Aurizon Holdings Ltd. · ASX:AZJ
Aurizon — FY2019 Earnings Presentation
88 slides from Aurizon's earnings presentation, Aug 12, 2019
Slide 1: FY2019 Results
FY2019 Results Andrew Harding – Managing Director & CEO Pam Bains – CFO & Group Executive Strategy 12 August 2019
Slide 2: Disclaimer
FY2019 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: Agenda
FY2019 RESULTS Agenda 1 Safety 2 Integration Review 3 FY2019 Performance Overview 4 FY2019 Financial Performance 5 Outlook & Key Takeaways 6 Q&A 3
Slide 4: Safety performance
FY2019 RESULTS Safety performance The result reinforces the importance of our Seamless Safety initiative to reset the safety culture TOTAL RECORDABLE INJURY FREQUENCY RATE (TRIFR)1 +10% Incidents per million person-hours worked 11.07 9.88 10.02 8.43 7.12 FY2015 FY2016 FY2017 FY2018 FY2019 1. TRIFR i
Slide 5: Integration review
FY2019 RESULTS Integration review Andrew Harding Managing Director & CEO
Slide 6: Integration review
FY2019 RESULTS INTEGRATION REVIEW Integration review In June 2018 Aurizon announced it would review the benefits of remaining vertically integrated. The review of the integrated structure was assessed through five relevant core criteria SYNERGIES / GROWTH CAPITAL STAKEHOLDERS VALUATION DIS-SYNERGIES
Slide 7: Stakeholders
FY2019 RESULTS INTEGRATION REVIEW Stakeholders Majority of stakeholders either have no preference or prefer Aurizon to remain vertically integrated STAKEHOLDERS INSIGHT FROM CUSTOMERS › Majority of customers are either ambivalent or prefer Aurizon to remain integrated OTHER STAKEHOLDER CONSIDERATION
Slide 8: Synergies / dis-synergies
FY2019 RESULTS INTEGRATION REVIEW Synergies / dis-synergies A separated structure would result in loss of operational synergies and also SYNERGIES / incur costs of duplication DIS-SYNERGIES DIS-SYNERGIES AND RISKS FROM SEPARATION ARE REAL Enables easier implementation of operational improvements as
Slide 9: Growth options & Valuation
FY2019 RESULTS INTEGRATION REVIEW Growth options & Valuation Growth options are present in either structure, but execution GROWTH remains uncertain OPTIONS VALUATION GROWTH OPPORTUNITIES VALUATION › Current share price implies discount to fair value has narrowed 1 Separation unlocks a small › Market
Slide 10: Capital structure
FY2019 RESULTS INTEGRATION REVIEW Capital structure More efficient capital structure can be implemented regardless of CAPITAL integration STRUCTURE OUTCOMES OF LEGAL AND CAPITAL STRUCTURE REVIEW 1 CURRENT LEGAL STRUCTURE BBB+/Baa1 Current capital structure is not optimised, with Holdings Group credi
Slide 11: Conclusion
FY2019 RESULTS INTEGRATION REVIEW Conclusion The review concluded that the benefits of remaining vertically integrated outweigh separation at this time CRITERIA INTEGRATION SEPARATION BENEFITS BENEFITS • Customer preference (by contracted • Provides choice of pure-play exposure STAKEHOLDERS volume
Slide 12: Performance overview
FY2019 RESULTS Performance overview Andrew Harding Managing Director & CEO
Slide 13: FY2019 highlights
FY2019 RESULTS PERFORMANCE OVERVIEW FY2019 highlights Non Network EBIT (ex redundancy) $450m above top end of guidance, includes $20m doubtful debt recovery GROUP EBIT STATUTORY NPAT ROIC FREE CASHFLOW $829m $473m 9.7% $735m down 12% down 15% down 1.2ppt up 10% NETWORK CAPITAL COAL VOLUMES FINAL DIV
Slide 14: Achievements to date
FY2019 RESULTS PERFORMANCE OVERVIEW Achievements to date Execution of the strategy over the last two years has generated long term value for Aurizon shareholders Achieved Execute Ongoing De-risked Optimising Restructured fundamental Freight operational near term the legal and to Business regulatory
