Aurizon Holdings Ltd. · ASX:AZJ
Aurizon — FY2018 Earnings Presentation
77 slides from Aurizon's earnings presentation, Aug 13, 2018
Slide 1: FY2018 Results
FY2018 Results Andrew Harding – MD & CEO Pam Bains – CFO & Group Executive Strategy 13 August 2018
Slide 2: Disclaimer
FY2018 RESULTS Disclaimer NO RELIANCE ON THIS DOCUMENT NO OFFER OF SECURITIES This document was prepared by Aurizon Holdings Limited (ACN 146 335 622) (referred to Nothing in this presentation should be construed as a recommendation of or an offer to sell or a as “Aurizon” which includes its related
Slide 3: Performance Overview
FY2018 RESULTS PERFORMANCE OVERVIEW Performance Overview Andrew Harding Managing Director & CEO 3
Slide 4: Safety performance
FY2018 RESULTS PERFORMANCE OVERVIEW Safety performance Aurizon is on a journey to reset the safety culture Incidents per million person-hours worked TOTAL RECORDABLE INJURY FREQUENCY RATE (TRIFR)1 -6% 10.33 9.88 9.75 8.43 7.12 FY2015 FY2016 FY2017 1HFY2018 2HFY2018 1. TRIFR includes employees and co
Slide 5: Aurizon's vision, purpose and values
FY2018 RESULTS PERFORMANCE OVERVIEW Aurizon’s vision, purpose and values Focussed on customers and recognises its important role in both regional Australia and global supply chains VISION PURPOSE Achievement of vision represents: The first Growing choice for regional • #1 in the market bulk Australi
Slide 6: Strategic levers required to fulfil Aurizon's vision
FY2018 RESULTS PERFORMANCE OVERVIEW Strategic levers required to fulfil Aurizon’s vision Execution against the three strategic levers is aimed at driving differentiation, competitive advantage and sustainable performance STRATEGIC LEVERS Delivering a cost effective Labour and asset Improving the and
Slide 7: Update on key priorities
FY2018 RESULTS PERFORMANCE OVERVIEW Update on key priorities $1bn returned to shareholders since March 2017. Three year transformation target of $380m has been achieved CAPITAL MANAGEMENT NETWORK REGULATION (UT5) › $1bn returned to shareholders since March 2017, › UT5 draft response strategy in exec
Slide 8: FY2018 highlights
FY2018 RESULTS PERFORMANCE OVERVIEW FY2018 highlights1 Solid result with $941m EBIT, 10.9% ROIC and 69.8% OR FINANCIAL RESULTS CASHFLOW › Underlying EBIT up 6% to $941m with earnings › Free cash flow (FCF) down 5% to $669m growth in Bulk › Total Above Rail volumes up 4% - growth in Coal (7%) SHAREHO
Slide 9: Coal update
FY2018 RESULTS PERFORMANCE OVERVIEW Coal update Operating in a supportive market environment, Coal is focussed on improving cost competitiveness, asset utilisation and delivery performance and achieved $47m in transformation in FY2018 COAL MARKET CONDITIONS COAL CUSTOMERS CONTRACT WINS › Annual volu
Slide 10: Network update
FY2018 RESULTS PERFORMANCE OVERVIEW Network update Aurizon is pursuing multiple pathways to resolve UT5 UT5 DRAFT RESPONSE STRATEGY OPERATIONAL RESPONSE TO THE DRAFT DECISION › Regulatory › Aurizon has aligned maintenance and operating practices with draft decision given retrospectivity to › March 2
Slide 11: Bulk update
FY2018 RESULTS PERFORMANCE OVERVIEW Bulk update The turnaround plan is in execution, focus now turns to growth opportunities CUSTOMER UPDATE TRANSFORMATION & GROWTH › IPL › $32m in benefits generated in FY2018. Key Fertilizer and acid hauls in Queensland (Mt Isa line) initiatives include: New contra
