MCGRATHNICOL ADVISORY

NEW ZEALAND WORKING CAPITAL REPORT Welcome

In 2020 the average Welcome to the McGrathNicol New Zealand Working Capital Report 2020. working capital cycle of This report profiles the working capital performance of a sample of 134 New Zealand domiciled companies (including 39 listed on the NZX) across the Building Products, the sampled companies Construction & Engineering, Food & Beverage, Leisure, Mining & Resources, Retail, decreased from 63.5 Transport & Distribution and Utilities sectors. to 57.7 days, driven The combined revenues of the companies included in this report is $101.7 billion. The information is based on the companies’ most recent results compared to the primarily by delaying results for the same period in the prior two years. payments to suppliers Overall average working capital days decreased from 2019. Results were fairly (DPO), perhaps due consistent across sectors, with all decreasing DWC except for Retail. to initial COVID-19 The following pages include our analysis for each sector, comparing the trends in cash flow pressures. New Zealand to those reported in by McGrathNicol Australia. The improvement in We focus on assisting businesses to increase cash flow by implementing practical and effective procedures to forecast, track, save and generate cash. We help DWC was compounded businesses to improve their working capital cycles and give them the tools to sustain by faster customer improvements. To discuss this report or how we can help your business, please contact a member of our team. collections for some sectors.

Andrew Grenfell Martin Badenhorst Partner Manager +64 9 926 5115 +64 9 926 5117 [email protected] [email protected]

Contributors Conor McElhinney Wade Bowles

Summary sample

Days 2018 2019 2020 Change DSO = Days sales outstanding (debtors) DSO 46.9 47.8 45.0 (2.8) DIO = Days inventory outstanding (inventory held) DIO 76.2 75.3 75.9 0.6 DPO = Days purchases outstanding (creditors) DPO 53.2 51.2 55.6 4.4 DWC = Days working capital (net working capital) DWC 62.6 63.5 57.7 (5.8) For details of the basis of preparation and calculations, see pages 12 & 13. Summary

The average Days As shown in the table below, DWC averaged over the full sample decreased by 5.8 days to Working Capital 57.7 days. All sectors reduced DWC except for Retail, which only increased DWC by 0.8 days. Interestingly, all sectors had higher DPO, suggesting that companies may have started (DWC) of the sampled shifting some of the COVID-19 impact to suppliers by delaying payments or negotiating companies decreased better terms. to 57.7 days in 2020 DIO changes were mixed with an average increase of 0.6 days to 75.9 days across all sectors. Building Products and Mining & Resources showed the largest decreases, as inventory from 63.5 days in 2019. was liquidated to assist with cashflow. Conversely, Utilities, Transport and Construction & All sectors, except Engineering increased inventory days, in all cases offset by DSO and DPO improvements. for Retail, improved Average DSO improved by 2.8 days to 45.0 days. Six of the eight sectors managed to DWC with higher DPO improve funds collection time from customers, with only Retail and Building Products showing slower collection times. Construction & Engineering and Leisure showed the across all sectors and largest improvements, both collecting funds faster by more than a week on average. to a lesser degree lower The biggest improvement in DWC was in the Food & Beverage sector, with improvements DSO. across the board in DSO, DIO and DPO. In Australia, the DWC of sampled companies decreased by 2.4 days to 44.6 days, releasing an equivalent of c.A$3.6 billion of cash from working capital. Three of the eight sectors sampled experienced a structural “funding gap”, where companies pay their suppliers more quickly than they receive payment from their customers (Construction & Engineering, Mining & Resources and Transport & Distribution). The largest funding gap is in the Construction sector, with a 28-day difference between collections and payments. This has been an issue historically, contributing to a number of New Zealand company failures. The following pages provide a breakdown by sector relative to the prior years, including comparisons to Australia. Average DWC by sector

110

100

90 93.5

80

70

60 65.7 s y 57.7 D a 56.2 50 50.0 40 44.3

30 35.5 BUILDING 20

160 (15.6)21.2 140 18.1 10 120 128.8 (13.5) 100 (4.0)

s 94.9 y 80 (7.7) (3.4)

D a 60 73.6 0 62.5 40 56.9 20 Building Construction & Food & Leisure Mining(9.6) & Retail Transport Utilities Full Products Engineering Beverage Resources & Distribution sample

DWC at 30 June (or latest available) 2018 2019 2020

3 Sector Summary Running down inventory levels and extending terms with suppliers has reduced DWC.

Building Products

Days 2018 2019 2020 Change DSO 47.3 45.6 47.4 1.8 DIO 90.7 95.0 87.9 (7.1) DPO 52.1 62.1 64.9 2.8 DWC 76.8 69.1 65.7 (3.4)

Best & Worst

Days Best Worst Spread DSO 31.3 82.3 51.0 DIO 47.4 117.9 70.5 DPO 213.0 20.3 192.7 DWC (27.7) 116.3 144.0

International Benchmarking

Days Asia EU US AU DSO 85.3 47.7 55.9 50.8 DIO 88.6 87.5 91.6 87.6 DPO 78.9 74.2 61.1 51.8 DWC 94.9 52.7 81.7 74.3 Building Products

Building Products suffered delays from Inventory management in the Building “Trading cash flows COVID-19, with projects being halted Products sector is always challenging, with during both the first (National) and second high levels of working capital investment for the division was… (Auckland) lockdowns. Statistics New being required to service the demands up on the prior year. Zealand reported that “completion dates of large construction projects (which can of home building projects in the June suffer delays due to funding and resource This was the result 2020 quarter were reported to be delayed constraints) as well as the continuous and of reduced working by nearly seven weeks on average.” immediate demands of a broad trade and capital, with tight DIY customer base. These delays may be reflected in the management of increase in DPO by 2.8 days to 64.9, International analysis shows that New as extension on payment terms from Zealand falls broadly in line with other both inventory and suppliers were put in place to alleviate the regions covered. Inventory levels of debtors throughout impact from delayed work. around three months is consistent across the year.” The decrease in DIO by 7.1 days to 87.9 all regions. may further indicate that inventory levels The Building Products and Construction Limited were run down to further assist with cash & Engineering sectors are set to benefit 2020 Annual Report flow, or due to an inability to obtain supply from a number of Government funds as global supply chain issues impacted to support housing and infrastructure. freight. These include the Infrastructure fund DSO increased by 1.8 days to 47.4, as of $3.0 billion, the Three Waters Reform collections slowed slightly. DSO has been programme of $0.8 billion, the Housing fairly consistent since 2018, averaging Acceleration fund for $3.8 billion, and the around 47 days. Residential Development Response fund of $350 million. Overall, average DWC in 2020 was 65.7 days, an improvement of 3.4 days, driven An increase in DIY expenditure for home by improvements in DIO and DPO, as improvement will further assist the businesses were forced to better manage sector. Challenges still remain, with one working capital in the face of COVID-19 of the sectors largest players, Fletcher work delays and challenges. Building, cutting 1,000 jobs in NZ and 500 in Australia in May-20 as a result of the pandemic and lost work.