Slide 15: Coal update
FY2019 RESULTS PERFORMANCE OVERVIEW Coal update Through a focus on reliability, performance and providing customers with tailored, flexible operating solutions, Coal has secured key contract extensions CONTRACT UPDATE CUSTOMER VALUE PROPOSITION › Jellinbah – contract extension for Jellinbah East & ›
Slide 16: Bulk update
FY2019 RESULTS PERFORMANCE OVERVIEW Bulk update Bulk continues to improve its market positioning. Target Bulk markets remain positive driven by demand for key commodities CONTRACT UPDATE BULK CONTRACT PORTFOLIO EXPIRY PROFILE1 › Glencore Freighter 0 - 3 years > 7 years 29% New service on commercial
Slide 17: Network update
FY2019 RESULTS PERFORMANCE OVERVIEW Network update Through constructive engagement with our customers, Network has submitted a customer DAAU that delivers significant regulatory reform and a range of benefits for both Network and customers BENEFITS FROM THE DAAU NETWORK OPERATING COSTS ($M)2 718 LON
Slide 18: Other matters
FY2019 RESULTS PERFORMANCE OVERVIEW Other matters Below is a summary update on other matters › On 15 May 2019 the Federal Court of Australia rejected ACCC’s allegations that the sale SALE OF agreement between Aurizon and Pacific National (PN) for ART contravened competition law ACACIA RIDGE TERMINAL
Slide 19: Financial Performance
FY2019 RESULTS FY2019 Financial Performance Pam Bains CFO & Group Executive Strategy
Slide 20: Key financial highlights
FY2019 RESULTS FINANCIAL PERFORMANCE Key financial highlights1 Results reflect reduced earnings in Network from the UT5 Final Decision, including the acceleration of the total FY2018 true up into FY2019 $m FY2019 FY2018 Variance › Revenue reflects the UT5FD, including the acceleration of the total F
Slide 21: Coal
FY2019 RESULTS FINANCIAL PERFORMANCE Coal EBIT result in line with expectations with increased spend for maintenance and reliability initiatives $m FY2019 FY2018 Variance Revenue Above rail 1,236 1,208 2% › Volumes – up 1%, CQCN flat impacted by PIA Track access 488 598 (18%) and weather, NSW & SEQ
Slide 22: Bulk
FY2019 RESULTS FINANCIAL PERFORMANCE Bulk Result includes the impact of the Cliffs cessation in FY2018 Net impact Cliffs cessation – reflects the impact of the $m FY2019 FY2018 Variance cessation of Cliffs in June 2018 Revenue 502 618 (19%) Revenue Access costs (104) (162) 36% › Excluding impact of
Slide 23: Network
FY2019 RESULTS FINANCIAL PERFORMANCE Network EBIT performance reflects the UT5FD, including $60m impact of the true up from FY2018. RAB rollover estimated value $5.7bn1 Revenue $m FY2019 FY2018 Variance › $60m recognised in relation to FY2018 UT5FD Track Access 1,070 1,167 (8%) true up Services & Ot
Slide 24: Capital expenditure
FY2019 RESULTS FINANCIAL PERFORMANCE Capital expenditure Capital result in line with guidance for FY2019. Non-growth capex forecast in line with long- term expectations CAPITAL EXPENDITURE1 FY2016 – FY2020 ($M) › FY2019 capex in line with guidance at 703 $495m (guidance $480m - $520m) › Capital expe
Slide 25: Legal and capital structure review
FY2019 RESULTS FINANCIAL PERFORMANCE Legal and capital structure review The objective of the review was to optimise the capital structure of the Group through a reorganisation of the legal entities under Holdings CURRENT LEGAL STRUCTURE PROPOSED LEGAL STRUCTURE BBB+/Baa1 Holdings Group credit rating
Slide 26: Implementation steps
