Mainfreight Annual Report 2015
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WE DELIVER ANNUAL REPORT 2015 WE DELIVER: LIFE’S ESSENTIALS TO A GLOBAL MARKETPLACE. OUR BUSINESS SPECIALISES IN GLOBAL SUPPLY CHAIN LOGISTICS, HELPING OUR CUSTOMERS SATISFY THE WORLD’S EVER-INCREASING DEMAND FOR ESSENTIAL COMMODITIES – FOR EXAMPLE FOOD, BEVERAGES AND SHELTER. 3 GLOBAL SUPPLY CHAIN LOGISTICS IS ONE OF THE WORLD’S FASTEST-GROWING INDUSTRIES. WHY? AS THE WORLD’S POPULATION DEMANDS READY ACCESS TO COMMODITIES FROM AROUND THE PLANET, A BORDERLESS GLOBAL MARKETPLACE IS A REALITY. Manufacturers who trade in this marketplace are seeking out robust, proven supply chain partners with a global network. Mainfreight has become a serious contender in this space. With real global capability, an ever-intensifying network and aggressive growth targets, we are well-positioned to help our customers get ever-increasing volumes of their products into the hands of their customers. Whether it’s down the road or across the globe. NOTICE OF MEETING Notice is given that the Annual Meeting of Shareholders of Mainfreight Limited will be held at 4.00pm on Wednesday 29 July 2015 at the Barrel Hall, Villa Maria Estate, 118 Montgomerie Road, Mangere, Auckland. Full details, including the Meeting Agenda, are contained in the separate Notice of Meeting and Explanatory Notes accompanying this report, and are also available on the Company’s website, www.mainfreight.com or by scanning the QR above. CONTENTS: 06 07 08 10 12 Our Place in Facts and Chairman’s Group Managing Network Growth the World Figures Report Director’s Report Strategy 14 16 20 24 28 Mainfreight Group New Zealand Australia The Americas Europe Operating Results Operating Results Operating Results Operating Results Operating Results 32 38 40 54 56 Asia Suppy Chain Our Mainfreight Environment Operating Results People Technology & Community 60 64 66 68 70 Our Key Targets and Capital Corporate Executive Team Milestones Achievements Expenditure Governance 74 75 76 79 80 A Tribute to Directors’ Board of Ten Year Operating Sir Donald Rowlands Report Directors Snapshot of Growth Statistics 83 84 85 86 87 Income Balance Statement of Cash Flow Notes to Financial Statement Sheet Changes in Equity Statement Statements 121 123 127 128 129 Auditor’s Statutory Five-Year Review Glossary Directory Report Information of Terms 6 MAINFREIGHT ANNUAL REPORT 2015 OUR PLACE IN THE WORLD MAINFREIGHT IS IN THE BUSINESS OF GLOBAL SUPPLY CHAIN LOGISTICS. PUT SIMPLY, WE PARTNER WITH OUR CUSTOMERS TO PROVIDE THE FULL SPECTRUM OF WAREHOUSING, DOMESTIC DISTRIBUTION AND INTERNATIONAL AIR AND OCEAN FREIGHT SERVICES. 6.8% 8.7% 7.7% $2,054.3m EBITDA $162.2m $83.5m REVENUE GROUP OPERATING REVENUE GROUP EBITDA GROUP NET PROFIT BEFORE ABNORMAL ITEMS NET PROFIT IN 2015 WE SET A NEW RECORD PRE-TAX PROFIT OF $121 MILLION OUR 73 BRANCHES 48 BRANCHES GLOBAL LOCATIONS 1,979 1,340 TEAM TEAM MEMBERS MEMBERS AUSTRALIA EBITDA: NZ$73.6m EBITDA: AU$37.2m NEW ZEALAND REVENUE: NZ$542.7m REVENUE: AU$490.6m 24 BRANCHES 69 BRANCHES 28 BRANCHES ASIA 278 683 EUROPE 1,997 TEAM TEAM TEAM MEMBERS MEMBERS MEMBERS EBITDA: US$5.0m EBITDA: US$19.1m EBITDA: EU€11.9M REVENUE: US$44.2m REVENUE: US$422.2m REVENUE: EU€259.7m THE AMERICAS 7 FACTS & FIGURES OUR OPERATIONS ARE POWERED BY A GLOBAL TEAM OF 6,277 PASSIONATE PEOPLE, WORLD CLASS TECHNOLOGIES AND A CAN-DO ATTITUDE. WHILE WE HAVE BUSINESSES OPERATING IN 242 BRANCHES IN 20 COUNTRIES AROUND THE WORLD, OUR JOURNEY WILL ONE DAY SEE US LOCATED IN ALL THE MAJOR TRADING NATIONS OF THE WORLD. GROUP PROFITS TOTAL 80,000 ASSETS 60,000 $1.124 40,000 BILLION 20,000 Before 0 Abnormals 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 ($000) GROUP REVENUE 2,000,000 TOTAL DIVIDEND PAID 1,500,000 Offshore 1,000,000 Revenue 34 ($000) CENTS PER SHARE 500,000 New Zealand 0 Revenue 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 ($000) GROUP EBITDA ADJUSTED 150,000 EARNINGS 120,000 90,000 Offshore EBITDA 83.95 60,000 ($000) CENTS PER SHARE 30,000 New Zealand 0 EBITDA 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 ($000) 8 MAINFREIGHT ANNUAL REPORT 2015 Did someone say two billion dollars… oh, and another fifty- four million on top! BRUCE PLESTED EXECUTIVE CHAIRMAN 9 CHAIRMAN’S REPORT WE HAVE HAD 37 YEARS OF HISTORY IN NEW ZEALAND AND IT WILL TAKE TIME TO DEVELOP THE SAME LEVEL OF PERFORMANCE IN OTHER COUNTRIES. Did someone say two billion dollars … of our new facilities. With focus Mainfreight remains committed to $2,000,000,000? on building momentum in sales, we supporting KiwiRail, locating our facilities will return quickly to growth levels on rail sidings wherever possible, and Oh, and another fifty-four million on top! of recent years. providing