Selection of companies - Building Products

140

120 116.3 100

80 86.0 s y D a 60 63.9 65.7 56.9 BUILDING 51.8 40

160 (15.6) 140 20 120 128.8 (13.5) 100 (4.0)

s 94.9 y 80 (7.7) (3.4)

D a 60 73.6 0 62.5 40 56.9 20 Steel & Tube Fletcher Rheem New (9.6) Daiken New Metro Performance Peer group Holdings Building Zealand Zealand Glass average

DWC at 30 June (or latest available) 2018 2019 2020

5 Sector Summary Improvement in both DSO and DPO reflects the higher emphasis placed on working capital in the industry.

Construction & Engineering

Days 2018 2019 2020 Change DSO 68.0 67.3 58.0 (9.3) DIO 28.8 27.0 30.6 3.6 DPO 38.6 28.4 30.3 1.9 DWC 60.6 63.8 56.2 (7.6)

Best & Worst

Days Best Worst Spread DSO 35.8 85.2 49.4 DIO - 93.8 93.8 DPO 83.5 1.3 82.2 DWC 17.8 92.0 74.2

International Benchmarking

Days Asia EU US AU DSO 125.4 69.7 81.2 61.4 DIO 53.1 84.9 44.4 36.7 DPO 91.3 88.2 54.1 60.3 DWC 87.4 70.4 71.2 46.7 Construction & Engineering

The Construction & Engineering From an international perspective, the On improving cash sector was somewhat cushioned average DWC is two weeks faster than from COVID-19, as some work was the US and EU and over four weeks faster from operations: deemed essential. As mentioned in the than Asia, but a week slower than AU. “Factors behind this Building Products section, a number of NZ has the lowest DPO by a significant Government funds will further support the margin, which may be due to the progress increase include Construction & Engineering sector. payment process under the Construction the overall strong The average DWC of our sampled Contracts Act. profit performance companies decreased by 7.6 days to of the business and 56.2. The improvement was mainly driven by faster debtor collection with a good working capital slight improvement in DPO. The sector management.” traditionally operates in an environment where suppliers are paid much faster than Fulton Hogan payments are received from customers. 2020 Annual Report The improvement in both DSO and DPO indicates that businesses attempted to improve the cash conversion cycle in this reporting period.

Selection of companies - Construction & Engineering

140

120

100

80 s y 72.3 D a 73.0 60 BUILDING 56.2 40 45.8 160 (15.6) 42.9 140 20 120 128.8 (13.5) 100 (4.0)

s 94.9 17.8 y 80 (7.7) (3.4)

D a 60 73.6 0 62.5 40 56.9 20 Electrix Delta Utility Calibre (9.6) Downer New Fulton Peer group Services Consulting Zealand Hogan average

DWC at 30 June (or latest available) 2018 2019 2020

7 Sector Summary DWC dropped in 2020, driven by improved collections across the whole Food & Beverage sector and reduced inventory levels for Alcoholic Beverage companies.

Food & Beverage

Days 2018 2019 2020 Change DSO 55.5 58.9 53.4 (5.5) DIO 115.6 115.0 113.9 (1.1) DPO 50.5 47.4 50.9 3.5 DWC 98.5 103.5 93.5 (10.0)

Best & Worst

Days Best Worst Spread DSO 1.5 176.8 175.3 DIO 3.8 573.1 569.3 DPO 128.1 9.3 118.8 DWC (24.0) 360.7 384.7

International Benchmarking

Days Asia EU US AU DSO 41.3 37.8 28.7 33.6 DIO 63.0 46.1 52.8 118.7 DPO 52.9 68.5 60.3 66.0 DWC 51.4 18.1 26.1 66.8 Food & Beverage

Overall, average Food & Beverage sector Dairy continues to be the single largest “Our receivables DWC fell significantly in 2020 by 10.0 contributor by revenue (61%) to the Food days to 93.5 days. This was the result & Non-Alcoholic Beverages sub-sector. days decreased of decreasing DSO (customers paying All five of the dairy companies sampled as a result of more sooner) and DIO (selling inventory sooner) reported an increase in revenue following while increasing DPO (paying suppliers relatively steady global dairy prices but a sales to customers later). more favourable dollar in the year to June on shorter This sector is often considered separately 2020. Four of the five sampled converted payment terms this into increased EBITDA. as two sub-sectors, Alcoholic Beverages as we prudently and Food & Non-Alcoholic Beverages, Excluding dairy, revenue of the sampled due to Alcoholic Beverages having much companies in the Food & Non-Alcoholic manage receivables longer DIO (products typically need to Beverage sector increased 3.8% from in the current ferment or mature). Reductions in the $14.5 billion in 2019 to $15.0 billion in DIO gap between the two sub-sectors in 2020, translating into EBITDA gains of environment, but recent years from 164.3 days in 2018 to 5.5%. this improvement 132.9 in 2020 are largely due to significant In Australia, average DWC across Food & was offset by reductions in the value of inventory Beverage companies sampled decreased reduced payables amongst some of the alcoholic beverage by 9.3 days to 66.8 days, releasing $300 companies sampled. DIO was reduced million in cash. This was driven by a 10.3 days reflecting the for the Alcoholic Beverages companies day reduction in average DSO with some lower payables sampled by an average of 23.1 days, offsetting shortening of supplier payment to 215.0 days, while DIO increased for cycles. Notably, unlike in New Zealand 71% associated with the the Food & Non-Alcoholic Beverages of the Australian companies sampled reduction in capital companies sampled by an average of 5.8 who collected more quickly also paid their expenditure.” days, to 82.1 days. suppliers more quickly.

Fonterra Co-operative Group Limited Annual Report 2020

Selection of companies - Food & Beverage

350 Alcoholic Beverages Food and Non-Alcoholic Beverages 300

250 247.5 200 223.6 s y D a 150 167.5 BUILDING 100

160 (15.6) 140 93.5 50 120 128.8 (13.5) 100 (4.0)

s 94.9 y 80 (7.7) 31.7(3.4) D a 60 73.6 20.6 0 62.5 40 56.9 20 Lion NZ Pernod Ricard Comvita (9.6) Fonterra Co-operative Zespri Peer group Winemakers Group Group average New Zealand DWC at 30 June (or latest available) 2018 2019 2020

9 Sector Summary In a challenging year for Leisure, DWC decreased by 7.9 days, driven by a drop in DSO as bookings were cancelled and an increase in DPO as creditor terms were renegotiated.

