Fliway pays special dividend as annual profit beats prospectus forecast

Fliway [NZX: FLI], the transport and logistics company that listed on the NZX in April, will pay a special dividend after reporting annual profit 33% above its prospectus forecasts – mainly due to lower-than-expected listing costs.

Net profit was $2.19 million compared to a prospectus forecast of $1.64 million, but still below last year's $4.7 million, as expected, due to the one-off listing costs and a number of non-cash accounting adjustments, the company said in a statement.

The Auckland-based business has been owned since 2006 by Duncan Hawkesby and his wife Gretchen, the daughter of New Zealand's richest man Graeme Hart, who supplied some seed capital to get the pair started in the business. They retained a 54% stake after the initial public offering.

As a result of IPO listing costs coming in $500,000 lower than expected, the board declared a special fully imputed dividend of 0.5 cents per share and a maiden dividend of 1.9 cents per share in relation to on-going earnings. Both dividends will be payable on October 20.

Chairman Craig Stobo said it was a one-off dividend relating to the period April to June and shareholders should expect future dividends to be in its normal payout range of 50-70% of earnings.

Sales revenue of $84.1 million was 1.3% below the prospectus forecast of $85.2 million due to a reduced fuel adjustment in the domestic business, while its international freight forwarding business was hit by some customer churn and lower shipping rates, which is expected to continue in the 2016 financial year. The UPS-Fliway joint venture delivered strong revenue growth with good cost control, and delivered a dividend $50,000, about 11% ahead of forecast.

Stobo said it was a sound first result as a listed company, with Fliway continuing to show earnings growth in international freight forwarding and the express package business, and improved capacity management in the domestic business unit.

"Revenue is slightly down on the prospectus forecast but ahead of last year. I'm comfortable with that as it comes with good management around costs," he said.

Net capital expenditure of $4.3 million was above forecast by $300,000 as a result of higher-than-expected capital costs, with shifting to a larger Auckland warehouse.

The company has a better cash position than forecast, with net debt of $8.2 million compared to forecast net debt of $10.7 million.

The board has reaffirmed the prospectus forecast for December 2015 revenue of $85.6 million. Net profit was forecast to be $4.5 million. Stobo said while revenue is expected to be softer than the prospectus forecast for 2016, its cost position was strengthening.

Fliway's share last traded at 97 cents, down from the $1.20 listing price, which has left Stobo slightly bemused given the absence of any material information from the company since listing.

"The company has been focused on meeting its prospectus forecasts and has done that, so it's interesting to see how the share price has traded."

Stobo said the transport sector was often seen as an indicator of where the economy is heading and comments from other large Kiwi transport businesses that they were seeing the impact of a slower economic growth on their customers could be affecting Fliway's share price.

At the time of the IPO, Mr Hawkesby, who is the company's managing director, said it was looking to expand courier deliveries and build or acquire into new sectors such as dangerous goods, refrigerated transport or bulk liquid haulage.

Stobo said the business was taking a cautious approach to any expansion into new areas or acquisitions because it was still focused on meeting its prospectus forecasts.

"We're not running out of the blocks like a sprinter,” he said. “We're being cautious at the moment and wanted to stay on top of meeting those June and December forecasts. It's so important to build credibility with our investors."

(BusinessDesk)