1 17.4 14.9 21.6 64.8 42.6 37.4 30.8 35.2 35.3 Wellington Electricity Distribution 29.2 31.2 27.7 - - - 70.6 56.2 75.2 (8.0) 1.6 (14.5) Network Limited Peer group average 34.8 37.7 37.6 21.8 20.6 20.6 68.7 61.2 63.2 16.4 20.2 18.4
16 New Zealand Working Capital Report Our offices
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