FY2019 RESULTS FINANCIAL PERFORMANCE Implementation steps Required to effect the share transfer of Network and establish independence from Operations › Duty relief - Office of State Revenue (OSR) in Queensland › An application for duty relief on the proposed restructure has been approved by the OSR
Slide 27: Capital structure objectives
FY2019 RESULTS FINANCIAL PERFORMANCE Capital structure objectives The objectives determine the appropriate credit ratings and gearing to ensure the optimal outcome for the Group and shareholders Balance sheet flexibility to adjust to changing Sustainability of market conditions, cashflows through th
Slide 28: Prioritisation of capital
FY2019 RESULTS FINANCIAL PERFORMANCE Prioritisation of capital Surplus capital will be applied in line with Aurizon’s capital allocation hierarchy CAPITAL ALLOCATION HIERARCHY 1 2 3 4 DETERMINE NON GROWTH SURPLUS AVAILABLE DIVIDENDS CAPITAL CAPITAL CAPITAL › Ongoing operating › Sustaining and › With
Slide 29: Outlook & Key Takeaways
FY2019 RESULTS Outlook & Key Takeaways Andrew Harding Managing Director & CEO
Slide 30: FY2020 outlook
FY2019 RESULTS OUTLOOK & KEY TAKEAWAYS FY2020 outlook Group EBIT guidance $880m – $930m KEY ASSUMPTIONS › QCA approves UT5 customer deal during 1HFY2020 and an uplift in WACC from 5.9% to 6.3% assumed 2HFY2020 › Above Rail Coal volumes of 220 - 230mt › Operational efficiency improvements remain a ke
Slide 31: Key messages
FY2019 RESULTS OUTLOOK & KEY TAKEAWAYS Key messages Aurizon has a simple strategy which enables the delivery of shareholder value Commercial De-risking & agreement growing Ongoing Implementing for UT5 ~50% of the Above Rail Maximise operational the optimal improves portfolio has contract book distri
Slide 32: Contact and further information
Contact and further information Chris Vagg Kath Clapham Head of Investor Relations & Group Treasurer Manager Investor Relations +61 7 3019 9030 +61 7 3019 9044 chris.vagg@aurizon.com.au kath.clapham@aurizon.com.au ASX: AZJ US OTC: AZNNY
Slide 33: Additional Information
FY2019 RESULTS Additional Information Group Coal Bulk Network Capital Expenditure
Slide 34: Aurizon's rail haulage operations
FY2019 RESULTS ADDITIONAL INFORMATION Aurizon’s rail haulage operations KEY OPERATIONAL STATISTICS COMMODITIES Coal, iron ore and bulk freight ROLLINGSTOCK ~500 active locomotives OPERATIONAL FOOTPRINT ~40 operational sites PEOPLE More than 4,500 full-time employees WAGONS 11,000+ active wagons 34
Slide 35: Aurizon's vision, purpose, values and strategic levers
FY2019 RESULTS ADDITIONAL INFORMATION Aurizon’s vision, purpose, values and strategic levers Execution against the three strategic levers is aimed at driving differentiation, competitive advantage and sustainable performance VISION PURPOSE STRATEGIC LEVERS Accelerate cost competitiveness of Aurizon
Slide 36: Sustainability
FY2019 RESULTS ADDITIONAL INFORMATION Sustainability 2019 will be the third year of TCFD disclosure for Aurizon › Aurizon takes a direct approach to reporting environmental, social and governance (ESG) disclosures with the publication of the annual Sustainability Report › In August 2019, Australian
Slide 37: Future of Coal
FY2019 RESULTS ADDITIONAL INFORMATION Future of Coal Australian export coal is dependent on the global traded market, driven by regional demand in Asia and preference for higher quality coal AUSTRALIA COAL EXPORT VOLUME SPLIT: FY20191 INDIA: COKING (METALLURGICAL) COAL REQUIREMENTS3 Metallurgical Co
Slide 38: Enterprise Agreements
