Aurizon Holdings Ltd. · ASX:AZJ
Aurizon — FY2019 Earnings Presentation
89 slides from Aurizon's earnings presentation, Aug 12, 2019
Slide 1: Full year results presentation ASX cover letter
Aurizon Holdings Limited ABN 14 146 335 622 For personal use only ASX Market Announcements ASX Limited 20 Bridge Street Sydney NSW 2000 BY ELECTRONIC LODGEMENT 12 August 2019 Full year results presentation Please find attached the Company’s full year results presentation for release to the market. T
Slide 2: FY2019 Results
FY2019 Results Andrew Harding – Managing Director & CEO Pam Bains – CFO & Group Executive Strategy For personal use only 12 August 2019
Slide 3: Disclaimer
FY2019 RESULTS Disclaimer For personal use only 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” whic
Slide 4: Agenda
FY2019 RESULTS Agenda For personal use only 1 Safety 2 Integration Review 3 FY2019 Performance Overview 4 FY2019 Financial Performance 5 Outlook & Key Takeaways 6 Q&A 3
Slide 5: Safety performance
FY2019 RESULTS Safety performance The result reinforces the importance of our Seamless Safety initiative to reset the safety For personal use only 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 FY
Slide 6: Integration review
FY2019 RESULTS Integration review For personal use only Andrew Harding Managing Director & CEO
Slide 7: Integration review
FY2019 RESULTS INTEGRATION REVIEW Integration review In June 2018 Aurizon announced it would review the benefits of remaining vertically integrated. For personal use only The review of the integrated structure was assessed through five relevant core criteria SYNERGIES / GROWTH CAPITAL STAKEHOLDERS V
Slide 8: Stakeholders
FY2019 RESULTS INTEGRATION REVIEW Stakeholders Majority of stakeholders either have no preference or prefer Aurizon to For personal use only remain vertically integrated STAKEHOLDERS INSIGHT FROM CUSTOMERS › Majority of customers are either ambivalent or prefer Aurizon to remain integrated OTHER STA
Slide 9: Synergies / dis-synergies
FY2019 RESULTS INTEGRATION REVIEW Synergies / dis-synergies A separated structure would result in loss of operational synergies and also SYNERGIES / For personal use only incur costs of duplication DIS-SYNERGIES DIS-SYNERGIES AND RISKS FROM SEPARATION ARE REAL Enables easier implementation of operat
Slide 10: Growth options & Valuation
FY2019 RESULTS INTEGRATION REVIEW Growth options & Valuation Growth options are present in either structure, but execution GROWTH For personal use only remains uncertain OPTIONS VALUATION GROWTH OPPORTUNITIES VALUATION › Current share price implies discount to fair value has narrowed 1 Separation un
Slide 11: Capital structure
FY2019 RESULTS INTEGRATION REVIEW Capital structure More efficient capital structure can be implemented regardless of CAPITAL For personal use only integration STRUCTURE OUTCOMES OF LEGAL AND CAPITAL STRUCTURE REVIEW 1 CURRENT LEGAL STRUCTURE BBB+/Baa1 Current capital structure is not optimised, wit
Slide 12: Conclusion
FY2019 RESULTS INTEGRATION REVIEW Conclusion The review concluded that the benefits of remaining vertically integrated outweigh separation For personal use only at this time CRITERIA INTEGRATION SEPARATION BENEFITS BENEFITS • Customer preference (by contracted • Provides choice of pure-play exposu
Slide 13: Performance overview
FY2019 RESULTS Performance overview For personal use only Andrew Harding Managing Director & CEO
Slide 14: FY2019 highlights
FY2019 RESULTS PERFORMANCE OVERVIEW FY2019 highlights Non Network EBIT (ex redundancy) $450m above top end of guidance, includes $20m For personal use only 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
Slide 15: 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 For personal use only shareholders Achieved Execute Ongoing De-risked Optimising Restructured fundamental Freight operational near term the legal and t
Slide 16: Coal update