Slide 12: Enterprise Agreement update
FY2018 RESULTS PERFORMANCE OVERVIEW Enterprise Agreement update EA - Bargaining has now commenced across all Queensland EAs ENTERPRISE AGREEMENTS # OF EMPLOYEES ENTERPRISE AGREEMENT EXPIRY DATE STATUS OF BARGAINING COVERED (approx.) WA Rollingstock Maintenance EA 100 10 May 2017 Complete Queensland
Slide 13: Intermodal update
FY2018 RESULTS PERFORMANCE OVERVIEW Intermodal update Intermodal Interstate closed, ACCC has blocked sale of Acacia Ridge and Queensland Intermodal (QIM) INTERMODAL - ACCC DECISION › On 19 July 2018 ACCC blocked the sale of QIM and Acacia Ridge Terminal (ART) and commenced proceedings in the Federal
Slide 14: FY2018 Financial Performance
FY2018 RESULTS FINANCIAL PERFORMANCE FY2018 Financial Performance Pam Bains CFO & Group Executive Strategy 14
Slide 15: Key financial highlights
FY2018 RESULTS FINANCIAL PERFORMANCE Key financial highlights1 EBIT growth from transformation and improved earnings in Coal and Bulk › Revenue impacted by UT4 and FY2016 $m FY2018 FY2017 Var revenue true up in Network and lower volumes in Bulk, offset in part by higher Revenue 3,113 3,143 (1%) coal
Slide 16: Coal
FY2018 RESULTS FINANCIAL PERFORMANCE Coal Volume growth and transformation deliver improved performance despite increased cyclical maintenance and costs supporting new volumes $m FY2018 FY2017 Variance Revenue Above rail revenue 1,208 1,157 4% › Volumes – up 7% post Cyclone Debbie recovery and comme
Slide 17: Bulk
FY2018 RESULTS FINANCIAL PERFORMANCE Bulk Earnings turnaround driven by transformation benefits and reduced depreciation offset by lower volumes in Bulk Revenue $m FY2018 FY2017 Variance › Lower bulk volumes with cessation of Mt Isa Revenue 618 645 (4%) Freighter and lower iron ore and grain volumes
Slide 18: Network
FY2018 RESULTS FINANCIAL PERFORMANCE Network Performance in line with expectation, cost reductions and higher volumes offset by UT4 adjustments from FY2017 Revenue $m FY2018 FY2017 Variance › UT4 one off true up (~$90m) in FY2017 Revenue 1,219 1,262 (3%) › FY2016 revenue adjustment ($22m) Operating
Slide 19: Intermodal
FY2018 RESULTS FINANCIAL PERFORMANCE Intermodal Result includes benefit of closure of Intermodal Interstate in 1HFY2018. Reported as a discontinued item EBIT Loss improvement driven by lower $m FY2018 FY2017 Variance operating costs with the closure of Intermodal Interstate in 1HFY2018 and lower Rev
Slide 20: Capital expenditure
FY2018 RESULTS FINANCIAL PERFORMANCE Capital expenditure FY2019 capital expenditure mix change with Network decrease offset by increase in Above Rail CAPITAL EXPENDITURE1 FY2016 – FY2019 ($M) -30% 703 › FY2018 capex in line with guidance at $490m (guidance $485-495m) › Capital expenditure guidance f
Slide 21: Cashflow
FY2018 RESULTS FINANCIAL PERFORMANCE Cashflow FCF impacted by prior period asset sales FREE CASH FLOW ($M) NET CASH FROM OPERATIONS ($M) -5% 704 1,516 +3% 669 1,281 1,273 1,308 1,218 340 237 227 FY2014 FY2015 FY2016 FY2017 FY2018 FY2014 FY2015 FY2016 FY2017 FY2018 Total Group Continuing Operations ›
Slide 22: Funding update
FY2018 RESULTS FINANCIAL PERFORMANCE Funding update Interest costs reduced in FY2018. Strategy remains to diversify debt investor base and increase average tenor UT5 DRAFT DECISION IMPACT KEY DEBT METRICS FY2018 FY2017 › UT5DD does not currently support Moody’s Baa1 credit metrics for Network (Holdi