our customers with access to That’s Mainfreight’s combined global a full range of multi-modal services for The current New Zealand Government’s sales for the year ending 31 March 2015: their freight. investment and growing confidence $2,054,339,000. in KiwiRail is a sign of an emerging Since the late 1970s, our mission Nearly $40 million sales per week. understanding of the importance of rail statement has not varied: to the New Zealand economy. For too To the present and past customers and many years, politicians have used Rail in The only way to keep ahead of members of our global team, a huge the worst possible way – slagging them our competitors is by the superior thank you for the effort and success we in the House for mechanical breakdowns, performance of our people. have had since our standing start in 1978. or stormy weather on Cook Strait, or The only measure of that superior You have achieved this record. selling them to foreigners or other performance is in how the customer dubious imposters, then buying them Our pre-tax global profits are at a record perceives it. level of $121 million; an increase of $11 back at huge cost after they have been million or 10.2% on the previous year. thoroughly reamed out. We aim to delight our customers. Global sales have increased by $130 It is good to see that the “International We must be certain that we are totally million, or 6.8%. It is interesting to note Transport Forum” (ITF), a grouping of committed to this mission statement. that our total sales figure in 1996, the 54 member countries, and this year It is equally important whether we are year the Company was floated, was presided over by our own Transport working in a strong economy, or an $130 million. Minister, the Honourable Simon Bridges, underperforming economy. Our part in proclaim, “We recognise the potential the supply chain really does matter. Are we satisfied with these results? of rail as a cost-effective, reliable, Are we moderately satisfied? The answer, and environmentally friendly mode of My thanks to our global team for your probably, is “No”. And one of the main transport for trade and tourism”. efforts in striving for excellence in reasons for that is, New Zealand still everything we do. accounts for just over half of our total Railways are not a Ferrari or Apple; there net profit – despite Mainfreight now is no new model next year. There are no Our thanks also to all our customers, for being established in some of the largest speculative or easy profits – just honest supporting us and for recognising our economies in the world. toil from honest men and women, who total commitment to excellence and to accept that they are part of a 24-hour, delighting you. However, it is important for us to realise seven-day business. that we have had 37 years to create and develop our business and brand to a All subject to the vagaries of weather, high level in New Zealand. We need to accidents, mechanical and human failure, understand that this level of performance which can occur anywhere within the takes time to grow in other countries. thousands of kilometres over which Bruce Plested they operate. We are disappointed that we have briefly June 2015 stumbled in our growth in Australia. Yet And while successfully moving millions we have a high level of satisfaction with of tonnes of freight per year, for the our teams and leadership, and the quality benefit of the New Zealand economy. 10 MAINFREIGHT ANNUAL REPORT 2015 As demand for logistics services grows globally, we are well positioned to deliver. DON BRAID GROUP MANAGING DIRECTOR 11 GROUP MANAGING DIRECTOR’S REPORT OUR STRENGTH IS IN THE INTENSITY OF OUR EVER-INCREASING NETWORK, NOW LOCATED IN 20 COUNTRIES ACROSS THE WORLD. It is 11.00am on Friday, 20th February but also with our competence and 2015; five of our senior executives, competitiveness across the air and three from New Zealand, one from ocean segments. Thailand and one from the United States, Unfortunately, we were not successful in are in the Auckland boardroom of gaining the business in this instance; our a major multi-national manufacturer. Southeast Asian operations not yet large Mainfreight is one of five candidates enough in the minds of our customer to selected in the final tender round for the give them full confidence. However, we worldwide distribution of product for the were recognised as a global logistics manufacturer. Their manufacturing and company to tender against our largest distribution locations are in the same competitors, and proving ourselves countries where Mainfreight has capable and proficient in services across its operations. the full supply chain. A coming of age We all were excited about our prospects. for Mainfreight.