Leisure

Days 2018 2019 2020 Change DSO 26.9 29.0 21.1 (7.9) DIO 57.2 56.8 59.6 2.8 DPO 47.5 45.8 52.5 6.7 DWC 30.0 32.7 21.2 (11.5)

Best & Worst

Days Best Worst Spread DSO 8.6 60.5 51.9 DIO - 201.9 201.9 DPO 107.7 15.5 92.2 DWC (16.9) 81.8 98.7

SkyCity Entertainment Group

Days 2018 2019 2020 Change DSO 6.5 16.5 16.8 0.3 DIO 8.1 6.7 7.1 0.4 DPO 34.4 27.7 20.9 (6.8) DWC (4.5) 7.4 9.6 2.2 Leisure

The Leisure sector was hit hardest by Average DWC for the sector decreased “…what we the COVID-19 pandemic, with tourism, by 11.5 days to 21.2, through DSO falling consumer confidence and discretionary 7.9 days as bookings were cancelled. DPO have seen post- spending initially plummeting, albeit also increased as companies stretched lockdown is intense domestic spending recovered quickly and negotiated with creditors to help bear post-lockdown. the burden of lost tourism. discounting and None of the companies in our review The outlook for the Leisure sector is price competition as grew revenue versus prior year, with challenging, with the pandemic ongoing hotels and motels try total sample revenue falling $315 million worldwide and border closures in place for to attract as many (15.3%) to $1.75 billion. The largest player the foreseeable future, with the exception in the sector, SkyCity Entertainment, saw of a travel bubble with AU from April 2021. people as they can. revenue and EBITDA decrease by 20% Given average balance dates in the sample Put bluntly, hotels and 50% respectively. In response to the set, we are more likely to see the full in New Zealand are pandemic, cut 760 jobs and impact of COVID-19 in next year’s results. closed more than 90 stores. Millennium & all in survival mode *Interim results used for Millennium & Copthorne Hotels* reported an 86% drop and will remain that in revenue and a 301% drop in EBITDA for Copthorne Hotels to reflect recent trading. Q2 2020 compared to prior year. **We have been unable to source way for an extended All sector participants received International Benchmark metrics for the period of time.” Government relief through the Business Leisure sector. Continuity Package and wage subsidies to Millennium & Copthorne Hotels help cushion the blow. New Zealand Limited Shareholder Update Interim Report 2020

Selection of companies - Leisure

140

120

100

80 81.8 s y 60 D a 54.5 40 BUILDING 20 160 (15.6) 21.2 140 6.1 9.6 11.0 0 120 128.8 (13.5) 100 (4.0)

s 94.9 y 80 (7.7) (3.4)

D a 60 73.6 (20) 62.5 40 56.9 20 Millennium & Copthorne Tourism Flight Centre (9.6) SkyCity Entertainment Dynasty Hotel Peer group Hotels New Zealand Holdings (NZ) Group Group average

DWC at 30 June (or latest available) 2018 2019 2020

11 Sector Summary The sector improved DWC through improvements in DSO, DIO and DPO, but lags international counterparties with one of the slowest cash conversion cycles.

Mining & Resources

Days 2018 2019 2020 Change DSO 69.8 46.9 43.3 (3.6) DIO 59.3 46.2 43.8 (2.4) DPO 83.0 36.9 37.1 0.2 DWC 74.8 54.0 50.0 (4.0)

Best & Worst

Days Best Worst Spread DSO 1.4 88.7 87.3 DIO 14.2 76.4 62.2 DPO 90.0 1.2 88.8 DWC (15.0) 105.6 120.6

International Benchmarking

Days Asia EU US AU DSO 37.7 41.1 36.9 25.0 DIO 55.2 78.6 43.0 79.7 DPO 44.3 75.5 66.6 65.1 DWC 50.5 40.7 28.3 34.1 Mining & Resources

The Mining & Resources sector performed average, New Zealand Mining & Resources “ has poorly through the 2019/2020 financial companies may be able to improve cash year, with most commodity prices slumping. conversion through customer and supplier reached an Only one of the eight sampled companies negotiations. Additionally, New Zealand agreement on a increased revenue, with six of the eight companies have some of the lowest reporting lower EBITDA. inventory levels at 43.8 days. new electricity Average DWC across our sample The Mining & Resources sector outlook agreement with decreased by 4.0 days to 50.0 days, with appears to be promising, with commodity Meridian Energy improvement in DSO of 3.6 days, DIO of 2.4 prices increasing as economies reopened that allows New days and DPO of 0.2 days. post lockdowns. Zealand’s Aluminium From an international perspective, New The recent announcement that the Zealand Mining & Resources companies Tiwai Point aluminium smelter will remain Smelter (NZAS) to have one of the highest DWC (50.0 days) operational until December 2024 (instead continue operating compared to international counterparties, of August 2021) is positive news for both with EU, US and Australia averaging DWC the sector and the wider New Zealand the Tiwai Point of 30 to 40 days. With the slowest debtor economy. aluminium smelter collection and fastest supplier payments on until December 31, 2024. The extension provides certainty to employees, the local community and customers while providing more time for all stakeholders to plan for the future.”

Rio Tinto Selection of companies - Mining & Resources Notice to ASX/LSE 14 January 2021

160

140

120

100 105.6 s y 80 D a 79.2 70.2 72.8 67.3 60 BUILDING 40 50.0

160 (15.6) 140 20 120 128.8 (13.5) 100 (4.0)

s 94.9 y 80 (7.7) (3.4)

D a 60 73.6 0 62.5 40 56.9 20 Pacific Aluminium New Zealand New Zealand (9.6) Methanex New Simsmetal Peer group (New Zealand) Oil & Gas Aluminium Smelters Zealand Industries average

DWC at 30 June (or latest available) 2018 2019 2020

13 Sector Summary Retailers continue a five- year trend of stretching creditors, partially offset by DSO increasing.

Retail

Days 2018 2019 2020 Change DSO 30.2 32.4 36.1 3.7 DIO 90.7 88.9 88.5 (0.4) DPO 64.6 73.7 78.5 4.8 DWC 45.3 43.5 44.3 0.8

