Trading Update

An update on unaudited trading performance for the three months ended 30 September 2007 is provided below.

For the first three months of the current financial year, Freightways has delivered a positive operating earnings result compared with the corresponding period in the prior year. Net Profit After Tax (NPAT) however is only on a par with the prior year due to higher interest costs. While interest rates have been steadily increasing, Freightways has also increased its level of debt to fund recent capacity and growth related investment decisions. Freightways has a well established interest rate hedging strategy in place that is designed to provide long term protection against adverse movements in interest rates. However, short term movements in interest rates will have an impact on the cost of unhedged debt and consequently on NPAT.

The domestic market has continued to be challenging. Activity in Freightways’ core express package business is similar to the prior year, albeit the cost of doing business has increased. The emerging businesses operating in the business mail and information management markets have continued to enjoy strong year-on-year growth. Investment in property (Wellington), premises (Waikato), new operating branches (Queensland and Victoria), IT and linehaul capacity has enhanced Freightways’ positioning for future growth in each of its markets. A corporate office has also been established in Melbourne to support the growth of Freightways’ Australian businesses.

Given the challenging environment it is operating in, Freightways is pleased to deliver a trading update that again demonstrates the resilience of its business model, the importance of its past investment decisions and the successful execution of its growth strategies.

During the quarter, and as previously announced, Freightways completed the acquisition of the Australian document destruction business, Shred-X and subsequently the acquisition of the business of Document Destruction & Paper Recycling. These businesses have now been merged and synergy benefits are expected to flow from mid-October. A smaller Victorian business was also acquired to assist the establishment of Shred-X in the Victorian market. Over the last 16 months Freightways has diversified its interests geographically and also deeper into the information management market.

For the three months ended 30 September 2007, Freightways’ revenue totalled $77 million and Earnings Before Interest and Tax (EBIT) amounted to approximately $14 million. Compared to the prior corresponding period, this performance represents an increase in operating earnings of 4% and delivers an on-par NPAT result.

Results for the three (3) months ended 30 September (unaudited)

These latest results continue the strong historic performance of Freightways, as shown in the following graphs in relation to the last nine years’ financial performance. The results above for the 2007 period have been stated in accordance with NZIFRS. Accordingly, EBIT and NPAT for the 2007 period include no amortisation of goodwill and are therefore comparable with EBITA and NPATA for the 2006 period. There are no material differences affecting comparability of the above results between the periods as a result of transitioning to NZIFRS. (NB. Historic EBITA amounts for the years ended 30 June 1999 to 2003 have been presented on a pro-forma basis consistent with the Freightways Statement and Prospectus issues in August 2003.)

Freightways Operating Revenue

Freightways EBITA

Outlook

Freightways’ core express package business is expected to continue to perform soundly, although growth will again be influenced by the performance of the New Zealand marketplace. Freightways’ emerging growth businesses in the business mail and information management markets are expected to continue their positive growth and development.

Management will continue to take consistent strategies to each of the markets Freightways operates in. These strategies include exploring acquisitions that complement our existing capability. Importantly all subsidiaries are well positioned with capacity to accommodate future growth.

The recent Australian acquisitions are important initiatives for Freightways as it continues on its path to diversify and grow its activity both geographically and further into the information management market.

Freightways’ performance will in the near term be influenced by a challenging domestic marketplace. Medium to longer term and subject to business factors beyond its control, Freightways is exceptionally well positioned in all aspects of its business to continue to achieve positive performance for its shareholders and all other stakeholders.

For further information please contact:

DEAN BRACEWELL
Managing Director
Freightways Limited
Ph: (09) 571 9670
Fax: (09) 571 9671