Slide 23: Outlook & Key Takeaways
FY2018 RESULTS OUTLOOK & KEY TAKEAWAYS Outlook & Key Takeaways Andrew Harding Managing Director & CEO 23
Slide 24: FY2019 outlook
FY2018 RESULTS OUTLOOK & KEY TAKEAWAYS FY2019 outlook Providing Group earnings guidance is challenging due to uncertainty around UT5 final outcome › Underlying EBIT guidance for above rail business $390-430m › Providing guidance for Network is challenging as transitional tariffs in place for only 1H
Slide 25: Key takeaways
FY2018 RESULTS OUTLOOK & KEY TAKEAWAYS Key takeaways Delivered to expectations in FY2018. Earnings headwinds in FY2019 with new strategic framework positioned to deliver long term earnings growth EARNINGS UT5 › Solid FY2018 performance with EBIT up 6% › UT5 draft response strategy in execution acros
Slide 26: Contact and Further Information
Contact and Further Information Chris Vagg Kath Clapham Head of Investor Relations & Manager Investor Relations Group Treasurer +61 7 3019 9044 +61 7 3019 9030 26
Slide 27: Additional Information
FY2018 RESULTS ADDITIONAL INFORMATION Additional Information Group Information Coal Bulk Network Capital Expenditure 27
Slide 28: Aurizon's rail haulage operations
FY2018 RESULTS ADDITIONAL INFORMATION Aurizon’s rail haulage operations KEY OPERATIONAL STATISTICS1 COMMODITIES Coal, iron ore, bulk freight and intermodal ROLLINGSTOCK 500+ active locomotives OPERATIONAL FOOTPRINT More than 160 operational sites PEOPLE More than 4,500 operational full-time employee
Slide 29: Capital allocation framework
FY2018 RESULTS ADDITIONAL INFORMATION Capital allocation framework Operating Sustaining Dividends Surplus capital Cash flow & (payout range returns 70-100%) (e.g. Buy-backs) & Transformation Net borrowings Capital Growth capital (at ~40% targeted (only where it gearing) maximises shareholder value)
Slide 30: Additional Information: Group
FY2018 RESULTS – ADDITIONAL INFORMATION Additional Information Group 30
Slide 31: Financial highlights (underlying)
FY2018 RESULTS ADDITIONAL INFORMATION Financial highlights1 (underlying) $m FY2018 FY2017 Variance Revenue 3,112.7 3,142.5 (1%) Operating costs (1,646.6) (1,691.0) 3% EBITDA 1,466.1 1,451.5 1% EBIT 940.6 884.2 6% NPAT 542.1 494.7 10% EPS (cps) 26.9 24.1 12% Total dividend (cps) 27.1 22.5 20% ROIC 10
Slide 32: EBIT by business unit (underlying)
FY2018 RESULTS ADDITIONAL INFORMATION EBIT by business unit (underlying) $m FY2018 FY2017 Variance Coal 428.6 420.0 2% Bulk 50.1 (14.4) nm Network 480.6 480.9 - Other (18.7) (2.3) (713%) EBIT1 940.6 884.2 6% 1. Continuing Operations 32
Slide 33: Group operating highlights
FY2018 RESULTS ADDITIONAL INFORMATION Group operating highlights1 $m FY2018 FY2017 Variance Above Rail2 Revenue / NTK ($/’000 NTK) 38.1 38.7 (2%) Labour Costs3 / Revenue 24.4% 24.7% 0.3ppt NTK / FTE (MNTK) 13.2 12.5 6% EBITDA Margin – Underlying 47.1% 46.2% 0.9ppt Operating Ratio – Underlying 69.8%
Slide 34: Other profit & loss (underlying)
FY2018 RESULTS ADDITIONAL INFORMATION Other profit & loss (underlying) $m FY2018 FY2017 Variance Revenue 90.8 107.0 (15%) Total operating expenses1 (99.7) (98.7) (1%) EBITDA (8.9) 8.3 nm Depreciation and amortisation (9.8) (10.6) 8% EBIT (18.7) (2.3) (713%) 1. FY2017 includes $26.4m one off overhead
Slide 35: Quarterly above rail tonnes – June quarter 2018