Best & Worst

Days Best Worst Spread DSO - 196.8 196.8 DIO 3.2 249.7 246.5 DPO 463.7 13.0 450.7 DWC (33.7) 187.8 221.5

International Benchmarking

Days Asia EU US AU DSO 32.9 30.2 15.0 18.1 DIO 79.7 80.5 65.2 105.2 DPO 57.3 78.7 46.6 57.3 DWC 50.7 36.9 35.7 39.2 Retail

2020 saw significant disruption to the to 44.3 days, driven primarily by an increase “As retail stores Retail industry from Government-imposed in DSO, up 3.7 days to 36.1 days, partially lockdowns driving growth of online retailing offset by an increase in DPO of 4.8 days. reopened as retailers scrambled to ensure their digital New Zealand retailers continued to delay following the initial offerings could cater to new demand. As payments to suppliers, or negotiate better lockdowns, sales with Leisure, the full impact of COVID-19 terms, as DPO increased again in 2020 to on Retail will be seen in next year’s results. 78.5 days. This is a continuation of a long- rebounded strongly, Despite the disruption of COVID-19, term trend, with DPO increasing over the reducing inventory 2020 saw a relatively low number of major last five years for our sampled retailers from significantly, and retail failures. This was largely attributable 46.5 days in 2016. generating strong to support from the Government (wage Effective inventory management is a key subsidy, debt hibernation and Government success factor. Inventory turnover has cashflow. As a loans), landlords (rent abatements), remained relatively steady in FY20 despite result, the Group increased online spending and increased initial supply chain disruption caused by domestic spending with consumers unable COVID-19. This may be a net effect of finished the financial to travel overseas. lockdowns leaving retailers with a buffer year with a robust During 2020, 71% of the retailers in our of stock to sell when consumer spending balance sheet and sample saw sales growth, averaging 6% rebounded post-lockdown. Going forward, across the industry. Overall, retailers continued global supply chain disruption healthy inventory increased their gross margin by 1.6% with may limit retailer’s success. level, positioning the 63% of those sampled seeing an increase Compared with international retailers, Group well for the in their EBITDA compared to 2019 as NZ and AU inventory turnover is slower consumer spending outweighed lockdown than the other international regions future.” impacts. benchmarked, perhaps due to our greater The average DWC for the sampled distance from suppliers. Kathmandu Holdings Limited companies increased by 0.8 days in 2020 Chairman and CEO’s letter FY20 Annual Report

Selection of companies - Retail

120

100 98.7 80 s y 60 D a BUILDING 40 46.6 44.3 160 (15.6) 140 20 120 128.8 (13.5) 100 (4.0)

s 94.9 y 80 15.4 (7.7) 17.9(3.4) D a 60 73.6 6.6 0 62.5 40 56.9 20 Kathmandu Lion Liquor Briscoe (9.6) Hallenstein Glasson The Warehouse Peer group Holdings Retail Group Holdings Group average

DWC at 30 June (or latest available) 2018 2019 2020

15 Sector Summary Average DWC decreased to 35.5 days, driven primarily by an increase in DPO.

Transport & Distribution

Days 2018 2019 2020 Change DSO 47.8 52.1 50.3 (1.8) DIO 11.7 10.9 13.2 2.3 DPO 27.9 28.6 34.4 5.8 DWC 35.9 39.9 35.5 (4.4)

Best & Worst

Days Best Worst Spread DSO 26.4 113.7 87.3 DIO - 60.9 60.9 DPO 87.7 2.5 85.2 DWC (8.2) 117.2 125.4

International Benchmarking

Days Asia EU US AU DSO 55.3 49.3 40.1 38.9 DIO 11.9 30.7 30.8 48.8 DPO 38.1 79.8 57.5 87.2 DWC 29.1 20.3 23.5 27.5 Transport & Distribution

The Transport & Distribution sector In Australia, Transport & Distribution “Freightways was heavily impacted by the pandemic DWC improved by 3.5 days to 27.5 days and lockdowns, with commercial through a shorter collection cycle (DSO) has always been transportation experiencing disruptions used to pay suppliers more quickly (DPO). particularly and delays, followed by strong increases Sector “winners” were those associated in demand once restrictions were with online retail deliveries and other “final disciplined around lifted. Freightways and Mainfreight mile” courier services. capital management, both increased revenue and EBITDA. International benchmarking shows and capital We expect to see a greater impact of DWC between 20 and 29 days, more expenditure and COVID-19 in next year’s results. than a week lower than in NZ. Potential Average DWC across our sample improvements may be found in supplier management of cash decreased by 4.4 days to 35.5 days, driven negotiations to increase DPO and will remain a clear primarily by a 5.8 day increase in DPO, release working capital, although the along with a 1.8 day improvement in DSO. balance of power with key suppliers focus.” The funding gap between customer such as fuel and transport contractors may make this challenging in the highly Freightways Limited collections and supplier payment FY20 Annual Report improved but persists from prior years. fragmented NZ transport market. Transport & Distribution is a demanding industry balancing critical suppliers with demanding customers.

Selection of companies - Transport & Distribution

50

40

30 35.5

27.4 26.8 20 s y

D a 15.3 10 9.6 BUILDING 0 160 (15.6) (8.2) 140 (10) 120 128.8 (13.5) 100 (4.0)

s 94.9 y 80 (7.7) (3.4)

D a 60 73.6 (20) 62.5 40 56.9 20 Freightways TIL Logistics Toll Group (9.6) Mainfreight C3 Peer group Group (NZ) average

DWC at 30 June (or latest available) 2018 2019 2020

17 Rebounding from COVID-19 Ten working capital considerations for businesses

Potential working capital crunch

For many businesses, significant investment in new stock will be required to support higher activity levels. The ability to self-fund may be compromised by increasing cash burn 01. as revenues lag costs and wage subsidies and other Government stimulation end.

The “bullwhip” effect

Critical and regular assessment of demand patterns will be vital post COVID-19 to avoid over-stocking and unnecessarily locking up cash in working capital, balance against supply chain disruption requiring companies to hold greater contingency stock. A focus on sales 02. and operations, forecasting and supply chain planning will be key for businesses looking to avoid the “bullwhip” effect.

Debunking old rules of engagement

Pre COVID-19 supply chain management was largely predicated on volumes being consolidated to drive lower unit costs and minimal inventory holdings. Whilst this may have worked in a stable global economy, it has been found to bring increased risk. The challenge 03. for management teams will be balancing the need to reduce risk to an acceptable level while also pursuing profit restoration.