FY2019 RESULTS PERFORMANCE OVERVIEW Coal update Through a focus on reliability, performance and providing customers with tailored, flexible For personal use only operating solutions, Coal has secured key contract extensions CONTRACT UPDATE CUSTOMER VALUE PROPOSITION › Jellinbah – contract extension
Slide 17: Bulk update
FY2019 RESULTS PERFORMANCE OVERVIEW Bulk update Bulk continues to improve its market positioning. Target Bulk markets remain positive driven For personal use only by demand for key commodities CONTRACT UPDATE BULK CONTRACT PORTFOLIO EXPIRY PROFILE1 › Glencore Freighter 0 - 3 years > 7 years 29% New
Slide 18: Network update
FY2019 RESULTS PERFORMANCE OVERVIEW Network update Through constructive engagement with our customers, Network has submitted a customer DAAU For personal use only that delivers significant regulatory reform and a range of benefits for both Network and customers BENEFITS FROM THE DAAU NETWORK OPERATI
Slide 19: Other matters
FY2019 RESULTS PERFORMANCE OVERVIEW Other matters Below is a summary update on other matters For personal use only › 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
Slide 20: Financial Performance
FY2019 RESULTS FY2019 Financial Performance For personal use only Pam Bains CFO & Group Executive Strategy
Slide 21: Key financial highlights
FY2019 RESULTS FINANCIAL PERFORMANCE Key financial highlights1 Results reflect reduced earnings in Network from the UT5 Final Decision, including the For personal use only acceleration of the total FY2018 true up into FY2019 $m FY2019 FY2018 Variance › Revenue reflects the UT5FD, including the accel
Slide 22: Coal
FY2019 RESULTS FINANCIAL PERFORMANCE Coal EBIT result in line with expectations with increased spend for maintenance and reliability For personal use only 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%) a
Slide 23: Bulk
FY2019 RESULTS FINANCIAL PERFORMANCE Bulk Result includes the impact of the Cliffs cessation in FY2018 For personal use only 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%
Slide 24: Network
FY2019 RESULTS FINANCIAL PERFORMANCE Network EBIT performance reflects the UT5FD, including $60m impact of the true up from FY2018. For personal use only RAB rollover estimated value $5.7bn1 Revenue $m FY2019 FY2018 Variance › $60m recognised in relation to FY2018 UT5FD Track Access 1,070 1,167 (8%)
Slide 25: Capital expenditure
FY2019 RESULTS FINANCIAL PERFORMANCE Capital expenditure Capital result in line with guidance for FY2019. Non-growth capex forecast in line with long- For personal use only term expectations CAPITAL EXPENDITURE1 FY2016 – FY2020 ($M) › FY2019 capex in line with guidance at 703 $495m (guidance $480m -
Slide 26: 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 For personal use only reorganisation of the legal entities under Holdings CURRENT LEGAL STRUCTURE PROPOSED LEGAL STRUCTURE BBB+/Baa1 Holdin
Slide 27: Implementation steps
FY2019 RESULTS FINANCIAL PERFORMANCE Implementation steps Required to effect the share transfer of Network and establish independence from For personal use only Operations › Duty relief - Office of State Revenue (OSR) in Queensland › An application for duty relief on the proposed restructure has bee
Slide 28: Capital structure objectives
FY2019 RESULTS FINANCIAL PERFORMANCE Capital structure objectives The objectives determine the appropriate credit ratings and gearing to ensure the optimal For personal use only outcome for the Group and shareholders Balance sheet flexibility to adjust to changing Sustainability of market conditions
Slide 29: Prioritisation of capital
FY2019 RESULTS FINANCIAL PERFORMANCE Prioritisation of capital Surplus capital will be applied in line with Aurizon’s capital allocation hierarchy For personal use only CAPITAL ALLOCATION HIERARCHY 1 2 3 4 DETERMINE NON GROWTH SURPLUS AVAILABLE DIVIDENDS CAPITAL CAPITAL CAPITAL › Ongoing operating ›
Slide 30: Outlook & Key Takeaways
FY2019 RESULTS Outlook & Key Takeaways For personal use only Andrew Harding Managing Director & CEO
Slide 31: FY2020 outlook
FY2019 RESULTS OUTLOOK & KEY TAKEAWAYS FY2020 outlook Group EBIT guidance $880m – $930m For personal use only 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 im