FY2019 RESULTS ADDITIONAL INFORMATION Enterprise Agreements Headline Increases # Staff Term EA Expiry Date Year 1 Year 2 Year 3 Year 4 Comments Covered (years) WA Rollingstock 100 4 10 May 2021 1.0% 1.5% 1.75% 1.75% Complete Maintenance WA Rail Operations 420 4 30 June 2022 1.5% 2.0% 2.0% 2.0% Compl
Slide 39: Additional information: Group
FY2019 RESULTS Additional information Group
Slide 40: Financial highlights (underlying)
FY2019 RESULTS ADDITIONAL INFORMATION Financial highlights1 (underlying) $m FY2019 FY2018 Variance Revenue 2,907.6 3,112.7 (7%) Operating costs (1,536.0) (1,646.6) 7% EBITDA 1,371.6 1,466.1 (6%) EBIT 829.0 940.6 (12%) NPAT 473.3 542.1 (13%) EPS (cps) 23.8 26.9 (12%) Total dividend (cps) 23.8 27.1 (1
Slide 41: Underlying group EBIT bridge ($m)
FY2019 RESULTS ADDITIONAL INFORMATION Underlying group EBIT bridge ($m) 941 14 13 80 5 829 FY2018 Coal Bulk Network Other FY2019 41
Slide 42: EBIT by business unit (underlying)
FY2019 RESULTS ADDITIONAL INFORMATION EBIT by business unit (underlying) $m FY2019 FY2018 Variance Coal 415.1 428.6 (3%) Bulk 37.3 50.1 (26%) Network 400.3 480.6 (17%) Other (23.7) (18.7) (27%) EBIT1 829.0 940.6 (12%) 1. Continuing Operations 42
Slide 43: Group operating highlights
FY2019 RESULTS ADDITIONAL INFORMATION Group operating highlights1 $m FY2019 FY2018 Variance Above Rail2 Revenue / NTK ($/’000 NTK) 37.7 38.1 (1%) Labour Costs3 / Revenue 26.0% 24.4% (1.6ppt) NTK / FTE (MNTK) 12.5 13.2 (5%) EBITDA Margin – Underlying 47.2% 47.1% 0.1ppt Operating Ratio – Underlying 71
Slide 44: Other profit & loss (underlying)
FY2019 RESULTS ADDITIONAL INFORMATION Other profit & loss (underlying) $m FY2019 FY2018 Variance Revenue 82.2 90.8 (9%) Total operating expenses (96.1) (99.7) 4% EBITDA (13.9) (8.9) (56%) Depreciation and amortisation (9.8) (9.8) - EBIT (23.7) (18.7) (27%) 44
Slide 45: Quarterly above rail tonnes – June quarter 2019
FY2019 RESULTS ADDITIONAL INFORMATION Quarterly above rail tonnes – June quarter 2019 Quarter Jun-19 Year Financial Variance Quarter Ending vs. to date Jun-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 % Jun-19 Jun-18 % Coal volumes (mt) CQCN 38.9 38.0 38.4 36.4 39.5 2% 152.3 152.5 - NSW & SEQ 15.8 14.2 15.
Slide 46: Cashflow and shareholder returns
FY2019 RESULTS ADDITIONAL INFORMATION Cashflow and shareholder returns FREE CASH FLOW ($M) SHAREHOLDER RETURNS ($M) +10% 830 735 762 704 669 301 300 552 465 488 69 340 227 529 462 396 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 Total Group Continuing operations Buy Back Dividends › FCF benefit
Slide 47: Balance sheet summary
FY2019 RESULTS ADDITIONAL INFORMATION Balance sheet summary $m 30 June 2019 30 June 2018 Assets classified as held for sale1 108.4 108.0 Other current assets 631.2 698.2 Property, plant & equipment 8,536.3 8,659.9 Other non-current assets 425.2 315.7 Total assets 9,701.1 9,781.8 Liabilities classifi
Slide 48: Funding update
FY2019 RESULTS ADDITIONAL INFORMATION Funding update FY2019 FUNDING ACTIVITY KEY DEBT METRICS FY2019 FY2018 › Aurizon Finance cancelled existing bank debt Weighted average syndicated facilities and replaced with bilateral facilities 4.3 years 4.7 years maturity1 totalling $450m, with maturity extend
Slide 49: Reconciliation of borrowings
FY2019 RESULTS ADDITIONAL INFORMATION Reconciliation of borrowings $m Commentary Total debt including working capital facility 3,147.8 › Non-current debt on a Cash basis Reconciliation to Financial Statements Add/(less): › Transaction costs directly attributable to borrowings are Capitalised transac
Slide 50: Significant Items
FY2019 RESULTS ADDITIONAL INFORMATION Significant Items $m FY2019 FY2018 Variance Continuing operations - 25.7 - Asset impairments - Bulk - (31.7) - Cliffs contract exit - 34.5 - Redundancy benefit - 22.9 - Discontinued operation - Intermodal (11.4) (74.7) nm 50
