APRIL 2012 Introduction to New Zealand Post Investor Relations Presentation New Zealand Post Group: New Zealand Post Limited.
GROUP OVERVIEW Page 2 Investor Relations Presentation
Long standing history Over 170 years of postal services The history of New Zealand Post (NZP) dates from 1840 with the establishment of the first Post office By 1984, New Zealand Post Office was a monopoly Government provider of telecommunications and postal services, and also provided a Post Office Savings Bank service, but had suffered from chronic under-investment In 1986, the SOE Act led to the creation of New Zealand Post Limited, Telecom Corporation of New Zealand and PostBank Limited on 1 April 1987 The powers of the Board and the Government were separated with no government interference in day to day business operations Telecom and PostBank were later privatised but NZP remains 100% NZ Government owned Page 3 Investor Relations Presentation
Competing in deregulated markets NZP is a commercial company which operates across a range of deregulated, competitive markets ─ The standard letter market was deregulated in 1998 with independent operators given access to the postal network NZP operates a mixed relationship model in its Express business (50/50 JV with DHL in New Zealand and Australia) ─ NZP regards partnering with other corporates as a key part of future success Since 2000, NZP also has sought to diversify away from core postal operations into: ─ Financial services – Kiwibank ─ Information and data management – Datam ─ Digital Services – Datacom, Localist Page 4 Investor Relations Presentation
A trusted investment Trusted and iconic brands NZP has the best reputation in New Zealand (AMR Interactive Corporate Reputation Index 2010) Wide reach into the community ─ Network of almost 900 Post Shops and PostCentres ─ Sponsor of the New Zealand Book Awards ─ Community support including includes free postage through Community Post and Books in Homes programme. Historic returns Returns under short term 16% 100 90 14% pressure 80 12% 70 $m - NPAT Return % 10% 60 Although profitability has been under 8% 50 40 6% pressure in recent years, NZP is still 30 4% 20 2% one of the very few profitable post 10 0% 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 businesses in the world Normalised NPAT Normalised ROCE Source: NZP Page 5 Investor Relations Presentation
Responsive to change NZP has overcome major strategic threats: 1840 1920s 1960s 1980s Now First post office Telephone Courier Fax Internet In reaction to each of these threats, NZP concentrated on doing what it did better and more efficiently However in the 2010s, NZP will have to be different in order to survive Page 6 Investor Relations Presentation
The journey so far 2010 2011 2012 onwards Develop Plan Execute Plan Analysis First members of the new Completion of new Group Implementation of strategic management team in place Leadership Team including programmes several external hires Cameron Partners undertake Continued growth through the strategy review Restructure away from bank federated model and active Decision to move from Target mid term ROCE of at portfolio management with federated model least 12% and overall long-term benefits but short- stronger financial Development of initial term restructuring costs performance strategic plan to tackle Plan on a page developed with NZ Post‟s transformation is reduction in postal volumes a focus on long-term benefits and grow the bank ongoing but benefits Work across strategic projects beginning to accrue on: Physical network Store network Kiwibank Digital Page 7 Investor Relations Presentation
Group Leadership Team Brian Roche, CEO, NZ Post Group (2010) Paul Brock, CEO, Kiwibank (2002) Brian has held a wide variety of leadership roles in New Zealand with a particular Paul has an extensive background in New Zealand's banking industry, focus on transport, treaty settlements, education and housing. He was project including managerial roles with Westpac and Trust Bank. He was part of the manager for the successful bid to secure the hosting rights to Rugby World Cup team that created Kiwibank in 2002 and has held a number of key positions 2011. within the bank, including GM Marketing and GM Savings and Transactions. Mark Yeoman, CFO, NZ Post Group (2009) Gary Woodham, Group GM, Customer Mark was previously CFO at Airways and before that CEO of Samoa's telecom Solutions &Services (2004) and postal company where he managed its transformation from a government Gary was previously CEO of Datam (formerly Datamail) . He has extensive department to a State-Owned Enterprise. Mark has held a number of executive experience in business process outsourcing, change management, and roles in a wide-range of technology based industries in Australia and New customer experience, including 27 years with Databank/EDS in New Zealand Zealand after beginning his career with Deloitte. and Asia Pacific. Ashley Smout, Group GM, Operations (2011) Jacqui Cleland, Group Manager, HR (2007) Ashley was previously CEO at Airways Corporation of New Zealand, Before Jacqui was previously GM IR at Inland Revenue and before that HR joining Airways Corporation in 1999, Ashley spent 10 years in general Manager in Fonterra's Marketing and Innovation Division,. She previously management roles with Schneider Electric, including positions in Australia and researched and lectured in human resource management at Massey Singapore. University and has performed HR consulting both in New Zealand and overseas. Mark Gibson, CEO, Express Couriers (2005) Paul Reid, Group GM, Strategy & Innovation Mark was appointed as CEO of ECL after holding a number of senior roles (2011) within Courier Post. Mark has an executive management background across a Paul was previously CEO at MetService Limited, Before joining MetService in number of different industries, including freight, distribution, retail and 2007, Paul held a variety of senior commercial and operational positions with automotive. Air New Zealand, Carter Holt Harvey and Ernst & Young. Malcolm Shaw, Group Manager, Assurance (2000) Malcolm‟s role also includes General Counsel and Company Secretary. He has an extensive legal background, as Legal Counsel for Contact Energy, Assistant General Counsel for the New Zealand Dairy Board and as a lawyer for a number of firms both here and overseas. Page 8 Investor Relations Presentation
Shape of NZ Post NZ Post is focused on three core businesses Brand Highlights Division Description Financial Kiwibank and New Zealand Home Loans Services The delivery of post and packages via Postal time and service based offerings, and the channels to maximise this Platforms to link businesses with Digital customers, leveraging trusted brand Services position Page 9 Investor Relations Presentation
Revenue and EBIT split The legacy Postal businesses still contribute the majority of NZP revenue but financial services is increasing its contribution to EBIT External revenues by division EBIT by division Digital 4% Digital 7% Financial Services 27% Postal 32% Financial Services Postal 64% 66% Source: NZP Source: NZP 2012 forecast results Page 10 Investor Relations Presentation
Current four fold challenge 1. Decline in postal volumes 3. Digital services The challenge: The challenge: A structural decline in postal volumes through Creating a sustainable business in the information substitution of digital media services/digital market Our plan: Our plan: Build a sustainable physical network that is New Leverage our trusted brand to provide digital solutions to Zealand’s provider of choice support NZP’s businesses and the modern needs of New Zealanders 2. Maturity of Kiwibank 4. Retail transformation The challenge: The challenge: The second stage of growth of Kiwibank – from start An outdated store network experience that is expensive to run and doesn’t fit our modern customer needs for up challenger brand to full service bank both postal services and for Kiwibank. Our plan: Our plan: Grow our core business and to diversify the bank into new markets – reducing portfolio risk and accessing Deliver an industry leading customer experience, a new growth markets. reduction in the overall cost of the Store Network, an improved experience for our people and a platform for growth for Kiwibank Page 11 Investor Relations Presentation
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