FY2018 RESULTS ADDITIONAL INFORMATION Quarterly above rail tonnes – June quarter 2018 Quarter Jun-17 Year Financial Variance Quarter Ending vs. to date Jun-18 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 % Jun-18 Jun-17 % Coal volumes (mt) CQCN 31.7 39.7 38.1 35.8 38.9 23% 152.5 143.5 6% NSW & SEQ 14.6 15.2 1
Slide 36: Balance sheet summary
FY2018 RESULTS ADDITIONAL INFORMATION Balance sheet summary $m 30 June 2018 30 June 2017 Assets classified as held for sale1 108.0 7.3 Other current assets 689.8 722.1 Property, plant & equipment 8,659.9 8,835.0 Other non-current assets 315.7 281.5 Total assets 9,773.4 9,845.9 Liabilities classified
Slide 37: Reconciliation of borrowings
FY2018 RESULTS ADDITIONAL INFORMATION Reconciliation of borrowings $m Commentary Total debt including working capital facility 3,398.8 › Non-current debt on a Cash basis Reconciliation to Financial Statements Add/(less): › Transaction costs directly attributable to borrowings are Capitalised transac
Slide 38: Significant Items
FY2018 RESULTS ADDITIONAL INFORMATION Significant Items This table represents items classified as significant and excluded from underlying earnings $m FY2018 FY2017 Variance Continuing operations 25.7 (759.8) 785.5 Asset Impairments (31.7) (649.0) 617.3 Freight Management Transformation project - (6
Slide 39: Material items to note
FY2018 RESULTS ADDITIONAL INFORMATION Material items to note › Table represents items that are included $m FY2018 FY2017 Variance in Underlying EBIT for the continuing operations Redundancy expense (17) (5) (12) › This table is designed to assist investors to ‘normalise’ underlying earnings Long ter
Slide 40: Redundancy cost breakdown
FY2018 RESULTS ADDITIONAL INFORMATION Redundancy cost breakdown › Redundancy costs since IPO have been included in Redundancy costs Redundancy costs underlying EBIT as well as classified as a significant Year included in underlying classified as item EBIT ($m) Significant items ($m) › Aurizon classi
Slide 41: Dividend history
FY2018 RESULTS ADDITIONAL INFORMATION Dividend history Amount per share Payment Date Franking Payout Ratio (cents) FY2018 Final 24 September 2018 13.1 60% 100%1 FY2018 Interim 26 March 2018 14.0 50% 100%1 FY2018 Total Dividend 27.1 FY2017 Final 25 September 2017 8.9 50% 100% FY2017 Interim 27 March
Slide 42: Additional Information: Coal
FY2018 RESULTS – ADDITIONAL INFORMATION Additional Information Coal 42
Slide 43: Coal strategic levers
FY2018 RESULTS ADDITIONAL INFORMATION Coal strategic levers Priorities are focussed on the Optimise and Excel levers to improve cost competitiveness, asset utilisation and delivery performance Asset Precision Customer Existing Supply chain Portfolio Cost Asset utilisation Adjacencies Utilisation ope
Slide 44: Coal profit & loss (underlying)
FY2018 RESULTS ADDITIONAL INFORMATION Coal profit & loss (underlying) $m FY2018 FY2017 Variance Tonnes (m) 212.4 198.2 7% Above Rail 1,207.8 1,156.8 4% Track Access 598.1 630.3 (5%) Other 7.3 7.9 (8%) Total Revenue 1,813.2 1,795.0 1% Operating Expenses (1,202.0) (1,191.3) (1%) EBITDA 611.2 603.7 1%
Slide 45: Coal financial & operating metrics
FY2018 RESULTS ADDITIONAL INFORMATION Coal financial & operating metrics FY2018 FY2017 Variance Tonnes (m) 212.4 198.2 7% NTKs (bn) 50.4 47.6 6% Operating Ratio 76.4% 76.6% 0.2ppt Above Rail Revenue /NTK ($/’000 NTK) 24.0 24.3 (1%) Opex (excl access)/NTK ($/’000 NTK) 15.4 15.3 (1%) Labour productivi