Slide 51: Redundancy cost information
FY2019 RESULTS ADDITIONAL INFORMATION Redundancy cost information › Redundancy costs since IPO have been included in Redundancy costs Redundancy costs underlying EBIT as well as classified as a significant Year included in underlying classified as item EBIT ($m) Significant items ($m) › Aurizon clas
Slide 52: Dividend history
FY2019 RESULTS ADDITIONAL INFORMATION Dividend history Amount per share Payment Date Franking Payout Ratio (cents) FY2019 Final 23 September 2019 12.4 70% 100%1 FY2019 Interim 25 March 2019 11.4 70% 100%1 FY2019 Total Dividend 23.8 FY2018 Final 24 September 2018 13.1 60% 100%1 FY2018 Interim 26 Marc
Slide 53: Impact of AASB 16 Leases
FY2019 RESULTS ADDITIONAL INFORMATION Impact of AASB 16 Leases The Group will adopt AASB 16 from 1 July 2019 ESTIMATED IMPACT ON BALANCE SHEET › The adoption of AASB 16 will result in almost all previously ASSETS $m recognised operating leases being recognised on the balance Current Assets sheet. Un
Slide 54: Additional information: Coal
FY2019 RESULTS Additional information Coal
Slide 55: Coal snapshot
FY2019 RESULTS ADDITIONAL INFORMATION Coal snapshot As at 30 June 2019 214 336 236km average haul million tonnes active locos length 76 8,724 22.8km/hr average services active wagons velocity per day TONNES HAULAGE BREAKDOWN (estimate) Thermal Coal CQCN 29% Metallurgical Coal NSW/SEQ 45% 55% 71% 55
Slide 56: Coal operations - CQCN
FY2019 RESULTS ADDITIONAL INFORMATION Coal operations - CQCN Includes all mines in the CQCN 56
Slide 57: Coal operations – NSW & South East Queensland (SEQ)
FY2019 RESULTS ADDITIONAL INFORMATION Coal operations – NSW & South East Queensland (SEQ) Includes all mines in NSW & SEQ 57
Slide 58: Coal profit and loss (underlying)
FY2019 RESULTS ADDITIONAL INFORMATION Coal profit and loss (underlying) $m FY2019 FY2018 Variance Tonnes (m) 214.3 212.4 1% Above Rail 1,236.2 1,207.8 2% Track Access 487.7 598.1 (18%) Other 0.9 7.3 (88%) Total Revenue 1,724.8 1,813.2 (5%) Operating Expenses (1,115.0) (1,202.0) 7% EBITDA 609.8 611.2
Slide 59: Coal financial and operating metrics
FY2019 RESULTS ADDITIONAL INFORMATION Coal financial and operating metrics FY2019 FY2018 Variance Tonnes (m) 214.3 212.4 1% NTKs (bn) 50.5 50.4 - Above Rail Revenue /NTK ($/’000 NTK) 24.5 24.0 2% Opex (excl access)/NTK ($/’000 NTK) 16.6 15.4 (8%) Locomotive Productivity (000’s NTK / Active loco days
Slide 60: Coal haulage tonnes (mt) by system
FY2019 RESULTS ADDITIONAL INFORMATION Coal haulage tonnes (mt) by system FY2019 FY2018 Variance CQCN Newlands 18.8 20.4 (8%) Goonyella 61.0 62.4 (2%) Blackwater 58.9 58.5 1% Moura 13.6 11.2 21% Total CQCN 152.3 152.5 - NSW & SEQ West Moreton 7.4 7.6 (3%) Hunter Valley 54.6 52.3 4% Total NSW & SEQ 62
Slide 61: Coal contract portfolio
FY2019 RESULTS ADDITIONAL INFORMATION Coal contract portfolio COAL CONTRACT PORTFOLIO EXPIRY PROFILE ANNUALISED FORECAST COAL CONTRACTED (AS AT 30 JUNE 2019)1 VOLUMES (MTPA)1 249 238 0 - 3 years 229 13% 69 63 63 >3 - 7 years 15% 175 180 166 72% >7 years FY2018a FY2019a FY2020f NSW & SEQ CQCN 1. This
Slide 62: Coal contract portfolio
FY2019 RESULTS ADDITIONAL INFORMATION Coal contract portfolio AURIZON COAL CONTRACT VOLUME EXPIRY BY YEAR (MTPA – AS AT 30 JUNE 2019) 60 Contracted volume expiry Glencore extension / new volume Jellinbah extension 45 Million tonnes per annum 30 15 0 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29