Diversify to de-risk

Businesses with a high concentration of suppliers and customers were most at risk of COVID-19 disrupting their operations. Building resilience across the supply chain will require a quick evaluation of alternative sourcing options, reassessment of sales reach and 04. distributor strategies, and identification of new customer opportunities, channel shifts and emerging markets.

Technology as a tool

With potentially more customers and suppliers to manage, businesses will need to harness technology to drive efficiency. From the shift to ecommerce, to automating processes to accelerate reaction times and accessing data to inform decisions around 05. product mix, pricing and working capital terms, technology will provide a key competitive advantage moving forward. Collaborations and partnerships

Building working capital resilience will require end-to-end management of the supply chain. Initially post COVID-19, this will help businesses determine if longer term support is required for “tier 2” suppliers. Over time it will allow management teams to better align 06. demand, supply and capacity planning. Already there are signs of greater collaboration and businesses partnering to better leverage freight capacity and other assets.

Opportunities for distressed M&A

There is an expectation that as Government stimulus and temporary measures to curb the level of insolvencies roll off, there will be an increase in distressed M&A activity. Those businesses that can manage their working capital to maximise free cash flow will be best 07. placed to take advantage of the opportunities that arise.

Supplier payment terms

The Ministry for Business, Innovation and Employment is looking to clamp down on late payments, especially from larger to small businesses, following in Australia’s footsteps with the new Payment Times Reporting Framework (PTRF) legislation implemented on 08. 1 January 2021. Public consultation on the ‘Improving business-to-business payment practices’ paper is ongoing.

Knowing your counterparties

Businesses are taking the opportunity to reset processes and procedures across the working capital cycle, including implementing tighter pricing and purchasing controls and delegations of authority. This extends to managing counterparty risk through a systematic 09. approach to due diligence, having a credit function independent from the finance team and including working capital governance as part of internal audits.

Socially responsible business models

Consumers are continuing to push for greater transparency around social responsibility. The Ethical Fashion Report has graded 130 companies on the strength of their systems to mitigate against the risks of forced labour, child labour and exploitation in their supply 10. chains. In New Zealand and Australia, the promotion of ethical business practices has seen over 300 businesses register as “B Corporations” (based on social and environmental standards). This number is expected to grow post COVID-19.

19 Basis of Preparation

Data used in this survey has been Peer group sample GICS groups included sourced from the S&P Capital IQ Building Products Building Products platform and annual accounts. 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 and Transport Construction & Engineering Aerospace and Defense & Distribution peer group samples Construction and Engineering underpinning this report have been Electrical Equipment selected according to the Global Industry Machinery Classification Standards (“GICS”) listed in Trading Companies and Distributors the table opposite. Food & Beverage Beverages Food and Staples Retailing Food Products Accounting periods Personal Products Financial information in this survey Leisure Hotels, Resorts and Cruise Lines draws on the most recently published Movies and Entertainment accounts as at 2 February 2021 (i.e. Casinos and Gaming the most recently published financial Road and Rail information prior to this date has been used). The average balance date across Mining & Resources Metals and Mining all companies surveyed is 24 April 2020. Oil, Gas and Consumable Fuels Retail Food and Staples Retailing Multiline Retail Restaurants Specialty Retail Trading Companies and Distributors Transport & Distribution Air Freight & 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 22 - 26.

Sector summary (bubble size = revenue NZ$b)

140

120

100 Food & Beverage $41.7b Building Products 80 Construction & Engineering $7.3b Retail $9.2b

DWC $16.7b 60

40 Leisure Mining & Resources $1.7b $3.2b Transport & Distribution 20 $6.2b

0 - 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x 7.0x 8.0x 9.0x 10.0x

Debt / EBITDA mulitple Basis of Preparation

Source data Days purchases outstanding Days Purchases Outstanding This publication contains high level Creditors include GST, whilst cost of sales (“DPO”) financial information sourced from the do not. To the extent that a company DPO is the number of days’ worth of S&P Capital IQ database of the latest acquires inventory or input services in New purchases represented by the outstanding available published financial statements Zealand (or another jurisdiction that levies creditors at the relevant calculation date. of New Zealand domiciled entities. The a consumption tax), results will vary. The calculation used in this survey is: information contained herein is based In addition, to the extent that there has Creditors on sources we believe reliable, but we do been an accounting adjustment that has DPO = x 365 not guarantee its accuracy, and it should affected a company’s sales, purchases, Cost of Sales be understood to be general information debtors, inventory or creditors, this has only. The information is not intended to not been isolated in the analysis and A low DPO metric indicates that it takes be taken as advice with respect to any may be reflected as a change in working fewer days for a company to pay its specific organisation or situation and capital. trade creditors. A high DPO is desirable cannot be relied upon as such. from a cash flow and working capital McGrathNicol accepts no responsibility for Calculation methodology management perspective, but can be an errors or omissions in financial information indicator of tight liquidity and the cause of underpinning this publication, nor the The working capital metrics referred to strained supplier relationships. loss of any person arising from use of or in this report have been calculated, as reliance on information herein. All readers follows: Days Working Capital (“DWC”) of this publication must make their own DWC is a relative measure of total working enquiries or obtain professional advice in Days Sales Outstanding (“DSO”) capital tied up in a company relative to relation to any issue or matter referred to in DSO is the number of days’ worth of sales. The calculation used in this survey is: this publication. sales represented by the outstanding debtors at the relevant calculation date. Debtors + Inventory Limitations The calculation used in this publication is: - Creditors DWC = x 365 McGrathNicol acknowledges that at the Debtors Sales level of detail applied, the analysis has DSO = x 365 limitations, some of which are noted below. Sales A low DWC metric is favourable as it For this reason, the analysis focuses on indicates a low level of working capital performance relative to the prior period, A low DSO metric is desirable and indicates relative to the size of the business. rather than in absolute terms against that it takes a relatively low number of days peers. for a company to collect debtors. Days sales outstanding Days Inventory Outstanding Debtors include GST, whilst sales do not. To (“DIO”) the extent that a company makes more or less of its sales in New Zealand (or another DIO is the number of days’ worth of jurisdiction that levies a consumption tax), purchases represented by the inventory results will vary. balances at the relevant calculation date. The calculation used in this survey is:

Days inventory outstanding Inventory DIO = x 365 To the extent that a company has more Cost of Sales or less labour included in its cost of sales, results will vary.