Slide 32: Key messages
FY2019 RESULTS OUTLOOK & KEY TAKEAWAYS Key messages Aurizon has a simple strategy which enables the delivery of shareholder value For personal use only Commercial De-risking & agreement growing Ongoing Implementing for UT5 ~50% of the Above Rail Maximise operational the optimal improves portfolio ha
Slide 33: 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 For personal use only chris.vagg@aurizon.com.au kath.clapham@aurizon.com.au ASX: AZJ US OTC: AZNNY
Slide 34: Additional Information
FY2019 RESULTS Additional Information For personal use only Group Coal Bulk Network Capital Expenditure
Slide 35: Aurizon's rail haulage operations
FY2019 RESULTS ADDITIONAL INFORMATION Aurizon’s rail haulage operations For personal use only 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 11,0
Slide 36: 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 For personal use only advantage and sustainable performance VISION PURPOSE STRATEGIC LEVERS Accelerate cost compe
Slide 37: Sustainability
FY2019 RESULTS ADDITIONAL INFORMATION Sustainability 2019 will be the third year of TCFD disclosure for Aurizon For personal use only › Aurizon takes a direct approach to reporting environmental, social and governance (ESG) disclosures with the publication of the annual Sustainability Report › In Au
Slide 38: Future of Coal
FY2019 RESULTS ADDITIONAL INFORMATION Future of Coal Australian export coal is dependent on the global traded market, driven by regional demand For personal use only in Asia and preference for higher quality coal AUSTRALIA COAL EXPORT VOLUME SPLIT: FY20191 INDIA: COKING (METALLURGICAL) COAL REQUIREM
Slide 39: Enterprise Agreements
FY2019 RESULTS ADDITIONAL INFORMATION Enterprise Agreements For personal use only 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
Slide 40: Additional information: Group
FY2019 RESULTS Additional information For personal use only Group
Slide 41: Financial highlights (underlying)
FY2019 RESULTS ADDITIONAL INFORMATION Financial highlights1 (underlying) For personal use only $m FY2019 FY2018 Variance Revenue 2,907.6 3,112.7 (7%) Operating costs (1,536.0) (1,646.6) 7% EBITDA 1,371.6 1,466.1 (6%) EBIT 829.0 940.6 (12%) NPAT 473.3 542.1 (13%) EPS (cps) 23.8 26.9 (12%) Total divid
Slide 42: Underlying group EBIT bridge
FY2019 RESULTS ADDITIONAL INFORMATION Underlying group EBIT bridge ($m) For personal use only 941 14 13 80 5 829 FY2018 Coal Bulk Network Other FY2019 41
Slide 43: EBIT by business unit (underlying)
FY2019 RESULTS ADDITIONAL INFORMATION EBIT by business unit (underlying) For personal use only $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 44: Group operating highlights
FY2019 RESULTS ADDITIONAL INFORMATION Group operating highlights1 For personal use only $m FY2019 FY2018 Variance Above Rail2 Revenue / NTK ($/’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
Slide 45: Other profit & loss (underlying)
FY2019 RESULTS ADDITIONAL INFORMATION Other profit & loss (underlying) For personal use only $m FY2019 FY2018 Variance Revenue 82.2 90.8 (9%) Total operating expenses (96.1) (99.7) 4% EBITDA (13.9) (8.9) (56%) Depreciation and amortisation (9.8) (9.8) - EBIT (23.7) (18.7) (27%) 44
Slide 46: Quarterly above rail tonnes – June quarter 2019
FY2019 RESULTS ADDITIONAL INFORMATION Quarterly above rail tonnes – June quarter 2019 For personal use only Quarter Jun-19 Year Financial Variance Quarter Ending vs. to date Jun-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 % Jun-19 Jun-18 % Coal volumes (mt) CQCN 38.9 38.0 38.4 36.4 39.5 2% 152.3 152.5 - N
Slide 47: Cashflow and shareholder returns
FY2019 RESULTS ADDITIONAL INFORMATION Cashflow and shareholder returns For personal use only FREE CASH FLOW ($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 D
Slide 48: Balance sheet summary
FY2019 RESULTS ADDITIONAL INFORMATION Balance sheet summary For personal use only $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.
