Aurizon Holdings Ltd. · ASX:AZJ
Aurizon — Debt Investor Presentation (August 2014)
33 slides from Aurizon's debt investor presentation, Aug 25, 2014
Slide 1: Debt Investor Update - FY2014
Debt Investor Update - FY2014 Erin Strang – Group Treasurer & VP Tax & Governance Pam Bains – VP Network Finance 25 August 2014 * Based on Aurizon - Full Year Report Analyst Presentation released to the ASX on 18 August 2014
Slide 2: Important notice
Important notice No Reliance on this document This document was prepared by Aurizon Holdings Limited (ACN 146 335 622) (referred to as “Aurizon” which includes its related bodies corporate). Whilst Aurizon has endeavoured to ensure the accuracy of the information contained in this document at the da
Slide 3: Year in review
Year in review
Slide 4: Aurizon Group
Aurizon Group Erin Strang – Group Treasurer & VP Tax & Governance
Slide 5: Key headlines
Key headlines Safety 71% improvement in LTIFR, 0.28 now at World Class performance 49% improvement in MTIFR FOR PERSONAL USE ONLY Earnings Statutory EBIT down 32% - includes transformation related asset impairment ($190m), other asset impairments ($127m) and voluntary redundancy costs ($69m)
Slide 6: Financial highlights – Underlying
Financial highlights – Underlying $m FY2014 FY2013 Variance 13% improvement in underlying EBIT & EPS FOR PERSONAL USE ONLY Total revenue 3,832 3,766 2% Coal volume up 9% driven by higher demand in both Queensland and Hunter Valley EBITDA 1,351 1,251 8% Iron Ore volume up 21%, at full contractual
Slide 7: Significant items for FY2014
Significant items for FY2014 Asset Class ($m) Pre-Tax Transformation-related asset impairments: Rollingstock 170 Integrated Operating Plan identified 200 locomotives and almost 2,800 wagons as surplus 76 locos and 2,387 wagons sold during the year, with further disposals to follow FOR PERSONAL U
Slide 8: Operating highlights
Operating highlights FY2014 FY2014 vs. FY2014 2H 1H FY2013 FY2013 Opex / NTK improved 10% FOR PERSONAL USE ONLY Variance Revenue / NTK ($/000 NTK) 51.7 52.2 51.3 55.8 (7%) Revenue / NTK decrease driven by lower Labour Costs / Revenue 27.1% 27.2% 26.9% 29.0% 1.9ppt Network revenue due to capped tra
Slide 9: Blackwater operational performance and transformation
Blackwater opportunity cost saving of $34m through the delivery of increased volumes on a flat cost base Operational Performance Transformation Operational FY2013 FY2014 Improvement Drivers Efficiencies Volumes (MTPA) 50.5 49.7 62.0 23% mtpa FOR PERSONAL USE ONLY increase Turn around Time (TAT) • Im
Slide 10: On track to deliver 75% operating ratio in FY2015
On track to deliver 75% operating ratio in FY2015 FY2014 achieved $129m in transformation benefits against a target of 2.1ppt improvement vs. FY2013 $90m Operations benefits - $96m 88.0 FOR PERSONAL USE ONLY o $42m reduction in labour o $29m in fleet productivity o $13m in fuel productivity 83.4 o
Slide 11: Enterprise Agreements update
Enterprise Agreements update Queensland Aurizon’s main efforts have been directed toward negotiating for replacement Enterprise Agreements that are fair, competitive and FOR PERSONAL USE ONLY commercially sustainable Aurizon applied to Fair Work Commission (FWC) on 12th May 2014 under s.225 of t
Slide 12: Aurizon Network
Aurizon Network Pam Bains – VP Network Finance
Slide 13: Network profit & loss - Underlying
Network profit & loss - Underlying FY2014 FY14 vs. FY13 $m FY2014 2H 1H FY2013 Variance FOR PERSONAL USE ONLY Tonnes (million) 214.5 106.9 107.6 182.3 18% Revenue growth impacted by Revenue - Access 951 461 490 921 3% capped transitional tariffs ($60m) - Services 17 9 8 26 (35%) GAPE revenue gro
Slide 14: Network metrics
Network metrics FY2014 FY14 vs. Record volume throughput over the FY13 CQCN totalling 214.5mt, an increase of FY2014 2H 1H FY20132 Variance 32mt (18%) on FY2013 FOR PERSONAL USE ONLY EBIT – Underlying ($m) 412 195 217 417 (1%) Maintenance spend per NTK remained constant in nominal terms despite
Slide 15: Central Queensland Coal Network volumes (mt)
Central Queensland Coal Network volumes (mt) FY2014 FY2014 FY2013 2H 1H FOR PERSONAL USE ONLY Newlands 12.0 5.9 6.1 14.5 Goonyella 114.4 57.1 57.3 97.6 Blackwater 63.1 31.4 31.7 54.9 Moura 12.5 6.2 6.3 10.8 GAPE 12.5 6.4 6.1 4.5 Total 214.5 106.9 107.6 182.3 Average haul length (kms) 253 253 253 245
Slide 16: Reconciliation: Network Segment to Network Legal Entity
Reconciliation: Network Segment to Network Legal Entity FY13 FY14 Effective 1 July 2013 Aurizon Network Pty Ltd is substantially aligned with the Aurizon Holdings Ltd 417 412 Network segment within Aurizon Network Segment – underlying EBIT Holdings Ltd Services Business Engineering & Project Deliv