21 Findings

Building Products DSO DIO DPO DWC Company name 2018 2019 2020 2018 2019 2020 2018 2019 2020 2018 2019 2020 Fletcher Building Limited 60.7 45.8 40.7 97.1 97.2 100.7 59.6 46.1 40.4 90.7 82.9 86.0 Metro Performance Glass Limited 55.0 52.9 47.7 58.8 57.1 53.3 51.6 49.6 45.7 58.9 57.0 51.8 Steel & Tube Holdings Limited 62.6 55.2 52.9 111.9 107.5 110.5 32.9 30.3 31.3 122.9 115.2 116.3 CSR Building Products (NZ) Limited 40.6 46.0 37.1 112.5 132.7 117.9 51.6 179.6 213.0 82.4 13.8 (27.7) Daiken New Zealand Limited 12.1 18.8 31.3 65.8 54.4 47.4 23.9 25.2 20.3 49.6 46.0 56.9 Fernhoff Limited 45.8 42.8 82.3 69.7 98.4 76.5 80.1 43.3 38.6 40.5 66.0 104.5 Rheem New Zealand Limited 36.3 40.6 35.4 119.6 106.6 117.0 65.3 67.5 71.6 69.5 65.0 63.9 Tasman Steel Holdings Limited 65.2 62.4 52.0 90.5 105.8 79.9 51.5 55.0 58.2 99.9 107.3 73.5 Peer group average 47.3 45.6 47.4 90.7 95.0 87.9 52.1 62.1 64.9 76.8 69.1 65.7

Construction & Engineering DSO DIO DPO DWC Company name 2018 2019 2020 2018 2019 2020 2018 2019 2020 2018 2019 2020 ABB Limited 73.3 71.5 85.2 123.8 88.2 93.8 94.1 54.1 83.5 92.3 91.2 92.0 Aurecon New Zealand Limited 104.7 70.8 71.6 9.9 10.2 11.5 4.5 2.4 5.3 108.3 76.3 76.0 Calibre Consulting Limited 71.3 64.8 47.0 - - - 3.0 9.8 1.3 68.8 56.3 45.8 Delta Utility Services Limited 65.0 56.3 50.9 62.7 75.9 85.8 35.9 32.0 35.0 77.1 75.9 72.3 Downer New Zealand Limited 62.9 53.1 52.0 5.1 6.7 9.2 26.8 32.2 19.1 42.8 30.0 42.9 Electrix Limited 80.0 120.7 73.3 11.8 14.3 15.7 37.5 16.1 16.3 68.6 119.9 73.0 Fulton Hogan Limited 44.0 48.0 35.8 17.2 20.5 28.4 67.6 58.7 59.6 13.9 25.5 17.8 WorleyParsons New Zealand Limited 42.8 53.0 48.2 - - - 39.1 22.0 22.5 13.2 35.6 29.9 Peer group average 68.0 67.3 58.0 28.8 27.0 30.6 38.6 28.4 30.3 60.6 63.8 56.2 Findings

Food & Beverage DSO DIO DPO DWC Company name 2018 2019 2020 2018 2019 2020 2018 2019 2020 2018 2019 2020 Asahi Beverages (NZ) Limited 64.7 72.6 73.3 49.4 56.9 55.8 59.6 56.4 63.5 57.2 73.0 67.5 DB Breweries Limited 82.8 73.4 76.6 42.6 44.5 34.9 108.7 110.2 115.4 44.9 35.2 29.5 Delegat Group Limited 54.4 46.6 44.0 448.3 400.8 377.7 54.1 43.2 32.1 239.3 231.6 217.1 Foley Wines Limited 79.1 71.5 50.5 428.4 567.5 573.1 49.3 58.4 54.8 342.1 404.1 360.7 Lion NZ Limited 125.9 179.9 162.4 171.0 189.9 157.7 52.3 81.2 35.8 201.8 249.8 247.5 Marlborough Wine Estates Group 98.1 92.3 86.7 463.3 340.3 380.4 42.8 30.9 81.7 372.8 295.8 285.6 Moa Group Limited 62.6 93.8 16.3 95.0 133.9 50.1 97.5 141.9 88.5 60.8 88.4 (2.6) Negociants New Zealand Limited 124.6 136.2 135.4 148.2 120.5 127.9 26.4 28.4 25.9 219.8 208.6 215.1 Nobilo Holdings 81.2 102.0 122.9 181.6 188.3 161.5 33.4 39.0 34.5 176.7 199.7 207.6 Pernod Ricard Winemakers New Zealand 61.2 65.6 80.4 426.0 363.3 241.1 136.6 112.4 128.1 253.0 253.0 167.5 (Matua) Limited 57.1 138.0 176.8 192.2 213.7 205.3 10.4 22.6 21.8 202.2 264.6 320.2 Alcoholic Beverages 81.0 97.4 93.2 240.6 238.1 215.0 61.0 65.9 62.0 197.3 209.4 192.3 Alliance Group Limited 24.3 24.4 22.9 24.6 23.5 28.4 18.0 16.2 18.6 30.7 31.3 32.2 Allied Foods (N.Z.) Limited 38.6 32.3 40.7 36.5 46.1 37.2 46.0 27.1 40.2 32.6 44.3 38.9 ANZCO Foods Limited 34.5 39.8 35.1 65.1 52.3 46.5 21.5 18.0 32.1 76.1 72.4 48.1 Arnott's New Zealand Limited 77.6 81.1 51.2 53.7 46.3 41.6 94.7 92.0 100.2 44.2 43.6 3.6 Beam Suntory NZ Limited 186.8 212.5 175.0 5.1 5.1 3.8 43.0 37.9 41.4 150.4 181.0 139.2 Bidfood Limited 28.1 27.8 23.7 25.4 27.3 27.8 48.7 45.9 47.3 9.9 13.4 8.6 Blue Sky Meats (NZ) Limited 54.4 44.0 25.3 39.1 48.7 32.2 30.1 21.4 14.2 62.3 68.2 41.6 Compass Group New Zealand Limited 35.7 34.3 27.9 5.5 5.8 6.2 43.1 45.3 47.7 3.9 0.8 (6.6) Comvita Limited 114.1 65.9 33.0 403.8 449.7 411.4 49.9 48.0 38.0 322.9 317.9 223.6 Dairy Goat Co-Operative (N.Z.) Limited 51.8 65.1 94.4 167.0 187.6 211.7 50.8 60.4 65.0 119.0 138.9 178.0 EastPack Limited 8.9 10.2 15.7 11.1 10.3 13.3 89.8 18.4 19.1 (36.8) 5.5 11.9 Fonterra Co-operative Group Limited 36.0 32.8 29.4 61.6 70.7 69.2 69.5 74.1 66.6 29.4 29.9 31.7 Frucor Suntory New Zealand Limited 87.7 89.2 87.1 78.2 73.3 59.7 40.8 61.3 111.7 108.0 96.0 57.0 General Mills New Zealand Limited 85.6 93.2 49.2 86.3 68.3 66.3 96.1 77.2 103.5 78.9 87.1 23.5 Glencore Agriculture (NZ) Limited 94.8 89.3 80.6 110.0 93.3 102.6 91.7 29.4 22.0 111.4 146.3 152.6 Good Spirits Hospitality Limited 1.2 1.1 1.8 9.8 10.4 10.6 42.2 63.1 56.3 (15.4) (25.7) (24.0) Kerry Ingredients (NZ) Limited 53.4 71.8 97.1 59.3 55.6 61.2 26.0 38.5 54.2 77.5 85.2 102.7 Kura Limited 81.6 93.1 51.8 140.6 122.5 260.4 90.9 80.0 80.1 116.2 123.5 172.5 Landcorp Farming Limited 38.4 40.9 36.4 412.0 385.5 350.7 57.8 51.2 50.1 183.2 189.3 158.5 Market Gardeners Limited 28.5 26.3 34.0 7.6 6.8 6.8 47.3 44.9 54.2 (6.8) (7.2) (8.2) Mars New Zealand Limited 49.3 24.3 26.9 62.8 60.7 58.6 82.9 26.5 37.7 37.1 44.8 38.6 Nestlé New Zealand Limited 30.0 33.3 33.3 65.1 80.4 73.7 98.4 104.8 104.6 14.0 21.1 17.4 New Zealand King Salmon Investments 24.8 24.7 23.1 55.0 59.4 134.0 37.1 29.7 49.3 37.1 46.7 76.0 New Zealand Sugar Company Limited 54.3 66.9 58.6 64.0 73.5 81.8 19.9 23.4 22.3 89.4 105.6 104.8 Sanford Limited 35.3 41.0 40.3 67.6 65.0 107.3 8.3 9.9 12.1 81.5 85.2 118.8 Scales Corporation Limited 20.5 16.1 10.2 31.6 53.1 25.2 14.6 16.4 11.1 33.4 44.5 21.3 SeaDragon Limited 32.5 17.2 1.5 97.0 74.0 87.7 23.8 21.5 41.3 177.9 105.6 67.6 Seeka Limited 31.5 26.9 30.4 11.6 10.5 10.5 8.4 11.4 13.4 34.1 26.2 28.1 Speirs Group Limited 34.4 36.3 33.1 37.8 37.1 31.4 45.7 46.6 51.0 31.2 32.3 25.2 Synlait Milk Limited 19.4 20.6 15.6 74.5 71.8 89.5 28.3 35.8 35.5 56.8 50.0 61.1 T&G Global Limited 46.0 40.2 48.9 29.4 21.0 19.9 42.0 38.4 49.1 36.6 26.7 26.4 Limited 21.1 16.3 13.4 51.1 67.4 70.5 52.7 52.3 62.3 20.3 23.1 17.0 The Tatua Co-operative Dairy Company 47.5 42.6 40.5 65.2 61.4 80.7 37.2 37.7 43.3 72.2 62.6 71.2 Weyville Holdings Limited 48.3 52.4 39.5 144.1 128.2 127.8 47.1 43.0 55.1 132.7 129.2 107.0 Zespri Group Limited 6.4 5.1 5.1 11.1 17.4 27.9 7.7 7.4 9.3 9.4 13.5 20.6 Food & Non-Alcoholic Beverages 47.5 46.8 40.9 76.3 76.3 82.1 47.2 41.6 47.4 67.5 70.3 62.5