Slide 46: Coal haulage tonnes (mt) by system
FY2018 RESULTS ADDITIONAL INFORMATION Coal haulage tonnes (mt) by system FY2018 FY2017 Variance CQCN Newlands 20.4 17.8 15% Goonyella 62.4 54.3 15% Blackwater 58.5 59.4 (2%) Moura 11.2 12.0 (7%) Total CQCN 152.5 143.5 6% NSW & SEQ West Moreton 7.6 7.0 9% Hunter Valley 52.3 47.7 10% Total NSW & SEQ 5
Slide 47: Coal haulage tonnes (mt)
FY2018 RESULTS ADDITIONAL INFORMATION Coal haulage tonnes (mt) ABOVE RAIL COAL TYPE SPLIT (ESTIMATE) 100% 49% 48% 49% 49% 52% 53% 51% 52% 51% 51% 48% 47% FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Thermal Metallurgical Source : Aurizon analysis 47
Slide 48: Coal contract expiry
FY2018 RESULTS ADDITIONAL INFORMATION Coal contract expiry AURIZON COAL CONTRACT VOLUME EXPIRY BY YEAR (MTPA – AS AT 30 JUNE 2018) 60 45 Million tonnes per annum 30 15 0 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 Notes: › This represents the maximum contracted tonnes as at 30 June 2
Slide 49: Coal revenue and contractual outlook
FY2018 RESULTS ADDITIONAL INFORMATION Coal revenue and contractual outlook COAL ABOVE RAIL1 REVENUE COMPOSITION ANNUALISED FORECAST COAL CONTRACTED VOLUMES (MTPA)2 608 607 253 577 586 579 245 570 28 34 30 20 12 23 26 12 5 229 10 8 6 70 76 134 150 155 136 63 182 178 417 411 418 413 166 175 177 355 36
Slide 50: Australian export coal demand
FY2018 RESULTS ADDITIONAL INFORMATION Australian export coal demand The fundamentals of metallurgical and thermal coal remain strong, driven by steel and energy demand growth in Asia, supporting growth in Australian exports of ~2% pa over the next decade INDIA: CRUDE STEEL PRODUCTION (MT) +54% Metal
Slide 51: Coal market: Australia
FY2018 RESULTS ADDITIONAL INFORMATION Coal market: Australia AUSTRALIA: METALLURGICAL COAL EXPORT AUSTRALIA: THERMAL COAL EXPORT 250 $300 250 $150 Hard Coking Coal Price (USD/t) Thermal Coal Price (USD/t) 200 200 million tonnes million tonnes $200 $100 150 150 100 100 $100 $50 50 50 0 $0 0 $0 FY11 F
Slide 52: Coal trade
FY2018 RESULTS ADDITIONAL INFORMATION Coal trade AUSTRALIA: METALLURGICAL COAL EXPORT AUSTRALIA: THERMAL COAL EXPORT 20mt 120% 20mt 20% 80% 10% 15mt 18mt 40% 0% 0% 10mt 16mt -10% -40% 5mt -80% 14mt -20% Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- 16 16 17 17 17 17
Slide 53: Coal Price | Coal Capital & Exploration Expenditure
FY2018 RESULTS ADDITIONAL INFORMATION Coal Price | Coal Capital & Exploration Expenditure HARD COKING COAL SPOT PRICE (US$/t FOB) THERMAL COAL SPOT PRICE (US$/t FOB) $300 $150 $250 $105 $191 $200 $100 $150 $100 $50 $50 $0 $0 Jun- Dec- Jun- Dec- Jun- Dec- Jun- Jun- Dec- Jun- Dec- Jun- Dec- Jun- 15 15
Slide 54: Coal demand
FY2018 RESULTS ADDITIONAL INFORMATION Coal demand CHINA CRUDE STEEL PRODUCTION INDIA CRUDE STEEL PRODUCTION 1,000mt 20% 120mt 15% 100mt 750mt 10% 10% 80mt 500mt 0% 5% 60mt 250mt -10% 40mt 0% CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 Crude Ste
Slide 55: Australia coal competitiveness
FY2018 RESULTS ADDITIONAL INFORMATION Australia coal competitiveness METALLURGICAL COAL CASH COSTS (US$/t, CFR INDIA, 2018) THERMAL COAL CASH COSTS (US$/t, CFR JAPAN, 2018) $120 $80 $70 $100 $60 US$/t US$/t $80 $115 $120 $106 $50 $72 $95 $63 $64 $60 $57 $58 $75 $40 $40 $30 Russia Australia Canada Mo
Slide 56: Additional Information: Bulk
FY2018 RESULTS – ADDITIONAL INFORMATION Additional Information Bulk 56
Slide 57: Bulk strategic levers