Slide 63: Australia FY2018 Coal Supply Summary
FY2019 RESULTS ADDITIONAL INFORMATION Australia FY2018 Coal Supply Summary Coal Production Domestic Consumption Export All Coal Export (By Destination) All Coal Export (By Port) 118mt 157mt 450mt 68mt 382mt 89mt 120mt 31% 48mt 47mt 48mt 41% 67mt 23% 32mt 31% State Split State Split State Split^ 28mt
Slide 64: Coal Market | Australia
FY2019 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 $200 $100 million tonnes million tonnes 150 150 100 100 210 183 $100 $50 50 50 0 $0 0
Slide 65: Coal Price | Coal Capital & Exploration Expenditure
FY2019 RESULTS ADDITIONAL INFORMATION Coal Price | Coal Capital & Exploration Expenditure HARD COKING COAL SPOT PRICE (US$/t FOB) THERMAL COAL SPOT PRICE (US$/t FOB) $300 $150 $250 $204 $200 $100 $80 $150 $100 $50 $50 $0 $0 Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Jun- Dec- Jun- Dec- Jun- Dec- J
Slide 66: Australia coal competitiveness
FY2019 RESULTS ADDITIONAL INFORMATION Australia coal competitiveness METALLURGICAL COAL CASH COSTS (US$/t, CFR INDIA, 2019) THERMAL COAL CASH COSTS (US$/t, CFR JAPAN, 2019) $160 $80 $140 $70 $120 US$/t US$/t $100 $60 $141 $127 $69 $70 $80 $112 $62 $63 $50 $59 $93 $60 $82 $40 $40 Russia Australia Can
Slide 67: Additional information: Bulk
FY2019 RESULTS Additional information Bulk
Slide 68: Bulk snapshot
FY2019 RESULTS ADDITIONAL INFORMATION Bulk snapshot As at 30 June 2019 45 162 >10 million tonnes active locos products hauled 191km 2,510 8.5b average haul active wagons NTK1 length HAULAGE BREAKDOWN Bauxite/Alumina 27% Iron Ore 48% Other2 25% 1. Net tonnes per kilometre. Payload tonnes x distance p
Slide 69: Bulk operations – Queensland
FY2019 RESULTS ADDITIONAL INFORMATION Bulk operations – Queensland 69
Slide 70: Bulk operations – Western Australia
FY2019 RESULTS ADDITIONAL INFORMATION Bulk operations – Western Australia 70
Slide 71: Bulk profit & loss (underlying)
FY2019 RESULTS ADDITIONAL INFORMATION Bulk profit & loss (underlying) $m FY2019 FY2018 Variance Tonnes (m) 44.6 54.7 (18%) Total Revenue 501.7 618.1 (19%) Total operating expenses (447.2) (542.9) 18% EBITDA 54.5 75.2 (28%) Depreciation and amortisation (17.2) (25.1) 31% EBIT 37.3 50.1 (26%) Operatin
Slide 72: Bulk financial and operating metrics
FY2019 RESULTS ADDITIONAL INFORMATION Bulk financial and operating metrics $m FY2019 FY2018 Variance Tonnes (m) 44.6 54.7 (18%) NTKs (bn) 8.5 13.4 (37%) Operating Ratio 92.6% 91.9% (0.7ppt) Revenue / NTK ($000 NTK) 59.0 46.1 28% Opex (excl access)/NTK ($/’000 NTK) 42.4 30.3 (40%) Fuel Consumption (l
Slide 73: Australia Capital & Exploration Expenditure
FY2019 RESULTS ADDITIONAL INFORMATION Australia Capital & Exploration Expenditure CAPITAL EXPENDITURE: METAL ORE MINING1 EXPLORATION EXPENDITURE: IRON ORE A$4.0b A$100m +18% +19% A$2.0b A$50m A$0.0b A$0m Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- 15 15 16 16 17 1
Slide 74: Bulk commodities: Global & Australia
FY2019 RESULTS ADDITIONAL INFORMATION Bulk commodities: Global & Australia Global & Australia supply growth (CAGR 2019-2024) (Selected commodities) 11.2% 4.0% 3.7% 2.6% 2.3% 0.9% Lithium Nickel Copper Potash Phosphate Bauxite Iron ore Alumina Zinc Global Australia Source/Notes: Lithium, Nickel, Baux
Slide 75: Additional Information: Network
FY2019 RESULTS Additional Information Network
Slide 76: Network snapshot
FY2019 RESULTS ADDITIONAL INFORMATION Network snapshot As at 30 June 2019 233 40+ three above rail million tonnes mines serviced operators $5.7b five 2,670km Regulated Asset export terminals railway track Base1 HAULAGE BREAKDOWN2 FY2019 (estimate) Thermal Coal 31% Metallurgical Coal 69% 1. Estimate