Peer group average 55.5 58.9 53.4 115.6 115.0 113.9 50.5 47.4 50.9 98.5 103.5 93.5 23 Findings

Leisure DSO DIO DPO DWC Company name 2018 2019 2020 2018 2019 2020 2018 2019 2020 2018 2019 2020 Dynasty Hotel Group Limited 19.9 30.2 14.3 7.7 7.6 7.2 19.4 21.0 15.5 16.1 25.4 11.0 Flight Centre (NZ) Limited 85.6 81.8 60.5 - - - 91.1 95.7 69.6 37.4 37.1 6.1 Millennium & Copthorne Hotels NZ 35.9 33.5 23.8 240.7 200.1 201.9 11.9 9.3 71.1 129.0 114.6 81.8 10.3 7.1 8.6 - - - 63.2 63.4 107.7 (5.1) (7.6) (16.9) SkyCity Entertainment Group Limited 6.5 16.5 16.8 8.1 6.7 7.1 34.4 27.7 20.9 (4.5) 7.4 9.6 SPAK (1996) Limited 22.6 23.9 12.5 3.7 3.8 1.9 9.5 9.8 23.1 18.4 19.5 2.4 Tourism Holdings Limited 7.4 9.8 10.9 140.0 179.3 199.2 102.9 94.1 59.9 18.8 32.8 54.5 Peer group average 26.9 29.0 21.1 57.2 56.8 59.6 47.5 45.8 52.5 30.0 32.7 21.2

Mining & Resources DSO DIO DPO DWC Company name 2018 2019 2020 2018 2019 2020 2018 2019 2020 2018 2019 2020 Bathurst Resources Limited 26.2 19.9 22.4 13.4 14.7 14.2 17.1 21.9 22.6 23.6 14.7 16.0 Resources NZ (Holdings) 39.5 58.0 38.0 50.8 11.2 17.5 351.1 78.2 90.0 (1.9) 14.5 (15.0) Methanex New Zealand Limited 77.8 82.2 88.7 10.7 12.0 18.6 23.0 29.8 30.7 67.8 69.1 79.2 New Zealand Aluminium Smelters Limited 87.1 76.7 60.8 58.2 56.5 61.6 59.1 68.7 52.6 86.5 67.6 67.3 New Zealand Oil & Gas Limited 117.2 65.9 61.0 39.3 53.1 48.7 47.2 32.2 29.6 112.7 74.5 70.2 Oceana Gold (New Zealand) Limited 91.3 2.4 1.4 63.3 78.1 62.6 39.5 40.8 57.6 103.4 19.3 4.0 Pacific Aluminium (New Zealand) Limited 60.7 56.2 37.4 82.1 103.0 76.4 14.7 8.3 1.2 110.3 135.1 105.6 Simsmetal Industries Limited 58.7 13.5 36.5 156.8 41.2 50.6 112.7 15.5 12.2 95.8 37.3 72.8 Peer group average 69.8 46.9 43.3 59.3 46.2 43.8 83.0 36.9 37.1 74.8 54.0 50.0 Findings