FY2018 RESULTS ADDITIONAL INFORMATION Bulk strategic levers The plan to optimise the business is in execution. Focus now turns to the Excel and Extend levers to drive the turnaround plan Precision Customer Existing Supply chain Portfolio Cost Service delivery Asset utilisation Adjacencies operations
Slide 58: Update on the plan
FY2018 RESULTS ADDITIONAL INFORMATION Update on the plan Bulk is delivering on its plan to strengthen its haulage portfolio INITIAL REVIEW 1HFY2018 TODAY As1at AprilRETAIN 2018 5 8 9 • Benefit from ongoing Cement Australia IPL Fertilizer & IPL Acid transformation MMG KAL Freighter 2 TRANSFORM 7 4 2
Slide 59: Bulk profit & loss (underlying)
FY2018 RESULTS ADDITIONAL INFORMATION Bulk profit & loss (underlying) $m FY2018 FY2017 Variance Tonnes (m) 54.7 58.3 (6%) Total Revenue 618.1 645.2 (4%) Total operating expenses (542.9) (586.1) 7% EBITDA 75.2 59.1 27% Depreciation and amortisation (25.1) (73.5) 66% EBIT 50.1 (14.4) nm Operating Rati
Slide 60: Bulk financial and operating metrics
FY2018 RESULTS ADDITIONAL INFORMATION Bulk financial and operating metrics $m FY2018 FY2017 Variance Tonnes (m) 54.7 58.3 (6%) NTKs (bn) 13.4 15.4 (13%) Operating Ratio 91.9% 102.2% 10.3ppt Total Revenue / NTK ($000 NTK) 46.1 41.9 10% Opex (excl access)/NTK ($/’000 NTK) 30.3 31.1 3% Labour productiv
Slide 61: Australia Capital & Exploration Expenditure – Metal Ore
FY2018 RESULTS ADDITIONAL INFORMATION Australia Capital & Exploration Expenditure – Metal Ore CAPITAL EXPENDITURE: METAL ORE MINING^ EXPLORATION EXPENDTURE: SILVER, LEAD, ZINC A$4.0b A$40m +36% +142% A$30m A$2.0b A$20m A$10m A$0.0b A$0m Jun- Dec- Jun- Dec- Jun- Dec- Jun- Jun- Dec- Jun- Dec- Jun- Dec
Slide 62: Additional Information: Network
FY2018 RESULTS – ADDITIONAL INFORMATION Additional Information Network 62
Slide 63: Network snapshot
FY2018 RESULTS ADDITIONAL INFORMATION Network snapshot Central Qld Coal Network (CQCN) KEY NETWORK FACTS 40 + operating coal mines serviced LEGEND Townsville PORT OF ABBOT POINT Open access network with three Abbot Point Coal Terminal (APCT) City/town above rail coal operators – Aurizon Power Statio
Slide 64: Network strategic levers
FY2018 RESULTS ADDITIONAL INFORMATION Network strategic levers Priorities are focused on the development of a fit for purpose network that creates value and facilitates changing the regulatory environment for the benefit of all Fit for purpose Existing UT5 solution Capability Customer solutions Regu
Slide 65: Network context - UT5 draft decision recap
FY2018 RESULTS ADDITIONAL INFORMATION Network context - UT5 draft decision recap AURIZON AURIZON NETWORK NETWORK’S UT5 QCA DRAFT DECISION RESPONSE TO SUBMISSION DRAFT DECISION Total Adjusted MAR 4,892 3,893 4,757 WACC (post tax nominal vanilla) 6.78% 5.41% 7.03% Inflation 1.22% 2.37% 2.30% WACC (pos
Slide 66: Risk, capital and maintenance
FY2018 RESULTS ADDITIONAL INFORMATION Risk, capital and maintenance Operation of the CQCN to deliver optimal value to all stakeholders requires the appropriate balance of investment, maintenance and operational support • For an infrastructure asset, the level of capital investment is directly relate
Slide 67: Operational response to the UT5 draft decision
FY2018 RESULTS ADDITIONAL INFORMATION Operational response to the UT5 draft decision Operating and maintenance practices and risk tolerance have been aligned to those assumed in the draft decision due to the retrospectivity of UT5 to 1 July 2017 EXAMPLES OF CHANGES • No deviation from the plan (excl