Slide 49: Funding update
FY2019 RESULTS ADDITIONAL INFORMATION Funding update For personal use only 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
Slide 50: Reconciliation of borrowings
FY2019 RESULTS ADDITIONAL INFORMATION Reconciliation of borrowings For personal use only $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 a
Slide 51: Significant Items
FY2019 RESULTS ADDITIONAL INFORMATION Significant Items For personal use only $m FY2019 FY2018 Variance Continuing operations - 25.7 - Asset impairments - Bulk - (31.7) - Cliffs contract exit - 34.5 - Redundancy benefit - 22.9 - Discontinued operation - Intermodal (11.4) (74.7) nm 50
Slide 52: Redundancy cost information
FY2019 RESULTS ADDITIONAL INFORMATION Redundancy cost information For personal use only › Redundancy costs since IPO have been included in Redundancy costs Redundancy costs underlying EBIT as well as classified as a significant Year included in underlying classified as item EBIT ($m) Significant ite
Slide 53: Dividend history
FY2019 RESULTS ADDITIONAL INFORMATION Dividend history For personal use only 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
Slide 54: Impact of AASB Leases
FY2019 RESULTS ADDITIONAL INFORMATION Impact of AASB 16 Leases The Group will adopt AASB 16 from 1 July 2019 For personal use only 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 Cu
Slide 55: Additional information: Coal
FY2019 RESULTS Additional information For personal use only Coal
Slide 56: Coal snapshot
FY2019 RESULTS ADDITIONAL INFORMATION Coal snapshot As at 30 June 2019 For personal use only 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 N
Slide 57: Coal operations - CQCN
FY2019 RESULTS ADDITIONAL INFORMATION Coal operations - CQCN For personal use only Includes all mines in the CQCN 56
Slide 58: Coal operations – NSW & SEQ
FY2019 RESULTS ADDITIONAL INFORMATION Coal operations – NSW & South East Queensland (SEQ) For personal use only Includes all mines in NSW & SEQ 57
Slide 59: Coal profit and loss (underlying)
FY2019 RESULTS ADDITIONAL INFORMATION Coal profit and loss (underlying) For personal use only $m FY2019 FY2018 Variance Tonnes (m) 214.3 212.4 1% Above Rail 1,236.2 1,207.8 2% Track Access 487.7 598.1 (18%) Other 0.9 7.3 (88%) Total Revenue 1,724.8 1,813.2 (5%) Operating Expenses (1,115.0) (1,202.0)
Slide 60: Coal financial and operating metrics
FY2019 RESULTS ADDITIONAL INFORMATION Coal financial and operating metrics For personal use only FY2019 FY2018 Variance Tonnes (m) 214.3 212.4 1% NTKs (bn) 50.5 50.4 - Above Rail Revenue /NTK ($/’000 NTK) 24.5 24.0 2% Opex (excl access)/NTK ($/’000 NTK) 16.6 15.4 (8%) Locomotive Productivity (000’s
Slide 61: Coal haulage tonnes by system
FY2019 RESULTS ADDITIONAL INFORMATION Coal haulage tonnes (mt) by system For personal use only 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
Slide 62: Coal contract portfolio
FY2019 RESULTS ADDITIONAL INFORMATION Coal contract portfolio For personal use only 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
Slide 63: Coal contract portfolio expiry by year
FY2019 RESULTS ADDITIONAL INFORMATION Coal contract portfolio For personal use only 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 FY2
Slide 64: Australia FY2018 Coal Supply Summary
FY2019 RESULTS ADDITIONAL INFORMATION Australia FY2018 Coal Supply Summary For personal use only 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 S
Slide 65: Coal Market | Australia
FY2019 RESULTS ADDITIONAL INFORMATION Coal Market | Australia For personal use only 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 $100 million tonnes million tonnes 150 150 100 100 210 183
Slide 66: Coal Price | Coal Capital & Exploration Expenditure
FY2019 RESULTS ADDITIONAL INFORMATION Coal Price | Coal Capital & Exploration Expenditure For personal use only HARD COKING COAL SPOT PRICE (US$/t FOB) THERMAL COAL SPOT PRICE (US$/t FOB) $300 $150 $250 $204 $200 $100 $80 $150 $100 $50 $50 $0 $0 Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Jun- Dec-
Slide 67: Australia coal competitiveness
FY2019 RESULTS ADDITIONAL INFORMATION Australia coal competitiveness For personal use only METALLURGICAL COAL CASH COSTS (US$/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 $4
Slide 68: Additional information: Bulk
FY2019 RESULTS Additional information For personal use only Bulk
Slide 69: Bulk snapshot
FY2019 RESULTS ADDITIONAL INFORMATION Bulk snapshot As at 30 June 2019 For personal use only 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. Paylo