Retail DSO DIO DPO DWC Company name 2018 2019 2020 2018 2019 2020 2018 2019 2020 2018 2019 2020 Breville New Zealand Limited 39.2 51.3 39.3 60.9 50.4 44.7 47.5 47.6 62.2 50.1 53.5 25.2 Bridgestone New Zealand Limited 36.5 33.6 35.6 133.6 131.5 140.2 79.1 74.0 80.0 65.8 63.7 66.2 Briscoe Group Limited 0.3 0.3 0.3 74.9 78.1 80.7 57.5 55.4 55.8 10.8 13.9 15.4 BSH Home Appliances Limited 29.9 48.3 46.0 163.3 149.8 180.3 84.7 52.2 99.4 83.0 109.1 95.9 Bunnings Limited 16.1 15.6 15.5 90.5 84.3 94.4 33.8 32.1 39.5 55.8 52.3 53.8 Burger Fuel Group Limited 42.7 50.5 81.8 16.3 12.3 11.5 19.9 23.6 13.0 39.2 40.6 80.5 Century Yuasa Batteries (NZ) Limited 67.1 64.8 71.3 117.7 119.5 122.0 74.3 77.1 103.1 94.0 91.1 82.4 Charles Parsons (NZ) Limited 116.2 151.7 156.6 91.0 107.0 119.7 39.9 99.4 68.8 146.7 156.1 187.8 New Zealand Holdings 0.1 0.1 0.2 72.1 88.4 75.4 71.1 78.3 56.3 0.7 6.4 12.4 DFS New Zealand Limited 17.6 6.3 1.0 161.6 155.0 111.7 124.3 121.3 71.1 39.7 27.7 27.7 Green Cross Health Limited 22.5 20.7 24.7 26.0 23.5 25.0 24.5 24.1 28.5 23.8 20.2 21.6 Hallenstein Glasson Holdings Limited 0.2 2.1 3.0 71.2 76.2 75.8 18.7 21.6 39.4 20.6 23.9 17.9 Kathmandu Holdings Limited 6.1 6.5 23.6 224.4 217.2 249.7 48.1 53.9 69.7 70.6 69.0 98.7 Kimbyr Investments Limited - - - 138.7 145.8 137.1 28.2 21.9 50.7 48.4 54.2 37.6 Lion Liquor Retail Limited 7.3 7.5 7.2 101.4 91.1 112.1 56.7 56.1 60.3 41.1 33.8 46.6 Louis Vuitton New Zealand Limited 3.0 4.3 1.5 98.7 73.0 66.8 50.0 68.1 58.9 37.7 8.0 7.3 Luxottica Retail New Zealand Limited 23.0 25.1 20.9 82.3 85.3 52.2 36.7 213.7 201.6 34.2 (10.0) (26.2) McDonald's Restaurants (New Zealand) 24.3 25.2 35.6 3.1 2.4 3.2 51.6 87.3 69.4 4.5 (5.9) 15.5 Mitre 10 (New Zealand) Limited 153.9 148.5 196.8 79.5 73.7 61.5 423.2 394.2 463.7 (31.1) (25.2) (33.7) NZPM Group Limited 37.9 36.9 32.6 79.0 76.1 75.5 42.9 35.3 32.4 63.1 65.8 63.2 Limited 5.6 5.0 9.7 95.4 92.5 67.2 42.9 55.1 71.8 40.7 29.9 6.6 Turners Automotive Group Limited 19.3 21.7 16.0 65.0 65.0 76.1 27.3 21.2 23.7 53.6 62.3 62.1 Industrial & Safety Holdings Nz Limited 53.8 48.1 44.0 102.4 107.0 115.0 25.1 28.9 22.5 102.9 99.7 105.2 Woolworths New Zealand Group Limited 2.2 2.2 3.8 27.6 27.9 27.3 41.3 27.2 41.5 (8.2) 2.8 (6.9) Peer group average 30.2 32.4 36.1 90.7 88.9 88.5 64.6 73.7 78.5 45.3 43.5 44.3

25 Findings

Transport & Distribution DSO DIO DPO DWC Company name 2018 2019 2020 2018 2019 2020 2018 2019 2020 2018 2019 2020 Budget Rent a Car Limited 27.9 27.4 32.8 0.6 0.6 0.5 1.6 2.1 2.5 27.2 26.3 31.5 C3 Limited 23.4 19.6 26.4 6.2 4.6 5.1 25.8 36.4 48.3 8.0 (5.3) (8.2) Crown Worldwide (NZ) Limited 37.4 51.0 38.8 5.6 6.7 6.5 17.3 30.6 24.6 29.7 34.9 26.6 Freightways Limited 43.6 42.6 49.8 4.5 4.4 5.2 34.8 30.0 38.6 23.3 25.3 27.4 Hellmann Worldwide Logistics Limited 51.4 47.8 49.2 0.2 0.2 0.3 24.1 23.6 24.7 33.1 30.3 31.2 KiwiRail Holdings Limited 53.9 118.7 64.4 51.4 47.4 60.9 37.6 32.6 68.8 65.4 131.3 57.9 Kuehne + Nagel Limited 68.0 54.8 45.8 5.8 - - 41.7 35.4 34.6 39.0 26.1 18.2 Mainfreight Limited 50.5 48.1 49.6 - - - 49.2 45.9 50.1 8.8 9.2 9.6 ORIX New Zealand Limited 97.8 108.9 113.7 34.2 28.5 44.4 41.6 48.3 31.8 95.5 103.0 117.2 QEX Logistics Limited 41.3 33.3 44.2 52.1 55.6 58.2 25.9 10.7 11.9 63.3 72.6 85.3 Quayside Holdings Limited 57.3 63.4 70.9 1.9 3.8 3.6 31.5 42.6 87.7 43.6 45.3 30.9 TIL Logistics Group Limited 49.8 50.2 45.2 0.4 0.4 0.1 30.6 28.9 23.6 23.4 25.7 26.8 TNT Express Worldwide (NZ) 25.2 21.9 31.4 0.6 - - 5.3 3.5 4.3 20.7 18.7 27.5 Toll Group (NZ) Limited 41.9 42.4 41.5 0.6 0.5 0.5 24.0 30.3 29.9 21.1 14.9 15.3 Peer group average 47.8 52.1 50.3 11.7 10.9 13.2 27.9 28.6 34.4 35.9 39.9 35.5

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