Slide 77: Central Queensland Coal Network (CQCN)
FY2019 RESULTS ADDITIONAL INFORMATION Central Queensland Coal Network (CQCN) CQCN comprises four major coal systems and one connecting system link (GAPE) servicing Queensland’s Bowen Basin coal region 77
Slide 78: Network profit & loss (underlying)
FY2019 RESULTS ADDITIONAL INFORMATION Network profit & loss (underlying) FY2019 FY2018 Variance $m Tonnes (m) 232.7 229.6 1% Access Revenue 1,070.3 1,167.1 (8%) Services and other 47.4 51.6 (8%) Total Revenue 1,117.7 1,218.7 (8%) Operating costs (396.5) (430.1) 8% EBITDA 721.2 788.6 (9%) Depreciatio
Slide 79: Network financial and operating metrics
FY2019 RESULTS ADDITIONAL INFORMATION Network financial and operating metrics FY2019 FY2018 Variance Tonnes (m) 232.7 229.6 1% NTK (bn) 57.9 56.9 2% Operating Ratio 64.2% 60.6% (3.6ppt) Maintenance/NTK ($/’000 NTK) 2.3 2.2 (5%) Opex/NTK ($/’000 NTK) 12.4 13.0 5% Cycle Velocity (km/hr) 23.1 23.5 (2%)
Slide 80: Network volumes
FY2019 RESULTS ADDITIONAL INFORMATION Network volumes FY2019 FY2018 Variance Newlands 12.6 13.1 (4%) Goonyella 124.5 126.5 (2%) Blackwater/WIRP 64.9 62.7 4% Moura 13.6 11.1 23% GAPE 17.1 16.2 6% Total 232.7 229.6 1% Average haul length2 (kms) 248.8 247.7 - 1. Table represents coal tonnes hauled on t
Slide 81: Network adjusted MAR bridge - Customer DAAU
FY2019 RESULTS ADDITIONAL INFORMATION Network adjusted MAR bridge - Customer DAAU Indicative Network adjusted MAR (Ex GAPE) for FY2019 to FY2023 based on the revised terms of the Customer DAAU INDICATIVE NETWORK ADJUSTED MAR* FY2018 – FY2023 ($M) ~954 ~953 ~5 ~8 ~945 ~19 ~12 ~12 ~937 936 ~4 55 ~51 8
Slide 82: Network revenue adjustment amounts (revenue cap)
FY2019 RESULTS ADDITIONAL INFORMATION Network revenue adjustment amounts (revenue cap) › Revenue adjustment amounts (RAA) are the difference by system between Aurizon’s Total Financial AT2-4 AT5 Total Actual AT2-5 Revenue and Allowable AT2-5 (diesel tariff) (electric tariff) Year $m $m $m Revenue ›
Slide 83: Reconciliation of billed MAR to reported access revenue
FY2019 RESULTS ADDITIONAL INFORMATION Reconciliation of billed MAR to reported access revenue FY2019 FY2018 $m Actual Actual Billed Access Revenue (AT1 to AT5) (ex. GAPE) 885 940 Approved Adjustments to MAR Flood Claim recoveries1 - 18 Revenue Cap (ex. GAPE and inclusive of capitalised interest) 44
Slide 84: Regulated asset base (RAB)
FY2019 RESULTS ADDITIONAL INFORMATION Regulated asset base (RAB) Network maintains a record of the value of its existing assets for regulatory pricing called the RAB ROLLFORWARD RAB › This represents the value of Network assets for regulatory purposes › Each year Network rolls forward the RAB adjust
Slide 85: Additional Information: Capital Expenditure
FY2019 RESULTS Additional Information Capital Expenditure
Slide 86: FY2019 group and business unit capital expenditure ($m)
FY2019 RESULTS ADDITIONAL INFORMATION FY2019 group and business unit capital expenditure ($m) 495 451 251 167 250 128 30 40 7 44 39 26 40 1 4 7 FY20191,2 Network1,2 Coal1 Bulk2 Intermodal Corporate Non Growth Growth 1. Includes capitalised interest 2. Net of externally funded payments 86
Slide 87: Glossary
FY2019 RESULTS ADDITIONAL INFORMATION Glossary Metric Description Access Revenue Amounts received by Aurizon Network for access to the Network infrastructure under all Access Agreements AFD Access Facilitation Deed Average haul length NTK/Total tonnes Contract utilisation Total volumes hauled as a p
Slide 88: <4 AURIZON.
7M <4 AURIZON.