Slide 70: Bulk operations – Queensland
FY2019 RESULTS ADDITIONAL INFORMATION Bulk operations – Queensland For personal use only 69
Slide 71: Bulk operations – Western Australia
FY2019 RESULTS ADDITIONAL INFORMATION Bulk operations – Western Australia For personal use only 70
Slide 72: Bulk profit & loss (underlying)
FY2019 RESULTS ADDITIONAL INFORMATION Bulk profit & loss (underlying) For personal use only $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
Slide 73: Bulk financial and operating metrics
FY2019 RESULTS ADDITIONAL INFORMATION Bulk financial and operating metrics For personal use only $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
Slide 74: Australia Capital & Exploration Expenditure
FY2019 RESULTS ADDITIONAL INFORMATION Australia Capital & Exploration Expenditure For personal use only 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-
Slide 75: Bulk commodities: Global & Australia
FY2019 RESULTS ADDITIONAL INFORMATION Bulk commodities: Global & Australia For personal use only 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:
Slide 76: Additional Information: Network
FY2019 RESULTS Additional Information For personal use only Network
Slide 77: Network snapshot
FY2019 RESULTS ADDITIONAL INFORMATION Network snapshot As at 30 June 2019 For personal use only 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
Slide 78: 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 For personal use only Queensland’s Bowen Basin coal region 77
Slide 79: Network profit & loss (underlying)
FY2019 RESULTS ADDITIONAL INFORMATION Network profit & loss (underlying) For personal use only FY2019 FY2018 Variance $m Tonnes (m) 232.7 229.6 1% Access Revenue 1,070.3 1,167.1 (8%) Services and other 47.4 51.6 (8%) Total Revenue 1,117.7 1,218.7 (8%) Operating costs (396.5) (430.1) 8% EBITDA 721.2
Slide 80: Network financial and operating metrics
FY2019 RESULTS ADDITIONAL INFORMATION Network financial and operating metrics For personal use only FY2019 FY2018 Variance Tonnes (m) 232.7 229.6 1% NTK (bn) 57.9 56.9 2% Operating Ratio 64.2% 60.6% (3.6ppt) Maintenance/NTK ($/’000 NTK) 2.3 2.2 (5%) Opex/NTK ($/’000 NTK) 12.4 13.0 5% Cycle Velocity
Slide 81: Network volumes
FY2019 RESULTS ADDITIONAL INFORMATION Network volumes For personal use only FY2019 FY2018 Variance Newlands 12.6 13.1 (4%) Goonyella 124.5 126.5 (2%) Blackwater/WIRP 64.9 62.7 4% Moura 13.6 11.1 23% GAPE 17.1 16.2 6% Total 232.7 229.6 1% Average haul length2 (kms) 248.8 247.7 - 1. Table represents c
Slide 82: Network adjusted MAR bridge - Customer DAAU
FY2019 RESULTS ADDITIONAL INFORMATION Network adjusted MAR bridge - Customer DAAU Indicative Network adjusted MAR (Ex GAPE) for FY2019 to FY2023 based on the revised terms For personal use only of the Customer DAAU INDICATIVE NETWORK ADJUSTED MAR* FY2018 – FY2023 ($M) ~954 ~953 ~5 ~8 ~945 ~19 ~12 ~1
Slide 83: Network revenue adjustment amounts (revenue cap)
FY2019 RESULTS ADDITIONAL INFORMATION Network revenue adjustment amounts (revenue cap) For personal use only › 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) Ye
Slide 84: Reconciliation of billed MAR to reported access revenue
FY2019 RESULTS ADDITIONAL INFORMATION Reconciliation of billed MAR to reported access revenue For personal use only FY2019 FY2018 $m Actual Actual Billed Access Revenue (AT1 to AT5) (ex. GAPE) 885 940 Approved Adjustments to MAR Flood Claim recoveries1 - 18 Revenue Cap (ex. GAPE and inclusive of cap
Slide 85: Regulated asset base (RAB)
FY2019 RESULTS ADDITIONAL INFORMATION Regulated asset base (RAB) Network maintains a record of the value of its existing assets for regulatory pricing called the For personal use only RAB ROLLFORWARD RAB › This represents the value of Network assets for regulatory purposes › Each year Network rolls
Slide 86: Additional Information: Capital Expenditure
FY2019 RESULTS Additional Information For personal use only Capital Expenditure
Slide 87: Group and business unit capital expenditure
FY2019 RESULTS ADDITIONAL INFORMATION FY2019 group and business unit capital expenditure ($m) For personal use only 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 p
Slide 88: Glossary
FY2019 RESULTS ADDITIONAL INFORMATION Glossary For personal use only 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
Slide 89: For personal use only
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