Slide 17: Financials and operating metrics
Financials and operating metrics FY14 vs Historic financials (A$ millions) FY11 FY12 FY13 FY14 FY13 Total assets 3,838 4,392 5,032 5,378 346 Regulated Asset Base3 3,080 4,055 4,181 N/A N/A Revenue 795.0 821.5 973.5 1,012.1 38.6 EBITDA 418.4 452.2 603.4 543.0 (60.4) Tonnes (m) 164.0 166.7 182.3 214.5
Slide 18: Network Regulation update
Network Regulation update Transitional Tariffs In June 2014, a “Transitional Tariffs” Draft Amending Access Undertaking (DAAU) was approved by the QCA to further extend UT3 to the earlier of 30 June 2015 and the QCA’s final determination on UT4, and to apply transitional Reference Tariffs for FY20
Slide 19: Committed capital expenditure profile
Committed capital expenditure profile Committed growth vs. sustaining capex1 ($m) Growth Capex includes WIRP, Rolleston Electrification, Hexham and Whitehaven rollingstock FOR PERSONAL USE ONLY 1,370 FY2014 sustaining capex: 1,202 - additional spend for coal wagon and locomotive ~1,100 overhauls
Slide 20: Group and segment capital expenditure
Group and segment capital expenditure ($m) FY2014 capex and segment breakdown1 FOR PERSONAL USE ONLY 932 473 595 336 459 159 259 71 97 89 10 16 26 70 55 71 4 6 FY2014 Network Coal Iron Ore Freight Other2 Growth Sustaining 1. FY2014 excludes $120m strategic projects asset impairment (growth capex) 2.
Slide 21: Major committed Network growth projects
Major committed Network growth projects Wiggins Island Rail WIRP is the staged development of new rail lines and upgrading of existing lines to service the new Project (WIRP) Wiggins Island Coal Export Terminal at the Port of Gladstone Commenced: FY2012 FOR PERSONAL USE ONLY Spend to date: $52
Slide 22: Capital Overview
Capital Overview Erin Strang – Group Treasurer & VP Tax & Governance
Slide 23: Debt summary
Debt summary Aurizon Group $0.325bn maturity profile as $m at 30 June 2014 Credit ratings unchanged at BBB+/Baa1 25 Drawn Debt Stable debt maturity profile with an average tenor of 3.5 Undrawn Debt years (FY2013 - 3.6 years) FOR PERSONAL USE ONLY 300 275 Liquidity at 30 June 2014 $0.94bn (undr
Slide 24: Committed capital expenditure profile
Committed capital expenditure profile Committed growth vs. sustaining capex1 ($m) Growth Capex includes WIRP, Rolleston Electrification, Hexham and Whitehaven rollingstock FOR PERSONAL USE ONLY 1,370 FY2014 sustaining capex: 1,202 - additional spend for coal wagon and locomotive ~1,100 overhauls
Slide 25: Major committed Coal growth projects
Major committed Coal growth projects Hexham Train Stage one of the Hexham Train Support Facility (TSF) will service Aurizon’s growing Hunter Valley Support Facility coal freight business and alleviate capacity pressures in the coal supply chain Hunter Valley The TSF will provide for statutory an
Slide 26: Group Strategy & Outlook
Group Strategy & Outlook Erin Strang – Group Treasurer & VP Tax & Governance
Slide 27: Strategic Projects – West Pilbara Infrastructure Project
Strategic Projects – West Pilbara Infrastructure Project Aurizon and Baosteel have effected an off-market takeover of Aquila Resources (delisted on 29th July) Strategic intent of Aurizon’s investment in Aquila is to facilitate development of rail and port infrastructure for the West Pilbara FOR
Slide 28: Strategic Projects - other
Strategic Projects - other Galilee Basin (Coal) Moorebank (Intermodal) FOR PERSONAL USE ONLY Aurizon progressing with GVK Hancock to acquire 51% interest in The Sydney Intermodal Terminal Alliance (SIMTA) consortium, Hancock Coal, which holds the Abbot Point T3 (Port Project) and comprising Qube
Slide 29: FY2015 Outlook
FY2015 Outlook Based on current market conditions, our volume outlook in respect of FY2015 is: FOR PERSONAL USE ONLY o Coal – haulage volumes in a range of 210-220mt o Iron Ore – decrease in contracted volumes from 30mt in FY2014 to ~23mt in FY2015 as previously disclosed o Freight – modest increa
Slide 30: Summary
Summary Strong underlying result driven by: FOR PERSONAL USE ONLY o Volume growth and delivering sustainable value from the transformation program Disciplined capital management continues with dividend payout ratio increasing from 65% to 70% 75% Operating Ratio for FY2015 remains the key objec
Slide 31: Questions & Answers
Questions & Answers
Slide 32: Appendix
Appendix
Slide 33: Definitions
Definitions Metric Description Access Revenue Amount received for access to the Network infrastructure under the Access Agreement Average haul length NTK/Total tonnes Contract utilisation Total volumes hauled as a percentage of total volumes contracted CQCN Central Queensland Coal Network dGTK Diese
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