Slide 68: Network EBIT Bridge
FY2018 RESULTS ADDITIONAL INFORMATION Network EBIT Bridge Worst case scenario assumes final UT5 decision equals the UT5 draft decision INDICATIVE NETWORK EBIT* FY2017 – FY2019 ($M) Based on transitional tariffs If transitional tariffs in place for full FY19, EBIT UT4 Adjustments UT5 Adjustments ~470
Slide 69: Network profit & loss (underlying)
FY2018 RESULTS ADDITIONAL INFORMATION Network profit & loss (underlying) $m FY2018 FY2017 Variance Tonnes (m) 229.6 210.8 9% Access Revenue 1,167.1 1,199.9 (3%) Services and other 51.6 62.2 (17%) Total Revenue 1,218.7 1,262.1 (3%) Operating costs (430.1) (481.7) 11% EBITDA 788.6 780.4 1% EBITDA marg
Slide 70: Network financial and operating metrics
FY2018 RESULTS ADDITIONAL INFORMATION Network financial and operating metrics FY2018 FY2017 Variance Tonnes (m) 229.6 210.8 9% NTK (bn) 56.9 53.2 7% Operating Ratio 60.6% 61.9% 1.3ppt Maintenance/NTK ($/’000 NTK) 2.2 2.3 4% Opex/NTK ($/’000 NTK) 13.0 14.7 12% Cycle Velocity (km/hr) 23.5 23.5 - Syste
Slide 71: Network volumes (mt)
FY2018 RESULTS ADDITIONAL INFORMATION Network volumes1 (mt) FY2018 FY2017 Variance Newlands 13.1 12.0 9% Goonyella 126.5 111.1 14% Blackwater/WIRP 62.7 62.2 1% Moura 11.1 12.2 (9%) GAPE 16.2 13.3 22% Total 229.6 210.8 9% Average haul length2 (kms) 247.7 252.3 (2%) 1. Table represents coal tonnes hau
Slide 72: Network volumes (mt)
FY2018 RESULTS ADDITIONAL INFORMATION Network volumes1 (mt) NETWORK COAL TYPE SPLIT (ESTIMATE) 100% 28% 28% 28% 28% 30% 33% 72% 72% 72% 72% 70% 67% FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Thermal Metallurgical 1. Represents coal tonnes hauled on the CQCN by all operators Source : Aurizon analysis
Slide 73: Network revenue adjustment amounts (revenue cap)
FY2018 RESULTS ADDITIONAL INFORMATION Network revenue adjustment amounts (revenue cap) AT2-4 AT5 › Revenue adjustment amounts (RAA) are the Financial Total (diesel tariff) (electric tariff) difference by system between Aurizon’s Total Year $m $m $m Actual AT2-5 Revenue and Allowable AT2-5 1 Revenue
Slide 74: Reconciliation of billed MAR to reported access revenue
FY2018 RESULTS ADDITIONAL INFORMATION Reconciliation of billed MAR to reported access revenue FY2014 FY2015 FY2016 FY2017 FY2018 $m Actual Actual Actual Actual Actual Billed Access Revenue (AT1 to AT5) (ex. GAPE) 794 787 924 892 940 Approved Adjustments to MAR Transitional tariff adjustment (70) - -
Slide 75: Additional Information: Capital Expenditure
FY2018 RESULTS – ADDITIONAL INFORMATION Additional Information Capital Expenditure 75
Slide 76: FY2018 group and business unit capital expenditure ($m)
FY2018 RESULTS ADDITIONAL INFORMATION FY2018 group and business unit capital expenditure ($m) 490 283 443 276 126 86 47 33 47 40 1 47 7 33 0 0 1 0 FY20182 Network Coal Bulk1 Intermodal Corporate2,3 Non Growth Growth 1. Net of externally funded payments 2. Includes capitalised interest 3. Net of leas
Slide 77: Glossary
FY2018 RESULTS ADDITIONAL INFORMATION Glossary Metric Description Access Revenue Amounts received by Aurizon Network for access to the Network infrastructure under all Access Agreements Average haul length NTK/Total tonnes Contract utilisation Total volumes hauled as a percentage of total volumes co